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This paper studies how trade integration of both final output and intermediate input markets affected aggregate efficiency and welfare in the European Union (EU) during the period 2004–2012. The results suggest that aggregate efficiency gains from trade mainly occur through input switching effects within firms and output reallocation effects across firms. Moreover, welfare gains from trade are relatively smaller than aggregate efficiency gains, due to a decrease in domestic final varieties.

This paper aims at clarifying the analytical conditions under which financial globalization originates welfare gains in a simple endogenous growth setting. We focus on an open-economy $$\textit{AK}$$ model in which the capital-deepening effect of financial globalization boosts growth in a in permanent but entails an entry cost in order to access international credit markets. We show that constrained borrowing triggers substantial welfare gains, even at small levels of international financial integration, provided that the autarkic growth rate is larger than the world interest rate. Such conditional welfare benefits boosted by stronger growth—long-run gain—arise in our preferred model without investment commitment and they range, relative to autarky, from about $$2\%$$ in middle-income countries to about $$13\%$$ in OECD-type countries under international financial integration. Sizeable benefits emerge despite the fact that consumption initially falls—short-run pain—which is, however, shown not to dwarf positive growth changes.

The Kurdistan Region of Iraq (KRI) is a constitutionally recognized semiautonomous region in northern Iraq. Its government, the Kurdistan Regional Government (KRG), based in Erbil, has the right, under the Iraqi constitution of 2005, to exercise legislative, executive, and judicial powers according to the constitution, except in what is listed therein as exclusive powers of the federal authorities. The Iraqi constitution defines the Kurdistan Region as a federal entity of Iraq. KRG has a parliamentary democracy with a regional assembly that consists of 111 seats. KRI has been largely immune to the insecurity and conflict witnessed elsewhere in Iraq, especially following the 2003 Iraq War. KRG is facing a wide range of immediate and medium to longer-term challenges that are intrinsically linked to the overall macroeconomic situation of Iraq as well as the regional and global environment. The immediate challenge consists in coping with (a) the deep fiscal crisis, and (b) the security and social problems brought about by the conflict with the Islamic State in Iraq and Syria (ISIS) group and the resulting influx of Syrian refugees and Iraqi Internally Displaced Persons (IDPs). These challenges are clearly immediate priorities for the KRG, and will bear significant repercussions nationally and internationally if inadequately addressed. The medium to longer-term challenges pertain to moderating dependence on the oil sector and transforming the KRI economy into a diversified one that supports private sector-led economic growth and job creation in a sustainable manner.

Transformational engagements are a critical pillar of the World Bank Group’s strategy for achieving its twin goals of extreme poverty elimination and shared prosperity. This learning product uses evaluative evidence from the Independent Evaluation Group (IEG) to understand the mechanisms and conditions for transformational engagements and the implications for the World Bank Group if it seeks to rely on such engagements to more effectively pursue its goals.

This paper quantifies the distortions from specific tariffs levied by the EU. The most-favored-nation (MFN) specific tariffs levied by the EU translate into higher tariff barriers for poor countries exporting low price goods. We show that for poor countries, these higher tariff barriers from specific tariffs offset the gains from preferential tariffs. We apply a two-stage analysis to show that the specific tariffs levied by the EU on its agricultural imports wash away more than half of the welfare benefits enjoyed by the Sub-Saharan African countries from EU preferential tariffs. Our results provide the first quantitative estimate of the distortions associated with specific tariffs. Copyright 2012, Oxford University Press.

For more than a decade, Africa has enjoyed a mineral boom. is the growth mostly happening in isolated places, sectors and periods? The approach adopted in this study is two-pronged. First, through case studies, including the results of fieldwork, mining’s impacts are examined in a country-specific context for each of three countries, Ghana, Mali, and Tanzania; and second, a statistical analysis is used to test whether the indicators of welfare improve with proximity to a mine.

The expansion of international trade has been essential to development and poverty reduction. Todays economy is unquestionable global. Trade as a proportion of global GDP has approximately doubled since 1975. Markets for goods and services have become increasingly integrated through a fall in trade barriers, with technology helping drive trade costs lower. But trade is not an end in itself. People measure the value of trade by the extent to which it delivers better livelihoods, through higher incomes, greater choice, and a more sustainable future, among other benefits. For the extreme poor living on less than $1.25 a day, the central value of trade is its potential to help transform their lives and those of their families. In this way, there is no doubt that the integration of global markets through trade openness has made a critical contribution to poverty reduction. The number of people living in extreme poverty around the world has fallen by around one billion since 1990. Without the growing participation of developing countries in international trade, and sustained efforts to lower barriers to the integration of markets, it is hard to see how this reduction could have been achieved.

The Tunisia Systematic Country Diagnostic (SCD) seeks to identify the challenges and opportunities to achieve the twin goals of reducing poverty and boosting shared prosperity in a sustainable way. This SCD takes into account Tunisia’s historical sociopolitical context and the political economy of past reforms to provide the context for the challenges and opportunities that exist today to make progress toward the twin goals. The economic policies of the two decades preceding the 2011 revolution delivered widely recognized achievements, including growth rates above the regional average, impressive progress in human development indicators and reduced poverty. However, they failed to address, and even exacerbated, the deep-rooted distortions in the economy that closed the channels, in particular, productive employment and job creation, for a more equal and inclusive society. These distortions were also grounded in a tightly controlled social and political space that favored the elite while repressing others. This development model proved to be economically and socially unsustainable. With a new constitution adopted in 2014 and a democratically-elected government established in 2015, there is today an unprecedented window of opportunity for Tunisia to embark on deep structural reforms to open the channels conducive to a more equal and inclusive society and put the country on a path of more sustainable development. The SCD identifies key opportunities to build on Tunisia’s multiple strengths and economic potential to help guide future development policies. It highlights the importance of social and political stability (as well as domestic security) as prerequisites for critical reforms to be undertaken, as well as the importance of voice, transparency, and accountability in all economic and institutional spheres for those reforms to be sustainable.

The objective of this Systematic Country Diagnostic (SCD) is to identify the priority constraints Bolivia faces in sustaining its gains on reducing poverty and enhancing shared prosperity over the next years. It will analyze the dynamics behind the progress achieved in the past decade on inclusive growth, and identify a number of key constraints for sustaining and consolidating this progress. The SCD begins, in Chapter two, with a presentation of four characteristics that make Bolivia special, including its State‐led development strategy, large natural resource wealth, difficult geography and landlocked condition, and rich ethnic diversity. In chapter three, this SCD presents an in‐depth evaluation of the generally positive evolution in growth and in the reduction of poverty and inequality over the past decade. An assessment of the recent past and current context concludes that there is a need for enabling new inclusive growth engines, particularly through increased private investment and higher productivity. Chapter four makes a case for rebalancing the path of inclusive growth, and presents three main challenges in this sense: sustaining macroeconomic and fiscal stability, developing non‐extractive sectors with higher productivity and a lower environmental footprint, and reducing gaps and disparities in access to opportunities. The discussion of these challenges reveals a number of priority constraints, a key input for the prioritization exercise. Finally, in chapter five the SCD presents the findings of a prioritization exercise aimed at producing a restricted list of prioritized constraints, as well as a list of knowledge gaps identified in the different parts of the analysis.

This Systematic Country Diagnostic (SCD) aims to identify the major constraints on and opportunities for sustaining poverty reduction and shared prosperity in Serbia. The SCD serves as the analytic foundation on which the World Bank Group and the Government of Serbia will define a new Country Partnership Framework for FY2016 to FY2020. It is based on the best possible analysis, drawing on available evidence, and not limited to areas where the World Bank Group is currently engaged. The SCD is structured as follows: Chapter 2 presents the political and economic context. The economic context describes recent trends in growth, shared prosperity, and poverty reduction and briefly discusses factors behind them. Chapter 3 discusses pre-crisis patterns of growth and opportunities for future growth and inclusion in Serbia. Chapter 4 presents drivers of economic growth in Serbia and the principal constraints on growth and competitiveness. Chapter 5 discusses drivers of and constraints to economic inclusion. Chapter 6 outlines risks to sustainable shared prosperity and poverty reduction. Chapter 7 presents priorities for action.

This paper provides a quantitative evaluation of the welfare effect of the introduction of proportional taxation in Bulgaria in 2008, an effect that operates through the grey economy channel. Using a general-equilibrium model, augmented with informal sector, a computational experiment is performed to evaluate the welfare gain from the adoption of proportional taxation. The lower effective tax burden in the new tax regime produces a relocation of people into the official sector, stimulates investment, and increases output and consumption. Finally, under the flat tax regime, the size of the informal sector is smaller, and quantitatively consistent with OECD (Is informal normal? Towards more and better jobs in developing countries. OECD, Paris, 2009) and European Commission (Tax reforms in EU member states, Official Publications of the European Communities, Luxembourg, p 2012, 2012) figures.

This paper is a first attempt to provide a quantitative evaluation of the welfare gains resulting from the introduction of flat income taxation in Bulgaria in 2008. Using a calibrated micro-founded endogenous growth model with physical and human capital accumulation to Bulgarian data, a computational experiment is performed to quantify the dynamic welfare effect of progressive income taxation vis-a-vis flat income taxation. The model demonstrates that significant welfare gains, measured in terms of per-period consumption, can be realized with the introduction of flat income taxation. In addition, these welfare gains increase proportionally with the length of the time horizon considered. Finally, sensitivity analysis was performed to demonstrate that the results obtained are robust. this is the accepted version of the article that appeared in Eastern European Economics

This article is concerned with the interaction of regulated efficiency and World Trade Organization (WTO) accession and its impact on China's motor vehicle sector. The analysis is conducted using a 23 sector-25 region computable general equilibrium model. Regulatory reform and internal restructuring are found to be critical. Restructuring is represented by a cost reduction following from consolidation and rationalization that moves costs toward global norms. Without restructuring, WTO accession means a surge of final imports, though imports of parts could well fall as production moves offshore. However, with restructuring, the final assembly industry can be made competitive by world standards, with a strengthened position for the industry.

Bu tezde, Eaton ve Kortum (2002)'nin Ricardocu ticaret modelini tahminederken ulkelerin verimlilik daglmn gostermede Frechet daglmn almakyerine diger uc deger daglm olan Weibull daglmn kullandk. Eaton ve Ko-rtum (2002) modelinde de oldugu gibi, analitik kolaylk nedeniyle, verimlilikdaglmnn Frechet daglmn izledigini varsaymak artk uluslararas ticaretliteraturunde yaygn bir gelenek olmustur. Ancak, son calsmalar tahminsonuclarnn bu parametrelemeye duyarl oldugunu gostermistir. Bu goruskarssnda, Eaton ve Kortum (2002) modeli verimlilik daglm icin Weibulluc deger daglmn kullanarak tahmin yaptk ve farkl daglm kullanldgndatahmin edilen degerlerin degistigini gosterdik.Anahtar Kelimeler: Ticaret, teknoloji, cografya, refah arts, uc deger daglmlar,verimlilik. In this thesis, we estimate the Ricardian trade model of Eaton and Kortum(2002) using a dierent extreme value distribution for the productivity distri-butions of countries. Due to its analytical convenience, it is now a commontradition in international trade literature to assume that the distribution ofproductivities follows a Frechet distribution, which is the case for Eaton andKortum (2002) model as well. However, recent studies have shown that theestimation results are sensitive to this parametrization. In view of this, weestimate the Eaton and Kortum (2002) model where Weibull distribution isused for the distribution of productivities and show that estimated resultschange when we use another distribution.Keywords: Trade, technology, geography, welfare gains, extreme value distri-butions, productivity 102

We analyze the e¤ects of capital mobility on the speed of convergence and welfare. Using a two-sector endogenous growth model, the speed of convergence is determined primarily by the gap in rates of return between physical and human capital. In a closed economy, where we consider a typi- cal situation of having relatively less physical capital than in a steady state, the return on physical capital will be signi cantly large, while the return on human capital will be relatively small. Thus, this gap in rates of return is considerably large when the economy is not at its steady state. In an open economy, where human capital is non tradable, the gap in rates of return is small, as it is the gap between the international interest rate (which is less than the closed economy return on physical capital during transition) and the return on human capital. Hence, convergence in open economies will be relatively slow, and convergence in closed economies will be relatively fast, and therefore there is little welfare gains to nancial liberalization. More- over, the result on the speeds of convergence for closed and open economies reverses the conclusion given by the one-sector neoclassical growth model for the same experiment., Fundação para a Ciência e a Tecnologia (FCT), COMPETE, QREN, FEDER

Pakistan’s trade indicators reflect low outward orientation, concentration on low value added activities and an undiversified product mix which out of line with the fastest growing areas of world demand. The export share of Gross Domestic Product (GDP) has remained low and falling—fro

This note synthesizes the experience of three political economy case studies: the water sector in West Bank and Gaza, the bus sector in Dhaka, Bangladesh, and the port sector in Chittagong, Bangladesh. The objective is to describe: the process of conducting these types of studies, and how recommendations which have a higher chance of feeding into reforms or operations can be developed. It is hoped that these insights will be useful for development practitioners and operational teams who are considering conducting political economy studies. It is increasingly accepted that better understanding and management of the political economy of policy reforms can help development agencies, including the World Bank, refine policy advice and operational support in partner countries. Support of reforms which are technically feasible and politically acceptable, while simultaneously promoting a poverty reduction agenda, remain a core challenge for the World Bank. It is anticipated that the additional time and effort put into political economy work will often translate into improved design and implementation of sector reforms and operations, and thus increase their effectiveness. It illustrates lessons for operational teams and development practitioners on conducting political economy work. Finally, it shows that certain obstacles need to be anticipated when translating political economy recommendations into design of operations and illustrates, through the case studies, how they can be addressed.

Current international financing (primarily ODA) for environmental services in developing countries is very roughly estimated to be upwards of $21 billion annually (not including climate change financing), but additional resources on the order of tens, if not hundreds, of billions of dollars are needed. In 2009, environmental ODA was estimated at $18 billion with a few billion more delivered through philanthropic and market-based financing channels. Although there are only a few studies of the additional financing needed, and those are relatively narrow in scope, the estimates that are available clearly indicate that significantly higher levels of finance still need to be reached. Additionally, the impacts of environmental finance on environmental sustainability and development objectives are poorly understood. Systematic reviews of previous experience, and standardized monitoring in the future, would support the countries and projects monitored, while also providing important lessons for the broader development and environment communities.

This paper assesses the welfare impact of trade and technology diffusion as well as the change in the cross-country distribution of GDP due to removal of trade costs and diffusion barriers. The model extends the multi-country Ricardian trade model of Alvarez and Lucas (2007) to include technology diffusion with diffusion barriers. A key feature of the model is that some countries export goods produced by foreign technology via diffusion. The model is calibrated to match the world GDP distribution, the merchandise trade and technology diffusion shares of GDP, and real GDP per capita for a sample of 31 countries. Data on international trade in royalties, license fees, and information intensive services are used as proxies for international technology diffusion. There are three key findings. First, the welfare gains from removing diffusion barriers are 4--60% across countries, generally larger than the gains from removing trade costs (8--40%). The main reason is that diffusion has a larger impact on the nontradable sector due to the substitutability between trade and diffusion in the tradable sector. Another reason is that diffusion barriers are generally larger than trade costs. Second, removing trade costs and diffusion barriers has little impact on reducing the dispersion of real GDP per capita (measured by Gini index) across countries. Compared to the benchmark, free diffusion decreases the Gini by 4%, and free trade decreases the Gini by 2%. Third, removing diffusion barriers increases trade, which indicates that diffusion may enhance trade.

The proliferation of preferential trade liberalization over the last 20 years has raised the question of whether it slows multilateral trade liberalization. Recent theoretical and empirical evidence indicates that this is the case even for unilateral preferences that developed countries provide to small and poor countries, but there is no estimate of the resulting welfare costs. This stumbling block effect can be avoided by replacing the unilateral preferences with a fixed import subsidy, which generates a Pareto improvement. More importantly, this paper presents the first estimates of the welfare cost of preferential liberalization as a stumbling block to multilateral liberalization. Recent estimates of the stumbling block effect of preferences with data for 170 countries and more than 5,000 products are used to calculate the welfare effects of the European Union, Japan, and the United States switching from unilateral preferences for least developed countries to an import subsidy scheme. In a model with no dynamic gains to trade, the switch produces an annual net welfare gain for the 170 countries that adds about 10 percent to the estimated trade liberalization gains in the Doha Round. It also generates gains for each group: the European Union, Japan, and the United States ($2,934 million), least developed countries ($520 million), and the rest of the world ($900 million).

This housing policy in developing countries, conjectures and refutations article discusses housing policy in developing economies. It examines recent research findings in light of earlier arguments as to the benefits of more market-oriented approaches. It also looks at whether the recommendations of earlier work have been refuted or developed in subsequent analyses and policy measures. In particular, it reviews the empirical analysis of the effects of policy on housing supply, the richer understanding of the effects that land market regulations have on housing affordability and the functioning of urban areas, and the alleged mysterious effects that researchers claim effective property rights have on housing policy and on development more generally. It also examines the effects of the increased emphasis on community participation, showing how it helps to more fully reconcile the incentives faced by beneficiaries of housing policy and donors. Finally, it examines recent literature on the welfare effects of rent control. The article shows that some of the conjectures as to the likely benefits of more market-based policy have been refuted, but large welfare gains for poor people can still be realized by adapting this approach. Furthermore, this approach appears to be gaining ground as the consensus approach to effective housing policy.

The effective market access granted to textiles and apparel under the North American Free Trade Agreement (NAFTA) is estimated, taking into account the presence of rules of origin. First, estimates are provided of the effect of tariff preferences combined with rules of origin on the border prices of Mexican final goods exported to the United States (U.S.) and of U.S. intermediate goods exported to Mexico, based on eight-digit harmonized system tariff-line data. A third of the estimated rise in the border price of Mexican apparel products is found to compensate for the cost of complying with NAFTA's rules of origin, and NAFTA is found to have raised the price of U.S. intermediate goods exported to Mexico by around 12 percent, with downstream rules of origin accounting for a third of that increase. Second, simulations are used to estimate welfare gains for Mexican exporters from preferential market access under NAFTA. The presence of rules of origin is found to approximately halve these gains.

This article assesses the impact of the world price-depressing effect of agricultural subsidies and border protection in Organization for Economic Co-operation and Development (OECD) countries on developing economies' exports, imports, and welfare. Developing economy exporters are likely to benefit from reductions in such subsidies and trade barriers, whereas net importers may lose as world prices rise. A simple partial equilibrium model of global trade in commodities that benefit from domestic support or export subsidies is developed to estimate the relevant elasticities. Simulation results suggest that a 50 percent reduction in border protection will have a much larger positive impact on developing economies' exports and welfare than a 50 percent reduction in agricultural subsidies. Although there is significant heterogeneity across developing economies, the results suggest that efforts in the Doha round of World Trade Organization (WTO) negotiations should be directed at substantially reducing border protection.

Major changes are needed if Africans and their children are to claim the 21st century. With the rapidly growing population, 5 percent annual growth is needed simply to keep the number of poor from rising. Halving severe poverty by 2015 will require annual growth of more than 7 percent, along with a more equitable distribution of income. Trends in Africa will need to change radically for a catch-up process to materialize. This will require determined leadership within Africa. It will require better governance developing stable and representative constitutional arrangements, implementing the rule of law, managing resources transparently, and delivering services effectively to communities and firms. It will require greater investment in Africas people as well as measures that encourage private investment in infrastructure and production. And it will require better support and perhaps more support from the international development community. In facing these challenges, Africa has enormous potential including the potential of its women, who now provide more than half of the regions labor but lack equal access to education and factors of production. This report brings together the recent body of work particularly that emanating from Africa itself to show how some African countries are approaching common issues. African economies and sub-regions are diverse and each will have to find its way to address the challenges of the 21st century.

International audience; This paper calibrates the graduated income tax system currently in place in France while assuming that the number of earning-ability types in the economy are four. It also computes the optimal linear and nonlinear income tax schedules for this economy. Its main nding is that while an optimal linear income tax is (in most scenarios) welfare superior to the current tax system, the welfare gain may be small. On the other hand, an optimal general income tax leads to substantial belfare gains over the present system.

The Africa Competitiveness Report 2015 comes out at a promising time for the continent: for 15 years growth rates have averaged over 5 percent, and rapid population growth holds the promise of a large emerging consumer market as well as an unprecedented labor force that - if leveraged - can provide significant growth opportunities. Moreover, the expansion of innovative business models, such as mobile technology services, is indicative of the continents growth potential. However, Africa continues to be largely agrarian, with an economy that is underpinned by resource-driven growth and a large and expanding informal sector. Indeed, more than a decade of consistently high growth rates have not yet trickled down to significant parts of the population: nearly one out of two Africans continue to live in extreme poverty, and income inequality in the region remains among the highest in the world. What is more, across sectors - from agriculture to manufacturing and services - productivity levels remain low. It will be necessary to raise productivity across all sectors of the economy to achieve higher growth and create quality employment, and turn this progress into sustainable inclusive growth.