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Connecting Landlocked Developing Countries: What have we learned during the Almaty Programme of
Action period?
Jean-François ArvisInternational Trade Department
The World BankWashington June 13, 2013
How to assess the impact of the APoA 2004-2013?
Several perspectives• Macro trends: trade, growth• Changes in access costs and connectivity• Effective action on the ground to address
sources of access costs and reduced connectivity.
Trends (2000-2011)
Revenue per capita in LLDC:• From 11.5 % to 15.6 % of world average• Annual growth 3.8% in LLDC (2.1% SSA) against
3.4% in transit countries, and 1.5% world averageTrade:• LLDCs from 0.5% to 1.1% of world trade• Transit countries from 10.3% to 21.7%=> NO BETTER TRENDS THAN TRANSIT COUNTRIES
Trade trends
High income developed
High income developing
Middle income
Low income
Landlocked developing
Sub-Saharan Africa
Central Asia
South Asia
Transit
World
0 20 40 60 80 100 120
201120062000
Trade Performance
Trade growth 2000-2011 (percent per year)
Lower middle income
Low income
Landlocked developing countries:
LLDC Sub-Saharan Africa
LLDC Central Asia
LLDC South Asia
Transit
World
0 5 10 15 20 25
ExportTrade
2000 2006 20110
20
40
60
80
100
120
High income developedHigh income developingMiddle income Low incomeLandlocked developingTransit
2000 2006 20110
20
40
60
80
100
120
Landlocked developingSub-Saharan AfricaCentral AsiaSouth AsiaTransit
Trade Openness (percent)
Trade costs and logistics performance
• Trade costs measure the “wedge” between international trade and domestic consumption= ad valorem price equivalent that explain reduction of bilateral trade flows as compared with domestic markets of exporter and importer= caused by distance but also endogenous factors such as connectivity, logistics, and trade facilitation.
• National logistics performance measured by Logistics Performance Index (LPI)
Trade costs:Evidence of LLDCs disadvantage
High income - OECD
High income - non OECD
Upper middle income
Lower middle income
Low income
Landlocked developing countries
Transit coastal countries
World
0 50 100150200250300350
USA
20092000
High income - OECD
High income - non OECD
Upper middle income
Lower middle income
Low income
Landlocked developing countries
Transit coastal countries
World
0 50 100 150 200 250
Germany
20092000
High income - OECD
High income - non OECD
Upper middle income
Lower middle income
Low income
Landlocked developing countries
Transit coastal countries
World
0 50 100150200250300350
Japan
20092000
USA
Germany
Japan
0 50 100 150 200 250 300 350 400
Sub-Saharan Africa
Coastal countriesLLCs
USA
Germany
Japan
0 50 100 150 200 250 300 350
South Asia
Coastal countriesLLCs
USA
Germany
Japan
0 50 100 150 200 250 300 350 400
East Asia and Pacific
Coastal countriesLLCs
USA
Germany
Japan
0 50 100 150 200 250 300 350 400
Latin America and the Car-ibbean
Coastal countriesLLCs
No cost of landlockedness for rich landlocked countries
Austria
Belgium
Switzerland
France
Italy
0 20 40 60 80 100 120 140 160
Japan
20092000
Austria
Belgium
Switzerland
France
Italy
0 20 40 60 80 100 120 140
USA
20092000
Logistics Performance
High income - OECD
High income - non OECD
Upper middle income
Lower middle income
Low income
Landlocked developing countries
Transit coastal countries
World
2 2.2 2.4 2.6 2.8 3 3.2 3.4 3.6 3.8 4
201220102007
regional average
landlocked countries
coastal countries
1.6 1.8 2 2.2 2.4 2.6 2.8 3
East Asia and Pacific
20122007
regional average
landlocked countries
coastal countries
1.6 1.8 2 2.2 2.4 2.6 2.8 3
Latin America and the Caribbean
20122007
regional average
landlocked countries
coastal countries
1.6 1.8 2 2.2 2.4 2.6 2.8 3
Sub-Saharan Africa
20122007
regional average
landlocked countries
coastal countries
1.6 1.8 2 2.2 2.4 2.6 2.8 3
South Asia
20122007
Logistics performance by regions
Connecting LLDCs
• Complex supply chains in transit system• Inefficiencies and fragmentation => logistics costs
Logistics Costs= Cost+ Time+ Reliability
Urban myths
• Transportation costs in LLDCs can represent 30% of import value in certain countries.
• Delays to import are exceeding 100 days in several landlocked countries.
• The main sources of costs and delays are the obstacles en route or at borders or bad infrastructure.
Costs
= out of pocket expenses for freight • In the absence of market distortion (e.g. freight allocation
system), …• road freight is relatively homogenous worldwide (1 to 1.5 USD per
km)• But :
– Imbalance– Legal and illegal rents plus overheads seeking activities (up to X2)– Other inefficiencies (e.g. idle time)– Market intervention (e.g. Central Africa ) (X2)
• Transport markup of being LLDC as compared with transit no more than 5%
Time
• Much less corridor time than transoceanic time– Lead time on corridors less than 15 days average
(more in Central and Eastern Africa)– 4-6 weeks for transoceanic(breakdown in cost would be more even)
• Most delays happen in ports and in transit countries.
Reliability: Looking beyond averages
• The spread of delays of transit containers in the port of Dar Es Salam
0 10 20 30 40 50 60 70 80 90 100 110 1200
0.01
0.02
0.03
0.04
0.05
0.06
0.07
number of days
prop
ortio
n of
cont
aine
rs
Address sources of fragmentation and unreliability
18
TOTAL LOGISTICS COSTS IN COMMERCETransportation 7% InterviewCertification 2% InterviewInventory 5% 40 days in transit +2 months inventory at 0.05% per dayLosses 3% InterviewOther administrative 5% Own estimateTotal logistics costs 22%
Losses,
theft (3%)
Cost of delays, long replenishment cycles and big inventories (2-3 months vs. 2
weeks in EU and USA)
Transportation costs
Logistics Costs and their impact; e.g. Kazakhstan
Transit system
"SOFT "AND "HARD" INFRASTRUCTURE
IMPLEMENTATION ACTIVITY
IMPLEMENTATION FOCUS
TRANSIT SYSTEM: IMPLEMENTATION MECHANISMS
CustomsTRANSIT REGIME
& Facilitation
Enforcement ofTRANSPORT Policies
CORRIDOR Management
International Movement of
GOODS
International Movement of Vehicles
& SERVICES
Cross BorderCOOPERATION &
information SHARING
Physical Connectivity
rail road
border ICT
Institutions
CustomsTransport
regional secretariat
Legal Framework
bilateral treaties
regional community
global tools
Private sector
banks
truckers forwarders
business assoc
Soft and hard infrastructure and implementation mechanisms
What has improved
• Infrastructure:– All weather connection for all LLDCs– Rehabilitation and maintenance
• Delays in ports – Rarely more than 2 weeks (6 weeks 10 years ago)– But not APoA specific: measure taken for coastal countries, not transit.
• IT and trade facilitation:– Border infrastructure– IT systems (e.g. Asycuda)
• International legal instruments (no obvious gaps)• Data collection by corridor (SSTAP, CAREC, IRU…)
What has not really improved
• Customs reforms in the smaller States (mixed success)• Some success stories with border posts (but over-
emphasized).• Market structure of trucking (virtually an ignored area)• Railways (mixed)• Transit system (some attention but often wrong focus
or wrong ideas)• Corridor management institutions
Some successes
• Malaba (Kenya-Uganda): 2day -> 2 hours at border
• Eurasian Customs Union: one border and $500 less per trip
• Cotonou (Benin-Niger): cleansing trucks in ports reduces delays from weeks to days
• TIM in Central America: the only successful implementation of regional transit out of EU
Where to push
• Transit regimes, tremendous potential in regionally integrated system (one procedure one bond). Only two designs to consider:– TIR for loosely integrated areas– EU Common transit for highly integrated regions
• Trucking agreements
=> Very much to do with deeper integration in sub-regions