Publication: Trade Policy, Green Goods and the Labor Market: Evidence from the Philippines
Loading...
Date
2024-12-17
ISSN
Published
2024-12-17
Author(s)
Editor(s)
Abstract
Green goods trade will matter for the transition to a low-carbon global economy as well as for its adaptive capacity to climate events. This study explores green goods trade and related trade policies in the Philippines and its relationship with the labor markets. The paper finds that the country’s green goods trade is limited due to certain costly non-tariff measures affecting energy transition and other types of green goods. Of about 90 measures, five are identified as reform candidates. Reforming these could enhance green goods trade, as there is a positive correlation between imports and exports of green goods. However, increased exports could reduce the number of high-skilled workers, while imports might increase the shares of female workers within industries. Green goods imports also correlate with higher earnings across industries. The study suggests that trade policy reforms may lead to labor shifts, necessitating complementary policies for affected workers when making trade policies more climate-friendly.
Link to Data Set
Citation
“Coulibaly, Souleymane; Montfaucon, Angella Faith; Nigatu, Natnael Simachew; Seri-Atsebi, Regina. 2024. Trade Policy, Green Goods and the Labor Market: Evidence from the Philippines. Policy Research Working Paper; 11001. © World Bank. http://hdl.handle.net/10986/42556 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Publication Geopolitics and the World Trading System(Washington, DC: World Bank, 2024-12-23)Until the beginning of this century, the GATT/WTO system worked. Economic research provided a compelling explanation. It showed that if governments maximize the well-being of their own countries broadly defined, GATT/WTO principles would facilitate mutually beneficial cooperation over their trade policy choices. Now heightened geopolitical rivalry seems to have undermined the WTO. A simple transposition of the previous rationalization suggests that geopolitics and trade cooperation are not compatible. The paper shows that this is only true if rivalry eclipses any consideration of own-country well-being. In all other circumstances, there are gains from trade cooperation even with geopolitics. Furthermore, the WTO’s relevance is in question only if it adheres too rigidly to its existing rules and norms. Through measured adaptation to the geopolitical imperative, the WTO can continue to thrive as a forum for multilateral trade cooperation in the age of geopolitics.Publication Chinese Imports and Industrialization in Africa(Washington, DC: World Bank, 2025-05-12)The rise of China in the global economy has been linked with negative impacts on employment across many high- and middle-income countries. However, evidence for African countries is limited. This paper investigates the causal relationship between Chinese imports and manufacturing employment in Ethiopia. Imports may harm domestic firms through a revenue effect (lower market shares) or benefit them, indirectly if competition spurs innovation or directly through access to better quality or cheaper inputs. The analysis shows that a one unit increase in import penetration leads to a 15.2 percent increase in industry employment. The inputs effect is disentangled from the other two effects by decomposing total Chinese imports by their end-use category using input-output tables. The evidence shows that imported intermediate inputs are driving the employment gains. The findings are consistent with the idea that employment gains are a result of productivity gains and increases in capacity utilization. These employment gains appear to benefit large firms and labor-intensive industries disproportionately.Publication VAT Exemptions, Embedded Tax, and Unintended Consequences(Washington, DC: World Bank, 2025-05-15)The value-added tax (VAT) has proved to be a highly effective tool at raising revenue in developed and developing countries alike. However, the effective operation of the VAT breaks down in the presence of exemptions. Unlike zero rates, exemptions deny input tax credits, thereby increasing production costs and resulting in VAT being embedded within the prices of goods and services. This paper develops a VAT model based on input-output table and household budget survey data for 29 European countries to examine the effects of VAT exemptions on final prices and to assess the merits of their use. Simulation results show that exemptions suffer from the same targeting problems as reduced VAT rates, but, in addition, they are non-transparent and have unpredictable and counterproductive indirect effects. These effects are in addition to the well-known distortionary impact of exemptions on production decisions, and their creation of incentives to self-supply. The paper concludes that the use of exemptions should be limited to addressing pragmatic concerns, such as the disproportionate compliance costs of small businesses and the practical difficulty in taxing margin-based financial services.Publication Disentangling the Key Economic Channels through Which Infrastructure Affects Jobs(Washington, DC: World Bank, 2025-04-03)This paper takes stock of the literature on infrastructure and jobs published since the early 2000s, using a conceptual framework to identify the key channels through which different types of infrastructure impact jobs. Where relevant, it highlights the different approaches and findings in the cases of energy, digital, and transport infrastructure. Overall, the literature review provides strong evidence of infrastructure’s positive impact on employment, particularly for women. In the case of electricity, this impact arises from freeing time that would otherwise be spent on household tasks. Similarly, digital infrastructure, particularly mobile phone coverage, has demonstrated positive labor market effects, often driven by private sector investments rather than large public expenditures, which are typically required for other large-scale infrastructure projects. The evidence on structural transformation is also positive, with some notable exceptions, such as studies that find no significant impact on structural transformation in rural India in the cases of electricity and roads. Even with better market connections, remote areas may continue to lack economic opportunities, due to the absence of agglomeration economies and complementary inputs such as human capital. Accordingly, reducing transport costs alone may not be sufficient to drive economic transformation in rural areas. The spatial dimension of transformation is particularly relevant for transport, both internationally—by enhancing trade integration—and within countries, where economic development tends to drive firms and jobs toward urban centers, benefitting from economies scale and network effects. Turning to organizational transformation, evidence on skill bias in developing countries is more mixed than in developed countries and may vary considerably by context. Further research, especially on the possible reasons explaining the differences between developed and developing economies, is needed.Publication Economic Consequences of Trade and Global Value Chain Integration(World Bank, Washington, DC, 2025-04-04)This paper introduces a new approach to measuring Global Value Chains (GVC), crucial for informed policy-making. It features a tripartite classification (backward, forward, and two-sided) covering trade and production data. The findings indicate that traditional trade-based GVC metrics significantly underestimate global GVC activity, especially in sectors like services and upstream manufacturing, and overstate risks in early trade liberalization stages. Additionally, conventional backward-forward classifications over-estimate backward linkages. The paper further applies these measures empirically to assess how GVC participation mediates the impact of demand shocks on domestic output, highlighting both the exposure and stabilizing potential of GVC integration. These new measures are comprehensively available on the World Bank’s WITS Platform, providing a key resource for GVC analysis.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Trade Policies and Sea and Air Freight(World Bank, Washington, DC, 2023-01)This study analyzes how Indonesia’s international trade was affected by its own lockdown policies (domestic) and those of its trading partners (external) in response to COVID-19. The study differentiates between sea freight and air freight, as well as products affected by specific non-tariff measures. Event-study results show that the decline in imports (which were more negatively affected than exports) was mainly attributed to external lockdowns, the impacts of which were more pronounced and persistent for imports entering Indonesia by air (due to restrictions to international travel) and imports subject to port-related non-tariff measures. Domestic lockdowns adversely affected intermediate imports subject to non-tariff measures requiring physical inspection, testing, and approval processes. External lockdowns, which also had a larger impact on exports relative to domestic policies, affected sea and air exports evenly. Demand factors (specifically, workplace closures and stay-at-home orders) in the partner countries were the drivers of the decline in exports. Enhancing trade facilitation to keep goods moving as smoothly as possible, reforming specific non-tariff measures, and improving customs and other procedures would ensure fewer disruptions from shocks in a globally integrated world.Publication The Gendered Labor Market Impacts of Trade Liberalization : Evidence from Brazil(World Bank Group, Washington, DC, 2014-11)This paper investigates gender differences in the impact of Brazil's trade liberalization on labor market outcomes. To identify the causal effect of trade reforms, the paper uses difference-in-difference estimation exploiting variation across microregions in pre-liberalization industry composition. The analysis finds that trade liberalization reduced male and female labor force participation and employment rates, but the effects on men were significantly larger. Thereby, tariff reductions contributed to gender convergence in labor force participation and employment rates. Gender differences are concentrated among the low-skilled population and in the tradable sector, where male and female workers are most likely to be imperfect substitutes.Publication Non-Tariff Measures, Import Competition, and Exports(World Bank, Washington, DC, 2021-10)The empirical evidence on the impact of import competition on economic performance relies mainly on import tariff liberalization as the source of changes to competition. This paper extends this evidence by focusing on non-tariff measures, an increasingly important trade policy tool globally. The analysis examines the competition effect of four specific non-tariff measures on the exporting activity of the universe of Indonesian firms. The focus is on measures that do not clearly address any negative externalities of imports—the supposed objective of non-tariff measures—and hence appear to be protectionist in nature. The results suggest that by restricting import competition, these measures reduce the survival of firms in export markets as well as the intensive and extensive margins of their exports. Non-tariff measures have a more negative effect than import tariffs in most cases and these results are robust to various checks. The analysis provides suggestive evidence that markups are an important channel through which these effects are mediated.Publication Firms in Global Value Chains during Covid-19(World Bank, Washington, DC, 2023-07-18)Using detailed monthly firm-level trade data from Indonesia from February 2019 to June 2021, this paper shows that firm-level exports were overall more resilient than imports during Covid-19. Firms that participated in global value chains were more resilient to the Covid-19 shock beyond the immediate short-run compared to firms that did not. However, among global value chain firms, those that faced certain types of non-tariff measures on their import products, notably port of entry restrictions, on average faced larger reductions in export quantities and number of transactions compared to firms that did not face such restrictions, consistent with the evidence of major port congestion during Covid-19. Therefore, although international connectedness could be a source of vulnerability to global shocks in the immediate short run, policies that enable firms to be more globally engaged through global value chains could enhance resilience. Relatedly, tackling measures such as port of entry restrictions can ensure fast and efficient port and customs procedures, especially during periods of high port congestion, as global value chain trade requires goods to cross borders many times.Publication Building a Dataset for Non-Tariff Measures and its Usage(World Bank, Washington, DC, 2023)As import tariffs have been declining over the past decades, non-tariff measures (NTMs) have become the most frequently used measures in trade policy. The increasing use of NTMs in global trade has highlighted the need for timely, high frequency and accurate data in order to better understand the implications that NTMs have on products, firms and the economy. This manual describes the first high-frequency panel dataset built by the World Bank on the universe of NTMs applied by a country, i.e. Indonesia. The manual includes a comprehensive overview of the purpose, building procedures and usage of the data for Indonesia. The dataset expands on and improves on existing data on Indonesian NTMs collected by other institutions (UNCTAD and ERIA) by covering a broader source base, customizing the data, and by increasing the frequency of updates. By documenting the data collection and transformation process, the manual hopes to facilitate the construction of similar datasets in other countries.
Users also downloaded
Showing related downloaded files
Publication Europe and Central Asia Economic Update, Fall 2024: Better Education for Stronger Growth(Washington, DC: World Bank, 2024-10-17)Economic growth in Europe and Central Asia (ECA) is likely to moderate from 3.5 percent in 2023 to 3.3 percent this year. This is significantly weaker than the 4.1 percent average growth in 2000-19. Growth this year is driven by expansionary fiscal policies and strong private consumption. External demand is less favorable because of weak economic expansion in major trading partners, like the European Union. Growth is likely to slow further in 2025, mostly because of the easing of expansion in the Russian Federation and Turkiye. This Europe and Central Asia Economic Update calls for a major overhaul of education systems across the region, particularly higher education, to unleash the talent needed to reinvigorate growth and boost convergence with high-income countries. Universities in the region suffer from poor management, outdated curricula, and inadequate funding and infrastructure. A mismatch between graduates' skills and the skills employers are seeking leads to wasted potential and contributes to the region's brain drain. Reversing the decline in the quality of education will require prioritizing improvements in teacher training, updated curricula, and investment in educational infrastructure. In higher education, reforms are needed to consolidate university systems, integrate them with research centers, and provide reskilling opportunities for adult workers.Publication Commodity Markets Outlook, October 2024(Washington, DC: World Bank, 2024-10-29)Commodity prices are expected to decrease by 5 percent in 2025 and 2 percent in 2026. The projected declines are led by oil prices but tempered by price increases for natural gas and a stable outlook for metals and agricultural raw materials. The possibility of escalating conflict in the Middle East represents a substantial near-term upside risk to energy prices, with potential knock-on consequences for other commodities. However, over the forecast horizon, longer-term dynamics—including decelerating global oil demand, diversifying oil production, and ample oil supply capacity—suggest sizable downside risks to oil prices, especially if OPEC+ unwinds its latest production cuts. There are also dual risks to industrial commodity demand stemming from economic activity. On the one hand, concerted stimulus in China and above-trend growth in the United States could push commodity prices higher. On the other, weaker-than-anticipated global industrial activity could dampen them. Following several overlapping global shocks in the early 2020s, which drove parallel swings in commodity prices, commodity markets appear to be departing from a period of tight synchronization. A Special Focus analyzes commodity price synchronization over time and considers the relative importance across commodity cycles of a wide range of demand and supply shocks, including global demand shocks and shocks specific to different commodity markets. It concludes that, while supply shocks were the dominant commodity price driver in the early 2000s and around the global financial crisis, post-pandemic price movements have been more substantially shaped by commodity-specific shocks, such as those related to conflicts.Publication Cybersecurity Economics for Emerging Markets(Washington, DC: World Bank, 2024-09-17)In our increasingly interconnected world, where digital technologies are rapidly transforming multiple aspects of daily life, the critical role of cybersecurity cannot be overstated, especially in developing nations. As these countries strive to harness the power of modern technology to drive economic growth, enhance public services, and elevate living standards, they concurrently face heightened risks associated with cyber threats. The increasing exposure of developing countries to cyber incidents is often compounded by various factors, including scarce resources, inadequate infrastructure, political unrest, inefficiencies in cybersecurity and technology markets, shortages of skilled cybersecurity professionals, legislative voids, and rapid rates of digital adoption. "Cybersecurity Economics for Emerging Markets" is a pioneering research work that delves into the drivers and profound consequences of cyber incidents worldwide. From economic setbacks that can destabilize entire economies to interruptions of vital services and impediments to social and economic development, the impacts of cyber incidents are far-reaching. This book analyzes hundreds of scholarly works and thousands of publicly disclosed cyber incidents over the past decade across some 190 countries. It sheds light on these incidents’ characteristics and trends, as well as the proactive roles that private market players and governments can assume to safeguard infrastructure in cyberspace effectively. The book presents practical, evidence-based policy suggestions that include efforts to strengthen the resilience of the most essential and interconnected sectors. It advocates for bolstering the national cybersecurity industries, strategizing cybersecurity research and development, addressing market failures through cybersecurity awareness and training programs, and taking proactive steps to reduce and control contagion effects from cyber incidents. By revealing crucial empirical and theoretical dimensions of cybersecurity economics, this book provides insights that could inform the creation of effective cybersecurity investments, with a focus on developing countries. These insights are invaluable for policy makers and stakeholders committed to fortifying the digital ecosystem against the ever-evolving landscape of cyber threats.Publication State and Trends of Carbon Pricing 2024(Washington, DC: World Bank, 2024-05-21)This report provides an up-to-date overview of existing and emerging carbon pricing instruments around the world, including international, national, and subnational initiatives. It also investigates trends surrounding the development and implementation of carbon pricing instruments and some of the drivers seen over the past year. Specifically, this report covers carbon taxes, emissions trading systems (ETSs), and crediting mechanisms. Key topics covered in the 2024 report include uptake of ETSs and carbon taxes in low- and middle- income economies, sectoral coverage of ETSs and carbon taxes, and the use of crediting mechanisms as part of the policy mix.Publication Business Ready 2024(Washington, DC: World Bank, 2024-10-03)Business Ready (B-READY) is a new World Bank Group corporate flagship report that evaluates the business and investment climate worldwide. It replaces and improves upon the Doing Business project. B-READY provides a comprehensive data set and description of the factors that strengthen the private sector, not only by advancing the interests of individual firms but also by elevating the interests of workers, consumers, potential new enterprises, and the natural environment. This 2024 report introduces a new analytical framework that benchmarks economies based on three pillars: Regulatory Framework, Public Services, and Operational Efficiency. The analysis centers on 10 topics essential for private sector development that correspond to various stages of the life cycle of a firm. The report also offers insights into three cross-cutting themes that are relevant for modern economies: digital adoption, environmental sustainability, and gender. B-READY draws on a robust data collection process that includes specially tailored expert questionnaires and firm-level surveys. The 2024 report, which covers 50 economies, serves as the first in a series that will expand in geographical coverage and refine its methodology over time, supporting reform advocacy, policy guidance, and further analysis and research.