Estimates of trade-related adjustment costs in Syria

The scope and complexity of international trading arrangements in the Middle East, as well as their spotty historical record of success, underscores the urgent need for an adequate understanding of the relative costs and benefits of participation in preferential trading arrangements and, more generally, of changes in domestic import regimes. This paper seeks to address this problem by providing estimates of the adjustment costs associated with two broad classes of hypothetical trade policy scenarios for Syria: participation in preferential trading arrangements, and changes in the domestic import regime. The authors find that the revenue consequences of the first scenario may be substantial. Their analysis of the second scenario suggests that the number of tariff bands can be reduced, while ensuring revenue neutrality, via the introduction of a value added tax of sufficient but reasonable size.Trade Policy,Debt Markets,Free Trade,International Trade and Trade Rules,Economic Theory&Research

Estimates of Trade-Related Adjustment Costs in Syria

The scope and complexity of international trading arrangements in the Middle East, as well as their spotty historical record of success, underscores the urgent need for an adequate understanding of the relative costs and benefits of participation in preferential trading arrangements and, more generally, of changes in the domestic import regimes. This paper seeks to address this problem by providing estimates of the adjustment costs associated with two broad classes of hypothetical trade policy scenarios scenarios for Syria: Participation in preferential trading arrangements, and changes in the domestic import regime. We find that the revenue consequences of the first scenario may be substantial, while our analysis of the second scenario suggests that the number of tariff bands can be reduced to a lower number, while ensuring revenue neutrality, via the introduction of a VAT of sufficient but reasonable size.Trade policy; trade adjustment costs; tariff reform; Syria

What explains the low survival rate of developing country export flows ?

Successful export growth and diversification require not only entry into new export products and markets, but also the survival and growth of export flows. This paper uses a detailed, cross-country dataset of product level bilateral export flows to illustrate that exporting is an extremely perilous activity and especially so in low-income countries. The authors find that unobserved individual heterogeneity in product-level export flow data prevails despite controlling for a wide range of observed country and product characteristics. This questions previous studies that have used the Cox proportional hazards model to model export survival. The authors estimate a Prentice-Gloeckler model, amended with a gamma mixture distribution summarizing unobserved individual heterogeneity. The empirical results confirm the significance of a range of products as well as country-specific factors in determining the survival of export flows. From a policy perspective, an interesting finding is the importance of learning-by-doing for export survival: experience with exporting the same product to other markets or different products to the same market are found to strongly increase the chance of export survival. A better understanding of such learning effects could substantially improve the effectiveness of export promotion strategies.Economic Theory&Research,Free Trade,Trade Policy,Emerging Markets,Markets and Market Access

Trade finance in crisis : should developing countries establish export credit agencies ?

New data on export insurance and guarantees suggest that publicly backed export credit agencies have played a role to prevent a complete drying up of trade finance markets during the current financial crisis. Given that export credit agencies are mainly located in advanced and emerging economies, the question arises whether developing countries that are not equipped with these agencies should establish their own agencies to support exporting firms and avoid trade finance shortages in times of crisis. This paper highlights a number of issues requiring attention in the decision whether to establish such specialized financial institutions. It concludes that developing countries should consider export credit agencies only when certain pre-requirements in terms of financial capacity, institutional capability, and governance are met.Debt Markets,Emerging Markets,Access to Finance,Banks&Banking Reform,Financial Intermediation

Managing Openness and Volatility: The Role of Export Diversification

As developing countries look to embrace an outward-oriented growth strategy, some may be concerned about the possibility that increased openness will be accompanied by increased volatility. However, although a more open economy may face increased volatility in its terms of trade, openness confers diversification benefits. In this note, we argue that export diversification is a key mitigating factor for the total effect of openness on volatility. More specifically, we show that most developing countries fall on the “good” side of a diversification threshold, where they are likely to experience less volatility as they pursue a strategy of greater openness.trade, openness, volatility, export, diversification, developing countries, trade policy, imports, terms of trade, development

Trade openness reduces growth volatility when countries are well diversified

This paper addresses the mechanisms by which trade openness affects growth volatility. Using a diverse set of export diversification indicators, it presents strong evidence pointing to an important role for export diversification in reducing the effect of trade openness on growth volatility. The authors also identify positive thresholds for product diversification at which the effect of openness on volatility changes sign. The effect is shown to be positive only for a minority of countries with highly concentrated export baskets. This result is shown to be robust to both explicit accounting for endogeneity as well as the inclusion of a host of additional controls.Economic Conditions and Volatility,Achieving Shared Growth,Markets and Market Access,Free Trade,Emerging Markets

Assessing the adjustment implications of trade policy changes using TRIST (tariff reform impact simulation tool)

TRIST is a simple, easy to use tool to assess the adjustment implications of trade reform. It improves on existing tools. First, it is an improvement in terms of accuracy because projections are based on revenues actually collected at the tariff line level rather than simply applying statutory rates. Second, it is transparent and open; runs in Excel, with formulas and calculation steps visible to the user; and is open-source and users are free to change, extend, or improve according to their needs. Third, TRIST has greater policy relevance because it projects the impact of tariff reform on total fiscal revenue (including VAT and excise) and results are broken down to the product level so that sensitive products or sectors can be identified. And fourth, the tool is flexible and can incorporate tariff liberalization scenarios involving any group of trading partners and any schedules of products. This paper describes the TRIST tool and provides a range of examples that demonstrate the insights that the tool can provide to policy makers on the adjustment impacts of reducing tariffs.Trade Policy,Free Trade,Debt Markets,International Trade and Trade Rules,Economic Theory&Research

Urlaub in Deutschland: Erwerbstätige nutzen ihren Urlaubsanspruch oftmals nicht aus

Deutschland wird immer wieder als "Freizeitpark" bezeichnet, in dem die Arbeitszeiten kurz, der Urlaub dagegen lang ist. Im internationalen Vergleich werden für inländische abhängig Beschäftigte nur 1 397 Stunden pro Jahr statistisch ausgewiesen, in den USA und Japan dagegen 1 829 bzw. 1 840 Stunden. Besonders in der verarbeitenden Industrie liegt Deutschland beim Jahresurlaub und bei bezahlten Feiertagen vorn. Die vom DIW Berlin zusammen mit Infratest Sozialforschung erhobenen Daten des Sozio-oekonomischen Panels (SOEP) zeigen freilich, dass 30 % der abhängig Beschäftigten ihren Jahresurlaub 1999 nicht vollständig ausgenutzt haben. Von den etwa 936 Mill. Tagen Urlaubsanspruch, die sich aus den Angaben der Befragten ergeben, wurden nur rund 870 Mill. Tage effektiv genommen. Von 28 Tagen Urlaubsanspruch nahmen die Befragten im Durchschnitt nur 26 Tage. Da unter denjenigen, die einen verkürzten Jahresurlaub nehmen, besonders viele jüngeren Alters sind, die Überstunden machen und hoch qualifiziert sind, kann man annehmen, dass sie die zusätzlichen Arbeitstage als Investition in ihr Humankapital bzw. ihre Karriere betrachten. Selbständige nahmen im Jahre 1999 durchschnittlich nur 14 Urlaubstage. Hingegen schöpften Beamte, darunter auch Beamte in höherer Stellung, ihren Jahresurlaub (im Schnitt 30 Urlaubstage) nach eigenen Angaben weitgehend aus

Trade openness reduces growth volatility when countries are well diversified

This paper addresses the mechanisms by which trade openness affects growth volatility. Using a diverse set of export concentration measures, we present strong evidence pointing to an important role for export diversification in conditioning the effect of trade openness on growth volatility. Indeed, the effect of openness on volatility is shown to be negative for a significant proportion of countries with relatively diversified export baskets