Economic research and trade policy analysis
World Trade Report 2020
In the digital age a growing number of governments have adopted policies aimed at boosting growth through innovation and technological upgrading. The World Trade Report 2020 looks at these trends and at how trade and the WTO fit with them. A defining feature of government policies adopted in recent years has been their support of the transition towards a digital economy. Trade and trade policies have historically been important engines for innovation. In particular the multilateral trading system has contributed significantly to the global diffusion of innovation and technology by fostering predictable global market conditions and by underpinning the development of global value chains. As data become an essential input in the digital economy firms rely more on intangible assets than on physical ones and digital firms are able to reach global markets faster without the amount of physical investment previously necessary in other sectors. Success in the digital economy will depend on openness access to information and communication technology (ICT) goods and services collaboration on research projects and the diffusion of knowledge and new technology. The World Trade Report 2020 shows that there is a significant role for international cooperation to make the pursuit of digital development and technological innovation more effective while minimizing negative spill-overs from national policies. The WTO agreements reached a quarter of a century ago have proved to be remarkably forwardlooking in providing a framework that has favoured the development of ICT-enabled economies across all levels of development. Further international cooperation at the WTO and elsewhere would enable continued innovation and reduce trade tensions to help international markets function more predictably.
Acknowledgements and Disclaimer
The World Trade Report 2020 was prepared under the general responsibility of Xiaozhun Yi WTO Deputy Director-General and Robert Koopman Director of the Economic Research and Statistics Division. The report was coordinated by Marc Auboin and Ankai Xu. The authors of the report are Marc Auboin Marc Bacchetta Cosimo Beverelli Eddy Bekkers Kian Cassehgari Posada Emmanuelle Ganne John Hancock Kathryn Lundquist Gabrielle Marceau José-Antonio Monteiro Roberta Piermartini Stela Rubínová Victor Stolzenburg Ankai Xu and Qing Ye (Economic Research and Statistics Division).
Applied Services Trade Policy
Better information on how services policies vary across economies and sectors over time would improve the empirical analysis of their impact. This paper describes the Services Trade Policy Database (STPD) a joint initiative by the World Bank and the WTO Secretariat which builds on a database developed by the World Bank nearly ten years ago and draws on a recent OECD database.
International health worker mobility and trade in services
Despite its substantial and increasing importance to health systems and inclusive economic growth the relationship between international trade in services and health worker mobility has been largely unexplored. However international health worker mobility and trade in services have both been increasing rapidly and at a growing pace in recent years.
How do natural disasters affect services trade?
This paper is the first in the literature to examine the impact of natural disasters on trade in services. We measure the magnitude of natural disasters using two distinct sets of variables and quantify the effect of natural disasters on trade in services using a structural gravity model.
Footloose Global Value Chains
The geography of global value chains (GVCs) depends crucially on trade costs between countries hosting various stages of production. Some stages might be more sensitive to trade costs than others. In this paper we exploit a value-added decomposition of bilateral trade flows to distinguish low value-added GVC trade typically associated with production stages such as assembly from high value-added GVC trade associated with stages such as R&D and design. We test the hypothesis that low value-added stages will more easily reroute given changes in trade costs between importing and exporting countries than high value-added stages.
The WTO Global Trade Model
This document provides a technical description of the WTO Global Trade Model developed by the Center for Global Trade Analysis (GTAP) and the World Trade Organization (WTO). The model can be used to generate global trade projections and to assess the medium and long run effects of a wide range of global and national trade policies.
Enforcement of Labour Regulation and the Labour Market Effects of Trade: Evidence from Brazil
This chapter examines how enforcement of labour regulation shapes the labour market effects of trade. To do so we focus on the early 1990s Brazilian trade liberalization episode which was a unilateral and extensive tariff reduction process.
The Republic of Korea’s Trade Adjustment Policies and their Effects on Labour Market Adjustment
The Republic of Korea (hereafter Korea) has been actively opening its markets since the early 1990s making its first bilateral trade agreement with Chile effective from 3 April 2004. It has since arranged such agreements with 52 countries that now cover more than 77 per cent of the world’s GDP. Given the little progress made in multilateral negotiations under the Doha Development Agenda (DDA) much of the progress in market liberalization has taken the form of regional trade agreements (RTAs). It has been through an extensive network of these arrangements with partners such as the EU the US and the People’s Republic of China (hereafter China) that the Korean Government has been pursuing sustained growth.
Acknowledgements
This report was made possible thanks to the funding of the Swedish Government.
German Employment Legislation and its Impact on the Trade and Labour Market Nexus
Motivated by Germany’s economic weakness and high labour market inflexibility The Economist (1999) once described the country as “the sick man of the euro”. The public debate surrounding this statement considered Germany as one of the major threats to the euro due to its persistently high rates of unemployment since the mid-1970s. The rather low levels of job creation were presumed to be caused by labour market institutions including restrictive employment protection a high level of union coverage and a generous welfare system. The German Government started to transform the labour market legislation at the beginning of the 21st century by giving particular enterprises more flexibility in hiring and firing their employees as part of an in-depth labour market reform programme. Other adjustments included lower unemployment benefits and various active labour market policies. Consequently unemployment rates in Germany were plummeting shortly after the enforcement of the reforms. Today Germany’s rate of unemployment is at a record low level of 3.4 per cent which is the second-lowest rate in the European Union (EU). To some extent this success is an achievement that can be attributed to the rigorous labour market reforms.
Globalization, Flexicurity and Adult Vocational Training in Denmark
For more than 20 years the performance of the Danish labour market has attracted attention with its relatively low unemployment rates and high but rather compressed wages. While Denmark was hit hard by the global financial crisis a decade ago the unemployment rate did not exceed 8 per cent and it remained below the OECD average. Denmark is a small open economy and the Danish labour market has been exposed to globalization shocks and technological change over the same period of time. Offshoring rising Chinese import competition automation and immigration have forced many Danish firms and workers to adjust but the labour market appears to have coped well with the adjustment process. This chapter discusses whether Danish labour market policies have been particularly effective in times of structural change.
Higher Education Response to India’s IT Boom: Did State Governments Play a Role?
The contribution of information technology (IT) to India’s GDP increased from 1.2 per cent in 1997 to 9.3 per cent in 2015. A notable characteristic of this phenomenon is that the majority of the growth in this sector is driven by exports. Currently more than 80 per cent of IT output is exported. This sector is thus very vulnerable to demand shocks in the world economy. Also unlike the export of most goods the export of IT services relies exclusively on the Internet the expansion of which in the 1990s is a relatively recent phenomenon. The combination of worldwide rapid Internet growth along with rising demand for computing skills created an unprecedented demand for Indian IT services: from 1998 IT exports and employment doubled in a span of just two years.
Labour Market Policy Responses Amid Globalization: The Case of South Africa
The South African economy is one mired in a long-run low-level growth trap which has entrenched high levels of structural unemployment. Further and as is the case with many middle-income economies it has struggled with the domestic consequences emanating from a variety of exogenous economic shocks. Nowhere is this more apparent than in the case of contagion effects from the 2008 global crisis and trade-induced shocks – within a world economy that is increasingly defined by its interconnectedness. For South Africa the real economic impact has been most powerfully felt in the labour market with current and future employment threatened through these shocks. Thus the combination of high levels of structural unemployment and the adverse labour market effects associated with exposure to global shocks has necessitated the design of appropriate and effective labour market responses.
The Policy to Mitigate the Effects of the 2008 Global Crisis on Textile, Clothing, Leather and Footwear Jobs in Morocco
This chapter aims to analyse the short episode of labour market adjustment policy in Morocco adopted as a response to the global crisis of 2008 by the Moroccan Government. It focuses on the rationale implementation and effects of this policy on the resilience of firms employment and workers in the textile clothing leather and footwear (TCLF) sector.
Literature Review
Globalization is the integration of goods services financial and capital markets on a world scale. From the perspective of firms this integration means having access to broader markets but also facing tougher competition. In order to remain competitive in global markets firms have to adjust by engaging in innovation developing new products and adopting new technologies. They must also adjust by adapting their workforce to the new competitive environment. Such adjustment is costly however and workers bear a large share of the cost of adjustment to globalization. In this context what are the responses policy-makers can offer to mitigate those costs and make globalization more inclusive? This chapter reviews the literature on adjustment policies with a view to answering this question.