The Impact of Trade Facilitation Mechanisms on Export Competitiveness

1. �The Impact of Trade Facilitation Mechanisms on Export Competitiveness� Malcolm D. Spence Stephen N. Karingi Regional Integration, Infrastructure and Trade Division Economic Commission for Africa Hello, do my notes show up on print preview Hello, do my notes show up on print preview

2. The Impact of Trade Facilitation Mechanisms on Export Competitiveness �The results suggest that both imports and exports for a country and for the world will increase with improvements in �trade facilitation measures.� (Wilson et al., 2005; abstract) �Competitiveness is a largely meaningless concept.� (Krugman, 1991; p.41) �Economists, in general, do not use the word competitiveness� (Krugman, 1996; p.24) 1. Three ways of thinking about export competitiveness: Market share Productivity and the foundations of competitiveness (New) export competitiveness 2. Introducing Trade Facilitation 3. Trade Facilitation and Export Competitiveness: Conceptual Framework and Empirical Results 4. Conclusions an Recommendations 1. Three ways of thinking about export competitiveness: Market share Productivity and the foundations of competitiveness (New) export competitiveness 2. Introducing Trade Facilitation 3. Trade Facilitation and Export Competitiveness: Conceptual Framework and Empirical Results 4. Conclusions an Recommendations

3. Export Competitiveness as Market Share �The most intuitive definition of competitiveness is a country�s share of world markets for its products. This makes competitiveness a zero-sum game, because one country�s gain comes at the expense of others.� (Porter et al., 2008; p.2)

4. Export Competitiveness as Market Share:Africa�s Share of World Merchandise Trade

5. Export Competitiveness as Market Share: Constant Market Share Analysis

6. Export Competitiveness as Market Share:Constant Market Share Analysis Potentially in conflict with rising standards of living Potentially derived from unsustainable price effects rather than real phenomena Overstates the �conflict dimension� � success of one country doesn�t necessary disadvantage another Overstates export competition as a source of prosperity Potentially in conflict with rising standards of living Potentially derived from unsustainable price effects rather than real phenomena Overstates the �conflict dimension� � success of one country doesn�t necessary disadvantage another Overstates export competition as a source of prosperity

7. Productivity and the Foundations of Competitiveness:The Twelve Pillars of the GCI

8. Productivity and the Foundations of Competitiveness:The Twelve Pillars of the GCI

9. Productivity and the Foundations of Competitiveness

10. Productivity and the Foundations of Competitiveness

11. (New) Export Competitiveness Hausmann, Hwang and Rodrik (2007) � �what you export matters�

12. (New) Export Competitiveness

13. (New) Export Competitiveness

14. Introducing Trade Facilitation World Bank Thematic Group on Export Competitiveness: The incentive framework � resources must be allocated to firms that have the capacity to compete internationally in the long run, and the most productive firms. Reducing trade related costs � this includes physical infrastructure and complementary services related to trade, as well as polices related to the supply of capable workers. Overcoming market and government failures � a holistic approach to mitigate weak capacity through building institutional quality in areas such as export promotion, innovation, and transparency of government procedure.

15. Introducing Trade Facilitation World Bank Thematic Group on Export Competitiveness: The incentive framework � resources must be allocated to firms that have the capacity to compete internationally in the long run, and the most productive firms. Reducing trade related costs � this includes physical infrastructure and complementary services related to trade, as well as polices related to the supply of capable workers. Overcoming market and government failures � a holistic approach to mitigate weak capacity through building institutional quality in areas such as export promotion, innovation, and transparency of government procedure.

16. Trade Facilitation and Export Competitiveness

17. Introducing Trade Facilitation Transaction effect � arising from lower transaction costs Production effect � arising from the redistribution of resources toward more productive activities Exports tend to benefit more than imports Extensive expansion outweighs intensive expansion

18. Trade Facilitation and Export Competitiveness Regress TFP and EXPY on 4 indicators of trade facilitation from Portugal-Perez and Wilson(2010): INF, physical infrastructure ICT, information and communications technology BORDER, border efficiency BUS, business environment Small sample size (21x4 and 17x4) inhibits panel stationary tests, and power of fixed/random effects specifications Multicollinearity between trade facilitation indicators and control variables White test confirms heteroskedasticity, justifying use of EGLS

19. Trade Facilitation and TFP: Model Estimates

20. Trade Facilitation and EXPY: Model Estimates

21. Conclusions and Recommendations Trade Facilitation can bolster total factor productivity Hard Infrastructure is the most significant Pervasive transaction effect Weaker impact on EXPY Physical infrastructure still significant Less prominent production effect Openness and market size variables positively significant Gains from regional integration Focused only on certain dimensions of export competitiveness Trade Facilitation Data limitations No examination of country effects CMSA and EXPY better facilitate the identification of strategic interventions Focused only on certain dimensions of export competitiveness Trade Facilitation Data limitations No examination of country effects CMSA and EXPY better facilitate the identification of strategic interventions

22. Thank you for your kind attention. Comments and suggestions to mspence@uneca.org and skaringi@uneca.org