AID FOR TRADEAID FOR TRADE

JOHN S. WILSON

THE WORLD BANK

JOHN S. WILSON

THE WORLD BANKNEW YORK

JULY 15, 2010NEW YORK

JULY 15, 2010

I -Aid for trade – why it matters

II - Supply, demand, and effectiveness

III – Looking Ahead - LDCs

OBJECTIVE AND OVERVIEW

07/15/2010 2

WHAT AND HOW MUCH?

Aid for trade – official development assistance

Trade policy and regulatory reform

Trade capacity

Infrastructure

Total aid for trade $40 billion (2008)

About 27% of total official development assistance

Aid for trade – official development assistance

Trade policy and regulatory reform

Trade capacity

Infrastructure

Total aid for trade $40 billion (2008)

About 27% of total official development assistance

07/15/2010 3

AID FOR TRADE COMMITMENTS

ODA commitments (constant 2008 US$ million)

Source: OECD CRS 2010.

ODA commitments (constant 2008 US$ million)

Source: OECD CRS 2010.

07/15/2010 4

WHY AID FOR TRADE MATTERS to LDCs

Supports trade as engine of growth

Enhance diversification

Fight protectionism and support for global and regional

trade agenda

Lowers trade costs – more critical given fragile and changed

global demand; higher financing costs

Supports trade as engine of growth

Enhance diversification

Fight protectionism and support for global and regional

trade agenda

Lowers trade costs – more critical given fragile and changed

global demand; higher financing costs

07/15/2010 5

Performance Rankings: LLDCs / LDCs / OECD

LLDCs* LDCs** OECD

LPI (Average Score) 2.36 2.41 3.66

DB Time to Export (days) 48 35 11

DB Time to Import (days) 54 39 11

DB Import (US$) 3,400 2,145 1,146

DB Export (US$) 2,758 1,773 1,090

07/15/2010

* Land Locked Countries ** Least Developed Countries

Sources: Doing Business 2009; Logistics Perception Index 2009.

6

Gains to Reform and Capacity Building

07/15/2010

Sources: World Bank estimates in Portugal and Wilson, 2010.

7

QUESTIONS MOVING FORWARD

Are countries most in need getting aid for trade?

Is aid for trade effective?

A new agenda for LDCs -- with G-20 support (Hoekman

Wilson 2010)

Are countries most in need getting aid for trade?

Is aid for trade effective?

A new agenda for LDCs -- with G-20 support (Hoekman

Wilson 2010)

07/15/2010 8

DOES DEMAND MATCH SUPPLY?

ARMBEN

BGD

BIH

BOL

CMRECU

ETH

HND KAZKEN

KGZ

LKA

MDG

MLI

MNG

MOZ MWI

NIC

PRYUGA

VEN

ZMB

ZWEARG

AZE

BRABWACHL CHN COL CRIDZA

GEO

GHA

GMB

GTMHRVIDN

INDJAMJOR MAR

MDA

MEXMUSMYS

NAM

PAKPANPER

PHL

SLVTHATUN

TUR

TZA

UKRURY

VNM

ZAF

-.0

10

.01

.02

.03

AF

T D

isb

urs

em

en

ts a

s s

hare

of

GD

P

1 1.5 2 2.5 3 3.5TF Index

Average AFT Bottom Performers

Top Performers

Source: Authors Calculations based on indexes from Wilson & Portugal (2010), World Bank and ITC

Controlling for GDP per Capita, Rule of Law and Trade Facilitation Index

Potential Demand for AFT, 2005

ARMBEN

BGD

BIH

BOL

CMRECU

ETH

HND KAZKEN

KGZ

LKA

MDG

MLI

MNG

MOZ MWI

NIC

PRYUGA

VEN

ZMB

ZWEARG

AZE

BRABWACHL CHN COL CRIDZA

GEO

GHA

GMB

GTMHRVIDN

INDJAMJOR MAR

MDA

MEXMUSMYS

NAM

PAKPANPER

PHL

SLVTHATUN

TUR

TZA

UKRURY

VNM

ZAF

-.0

10

.01

.02

.03

AF

T D

isb

urs

em

en

ts a

s s

hare

of

GD

P

1 1.5 2 2.5 3 3.5TF Index

Average AFT Bottom Performers

Top Performers

Source: Authors Calculations based on indexes from Wilson & Portugal (2010), World Bank and ITC

Controlling for GDP per Capita, Rule of Law and Trade Facilitation Index

Potential Demand for AFT, 2005

07/15/2010 9

WHAT ABOUT AID EFFECTIVENESS?

World Bank research.

Examine rate of return on investment.

Inform priorities – global level.

$1 invested in trade policy & regulatory reform = $697

trade.

World Bank research.

Examine rate of return on investment.

Inform priorities – global level.

$1 invested in trade policy & regulatory reform = $697

trade.

07/15/2010 10

AID TYPES & RATES OF RETURN

Aid Spent (USD millions), 2007Aid Spent (USD millions), 2007

*Based on estimates in Helble, Mann, Wilson (2009).

Return on Increase in Aid (USD)*Return on Increase in Aid (USD)*

07/15/2010 11

SUMMARY CONCLUSIONS

Commitments on aid for trade solid.

But critical gaps remain

Basic data, analysis of effectiveness

Need to leverage large infrastructure investment

Greater clarity and coordination going forward

Unique time to build on achievements to date and drive a

high profile agenda.

Commitments on aid for trade solid.

But critical gaps remain

Basic data, analysis of effectiveness

Need to leverage large infrastructure investment

Greater clarity and coordination going forward

Unique time to build on achievements to date and drive a

high profile agenda.

07/15/2010 12

PRIORITIES - AID FOR TRADE

1. Expand South-South knowledge exchange with strategic

initiative of policy dialogue and advice by bringing

middle-income G20 countries into the aid for trade

initiative.

2. Create a new public-private partnership to harness the

dynamism and expertise in the private sector. The World

Bank is developing an Aid for Trade Facilitation Public

Private Partnership which could serve as a model.

1. Expand South-South knowledge exchange with strategic

initiative of policy dialogue and advice by bringing

middle-income G20 countries into the aid for trade

initiative.

2. Create a new public-private partnership to harness the

dynamism and expertise in the private sector. The World

Bank is developing an Aid for Trade Facilitation Public

Private Partnership which could serve as a model.

07/15/2010 13

PRIORITIES - AID FOR TRADE

3. Provide dedicated financial support for a global program

of monitoring and evaluation of aid for trade anchored in

systematic data collection and research .

4. Promote market access for low income countries through

a commitment by all G20 members to eliminate import

restrictions for LDCs, thus stimulating South-South trade

and leveraging return on aid for trade disbursements.

3. Provide dedicated financial support for a global program

of monitoring and evaluation of aid for trade anchored in

systematic data collection and research .

4. Promote market access for low income countries through

a commitment by all G20 members to eliminate import

restrictions for LDCs, thus stimulating South-South trade

and leveraging return on aid for trade disbursements.

07/15/2010 14

JOHN S. WILSON THE WORLD BANK

JSWILSON@WORLDBANK.ORG

HTTP://WORLDBANK.ORG/TRADE HTTP://ECON.WORLDBANK.ORG/PROJECTS/TRADE_COSTS

THANK YOUTHANK YOU

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