rafmacalaba/datause-encoder-data huggingface dataset:
Implementing a WTO agreement on
            trade facilitation : what makes sense
# WPS3971

## **Implementing a WTO Agreement on Trade Facilitation:  What Makes Sense?**

### **J. Michael Finger and John S. Wilson**<sup>**1**</sup>

### **Abstract**

Contrary to the prevailing view that the Doha negotiations have achieved little, we find that on trade facilitation much progress has been made. This is particularly true in regard to action by development banks and bilateral development agencies to meet client demand for assistance in reform. Active private sector participation has been an important factor driving change. Many agencies have been involved in this work; we find that their roles have been consistent with their comparative advantages.

As to how the international community can best support continued progress, we conclude in favor of a cautious approach to the imposition of new WTO obligations in the area of trade facilitation. On the whole, this is the approach the WTO has taken, e.g., by limiting its negotiations on trade facilitation to several specific provisions of the GATT. The WTO can continue to function as a catalyst for reform; it is perhaps uniquely placed to relate the trade facilitation agenda to the overall trade agenda.

On design and construction of the relevant infrastructures and capacities to spur development, the development institutions, including bilateral agencies, should continue to lead. We find little evidence to support the need for a comprehensive new “platform” or mechanism to channel trade-related aid as part of implementation of any new agreement at the WTO on trade facilitation. We recommend, however, that an innovative approach to using the well established, but under utilized Trade Policy Review Mechanism be considered to increase transparency on where new aid is going over time and to expand understanding of where and how country-based progress has been achieved.

World Bank Policy Research Working Paper 3971, August 2006 The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent. Policy Research Working Papers are available online at http://econ.worldbank.org.

> 1 J. Michael Finger is a consultant to the World Bank.  John S. Wilson is Lead Economist, Development Research Group, World Bank.
Conditional cash transfers, adult
            work incentives, and poverty
Conditional cash transfer (CCT) programs
            aim to alleviate poverty through monetary and in-kind
            benefits, as well as reduce future levels of poverty by
            encouraging investments in education, health, and nutrition.
            The success of CCT programs at reducing poverty depends on
            whether, and the extent to which, cash transfers affect
            adult work incentives. The authors examine whether the
            PROGRESA program of Mexico affects adult participation in
            the labor market and overall adult leisure time, and they
            link these effects to the impact of the program on poverty.
            Using the experimental design of PROGRESA's evaluation
            sample, the authors find that the program does not have any
            significant effect on adult labor force participation and
            leisure time. Their findings on adult work incentives are
            reinforced further by the result that PROGRESA leads to a
            substantial reduction in poverty. The poverty reduction
            effects are stronger for the poverty gap and severity of
            poverty measures.
Substitution in Markusen's
            classic trade and factor movement complementarity models
Mundell and Markusen each wrote classic
            papers on the relationship between trade and factor
            movement. Mundell showed that substitution holds in the
            Heckscher-Ohlin model. Markusen challenged the substitution
            result and showed in five different models that removing
            barriers to factor movement results in complementarity under
            free trade, identical factor endowments, and a change in any
            one of the other assumptions underlying the Heckscher-Ohlin
            model. The author generalizes Markusen's analysis by
            considering the liberalization of barriers to factor
            movement under any non-negative level of protection, and
            liberalizing trade barriers under factor mobility. He shows
            that (1) substitution holds at high protection levels, (2)
            complementarity holds at low protection levels, and (3)
            either substitution or complementarity hold under large
            tariff changes.
Financing firms in India
The authors examine the legal and
            business environments, financing channels, and governance
            mechanisms of various types of firms in India and compare
            them to those from other countries. Despite its English
            commonlaw origin, strong legal protection provided by the
            law, and a democratic government, corruption within
            India's legal system and government significantly
            weakens investor protection in practice. External financing
            of firms has been dominated by nonmarket sources of
            financing, while the characteristics of listed firms are
            similar to those from countries with weak investor
            protection. The evidence, including results based on a
            survey of small and medium-scale private firms, shows that
            alternative financing channels provide the most important
            source of funds. The authors also find that informal
            governance mechanisms, such as those based on reputation,
            trust, and relationships are more important than formal
            mechanisms (such as courts) in resolving disputes,
            overcoming corruption, and supporting growth.
Quantifying the value of U.S. tariff
            preferences for developing countries
In recent debates, trade preference
            erosion has been viewed by some as damaging to developing
            countries, and by others as insignificant, except in a few
            cases. But little data have been available to back either
            view. The objective of this paper is to improve our measures
            of the size, utilization, and value of all U.S.
            nonreciprocal trade preference programs in order to shed
            light on this debate. Highly disaggregated data are used to
            quantify the margins, coverage, utilization, and value of
            agricultural and nonagricultural tariff preferences for all
            beneficiary countries in the U.S. regional programs and in
            the Generalized System of Preferences. Results show that
            U.S. regional tariff preference programs are generally
            characterized by high coverage of beneficiary
            countries'exports, high utilization by beneficiary
            countries, and low tariff preference margins (except on
            apparel). For 29 countries, the value of U.S. tariff
            preferences was 5 percent or more of 2003 dutiable exports
            to the United States, even after incorporating actual
            utilization. Most of this value is attributable to
            nonagricultural tariff preferences, and to apparel
            preferences in particular. These results suggest that
            preference erosion may be significant for more countries
            than many had thought.
Quantifying the value of U.S. tariff
            preferences for developing countries
WPS3977

# **Quantifying the Value of U.S. Tariff Preferences for Developing Countries**<sup>*****</sup>

## Judith M. Dean<sup>†</sup> John Wainio<sup>‡</sup>

### **Abstract**

In recent debates, trade preference erosion has been viewed by some as damaging to developing countries, and by others as insignificant, except in a few cases. However, little data have been available to back either view. The objective of this paper is to improve our measures of the size, utilization and value of all US non-reciprocal trade preference programs, in order to shed some light on this debate. Highly disaggregated data are used to quantify the margins, coverage, utilization and value of nonagricultural and agricultural tariff preferences, for all beneficiary countries in the US regional programs and in the GSP. Results show that US regional tariff preference programs are generally characterized by high coverage of beneficiary countries’ exports, high utilization by beneficiary countries, and low tariff preference margins (except on apparel). For 29 countries, the value of US tariff preferences was 5% or more of 2003 dutiable exports to the US, even after incorporating actual utilization. Most of this value is attributable to non-agricultural tariff preferences, and to apparel preferences in particular. These results suggest that preference erosion may be significant for more countries than many had thought.

#### JEL: F13

Keywords: trade preference erosion, development, utilization

### World Bank Policy Research Working Paper 3977, August 2006

_The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent. Policy Research Working Papers are available online at http://econ.worldbank.org._

* Revised version of paper presented at the "Preference Erosion:  Impacts and Policy Responses," International Symposium, WTO, Geneva, June 13-14, 2005.  We are grateful to Maya Shivakumar and Nick Grossman for their superb work assembling and analyzing data.  We also thank Pat Thomas for her valuable help constructing tables and Peg MacKnight for her help with the USITC Dataweb.  The views expressed here do not necessarily reflect the views of the USITC, or any of its individual Commissioners, or the USDA.

> † U.S. International Trade Commission.

> ‡ U.S. Department of Agriculture.
Microfinance games
Microfinance has been heralded as an
            effective way to address imperfections in credit markets.
            But from a theoretical perspective, the success of
            microfinance contracts has puzzling elements. In particular,
            the group-based mechanisms often employed are vulnerable to
            free-riding and collusion, although they can also reduce
            moral hazard and improve selection. The authors created an
            experimental economics laboratory in a large urban market in
            Lima, Peru and over seven months conducted 11 different
            games that allow them to unpack microfinance mechanisms in a
            systematic way. They find that risk-taking broadly conforms
            to predicted patterns, but that behavior is safer than
            optimal. The results help to explain why pioneering
            microfinance institutions have been moving away from
            group-based contracts.
Health Service Delivery in China: A
            Literature Review
The authors report the results of a
            review of the Chinese-language and English-language
            literatures on service delivery in China, asking how well
            China's health care providers perform, what determines
            their performance, and how the government can improve it.
            They find current performance leaves room for improvement in
            terms of quality, responsiveness to patients, efficiency,
            cost escalation, and equity. The literature suggests that
            these problems will not be solved by simply shifting
            ownership to the private sector, or by simply encouraging
            providers-public and private-to compete with one another for
            individual patients. In contrast, substantial improvements
            could be (and in some places have already been) made by
            changing the way providers are paid-shifting away from
            fee-for-service and the distorted price schedule toward
            prospective payments. Active purchasing by insurers could
            further improve outcomes.
The elimination of Madagascar's
            Vanilla Marketing Board, ten years on
This paper explores how the elimination
            of Madagascar's Marketing Board in 1995 affected prices
            paid to farmers, incentives, and regional indicators of
            poverty and inequality. After steadily losing market share,
            Madagascar has been able to regain some of the lost ground
            since the mid-1990s. Margins between freight on board (FOB)
            and farmgate prices have spectacularly narrowed down, but
            this effect is dwarfed by that of world-price volatility. A
            counterfactual analysis based on a model of Cournot
            competition between vanilla traders suggests that whatever
            limited competition there is among them has contributed to
            raise purchase prices and the cash income of vanilla
            farmers. But the effect on farmers' consumption remains
            small because a large part of it is self-consumed. The
            effect on aggregate measures of poverty and inequality is
            even smaller, even at the regional level. After taking into
            account the reduction in Madagascar's monopoly power on
            the world vanilla market implied by the elimination of the
            Marketing Board, the induced rise in producer prices is
            estimated to have lifted about 20,000 individuals out of poverty.
Trade reforms, farm productivity,
            and poverty in Bangladesh
This paper analyzes the distributional
            impacts of trade reforms in rural areas of Bangladesh. The
            liberalization of trade in irrigation equipment and
            fertilizer markets during the early 1990s has led to
            structural changes in the agricultural sector and a
            significant increase in rice productivity. A resulting
            increase in output has been associated with a decline in
            producer and consumer rice prices of approximately 25
            percent. Using a combination of ex-post and ex-ante
            approaches, the authors investigate the implications of the
            changes in rice productivity and prices for the welfare of
            households. They find that the net effects of increased rice
            productivity and lower rice prices have benefited the poor.
            Regardless of the particular category analyzed, the poorest
            households emerged as being particularly positively affected
            by reforms in the 1990s. This mainly reflects the fact that
            they are predominantly net rice buyers in both urban and
            rural markets. In contrast, large net sellers of rice, among
            the better-off households in the rural areas, were the main
            losers. Since net buyers in rural areas tend to be poorer
            than net sellers, trade liberalization has benefited the
            poor. Although the authors are not able to test empirically
            what has happened to the welfare level of agricultural wage
            earners, secondary evidence suggests that they have gained
            from trade liberalization.
Quality of schooling and quality of
            schools for indigenous students in Guatemala, Mexico, and Peru
A substantial gap in test scores exists
            between indigenous and non-indigenous students in Latin
            America. Using test score data for 3rd and 4th year primary
            school pupils in Guatemala and Peru, and 5th grade pupils in
            Mexico, the authors assess the magnitude of the indigenous
            and non-indigenous test score gap and identify the main
            family and school inputs contributing to the gap. A
            decomposition of the gap into its constituent components
            suggests that the proportion that is explained by family and
            school characteristics is between 41 and 75 percent of the
            overall test-score gap. Furthermore, family variables
            contribute more than school variables to the overall
            explained component.
Openness and technological
            innovations in developing countries : evidence from
            firm-level surveys
The authors analyze the role of
            international technological diffusion for firm-level
            technological innovations in several developing countries.
            Their findings show that, after controlling for firm,
            industry, and country characteristics, exporting and
            importing activities are important channels for the
            diffusion of technology. They also find evidence that the
            majority of foreign-owned firms are significantly less
            likely to engage in technological innovations than minority
            foreign-owned firms or domestic-owned firms. The authors
            interpret this finding as evidence that the technology
            transferred from multinational parents to majority-owned
            subsidiaries is more mature than that transferred to
            minority-owned subsidiaries. This finding supports the idea
            that equity joint ventures maximize technology transfers to
            local firms.
Reforming the investment climate :
            lessons for practitioners
Most people agree that a good investment
            climate is essential for growth and poverty reduction. Less
            clear is how to achieve it. Many reforms are complex,
            involving more than technical design and content. They are
            both political, facing opposition from organized and
            powerful groups-and institutionally demanding, cutting
            across different departments and levels of government.
            Reform thus requires paying as much attention to
            understanding the politics and institutional dimensions as
            to policy substance, which is the goal of this paper.
            Drawing from more than 25 case studies, it shows that there
            is no single recipe or "manual" for reform, given
            diverse contexts and serendipity in any reform effort. But
            three broad lessons emerge. The first is to recognize and
            seize opportunities for reform. Crisis and new governments
            are important catalysts, but so is the competition generated
            by trade integration and new benchmarking information. The
            second is to invest early in the politics of reform. Central
            to this process is using education and persuasion strategies
            to gain wider acceptance and neutralize opponents. Pilot
            programs can be valuable for demonstrating the benefits and
            feasibility of change. And the third is to pay greater
            attention to implementation and monitoring. This does not
            require full scale public management reforms. Reformers can
            draw on private sector change management techniques to
            revitalize public institutions responsible for
            implementation. Given the cross-cutting nature of reform,
            new oversight mechanisms may be needed to monitor and
            sustain reform. The paper concludes with an emerging
            checklist for reformers and identifies areas for future work.
Reforming the investment climate :
            lessons for practitioners
WPS3986

# **REFORMING THE INVESTMENT CLIMATE:**

# **LESSONS FOR PRACTITIONERS**

**Sunita Kikeri**

**Thomas Kenyon Vincent Palmade**

### World Bank Policy Research Working Paper 3986, August 2006

_The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent. Policy Research Working Papers are available online at http://econ.worldbank.org._

## **Investment Climate Department**

**Private Sector Development Vice-Presidency World Bank/IFC**
International benchmarking of
            infrastructure performance in the Southern African Customs
            Union Countries
The paper provides a first, systematic
            benchmarking of infrastructure performance in the Southern
            African Customs Union (SACU) countries (South Africa,
            Botswana, Lesotho, Namibia, and Swaziland) in four major
            sectors-electricity, water and sanitation, information and
            communication technology, and transportation-against the
            relevant group of comparator countries using a new World
            Bank international data base with objective and
            perception-based indicators of infrastructure performance
            from over 200 countries. The analysis suggests important
            comparative gaps in all major infrastructure sectors,
            although performance varies widely across the SACU region.
            Performance shortfalls are particularly acute in rural areas
            where most of the poor live. The benchmarking is envisaged
            as a comparative input into deeper analyses of
            infrastructure performance, especially in the context of the
            ongoing scaling-up efforts (for example, South Africa,
            Lesotho, and Botswana).
Firm Productivity in Bangladesh
            Manufacturing Industries
The author studies the determinants of
            total factor productivity (TFP) for manufacturing firms in
            Bangladesh using data from a recent survey. She obtains TFP
            measures by making use of firm-specific deflators for output
            and inputs. Controlling for industry, location, and year
            fixed effects, she finds that: (1) firm size and TFP are
            negatively correlated; (2) firm age and TFP exhibit an
            inverse-U shaped relationship; (3) TFP improves with the
            quality of the firm's human capital; (4) global
            integration improves TFP; (5) firms with research and
            development activities and quality certifications have
            higher TFP, while more advanced technologies improve TFP
            only in the presence of significant absorptive capacity; (6)
            power supply problems cost firms heavily in terms of TFP
            losses; and (7) the presence of crime dampens TFP.