LDCs Archives - WITA

Lowering Prices of Pharmaceuticals: Insights for Better Procurement Strategies in Latin America

Ryan Murphy — Tue, 08 Jun 2021 17:49:55 +0000

Containing rapidly growing health care costs in the Latin American and the Caribbean region, especially amid the COVID-19 pandemic, requires an in-depth analysis of prices from a novel perspective. This paper documents hitherto understudied variations in prices paid for pharmaceuticals, equipment, and medical supplies within countries and markets. It also identifies effective procurement strategies for lowering prices within existing regulatory frameworks. The analysis uses public procurement data gathered by governments’ electronic procurement systems in nine countries and territories across the region. The data are uniquely detailed and complete, encompassing the minute detail of purchasing decisions and processes made across all regulated public entities in the study countries and territories. Traditional regression analysis and machine learning (random forests) methods are used to explain prices as a function of procurement decisions and outputs, such as the number of bidders. Based on in-depth discussions with policy makers, the paper also devises realistic policy interventions, which in turn can be used to estimate savings scenarios. First, the findings show that the prices paid vary greatly across and within countries. The latter is surprising given that the regulatory and institutional framework is largely fixed within each country. Second, a high proportion of within-country and -market variation can be explained by standard features of procurement policy implementation, such as the length of advertising tenders. Third, the explanatory models point to the potential for lowering prices across the region by about 14 percent by implementing low-level, yet impactful changes to how purchasing is done.

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To read the full report from The World Bank Group, please click here.

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Trade and Gender Linkages: An Analysis of Least Developed Countries

Ryan Murphy — Tue, 08 Jun 2021 16:59:42 +0000

In the first months of 2020, the world experienced an outbreak of the coronavirus (COVID-19). The disease was declared a pandemic, and social distancing measures were introduced all around the world that resulted in travel restrictions and an unprecedented disruption in economic activity. As a result, the COVID-19pandemic has led to the worst economic and social crisis since the Great Depression. The health effects of the pandemic in the LDCs have been relatively less dramatic than was initially feared. However, the global economic downturn has had disproportionately adverse economic and social effects on the LDCs due to their lack of domestic financial resources, high debt levels, fragile health systems, and limited capacity to cope with external shocks. Moreover, the recovery path for the LDCs from the current global economic downturn is projected to be slower and longer than from previous downturns.

The economic and social impact of the COVID- 19 pandemic is disproportionality experienced by women because of occupational and sectoral gender segregation in employment, uneven division of unpaid labour, and pre- existing gender inequalities in economic and social life. Evidence from developing countries in South and South-east Asia and West Africa shows that the COVID-19 pandemic is likely to have a disproportionate negative effect on women’s employment opportunities and widen the gender gap in employment over time. Similarly, women are found to be more likely to permanently lose their job and experience a larger fall in their income than men due to the pandemic.

The same holds for women in the LDCs, since women in these countries are very active in economic activities that have been hit hard by the pandemic. These activities include horticulture and informal cross-border trade, especially important in the African LDCs; the low-skilled manufacturing sector (e.g. garments) central to many of the Asian LDCs and a few of the African LDCs; and the accommodation and food services sector and other tourism-related services that are important for most Island LDCs. Most people lack access to social protection and income- support systems in the LDCs, exacerbating the adverse impact of job losses.

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To read the full report from the United Nations Conference on Trade and Development, please click here.

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How Much Does Latin America Gain from Enhanced Cross-Border Electricity Trade in the Short Run?

Ryan Murphy — Tue, 08 Jun 2021 14:13:51 +0000

Regional or cross-border trade of electricity would be beneficial for all trading partners for multiple reasons. However, cross-border electricity trade in Latin America is limited, and the potential benefits have been forfeited. This study estimates the potential savings on electricity supply costs if 20 Latin American countries allowed unrestricted trade of electricity between the borders without expanding their current electricity generation capacity. Two hypothetical electricity trade scenarios—unconstrained trade of electricity between the countries within the Andean, Central, and Mercosur subregions and full regional trade involving all 20 countries are simulated using a power system model. The study shows that the volume of cross-border electricity trade would increase by 13 and 29 percent under the subregional and regional scenarios, respectively. The region would gain US$1.5 billion annually under the subregional scenario and almost US$2 billion under the full regional scenario. More than half of this gain would be realized by the Andean subregion under both scenarios. These are short-term benefits without expanding the current electricity generation capacities. In the future, when countries add more generation capacity to meet their increasing demand, the potential benefits of electricity trade would be higher. A further study is needed to measure the increased benefits in the long run.

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To read the full report from The World Bank Group, please click here.

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Chinese Investment in Latin America: Sectoral Complementarity and the Impact of China’s Rebalancing

Ryan Murphy — Mon, 07 Jun 2021 17:55:24 +0000

Over the last decade China’s investment in Latin America and the Caribbean (LAC) has increased substantially in volume and become more diversified from natural resources to other industries. Using cross-border mergers and acquisitions data, we demonstrate that since mid-2010s China’s overseas investment has tilted toward sectors where China has a comparative advantage in the global markets, a trend similar to that of other major foreign direct investment (FDI) source countries. Moreover, China’s rising overseas investment can be linked to the rebalancing of Chinese economy, and LAC stands to benefit from its complementarity vis-à-vis China in sectors where the rising Chinese overseas investment can be met with LAC’s own investment gaps. The COVID-19 pandemic could have a long-lasting impact on global value chains and FDI flows, which poses both challenges and opportunities to LAC in attracting FDI, including from China, to support the region’s long-run economic development.

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To read the full article from the International Monetary Fund, please click here.

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The unappreciated trend toward unilateral trade liberalization

Sebastian Petersen-Alven — Wed, 31 Mar 2021 21:04:40 +0000

A frequently voiced complaint from the Trump administration was that US firms have faced a competitive disadvantage in exports because the US market is open and US tariffs are low but US trading partners protect their markets with high tariffs. The administration used this concern to justify raising US tariffs whenever it could. Lawrence argues that these claims should be more nuanced and account for the extensive unilateral liberalization by many countries over the past 30 years and that the grievances that motivated the Trump trade policies are increasingly misplaced. Many developing countries have reduced their tariffs unilaterally to rates that are far lower than they applied three decades ago and far less than the bound rates reflected in their World Trade Organization (WTO) obligations. Globally, on average, tariffs were not raised during the global financial crisis of 2008 and continued to decline through at least 2018. Even when shocks from imports resulted in serious injury to domestic industries, several developing countries temporarily provided safeguard protection but at levels that were lower than their WTO bound rates. This evidence of import liberalization also suggests that rising protectionism was not responsible for the slow growth in world trade that has been evident since 2011. It remains uncertain whether countries will now respond to disruptions to global supply chains since 2018 caused by Trump’s trade policies and the COVID-19 pandemic by reversing their tariff liberalization stance, but the sustained enthusiasm for new megaregional trade agreements suggests many countries will not.

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To read the full policy brief by the Peterson Institute for International Economics, please click here.

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Don’t Graduate – Grandfather: Canada, Trade and the Least Developed Countries

Griffin Ursin — Mon, 30 Nov 2020 14:29:26 +0000

Canada and some least developed countries (LDCs) have enjoyed a growing trade relationship over 17 years, thanks to the liberalization of Canada’s Least Developed Country Tariff (LDCT). In 2003 Canada, following the EU’s “Everything but Arms” initiative, dropped to zero all tariffs against imports from the 47 LDCs except for supply-managed products and made the criteria for zero tariff treatment – the rules of origin – more generous.

LDC exports to Canada in 2017 represented just under $4 billion, around one per cent of total Canadian imports (or, more colloquially, about two hours of Canada-U.S. trade.) Their importance lies in their sector specificity; the majority of manufactured exports are apparel. After the 2003 liberalization, Bangladesh and Cambodia became the second and third largest suppliers of apparel to Canada after China, as much an achievement in import diversification for Canada as in export growth for Bangladesh and Cambodia.

Between 2003 and 2017, Bangladesh’s year-over-year exports to Canada grew at an average rate of 22 per cent, Cambodia’s at 58 per cent, Laos at 17 per cent and Nepal at 10 per cent. On the other hand, Canada’s exports to Bangladesh grew six-fold between 2004 and 2018. Bangladesh is now Canada’s fourth largest importer of pulses.

The 2003 market opening was enabled by of a GATT/WTO rule that facilitates preferential arrangements for countries on the United Nations’ Least Developed Countries list; effectively, the world’s poorest countries. Canada’s initiative was a near-impeccable preferential arrangement. It grew trade in both directions between Canada and some low-cost exporters without the bother of negotiations for bilateral free trade agreements, and without significant trade diversion. Together with the EU liberalization (and subsequent liberalizations in several other countries), it contributed to both export-led growth and poverty reduction in some least developed countries.

Canada’s relationship with these LDCs could change shortly. Along with six developing island countries and mineral-rich Angola, Bangladesh, Myanmar, Laos and Nepal are scheduled for graduation from the UN/WTO list of least developed countries (three were eligible as far back as 2018), and Cambodia has begun to meet the criteria for graduation. Graduation could mean the loss of the preferential tariff treatment that contributed to a rapid increase in exports in the last 17 years. Of the countries that are about to graduate, or have been graduated, the developing island countries export very little to Canada. Angola’s mineral exports enter duty free anyway, but the remaining countries – Bangladesh, Myanmar, Laos, Nepal and at some point Cambodia – are now heavily integrated into the Canadian apparel market. Apparel has become the primary manufactured export for most of these countries. Graduation therefore could have consequences for Canadian consumers, and for economic growth and poverty reduction in the countries concerned. Later, we discuss this problem specifically with reference to Bangladesh.

The earliest date for graduation is 2021; the latest date so far is 2024. Canada may agree to Bangladesh’s request for a three-year deferral from 2021, particularly in light of COVID-19’s impact on the economy, or it could follow the EU, which is reportedly considering a phased-in graduation process of three years, 2021-2024. If LDCs graduate, they will be subject to the tariffs and rules of origin of Canada’s General Preferential Tariff (GPT). Graduation is not restricted to Canada and the EU. During the World Trade Organization’s Doha round of multilateral trade negotiations, several WTO members offered similar concessions; graduation from the LDC list will require WTO members to consider whether to extend or terminate preferential treatment for the graduating LDCs.

Canada can continue duty-free treatment – to grandfather the zero tariff and maintain LDC treatment for as long as it deems desirable. It is also in Canada’s interests to do so; the relationship with the Asian LDCs has been a win-win for both sides. Graduation could cost Canadian consumers and exporters alike and if both the EU and Canada graduate these countries, it could stall economic growth and poverty reduction efforts in the LDCs.

This paper maintains that while COVID-19’s impact makes a short-term deferral likely, it makes more sense to look long term at both the trade and development implications of graduation for both Canada and the LDCs. It recommends that Canada continue preferential treatment for an extended period of time or simply leave the low tariffs in place.

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Fauzya Moore is an Ottawa-based consultant and writer. She has worked as a Senior
Economic Advisor at the various iterations of Global Affairs Canada, and also as a Senior Advisor on Governance at the Treasury Board of Canada. She is also a graduate of the Harvard Kennedy School (2009) where she held both a Fulbright scholarship and a fellowship from the Ash Centre for Governance and Innovation. She has worked in both the developed and developing world.

To download the full report, please click here.

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DFC’s Roadmap for Impact

Griffin Ursin — Thu, 22 Oct 2020 14:43:13 +0000

Through the U.S. International Development Finance Corporation (DFC), the U.S. Government (USG) accelerates the flow of private capital to less developed countries by supporting private sector investments that cannot obtain financing from other sources. This support is essential to advancing key sectors, such as infrastructure, agriculture, and health, which improve the quality of life for millions and lay the groundwork for modern, inclusive, and sustainable economies. Equipped with new financial tools, DFC has the flexibility to catalyze private capital to spur development, advance U.S. foreign policy, and generate returns for the American taxpayer—a triple impact.

DFC’s Roadmap for Impact (Roadmap) takes into account global development needs to establish portfolio-wide development priorities. The Roadmap identifies opportunities to increase private investment in low-income countries (LIC) and lower middle-income countries (LMIC)—targeting 60 percent of total portfolio projects in LICs, LMICs or fragile states. It also recognizes the importance of supporting projects that are significantly developmental or that target the most vulnerable populations in upper middle-income countries (UMICs). In addition, the Roadmap defines priority cross-cutting development themes and sectors, and it establishes investment goals and development metrics in order to focus DFC’s investment activities and measure our progress.

The Roadmap outlines capabilities and resources that are required to achieve these development goals, with an emphasis on enhanced coordination within DFC and across USG initiatives, departments and agencies, development finance institutions (DFIs), international financial institutions (IFIs), and other members of the development community. It also emphasizes the importance of transparency and enhanced social and environmental standards in the design and sustainable execution of DFC-supported projects in order to demonstrate that the U.S.-led model of development advances the best interests of Americans, host countries, and the planet whenever we invest.

The Roadmap does not reflect an exhaustive list of the sectors where DFC invests; rather, it focuses on sectors where DFC investments and technical assistance can have the greatest, measurable development impact over the next five years. Working closely with newly created U.S. Embassy deal teams, particularly with the Departments of State’s and Commerce’s DC Central Deal Team, as well as with DFC liaisons at U.S. Agency for International Development (USAID) missions worldwide, DFC can expand its client base and broaden the markets it serves. It will not be easy; and it will require additional resources, private capital to invest alongside, changes to processes, and patience. But DFC is committed to prioritizing the most highly developmental projects in the most underserved communities worldwide.

To download the full report, please click here.

DFC's Roadmap for Impact

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Trade and Development: Canadian Tariffs and the Least Developed Countries

Griffin Ursin — Mon, 19 Oct 2020 13:41:01 +0000

The Kananaskis Initiative was gazetted on the same day as the Conflict Diamonds Initiative, January 1, 2003. The Conflict Diamonds Initiative received more attention because it was one of Canada’s first Security Council initiatives; but the market access initiative has been arguably more far reaching because it led to long lasting growth and trade development in a handful of countries. That there is more to be done is clear, but the achievement is notable.

Over the past seventeen years, exports from several LDCs to Canada have grown and diversified, changing the profile of Canada from a traditional market for unprocessed minerals and raw food to a destination for imports of low cost, labour intensive manufactured merchandise. Bangladesh and Cambodia now rank after China as highest exporters of apparel to Canada, several others show continued growth in exports to the Canadian market.

Canada supports the LDCs in many ways including a large military and development presence in Afghanistan, in rebuilding Haiti, in promoting economic growth in Bangladesh and Ethiopia and so on. Further reducing or eliminating tariffs on LDC exports, particularly for small exporters to Canada is an important part of this work, but it is often a forgotten issue.

Critics of the LDC liberalizations may argue that just a few LDCs benefitted; supporters will maintain that tariff reductions usually benefit just a few countries. Both are right; more could be done to help LDC exporters in the 47 LDCs take advantage of the Canadian market, which is now wide open to them. More could be done to enable small exporters and producers benefit from the LDCT.

But in the absence of multilateral initiatives to open advanced country markets to first tier manufactures from the poorest countries, and with the failure of the Doha Round of Multilateral Trade Negotiations, the results of the LDCT liberalizations are a credible, and important contribution to development through trade.

To download the full paper, please click here.

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Fauzya Moore is an Ottawa-based consultant and writer, a graduate of Harvard’s Kennedy School, and former senior advisor on trade and development in Canada’s Department of Foreign Affairs, Trade and Development.

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A Scoping Review of Market Links Between Value Chain Actors and Small-scale Producers in Developing Regions

Griffin Ursin — Mon, 12 Oct 2020 14:11:27 +0000

Sustainable Development Goal 2 aims to end hunger, achieve food and nutrition security and promote sustainable agriculture by 2030. This requires that small-scale producers be included in, and benefit from, the rapid growth and transformation under way in food systems. Small-scale producers interact with various actors when they link with markets, including product traders, logistics firms, processors and retailers. The literature has explored primarily how large firms interact with farmers through formal contracts and resource provision arrangements. Although important, contracts constitute a very small share of smallholder market interactions. There has been little exploration of whether non-contract interactions between small farmers and both small- and large-scale value chain actors have affected small farmers’ livelihoods. This scoping review covers 202 studies on that topic. We find that non-contract interactions, de facto mostly with small and medium enterprises, benefit small-scale producers via similar mechanisms that the literature has previously credited to large firms. Small and medium enterprises, not just large enterprises, address idiosyncratic market failures and asset shortfalls of small-scale producers by providing them, through informal arrangements, with complementary services such as input provision, credit, information and logistics. Providing these services directly supports Sustainable Development Goal 2 by improving farmer welfare through technology adoption and greater productivity.

To download the full article, please click here.

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Lenis Saweda O. Liverpool-Tasie is an Associate Professor in the Department of Agricultural, Food, and Resource Economics at Michigan State University.

Ayala Wineman is a Research Associate in Evans School of Public Policy & Governance at University of Washington.

Sarah Young is a Senior Librarian at Carnegie Mellon University.

Justice Tambo is a Socio-Economist at the Centre for Agriculture and Bioscience International.

Carolina Vargas is a Master’s/PhD Student in the Department of Agricultural, Food, and Resource Economics at Michigan State University.

Thomas Reardon is a Professor and MSU Distinguished Faculty in Department of Agricultural, Food, and Resource Economics at Michigan State University.

Guigonan Serge Adjognon is an Agricultural Economist on the Development Impact Evaluation (DIME) Team at theWorld Bank.

Jaron Porciello is an Associate Director for Research Data Engagement in the Department of Global Development at Cornell University.

Nasra Gathoni is part of the faculty of Health Sciences Librarian at Aga Khan University.

Livia Bizikova is the Lead, Monitoring and Governance, Tracking Progress at International Institute for Sustainable Development.

Alessandra Galiè is a senior scientist at the Gender International Livestock Research Institute.

Ashley Celestin is a Master of Professional Studies candidate in International Agriculture and Rural Development at Cornell University.

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Does the Designation of Least Developed Country Status Promote Exports?

Johnny Morris — Sun, 11 Oct 2020 17:23:36 +0000

In this paper we examine to what extent developing countries export more as a result of having the official Least Developed Country (LDC) status. We estimate a gravity model of trade over the period 1973–2013, in which identification is achieved by exploiting the particularities and asymmetries of ‘inclusion’ and ‘graduation’ criteria of LDC status. As mechanisms through which LDCs might benefit, we evaluate the effectiveness of individual trade preference schemes for LDCs of the European Union, United States, Canada, Japan, Australia, New Zealand, Norway, and Turkey and the impact of LDC status on exports. We find that first, individual trade preference regimes are not always beneficial in terms of increased export values. Export promoting effects are found for the individual schemes of some developed countries and some sectors. Second, a country’s official designation as a LDC is associated with higher aggregated exports. This is particularly the case for LDCs that export agricultural goods and light manufacturing products, including textiles and leather after 1990. Third, the positive effect of LDC status is significant and sizable even when controlling for specific trade preference schemes suggesting that there are other benefits of LDC status that play a role in promoting exports.

Does the designation of least developed country status promote exports

To read the original article from The Journal of International Trade & Economic Development, please visit here

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