Transcript Global Economic Prospects 2004: Realizing the Development Promise of the Doha Agenda Mick Riordan and Richard Newfarmer World Bank Sept 3, 2003

Global Economic Prospects 2004:
Realizing the Development Promise
of the Doha Agenda
Mick Riordan and Richard Newfarmer
World Bank
Sept 3, 2003
Main messages…

Global recovery, though still fragile, is now underway,
and developing countries are likely to grow faster than
rich countries.

The Doha Agenda has the potential to speed growth,
raise incomes, and reduce poverty, and all countries
have an interest in its success.

But to realize this potential, governments have to
tackle inequities in the world trading system – and to
forge an agreement than benefits the poor.
The rich countries: a moderate recovery...
Real GDP, percent change
5
High income countries
4
Forecast
3
2
East Asia
financial crisis
1
4
20
05
3
2
1
98
97
96
95
94
93
92
91
89
19
90
88
87
86
85
84
83
82
99
20
00
2001 downturn
Early 1980s recession
19
81
0
Early 1990s recession
Global prospects
The rich countries: investment now rising....
Real fixed investment, percent change at annual rates
8
Japan
4
0
-4
Euro Area
-8
-12
United States
-16
Q2 01
Q3 01
Q4 01
Q1 02
Q2 02
Q3 02
Q4 02
Q1 03
Q2 03
The international environment improves...
2001 2002
Percentage change
Export market growth
2003 2004
/1
-0.2
2.5
6.8
8.0
Non-oil commodity prices
-9.1
5.1
6.9
1.1
U.S. LIBOR (%)
3.5
1.8
1.0
2.0
Emerging market spread (bp)
797
728
610
...
Source: World Bank. Note: /1 import demand in partner markets.
The international environment improves...
2001 2002
Percentage change
Export market growth
2003 2004
/1
-0.2
2.5
6.8
8.0
Non-oil commodity prices
-9.1
5.1
6.9
1.1
U.S. LIBOR (%)
3.5
1.8
1.0
2.0
Emerging market spread (bp)
797
728
610
...
Source: World Bank. Note: /1 import demand in partner markets.
The international environment improves...
2001 2002
Percentage change
Export market growth
2003 2004
/1
-0.2
2.5
6.8
8.0
Non-oil commodity prices
-9.1
5.1
6.9
1.1
U.S. LIBOR (%)
3.5
1.8
1.0
2.0
Emerging market spread (bp)
797
728
610
...
Source: World Bank. Note: /1 import demand in partner markets.
Global prospects
... But risks remain

Longer-term structural
problems persist in the
rich countries

Potential for additional
geopolitical shocks

And macro policy has
largely run its course—
may be insufficient to
meet new challenges
Global prospects
... But risks remain


Longer-term structural
problems persist in the
rich countries
Potential for additional
geopolitical shocks
Market interest rates
7
6
5
US 10-yr Note

And macro policy has
largely run its course—
may be insufficient to
meet new challenges
4
- Interest rates at lows
2
3
EURIBOR
US LIBOR
1
Jul-00
Nov-00 Mar-01 Jul-01
Nov-01 Mar-02 Jul-02
Nov-02 Mar-03 Jul-03
Global prospects
... But risks remain



Longer-term structural
problems persist in the
rich countries
General government financial balances, % GDP
0.0
-1.0
Potential for additional
geopolitical shocks
-2.0
And macro policy has
largely run its course—
may be insufficient to
meet new challenges
-4.0
- Interest rates at lows
-3.0
-5.0
2001
2002
2003
-6.0
-7.0
- Fiscal deficits widen across
-8.0
the rich countries
Germany
United States
Source: OECD data and projections.
Japan
Global prospects
... But risks remain



Longer-term structural
problems persist in the
rich countries
General government financial balances, % GDP
0.0
-1.0
Potential for additional
geopolitical shocks
-2.0
And macro policy has
largely run its course—
may be insufficient to
meet new challenges
-4.0
- Interest rates at lows
-3.0
-5.0
2001
2002
2003
-6.0
-7.0
- Fiscal deficits widen across
-8.0
the rich countries
Hence, addressing the
structural issues is key
Germany
United States
Source: OECD data and projections.
Japan
The developing countries: a robust outlook
Real GDP, percent change for developing countries
Forecast
5
4
Early 1980s
debt crisis
3
2001 Global
downturn
2
East Asia financial crisis
1
1990s recession
Transition countries
0
81
9
1
82
83
84
85
86
87
88
89 990
1
91
92
93
94
95
96
97
98
99 000
2
1
2
3
4
05
0
2
The developing countries: a robust outlook
Real GDP, percent change for developing countries
Forecast
5
4
Early 1980s
debt crisis
3
2001 Global
downturn
Trend growth
2
East Asia financial crisis
1
1990s recession
Transition countries
0
81
9
1
82
83
84
85
86
87
88
89 990
1
91
92
93
94
95
96
97
98
99 000
2
1
2
3
4
05
0
2
Global prospects
Near-term step up in growth across regions...
Real GDP growth, 2001-2005
6.5
6.1
6.5
5.4
2001-2002
4.6
5.0
4.3
3.4
3.5
2003-2005
3.1
3.2
3.5
3.0
3.4
2.0
0.5
-0.2
-1.0
East Asia
South Asia
East. Eur. &
Central Asia
Latin
America
Middle East Sub-Saharan
& North
Africa
Africa
Global prospects
... and improved per-capita growth longer term
Real GDP per capita growth, 1990s and 2006-2015
6.5
6.4
5.4
1990s
5.0
2006-2015
4.1
3.3
3.5
3.3
2.5
1.7
2.0
2.5
1.6
1.2
0.5
-0.2
-1.0
-1.8
-2.5
East Asia
South Asia
East. Eur. &
Central Asia
Latin
America
Middle East Sub-Saharan
& North
Africa
Africa
The Doha Agenda has the potential to
accelerate growth
A “good” agreement could boost incomes $270-520 b.
400
US $billions change in real income in 2015 relative to baseline
350
Dynamic gains
$1997 billion
300
250
Static gains
200
150
100
50
0
High-income countries
Developing countries
More people would be lifted above the
poverty line…140 million…many in Africa
$2 per day
change in the number of poor in 2015 relative to the baseline
$1 per day
70
60
Millions
50
40
30
20
10
0
East Asia
and Pacific
Europe and
Latin
Central Asia America and
the
Caribbean
Source: World Bank staff simulations.
Middle East
and North
Africa
South Asia
Sub-Saharan
Africa
But to realize development promise, an
agreement has to reduce barriers to the
products the poor produce



Agriculture is a priority, particularly reducing
border protection and subsidies in rich
countries
Reducing protection on manufactures,
particularly in the South
Helping low-income countries reduce reliance
on trade preferences and increase
competitiveness exports
Developing countries have failed to penetrate
agricultural markets of rich countries
Developing countries’ share of total world exports
Manufacturing
Agriculture
30
30
25
Exports to rich countries
25
20
20
15
15
10
10
5
Exports to poor countries
0
5
Exports to rich countries
Exports to poor countries
0
1980
1990
2000
1980
1990
2000
Protection in rich countries is high and unchanged since
the Uruguay round…
Industrial countries: Producer Support
300
Direct subsidies
250
200
Border protection
150
100
50
0
86-88 99-01
EU
86-88 99-01
US
86-88 99-01
Japan
* As a percent of output at world prices
Source: OECD
86-88 99-01
Other
industrial
Protection in rich countries is high and unchanged since
the Uruguay round…though developing countries have
reduced barriers
Industrial countries: Producer Support Estimate
300
Direct subsidies
Developing countries: average tariffs for
agriculture
300
250
250
200
200
Border protection
150
150
100
100
50
50
0
86-88 99-01
EU
86-88 99-01
US
86-88 99-01
Japan
* As a percent of output at world prices
Source: OECD
86-88 99-01
1990
0
Other
industrial
Source: TRAINS
1995
2000
Rich countries levy higher tariffs on imports
from developing countries
Av tariffs of industrial countries charged to exporters
from various regions, 1997 (percent)
9
8
7
6
5
4
3
2
1
0
Industrial
Latin
SubEast Asia
America Saharan
and
Africa
Caribbean
Europe
and
Central
Asia
Middle
East
South
Asia
…and so do other developing countries
Protection rates faced by Latin American exporters of
manufactures, 1997
percent
25
20
15
10
5
0
East Asia Europe
and
Central
Asia
Latin
America
Middle
East
South
Asia
Sub- Industrial
Saharan
Africa
Developing countries pay more of their foreign
tariffs to rich countries and to neighbors
Share of tariff burden,
percent
100
90
80
70
60
50
40
30
20
10
0
Rest of world
Intra-region
Industrial
Industrial
East Asia
Europe and
Central
Asia
Latin
Middle East South Asia
America
and North
and
Africa
Caribbean
SubSaharan
Africa
Developing countries have an interest in reducing protection
in the South as well as the North
Low income countries have relied too much
on trade preferences..with only marginal
success
Share of LDCs in EU and US imports,
1966–2002 (percent)
1.0%
0.9%
US
0.8%
0.7%
0.6%
0.5%
EU
0.4%
0.3%
0.2%
0.1%
0.0%
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Source: WITS.
Low income countries have relied too much
on trade preferences..with only marginal
success
Share of LDCs in EU and US imports,
1966–2002 (percent)
1.0%
Share of preferential programs in US
imports, 1966–2002 (percent)
2.0%
0.9%
US
0.8%
1.8%
0.7%
1.4%
0.6%
1.2%
0.5%
EU
0.4%
CBI
1.6%
1.0%
AGOA
0.8%
0.3%
0.6%
0.2%
0.4%
0.1%
0.2%
Andean
0.0%
0.0%
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Source: WITS.
1996
1997
1998
1999
2000
2001
2002
Improving trade logistics can be as
important as cutting tariffs…ports, customs,
transport
Average number of days to clear customs for sea cargo
Developed
East Asia and
Pacific
Latin America
and Caribbean
Africa
South Asia
0
2
4
6
8
10
12
Development assistance is key to improving ports, customs
and trade infrastructure
Source: International Exhibition Logistics Associates, based on a sample of countries in
each region
For the development promise of the Doha
agenda to be realized, all countries have to
take responsibility

Rich countries have to lead in agriculture, laborintensive manufactures, and development
assistance as well as in services (mode 4)

Middle-income countries have to be willing to
lower high external tariffs—benefiting
themselves and their neighbors

Low-income countries have to rely less on
preferences and reform trade-related
institutions.
Global Economic Prospects 2004:
Realizing the Development Promise
of the Doha Agenda
Mick Riordan and Richard Newfarmer
World Bank
Sept 3, 2003