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This Country Partnership Framework (CPF) presents the World Bank Group (WBG) program and the associated results framework for Lebanon for the period FY17-FY22. In a fragile and conflict-prone environment, this CPF aims at mitigating the immediate, and potentially long-lasting impact of the Syria crisis on Lebanon, while strengthening state institutions, addressing existing vulnerabilities, and bolstering efforts on longer term development challenges, all through interventions that foster inclusion and shared prosperity. The CPF will work through two focus areas as a way to renew the social contract between the state and the citizens: (i) expand access to and quality of service delivery; and (ii) expand economic opportunities and increase human capital. Through these two focus areas, the WBG will help Lebanon mitigate the economic and social impact of the Syria crisis, safeguard the country’s development gains, and enhance the prospects for stability and development in the coming years. The CPF will contribute to strengthening the relationship between the state and its citizens, a critical ingredient for peace and stability. The CPF will contribute to strengthening the relationship between the state and its citizens, a critical ingredient for peace and stability. The CPF benefited from a series of stakeholder consultations, including those held in connection with the Systematic Country Diagnostic (SCD) and the WBG Gender Strategy.

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.

Evidence indicates that trade costs are a much more substantial barrier to trade than tariffs are, especially in Sub-Saharan Africa. This paper decomposes trade costs into: (i) trade facilitation, (ii) non-tariff barriers, and (iii) the costs of business services. The paper assesses the poverty and shared prosperity impacts of deep integration to reduce these three types of trade costs in: (i) the East African Customs Union–Common Market of East and Southern Africa–South African Development Community "Tripartite" Free Trade Area; (ii) within the East African Customs Union; and (iii) unilaterally by the East African Customs Union. The analysis employs an innovative, multi-region computable general equilibrium model to estimate the changes in the macroeconomic variables that impact poverty and shared prosperity. The model estimates are used in the Global Income Distribution Dynamics microsimulation model to obtain assessments of the changes in the poverty headcount and shared prosperity for each of the simulations for the six African regions or countries. The paper finds that these reforms are pro-poor. There are significant reductions in the poverty headcount and the percentage of the population living in poverty for all six of the African regions from deep integration in the Tripartite Free Trade Area or comparable unilateral reforms by the East African Customs Union. Further, the incomes of the bottom 40 percent of the populations noticeably increase in all countries or regions that are engaged in the trade reforms. The reason for the poor share in prosperity is the fact that the reforms increase unskilled wages faster than the rewards of other factors of production, as the reforms tend to favor agriculture. Despite the uniform increases in income for the poorest 40 percent, there are some cases where the share of income captured by the poorest 40 percent of the population decreases. The estimated gains vary considerably across countries and reforms. Thus, countries would have an interest in negotiating for different reforms in different agreements.

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.

Bolivia’s distinct characteristics and aspirations are a key for understanding its development trajectory. Bolivia is one of the countries with the highest share of indigenous population, representing a tapestry of different groups with different historical, cultural and economic features, with a significant influence in policy decision making. The country is landlocked and one of the most sparsely populated in the world. As a result, long distances to the nearest seaports and markets and a challenging topography pose important natural constraints to economic expansion, and hamper broad-based and inclusive growth. Bolivia is also wealthy in natural resources, not only in hydrocarbon and in mining but in forestry and arable land, with high potential for growth, which make it vulnerable to commodity price shocks. In addition, in the last decade, the country has experienced a profound economic and political paradigm shift, enshrined in the 2009 Constitution, which has been predominantly driven by a state-led development model geared at addressing the social aspirations of Bolivians. The Agenda Patriótica provides the overall policy vision to 2025 and includes 13 strategic pillars. The PDES contains a five-year rolling plan with policy actions and budgets to operationalize the Agenda Patriótica. The overarching development agenda of the Government is still, by and large, based on an economic model that emphasizes state-led public investment, but which is increasingly opening up to private investment in important areas.

International supply chains require the coordination of numerous activities across multiple countries and firms. This paper develops a theoretical model of supply chains in which the measure of tasks completed within a firm is determined by parameters that define transaction costs and the cost of coordinating more activities within the firm. The structural parameters that govern these costs explain variation in supply chain length as well as cross-country variation in gross-output-to-value-added ratios. The structural parameters are linked to comparative advantage along and across supply chains. The paper provides an analytical treatment of trade and welfare responses to trade cost change in a simple two-country model. To explore the models implications in a richer setting, the model is calibrated to match key observables in East Asia, and the calibrated model is used to evaluate implications of changes in model parameters for trade, welfare, the length of supply chains, and countries relative position within them.

This Country Partnership Framework (CPF) sets out the World Bank Group (WBG) program for Albania for the period FY15-19, aimed at supporting Albanias aspiration to achieve equitable growth and integration into the European Union. Albania emerged from the collapse of isolationist communism in the early 1990s as one of the poorest countries in Europe. The country then experienced rapid growth of nearly 6 percent per annum, rising into the ranks of middle income countries by 2008. The global and Eurozone crises in 2008 brought Albanias growth to a near stand-still by 2012, and the country is struggling to recover, particularly given its historic ties to Europes poorer performing economies. The CPF reflects selectivity based on the fundamental priorities of the System Country Diagnostic (SCD) that allows for ramping up support from the World Bank Group. The CPF selectively chooses only five of the twelve SCD priorities, and builds a program of support around this subset of priorities on the basis of additional selectivity filters. These five fundamental priorities include: 1) restoring fiscal sustainability and maintaining financial stability; 2) establishing a high quality business environment; 3) providing clean, efficient, equitable and financially sustainable energy; 4) formalizing and enhancing inclusiveness and sustainability of land markets; and 5) enhancing governance, transparency and accountability of government.

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 main message of this report is that if Kazakhstan wants to take advantage of global integration and diversification opportunities, the government needs to improve its trade policy framework, its management, and its regulations. It is also finalizing accession to the World Trade Organization (WTO) while its trade strategy includes a number of free trade agreements to be negotiated. It is an active member of the Central Asia Region Economic Cooperation (CAREC). This report is composed of three policy notes that discuss how to improve the trade policy framework, management, and regulations: note one is on the trade policy framework and recommends joining the WTO on a tariff schedule that is more liberal than Russia’s; note two postulates that to benefit more fully from the WTO membership and future regional or bilateral agreements, the institutional framework for trade policy management will need a clearer strategic vision, better coordination within the government and with private sector, and enhanced human capacity; and note three suggests that for the private sector to benefit from global integration and diversification, the government should ease the burden of regulations that affect trade (non-tariff measures (NTMs)).

This paper views tariff-cutting formulas as a potential solution to the free-rider problem that arises when market opening is negotiated bilaterally and extended on a most-favored-nation basis. The negotiators in the Doha Agenda chose formulas that are ideal from an economic efficiency viewpoint in that they most sharply reduce the highest and most economically-costly tariffs. When the political support that gave rise to the original tariffs is considered, however, this approach appears to generate very high political costs per unit of gain in economic efficiency. The political costs associated with the formulas appear to have led to strong pressure for many, complex exceptions, which both lowered and increased uncertainty about members’ market access gains. Where tariff cuts focus on applied rates, it seems likely that a proportional cut rule would reduce the political costs of securing agreements. However, detailed examination of the Doha proposals with their product exceptions suggests that negotiators are likely to find cuts with exceptions politically attractive but economically costly when cuts are based on bound tariffs with different degrees of binding overhang.

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.

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

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 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.

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.

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.