Delivering on Doha’s Promise: Delivering on Doha’s Promise: The Role of Rich Country PoliciesThe Role of Rich Country Policies

Nancy BirdsallNancy BirdsallCenter for Global DevelopmentCenter for Global Development

Cancun Trade and Development Cancun Trade and Development SymposiumSymposiumSeptember 11, 2003September 11, 2003Cancun, MexicoCancun, Mexico

Why a CDI?

Rich country policies matter for development

Time to hold rich countries accountable

Need a tool to measure rich country commitments to development – ex: Millennium Development Goal 8

What is the CDI ?

Measure of policyMeasure of policy effort effort on on policies that affect development policies that affect development prospects of poor countries prospects of poor countries

The index ranks 21 countries –The index ranks 21 countries –members of the DAC (except members of the DAC (except Luxembourg)Luxembourg)

Components AidAid TradeTrade InvestmentInvestment EnvironmentEnvironment MigrationMigration PeacekeepingPeacekeeping

Overall Scores

                                          

0 1 2 3 4 5 6

NetherlandsDenmarkPortugal

New ZealandSwitzerland

GermanySpain

SwedenAustriaNorway

United KingdomBelgiumGreeceFrance

ItalyIrelandFinlandCanada

AustraliaUnited States

Japan

Aid Trade Investment Environment Migration Peacekeeping

Goals of the CDI

Educate and inspire to action the rich-world public and policy makers

Motivate a race to the top among OECD countries

Spark new research and data collection

Foster debate about the role of rich country policies in development

Trade

Aggregate measure of Aggregate measure of protection in protection in tariff equivalenttariff equivalent terms:terms:

TariffsTariffs Non-tariff barriers Non-tariff barriers SubsidiesSubsidies

Revealed OpennessRevealed Openness

Total Tariff Equivalent of Agricultural Protection Against Developing Countries

(percent tariff equivalent)

US Canada EU Japan

Tariffs 11.2 62.6 67.4 202.3

Tariff-Equivalent of domestic subsidies

20.8 1.8 19.6 9.8

Total Tariff-Equivalent

34.3 65.5 100.2 231.9

Source: William Cline, “An Index of Industrial Country Trade Policy toward Developing Countries,” CGD Working Paper #14, October 2002.

Manufac-tures/ Other Textiles Apparel Agriculture

Country Tariffs Tariffs Non-tariff Total1 Tariffs

Non-tariff Total1 Tariffs

Subsi-dies Total1

(%) --------- (%) --------- --------- (%) --------- --------- (%) --------- Australia 13.4 17.0 7.1 25.3 29.3 8.3 40.0 2.5 2.6 5.2 Austria 5.0 9.7 5.1 15.3 12.1 5.2 17.9 67.0 19.5 99.6 Belgium 5.0 9.7 5.1 15.3 12.1 5.2 17.9 67.0 20.6 101.4 Canada 5.4 15.7 9.1 26.2 21.2 11.4 35.0 63.0 1.8 65.9 Denmark 5.0 9.7 5.1 15.3 12.1 5.2 17.9 67.0 18.9 98.6 Finland 5.0 9.7 5.1 15.3 12.1 5.2 17.9 67.0 18.0 97.1 France 5.0 9.7 5.1 15.3 12.1 5.2 17.9 67.0 18.1 97.2 Germany 5.0 9.7 5.1 15.3 12.1 5.2 17.9 67.0 18.3 97.6 Greece 5.0 9.7 5.1 15.3 12.1 5.2 17.9 67.0 22.0 103.7 Ireland 5.0 9.7 5.1 15.3 12.1 5.2 17.9 67.0 23.6 106.4 Italy 5.0 9.7 5.1 15.3 12.1 5.2 17.9 67.0 13.5 89.5 Japan 3.6 8.5 0.0 8.5 12.5 0.0 12.5 202.0 9.8 231.6 Netherlands 5.0 9.7 5.1 15.3 12.1 5.2 17.9 67.0 12.8 88.4 New Zealand 12.3 8.6 7.1 16.3 25.0 8.3 35.4 5.0 0.0 5.0 Norway 3.6 13.8 7.1 21.9 17.5 8.3 27.3 273.0 8.6 305.1 Portugal 5.0 9.7 5.1 15.3 12.1 5.2 17.9 67.0 15.0 92.1 Spain 5.0 9.7 5.1 15.3 12.1 5.2 17.9 67.0 18.0 97.1 Sweden 5.0 9.7 5.1 15.3 12.1 5.2 17.9 67.0 15.1 92.2 Switzerland 1.9 0.7 7.1 7.8 17.5 8.3 27.3 161.0 10.0 187.1 U.K. 5.0 9.7 5.1 15.3 12.1 5.2 17.9 67.0 16.3 94.2 United States 4.6 11.2 9.1 21.3 13.3 11.4 26.2 11.0 20.8 34.1

0 1 2 3 4 5 6 7 8

NorwaySwitzerland

JapanCanadaIrelandGreece

BelgiumAustria

DenmarkGermany

FranceFinland

SpainUnited

SwedenPortugal

ItalyNetherlandsNew Zealand

AustraliaUnited States

Trade Results

Global Free Trade Can Reduce Poverty in Developing Countries by:

1. Opening Agriculture Markets

2. Raising Unskilled Labor Wages

3. Boosting Productivity

4. Inducing Investment

5. An early harvest: free market access for poor nations

Liberalization of agricultural markets

Agricultural protection against developing countries:

34 percent in the United States 100 percent in the EU 230 percent in Japan 65 percent in Canada Free trade in agriculture would reduce global

poverty by an estimated 200 million people, or about 7 percent.

Source: William Cline, “Trading Up: Trade Policy and Global Poverty,” CGD Brief 7, September 2003.

The Impact of Global Agricultural Liberalization on Poverty in Selected Countries

Biggest Reductions in Poverty, (%)

Biggest Reductions in Poverty, (millions)

Malawi (15.2) China (72.1)

Vietnam (15.1) India (59.2)

Kenya (14.8) Bangladesh (12.0)

Tanzania (12.0) Pakistan (10.4)

Bangladesh (11.8) Indonesia (9.9)

Source: William Cline, “Trading Up: Trade Policy and Global Poverty,” CGD Brief 7, September 2003.

Raising Unskilled Labor Wages

Global free trade would boost world income by about $230 billion annually

About $140 billion in gains for industrial countries and $90 billion for developing countries

In developing countries, real wages of unskilled labor would rise by an estimated 5

Source: William Cline, “Trading Up: Trade Policy and Global Poverty,” CGD Brief 7, September 2003.

Boosting Productivity

Increasing trade spurs productivity, which in turn supports long-term increases in per capita income.

Productivity gains in developing countries would lift an estimated additional 200 million people out of poverty in the long term.

Source: William Cline, “Trading Up: Trade Policy and Global Poverty,” CGD Brief 7, September 2003.

Inducing Investment

Increased trade opportunities induce investment, which also generates long-term increases in per capita income.

Capital investment effects could conservatively reduce the number living in poverty by an additional 300 million people.

Source: William Cline, “Trading Up: Trade Policy and Global Poverty,” CGD Brief 7, September 2003.

An early harvest: free market access for poor nations

LDCs, SSA and HIPC countries account for 64 countries with a combined population of 1 billion, of whom 715 million live in poverty.

Estimated growth effects from preferential trade agreements:

US Caribbean Basin Initiative 7-8% EU Lome-Cotonou arrangement 7-8% Andean Trade Preference Act 2 %

Source: William Cline, “Trading Up: Trade Policy and Global Poverty,” CGD Brief 7, September 2003.

Poverty Intensity of US Imports from Developing Countries

Regions Headcount Weighting

Income Share Weighting

Total 38.11 8.16

LDC 69.2 44.1

HIPC 66.1 38.7

SSA 70.3 55.8

Source: William Cline, “Trading Up: Trade Policy and Global Poverty,” CGD Brief 7, September 2003.

Impact of Global Free Trade on Global Poverty Reduction (in millions, cumulative)

Source: William Cline, “Trading Up: Trade Policy and Global Poverty,” CGD Brief 7, September 2003.

0

200

400

600

800

Direct Effects Productivity Effects Investment Effects