How do differing standards increase trade costs? The case of pallets

The pallet is a platform used for storing, handling, and transporting products. There are hundreds of different pallet sizes around the world. The case of pallets is examined to illustrate the impact of multiplicity of standards on trade costs. We select this case because pallets are used all around the world, pallet standards are not too sophisticated, and data on the impact of pallet standards are to some extent available. The paper examines why there are so many different pallet sizes, the associated trade costs and the reasons why countries have not harmonized pallet sizes to eliminate such costs. It then presents options for exporters to mitigate the adverse effects of standards multiplicity while complying with destination markets'standard requirements. The range of options is limited in the case of exporters from less developed countries because of the lack of rental and exchange pallet markets. To mitigate the costs of this multiplicity of standards, the World Bank's strategy should be divided in two directions: to develop awareness of costs related to the multiplicity of standards and to support actively harmonization at the global level (within International Organization for Standardization) and at the regional level (within regional cooperation agreements).Health Economics&Finance,Common Carriers Industry,Environmental Economics&Policies,Transport and Trade Logistics,Economic Theory&Research,Health Economics&Finance,Transport and Trade Logistics,Economic Theory&Research,Common Carriers Industry,Environmental Economics&Policies

Cargo dwell time in Durban : lessons for Sub-Saharan African ports

Based on quantitative and qualitative data, this paper attempts to identify the main reasons why cargo dwell time in Durban port has dramatically reduced in the past decade to a current average of 3-4 days. A major customs reform; changes in port storage tariffs coupled with strict enforcement; massive investments in infrastructure and equipment; and changing customer behavior through contractualization between the port operator and shipping lines or between customs, importers, and brokers have all played a major role. The main lesson for Sub-Saharan Africa that can be drawn from Durban is that cargo dwell time is mainly a function of the characteristics of the private sector, but it is the onus of public sector players, such as customs and the port authority, to put pressure on the private sector to make more efficient use of the port and reduce cargo dwell time.Transport Economics Policy&Planning,Transport and Trade Logistics,Common Carriers Industry,Ports&Waterways,Airports and Air Services

The impact of regional liberalization and harmonization in road transport services : a focus on Zambia and lessons for landlocked countries

Based on a detailed empirical study, this paper argues that regional liberalization of trucking services has had an important effect on transport costs and tariffs for Zambia's economy. Zambia is a peculiar example in Southern Africa as it benefits from relatively low transport costs compared with other landlocked countries in Africa. This is mainly because of competition between Zambian and other regional, mainly South African, operators and because of South African investments in Zambia's trucking industry. As a result, the costs of operators registered in Zambia and South Africa are similar. The study also demonstrates that enhancing trucking interoperability in Southern Africa would significantly impact positively the Zambian trucking industry's competitiveness. The main measures to significantly increase trucking competitiveness in the region would more likely derive from reducing fuel costs in Zambia, improving border-post operations, and relaxing South African truck import rules.Transport Economics Policy&Planning,Rural Roads&Transport,Roads&Highways,Common Carriers Industry,Transport and Trade Logistics

The impact of roads on poverty reduction : a case study of Cameroon

Many investments in infrastructure are built on the belief that they will ineluctably lead to poverty reduction and income generation. This has entailed massive aid-financed projects in roads in developing countries. However, the lack of robust evaluations and a comprehensive theoretical framework could raise questions about current strategies in Sub-Saharan Africa. Using the second Cameroonian national household survey (Enquete Camerounaise Aupres des Menages II, 2001) and the Cameroon case study, this paper demonstrates that investing uniformly in tarred roads in Africa is likely to have a much lower impact on poverty than expected. Isolation from a tarred road is found to have no direct impact on consumption expenditures in Cameroon. The only impact is an indirect one in the access to labor activities. This paper reasserts the fact that access to roads is only one factor contributing to poverty reduction (and not necessarily the most important in many cases). Considering that increase in non-farming activities is the main driver for poverty reduction in rural Africa, the results contribute to the idea that emphasis on road investments should be given to locations where non-farming activities could be developed, which does mean that the last mile in rural areas probably should not be a road.Transport Economics Policy&Planning,Rural Poverty Reduction,Regional Economic Development,Achieving Shared Growth

Increasing public expenditure efficiency in oil-rich economies : a proposal

This paper proposes that, to increase the efficiency of public spending in oil-rich economies, some or all of the oil revenues be transferred to citizens, and fiscal instruments such as taxation be used to finance public expenditures. The authors develop the case as follows. First, they confirm the well-known result that public-expenditure efficiency is lower in oil-rich countries compared with other developing countries. Second, they show that this efficiency gap is associated with differences in accountability to citizens of government's spending decisions. They find that various measures of accountability are systematically weaker in oil-rich countries. They attribute this difference to the fact that oil revenues typically accrue directly to the government, unlike tax revenues, which pass through the hands of citizens. Third, they show that, controlling for a number of factors, accountability is stronger in countries that rely more on direct taxation to finance public spending. They conclude that accountability, and hence public expenditure efficiency, can be increased by transferring oil revenues to citizens and then taxing them to finance public spending. The paper reviews existing schemes that redistribute oil revenues to the population, such as the Alaska Citizen Fund, to assess the feasibility of a modest proposal in African countries. The authors conclude that, while it may be difficult to implement such a proposal in existing oil producers, there is scope for introducing it in some of Africa's new oil producers.Subnational Economic Development,National Governance,Public Sector Economics,Public Sector Expenditure Policy,DebtMarkets

The cost of being landlocked : logistics costs and supply chain reliability

A large proportion of the least developed countries are landlocked and their access to world markets depends on the availability of a trade corridor and transit systems. Based on empirical evidence from World Bank projects and assessments in Africa, Central Asia, and elsewhere, this paper proposes a microeconomic quantitative description of logistics costs. The paper theoretically and empirically highlights that landlocked economies are primarily affected not only by a high cost of freight services but also by the high degree of unpredictability in transportation time. The main sources of costs are not only physical constraints but widespread rent activities and severe flaws in the implementation of the transit systems, which prevent the emergence of reliable logistics services. The business and donor community should push toward implementation of comprehensive facilitation strategies, primarily at the national level, and the design of robust and resilient transport and transit regimes. A better understanding of the political economy of transit and a review of the implementation successes and failures in this area are needed.Transport Economics Policy&Planning,Transport and Trade Logistics,Common Carriers Industry,Economic Theory&Research,Rural Roads&Transport

How are Oil Revenues redistributed in an Oil Economy? The case of Kazakhstan

Kazakhstan’s economy has been driven by an oilboom since the discovery of large new oilfields coincided with the upturn of world oil prices after 1998. This paper uses national household expenditure survey data to examine whether Kazakhstan’s experience supports a curse or a blessing outcome. We assess the extent to which the benefits from the oilboom are retained in the oil-producing regions, or spread evenly across the national economy, or are concentrated in the cities where the country’s elite lives. We then analyze the data to determine the transmission mechanisms (higher wages, social transfers or informal income) from the oilboom to household expenditure.resource boom; redistribution

Revising the roads investment strategy in rural areas : an application for Uganda

Based on extensive data collection in Uganda, this paper demonstrates that the rural access index, as defined today, should not be a government objective because the benefit of such investment is minimal, whereas achieving rural accessibility at less than 2 kilometers would require massive investments that are not sustainable. Taking into account the fact that plot size is limited on average to less than 1 hectare, a farmer’s transport requirement is usually minimal and does not necessarily involve massive investments in infrastructure. This is because most farmers cannot fully load a truck or pay for this service and, even if productivity were to increase significantly, the production threshold would not be reached by most individual farmers. Therefore, in terms of public policy, maintenance of the existing rural roads rather than opening new roads should be given priority; the district feeder road allocation maintenance formula should be revised to take into account economic potential and, finally, policy makers should devote their attention to innovative marketing models from other countries where smallholder loads are consolidated through private-based consolidators.Transport Economics Policy&Planning,Rural Roads&Transport,Roads&Highways,Rural Transport,Markets and Market Access

Could a well-designed customs reforms remove the trade-off between revenue collection and trade facilitation?

This paper is based on first-hand experience from Customs reforms in Sub Saharan Africa (SSA) and presents unpublished data on the impact of Customs reforms on revenues, trade facilitation, private sector operators and frontline Customs officials behaviors in Africa. Customs agencies are usually one of the key revenue collection agencies in Africa. Customs officials usually consider trade facilitation measures as a threat for revenue collection and strive to increase control over private sector operators through systematic inspections and checkpoints in order to increase public revenues (in theory). In reality, imports undervaluation remains high as well as smuggling and transit diversion, which result in endemic corruption and increased clearance time and uncertainty. Because many issues lie in the internal weaknesses of Customs agencies, a revised approach to Customs reforms is needed to ensure, first, internal control of the organization and then gradually relax controls on operators and ensure formal trade facilitation. Without internal control and knowledge of the magnitude of the malpractices in most Customs agencies in Africa, private sector differentiation can not happen and therefore formal trade facilitation would remain inexistent, while results in terms of revenue collection will probably be below what can be achieved. --Customs,trade facilitation,Nigeria,Cameroon,public sector reform