JSW World Bank 1

Trade FacilitationAnd Economic Development

Development Research Group

The World Bank

John S. Wilson

JSW World Bank 2

Bank Trade Logistics Agenda

• Policy relevant research and diagnostics– New analysis and data

• Bank operations – Review and support

• Strengthen partnerships – GFP

JSW World Bank 3

Overview

• Trade Facilitation – More than Transport

• Security and Trade - Potential Win-Win

• Framework for Capacity Building Needed

JSW World Bank 4

Trade Facilitation: What Impact?

• Bank research – Wilson, Mann, Otsuki 2003

• New dataset – 19 APEC members

• Econometric approach – gravity model

JSW World Bank 5

Four Indicators of Trade Facilitation

1. Port Efficiency

2. Customs Environment

3. Domestic Regulatory Environment

4. E-business usage

Survey Data:• World Economic Forum Global Competitiveness Report

(GCR)• IMD Lausanne, World Competitiveness Yearbook (WCY)• Micco, Ximena and Dollar (2001), Maritime Transport Costs

and Port Efficiency, World Bank Group (MXD). • Transparency International

JSW World Bank 6

Raising Capacity Half-Way to APEC Average

Change in Trade Flow ($ billion)

Change in Trade Flow (%)

‘Border’ Measures

Port Efficiency 116.89 9.7 Customs Environment

Bring below-average members up to the APEC average

21.63 1.8

‘Inside-the Border’ Measures

E-business Bring below-average members up to the APEC average

27.69 2.3

Regulatory Environment

Regulatory Harmonization

88.15 7.3

Grand Total 254.36 21.0

JSW World Bank 7

Policy Relevance and Next Steps

• Inform capacity building priorities– Collective action and unilateral

• New research – World Bank GEP 2004– Analysis expanded to 75 countries– Revised data input

JSW World Bank 8

Terrorism and Trade: Economic Impact?

• Doubling of terrorist incidents 1968-1979 led to a 6% decrease in bilateral trade between targeted economies (Nitsch and Schumacher, 2002).

• Security promotes investment and growth in developing economies Poirson (1998). Private investment rose 0.5 to 1 percent of GDP in countries that adopted security measures in ‘best practice’ regions. Economic growth rose by 0.5 to 1.25 percent per year.

• World welfare declines by $75 billion – 1% increase in trade costs (Walkenhorst and Dihel 2002).

JSW World Bank 9

Security Considerations….

• Necessary to ensure that less developed countries are not excluded from benefits of new security programs.

• Potential win-win situation - higher costs can be recovered through greater efficiencies in the supply chain and increased exports.

• Need coordinated multilateral plan.

JSW World Bank 10

Impact of WTO Rules?

• New analysis in Wilson, Otsuki, Mann to include estimates of potential gains.

• Trade system limited impact.

• Main engine of economic growth – long-term development strategy.

JSW World Bank 11

Conclusions…..

• Trade facilitation.– More than transport.– Development context central role.

• Policy decisions demand new data and indicators to ensure sound policy decisions.

JSW World Bank 12

Thank You

John S. Wilson

Lead Economist

Development Research Group

International Trade

The World Bank

jswilson@worldbank.org