Evaluating Aid for Trade: Beyond the World Bank - Richard Newfarmer Special Representative to UN and WTO World Bank OECD, Paris November 10, 2009
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Evaluating Aid for Trade:
Beyond the World Bank
Richard Newfarmer
Special Representative to UN and WTO
World Bank
OECD, Paris
November 10, 2009World Bank evaluations take different forms…
Quality assurance (Qag)
– Quality at entry
– Quality during implementation
Project completion reports
– Reports authored with governments
– Development outcomes and project results
Independent Evaluation Group
– Ex post project evaluation
– Program evaluations (Trade 1987-2004, but also Transport, Agriculture in Africa)
Impact evaluation (Development Impact Monitoring Evaluation)
– Africa team
– Development economics
Comprehensive analyses
– Demand and supply of aid for trade (Gamberoni and Newfarmer, 2009)
– Aid for trade facilitation (Portugal and Wilson, 2009)
– Is trade being included in country strategies or PRSPs (WB, 2009)Aid goes to the right beneficiaries (mostly)…but
Finding 1:
some countries are underserved
Aid for trade (GDP) is determined by potential demand, p.c. income, and aid
effectiveness…
ARM VUT
GEO SLB
Supply of aid for trade /GDP BIH
NIC
DMA
MNG TMP
STP
MRT LCA
BOL LAO
AZE CAF
Good news: positive
CMR KGZ BEN GUY
KHM HTI TON
CPV ZMB
correlation VNM
SENKEN
HND
LKA
BTN
COM PNGTJK
COG
MDA
LBR MOZ GNB
GRD GIN
AGO SDN
BFA
KIR YEM
LSO
GMB NPL
GHA ETH RWA
BDI PAK MLI MWI UZB
BGD TZA
DJI MDG
CIVNGA NER SLE
ZAR
Other news: many countries MDV
UGA
underserved ERI
IND
GNQ
TGO
TCD
Potential demand for aid for trade
Source: Authors calculation based on 2006 cross section regressionIssues are correct: Infrastructure, institutions and
Finding 2:
incentives influence trade
Effects of 1% change in infrastructure, institution, and incentive on exports
Infrastructure Transport and IT
Time to export
Institutions
Customs efficiency
Trade restictions
Incentives
Tariff peak
a
WTO
Control variables a
FTA
(selected)b
Distance
GDP of importer
-3 -2 -1 00 1 2 3 4 5
Change in exports %
Note: Marginal effects calculates at the average of the sample. a represents the change passing from zero to one. The rest of the variables refers to
change of 1 percentage point. bOther control variables are listed in the Annex.Finding 3: Aid can make a difference…
Increase in US$ trade associated with 1 US$ increase in aid for trade facilitation
(by type of aid, trade flows 2007)
1200
1000
800 Broad
All aid for
definition
600
trade
Narrow Soft Hard
400 definition definition definition
200
0
Source: Helble, Mann and Wilson (2009)
Note: The narrow definition includes aid for Trade Policy and Regulations; the broad definition includes aid related to Trade
Development and Economic Infrastructure, the soft definition includes aid towards education and training, administration and
management, and aid for trade policy and regulatory adherence while the hard definition includes aid towards infrastructure (such
as ports, but also industry-sectoral targeted aid programs)Finding 4: Trade is slowly becoming mainstreamed… …in Poverty Reduction Strategies… …in Bank Country Strategies Source: World Bank, 2009 Unlocking Global Opportunities : The Aid for Trade Program of the World Bank
Finding 5: Shortcomings leave room for improvement IEG report on Transport (2006) ―…past performance has been …effective, especially for intercity highway construction and rehabilitation, that the Bank’s approach to transport contributed to private sector development . ―However, transport must now focus more attention on confronting cross-cutting issues such as traffic congestion, environmental damages, safety, efficiency,‖ IEG Report on Trade (2006) : Three phases of Bank activity were quite different :1987-95; 1995 - 2001; post 2001. In the first phase particularly ―… trade support has helped reduce distortions and contributed to enhancing external competitiveness. But the Bank underestimated the importance and complexity of complementary policies, inadequately analyzed adjustment costs, and was slow to assess the role of the external environment. Maximizing gains from trade liberalization requires a cross-sectoral approach that explicitly takes welfare, distributional, and political economy factors into account. ― ―The Bank’s objectives between 2001 and 2004 to be relevant…. However, given the inherent limitations of the Bank’s role in global negotiations and the importance of country-specific policy dialogue, the evaluation finds that more attention should have been given to strengthening the analytical tools, processes, and systematic interactions between the Trade Department and operational colleagues. Moreover, the dependency on trust funds in research and capacity building potentially poses serious challenges to the Bank in determining an independent work program.
Finding 5: Shortcomings leave room for improvement IEG Report on Agriculture in Africa (2007) …the agriculture sector has been neglected both by governments and the donor community, including the World Bank. The Bank’s. … technical skills to support agricultural development adequately have declined over time. The Bank’s limited—and, until recently, declining—support for addressing the constraints on agriculture has not been strategically used to meet the diverse needs of a sector that requires coordinated intervention across a range of activities. The lending support from the Bank has been ―sprinkled‖ across various agricultural activities such as research, extension, credit, seeds, and policy reforms in rural space, but with little recognition of the potential synergy among them to effectively contribute to agricultural development. As a result, though there have been areas of comparatively greater success—research, for example— results have been limited because of weak linkage with extension and limited availability of such complementary and critical inputs as fertilizers and water. Poor governance and conflict in several countries further complicate matters. One of the strongest areas of analysis at present a work in this area has been produced to back the Bank’s efforts in lobbying for a genuinely pro-development Doha Round and for eliminating OECD agricultural subsidies. Even the Bank’s most recent trade-related analytical work has not had much influence on lending or country dialogue.
Gaps remain in the Bank’s evaluations…
• IEG report on trade says little about post- 2004 strategy (e.g.,
emphasis on trade facilitation)
• IEG report on transport says little about trade
• Few impact evaluations
• Brenton and von Uexkull (aid for specific products)
• Little attention to evaluation of all trade-related donor activities
in countries; inadequate attention to interaction with other
donors
• Virtually no analysis of effects Bank’s investments on trade
structure/diversificationWays forward: Can we learn from each other? Steering committee is potentially useful – Composition: usefully include beneficiaries – Bring China into the process -- $10 b. in Africa Working group of donors? – Comparing successes and failures at the project level? – Examining successful country experiences with multiple donors? – Examining efforts to fix a particular problem – e.g. diversification?
Ways forward: Can we learn from each other?
Cross country comparisons of selected instruments – trade facilitation
– What types of interventions in trade facilitation succeed in lowering trade costs?
– What explains the success and failure of customs projects?
– Indicators work should be related to objectives and instruments (Need for
specific, non-perception based indicators. E.g., Aid for Trade Facilitation
Partnership data focus on holding times).
Questions at country level
– Did trade programs addressing the most pressing issues that affect ability to
trade (imports and exports)?
– Were projects a success?
– Are donors working in support of a common program – donor coordination?
Questions at the international level
– How is aid allocated across countries – multilateral v. bilateral
– Why are particular countries apparently underserved?Evaluating Aid for Trade:
Beyond the World Bank
Richard Newfarmer
Special Representative to UN and WTO
World Bank
OECD, Paris
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