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With further declines in international assistance expected over the coming years, the government of Afghanistan faces a new challenge of enabling new growth drivers. One such driver is trade. Decades of civil war and military occupation that culminated in the fall of the Taliban in 2001, have devastated Afghanistan. High levels of conflict destroyed infrastructure, displaced a significant share of the population, incentivized informal and illicit economic activities, and jeopardized the delivery of public services. Trade could be an important channel for accelerating growth in Afghanistan. A plausible trade-driven growth scenario for Afghanistan should promote economic and export diversification. This report brings new evidence on the opportunities and challenges for development in the areas of trade in goods, trade in services, and transit trade. It also provides recommendations for an appropriate sequencing of policy reforms and strategic infrastructure investment to support potential growth in these sectors. The main findings of this report suggest that government intervention should focus on two complementary areas of competitiveness and connectivity.

Conflict and Development --- Economic Theory and Research --- Export Competitiveness --- Macroeconomics and Economic Growth --- Trade Policy

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This paper examines the effects of transit, documentation, and ports and customs delays on Africa's exports. The authors find that transit delays have the most economically and statically significant effect on exports. A one-day reduction in inland travel times leads to a 7 percent increase in exports. Put another way, a one-day reduction in inland travel times translates to a 1.5 percentage point decrease in all importing-country tariffs. By contrast, longer delays in the other areas have a far smaller impact on trade. The analysis controls for the possibility that greater trade leads to shorter delays in three ways. First, it examines the effect of trade times on exports of new products. Second, it evaluates the effect of delays in a transit country on the exports of landlocked countries. Third, it examines whether delays affect time-sensitive goods relatively more. The authors show that large transit delays are relatively more harmful because of high within-country variation.

Common Carriers Industry --- Congestion --- Costs --- Crossing --- Economic Theory & Research --- Freight --- Industry --- Infrastructure --- Inspection --- International Economics and Trade --- Macroeconomics and Economic Growth --- Port authorities --- Road --- Road conditions --- Roads --- Trade Policy --- Traffic --- Transit --- Transport --- Transport and Trade Logistics --- Transport Economics Policy & Planning --- Transportation --- Travel --- Travel distance --- Travel distances --- Travel time --- Travel times --- Vehicles

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Evidence suggests that Pakistan has the potential for much faster and more diversified economic growth. Energizing trade can help Pakistan to realize its growth potential. Pakistan's inward-oriented trade policies have had the effect of stalling Pakistan's integration into regional and global value chains (GVCs). Pakistan's failure to reform its trade policy to better foster export competitiveness can be attributed in part to institutional fragmentation within the government. This fragmentation has resulted in different agencies sometimes working at cross purposes. Efforts to reduce tariffs have been offset by the introduction of alternative protection instruments such as regulatory duties (RDs) and firm-specific special regulatory orders (SROs). In addition to tariffs, RDs and SROs, other obstacles to global integration include a heavy regulatory burden and perceived risks to investing and operating in the country, which have hurt efforts to attract foreign direct investment (FDI). Growth and competitiveness are also inhibited by inefficient trade facilitation policies, weak logistics services, and underdeveloped infrastructure. These constraints have made it difficult for Pakistan to fully exploit its proximity to China, a trade powerhouse, with which it has a free trade agreement. All in all, the anti-export bias of Pakistan's trade policy has made it more difficult for outward-looking firms to grow by accessing global markets. A series of actions in the areas of trade policy, trade facilitation and connectivity, and institutional coordination could potentially stimulate Pakistan's growth through increased trade and investment competitiveness. Integration with other countries in the region and neighboring regions, particularly East Asia, will allow Pakistan to diversify both its product basket and markets. Finally, full normalization of trade relations with India would allow Pakistan to benefit from India's fast growth and promote complementarities, including valuechain activities and investment potential.

Exchange Rates --- Export Competitiveness --- Rules of Origin --- Trade Facilitation --- Trade Policy

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This paper studies the relationship between trade policy and food prices. We show that, when individuals are loss averse, governments may use trade policy to shield the domestic economy from large food price shocks. This creates a complementarity between the price of food in international markets and trade policy. Specifically, unilateral actions give rise to a "multiplier effect": when a shock drives up the price of food, exporters respond by imposing restrictions while importers wind down protection, thus exacerbating the initial shock and soliciting further trade policy activism. We test the key prediction of the theory with a new dataset that comprises monthly information on trade measures across 77 countries and 33 food products for the period 2008-11, finding evidence of a multiplier effect in food trade policy. These findings contribute to inform the broader debate on the proper regulation of food trade policy within the multilateral trading system.

Exports and Imports --- Macroeconomics --- Taxation --- Trade Policy --- International Trade Organizations --- Agriculture: Aggregate Supply and Demand Analysis --- Prices --- Trade: General --- International Relations and International Political Economy: Other --- Commodity Markets --- Agriculture in International Trade --- International economics --- Public finance & taxation --- Trade policy --- Food prices --- Tariffs --- Imports --- Exports --- International trade --- Taxes --- Commercial policy --- Tariff --- United States

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Recent data show that the institutional content of preferential trade agreements has evolved over time. Although pre-1990s preferential trade agreements mostly focused on tariff liberalization, recent agreements increasingly contain deep provisions in diverse areas, such as intellectual property rights, investment, and standards. At the same time, there has been a remarkable increase in the internationalization of production through foreign direct investment and outsourcing. This paper employs the Antras and Helpman (2008) model of contractual frictions and global sourcing to study how deep trade agreements affect the international organization of production. The paper constructs new measures of the depth of preferential trade agreements and of vertical foreign direct investment to test the theory. Consistent with the model, the analysis finds evidence that the depth of trade agreements is correlated with vertical foreign direct investment, and that this is driven by the provisions that improve the contractibility of inputs provided by suppliers, such as regulatory provisions. Because this implication of the model is specific to the so-called "property rights" theory of the multinational firm, the findings provide empirical support to this approach vis-a-vis alternative theories of firm boundaries.

Contractual frictions --- Economic theory & research --- Emerging markets --- FDI --- Free trade --- International economics & trade --- Law and development --- Macroeconomics and economic growth --- Private sector development --- Trade agreements --- Trade law --- Trade policy