Trade protection and tax evasion: evidence from Kenya, Mauritius and Nigeria

Trade protection and tax evasion: evidence from Kenya, Mauritius and Nigeria

Sanitary and phytosanitary standards as bridge to cross:

This research assesses the effects of sanitary and phytosanitary (SPS) standards in international trade by introducing a new concept, bridge to cross (BTC), with product standards. The BTC in this paper is the regulatory gap between the exporting and importing countries with regard to any particular SPS measure. Assuming that each country's standard is binding in its own domestic markets, the standard of the importing country emerges as an effective trade barrier only when it exceeds the standard in the domestic market of the exporting country. Given the need to account for unobserved heterogeneity (multilateral resistance) in empirical trade models, if SPS regulations do not vary significantly over time, the effect of the regulation cannot be identified. However, the effect of BTC can still be identified because it varies by the pair of countries involved in the trade. As an application we apply the method to an SPS regulation relating to aflatoxin contamination in maize. In our empirical analysis we find that the effect of BTC varies by the size of the exporter and that the effect is stronger for poorer countries.bridge to cross, Gravity model, multilateral resistance, sanitary and phytosanitary standards,

The marginalization of Africa in world trade:

"In recent years, trade in Africa has assumed greater importance as a means of alleviating poverty, especially since the initiation of the Doha Round for development. At the same time, skepticism regarding the effectiveness of foreign aid has grown (Easterly 2006). Trade and aid have often been viewed as interchangeable, but “aid for trade” has recently gained prominence, with the result that the two factors are more often treated as complementary. Proponents of “aid for trade” argue that the capacity of developing countries to take advantage of any gains in market access through the Doha Round is hampered by a plethora of supply-side bottlenecks and costs, administrative constraints, and poor institutions. Aid for trade, thus, refers to additional aid to tackle trade-related constraints and adjustment costs in developing countries (Evenett 2005).1 Views differ as to what this package should entail, but many developing countries are in favor of building supplycapacity and trade-related infrastructure (IATP 2006)." from textTrade policy, Market access, Economic assistance, Poverty alleviation, Doha Developmental Round of the World Trade Organization (WTO), Trade reform, Protectionism, Trade barriers, exports, International trade,

Does Africa trade less than it should, and if so, why?: The role of market access and domestic factors

"This paper addresses the question of whether Africa is an undertrading continent. We answer this question using a much-improved data set for obtaining predicted trade and by employing methods that correct for bias in estimates of undertrading. Our results indicate that globally Africa is an underexporter in our preferred Heckman specification. This result is robust to the addition of various controls and the application of variants of the gravity model of trade. We also looked for explanations for Africa's undertrading. We found that accounting for transport and communication infrastructure reduced the undertrading effect for Africa, and in some specifications of the gravity model, the under-trading effect vanished altogether. Results from a semiparametric model provided evidence of significant nonlinear impacts from infrastructure, and the effects for a large number of African countries was significant and compared favorably with the marginal effects of infrastructure in countries on other continents and in comparable income brackets. Using this model we also found evidence of complementarity across transport and communication infrastructure, implying that much greater impacts will be likely if the infrastructure are developed jointly rather than in isolation." from Author's AbstractGravity model, Undertrading, Trade related infrastructure, Market access,

How safe is my food?: Assessing the effect of information and credible certification on consumer demand for food safety in developing countries

The literature regarding consumer demand for safer food in developing countries is scant, and the general assumption is that these consumers' willingness to pay (WTP, as an indicator of their demand) is constrained by their low ability to pay (ATP). There are, however, a number of developing countries with growing middle-income populations whose ATP has been steadily increasing, although low food safety standards in these countries still prevail. In this paper, we argue that ATP, while necessary, is not the sole condition for WTP and that credible information about and certification of food safety are required to ensure that ATP translates into WTP. To test this hypothesis, we conducted a randomized market experiment in two branches of a supermarket chain in Mumbai, India, a city that hosts one of the world's fastest growing middle-income populations. In this experiment, we sold grapes with credible food safety certification labels and the exact same grapes (a placebo) without such labels. We provided all consumers with extensive food safety information comprising banners and posters announcing the sale of food-safety-certified grapes in the supermarket. We also randomly selected one-half of the consumers and provided them with intensive information (a short documentation flier) describing what credible certification of food safety entails. By continuously varying the prices (with the labeled grapes priced higher than unlabeled ones) during the month in which the experiment was implemented, we found that those consumers who received intensive information (the treatment group) are more likely to purchase grapes labeled as certified. This result is robust to the inclusion of an extensive set of controls (income, gender, and education) gathered through a structured survey instrument implemented following the purchase of the grapes. To further investigate the marginal impact of credible information on consumer demand for food safety, we studied consumers' answers to various knowledge, attitude, perception, and practice (KAPP) questions also collected through the survey instrument. Using KAPP responses, we created a consumer-specific food safety consciousness index (FSCI) and stratified consumers according to those below and those above the sample mean FSCI. We find that the marginal impact of credible information and certification on the purchase of labeled grapes is significantly greater for consumers with higher FSCI. We therefore conclude that credible information and certification are important determinants of consumer demand for food safety.attitude and perceptions, certification, credible information, factor analysis, Food safety, Knowledge, randomized market experiment, willingness to pay,

Food policy liberalization in Bangladesh: how the government and the markets delivered

"Three factors, advent of new technology (HYV), development of infrastructure and market liberalization working in tandem have delivered favorable food security outcomes for Bangladesh. Bangladesh's food-policy has benefited from a liberalized trade regime and a consistent downsizing of the government, all with favorable effects on poverty and nutrition. Post liberalization, the findings suggest a perceptible increase in the cost-effectiveness of the public food grain distribution system (PFDS). The favorable effects of liberalization are also evident in growths in outputs, market size, the size of private stocks, the emergence of a two peak harvest seasonality, and finally in declining real rice prices. The government has moreover downsized the PFDS, making poverty-reduction a priority basis for grain allocation. While imports relative to total availability have remained virtually unchanged during the last 25 years, public issue relative to the availability has fallen by about a half. Average food grain consumption has fallen slightly during the 1990s but in face of rising incomes, this could partly be driven by diversifying tastes. Comparing the efficiency of the private and the public sector, the private marketing margin is slightly higher. In spite of the significant advantage(s) enjoyed by the public sector, the margin being thin is significant. In order to account for the expected global changes under the Doha round, simulations using competitive spatial-equilibrium models for the world's rice and wheat markets forecast increase in prices for rice and wheat by 21.7% and 10.1% respectively by 2013. USDA global CGE models (2001) show figures of increase in wheat prices by 18.1%, and rice prices by 10.1%. These estimates are used in a multi-market model for Bangladesh as estimates for global price shocks. Sensitivity analysis shows that over a range of values involving both an upper and a lower limit, small declines will occur in real incomes and caloric levels of both urban poor and rural landless households, while large farms will experience a small gain in their real incomes. Based on values corresponding to the lower limit, overall effects on food security are however quite small." Authors' AbstractFood policy, Liberalization, Government policy, Markets, food security,

The Africa Growth and Opportunity Act and its rules of origin : generosity undermined?

The African Growth and Opportunity Act (AGOA), signed into American law on May 18, 2000, is a major plank of U.S. initiatives toward the African continent. The Act aims broadly at improving economic policymaking in Africa, enabling countries to embrace globalization, and securing durable political and economic stability. As an incentive for Africa to adopt the necessary policy reform, AGOA offers increased preferential access for African exports to the United States. This paper describes the provisions of AGOA and assesses its quantitative impact on African exports, particularly in the apparel sector. Its main conclusions are: 1) AGOA will provide real opportunities to Africa. Even on conservative estimates about Africa's supply response, Africa's non-oil exports could be increased by about 8-11 percent. 2) However, the medium-term gains could have been much greater if AGOA had not imposed certain conditions and not excluded certain items from its coverage. The most important condition is the stringent rule-of-origin, that is, the requirement that exporters source certain inputs from within Africa or the United States. Estimates suggest that the absence of these conditions would have magnified the impact nearly five-fold, resulting in an overall increase in non-oil exports of US$0.54 billion compared with the US$100-US$140 million increase that is expected in the presence of these restrictions. These restrictions, particularly on apparel, will come at a particularly inopportune time, as Africa will be exposed to competition from other developing countries when the quotas maintained on the latters'exports under the Multi-Fiber Arrangement (MFA) are eliminated. Africa's apparel exports will be lower by over 30 percent with the dismantling of the MFA. If, on the other hand, AGOA had provided unrestricted access, the negative impact of the dismantling could be nearly fully offset.Export Competitiveness,Economic Theory&Research,Trade Policy,Environmental Economics&Policies,Agribusiness&Markets,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Economic Theory&Research,Environmental Economics&Policies,Export Competitiveness,Trade Policy

Food safety requirements in African green bean exports and their impact on small farmers:

"Many African countries have moved into the production of non-traditional agricultural products, in an effort to diversify their exports and increase foreign currency earnings. However, in order to access developed country markets and urban domestic markets, these products must meet food safety requirements, including protocols relating to pesticide residues, field and pack house operations, and traceability. Faced with stringent food safety requirements, companies that establish production centers in low-income countries might exclude poor farmers, thus negatively impacting the poor. We herein study this issue in the case of the green bean export sectors in three African countries: Ethiopia, Kenya and Zambia. In the short-term, stringent food safety standards have screened out smallholders in all these countries, excluding them from the green bean export chain. However, some institutional arrangements have helped support the smallholders who continue to function in the export-oriented green bean supply chains. In particular, public-private partnerships have played a key role in creating farm-to-fork linkages that can satisfy market demands for food safety while retaining smallholders in the supply chain. Furthermore, organized producer groups capable of monitoring their own food safety requirements through collective action have become attractive to buyers who are looking for ways to ensure traceability and reduce transaction costs." from Authors' AbstractInternational food safety standards, Small farmers, Supply chains, Agricultural trade, Public-private partnerships,

Trade liberalization and food security in Nepal

"Among South Asian countries, Nepal has liberalized most extensively during the 1980s and 1990s on both fronts, domestic and external. Nepal is a least developed country with a gross national product of US $235 per capita in 2001 and second lowest per capita wealth in the world. In South Asia, Nepal has the lowest per capita income, highest dependence of population on agriculture and second highest poverty rate. At the same time, on an average, Nepal has the lowest tariffs in South Asia and has taken several steps to downsize its public distribution system and remove a host of agricultural subsidies. This twin scenario where the lowest per capita income country is perhaps also the most liberalized makes for an interesting case for policy analysis. This paper reviews the outcomes from the liberalization policies followed by Nepal relating to food security." from Authors' Abstract

Institutional Innovations for Smallholder Compliance with International Food Safety Standards: Experiences from Kenya, Ethiopian and Zambian Green Bean Growers

Many African countries have moved into the production of non-traditional agricultural products to diversify their exports and increase foreign currency earnings. Accessing developed country markets requires meeting food safety standards brought about by several demand and supply side factors. Food retailers in the EU, the major destination market, have developed protocols relating to pesticide residue limits, field and packinghouse hygiene, and traceability. In this changing scenario where food safety requirements are getting increasingly stringent, there are worries that companies that establish production centers in LDCs might exclude smallholder farmers. In this paper, we study the cases of green beans production in Ethiopia, Kenya and Zambia for export to high value European markets. Though the immediate effect of the imposition of stringent food safety standards has been to screen away smallholders, there has been continued participation of smallholders in some cases. This paper finds that emergence of new institutional arrangements have enabled the smallholders to maintain their participation in high value European markets. In particular, public-private partnerships have played a key role in helping smallholder farmers acquire training on and certification against European food safety standards. Collective action in form of producer organizations has enabled smallholders to jointly invest in costly facilities and take advantage of economies of scale to remain competitive. Producer organizations also allow for cheaper means for buyers to ensure traceability and are critical in reducing transaction costs of linking up with smallholders.international food safety standards, compliance, smallholder farmers, institutional arrangements, collective action, producer organizations, public-private partnerships, Agricultural and Food Policy, Consumer/Household Economics, Environmental Economics and Policy, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, Labor and Human Capital, Marketing, Production Economics, Research and Development/Tech Change/Emerging Technologies,