World Bank demographic and country characteristic statistics identify 16 small landlocked countries that are similar to Lesotho. Ng and Yeats attempt to determine what useful policy information can be derived from the recent trade performance of these "comparators." Among questions they pose are whether the trade profiles of the comparators suggest potentially promising export ventures for Lesotho, do they indicate directions for a geographic diversification of trade, or do they suggest products in which Lesotho might acquire a comparative advantage. The authors also use U.S. partner country statistics to evaluate Lesotho's export performance in this major market. The U.S. data indicate Lesotho lost competitive export shares for about three-quarters of its major clothing products during the late 1990s. The data show these losses were primarily to the North America Free Trade Agreement (NAFTA) countries in the Caribbean. Lesotho was competing on basically equal terms and did not fare well. But it is generally held that the most efficient clothing exporters are in the Far East and not Latin America. Lesotho's difficulties in competing with the latter have worrisome implications for its ability to compete with East Asian exporters when the Multifiber Arrangement is phased out. The comparative advantage profiles of the landlocked comparator countries suggest Lesotho's options for a greatly needed export diversification may be wider than is assumed. One or more of the comparator countries developed a comparative advantage in 110 four-digit SITC (non-clothing) manufactures which are generally labor-intensive in production. Many of these goods should also be suitable for production and export by Lesotho. International production sharing often involves the importation and further assembly of components in developing countries. This activity can significantly broaden the range of new products in which a country can diversify. Statistics show many landlocked comparator countries have moved into component assembly operations, and it appears this activity could contribute to Lesotho's export diversification and industrialization. But the quality problems associated with Lesotho's trade statistics makes it impossible to determine the extent to which local production sharing is occurring. A special effort is needed to tabulate reliable statistics on Lesotho's current involvement in this activity. Finally, the authors attempt to determine how the commercial policy environment in Lesotho compares with that in other countries. Policymakers previously had difficulty in addressing this issue, but several recent efforts to compile comprehensive cross-country indices of the quality of governance and commercial policies now provide relevant information. These statistics suggest domestic commercial policies make Lesotho relatively less attractive to foreign investment than many other developing countries. Less than 20 percent of all Latin American countries have a domestic commercial environment judged to be inferior to that in Lesotho, while the corresponding share for East Asia is under 30 percent. Overall, almost 70 percent of all developing countries appear to pursue commercial policies that make them as, or more, attractive to foreign investment than Lesotho. This paper--a product of Trade, Development Research Group--was prepared for the background study of Lesotho Diagnostic Trade Integration Study in summer 2002.
February 1997 Do the discriminatory trade barriers applied in regional trade arrangements encourage high-cost imports from member countries at the expense of lower-cost goods from nonmembers? In discussions about regional trade arrangements (RTAs), one concern has been whether the discriminatory trade barriers applied in RTAs encourage high-cost imports from member countries at the expense of lower-cost goods from nonmembers. But evaluations of the impact of RTAs have been hampered by a lack of appropriate empirical procedures for assessing their influence on the level and direction of trade. Yeats employs a new index for analyzing the static trade effects of an RTA. He examines changes in the regional orientation of exports and shows how this information can be employed in connection with the revealed comparative advantage (RCA) index to identify apparent inefficiencies in trade patterns. He applies the approach to statistics on Mercosur countries' exports to determine if recent trade is evolving along lines current compatible with these countries' current comparative advantage. He does not comment on the many other possible effects of RTAs, such as benefits from political cooperation, enhancing the credibility of reform strategies, or dynamic gains from trade. Nor does he focus directly on changes in trade with nonmembers, changes that accelerated rapidly because of the 1988-91 liberalization of trade in Mercosur countries. Thus the paper does not address the net welfare effects of trade creation and diversion relative to the 1988 trade policies of member countries. The results show the most dynamic (fast-growing) products in Mercosur's intra-trade generally are capital-intensive goods in which members have not displayed a strong export performance in outside markets. Neither the RCA indices nor statistics about factor proportions indicate that Mercosur has a comparative advantage in those products. The evidence suggests that Mercosur's own trade barriers are responsible for these trade changes. Most-favored-nation tariffs on the fast-growing products are above the average for all imports and provide Mercosur members with significant preferences. These findings constitute evidence of the potential adverse effects of regional trade arrangements on members and on third countries, as judged by the variance in their trade patterns from what current comparative advantage would predict. Although there are other possible standards, the counterfactual comparison used is an equivalent degree of liberalization on a nondiscriminatory basis. Given the recent proliferation of RTAs, they highlight the need for further empirical research on the domestic and international effects of these arrangements, to better assess the pros and cons of regionalism. This paper - a product of the International Trade Division, International Economics Department - is part of a larger effort in the department to study regionalism and development.
Urban Management Programme Paper No. 20. Reviews the specific actions that municipalities and city governments may take in contributing to urban poverty reduction. The paper highlights example of issues, options, and constraints that urban governments must address in fighting poverty. It focuses on municipalities and other city-level government entities as a critical institutional level of intervention. Other language editions available: French--Stock No. 13814 (ISBN 0-8213-3814-5); English--Stock No. 13716 (ISBN 0-8213-3716-5).
Abstract: ,500) and an annual increase of 3 or 4 percentage points in the growth rate for this variable. This paper-a product of Trade, Development Research Group-is part of a larger effort in the group to accelerate the trade and growth of developing countries. The authors may be contacted at email@example.com or firstname.lastname@example.org.: Turning the economies of Sub-Saharan Africa around requires badly needed national policy reform-abandoning the region's restrictive fiscal, monetary, property, and wage policies and trade barriers. Economists often argue that the level and structure of a country's trade barriers and the quality of its governance policies (for example, regulating foreign investment or limiting commercial activity with red tape) have a major influence on its economic growth and performance. One problem testing those relations empirically was the unavailability of objective cross-country indices of the quality of governance and statistics on developing countries' trade barriers. Ng and Yeats use new sources of empirical information to test the influence of trade and governance policies on economic performance. They use a model similar to those used in the literature on causes and implications of economic growth but focus more heavily on the World Bank's index of the speed with which countries are integrating into the world economy. Their results show that countries that adopted less restrictive governance and trade policies achieved significantly higher levels of per capita GDP; experienced higher growth rates for exports, imports, and GDP; and were more successful integrating with the world economy. Regression results indicate that national trade and governance regulations explain over 60 percent of the variance in some measures of economic performance, implying that a country's own national policies shape its rate of development, industrialization, and growth. Their tests provide new insights into the phenomenon of economic convergence, showing that poorer open countries are integrating more rapidly into the global economy than others. This finding parallels what others have observed about economic growth rates. They test their empirical results in a case study asking whether inappropriate national policies have caused Sub-Saharan Africa's dismal economic performance. The evidence strongly supports this proposition. Indices of the quality of national governance show that African countries have generally adopted the most inappropriate (restrictive) fiscal, monetary, property, and wage policies and that their own trade barriers (including customs procedures constraining commercial activity) are among the world's highest. Improving African trade and governance policies to levels currently prevailing in such (non-exceptional) countries as Jordan, Panama, and Sri Lanka would be consistent with a sevenfold increase in per capita GDP (to about.