Global enabling trade report
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The Global Enabling Trade Report 2012, published by the World Economic Forum, explores the reduction of supply chain barriers and their implications for global trade. It includes insights from various contributors and provides profiles of 132 economies, emphasizing the importance of trade facilitation and partnerships between customs and businesses. The report aims to enhance understanding of enabling trade dynamics through data and analysis.
![1.4: Logistics Investment and Trade Growth
Figure 5: Global inter-regional merchandise trade, US dollars (billions)
894
288
462
446 705
Supply Chain and
Logistics Institute regions
n Africa
351
n Asia
n North America
n CIS
n Europe
n Middle East
n SCAC
Note: CIS = Commonwealth of Independent States; ME = Middle East; NA = North America; SCAC = South and Central America and the Caribbean.
logistics investment may be required. This is clearly not how products are sourced and shipped. A reasonable
enough to make any meaningful infrastructure investment approximation of inventory cost associated with a lane
decisions, although it is still quite complex because of is given by [(transit time) + (time spent at port calls)] ×
the multifaceted nature of trade. (inventory rate) × (product value). Inventory rates are
A key element in a trade route is the container typically capital carrying rates and vary between 10
line service. Unless container lines are able to identify and 30 percent. For example, a container of product
services that they believe will be profitable, improving valued at US$36,000 at an inventory rate of 10 percent
port infrastructure will not result in increased trade would have an inventory cost per day of about US$10.
through the port. Models are required to determine As a point of reference, a 40-foot container of sports
the impact of creating or expanding a container line’s shoes, depending on the brand, typically have a value
services (ship size, frequency, ports of call, pricing, of between US$350,000 and US$2,500,000, while a
among others) under different assumptions of trade 40-foot container of appliances typically has a value of
growth, inventory cost, and connectivity with other between US$30,000 and US$100,000. Obviously, the
logistics services. Container services typically make inventory cost per day for high-end sports shoes at
calls at each major port on the route at least weekly. US$685 per day is much more than for the appliances.
For a route that takes 35 days to complete, this means The price of transporting a 40-foot container from Asia
employing five container ships and crews. Bigger ships to the United States is typically US$3,500–US$4,000.
means more potential revenue for each cycle, but only For higher-valued containers, the inventory cost may
if there is sufficient volume to get reasonable utilization well exceed the transportation cost and will therefore
of the ships. Shippers book containers on the ships influence routing decisions.
based on the transportation price, the number of days
in transit, the number of days between port calls, and CONCLUSION
the connectivity to the points of origin in the exporting For the past 20 years, a steady evolution of software
country and the destination in the importing country. systems has aided companies in locating and sizing
Transportation price is a particularly difficult issue manufacturing and warehousing facilities. These software
for the shipping lines, particularly since trade is often systems now include excellent geographic information
imbalanced. This imbalance results in a much lower systems, road networks, transport cost estimators
price in one direction than the other (e.g., the cost of (particularly for trucking), optimization routines, and
shipping a container from Asia to the United States is scenario managers. Such systems allow systematic
typically at least twice as much the cost of shipping the generation and evaluation of supply chain network
same container from the United States to Asia). alternatives for companies under different scenarios.
Another important consideration for shippers is the Although in the 1990s there were few data to support
inventory carrying cost. This can influence where and these systems, excellent data are now available—at
54 | The Global Enabling Trade Report 2012
@ 2012 World Economic Forum](https://image.slidesharecdn.com/globalenablingtradereport-120524003727-phpapp02/85/Global-enabling-trade-report-76-320.jpg)
Global enabling trade report
- 1. Insight Report The Global Enabling Trade Report 2012 Reducing Supply Chain Barriers ROBERT Z. LAWRENCE, MARGARETA DRZENIEK HANOUZ, AND SEAN DOHERTY, EDITORS
- 3. Insight Report The Global Enabling Trade Report 2012 Reducing Supply Chain Barriers Robert Z. Lawrence Margareta Drzeniek Hanouz Sean Doherty Editors @ 2012 World Economic Forum
- 4. The Global Enabling Trade Report 2012 is published by World Economic Forum the World Economic Forum within the framework of the Geneva Global Competitiveness Network and the Supply Chain and Transportation Industry Partnership. Copyright © 2012 by the World Economic Forum The terms country and nation as used in this Report do not in all cases refer to a territorial entity that is a state Published by World Economic Forum as understood by international law and practice. The www.weforum.org terms cover well-defined, geographically self-contained economic areas that may not be states but for which All rights reserved. No part of this publication may be statistical data are maintained on a separate and reproduced, stored in a retrieval system, or transmitted, independent basis. in any form or by any means, electronic, mechanical, photocopying, or otherwise without the prior permission of the World Economic Forum. ISBN-10: 92-95044-29-0 ISBN-13: 978-92-95044-29-6 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. The full version of the Report with profiles of all 132 economies is available at www.weforum.org/getr. @ 2012 World Economic Forum
- 5. Contents Contributors v 1.5 Illicit Trade, Supply Chain Integrity, 57 and Technology by Justin Picard, Advanced Track & Trace; Partner Institutes vii and Carlos A. Alvarenga, Accenture Preface xiii 1.6 Business Perspectives on Obstacles 65 by Børge Brende and Robert Greenhill, to Trade: Evidence from New Survey Data World Economic Forum by Julia Spies, International Trade Centre Executive Summary xv 1.7 Expansion of Customs-Business 77 by Sean Doherty, Margareta Drzeniek Hanouz, Partnerships in the 21st Century and Ronald Phillip, World Economic Forum by Kunio Mikuriya, World Customs Organization 1.8 The Merchant Fleet: A Facilitator of 85 World Trade Part 1: Enabling Trade: Selected Issues 1 By Hans Oust Heiberg, DNB Bank ASA 1.1 Reducing Supply Chain Barriers: 3 The Enabling Trade Index 2012 1.9 Benefits of Trade Facilitation: 91 The Case of Costa Rica by Robert Z. Lawrence, Harvard University; by Carlos Grau Tanner, Global Express Association and Sean Doherty and Margareta Drzeniek Hanouz, World Economic Forum 1.2 The Rise of Global Supply Chains: 35 Part 2: Country/Economy Profiles 95 Implications for Global Trade How to Read the Country/Economy Profiles...................................97 by the Global Agenda Council on Index of Countries/Economies.......................................................101 the Global Trade System, World Economic Forum Country/Economy Profiles.............................................................102 1.3 The Global Value Chain, the 41 Technical Notes and Sources 367 Enterprise-Based Operating Model, and Challenges to the Sovereign-Based Economic Measurement System About the Authors 375 by Gene Huang, FedEx Corporation Acknowledgments 379 1.4 Logistics Investment and Trade 47 Growth: The Need for Better Analytics by Donald Ratliff and Amar Ramudhin, Georgia Institute of Technology The Global Enabling Trade Report 2012 | iii @ 2012 World Economic Forum
- 6. @ 2012 World Economic Forum
- 7. Contributors Professor Klaus Schwab, Executive Chairman, STRATEGIC ADVISORS World Economic Forum Jennifer Blanke, Senior Director, Lead Economist, Global Børge Brende, Managing Director, Government Relations Competitiveness Network, World Economic Forum and Constituents Engagement, World Economic Forum John Moavenzadeh, Senior Director, Head of Mobility Industries, Robert Greenhill, Chief Business Officer, World Economic Forum World Economic Forum LEAD ACADEMIC AND CO-EDITOR DATA PROVIDERS Robert Z. Lawrence, Albert L. Williams Professor of Trade The World Economic Forum is pleased to thank the following and Investment, John F. Kennedy School of Government, experts who helped identify and provide data for the Enabling Harvard University Trade Index: Jean François Arvis, Senior Transport Economist, Trade Logistics CO-EDITORS & Facilitation, International Trade Department, The World Bank Sean Doherty, Associate Director and Head of Supply Chain Jean-François Bourque, Senior Legal Advisor, Business and Transportation Industry, World Economic Forum Environment Section, Division of Business and Institutional Margareta Drzeniek Hanouz, Director, Senior Economist, Support, International Trade Centre World Economic Forum Carlos Grau Tanner, Director General, Global Express Association Jan Hoffmann, Chief, Trade Facilitation Section, Trade Logistics PROJECT MANAGER Branch, Division on Technology and Logistics, United Nations Ronald Philip, Community Manager, Supply Chain and Conference on Trade and Development Transportation Industry, World Economic Forum Mondher Mimouni, Chief, Market Analysis and Research, International Trade Centre PROJECT TEAM AT THE WORLD ECONOMIC FORUM Monica Alina Mustra, Trade Facilitation and Logistics Specialist, Global Competitiveness Network GFP Coordinator, International Trade Department, The World Bank Beñat Bilbao-Osorio, Associate Director, Economist Andrea Navares Juanco, Analyst, Economics Department, Ciara Browne, Associate Director International Air Transport Association Roberto Crotti, Junior Quantitative Economist Xavier Pichot, Market Analyst, Market Analysis and Research, Thierry Geiger, Associate Director and Economist International Trade Centre Tania Gutknecht, Senior Community Associate Alexander Riveros, Trade Law Associate Expert, Business Environment Section, Division of Business and Institutional Caroline Ko, Junior Economist Support, International Trade Centre Cecilia Serin, Team Coordinator Bismark Sitorus, Economic Affairs Officer, Trade Facilitation Mobility Industries Section, Trade Logistics Branch, Division on Technology and Logistics, United Nations Conference on Trade and Development Katerina Soulounia, Senior Team Coordinator We thank Hope Steele for her superb editing work and Neil Weinberg for his excellent graphic design and layout. * The World Economic Forum is grateful for the support of the Industry Partners who served on the Advisory Board for this Report. The Global Enabling Trade Report 2012 | v @ 2012 World Economic Forum
- 8. @ 2012 World Economic Forum
- 9. Partner Institutes The World Economic Forum’s Global Competitiveness Bangladesh Network is pleased to acknowledge and thank the Centre for Policy Dialogue (CPD) Mustafizur Rahman, Executive Director following organizations as its valued Partner Institutes, Khondaker Golam Moazzem, Senior Research Fellow without which the realization of The Global Enabling Kishore Kumer Basak, Research Associate Trade Report 2012 would not have been feasible: Belgium Albania Vlerick Leuven Gent Management School Institute for Contemporary Studies (ISB) Priscilla Boairdi, Associate, Competence Centre Artan Hoxha, President Entrepreneurship, Governance and Strategy Elira Jorgoni, Senior Expert and Project Manager Wim Moesen, Professor Endrit Kapaj, Researcher Leo Sleuwaegen, Professor, Competence Centre Entrepreneurship, Governance and Strategy Algeria Centre de Recherche en Economie Appliquée pour le Benin Développement (CREAD) CAPOD—Conception et Analyse de Politiques de Youcef Benabdallah, Assistant Professor Développement Yassine Ferfera, Director Epiphane Adjovi, Director Maria-Odile Attanasso, Deputy Coordinator Angola Fructueux Deguenonvo, Researcher MITC Investimentos Estefania Jover, Senior Adviser Bosnia and Herzegovina South Africa-Angola Chamber of Commerce (SA-ACC) MIT Center, School of Economics and Business in Sarajevo, Roger Ballard-Tremeer, Hon Chief Executive University of Sarajevo Zlatko Lagumdzija, Professor Argentina Zeljko Sain, Executive Director IAE—Universidad Austral Jasmina Selimovic, Assistant Director Cristian Alonso, Project Manager Eduardo Luis Fracchia, Professor Botswana Botswana National Productivity Centre Armenia Letsogile Batsetswe, Research Consultant and Statistician Economy and Values Research Center Parmod Chandna, Acting Executive Director Manuk Hergnyan, Chairman Phumzile Thobokwe, Manager, Information and Research Sevak Hovhannisyan, Board Member and Senior Associate Services Department Gohar Malumyan, Research Associate Brazil Australia Fundação Dom Cabral Australian Industry Group Marina Araújo, Economist and Researcher, The Carola Lehmer, Senior Research Coordinator Competitiveness and Innovation Center Heather Ridout, Chief Executive Carlos Arruda, Executive Director, International Advisory Nikki Wilson, Administrative Assistant Council and Professor, The Competitiveness and Austria Innovation Center Austrian Institute of Economic Research (WIFO) Fabiana Madsen, Economist and Researcher, The Karl Aiginger, Director Competitiveness and Innovation Center Gerhard Schwarz, Coordinator, Survey Department Movimento Brasil Competitivo (MBC) Azerbaijan Erik Camarano, Director President Azerbaijan Marketing Society Nikelma Moura, Communications Assistant Fuad Aliyev, Project Manager Tatiana Ribeiro, Project Coordinator Ashraf Hajiyev, Consultant Bulgaria Bahrain Center for Economic Development Bahrain Competitiveness Council, Bahrain Economic Anelia Damianova, Senior Expert Development Board Burkina Faso Nada Azmi, Manager, Economic Planning and Development lnstitut Supérieure des Sciences de la Population (ISSP), Mohammed bin Essa Al-Khalifa, Chief Executive University of Ouagadougou Maryam Matter, Coordinator, Economic Planning and Samuel Kabore, Economist and Head of Development Development Strategy and Population Research The Global Enabling Trade Report 2012 | vii @ 2012 World Economic Forum
- 10. Partner Institutes Burundi Cyprus University Research Centre for Economic and Social Cyprus College Research Center Development (CURDES), National University of Burundi Bambos Papageorgiou, Head of Socioeconomic and Banderembako Deo, Director Academic Research Gilbert Niyongabo, Dean, Faculty of Economics & cdbbank—The Cyprus Development Bank Management Maria Markidou-Georgiadou, Manager, International Business Cambodia Banking Economic Institute of Cambodia Czech Republic Sok Hach, President CMC Graduate School of Business Seiha Neou, Research Manager Tomas Janca, Executive Director Sokheng Sam, Researcher Denmark Cameroon Innoption EMEA ApS Comité de Compétitivité (Competitiveness Committee) Carsten Snedker, Managing Partner Lucien Sanzouango, Permanent Secretary Ecuador Canada ESPAE Graduate School of Management, Escuela Superior The Conference Board of Canada Politécnica del Litoral (ESPOL) Michael R. Bloom, Vice-President, Organizational Elizabeth Arteaga, Project Assistant Effectiveness & Learning Virginia Lasio, Director Anne Golden, President and Chief Executive Officer Sara Wong, Professor P. Derek Hughes, Senior Research Associate Egypt Chad The Egyptian Center for Economic Studies Groupe de Recherches Alternatives et de Monitoring du Projet Iman Al-Ayouty, Senior Economist Pétrole-Tchad-Cameroun (GRAMP-TC) Omneia Helmy, Deputy Director of Research and Lead Antoine Doudjidingao, Researcher Economist Gilbert Maoundonodji, Director Magda Kandil, Executive Director and Director of Research Celine Nénodji Mbaipeur, Programme Officer Estonia Chile Estonian Institute of Economic Research Universidad Adolfo Ibáñez Evelin Ahermaa, Head of Economic Research Sector Fernando Larrain Aninat, Director of the Master in Marje Josing, Director Management and Public Policy, School of Government Camila Chadwick, Project Coordinator Estonian Development Fund Leonidas Montes, Dean, School of Government Kitty Kubo, Head of Foresight Ott Pärna, Chief Executive Officer China Institute of Economic System and Management Ethiopia National Development and Reform Commission African Institute of Management, Development and Zhou Haichun, Deputy Director and Professor Governance Chen Wei, Research Fellow Tegegne Teka, General Manager Dong Ying, Professor Finland China Center for Economic Statistics Research, ETLA—The Research Institute of the Finnish Economy Tianjin University of Finance and Economics Petri Rouvinen, Research Director Lu Dong, Professor Markku Kotilainen, Research Director Hongye Xiao, Professor Pekka Ylä-Anttila, Managing Director Bojuan Zhao, Professor France Huazhang Zheng, Associate Professor HEC School of Management, Paris Colombia Bertrand Moingeon, Professor and Deputy Dean National Planning Department Bernard Ramanantsoa, Professor and Dean Alvaro Edgar Balcazar, Entrepreneurial Development Director Gambia, The Hernando José Gómez, General Director Gambia Economic and Social Development Research Institute Nelson Fabián Villareal Rincón, Advisor (GESDRI) Colombian Council of Competitiveness Makaireh A. Njie, Director Rosario Córdoba, President Georgia Côte d’Ivoire Business Initiative for Reforms in Georgia Chambre de Commerce et d’Industrie de Côte d’Ivoire Tamara Janashia, Executive Director Jean-Louis Billon, President Giga Makharadze, Founding Member of the Board of Directors Jean-Louis Giacometti, Technical Advisor to the President Mamuka Tsereteli, Founding Member of the Board of Directors Mamadou Sarr, Director General Germany Croatia IW Consult GmbH, Cologne Institute for Economic Research National Competitiveness Council Adriana Sonia Neligan, Head of Department Jadranka Gable, Project Administrator WHU—Otto Beisheim School of Management, Vallendar Kresimir Jurlin, Research Associate Ralf Fendel, Professor of Monetary Economics Mira Lenardic, Senior Advisor Michael Frenkel, Professor, Chair of Macroeconomics and International Economics viii | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 11. Partner Institutes Ghana Israel Association of Ghana Industries (AGI) Manufacturers’ Association of Israel (MAI) Patricia Djorbuah, Projects Officer Shraga Brosh, President Cletus Kosiba, Executive Director Dan Catarivas, Director Nana Owusu-Afari, President Amir Hayek, Managing Director Greece Italy SEV Hellenic Federation of Enterprises SDA Bocconi School of Management Michael Mitsopoulos, Coordinator, Research and Analysis Secchi Carlo, Full Professor of Economic Policy, Bocconi Thanasis Printsipas, Economist, Research and Analysis University Paola Dubini, Associate Professor, Bocconi University Guatemala Francesco A. Saviozzi, SDA Assistant Professor, FUNDESA Strategic and Entrepreneurial Management Department Edgar A. Heinemann, President of the Board of Directors Pablo Schneider, Economic Director Jamaica Juan Carlos Zapata, General Manager Mona School of Business (MSB), The University of the West Indies Guyana Patricia Douce, Project Administrator Institute of Development Studies, University of Guyana Evan Duggan, Executive Director and Professor Karen Pratt, Research Associate William Lawrence, Director, Professional Services Unit Clive Thomas, Director Japan Haiti Keio University in cooperation with Keizai Doyukai Keizai Private Sector Economic Forum (Japan Association of Corporate Executives) Edouard Baussan, Deputy Coordinator Yoko Ishikura, Professor,Graduate School of Media Design, Reginald Boulos, Coordinator Keio University Bernard Craan, Secretary General Kiyohiko Ito, Managing Director, Keizai Doyukai Hong Kong SAR Heizo Takenaka, Director, Global Security Research Institute, Hong Kong General Chamber of Commerce Keio University David O’Rear, Chief Economist Jordan Federation of Hong Kong Industries Ministry of Planning & International Cooperation Alexandra Poon, Director Jordan National Competitiveness Team Mukhallad Omari, Director of Policies and Studies Department The Chinese General Chamber of Commerce Aktham Al-Zubi, Senior Researcher Hungary Kawther Al-Zou’bi, Head of Competitiveness Division KOPINT-TÁRKI Economic Research Ltd. Kazakhstan Peter Vakhal, Project Manager JSC “National Analytical Centre of the Government of the Éva Palócz, Chief Executive Officer Republic of Kazakhstan” Iceland Takhir Aslyaliyev, Project Manager Innovation Center Iceland Ayana Manasova, Chairperson Karl Fridriksson, Managing Director of Human Resources and Alikhan Yerzhanov, Expert Analyst Marketing Kenya Ardis Armannsdottir, Marketing Manager Institute for Development Studies, University of Nairobi Thorsteinn I. Sigfusson, Director Mohamud Jama, Director and Associate Professor India Paul Kamau, Senior Research Fellow Confederation of Indian Industry (CII) Dorothy McCormick, Research Professor Chandrajit Banerjee, Director General Korea, Republic of Marut Sengupta, Deputy Director General College of Business School, Korea Advanced Institute of Gantakolla Srivastava, Head, Financial Services Science and Technology KAIST Indonesia Ingoo Han, Senior Associate Dean and Professor Center for Industry, SME & Business Competition Studies, Byungtae Lee, Acting Dean University of Trisakti Professor Kayla Jisoo Lee, Manager, Exchange Programme Tulus Tambunan, Professor and Director Korea Development Institute Iran, Islamic Republic of Joohee Cho, Senior Research Associate The Centre for Economic Studies and Surveys (CESS), Iran Yongsoo Lee, Head, Policy Survey Unit Chamber of Commerce, Industries and Mines Kuwait Hammed Roohani, Director Kuwait National Competitiveness Committee Ireland Adel Al-Husainan, Committee Member Competitiveness Survey Group, Department of Economics, Fahed Al-Rashed, Committee Chairman University College Cork Sayer Al-Sayer, Committee Member Eleanor Doyle, Professor, Department of Economics Kyrgyz Republic Niall O’Sullivan Economic Policy Institute “Bishkek Consensus” Bernadette Power Lola Abduhametova, Program Coordinator National Competitiveness Council Marat Tazabekov, Chairman Adrian Devitt, Manager Latvia Michelle Nic Gearailt, Assistant Economist Institute of Economics, Latvian Academy of Sciences Helma Jirgena, Director Irina Curkina, Researcher The Global Enabling Trade Report 2012 | ix @ 2012 World Economic Forum
- 12. Partner Institutes Lebanon Mexico Bader Young Entrepreneurs Program Center for Intellectual Capital and Competitiveness Antoine Abou-Samra, Managing Director Erika Ruiz Manzur, Executive Director Hiba Zunji, Assistant René Villarreal Arrambide, President and Chief Executive Officer Lesotho Jesús Zurita González, General Director Private Sector Foundation of Lesotho O.S.M. Moosa, Chaiperson Instituto Mexicano para la Competitividad (IMCO) Tiisetso Sekhonyana, Researcher Priscila Garcia, Researcher Lindiwe Sephomolo, Chief Executive Officer Manuel Molano, Deputy General Director Juan E. Pardinas, General Director Lithuania Ministry of the Economy Statistics Lithuania . . Jose Antonio Torre, Undersecretary for Competitiveness and Vilija Lapeniene, Director General Standardization Gediminas Samuolis, Head, Knowledge Economy and Special Enrique Perret Erhard, Technical Secretary for Surveys Statistics Division . Competitiveness Ona Grigiene, Deputy Head, Knowledge Economy and Narciso Suarez, Research Director, Secretary for Special Surveys Statistics Division Competitiveness Luxembourg Moldova Chamber of Commerce of the Grand Duchy of Luxembourg Academy of Economic Studies of Moldova (AESM) François-Xavier Borsi, Attaché, Economic Department Grigore Belostecinic, Rector Carlo Thelen, Chief Economist, Member of the Managing Board Centre for Economic Research (CER) Christel Chatelain, Attachée, Economic Department Corneliu Gutu, Director Macedonia, FYR Mongolia National Entrepreneurship and Competitiveness Council Open Society Forum (OSF) (NECC) Munkhsoyol Baatarjav, Manager of Economic Policy Dejan Janevski, Project Coordinator Erdenejargal Perenlei, Executive Director Zoran Stavreski, President of the Managing Board Montenegro Saso Trajkoski, Executive Director Institute for Strategic Studies and Prognoses (ISSP) Madagascar Maja Drakic, Project Manager Centre of Economic Studies, University of Antananarivo Petar Ivanovic, Chief Executive Officer Ravelomanana Mamy Raoul, Director Veselin Vukotic, President Razato Rarijaona Simon, Executive Secretary Morocco Malawi Université Hassan II, LASAARE Malawi Confederation of Chambers of Commerce and Fouzi Mourji, Professor of Economics Industry General Confederation of Moroccan Entreprise (CGEM) Hope Chavula, Public Private Dialogue Manager Mounir Ferram, Delegate Director Chancellor L. Kaferapanjira, Chief Executive Officer Mozambique Malaysia EconPolicy Research Group, Lda. Institute of Strategic and International Studies (ISIS) Peter Coughlin, Director Mahani Zainal Abidin, Chief Executive Donaldo Miguel Soares, Researcher Steven C.M. Wong, Senior Director, Economics Ema Marta Soares, Assistant Malaysia Productivity Corporation (MPC) Namibia Mohd Razali Hussain, Director General Institute for Public Policy Research (IPPR) Lee Saw Hoon, Senior Director Graham Hopwood, Executive Director Mali Nepal Groupe de Recherche en Economie Appliquée et Théorique Centre for Economic Development and Administration (CEDA) (GREAT) Ramesh Chandra Chitrakar, Professor and Country Massa Coulibaly, Coordinator Coordinator Mauritania Bharat Pokharel, Project Director and Executive Director Centre d’Information Mauritanien pour le Développement Mahendra Raj Joshi, Member Economique et Technique (CIMDET/CCIAM) Netherlands Khira Mint Cheikhnani, Director INSCOPE: Research for Innovation, Erasmus University Lô Abdoul, Consultant and Analyst Rotterdam Habib Sy, Analyst Frans A. J. Van den Bosch, Professor Mauritius Henk W. Volberda, Director and Professor Joint Economic Council of Mauritius New Zealand Raj Makoond, Director Business New Zealand Board of Investment Phil O’Reilly, Chief Executive Kevin Bessondyal, Assistant Director, Planning and Policy The New Zealand Institute Dev Chamroo, Director, Planning and Policy Catherine Harland, Project Leader Raju Jaddoo, Managing Director Rick Boven, Director x | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 13. Partner Institutes Nigeria Russian Federation Nigerian Economic Summit Group (NESG) Bauman Innovation & Eurasia Competitiveness Institute Frank Nweke Jr., Director General Katerina Marandi, Programme Manager Chris Okpoko, Associate Director, Research Alexey Prazdnichnykh, Principal and Managing Director Foluso Phillips, Chairman Stockholm School of Economics, Russia Norway Igor Dukeov, Area Principal BI Norwegian School of Management Carl F. Fey, Associate Dean of Research Eskil Goldeng, Researcher Rwanda Torger Reve, Professor Private Sector Federation Oman Roger Munyampenda, Chief Executive Officer The International Research Foundation Vincent S. Safari, Director, Trade and Policy Advocacy Salem Ben Nasser Al-Ismaily, Chairman Saudi Arabia Public Authority for Investment Promotion and Export National Competitiveness Center (NCC) Development (PAIPED) Awwad Al-Awwad, President Mehdi Ali Juma, Expert for Economic Research Khaldon Mahasen, Vice President Pakistan Senegal Competitiveness Support Fund Centre de Recherches Economiques Appliquées (CREA), Maryam Jawaid, Communication Specialist University of Dakar Imran Khan, Economist Diop Ibrahima Thione, Director Shahab Khawaja, Chief Executive Officer Serbia Paraguay Foundation for the Advancement of Economics (FREN) Centro de Análisis y Difusión de Economia Paraguaya Mihail Arandarenko, Chairman of the Board of Directors (CADEP) Katarina Bojie, Project Coordinator Dionisio Borda, Research Member Bojan Ristic, Researcher Fernando Masi, Director Singapore María Belén Servín, Research Member Economic Development Board Peru Angeline Poh, Director Planning Centro de Desarrollo Industrial (CDI), Sociedad Nacional Cheng Wai San, Head, Research & Statistics Unit de Industrias Slovak Republic Néstor Asto, Project Director Business Alliance of Slovakia (PAS) Luis Tenorio, Executive Director Robert Kicina, Executive Director Philippines Slovenia Makati Business Club (MBC) Institute for Economic Research Marc P. Opulencia, Deputy Director Sonja Uršic, Senior Researcher Michael B. Mundo, Chief Economist Peter Stanovnik, Professor Peter Angelo V. Perfecto, Executive Director University of Ljubljana, Faculty of Economics In cooperation with the Management Association of Mateja Drnovšek, Professor the Philippines (MAP) Aleš Vahcic, Professor Arnold P. Salvador, Executive Director South Africa Poland Business Leadership South Africa Economic Institute, National Bank of Poland Friede Dowie, Director Jarosław T. Jakubik, Deputy Director Michael Spicer, Chief Executive Officer Piotr Boguszewski, Advisor Business Unity South Africa Portugal Coenraad Bezuidenhout, Executive Director for Economic PROFORUM, Associação para o Desenvolvimento da Policy Engenharia Jerry Vilakazi, Chief Executive Officer Ilídio António de Ayala Serôdio, Vice President of the Board of Directors Spain IESE Business School, International Center for Fórum de Administradores de Empresas (FAE) Competitiveness Paulo Bandeira, General Director María Luisa Blázquez, Research Associate Pedro do Carmo Costa, Member of the Board of Directors Enrique de Diego, Research Assistant Esmeralda Dourado, President of the Board of Directors Antoni Subirà, Professor Qatar Sri Lanka Qatari Businessmen Association (QBA) Institute of Policy Studies Issa Abdul Salam Abu Issa, Secretary-General Ayodya Galappattige, Research Officer Sarah Abdallah, Deputy General Manager Saman Kelegama, Executive Director Romania Dilani Hirimuthugodage, Research Officer Group of Applied Economics (GEA) Sweden Liviu Voinea, Executive Director International University of Entrepreneurship and Technology Irina Zgreaban, Program Coordinator Niclas Adler, President The Global Enabling Trade Report 2012 | xi @ 2012 World Economic Forum
- 14. Partner Institutes Switzerland United Arab Emirates University of St. Gallen, Executive School of Management, Abu Dhabi Department of Economic Development Technology and Law (ES-HSG) H.E. Mohammed Omar Abdulla, Undersecretary Beat Bechtold, Communications Manager Dubai Economic Council Rubén Rodriguez Startz, Head of Project H.E. Hani Al Hamly, Secretary General Syria Emirates Competitiveness Council Planning and International Cooperation Commission (PICC) H.E. Abdulla Nasser Lootah, Secretary General Amer Housni Loutfi, Head Institute for Social and Economic Research (ISER), Syrian Enterprise and Business Centre (SEBC) Zayed University Noha Chuck, Chief Executive Officer Mouawiya Alawad, Director National Competitiveness Observatory (NCO) United Kingdom Rami Zaatari, Team Leader LSE Enterprise Ltd, London School of Economics and Taiwan, China Political Science Council for Economic Planning and Development, Executive Adam Austerfield, Director of Projects Yuan Niccolo Durazzi, Project Officer Liu, Y. Christina, Minister Robyn Klingler Vidra, Researcher Hung, J. B., Director, Economic Research Department Uruguay Shieh, Chung Chung, Researcher, Economic Research Universidad ORT Department Isidoro Hodara, Professor Tajikistan Venezuela The Center for Sociological Research “Zerkalo” CONAPRI—Venezuelan Council for Investment Promotion Qahramon Baqoev, Director Eduardo Porcarelli, Executive Director Gulnora Beknazarova, Researcher Litsay Guerrero, Economic Affairs and Investor Services Manager Alikul Isoev, Sociologist and Economist Vietnam Tanzania Central Institute for Economic Management (CIEM) Research on Poverty Alleviation (REPOA) Dinh Van An, President Joseph Semboja, Professor and Executive Director Phan Thanh Ha, Deputy Director, Department of Lucas Katera, Director, Commissioned Research Macroeconomic Management Cornel Jahari, Researcher, Commissioned Research Pham Hoang Ha, Senior Researcher, Department of Department Macroeconomic Management Thailand Institute for Development Studies in HCMC (HIDS) Sasin Graduate Institute of Business Administration, Nguyen Trong Hoa, Professor and President Chulalongkorn University Du Phuoc Tan, Head of Department Pongsak Hoontrakul, Senior Research Fellow Trieu Thanh Son, Researcher Toemsakdi Krishnamra, Director of Sasin Piyachart Phiromswad, Faculty of Economics Yemen Yemeni Businessmen Club YBC Thailand Development Research Institute (TDRI) Ahmed Abu Bakr Bazara, Chairman Somchai Jitsuchon, Research Director Ali Saeed Mahmoud Al-Azaki, Executive Director Chalongphob Sussangkarn, Distinguished Fellow Margret Arning, Consultant Yos Vajragupta, Senior Researcher Zambia Tunisia Institute of Economic and Social Research (INESOR), Institut Arabe des Chefs d’Entreprises University of Zambia Majdi Hassen, Executive Counsellor Patricia Funjika, Research Fellow Chekib Nouira, President Jolly Kamwanga, Senior Research Fellow and Project Turkey Coordinator TUSIAD Sabanci University Competitiveness Forum Mubiana Macwan’gi, Director and Professor Izak Atiyas, Director Zimbabwe Selcuk Karaata, Vice Director Graduate School of Management, University of Zimbabwe Uganda A. M. Hawkins, Professor Kabano Research and Development Centre Bolivia, Costa Rica, Dominican Republic, Ecuador, Robert Apunyo, Program Manager El Salvador, Honduras, Nicaragua, Panama Delius Asiimwe, Executive Director INCAE Business School, Latin American Center for Catherine Ssekimpi, Research Associate Competitiveness and Sustainable Development (CLACDS) Ukraine Arturo Condo, Rector CASE Ukraine, Center for Social and Economic Research Lawrence Pratt, Director, CLACDS Dmytro Boyarchuk, Executive Director Marlene de Estrella, Director of External Relations Vladimir Dubrovskiy, Leading Economist Víctor Umaña, Researcher and Project Manager, CLACDS Latvia, Lithuania Stockholm School of Economics in Riga Karlis Kreslins, Executive MBA Programme Director Anders Paalzow, Rector xii | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 15. Preface BØRGE BRENDE Managing Director, Government Relations and Constituents Engagement, World Economic Forum ROBERT GREENHILL Chief Business Officer, World Economic Forum The Global Enabling Trade Report 2012 reflects a world all 132 economies covered this year. The profiles provide in which trade has rebounded from its 2009 slump. It is a an overview of the results on all indicators included in the world where trade is no longer dominated by developed Enabling Trade Index. economies but is now more concentrated in and among The Global Enabling Trade Report would not have emerging economies. This shift highlights the virtuous been possible without the distinguished academics role trade can play in economic growth and poverty and practitioners who have shared with us their reduction. With progress stalled in multilateral trade knowledge and experience. We thank our Data negotiations, the Report’s practical focus on tackling Partners—the Global Express Association (GEA), barriers is increasingly important. the International Air Transport Association (IATA), the Many of this year’s contributions reflect a growing International Trade Centre (ITC), the United Nations recognition that trade facilitation is most effective Conference on Trade and Development (UNCTAD), The when it is designed to support global value chains. World Bank, the World Customs Organization (WCO), Countries, like companies, increasingly specialize in and the World Trade Organization (WTO)—for making tasks rather than products, adding value to intermediate trade-related data available. products that cross many borders. Consequently, when We also wish to thank the authors of the chapter countries enable trade, the benefits are not just local or contributions for their cutting-edge insight: the members bilateral but global. But global disaggregation of value of the Global Agenda Council on the Global Trading chains through trade has brought challenges as well System, Gene Huang of FedEx Corporation, Donald as opportunities. Cognizant of the need to safeguard Ratliff and Amar Ramudhin of the Georgia Institute advances made, the Report considers the issue of of Technology, Justin Picard of Advanced Track & supply chain integrity and the steps both countries and Trace, Carlos A. Alvarenga of Accenture, Julia Spies companies can take to ensure that quality, security, of the International Trade Centre, Kunio Mikuriya of the and trade are mutually reinforcing rather than opposing. World Customs Organization, Hans Oust Heiberg of Several contributions also touch on the need to DNB Bank ASA, and Carlos Grau Tanner of the Global transform our perspectives on trade by updating the way Express Association. We are grateful to the Industry we measure it. Because trade and investment go hand Partners supporting this Report: Agility, Brightstar Corp., in hand, the Report has, since its inception, dealt with Deutsche Post DHL, DNB Bank ASA, FedEx Corp., AP enabling factors beyond national borders. Möller-Maersk, the Panama Canal Authority, Stena AB, Fundamentally, the Report’s assessment of factors Swiss International Airlines, Transnet, UPS, Volkswagen, that enable trade provides a reminder of the attributes and AB Volvo. that govern a nation’s ability to benefit from trade. These We wish to acknowledge the contributors to this attributes are captured in the Enabling Trade Index, volume, Robert Z. Lawrence of Harvard University and which stands at the core of the Report and includes four Sean Doherty and Margareta Drzeniek Hanouz, as well broad categories: market access, border administration, as Roberto Crotti, Caroline Ko, and Ronald Philip, of the infrastructure, and the business environment. World Economic Forum for their commitment. We would The Global Enabling Trade Report arises from and like to express our gratitude to Jennifer Blanke and John is supported by the World Economic Forum’s Supply Moavenzadeh for their guidance. Appreciation goes also Chain and Transportation Industry Partnership program. to other team members of the Global Competitiveness Since its introduction in 2008, the Report has become Network and the Supply Chain and Transportation a widely used reference, forming part of the toolbox Industry teams: Beñat Bilbao Osorio, Ciara Browne, of many countries in their efforts to increase trade and Thierry Geiger, Tania Gutknecht, Cecilia Serin, and helping companies with their investment decisions. The Katerina Soulounia. Report is the basis for high-level public-private dialogues, Finally, this Report would have not been possible facilitated by the World Economic Forum around the without the hard work and enthusiasm of our network world, that focus on practical steps that can be taken by of over 150 Partner Institutes worldwide, who carry out both governments and the private sector to overcome the Executive Opinion Survey, which is at the basis of trade barriers in a particular country or region. this work. The complete Report can be downloaded at www.weforum.org/getr. It contains detailed profiles for The Global Enabling Trade Report 2012 | xiii @ 2012 World Economic Forum
- 16. @ 2012 World Economic Forum
- 17. Executive Summary SEAN DOHERTY MARGARETA DRZENIEK HANOUZ RONALD PHILIP World Economic Forum The international trade agenda has seen many shifts over areas that are captured in subindexes A, B, C, and D and the last several years. After the 2008 slump in global nine pillars that are attributed to the subindexes as follows: trade, international trade rebounded with and among A. The market access subindex measures the extent emerging markets faster than in other economies, to which the policy framework of the country confirming the move in economic activity away from the welcomes foreign goods into the country and developed world. At the same time, events such as the enables access to foreign markets for its exporters. Japanese tsunami in 2011 highlighted the continued It includes the following pillar: international fragmentation of supply chains. Increasingly, goods are produced across a number of countries Pillar 1: Domestic and foreign market access within the same company or groups of companies, B. The border administration subindex assesses the and countries specialize in tasks rather than products. extent to which the administration at the border With the Doha Development Agenda at an impasse, facilitates the entry and exit of goods through the these developments raise the importance of practical following pillars: measures that countries can take to enable trade and Pillar 2: Efficiency of customs administration better participate in the global division of labor, with the Pillar 3: Efficiency of import-export procedures ultimate aim of supporting economic growth. Pillar 4: Transparency of border administration Since its introduction in 2008, The Enabling Trade Report has become a widely used reference, forming C. The transport and communications infrastructure part of the toolbox of many countries in their efforts subindex takes into account whether the country to increase trade and helping companies with their has in place the transport and communications investment decisions. The Report is the basis for many infrastructure necessary to facilitate the movement high-level public-private dialogues facilitated around the of goods within the country and across the border world each year by the World Economic Forum. These through the following pillars: dialogues focus on practical steps that can be taken by Pillar 5: Availability and quality of transport both governments and the private sector to overcome infrastructure particular trade barriers in a country or region. Pillar 6: Availability and quality of transport services The Enabling Trade Index (ETI) was developed Pillar 7: Availability and use of ICTs within the context of the World Economic Forum’s Supply Chain and Transportation Industry Partnership D. The business environment subindex looks at the program and was first published in The Global Enabling quality of governance as well as at the overarching Trade Report 2008. A number of Data Partners regulatory and security environment impacting the are collaborating in this effort: the Global Express business of importers and exporters active in the Association (GEA), the International Air Transport country through the following pillars: Association (IATA), the International Trade Centre Pillar 8: Regulatory environment (ITC), the United Nations Conference on Trade and Pillar 9: Physical security Development (UNCTAD), the World Bank, the World Customs Organization (WCO), and the World Trade Each of these pillars is made up of a number of Organization (WTO). We have also received significant individual variables. The dataset includes both hard input from companies that are part of the Supply data and survey data from the World Economic Forum’s Chain and Transportation Industry Partnership, namely Executive Opinion Survey (the Survey). The hard data A.P. Möller Maersk, Agility, Brightstar, Deutsche Post were obtained from publicly available sources and DHL, DNB Nor, FedEx, the Panama Canal Authority, international organizations active in the area of trade Stena, Swiss International Air Lines, Transnet, UPS, (for example, IATA, the ITC, ITU, UNCTAD, the UN, and Volkswagen, and AB Volvo. the World Bank). The Survey is carried out annually by The ETI measures the extent to which individual the World Economic Forum in all economies covered economies have developed institutions, policies, and by our research. It captures the views of top business services facilitating the free flow of goods over borders and executives on the business environment and provides to destination. The structure of the Index reflects the main unique data on many qualitative aspects of the broader enablers of trade, breaking them into four overall issue The Global Enabling Trade Report 2012 | xv @ 2012 World Economic Forum
- 18. Executive Summary business environment, including a number of specific spreading across the entire ETI sample. As highlighted issues related to trade. in past editions of the Report, the region’s outstanding domestic and foreign market access continuous to THE ENABLING TRADE INDEX 2012 RANKINGS be the main strength of many countries. However, the The rankings from the ETI are shown in Table 1, which overall business environment remains as an area for compares the 2012 rankings with those from the 2010 improvement, particularly in terms of corruption and edition. the lack of physical security, which impose high costs As in previous years, the top 10 of the ETI 2012 on exporting and importing enterprises. As in previous continues to be dominated by relatively small, open years, Chile is an exception in the region, leading the economies for which trade is key to achieving efficiency regional rankings at 14th place. Costa Rica, another because their domestic markets are small. Singapore small, open economy, comes in at a good 43rd position. continues to lead the way by a large, and widening, The larger economies from the region perform less well, margin over second-ranked Hong Kong SAR. Both with Mexico occupying 65th place and Brazil 84th. economies deliver a strong performance across all The Middle East and North African region maintains the components of the Index with open trade policies, a high degree of diversity in terms of enabling trade, excellent infrastructure, well-functioning border with the United Arab Emirates entering the top 20 while administration, and a business environment that is Algeria remains at the bottom of the rankings, at 120th. conducive to trade and investment. As in the previous In many Gulf countries, such as Saudi Arabia at 27th, edition, two Nordic economies—Denmark and Sweden— the environment is favorable to trade because trade occupy the 3rd and 4th position, respectively, based policies are open, border administration is efficient, on their strong business environments, efficient border and infrastructure is well developed. North African administrations, and highly developed infrastructures. economies, led by Tunisia at 44th, face a different Further down in the top 10 we observe some movement set of challenges, with trade policies and business as New Zealand continues its upward trend, gaining environments that are less conducive to trade and a one position to reach 5th place, while Finland and the need to upgrade infrastructure. Netherlands improve to occupy the 6th and 7th position, Sub-Saharan African countries enable trade to respectively. Switzerland, Canada, and Luxembourg different degrees, and the trade liberalization efforts of round up the top 10 rankings in this year’s ETI. recent decades have not been sufficient to significantly Asia and the Pacific is host to some of the fastest- improve the trade performance of the region as a whole. growing and largest economies worldwide. Many of the Many African countries have liberalized trade and now countries in the region have greatly benefited from trade enjoy important preferences in target markets, but and made it a central part of their growth strategy. The major improvements in trade facilitation have not yet ETI shows a wide gap between frontrunners Singapore, been achieved. As a result, it is still considerably more Hong Kong, and New Zealand and the rest of the expensive to trade with Africa than with other regions, region. Many agree that Asia has yet to fully leverage the and, in many cases, the cost of trading is a more opportunities offered by trade; this situation is reflected important obstacle to trade development than trade in the results of the ETI. Except for those in the top 10 policies. The exception to the rule is Mauritius, at 36th and Australia (17th), countries stay outside the top 20, place, which benefits from one of the most open trade with China at 56th position and India at a low 100th. policies globally. South Africa occupies the 63rd position, The key challenge for both these countries is to liberalize which reflects its well-developed infrastructure and restrictive trade policies. Thailand (57th), Indonesia efficient logistics services. (58th), and the Philippines have benefitted from trade This year the Report introduces for each country a liberalization within the Association of Southeast Asian set of direct measurements of the factors seen as the Nations (ASEAN) and improved in the rankings this year. most problematic for exporting and importing, based on A number countries within the European Union (EU) a survey of business executives. These results, which are rank within the top 20 of the ETI rankings, reflecting reported in the Country/Economy Profiles in Part 2 of this their well-developed infrastructures, widely available Report, show that, globally, tariff and non-tariff barriers, transport services, and efficient border administrations. along with burdensome customs administration, remain However, their trade performance is constrained by the the most important obstacles for importing. Exporting is overly restrictive common trade policy of the European hindered primarily by the difficulty of identifying markets Union. The United States ranks 23rd this year, continuing and buyers and by insufficient access to trade finance. its downward trend—the result of a deteriorating infrastructure and a less conducive regulatory EXPLORING ISSUES OF ENABLING TRADE environment. The Russian Federation, at 112th place, In addition to the Index rankings and the related ranks below other large emerging markets such as analysis, the Report contains a number of chapter Brazil, India, and China. The country would benefit from contributions that focus on issues relevant to the a freer trade policy, more efficient border administration, current trading environment. The chapters range from and a less burdensome regulatory environment. discussions of how the globalization of value chains The average performance of the countries in Latin impacts measurement of trade and overall trade policies America and the Caribbean places most of them in the to considerations of logistics investments, customs middle of the ETI rankings, with individual countries xvi | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 19. Executive Summary Table 1: The Enabling Trade Index 2012 rankings and 2010 comparison ETI 2012 ETI 2010 ETI 2012 ETI 2010 Country/Economy Rank Score Rank* Country/Economy Rank Score Rank* Singapore 1 6.14 1 Greece 67 4.07 55 Hong Kong SAR 2 5.67 2 Vietnam 68 4.02 71 Denmark 3 5.41 3 Romania 69 4.02 54 Sweden 4 5.39 4 El Salvador 70 3.99 57 New Zealand 5 5.34 6 Serbia 71 3.97 67 Finland 6 5.34 12 Philippines 72 3.96 92 Netherlands 7 5.32 10 Sri Lanka 73 3.95 99 Switzerland 8 5.29 5 Bulgaria 74 3.93 78 Canada 9 5.22 8 Namibia 75 3.92 70 Luxembourg 10 5.20 9 Moldova 76 3.92 n/a United Kingdom 11 5.18 17 Guatemala 77 3.90 69 Norway 12 5.17 7 Honduras 78 3.89 66 Germany 13 5.13 13 Jamaica 79 3.89 74 Chile 14 5.12 18 Bosnia and Herzegovina 80 3.87 80 Austria 15 5.12 14 Azerbaijan 81 3.85 77 Iceland 16 5.08 11 Nicaragua 82 3.83 79 Australia 17 5.08 15 Ecuador 83 3.83 89 Japan 18 5.08 25 Brazil 84 3.79 87 United Arab Emirates 19 5.07 16 Malawi 85 3.79 83 France 20 5.03 20 Ukraine 86 3.79 81 Belgium 21 4.96 24 Dominican Republic 87 3.78 73 Ireland 22 4.96 21 Zambia 88 3.78 85 United States 23 4.90 19 Colombia 89 3.78 91 Malaysia 24 4.90 30 Egypt 90 3.78 76 Oman 25 4.86 29 Gambia, The 91 3.74 82 Estonia 26 4.85 23 Senegal 92 3.72 90 Saudi Arabia 27 4.84 40 Lebanon 93 3.71 n/a Israel 28 4.82 26 Tanzania 94 3.69 97 Taiwan, China 29 4.81 28 Bolivia 95 3.68 98 Bahrain 30 4.80 22 Argentina 96 3.68 95 Spain 31 4.79 32 Mozambique 97 3.65 93 Qatar 32 4.74 34 Uganda 98 3.64 94 Slovenia 33 4.65 35 Ghana 99 3.59 96 Korea, Rep. 34 4.65 27 India 100 3.55 84 Portugal 35 4.63 36 Paraguay 101 3.53 103 Mauritius 36 4.62 33 Cambodia 102 3.52 102 Cyprus 37 4.61 31 Kenya 103 3.52 105 Georgia 38 4.58 37 Guyana 104 3.52 109 Montenegro 39 4.46 43 Kazakhstan 105 3.50 88 Uruguay 40 4.44 50 Ethiopia 106 3.49 107 Czech Republic 41 4.42 42 Madagascar 107 3.48 86 Jordan 42 4.42 39 Syria 108 3.47 104 Costa Rica 43 4.41 44 Bangladesh 109 3.46 113 Tunisia 44 4.39 38 Tajikistan 110 3.45 108 Lithuania 45 4.39 41 Kyrgyz Republic 111 3.45 100 Croatia 46 4.39 45 Russian Federation 112 3.41 114 Hungary 47 4.39 49 Lesotho 113 3.41 101 Poland 48 4.37 58 Mongolia 114 3.40 116 Albania 49 4.36 59 Benin 115 3.39 106 Italy 50 4.36 51 Pakistan 116 3.39 112 Rwanda 51 4.35 n/a Iran, Islamic Rep. 117 3.31 n/a Latvia 52 4.31 46 Cameroon 118 3.28 115 Peru 53 4.31 63 Yemen 119 3.25 n/a Botswana 54 4.31 53 Algeria 120 3.22 119 Slovak Republic 55 4.29 47 Mali 121 3.18 111 China 56 4.22 48 Burkina Faso 122 3.15 110 Thailand 57 4.21 60 Nigeria 123 3.13 120 Indonesia 58 4.19 68 Nepal 124 3.07 118 Armenia 59 4.19 52 Mauritania 125 3.06 117 Panama 60 4.16 61 Côte d’Ivoire 126 3.02 123 Macedonia, FYR 61 4.13 56 Angola 127 3.01 n/a Turkey 62 4.13 62 Haiti 128 2.97 n/a South Africa 63 4.10 72 Zimbabwe 129 2.96 122 Morocco 64 4.08 75 Venezuela 130 2.95 121 Mexico 65 4.08 64 Burundi 131 2.95 125 Kuwait 66 4.07 65 Chad 132 2.63 124 *The 2010 rank is out of 125 countries. Seven new countries were added to the 2012 Index: Angola, Haiti, Iran, Lebanon, Moldova, Rwanda, and Yemen. The Global Enabling Trade Report 2012 | xvii @ 2012 World Economic Forum
- 20. Executive Summary administration, the state of the merchant fleet, and a for the measurement of value-added in trade statistics country case study of Costa Rica. along with more direct measurement of cross-border Chapter 1.2, “The Rise of Global Supply Chains: linkages, knowledge infusion, and intangibles trade to Implications for Global Trade,” summarizes recent work better illustrate where nations have real advantages and by the Global Agenda Council (GAC) on the Global challenges. Trade System, a group of experts formed by the World In Chapter 1.4, “Logistics Investment and Trade Economic Forum. The GAC analyzes the consequences Growth: The Need for Better Analytics,” Donald Ratliff of the rise of global value chains that will require new and Amar Ramudhin from the Supply Chain and approaches, such as adjustments to ways that trade Logistics Institute at the Georgia Institute of Technology flows are measured and changes in global trade rules make the case for a new generation of trade data. and in the economic and trade policies of developing Traditional data collections were designed to support countries. The authors note that governments clearly customs functions and are no longer appropriate in a need to recognize that exports are only part of the world of global supply chains. Trade-supporting logistics development story. It is important for policymakers investment decisions are made by public entities, by to develop better measures of trade flows net of private enterprises for public use in the sense that these intermediate imports, and more generally to develop a decisions support services offered on the market, and better appreciation of how the national economy fits into for specific enterprises. In all cases, decision making global production chains. According to GAC members, could be dramatically improved through the availability of a failure to do so could lead to inaccurate policy better data. Excellent data exist in proprietary systems: conclusions about the importance of bilateral trade geographic information systems, origin and destination imbalances, to significant underestimates of the cost of databases for goods, logistical properties, service protection, and to a failure to appreciate the importance schedules, and so forth. Given the billions of dollars of bilateral or regional trading relationships. Furthermore, of public and private investment and return at stake, the existence of large and growing trade in intermediates, an effort to develop new systems for data exchange which is associated with foreign direct investment (FDI) and analysis would be worthwhile. The authors review and the globalization of production, greatly raises the trends in trade flows revealed by currently available stakes for countries to have open and predictable trade data and their influence on investment decisions. Their and investment regimes, including efficient logistics. The work highlights in particular the growth of intra-Asia authors conclude that the rise of value chains will require and Asia-Europe trade and the implications of that the WTO to focus more strongly on pursuing plurilateral growth for investment. However, they caution against negotiations. At the same time, preferential trading relying too heavily on trend data by illustrating the effect agreements will need to adjust negotiation approaches of the 2009 downturn on trade, and conclude that toward a reduction in transaction costs, rather than modeling scenarios with better data would improve risk erecting new barriers to trade. management in investment for trade. In Chapter 1.3, “The Global Value Chain, the In Chapter 1.5, “Illicit Trade, Supply Chain Integrity, Enterprise-Based Operating Model, and Challenges to and Technology,” Justin Picard of Advanced Track the Sovereign-Based Economic Measurement System,” & Trace and Carlos A. Alvarenga of Accenture point Gene Huang of FedEx Corporation argues that there out that one of the principal concerns of supply chain is a mismatch between sovereign-based economic managers is, increasingly, supply chain integrity. For activity measurement systems and globalized operating decades the complexity and opacity of global supply models. A new method of measurement is needed to chains meant that undesirable activities could often facilitate access to opportunity, to highlight areas of be hidden or ignored. A convergence of security, risk, and to avoid unintended policy consequences. The consumer activism, and corporate interests, together author notes that we tend to underestimate the level of with new technologies, is leading to greater traceability global integration, highlighting the fact that 60 percent and transparency. Retailers, logistics companies, of global trade is in intermediate goods and intra-firm and suppliers are all held increasingly accountable trade makes up 30 percent of world trade. Distribution for unethical practices and illegal goods in the supply systems are built around global value flows directed chain. Incentives to infiltrate and defend supply chains at the customer, so national income accounting can are ever-present. Increasingly commoditized production be only imprecise. However, accounting must follow means that high margins are captured through innovation. We currently face various difficulties: trade innovation, brand, and ethical business practices. credits are created where profits are registered, which is Security concerns increasingly focus on securing the often different than where the trade is taking place; the entire chain, as evidenced by the US National Strategy impact of time is under-measured; non-equity models for Global Supply Chain Security, which aims to enhance of foreign investment through contract manufacturing, “the integrity of goods as they move through the global outsourcing, and licensing are not recorded in FDI supply chain.” Beyond regulatory compliance, the investments; massive transfers of intangible assets and private sector has an interest in demonstrating oversight knowledge are occurring without appropriate records; of supply chains to prevent overreaction by security and measures of gross goods flow distort the picture agencies to cases of illicit trade. Product tracking and of bilateral relationships. To conclude, the author calls authentication technologies need to progress faster xviii | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 21. Executive Summary than fraudsters and counterfeiters can catch up. There voluntary compliance can help improve trade security are numerous new products on the market that work and customs enforcement in particular. Public-private with mobile technologies to provide ubiquitous digital partnerships in electronic single-window systems are footprinting. The authors conclude that supply chain risk increasingly prevalent. Contracting specific activities management must be able to answer four questions to the private sector provides customs administrations concerning product-level supply chain integrity: Does with more time and resources to focus on core activities this product come from where I think it did? Is it made as well as allowing customs to gain access to outside the way I think it is? Did it travel the way I think it did? Is expertise. In conclusion, customs-business partnerships it going to do what I think it will? have expanded and evolved to a new phase, with more In Chapter 1.6, “Business Perspectives on Obstacles proactive engagement of the private sector in traditional to Trade: Evidence from New Survey Data,” Julia Spies customs work so as to share the responsibility with the from the ITC analyzes how non-tariff measures (NTMs) public sector. The author argues that customs authorities affect trade based on the most recent enterprise-level should work with business in order to achieve their survey data. The analysis confirms that NTMs represent common and respective goals, introducing performance obstacles to trade and therefore influence market access indicators to regularly monitor outputs and outcomes conditions. In countries that trade less, a higher share to serve as feedback to improve the commitment. With of firms reports burdensome NTMs than in countries diligent work, the author believes there is an opportunity that trade more. Differences between sectors are also for the business perception of customs to be improved. considerable, with agricultural firms among the most This belief is reflected in improvements in business seriously affected by obstructive NTMs. Evidence from perception data, including those in the ETI. the ITC’s recent firm-level surveys on NTMs suggests, In Chapter 1.8, “The Merchant Fleet: A Facilitator however, that not all firms in the same sector are of World Trade,” Hans Oust Heiberg of DNB Bank ASA affected to the same extent. Even within a sector and a analyzes the state of the world merchant fleet to explain country, substantial differences persist. Rather, a firm’s the industry dynamics at work and to consider how perception of its exposure to burdensome NTMs is at shipping costs and complexity can work as potential least partly influenced by its particular situation. Whether trade barriers. The chapter opens with a brief overview a firm produces is strongly correlated with the incidence of world trade and the cost of seaborne trade, before of NTMs. Furthermore, there is some evidence that delving into an analysis of the opportunities to be found the smallest and the largest firms are more affected by in terms of coping with three key issues: increasing NTMs than medium-sized companies. The results imply fuel costs, an expected decade of environmental that policymakers who would like to successfully reduce regulation, and fleet renewal. The author argues that the incidence of NTMs should opt for approaches continued high oil prices and requirements for cleaner aimed at reducing the impact of trade obstacles that fit fuel are expected to place an upward pressure on different firm types rather than for sector- or countrywide transportation cost. More fuel-efficient tonnage will ease measures. this pressure somewhat over time. However, because In Chapter 1.7, “Expansion of Customs-Business of capital constraints and low earnings, the renewal of Partnerships in the 21st Century,” Kunio Mikuriya of the fleet in any meaningful way is likely to take time. the WCO makes the case that customs authorities The current low earnings rates, coupled with high in both developed and developing countries are scrap prices, will increase demolition to new peaks. A increasingly recognizing that productive interaction reduction in speed will further reduce the availability with business is essential for effective and efficient of tonnage and put upward pressure on rates. A bit customs administrations, which in turn can lead further out in time, tonnage availability is likely to reduce to increased trade and economic development. somewhat because of ships going to shipyards to be Effective business-customs partnerships can drive upgraded with emissions and ballast water treatment improved trade security, effective enforcement, prompt systems. Once financing is more available, tonnage clearances, lower transaction costs, and transparency renewal will accelerate. Clarity on emissions technology and predictability of customs. The author undertakes a and improved fuel efficiency will also be catalysts review of international instruments and tools related to for accelerated renewal, and a pattern of a two-tier customs-business partnerships, highlights key activities merchant fleet will evolve. The author expects the actual of the WCO intended to strengthen the relationship of cost of the shipping assets to be lower than it was in the customs with the business community, and presents last decade. Operating cost inflation is not expected to several lessons learned from customs administrations. be high. Thus the cost of the ship itself is not expected In many countries, the private sector plays an important to put upward pressure on the cost of transportation role as a stakeholder, a partner, and a service provider, unless there is a shortage of tonnage. For the dry cargo and customs is able to benefit from the private sector’s business, better infrastructure around ports will reduce involvement through consultation, collaboration, and the cost of transportation because ships will wait less contracting. The author highlights several successful time for cargo, thus making the fleet more efficient. examples of consultation mechanisms that have been These factors—increased transportation costs and institutionalized, including in the European Union and increased complexity—could serve as significant trade Peru. Collaboration through information-sharing and barriers in the future. The Global Enabling Trade Report 2012 | xix @ 2012 World Economic Forum
- 22. Executive Summary In Chapter 1.9, “Benefits of Trade Facilitation: The Case of Costa Rica,” Carlos Grau Tanner of the GEA reviews how Costa Rica has benefitted from improved trade facilitation. According to the author, the case of Costa Rica supports the findings of numerous academic studies that demonstrate the benefits of trade facilitation for increased trade, and emphasizes that these benefits flow to all players. Costa Rica has successfully taken advantage of its inclusion into global value chains, and improved trade facilitation measures have significantly contributed to this outcome. Customs revenues have grown manifold; the employment situation has also improved, both in quantity and quality, as have exports. This in turn led to further increases in foreign investment. The country, its citizens, and its corporations—both domestic and international—all gained in the process. This case study also shows, however, that even in the presence of strong and well-executed policies, setbacks can occur and facilitating trade is a process that requires constant improvement and continuous policy attention. The author closes by saying that the case of Costa Rica presents a very strong, practical argument for further multilateral trade facilitation measures, such as those discussed under the aegis of the WTO. PART 2: COUNTRY/ECONOMY PROFILES Part 2 presents comprehensive profiles for each of the 132 economies in the sample. CONCLUSION By analyzing issues related to international trade and ranking economies according to the barriers to trade they have in place, The Global Enabling Trade Report provides key information on measures that could enable economies to further benefit from trade in a constantly renewing and rapidly changing global environment. The Report is intended to be a motivator for change and a foundation for dialogue, providing a yardstick of the extent to which economies have in place the factors facilitating the free flow of goods and identifying areas where improvements are most needed. xx | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 23. Part 1 Enabling Trade: Selected Issues @ 2012 World Economic Forum
- 24. @ 2012 World Economic Forum
- 25. CHAPTER 1.1 As measured by the International Monetary Fund (IMF), the volume of global trade in goods and services plummeted in the face of the global financial crisis, Reducing Supply Chain dropping by 10 percent between 2008 and 2009. As of 2011, however, global trade had more than recovered Barriers: The Enabling and was 8.2 percent higher than its 2008 peak. Yet the geographic composition of that trade has shifted Trade Index 2012 to reflect the divergent growth performance of the developed and emerging economies. In 2008, for example, emerging economies accounted for only a ROBERT Z. LAWRENCE third of world trade, but in the subsequent three years Harvard University they contributed almost 60 percent of the growth seen SEAN DOHERTY in imports of goods and services and 52 percent of MARGARETA DRZENIEK HANOUZ the growth seen in exports. This rise reinforced a trend World Economic Forum already evident prior to the crisis, and that trend is expected to become even more important in the future: it is clear that global trade is increasingly concentrated in and among emerging economies. A second striking feature of the evolution apparent in today’s global trade environment is the changing way trade is organized. Traded commodities are increasingly composed of intermediate products. Reductions in transportation and communication costs and innovations in policies and management have allowed firms to operate global supply chains that benefit from differences in comparative advantage among nations, both through international intra-firm trade and through networks that link teams of producers located in different countries. Trade and foreign investment have become increasingly complementary activities. Awareness of these chains has been heightened by events—such as the tsunami in Japan, which affected supply chains in the automotive industry and in electronics, and the floods in Thailand, which impaired a substantial portion of global hard-drive production—that occurred in 2011. Increasingly, countries specialize in tasks rather than products. Value is now added in many countries before particular goods and services reach their final destination, and the traditional notion of trade as production in one country and consumption in another is increasingly inaccurate. As the World Economic Forum’s Global Agenda Council on the Global Trade System elaborates in Chapter 1.2 of this Report, the growing importance of these chains has major implications for both how we understand world trade and how we promote it. In particular, conventional methods of trade measurement may double- and triple-count products as they pass along the chains, which explains in part why these numbers are often far greater and more volatile than data based on value-added. Policies such as those concerned with rules of origin that require production in particular countries to be eligible for preferential agreements also need to be rethought. Policies that emphasize trade facilitation should receive high priority. Taken together, the growing role of developing countries and the emergence of global supply chains The authors would like to thank Roberto Crotti and Caroline Ko from the World Economic Forum for their excellent contribution to the quantitative analysis on which this chapter is based. The Global Enabling Trade Report 2012 | 3 @ 2012 World Economic Forum
- 26. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 help explain why the global trading system currently hortatory and vague and more symbolic and diplomatic presents some strikingly contrasting pictures. Judged than practical in character. by the state of the Doha Round, the system seems to These changes in the locus of global growth and be in serious trouble. Despite the repeated lip service the nature of global production have increased the paid by the Group of Twenty (G-20) leaders instructing relevance of the measures captured by our global their negotiators to reach an agreement, the Round is Enabling Trade Index. The Index is based on the clearly at an impasse. It has missed every deadline that recognition that there is a complementary set of policies has been set, and the prospects for resolution are bleak. that enable trade. These policies include not only those Although the causes for the impasse are complex, one that reduce border obstacles, such as tariffs and non- key issue is the reluctance of the advanced economies tariff barriers, to improve market access, but also a to support an agreement that fails to provide them with broader set of policies that facilitate trade with more significantly increased access to the large emerging efficient border administration, better infrastructure economies that will be the markets of the future. A and telecommunications, and improved regulatory and byproduct of the impasse has been an unfortunate failure security regimes that secure property rights and reduce to implement the relatively uncontroversial agreement on transactions costs. Policies that enable trade work both trade facilitation. ways. Low trade costs are important, not only for the Yet, despite the Doha impasse, in many respects welfare of the country that implements the policies but the system is vibrant and thriving. The dispute settlement also for the welfare of those that trade with it. Outsiders system at the World Trade Organization (WTO) is benefit from such policies in two ways. First, as countries working well, with active participation by both developed lower their export costs they can provide foreigners and developing countries. Partly because, with only a with cheaper imports. Second, as they reduce their few exceptions, they are integrated in supply chains, trade costs, they provide foreigners with more export countries have shown great forbearance by not raising opportunities. Thus, whether countries are making trade barriers in the face of the global financial crisis. improvements in enabling trade is not simply a matter of In the case of most developing countries, this restraint parochial or national interest, but is also significant for has involved maintaining applied tariff rates at levels far the international community at large. This is especially lower than actually required by WTO rules under their true for countries with large and growing markets. tariff bindings. Strikingly, especially in the advanced As our Index shows, not unexpectedly, developed economies, the demand for protection through countries generally rank higher in enabling trade than measures such as anti-dumping has been remarkably emerging ones. They have lower trade costs—with restrained—a development that can be explained by the noteworthy exceptions in labor-intensive manufacturing growing integration of domestic and foreign production. (e.g., clothing and agriculture)—not only because their But countries are not merely avoiding the erection tariffs are low, but also because economic development of new barriers. They are also actively taking steps to itself is intimately associated with enhanced capabilities promote trade. In addition to unilateral liberalization in administration, infrastructure and telecommunications, in several nations, new preferential agreements are and regulation. When the developed countries were the being concluded with great vigor. Between January dominant actors in world trade, from a global standpoint 2008 and March 2012, the WTO was notified of 61 of the issues highlighted by our Index were somewhat less these agreements. Of these, only 5 were between two relevant (although they were very important for individual developed countries, 32 involved both developed and developing countries). But as developing countries developing economies, and 24 were between developing became the drivers of trade, these issues are bound to countries. assume increasing significance. A cumulative process has been set in motion as In the decade to come, the consensus forecasts countries compete to become export platforms and are for strong global growth centered on developing increase their role in the supply chains. Because some countries. With slow-growing demand in the advanced nations offer foreign and domestic investors favorable countries, the emergence of large middle classes in domestic production environments combined with China and India will drive global demand. It is also preferential access to foreign markets, others feel expected that Chinese growth will shift away from pressured to do the same. This has led to agreements exports and toward domestic demand. The opportunities in which countries agree to rules (e.g., for investment, these developments will provide for other countries will competition policies, or intellectual property protection) in no small measure depend on how well developing and market openings (in goods and services) that go countries—such as the BRICs,1 with their large and considerably further than the agreements they have growing markets—enable trade within their national made under the umbrella of the WTO. As we have noted, borders. a second key driver of the rise in preferential agreements In addition to changing demand patterns, as has been flourishing South-South trade. In response, Chinese wages rise and China’s currency appreciates, developing countries have been signing agreements some of the supply chains currently based in China are between themselves to regularize and promote their seeking to relocate. This creates opportunities for less- interactions. These South-South agreements have varied developed countries in Asia, Africa, Latin America, and in depth and scope: some are quite comprehensive elsewhere to service international markets by becoming and detailed and likely to stimulate trade, but others are part of these manufacturing supply chains. Companies 4 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 27. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 Box 1: The most problematic factors for trade This year’s edition of The Global Enabling Trade Report the responses are reported in the country/economy profiles includes an important innovation that aims to shed additional at the end of the Report. In addition, the results can provide light on the obstacles that businesses face at the national level insight about the most important bottlenecks to trade globally when exporting and importing. and inform multilateral trade negotiations about priority areas Two questions that capture the most problematic factors for liberalization. As shown in Figure 1, the most important for exporting and importing were added to the Executive bottleneck to increasing exports is difficulty in identifying Opinion Survey 2011. Respondents were asked to choose and potential markets and buyers; this is considered far more rank in order of importance from a list of factors (ten factors important than the next-placed factor, insufficient access for exports and eight for imports) those five that they believe to trade finance. Other factors—such as transport costs have the highest impact on the ease of exporting and importing or burdensome customs procedures and corruption—play in the country in which they operate. For exports we included a much less important role. On the import side (Figure 2), a wide range of factors that may inhibit export development, burdensome customs procedures emerge as the second most such as supply-side constraints, technical requirements, rules of important impediment to trade, nearly on a par with tariffs origin, and administrative procedures. The import factors mirror and non-tariff barriers. The cost of international transportation the structure of the Enabling Trade Index (ETI) to the extent is the third most important factor; crime and theft, as well possible, thus providing an indication of the importance of the as telecommunications, all play a much smaller role. This pillars of the ETI for the trading environment of these countries. result underlines not only the importance of trade facilitation These two questions identify the most important at multilateral and bilateral levels, but also the potential of bottlenecks to trade and supply chain connectivity across countries for facilitating trade through practical measures within the economies covered in the Executive Opinion Survey, and their government’s purview. Figure 1: The most problematic factors for exporting Identifying potential markets and buyers Access to trade finance Access to imported inputs at competitive prices Inappropriate production technology and skills Technical requirements and standards abroad Difficulties in meeting quality/quantity requirements of buyers High cost or delays caused by international transportation High cost or delays caused by domestic transportation Burdensome procedures and corruption at foreign borders Rules of origin requirements abroad 0 5 10 15 20 Percent Source: World Economic Forum, Executive Opinion Survey 2011; authors’ calculations. Notes: From a list of ten factors, respondents were asked to select the five most problematic for exporting in their country and rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. The figure shows the average across the 142 economies covered by the World Economic Forum’s Executive Opinion Survey (because of data shortages, only 132 of these are covered in the ETI). Figure 2: The most problematic factors for importing Tariffs and non-tariff barriers Burdensome import procedures High cost or delays caused by international transportation Corruption at the border High cost or delays caused by domestic transportation Domestic technical requirements and standards Crime and theft Inappropriate telecommunications infrastructure 0 5 10 15 20 25 Percent Source: World Economic Forum, Executive Opinion Survey 2011; authors’ calculations. Notes: From a list of eight factors, respondents were asked to select the five most problematic for importing in their country and rank them between 1 (most problematic) and 5. The bars in the figure show the responses weighted according to their rankings. The figure shows the average across the 142 economies covered by the World Economic Forum’s Executive Opinion Survey (because of data shortages, only 132 of these are covered in the ETI). The Global Enabling Trade Report 2012 | 5 @ 2012 World Economic Forum
- 28. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 considering relocation will undoubtedly take labor costs Stena AB, Swiss International Air Lines, Transnet, UPS, in these countries into account. But at least as important Volkswagen, and AB Volvo. will be the other factors that affect trade costs, including The ETI measures the extent to which individual operating efficiency as measured by factors such as economies have developed institutions, policies, and customs administration, infrastructure, logistics, and the services facilitating the free flow of goods over borders countries’ regulatory and security environments. Thus and to destination.2 The structure of the Index reflects the ability of countries to reap gains by participating in the main enablers of trade, breaking them into four these supply chains will in no small part depend on their overall issue areas, captured in the subindexes: performance in enabling trade. 1. The market access subindex measures the extent In sum, we expect the adoption of policies that to which the policy framework of the country enable trade will become increasingly important in welcomes foreign goods into the economy the years to come, not only for enhancing economic and enables access to foreign markets for its development in individual countries but also for exporters. generating prosperity in their trading partners. Our hope is that by highlighting the importance of these trade 2. The border administration subindex assesses the determinants, and by providing ways to measure the extent to which the administration at the border situation that allow for benchmarking, we can assist facilitates the entry and exit of goods. countries to identify the areas that need to be improved 3. The transport and communications infrastructure for them to take advantage of the benefits of full subindex takes into account whether the country participation in the global supply chains. has in place the transport and communications USE OF THE GLOBAL ENABLING TRADE REPORT infrastructure necessary to facilitate the movement The Global Enabling Trade Report has become a widely of goods within the country and across the used reference since its introduction in 2008. It forms border. part of the toolbox of many countries in their efforts 4. The business environment subindex looks at to increase trade, and it helps companies with their the quality of governance as well as at the investment decisions. The Report is the basis for many overarching regulatory and security environment high-level public-private dialogues facilitated around the impacting the business of importers and world each year by the World Economic Forum. These exporters active in the country. dialogues focus on practical steps that can be taken by both governments and the private sector to overcome Each of these four subindexes is composed in turn particular trade barriers in a country or region. In building of a number of pillars of enabling trade, of which there a coalition for change, it has become evident that are nine in all. These are: establishing an “open borders” mindset in a joint effort 1. Domestic and foreign market access to tackle obstacles to the movement of both goods and 2. Efficiency of customs administration people is often the most effective approach. 3. Efficiency of import-export procedures To assist these practical dialogues, this year the 4. Transparency of border administration Report introduces for each country a set of direct 5. Availability and quality of transport measurements of the factors seen as the most infrastructure problematic for exporting and importing (see Box 1). 6. Availability and quality of transport services In response to user requests, the research team has 7. Availability and use of ICTs embarked on a multi-stakeholder effort to relate a 8. Regulatory environment financial cost to the barriers and illustrate the financial 9. Physical security case for easing them. The domestic and foreign market access pillar THE ENABLING TRADE INDEX measures the level of protection of a country’s markets, The Enabling Trade Index (ETI) was developed within the the quality of its trade regime, and the level of protection context of the World Economic Forum’s Transportation that a country’s exporters face in their target markets. Industry Partnership program, and was first published The measures taken into account include average in The Global Enabling Trade Report 2008. A number applied tariffs but also the share of goods imported duty- of Data Partners have collaborated in this effort: the free, the variance of tariffs, the frequency of tariff peaks, Global Express Association (GEA), the International Air the number of distinct tariffs, and the like. Protection Transport Association (IATA), the International Trade in foreign markets is captured by tariffs faced, but also Centre (ITC), the United Nations Conference on Trade the margin of preference in target markets negotiated and Development (UNCTAD), The World Bank, the World through bilateral or regional agreements or granted in Customs Organization (WCO), and the WTO. We have the form of trade preferences such as the Everything but also received significant input from companies that are Arms (EBA) program.3 part of this industry partnership program, namely Agility, The efficiency of customs administration pillar Brightstar, Deutsche Post DHL, DNB Bank ASA, FedEx measures the efficiency of customs procedures as Corp., A.P. Möller Maersk, the Panama Canal Authority, perceived by the private sector, as well as the extent of 6 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 29. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 Figure 1: Composition of the four subindexes of the ETI Transport and Market Border communications access administration infrastructure Domestic and foreign Efficiency of customs Availability and quality of market access administration transport infrastructure Destination Border Efficiency of import- Availability and quality of export procedures transport services Transparency of Availability and border administration use of ICTs Business environment Subindex Regulatory Physical Pillar environment security services provided by customs authorities and related of shipments in reaching destination, general postal agencies. efficiency, and the overall competence of the local The efficiency of import-export procedures pillar logistics industry (e.g., transport operators, customs extends beyond customs administration and assesses brokers). This pillar also takes into account the degree of the effectiveness and efficiency of clearance processes openness of the transport-related sectors as measured by customs as well as related border control agencies, by countries’ commitments to the General Agreement on the number of days and documents required to import Trade in Services (GATS). and export goods, and the total official cost associated Given the increasing importance of information with importing as well as exporting, excluding tariffs and and communication technologies (ICTs) for the trade taxes. management of shipments, as well as the central role Given the significant hindrance that corruption these technologies play in facilitating customs clearance can provide in trade, the transparency of border and communication, the availability and use of ICTs administration pillar assesses the pervasiveness of pillar includes the penetration rates of these tools— undocumented extra payments or bribes connected with including mobile phones, Internet, and broadband—in imports and exports, as well as the overall perceived each country. We add measures of the perceived use of degree of corruption in each country. Internet by business for buying and selling goods and an The availability and quality of transport index of the online readiness of government services. infrastructure pillar measures the state of transport The regulatory environment pillar captures the infrastructure across all modes of transport in each extent to which the country’s regulatory environment is country, as demonstrated by the density of airports conducive to trade. Included are indicators that capture and the percentage of paved roads as well as the the general quality of governance, but also indicators extent of transshipment connections available to concerned with openness to foreign participation, which shippers from each country. Also captured is the quality covers the ease of hiring foreign labor in the country of all types of transport infrastructure, including air, rail, (important for companies moving goods across borders), roads, and ports.4 the extent to which the policy environment encourages The availability and quality of transport services foreign direct investment, the availability of trade finance, pillar complements the assessment of infrastructure and an index of multilateral treaties signed by the country by taking into account the amount and the quality of pertaining to trade. services available for shipment, including the quantity The security environment is of great importance of services provided by liner companies, the ability to for ensuring the delivery of goods to destination without track and trace international shipments, the timeliness major frictions. In this context, the physical security The Global Enabling Trade Report 2012 | 7 @ 2012 World Economic Forum
- 30. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 (such as IATA, the ITC, ITU, UNCTAD, the UN, and the Box 2: Non-tariff measures World Bank). The Survey is carried out annually by the World Economic Forum in all economies covered Non-tariff measures have become a major impediment to by our research. It captures the views of top business international trade and market access, and are of particular executives on the business environment and provides concern to exporters and importers. Non-tariff measures unique data on many qualitative aspects of the broader refer to a wide range of requirements and regulations that business environment, including a number of specific countries must apply to import and export goods, and issues related to trade. For detailed descriptions of all the include technical regulations and customs procedures. Non-tariff measures also reflect the increasing sophistication indicators included, please see the Technical Notes and of markets, as consumers demand more information Sources at the end of this Report. about the products they buy. Although non-tariff measures The nine pillars are grouped into the four may be introduced for legitimate reasons, they may also subindexes described above,5 as shown in Figure 1, distort trade by reducing export opportunities and diverting and the overall score for each country is derived as an trade to those suppliers best placed to comply with the unweighted average of the subindexes. The details of the requirements. It is therefore vital to capture non-tariff composition of the ETI are shown in Appendix A. measures in the Enabling Trade Index (ETI) to ensure that the Index presents an accurate view of countries’ abilities to As econometric tests of the ETI 2009 demonstrated, enable trade. the ETI has explanatory power with respect to a However, given that non-tariff measures are often country’s trade performance.6 The analysis has qualitative in nature and frequently do not relate to trade shown that a 1 percent increase in the ETI score in directly, compiling adequate data to capture the trade the exporting country is associated with an increase restrictiveness of these measures is a major undertaking of 1.7 percent in that country’s exports. This effect is fraught with many difficulties. Until recently, the Trains even higher with respect to the importing country: the database compiled by the United Nations Conference on Trade and Development (UNCTAD) (http://r0.unctad.org/ model predicts that a 1 percent improvement in the ETI trains_new/database.shtm#) was the only source that score would lead to a 2.3 percent rise in imports. Taken captured non-tariff measures. This database was used together, these two effects predict that a 1 percent by the International Trade Centre (ITC) for calculating the increase in the average ETI score of any given country related indicator (variable 1.02) until the 2010 edition of pair would be associated with a 4 percent increase in this Report. However, the data were not being updated bilateral trade, all else being equal. regularly. Currently the ITC, UNCTAD, and the World Bank are engaged in a multi-agency initiative with the objective CHANGES TO THE INDEX METHODOLOGY of increasing transparency and understanding about non- The Index methodology has undergone only minor tariff measures and facilitating international trade. In this context, a common methodology and classification of non- changes this year, which do not inhibit the ability to tariff measures is being used by the three organizations to compare the 2012 results with the 2010 results. In the collect data on these measures in a more systematic and first pillar, the indicator on non-tariff measures (1.02) has comprehensive way. The collected and classified data are been removed from the Index calculation. As indicated disseminated through a new, integrated web application on in the 2010 edition of the Report, the ITC is currently market access data. expending considerable effort to collect up-to-date To date, this dataset covers 61 economies, a coverage and comparable information about the incidence of not yet sufficient to be included in the ETI. Consequently, this variable has been omitted from the 2012 Index non-tariff measures across countries. To date, these calculation. However, given the importance of the issue, it is data are available for only approximately 61 countries, a nevertheless being reported in the country/economy profiles country coverage that is too small to include these data. for information. As additional countries come on stream over Although the indicator has been dropped in this year’s the next two years, we envisage re-including this variable in edition, we will re-instate it once the data coverage is the next edition of the ETI. In light of the importance of these expanded to a larger number of countries. Appendix B measures for trade, it is crucial that efforts to collect relevant reports the data for 2010 without the non-tariff measure data are scaled up by international organizations in order to provide decision makers, negotiators, and the business indicator, to highlight the impact of removing this variable community with an adequate and up-to-date picture of the on the results. Box 2 analyzes the importance of non- impact of non-tariff measures on their activities. tariff measures. In pillar 8, an indicator assessing access to trade finance, based on results from the Survey, has been added. At the same time, the variable measuring the pillar specifically gauges country-level violence (both extent of capital controls has been removed, as it has in terms of general crime and violence as well as the been dropped from the Survey. And finally, the fixed threat of terrorism), as well as the reliability of the police telephone lines indicator in pillar 7 was removed, as services in enforcing law and order. the indicator assesses data that are less relevant today, Each of these pillars is made up of a number of while the number of Internet users was added to this individual variables. The dataset includes both hard pillar. data and survey data from the World Economic Forum’s Executive Opinion Survey (the Survey). The hard data COUNTRY COVERAGE were obtained from publicly available sources and Overall coverage increased from 125 to 132 economies international organizations active in the area of trade in the 2012 ETI. The seven new countries added to the 8 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 31. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 Table 1: The Enabling Trade Index 2012 rankings and 2010 comparison ETI 2012 ETI 2010 ETI 2012 ETI 2010 Country/Economy Rank Score Rank* Country/Economy Rank Score Rank* Singapore 1 6.14 1 Greece 67 4.07 55 Hong Kong SAR 2 5.67 2 Vietnam 68 4.02 71 Denmark 3 5.41 3 Romania 69 4.02 54 Sweden 4 5.39 4 El Salvador 70 3.99 57 New Zealand 5 5.34 6 Serbia 71 3.97 67 Finland 6 5.34 12 Philippines 72 3.96 92 Netherlands 7 5.32 10 Sri Lanka 73 3.95 99 Switzerland 8 5.29 5 Bulgaria 74 3.93 78 Canada 9 5.22 8 Namibia 75 3.92 70 Luxembourg 10 5.20 9 Moldova 76 3.92 n/a United Kingdom 11 5.18 17 Guatemala 77 3.90 69 Norway 12 5.17 7 Honduras 78 3.89 66 Germany 13 5.13 13 Jamaica 79 3.89 74 Chile 14 5.12 18 Bosnia and Herzegovina 80 3.87 80 Austria 15 5.12 14 Azerbaijan 81 3.85 77 Iceland 16 5.08 11 Nicaragua 82 3.83 79 Australia 17 5.08 15 Ecuador 83 3.83 89 Japan 18 5.08 25 Brazil 84 3.79 87 United Arab Emirates 19 5.07 16 Malawi 85 3.79 83 France 20 5.03 20 Ukraine 86 3.79 81 Belgium 21 4.96 24 Dominican Republic 87 3.78 73 Ireland 22 4.96 21 Zambia 88 3.78 85 United States 23 4.90 19 Colombia 89 3.78 91 Malaysia 24 4.90 30 Egypt 90 3.78 76 Oman 25 4.86 29 Gambia, The 91 3.74 82 Estonia 26 4.85 23 Senegal 92 3.72 90 Saudi Arabia 27 4.84 40 Lebanon 93 3.71 n/a Israel 28 4.82 26 Tanzania 94 3.69 97 Taiwan, China 29 4.81 28 Bolivia 95 3.68 98 Bahrain 30 4.80 22 Argentina 96 3.68 95 Spain 31 4.79 32 Mozambique 97 3.65 93 Qatar 32 4.74 34 Uganda 98 3.64 94 Slovenia 33 4.65 35 Ghana 99 3.59 96 Korea, Rep. 34 4.65 27 India 100 3.55 84 Portugal 35 4.63 36 Paraguay 101 3.53 103 Mauritius 36 4.62 33 Cambodia 102 3.52 102 Cyprus 37 4.61 31 Kenya 103 3.52 105 Georgia 38 4.58 37 Guyana 104 3.52 109 Montenegro 39 4.46 43 Kazakhstan 105 3.50 88 Uruguay 40 4.44 50 Ethiopia 106 3.49 107 Czech Republic 41 4.42 42 Madagascar 107 3.48 86 Jordan 42 4.42 39 Syria 108 3.47 104 Costa Rica 43 4.41 44 Bangladesh 109 3.46 113 Tunisia 44 4.39 38 Tajikistan 110 3.45 108 Lithuania 45 4.39 41 Kyrgyz Republic 111 3.45 100 Croatia 46 4.39 45 Russian Federation 112 3.41 114 Hungary 47 4.39 49 Lesotho 113 3.41 101 Poland 48 4.37 58 Mongolia 114 3.40 116 Albania 49 4.36 59 Benin 115 3.39 106 Italy 50 4.36 51 Pakistan 116 3.39 112 Rwanda 51 4.35 n/a Iran, Islamic Rep. 117 3.31 n/a Latvia 52 4.31 46 Cameroon 118 3.28 115 Peru 53 4.31 63 Yemen 119 3.25 n/a Botswana 54 4.31 53 Algeria 120 3.22 119 Slovak Republic 55 4.29 47 Mali 121 3.18 111 China 56 4.22 48 Burkina Faso 122 3.15 110 Thailand 57 4.21 60 Nigeria 123 3.13 120 Indonesia 58 4.19 68 Nepal 124 3.07 118 Armenia 59 4.19 52 Mauritania 125 3.06 117 Panama 60 4.16 61 Côte d’Ivoire 126 3.02 123 Macedonia, FYR 61 4.13 56 Angola 127 3.01 n/a Turkey 62 4.13 62 Haiti 128 2.97 n/a South Africa 63 4.10 72 Zimbabwe 129 2.96 122 Morocco 64 4.08 75 Venezuela 130 2.95 121 Mexico 65 4.08 64 Burundi 131 2.95 125 Kuwait 66 4.07 65 Chad 132 2.63 124 *The 2010 rank is out of 125 countries. Seven new countries were added to the 2012 Index: Angola, Haiti, Iran, Lebanon, Moldova, Rwanda, and Yemen. The Global Enabling Trade Report 2012 | 9 @ 2012 World Economic Forum
- 32. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 Table 2: The Enabling Trade Index 2012 SUBINDEXES Market Border Transport and Business OVERALL INDEX access administration communications infrastructure environment Country/Economy Rank Score Rank Score Rank Score Rank Score Rank Score Singapore 1 6.14 1 6.20 1 6.53 1 6.06 5 5.75 Hong Kong SAR 2 5.67 10 5.08 4 6.02 3 5.85 7 5.75 Denmark 3 5.41 67 3.90 3 6.22 8 5.75 4 5.77 Sweden 4 5.39 67 3.90 2 6.35 17 5.42 2 5.88 New Zealand 5 5.34 25 4.74 6 5.99 25 5.00 10 5.63 Finland 6 5.34 67 3.90 7 5.88 9 5.60 1 5.96 Netherlands 7 5.32 67 3.90 5 6.00 2 5.92 14 5.47 Switzerland 8 5.29 56 4.08 12 5.69 10 5.56 3 5.82 Canada 9 5.22 27 4.68 15 5.62 21 5.21 15 5.38 Luxembourg 10 5.20 67 3.90 21 5.37 6 5.78 6 5.75 United Kingdom 11 5.18 67 3.90 9 5.80 4 5.83 28 5.16 Norway 12 5.17 49 4.24 17 5.60 22 5.19 9 5.66 Germany 13 5.13 67 3.90 18 5.53 5 5.79 21 5.31 Chile 14 5.12 2 5.69 23 5.28 50 4.23 23 5.28 Austria 15 5.12 67 3.90 13 5.65 12 5.54 16 5.38 Iceland 16 5.08 24 4.76 24 5.28 27 4.94 20 5.33 Australia 17 5.08 54 4.12 14 5.63 23 5.18 18 5.38 Japan 18 5.08 98 3.79 8 5.83 14 5.51 26 5.18 United Arab Emirates 19 5.07 102 3.69 11 5.71 18 5.30 12 5.58 France 20 5.03 67 3.90 19 5.44 7 5.75 31 5.03 Belgium 21 4.96 67 3.90 27 5.14 13 5.53 24 5.27 Ireland 22 4.96 67 3.90 10 5.79 29 4.87 25 5.25 United States 23 4.90 60 4.02 20 5.42 15 5.45 42 4.69 Malaysia 24 4.90 32 4.62 39 4.68 20 5.25 30 5.03 Oman 25 4.86 33 4.54 37 4.75 35 4.59 13 5.55 Estonia 26 4.85 67 3.90 16 5.61 31 4.72 27 5.18 Saudi Arabia 27 4.84 61 4.02 30 5.09 36 4.55 8 5.70 Israel 28 4.82 43 4.35 22 5.34 28 4.94 44 4.64 Taiwan, China 29 4.81 101 3.70 31 4.97 19 5.26 22 5.31 Bahrain 30 4.80 52 4.22 26 5.19 41 4.46 19 5.34 Spain 31 4.79 67 3.90 28 5.12 16 5.43 41 4.73 Qatar 32 4.74 95 3.87 34 4.84 34 4.65 11 5.61 Slovenia 33 4.65 67 3.90 29 5.10 30 4.85 39 4.73 Korea, Rep. 34 4.65 115 3.42 25 5.19 11 5.55 57 4.42 Portugal 35 4.63 67 3.90 36 4.78 24 5.04 38 4.78 Mauritius 36 4.62 6 5.30 42 4.60 65 3.90 43 4.69 Cyprus 37 4.61 67 3.90 32 4.94 39 4.50 29 5.12 Georgia 38 4.58 9 5.10 33 4.85 66 3.88 50 4.49 Montenegro 39 4.46 38 4.41 52 4.36 54 4.06 32 5.02 Uruguay 40 4.44 34 4.50 48 4.40 59 3.95 34 4.89 Czech Republic 41 4.42 67 3.90 41 4.65 32 4.71 54 4.43 Jordan 42 4.42 36 4.49 50 4.37 58 3.97 35 4.85 Costa Rica 43 4.41 3 5.53 46 4.42 89 3.46 67 4.24 Tunisia 44 4.39 53 4.17 44 4.55 53 4.07 37 4.78 Lithuania 45 4.39 67 3.90 40 4.67 38 4.54 51 4.45 Croatia 46 4.39 42 4.37 61 4.11 33 4.71 60 4.36 Hungary 47 4.39 67 3.90 35 4.82 42 4.37 53 4.45 Poland 48 4.37 67 3.90 38 4.73 49 4.24 46 4.61 Albania 49 4.36 15 4.87 54 4.32 71 3.81 52 4.45 Italy 50 4.36 67 3.90 55 4.26 26 4.97 65 4.30 Rwanda 51 4.35 21 4.81 56 4.24 109 2.96 17 5.38 Latvia 52 4.31 67 3.90 43 4.59 44 4.35 58 4.41 Peru 53 4.31 4 5.51 53 4.34 85 3.54 92 3.83 Botswana 54 4.31 40 4.39 60 4.17 74 3.78 33 4.89 Slovak Republic 55 4.29 67 3.90 49 4.38 37 4.55 63 4.32 China 56 4.22 108 3.55 45 4.42 48 4.27 45 4.63 Thailand 57 4.21 59 4.03 47 4.41 46 4.30 76 4.13 Indonesia 58 4.19 17 4.86 65 4.06 77 3.72 77 4.12 Armenia 59 4.19 13 4.94 85 3.54 63 3.92 61 4.36 Panama 60 4.16 99 3.78 58 4.23 43 4.36 66 4.26 Macedonia, FYR 61 4.13 20 4.81 80 3.77 76 3.73 73 4.21 Turkey 62 4.13 51 4.22 63 4.07 47 4.28 86 3.95 South Africa 63 4.10 66 3.95 59 4.19 55 4.04 71 4.22 Morocco 64 4.08 107 3.56 51 4.37 57 3.97 55 4.43 Mexico 65 4.08 18 4.84 62 4.09 62 3.92 114 3.45 Kuwait 66 4.07 96 3.83 78 3.82 70 3.82 36 4.80 (Cont’d.) 10 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 33. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 Table 2: The Enabling Trade Index 2012 (cont’d.) SUBINDEXES Market Border Transport and Business OVERALL INDEX access administration communications infrastructure environment Country/Economy Rank Score Rank Score Rank Score Rank Score Rank Score Greece 67 4.07 67 3.90 79 3.80 40 4.47 80 4.09 Vietnam 68 4.02 41 4.37 94 3.45 56 4.04 69 4.24 Romania 69 4S.02 67 3.90 57 4.24 68 3.86 81 4.09 El Salvador 70 3.99 7 5.18 64 4.07 88 3.47 125 3.26 Serbia 71 3.97 46 4.32 67 3.98 75 3.73 91 3.85 Philippines 72 3.96 14 4.90 72 3.90 91 3.41 107 3.61 Sri Lanka 73 3.95 103 3.68 73 3.89 81 3.65 47 4.59 Bulgaria 74 3.93 67 3.90 74 3.88 52 4.20 98 3.74 Namibia 75 3.92 50 4.23 90 3.48 90 3.44 49 4.54 Moldova 76 3.92 19 4.83 101 3.32 83 3.59 87 3.93 Guatemala 77 3.90 11 5.00 68 3.94 86 3.53 128 3.11 Honduras 78 3.89 8 5.18 84 3.55 97 3.34 110 3.51 Jamaica 79 3.89 58 4.06 69 3.93 61 3.92 105 3.63 Bosnia and Herzegovina 80 3.87 48 4.26 97 3.41 80 3.69 78 4.11 Azerbaijan 81 3.85 57 4.07 107 3.11 69 3.84 59 4.37 Nicaragua 82 3.83 5 5.33 93 3.46 111 2.92 106 3.62 Ecuador 83 3.83 22 4.79 81 3.61 87 3.51 117 3.40 Brazil 84 3.79 104 3.64 83 3.59 73 3.80 75 4.14 Malawi 85 3.79 12 5.00 109 3.08 115 2.85 68 4.24 Ukraine 86 3.79 26 4.73 116 2.85 64 3.91 103 3.66 Dominican Republic 87 3.78 62 4.01 70 3.92 72 3.81 119 3.39 Zambia 88 3.78 28 4.68 105 3.20 112 2.91 62 4.34 Colombia 89 3.78 45 4.33 82 3.60 78 3.72 112 3.46 Egypt 90 3.78 113 3.48 76 3.86 60 3.94 93 3.83 Gambia, The 91 3.74 125 3.04 66 4.02 102 3.19 40 4.73 Senegal 92 3.72 116 3.40 75 3.86 100 3.21 56 4.42 Lebanon 93 3.71 93 3.89 91 3.47 79 3.70 97 3.78 Tanzania 94 3.69 30 4.65 99 3.35 114 2.87 90 3.88 Bolivia 95 3.68 23 4.77 89 3.49 104 3.07 118 3.39 Argentina 96 3.68 94 3.87 92 3.46 67 3.86 111 3.51 Mozambique 97 3.65 31 4.63 87 3.52 120 2.77 102 3.69 Uganda 98 3.64 16 4.86 103 3.25 121 2.76 100 3.71 Ghana 99 3.59 112 3.51 86 3.54 106 3.00 64 4.31 India 100 3.55 130 2.60 77 3.82 84 3.58 74 4.20 Paraguay 101 3.53 44 4.34 95 3.45 113 2.89 115 3.45 Cambodia 102 3.52 64 4.00 98 3.39 116 2.80 88 3.91 Kenya 103 3.52 37 4.49 119 2.76 99 3.24 108 3.59 Guyana 104 3.52 97 3.82 88 3.50 105 3.04 101 3.70 Kazakhstan 105 3.50 120 3.19 127 2.62 45 4.31 89 3.90 Ethiopia 106 3.49 105 3.63 102 3.28 117 2.80 70 4.23 Madagascar 107 3.48 29 4.66 106 3.18 119 2.79 124 3.31 Syria 108 3.47 122 3.14 117 2.84 96 3.35 48 4.54 Bangladesh 109 3.46 65 3.96 100 3.33 123 2.74 95 3.82 Tajikistan 110 3.45 100 3.72 128 2.46 92 3.40 72 4.22 Kyrgyz Republic 111 3.45 39 4.39 125 2.64 98 3.31 116 3.45 Russian Federation 112 3.41 129 2.94 111 3.03 51 4.23 113 3.45 Lesotho 113 3.41 47 4.32 112 3.03 127 2.58 99 3.71 Mongolia 114 3.40 110 3.52 118 2.82 101 3.21 82 4.06 Benin 115 3.39 121 3.17 104 3.20 103 3.10 79 4.10 Pakistan 116 3.39 128 2.95 71 3.92 95 3.35 123 3.34 Iran, Islamic Rep. 117 3.31 132 2.17 96 3.44 82 3.61 83 4.01 Cameroon 118 3.28 117 3.38 110 3.03 124 2.71 85 3.98 Yemen 119 3.25 55 4.09 113 2.99 108 2.99 130 2.93 Algeria 120 3.22 127 3.00 108 3.11 93 3.38 120 3.37 Mali 121 3.18 114 3.46 120 2.75 125 2.68 94 3.82 Burkina Faso 122 3.15 111 3.52 124 2.68 129 2.41 84 3.99 Nigeria 123 3.13 124 3.06 114 2.94 107 2.99 109 3.53 Nepal 124 3.07 106 3.60 126 2.63 118 2.80 126 3.24 Mauritania 125 3.06 118 3.36 115 2.88 126 2.65 121 3.35 Côte d’Ivoire 126 3.02 123 3.07 121 2.73 110 2.94 122 3.34 Angola 127 3.01 109 3.55 129 2.44 128 2.42 104 3.63 Haiti 128 2.97 63 4.00 123 2.68 130 2.37 131 2.84 Zimbabwe 129 2.96 131 2.57 122 2.73 122 2.75 96 3.81 Venezuela 130 2.95 119 3.29 130 2.42 94 3.36 132 2.75 Burundi 131 2.95 35 4.49 131 2.34 132 2.01 129 2.95 Chad 132 2.63 126 3.04 132 2.14 131 2.11 127 3.24 The Global Enabling Trade Report 2012 | 11 @ 2012 World Economic Forum
- 34. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 Table 3: The Enabling Trade Index 2012: Market access PILLARS 1a. Domestic market 1b. Foreign market MARKET ACCESS access access Country/Economy Rank Score Rank Score Rank Score Albania 15 4.87 12 5.73 54 3.15 Algeria 127 3.00 117 3.55 123 1.90 Angola 109 3.55 109 3.72 52 3.21 Argentina 94 3.87 106 3.96 36 3.68 Armenia 13 4.94 15 5.61 38 3.60 Australia 54 4.12 17 5.55 129 1.28 Austria 67 3.90 50 4.83 94 2.06 Azerbaijan 57 4.07 90 4.52 53 3.16 Bahrain 52 4.22 44 4.87 64 2.91 Bangladesh 65 3.96 114 3.58 9 4.71 Belgium 67 3.90 50 4.83 94 2.06 Benin 121 3.17 118 3.55 84 2.39 Bolivia 23 4.77 77 4.80 10 4.70 Bosnia and Herzegovina 48 4.26 38 5.01 70 2.77 Botswana 40 4.39 19 5.41 85 2.36 Brazil 104 3.64 101 4.05 68 2.82 Bulgaria 67 3.90 50 4.83 94 2.06 Burkina Faso 111 3.52 107 3.94 74 2.67 Burundi 35 4.49 36 5.06 49 3.35 Cambodia 64 4.00 121 3.44 3 5.11 Cameroon 117 3.38 116 3.56 57 3.02 Canada 27 4.68 13 5.68 73 2.67 Chad 126 3.04 124 3.28 79 2.56 Chile 2 5.69 5 5.96 2 5.14 China 108 3.55 97 4.26 92 2.13 Colombia 45 4.33 94 4.40 16 4.18 Costa Rica 3 5.53 3 5.99 13 4.60 Côte d’Ivoire 123 3.07 113 3.59 120 2.03 Croatia 42 4.37 28 5.19 72 2.73 Cyprus 67 3.90 50 4.83 94 2.06 Czech Republic 67 3.90 50 4.83 94 2.06 Denmark 67 3.90 50 4.83 94 2.06 Dominican Republic 62 4.01 46 4.85 86 2.34 Ecuador 22 4.79 23 5.28 30 3.81 Egypt 113 3.48 123 3.34 34 3.75 El Salvador 7 5.18 11 5.76 21 4.04 Estonia 67 3.90 50 4.83 94 2.06 Ethiopia 105 3.63 122 3.40 18 4.08 Finland 67 3.90 50 4.83 94 2.06 France 67 3.90 50 4.83 94 2.06 Gambia, The 125 3.04 127 3.10 62 2.92 Georgia 9 5.10 7 5.93 46 3.42 Germany 67 3.90 50 4.83 94 2.06 Ghana 112 3.51 104 4.01 80 2.50 Greece 67 3.90 50 4.83 94 2.06 Guatemala 11 5.00 10 5.79 45 3.42 Guyana 97 3.82 103 4.03 47 3.39 Haiti 63 4.00 99 4.18 37 3.64 Honduras 8 5.18 8 5.84 28 3.86 Hong Kong SAR 10 5.08 1 7.00 130 1.24 Hungary 67 3.90 50 4.83 94 2.06 Iceland 24 4.76 21 5.36 40 3.55 India 130 2.60 130 2.77 88 2.27 Indonesia 17 4.86 24 5.25 19 4.08 Iran, Islamic Rep. 132 2.17 131 2.46 126 1.57 Ireland 67 3.90 50 4.83 94 2.06 Israel 43 4.35 31 5.13 69 2.80 Italy 67 3.90 50 4.83 94 2.06 Jamaica 58 4.06 88 4.57 55 3.05 Japan 98 3.79 30 5.16 132 1.05 Jordan 36 4.49 83 4.68 17 4.11 Kazakhstan 120 3.19 119 3.48 76 2.60 Kenya 37 4.49 41 4.99 42 3.49 Korea, Rep. 115 3.42 100 4.15 122 1.95 Kuwait 96 3.83 82 4.69 93 2.10 Kyrgyz Republic 39 4.39 81 4.70 32 3.77 (Cont’d.) 12 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 35. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 Table 3: The Enabling Trade Index 2012: Market access (cont’d.) PILLARS 1a. Domestic market 1b. Foreign market MARKET ACCESS access access Country/Economy Rank Score Rank Score Rank Score Latvia 67 3.90 50 4.83 94 2.06 Lebanon 93 3.89 102 4.04 39 3.59 Lesotho 47 4.32 91 4.51 27 3.93 Lithuania 67 3.90 50 4.83 94 2.06 Luxembourg 67 3.90 50 4.83 94 2.06 Macedonia, FYR 20 4.81 16 5.57 50 3.30 Madagascar 29 4.66 87 4.58 7 4.81 Malawi 12 5.00 78 4.79 1 5.42 Malaysia 32 4.62 42 4.93 25 4.01 Mali 114 3.46 105 3.97 83 2.44 Mauritania 118 3.36 115 3.58 63 2.92 Mauritius 6 5.30 6 5.95 24 4.02 Mexico 18 4.84 25 5.24 22 4.03 Moldova 19 4.83 26 5.22 20 4.04 Mongolia 110 3.52 93 4.41 124 1.75 Montenegro 38 4.41 27 5.20 66 2.84 Morocco 107 3.56 120 3.44 31 3.80 Mozambique 31 4.63 79 4.77 15 4.34 Namibia 50 4.23 45 4.87 59 2.96 Nepal 106 3.60 129 2.93 5 4.92 Netherlands 67 3.90 50 4.83 94 2.06 New Zealand 25 4.74 14 5.61 58 3.01 Nicaragua 5 5.33 4 5.99 23 4.03 Nigeria 124 3.06 108 3.82 127 1.55 Norway 49 4.24 48 4.84 56 3.04 Oman 33 4.54 22 5.34 61 2.95 Pakistan 128 2.95 126 3.18 81 2.48 Panama 99 3.78 86 4.59 91 2.17 Paraguay 44 4.34 35 5.09 67 2.83 Peru 4 5.51 9 5.80 4 4.95 Philippines 14 4.90 32 5.13 14 4.43 Poland 67 3.90 50 4.83 94 2.06 Portugal 67 3.90 50 4.83 94 2.06 Qatar 95 3.87 76 4.80 121 1.99 Romania 67 3.90 50 4.83 94 2.06 Russian Federation 129 2.94 125 3.19 82 2.45 Rwanda 21 4.81 20 5.37 35 3.69 Saudi Arabia 61 4.02 43 4.87 87 2.31 Senegal 116 3.40 111 3.63 60 2.95 Serbia 46 4.32 34 5.10 71 2.75 Singapore 1 6.20 2 6.97 11 4.67 Slovak Republic 67 3.90 50 4.83 94 2.06 Slovenia 67 3.90 50 4.83 94 2.06 South Africa 66 3.95 49 4.83 90 2.18 Spain 67 3.90 50 4.83 94 2.06 Sri Lanka 103 3.68 98 4.23 77 2.59 Sweden 67 3.90 50 4.83 94 2.06 Switzerland 56 4.08 84 4.68 65 2.89 Syria 122 3.14 128 2.95 41 3.52 Taiwan, China 101 3.70 40 5.00 131 1.10 Tajikistan 100 3.72 92 4.47 89 2.23 Tanzania 30 4.65 85 4.65 12 4.64 Thailand 59 4.03 110 3.64 8 4.81 Tunisia 53 4.17 96 4.37 33 3.76 Turkey 51 4.22 37 5.05 78 2.57 Uganda 16 4.86 47 4.85 6 4.88 Ukraine 26 4.73 18 5.47 51 3.24 United Arab Emirates 102 3.69 80 4.76 128 1.54 United Kingdom 67 3.90 50 4.83 94 2.06 United States 60 4.02 29 5.18 125 1.70 Uruguay 34 4.50 39 5.00 43 3.49 Venezuela 119 3.29 112 3.61 75 2.64 Vietnam 41 4.37 89 4.56 26 4.00 Yemen 55 4.09 95 4.39 44 3.48 Zambia 28 4.68 33 5.11 29 3.81 Zimbabwe 131 2.57 132 2.18 48 3.37 The Global Enabling Trade Report 2012 | 13 @ 2012 World Economic Forum
- 36. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 Table 4: The Enabling Trade Index 2012: Border administration PILLARS BORDER 2. Efficiency of 3. Efficiency of 4. Transparency of ADMINISTRATION customs administration import-export procedures border administration Country/Economy Rank Score Rank Score Rank Score Rank Score Albania 54 4.32 38 4.65 63 4.76 61 3.55 Algeria 108 3.11 116 2.92 93 4.00 120 2.41 Angola 129 2.44 128 2.69 124 2.21 122 2.40 Argentina 92 3.46 93 3.50 85 4.23 102 2.66 Armenia 85 3.54 74 3.96 96 3.97 100 2.70 Australia 14 5.63 16 5.56 28 5.38 14 5.97 Austria 13 5.65 7 5.88 19 5.56 22 5.51 Azerbaijan 107 3.11 46 4.50 123 2.25 108 2.58 Bahrain 26 5.19 12 5.66 49 4.98 30 4.93 Bangladesh 100 3.33 103 3.26 86 4.22 115 2.52 Belgium 27 5.14 41 4.57 32 5.28 21 5.55 Benin 104 3.20 113 2.96 94 3.99 103 2.65 Bolivia 89 3.49 76 3.91 95 3.97 107 2.59 Bosnia and Herzegovina 97 3.41 122 2.82 83 4.30 72 3.12 Botswana 60 4.17 34 4.74 112 3.01 35 4.75 Brazil 83 3.59 99 3.41 101 3.69 57 3.69 Bulgaria 74 3.88 72 4.07 73 4.47 73 3.11 Burkina Faso 124 2.68 102 3.29 126 1.96 98 2.78 Burundi 131 2.34 125 2.79 125 2.01 128 2.21 Cambodia 98 3.39 90 3.65 89 4.17 125 2.36 Cameroon 110 3.03 92 3.50 111 3.04 109 2.56 Canada 15 5.62 18 5.46 33 5.27 10 6.13 Chad 132 2.14 120 2.84 132 1.56 131 2.01 Chile 23 5.28 24 5.18 43 5.06 18 5.60 China 45 4.42 45 4.50 37 5.17 59 3.59 Colombia 82 3.60 94 3.48 97 3.92 64 3.40 Costa Rica 46 4.42 35 4.73 66 4.71 51 3.83 Côte d’Ivoire 121 2.73 109 3.05 117 2.74 124 2.39 Croatia 61 4.11 57 4.38 74 4.45 63 3.50 Cyprus 32 4.94 52 4.44 25 5.47 32 4.90 Czech Republic 41 4.65 21 5.28 52 4.94 55 3.72 Denmark 3 6.22 6 5.91 3 6.22 2 6.53 Dominican Republic 70 3.92 78 3.86 50 4.97 89 2.92 Ecuador 81 3.61 77 3.87 92 4.01 87 2.95 Egypt 76 3.86 80 3.85 55 4.88 94 2.83 El Salvador 64 4.07 71 4.09 64 4.74 66 3.37 Estonia 16 5.61 11 5.70 8 5.94 23 5.18 Ethiopia 102 3.28 60 4.30 119 2.63 90 2.92 Finland 7 5.88 28 5.11 6 6.12 5 6.41 France 19 5.44 23 5.23 9 5.94 24 5.15 Gambia, The 66 4.02 79 3.86 67 4.69 62 3.51 Georgia 33 4.85 27 5.13 53 4.94 39 4.49 Germany 18 5.53 26 5.16 13 5.84 19 5.60 Ghana 86 3.54 108 3.06 75 4.44 71 3.13 Greece 79 3.80 96 3.47 71 4.60 67 3.32 Guatemala 68 3.94 37 4.67 90 4.08 78 3.07 Guyana 88 3.50 105 3.20 68 4.68 106 2.61 Haiti 123 2.68 131 2.51 105 3.41 130 2.11 Honduras 84 3.55 101 3.29 82 4.32 80 3.04 Hong Kong SAR 4 6.02 10 5.73 2 6.29 12 6.05 Hungary 35 4.82 15 5.59 58 4.82 45 4.05 Iceland 24 5.28 31 4.94 62 4.76 9 6.15 India 77 3.82 70 4.10 79 4.38 84 2.99 Indonesia 65 4.06 69 4.10 38 5.15 88 2.94 Iran, Islamic Rep. 96 3.44 91 3.50 99 3.74 77 3.07 Ireland 10 5.79 5 5.94 18 5.57 15 5.86 Israel 22 5.34 25 5.17 11 5.85 26 5.00 Italy 55 4.26 75 3.95 39 5.12 56 3.71 Jamaica 69 3.93 54 4.43 84 4.30 79 3.05 Japan 8 5.83 13 5.65 16 5.78 13 6.05 Jordan 50 4.37 65 4.23 59 4.81 43 4.09 Kazakhstan 127 2.62 107 3.11 130 1.64 76 3.09 Kenya 119 2.76 129 2.59 110 3.27 121 2.41 Korea, Rep. 25 5.19 30 5.00 5 6.19 40 4.38 Kuwait 78 3.82 110 3.04 81 4.34 44 4.07 Kyrgyz Republic 125 2.64 82 3.80 127 1.85 127 2.26 (Cont’d.) 14 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 37. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 Table 4: The Enabling Trade Index 2012: Border administration (cont’d.) PILLARS PILLARS BORDER 2. Efficiency of 3. Efficiency of 4. Transparency of ADMINISTRATION customs administration import-export procedures border administration Country/Economy Rank Score Rank Score Rank Score Rank Score Latvia 43 4.59 49 4.46 23 5.49 52 3.82 Lebanon 91 3.47 97 3.47 76 4.41 111 2.54 Lesotho 112 3.03 123 2.81 108 3.31 86 2.98 Lithuania 40 4.67 44 4.52 34 5.24 41 4.23 Luxembourg 21 5.37 40 4.63 31 5.34 8 6.16 Macedonia, FYR 80 3.77 111 2.97 69 4.65 58 3.68 Madagascar 106 3.18 130 2.57 77 4.40 110 2.56 Malawi 109 3.08 83 3.79 120 2.45 83 3.00 Malaysia 39 4.68 47 4.48 26 5.47 42 4.09 Mali 120 2.75 117 2.90 113 2.93 119 2.43 Mauritania 115 2.88 127 2.78 104 3.42 118 2.43 Mauritius 42 4.60 55 4.41 29 5.35 46 4.04 Mexico 62 4.09 58 4.32 57 4.82 70 3.14 Moldova 101 3.32 95 3.48 102 3.65 95 2.82 Mongolia 118 2.82 100 3.30 121 2.42 99 2.74 Montenegro 52 4.36 67 4.13 45 5.05 48 3.90 Morocco 51 4.37 39 4.64 41 5.09 65 3.39 Mozambique 87 3.52 87 3.71 98 3.82 81 3.03 Namibia 90 3.48 106 3.12 103 3.49 50 3.84 Nepal 126 2.63 121 2.83 118 2.69 126 2.36 Netherlands 5 6.00 3 5.97 12 5.84 7 6.18 New Zealand 6 5.99 8 5.86 27 5.43 1 6.67 Nicaragua 93 3.46 112 2.97 70 4.63 97 2.79 Nigeria 114 2.94 115 2.93 106 3.41 116 2.48 Norway 17 5.60 43 4.54 10 5.93 6 6.33 Oman 37 4.75 61 4.28 40 5.11 33 4.87 Pakistan 71 3.92 66 4.20 56 4.86 101 2.69 Panama 58 4.23 86 3.73 15 5.80 69 3.17 Paraguay 95 3.45 56 4.38 109 3.31 104 2.65 Peru 53 4.34 64 4.23 51 4.94 49 3.86 Philippines 72 3.90 62 4.25 48 4.99 117 2.47 Poland 38 4.73 48 4.46 36 5.20 38 4.53 Portugal 36 4.78 81 3.84 21 5.53 27 4.96 Qatar 34 4.84 84 3.78 44 5.05 16 5.68 Romania 57 4.24 53 4.43 65 4.71 60 3.56 Russian Federation 111 3.03 89 3.66 114 2.90 113 2.53 Rwanda 56 4.24 22 5.26 115 2.79 37 4.66 Saudi Arabia 30 5.09 29 5.10 24 5.49 36 4.68 Senegal 75 3.86 88 3.70 61 4.79 74 3.10 Serbia 67 3.98 59 4.31 72 4.54 75 3.10 Singapore 1 6.53 1 6.61 1 6.44 3 6.53 Slovak Republic 49 4.38 32 4.94 80 4.38 53 3.81 Slovenia 29 5.10 19 5.45 42 5.09 34 4.78 South Africa 59 4.19 33 4.92 100 3.69 47 3.97 Spain 28 5.12 20 5.42 46 5.02 31 4.90 Sri Lanka 73 3.89 85 3.76 47 5.02 92 2.89 Sweden 2 6.35 2 6.34 4 6.22 4 6.48 Switzerland 12 5.69 9 5.77 35 5.24 11 6.06 Syria 117 2.84 132 1.93 91 4.06 114 2.52 Taiwan, China 31 4.97 50 4.46 22 5.50 29 4.95 Tajikistan 128 2.46 114 2.96 131 1.56 93 2.85 Tanzania 99 3.35 119 2.85 78 4.40 96 2.80 Thailand 47 4.41 36 4.68 20 5.53 82 3.00 Tunisia 44 4.55 42 4.56 30 5.35 54 3.73 Turkey 63 4.07 68 4.10 60 4.81 68 3.31 Uganda 103 3.25 51 4.44 116 2.75 112 2.54 Ukraine 116 2.85 126 2.78 107 3.37 123 2.40 United Arab Emirates 11 5.71 17 5.56 7 6.02 20 5.57 United Kingdom 9 5.80 4 5.96 14 5.83 17 5.62 United States 20 5.42 14 5.60 17 5.62 25 5.04 Uruguay 48 4.40 73 4.05 87 4.20 28 4.95 Venezuela 130 2.42 104 3.21 128 1.84 129 2.19 Vietnam 94 3.45 124 2.81 54 4.91 105 2.63 Yemen 113 2.99 118 2.88 88 4.17 132 1.91 Zambia 105 3.20 63 4.24 122 2.38 85 2.98 Zimbabwe 122 2.73 98 3.44 129 1.82 91 2.91 The Global Enabling Trade Report 2012 | 15 @ 2012 World Economic Forum
- 38. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 Table 5: The Enabling Trade Index 2012: Transport and communications infrastructure PILLARS TRANSPORT AND 5. Availability and quality 6. Availability and quality 7. Availability and COMMUNICATIONS INFRASTRUCTURE of transport infrastructure of transport services use of ICTs Country/Economy Rank Score Rank Score Rank Score Rank Score Albania 71 3.81 94 3.62 64 3.75 58 4.06 Algeria 93 3.38 65 4.24 96 3.27 105 2.63 Angola 128 2.42 129 2.50 127 2.52 120 2.25 Argentina 67 3.86 84 3.79 75 3.55 52 4.25 Armenia 63 3.92 59 4.36 62 3.77 67 3.63 Australia 23 5.18 27 5.19 16 4.89 23 5.45 Austria 12 5.54 16 5.69 9 5.27 16 5.67 Azerbaijan 69 3.84 73 4.08 53 3.86 76 3.57 Bahrain 41 4.46 36 4.95 67 3.70 38 4.72 Bangladesh 123 2.74 126 2.68 104 3.07 110 2.46 Belgium 13 5.53 15 5.69 5 5.42 21 5.49 Benin 103 3.10 115 3.08 63 3.75 109 2.47 Bolivia 104 3.07 106 3.28 103 3.10 99 2.83 Bosnia and Herzegovina 80 3.69 108 3.21 35 4.27 74 3.59 Botswana 74 3.78 69 4.16 45 4.04 90 3.13 Brazil 73 3.80 109 3.19 48 3.98 53 4.23 Bulgaria 52 4.20 66 4.24 55 3.84 45 4.51 Burkina Faso 129 2.41 131 2.24 119 2.89 127 2.11 Burundi 132 2.01 132 2.24 132 2.05 131 1.74 Cambodia 116 2.80 112 3.14 116 2.92 116 2.35 Cameroon 124 2.71 122 2.97 121 2.83 117 2.34 Canada 21 5.21 19 5.55 24 4.61 22 5.46 Chad 131 2.11 130 2.31 130 2.47 132 1.55 Chile 50 4.23 57 4.40 65 3.75 44 4.56 China 48 4.27 53 4.49 21 4.73 72 3.60 Colombia 78 3.72 92 3.63 84 3.39 56 4.13 Costa Rica 89 3.46 85 3.78 101 3.11 80 3.49 Côte d’Ivoire 110 2.94 113 3.11 100 3.19 107 2.53 Croatia 33 4.71 35 4.95 42 4.11 30 5.05 Cyprus 39 4.50 33 5.02 40 4.14 51 4.35 Czech Republic 32 4.71 29 5.12 46 4.01 33 5.00 Denmark 8 5.75 3 6.07 15 4.89 2 6.29 Dominican Republic 72 3.81 60 4.35 80 3.44 68 3.63 Ecuador 87 3.51 80 3.83 94 3.32 82 3.39 Egypt 60 3.94 55 4.48 51 3.91 81 3.43 El Salvador 88 3.47 95 3.53 106 3.04 63 3.85 Estonia 31 4.72 50 4.63 54 3.85 15 5.69 Ethiopia 117 2.80 121 2.99 93 3.33 128 2.10 Finland 9 5.60 13 5.76 17 4.85 4 6.20 France 7 5.75 1 6.27 11 5.18 13 5.81 Gambia, The 102 3.19 78 3.85 117 2.90 100 2.81 Georgia 66 3.88 49 4.63 85 3.39 69 3.62 Germany 5 5.79 7 5.99 4 5.56 12 5.82 Ghana 106 3.00 100 3.37 111 2.98 102 2.66 Greece 40 4.47 28 5.17 52 3.87 50 4.38 Guatemala 86 3.53 89 3.67 91 3.35 75 3.57 Guyana 105 3.04 91 3.65 129 2.51 96 2.98 Haiti 130 2.37 127 2.67 131 2.43 129 2.02 Honduras 97 3.34 79 3.84 122 2.79 83 3.38 Hong Kong SAR 3 5.85 8 5.96 2 5.60 9 5.99 Hungary 42 4.37 86 3.72 27 4.45 34 4.96 Iceland 27 4.94 38 4.90 36 4.22 14 5.71 India 84 3.58 76 3.96 59 3.82 97 2.97 Indonesia 77 3.72 74 4.06 50 3.92 89 3.18 Iran, Islamic Rep. 82 3.61 67 4.22 71 3.59 94 3.02 Ireland 29 4.87 22 5.43 31 4.34 35 4.86 Israel 28 4.94 32 5.07 41 4.12 17 5.62 Italy 26 4.97 31 5.08 18 4.83 32 5.01 Jamaica 61 3.92 45 4.72 74 3.55 78 3.50 Japan 14 5.51 18 5.60 6 5.42 20 5.52 Jordan 58 3.97 44 4.74 73 3.55 71 3.61 Kazakhstan 45 4.31 48 4.67 57 3.84 47 4.43 Kenya 99 3.24 87 3.71 109 3.00 95 3.00 Korea, Rep. 11 5.55 21 5.48 14 4.98 5 6.19 Kuwait 70 3.82 64 4.30 107 3.03 55 4.14 Kyrgyz Republic 98 3.31 81 3.81 110 2.99 91 3.12 (Cont’d.) 16 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 39. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 Table 5: The Enabling Trade Index 2012: Transport and communications infrastructure (cont’d.) PILLARS TRANSPORT AND 5. Availability and quality 6. Availability and quality 7. Availability and COMMUNICATIONS INFRASTRUCTURE of transport infrastructure of transport services use of ICTs Country/Economy Rank Score Rank Score Rank Score Rank Score Latvia 44 4.35 47 4.69 76 3.53 36 4.81 Lebanon 79 3.70 70 4.14 68 3.68 88 3.27 Lesotho 127 2.58 125 2.74 123 2.74 119 2.25 Lithuania 38 4.54 62 4.34 58 3.84 24 5.44 Luxembourg 6 5.78 6 6.01 8 5.29 8 6.04 Macedonia, FYR 76 3.73 77 3.90 98 3.26 59 4.04 Madagascar 119 2.79 105 3.29 114 2.95 126 2.14 Malawi 115 2.85 107 3.26 88 3.36 130 1.93 Malaysia 20 5.25 12 5.81 10 5.22 37 4.72 Mali 125 2.68 123 2.96 120 2.84 121 2.24 Mauritania 126 2.65 120 3.04 125 2.71 122 2.19 Mauritius 65 3.90 40 4.86 89 3.36 79 3.49 Mexico 62 3.92 71 4.11 66 3.73 62 3.93 Moldova 83 3.59 88 3.68 79 3.44 66 3.65 Mongolia 101 3.21 103 3.34 112 2.96 86 3.32 Montenegro 54 4.06 54 4.48 99 3.22 46 4.49 Morocco 57 3.97 52 4.59 49 3.93 84 3.38 Mozambique 120 2.77 99 3.38 126 2.64 118 2.29 Namibia 90 3.44 46 4.71 113 2.96 104 2.64 Nepal 118 2.80 96 3.52 124 2.72 124 2.16 Netherlands 2 5.92 10 5.85 3 5.58 1 6.32 New Zealand 25 5.00 24 5.36 44 4.04 19 5.59 Nicaragua 111 2.92 102 3.35 118 2.90 108 2.52 Nigeria 107 2.99 114 3.08 97 3.27 106 2.62 Norway 22 5.19 25 5.25 39 4.17 6 6.15 Oman 35 4.59 42 4.81 34 4.28 40 4.68 Pakistan 95 3.35 75 4.06 92 3.35 103 2.65 Panama 43 4.36 26 5.23 82 3.43 49 4.41 Paraguay 113 2.89 117 3.06 128 2.51 93 3.11 Peru 85 3.54 93 3.63 86 3.38 70 3.61 Philippines 91 3.41 111 3.17 60 3.78 87 3.30 Poland 49 4.24 82 3.80 33 4.31 43 4.60 Portugal 24 5.04 20 5.55 25 4.54 31 5.04 Qatar 34 4.65 37 4.95 56 3.84 27 5.15 Romania 68 3.86 98 3.41 47 3.98 54 4.18 Russian Federation 51 4.23 56 4.46 72 3.57 42 4.64 Rwanda 109 2.96 124 2.95 78 3.48 111 2.46 Saudi Arabia 36 4.55 43 4.80 37 4.19 41 4.68 Senegal 100 3.21 104 3.34 87 3.38 98 2.91 Serbia 75 3.73 118 3.05 43 4.05 57 4.10 Singapore 1 6.06 2 6.15 1 6.06 11 5.98 Slovak Republic 37 4.55 51 4.61 32 4.32 39 4.71 Slovenia 30 4.85 30 5.09 29 4.37 28 5.09 South Africa 55 4.04 63 4.32 26 4.45 85 3.34 Spain 16 5.43 5 6.03 12 5.18 29 5.08 Sri Lanka 81 3.65 58 4.39 81 3.43 92 3.12 Sweden 17 5.42 23 5.37 19 4.82 7 6.08 Switzerland 10 5.56 4 6.06 23 4.64 10 5.98 Syria 96 3.35 72 4.11 77 3.48 112 2.45 Taiwan, China 19 5.26 17 5.63 20 4.77 25 5.38 Tajikistan 92 3.40 68 4.16 90 3.35 101 2.68 Tanzania 114 2.87 110 3.18 105 3.07 114 2.35 Thailand 46 4.30 34 4.96 30 4.35 73 3.60 Tunisia 53 4.07 41 4.82 69 3.67 65 3.72 Turkey 47 4.28 39 4.89 38 4.17 64 3.77 Uganda 121 2.76 128 2.63 95 3.30 115 2.35 Ukraine 64 3.91 61 4.34 83 3.42 61 3.98 United Arab Emirates 18 5.30 11 5.84 22 4.70 26 5.36 United Kingdom 4 5.83 9 5.91 7 5.32 3 6.27 United States 15 5.45 14 5.75 13 5.00 18 5.62 Uruguay 59 3.95 83 3.80 70 3.65 48 4.41 Venezuela 94 3.36 97 3.45 102 3.10 77 3.52 Vietnam 56 4.04 90 3.66 28 4.44 60 4.01 Yemen 108 2.99 119 3.05 61 3.77 125 2.14 Zambia 112 2.91 101 3.36 115 2.92 113 2.44 Zimbabwe 122 2.75 116 3.07 108 3.02 123 2.16 The Global Enabling Trade Report 2012 | 17 @ 2012 World Economic Forum
- 40. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 Table 6: The Enabling Trade Index 2012: Business environment PILLARS BUSINESS ENVIRONMENT 8. Regulatory environment 9. Physical security Country/Economy Rank Score Rank Score Rank Score Albania 52 4.45 72 3.62 44 5.28 Algeria 120 3.37 123 2.88 106 3.86 Angola 104 3.63 129 2.60 78 4.66 Argentina 111 3.51 124 2.87 97 4.14 Armenia 61 4.36 85 3.54 49 5.17 Australia 18 5.38 17 4.91 17 5.85 Austria 16 5.38 25 4.74 13 6.02 Azerbaijan 59 4.37 60 3.75 59 4.99 Bahrain 19 5.34 10 5.25 35 5.42 Bangladesh 95 3.82 92 3.49 96 4.14 Belgium 24 5.27 27 4.70 18 5.84 Benin 79 4.10 88 3.51 76 4.70 Bolivia 118 3.39 115 3.12 115 3.67 Bosnia and Herzegovina 78 4.11 110 3.20 55 5.02 Botswana 33 4.89 33 4.43 39 5.35 Brazil 75 4.14 70 3.66 81 4.62 Bulgaria 98 3.74 101 3.38 99 4.10 Burkina Faso 84 3.99 108 3.30 77 4.68 Burundi 129 2.95 130 2.58 124 3.31 Cambodia 88 3.91 67 3.70 98 4.12 Cameroon 85 3.98 103 3.33 79 4.63 Canada 15 5.38 14 5.15 30 5.61 Chad 127 3.24 126 2.72 112 3.75 Chile 23 5.28 20 4.86 26 5.70 China 45 4.63 38 4.31 62 4.95 Colombia 112 3.46 77 3.60 123 3.32 Costa Rica 67 4.24 53 3.91 84 4.57 Côte d’Ivoire 122 3.34 120 3.01 113 3.68 Croatia 60 4.36 102 3.36 37 5.37 Cyprus 29 5.12 28 4.62 28 5.61 Czech Republic 54 4.43 66 3.70 51 5.16 Denmark 4 5.77 8 5.27 3 6.28 Dominican Republic 119 3.39 104 3.33 122 3.45 Ecuador 117 3.40 113 3.14 114 3.67 Egypt 93 3.83 58 3.78 104 3.88 El Salvador 125 3.26 89 3.50 131 3.01 Estonia 27 5.18 30 4.56 19 5.79 Ethiopia 70 4.23 90 3.50 61 4.97 Finland 1 5.96 6 5.39 1 6.54 France 31 5.03 26 4.72 41 5.33 Gambia, The 40 4.73 39 4.29 50 5.17 Georgia 50 4.49 64 3.72 45 5.26 Germany 21 5.31 21 4.85 22 5.77 Ghana 64 4.31 61 3.73 65 4.88 Greece 80 4.09 97 3.46 73 4.73 Guatemala 128 3.11 95 3.47 132 2.75 Guyana 101 3.70 86 3.54 105 3.86 Haiti 131 2.84 132 2.38 125 3.30 Honduras 110 3.51 84 3.55 121 3.47 Hong Kong SAR 7 5.75 5 5.42 9 6.08 Hungary 53 4.45 63 3.73 48 5.17 Iceland 20 5.33 40 4.25 2 6.41 India 74 4.20 50 3.95 87 4.45 Indonesia 77 4.12 49 3.97 91 4.28 Iran, Islamic Rep. 83 4.01 98 3.42 82 4.60 Ireland 25 5.25 31 4.54 14 5.97 Israel 44 4.64 29 4.57 75 4.72 Italy 65 4.30 80 3.58 57 5.01 Jamaica 105 3.63 69 3.67 118 3.59 Japan 26 5.18 23 4.80 31 5.57 Jordan 35 4.85 44 4.15 32 5.55 Kazakhstan 89 3.90 99 3.41 88 4.38 Kenya 108 3.59 75 3.61 120 3.57 Korea, Rep. 57 4.42 59 3.76 53 5.08 Kuwait 36 4.80 45 4.10 33 5.50 Kyrgyz Republic 116 3.45 127 2.72 95 4.18 (Cont’d.) 18 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 41. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 Table 6: The Enabling Trade Index 2012: Business environment (cont’d.) PILLARS BUSINESS ENVIRONMENT 8. Regulatory environment 9. Physical security Country/Economy Rank Score Rank Score Rank Score Latvia 58 4.41 62 3.73 52 5.09 Lebanon 97 3.78 79 3.58 103 3.98 Lesotho 99 3.71 111 3.19 92 4.23 Lithuania 51 4.45 74 3.62 42 5.29 Luxembourg 6 5.75 3 5.46 11 6.04 Macedonia, FYR 73 4.21 81 3.57 68 4.86 Madagascar 124 3.31 121 3.01 116 3.62 Malawi 68 4.24 68 3.68 71 4.79 Malaysia 30 5.03 22 4.85 46 5.22 Mali 94 3.82 106 3.30 89 4.35 Mauritania 121 3.35 122 2.91 110 3.79 Mauritius 43 4.69 37 4.36 56 5.02 Mexico 114 3.45 71 3.62 126 3.28 Moldova 87 3.93 112 3.15 74 4.72 Mongolia 82 4.06 114 3.13 60 4.99 Montenegro 32 5.02 41 4.24 21 5.79 Morocco 55 4.43 48 3.99 66 4.87 Mozambique 102 3.69 107 3.30 101 4.07 Namibia 49 4.54 43 4.17 63 4.91 Nepal 126 3.24 109 3.25 128 3.24 Netherlands 14 5.47 11 5.22 25 5.72 New Zealand 10 5.63 7 5.35 16 5.91 Nicaragua 106 3.62 118 3.04 94 4.19 Nigeria 109 3.53 91 3.49 119 3.57 Norway 9 5.66 9 5.26 10 6.05 Oman 13 5.55 18 4.91 7 6.19 Pakistan 123 3.34 83 3.56 129 3.12 Panama 66 4.26 46 4.03 85 4.48 Paraguay 115 3.45 105 3.31 117 3.59 Peru 92 3.83 56 3.87 109 3.80 Philippines 107 3.61 96 3.46 111 3.76 Poland 46 4.61 51 3.94 43 5.29 Portugal 38 4.78 54 3.89 27 5.67 Qatar 11 5.61 13 5.21 12 6.02 Romania 81 4.09 100 3.40 72 4.77 Russian Federation 113 3.45 117 3.07 107 3.84 Rwanda 17 5.38 24 4.79 15 5.97 Saudi Arabia 8 5.70 12 5.21 8 6.18 Senegal 56 4.42 94 3.47 38 5.37 Serbia 91 3.85 116 3.08 80 4.63 Singapore 5 5.75 1 5.71 20 5.79 Slovak Republic 63 4.32 76 3.60 54 5.04 Slovenia 39 4.73 65 3.72 23 5.75 South Africa 71 4.22 36 4.36 100 4.08 Spain 41 4.73 47 3.99 34 5.46 Sri Lanka 47 4.59 42 4.17 58 5.01 Sweden 2 5.88 2 5.54 4 6.22 Switzerland 3 5.82 4 5.44 6 6.19 Syria 48 4.54 93 3.48 29 5.61 Taiwan, China 22 5.31 19 4.88 24 5.73 Tajikistan 72 4.22 78 3.60 70 4.83 Tanzania 90 3.88 87 3.53 93 4.22 Thailand 76 4.13 52 3.93 90 4.32 Tunisia 37 4.78 35 4.36 47 5.20 Turkey 86 3.95 55 3.87 102 4.03 Uganda 100 3.71 73 3.62 108 3.81 Ukraine 103 3.66 125 2.86 86 4.46 United Arab Emirates 12 5.58 16 4.96 5 6.21 United Kingdom 28 5.16 15 4.98 40 5.34 United States 42 4.69 32 4.54 69 4.85 Uruguay 34 4.89 34 4.38 36 5.40 Venezuela 132 2.75 131 2.42 130 3.07 Vietnam 69 4.24 82 3.57 64 4.90 Yemen 130 2.93 128 2.61 127 3.26 Zambia 62 4.34 57 3.81 67 4.86 Zimbabwe 96 3.81 119 3.03 83 4.59 The Global Enabling Trade Report 2012 | 19 @ 2012 World Economic Forum
- 42. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 Index this year are Angola, Haiti, the Islamic Republic of and a business environment that is highly conducive to Iran, Lebanon, Moldova, Rwanda, and Yemen. trade. Clearance by customs and other border agencies is efficient, transparent, and fast, although importing THE ENABLING TRADE INDEX 2012 RANKINGS and exporting goods remain very costly. With its very The detailed rankings from this year’s ETI are presented dense ICT penetration, Denmark is at the forefront in Tables 1 through 6. Table 1 compares the 2012 when it comes to ICT infrastructure. By the same token, rankings with those from the 2010 edition, while Tables 2 its quality of transport infrastructure is world-class. through 6 provide the details of the four subindexes and Also among Denmark’s strengths is the quality of its the nine pillars of the ETI for all economies covered. business environment (4th). The sizeable gap with the two countries preceding it in the overall ETI rankings is TOP 10 the result of Denmark’s rather mediocre performance As in previous years, the top 10 of the Enabling Trade in the market access component, where it ranks 67th. Index 2012 continues to be dominated by relatively small, Denmark, as do all other EU Member States, owes this open economies for which trade is key to achieving low position to the highly complex common external efficiency because their domestic markets are small. tariff schedule of the European Union (105th). In addition, Singapore continues to lead the way by a large, and although the tariffs applied by the European Union are widening, margin over second-ranked Hong Kong SAR. very low (3th), its members still face average tariffs of And as in the previous edition, two Nordic economies— close to 6 percent in destination markets, which places Denmark and Sweden—occupy 3rd and 4th place. them 79th out of 132 economies. Further down in the top 10 we observe some movement Sweden, ranked 4th, posts a performance similar as New Zealand continues its upward trend, gaining to Denmark’s. Maintaining its position since the previous one position to reach 5th place, while Finland and the edition of the Report, the country stands out for its Netherlands improve to occupy 6th and 7th position, highly efficient and transparent border administration, as respectively. Switzerland, Canada, and Luxembourg reflected in its 2nd rank (after Singapore) in the related round up the top 10 in this year’s ETI. subindex. Another area of strength is its very good Singapore remains at the head of the ETI rankings ICT infrastructure, where Sweden ranks 7th thanks by maintaining its outstanding performance across the to the extensive use of Internet by businesses and its board. As a small country, Singapore has a very open universal use of mobile telephony. Finally, Sweden offers trade policy and exporters face only a few barriers a business environment that is remarkably conducive in target markets. Singapore also is rewarded for the to trade (2nd), characterized by extremely high ethical extreme simplicity of its tariff structure, ranking 4th on standards in the public and private sectors (2nd), a very this indicator, just a few places behind first-placed Hong efficient government (4th), well-functioning financial Kong. Singapore’s border administration is second to markets (5th), and a high degree of openness to foreign none in terms of efficiency and is highly transparent participation (9th), although the hiring of foreign labor (3rd). As in previous years, the assessment of the quality remains rather difficult (63rd). By contrast, the highly and availability of its transport infrastructure is equally complex tariff structure makes Sweden, like other EU excellent. Singapore leads the way for the quality of members, a laggard in the market access component its air transport, seaport, and road infrastructure. Even (67th). more importantly, its regulatory environment is the best New Zealand gains one position to reach 5th in the ETI sample, with well-defined property rights, place overall. The country’s excellent performance on little corruption and undue influence, and a high level of the transparency pillar of the border administration openness to FDI. Taken together, all these factors enable component contributes to the efficiency of its border Singapore to be one of the most successful trading administration, although it underperforms on some nations worldwide. specific indicators, including the fees, number of Placed 2nd, Hong Kong SAR continues to deliver a documents, and time associated with exporting and consistently strong performance across the components importing goods. Partly because of New Zealand’s of the ETI. Hong Kong’s commitment to developing trade remoteness and small size, the availability and quality of is shown in the absence of trade barriers in the domestic its transport services (44th) are limited, as reflected by market (ranked 1st), although its exporters face some its low ranking on the Liner Shipping Connectivity Index of the highest barriers in other countries (130th). Hong (60th) and the transshipment connectivity index (51st). Kong’s 1st place in the quality of transport infrastructure On a more positive note, New Zealand offers a favorable reflects outstanding infrastructure facilities available business environment (10th), although removing across the four main transport modes: air (2nd), sea inefficiencies related to financial markets (27th) and (3rd), rail (3rd), and road (9th). Finally, Hong Kong offers making trade finance (22nd) more widely available would a very conducive environment for business (7th), with help the country to further boost international trade. the efficiency of its financial sector (2nd) in general and Finland occupies the 6th position in the 2012 ETI access to trade finance in particular rated as second to rankings, moving up six places following improvements none. across the four main components of the ETI. Finland’s Denmark maintains its strong 3rd position. The business environment, second to none, is characterized best-ranked of the Nordics boasts a highly efficient by strong institutions, efficient financial markets, and a border administration, a well-developed infrastructure, high level of security. At the same time, the country has 20 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 43. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 made great strides to improve the penetration and use (119th). Some barriers related to border administration of ICTs by individuals, government, and businesses, persist; these result in very high average costs to export achieving a very good 4th position on the related pillar. (104th) and import goods (92nd). On a more positive Transport services and the associated infrastructure have note, Canada boasts good transport infrastructure and equally improved since the 2010 assessment. However, services, including good connectivity, as well as fairly as is the case for other EU Member States, Finland’s high ICT penetration (22nd). Moreover, Canada offers a trade performance remains constrained by barriers to business environment that is conducive to trade (15th), market access, in particular the highly complex tariff with particular strengths lying in a favorable regulatory structure that is difficult to navigate for businesses, as environment (14th) and a good level of physical security well as high tariff barriers in target markets. (30th). The Netherlands moves up by three places to Luxembourg rounds up the top 10. The most attain 7th position. Efficient and transparent border positive aspect of the country’s overall ranking is the administration and the high-quality and available quality of its regulatory environment, where it places 3rd transport and logistics services are the strongest thanks to a strong institutional framework, highly efficient aspects of the country’s performance. Customs in the financial markets (7th), and the highest openness to Netherlands offers the necessary services to business foreign participation in the entire sample. The business (5th), and clearance procedures for imports and exports community also recognizes the high prevalence of are hassle-free and require little time (the country is foreign ownership in the country’s economy, the ease 12th on the efficiency of its import-export procedures) with which employers can hire foreign labor, and the while transport services are assessed as being among relative ease of access to trade finance (11th). Less the best in the world in terms of availability and quality positive and uneven is its performance in the border (3rd). Moreover, the country’s connectivity with the rest administration component (21st). Although border of the world via maritime routes is superior (5th), which clearance procedures are generally considered efficient is not surprising given that the country hosts Europe’s by the business community, they remain expensive main maritime gateway, the port of Rotterdam. By the (US$1,420), and Luxembourg receives a rather low score same token, the quality of port infrastructure is assessed on the customs services index (receiving 6 points out of as excellent (2nd). The assessment is somewhat 12, to place 76th). less positive when it comes to specific aspects of its regulatory environment and physical security. Trade ASIA AND THE PACIFIC would benefit both from easier rules and regulations for Asia and the Pacific is host to some of the fastest- hiring foreign labor (21st) and from better protection from growing and largest economies worldwide. Many of the common crime and violence (46th). countries in the region have greatly benefited from trade Although the country has dropped three places, and made it a central part of their growth strategy. In the Switzerland (8th) fares very well in most of the ETI, there is a wide gap between frontrunners Singapore, dimensions of the ETI, with some notable exceptions Hong Kong, and New Zealand and the rest of the within the market access component. Data show that region. Many agree that Asia has yet to fully leverage the Switzerland has the most complex tariff structure opportunities offered by trade in the region, a situation among the 132 countries covered by this Report. Yet that is reflected in the results of the ETI. Except for the this complexity seems to apply to only a small share of top 10 and Australia (17th), countries in the region remain overall trade—primarily to agricultural goods, where the outside the top 20, with China at 56th and India at a low weighted tariff rate amounts to 49 percent. In border 100th. administration, room for improvement remains for Australia ranks 17th as a result of good making procedures less costly, burdensome, and time performances across the board, although specific consuming for both exports and imports. Switzerland areas—such as market access, where the country boasts an excellent infrastructure for roads, railroads, places 54th—have room for improvement. Access to and air transport, which partially compensates for the the country’s domestic market remains hampered by disadvantage of being landlocked. Continuing on this tariffs that, especially for non-agricultural products, are positive note, the country’s regulatory environment is high in international comparison and that apply to a extremely supportive of business activity and trade, large share of imports (44 percent). At the same time, with well-defined property rights (2nd), an efficient Australian exports face some of the highest average government (5th), a high degree of openness to foreign tariffs in the world, 6 percent, and benefit from a very participation (6th), and efficient financial markets (10th). low preference margin. The quality of Australia’s border Canada (9th) remains in the top 10, although it administration has increased significantly (16th), although drops one spot since the 2010 edition. The country owes it could still improve in the time, costs, and paperwork its good position to a consistently good performance associated with exporting and importing goods. Some across all nine pillars of the ETI. Yet there is room for facets of Australia’s transport infrastructure (27th) are improvement, as Canada places below the top 10 on also in need of improvement; maritime transport is the many of the pillars. The country does better than many most worrisome of these, especially given the country’s advanced economies in the market access component remoteness. The country ranks 37th for the quality of (27th) of the Index despite a complex tariff structure its seaport infrastructure, and 37th and 39th on the (86th) and quite high tariffs for agricultural products transshipment connectivity index and Liner Shipping The Global Enabling Trade Report 2012 | 21 @ 2012 World Economic Forum
- 44. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 Connectivity Index, respectively. Finally, the country’s to be more difficult now than in previous years, the business environment is fairly good (18th). Yet among the border administration is somewhat less efficient and various issues affecting their international operations, the less transparent, and transport services and physical business community cites the difficulty of hiring foreign security do not keep up with the overall development of labor (101st), somewhat restrictive rules on FDI (44th). the country. Japan occupies 18th position overall in this year’s The availability and high quality of transport ETI. The country’s domestic market is protected services constitute the main areas of strength for through a highly complex structure of tariffs (99th) that China, which ranks 21st in this category. In particular, apply to agricultural products in particular. Overall, the country tops the Liner Shipping Connectivity Index only 22 percent of imports enter free of tariff duties.7 and displays a solid performance across most of the Despite its export success, Japan remains fairly closed dimensions captured in this pillar. By contrast, transport to participation from outside the country (83rd), as infrastructure (53rd), albeit improving, still presents major manifested in the difficulty of hiring of foreign labor and shortcomings, especially with respect to air transport. restrictive rules on FDI. On a more positive note, Japan’s China’s import-export procedures are assessed as fairly border administration is transparent and efficient. efficient (37th), especially when compared with those of Moreover, the quality of its transport-related services is the other BRIC economies. Average fees associated with world-class (6th), with the most efficient postal service importing and exporting goods are among the world’s worldwide and a high level of logistics competence lowest (3rd), at US$545 and US$500 per container, (9th). At the same time, although the assessment of respectively. However, the time required to complete the quality of transport infrastructure is rather positive these procedures ranges from 21 to 24 days, far longer (18th), Japan’s performance is mixed across the different than in Singapore, for example, which requires only 3 to modes of transport. While the quality of railroads is top 5 days. Although it is fairly efficient, border administration notch (2nd), air transport infrastructure lags far behind remains subject to irregular payments and corruption, as the world’s best (47th). reflected in China’s results on the related variable (59th) Malaysia strengthens its performance and and its 61st position in the Corruption Perceptions Index. moves up to 24th place. The country ranks fairly high China ranks a low 108th on the market access in the market access (32nd) and infrastructure (20th) component, a consequence of its high import tariffs components. Malaysia’s transport infrastructure is of of almost 12 percent (113th) as well as the very narrow high quality (16th) and widely available (9th) and the margin of preference (128th) granted in destination associated services are well developed (10th). Border markets. Finally, the quality of the Chinese regulatory clearance procedures are the least costly in the world environment has improved somewhat (38th, up five and businesses assess them as fairly hassle-free, notches), although business executives perceive crime, although many documents are necessary. The quality of violence, and terrorism to be imposing higher costs on the country’s business environment has improved since their business than they have in previous years. the last assessment, and Malaysia moves up to a good Thailand follows closely at 57th position in this 30th position on the related subindex. In particular, the year’s ETI, up three places since the last edition. Its key costs associated with crime and violence, as well as enabling factors for trade are its efficient import-export the threat of terrorism, are now somewhat contained procedures (20th), including customs administration and the overall regulatory framework remains fairly (36th), which has numerous services in place. It takes propitious (22nd), thanks to efficient financial markets little time and administrative hassle to import and (8th), solid property rights (24th), and strong domestic export goods in Thailand. The country further benefits competition (13th). Additionally, as a founding member of from a well-developed transport infrastructure (34th) as the Association of Southeast Asian Nations (ASEAN), the well as accessible and high-quality transport services country benefits from tariff reduction within this regional (30th). On a less positive note, room for improvement grouping, leading to improved access to foreign markets remains with respect to the transparency of its border as well as a higher margin of preference granted to procedures (82nd), physical security (90th), and access Malaysian exporters. to domestic markets, where Thailand ranks a low 110th China, the world’s largest exporter, occupies despite numerous rounds of liberalization under ASEAN. 56th place in this year’s ETI. Although the country The country’s tariffs are relatively high in international still has considerable room for improvement in every comparison (72nd) and its tariff structure is rather component of the Index, China’s performance appears complex (103rd). At the same time, Thailand’s exporters in a more positive light when compared with that of are in a comfortable position, as only few barriers to their other large countries, such as its BRIC peers. Brazil, exports persist in their target markets. its closest contender, lags 36 places behind China at Indonesia, at 58th, improves by 10 places in 84th, followed by India at 100th, while Russia follows this year’s ETI. The country’s upward movement in at an even lower 112th position. Since 2010, China the rankings reflects improvements primarily in its has dropped by eight positions in the ETI. Although infrastructure and the availability and quality of its this drop is partly explained by the exclusion of data logistics services as well as lower tariffs in export on non-tariff measures, which are not widely used in markets for Indonesian products. Overall, the most China, the country also deteriorates in a number of positive aspects of Indonesia’s performance are found other categories. Access to foreign markets appears in the regulatory framework pillar (49th). The country 22 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 45. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 receives good marks for the efficiency of its financial EUROPE AND NORTH AMERICA sector (29th) and of government policymaking (50th). A number countries within the European Union rank The assessment is more negative regarding security within the top 20 of the ETI rankings, reflecting their (91st), another key determinant of the quality of the well-developed infrastructures, widely available transport overall environment: Indonesia ranks 104th for the costs services, and efficient border administrations. However, associated with the threat of terrorism and 81st for the their trade performance is constrained by the overly reliability of the police, its performance in these areas restrictive common trade policy of the European Union. deteriorating since the last edition. Overall, in spite The United States ranks 23rd this year, continuing of improvements, the quality of Indonesia’s transport its downward trend—the result of a deteriorating infrastructure, including roads and seaports, remains infrastructure and a less conducive regulatory only second-rate (74th), and ICT infrastructure remains environment. The Russian Federation, at 112th place, largely underdeveloped (89th), with sparse Internet ranks below other large emerging markets such as usage and a limited government online presence. Border Brazil, India, and China. The country would benefit from administration also offers a mixed picture. Customs a freer trade policy, more efficient border administration, procedures associated with importing and exporting are and a less burdensome regulatory environment. relatively inexpensive and require little paperwork, but The United Kingdom takes the 11th position in they still take a lot of time by international standards, and this year’s ETI rankings. This strong positioning reflects border administration transparency remains marred by the country’s very good performance in terms of the corruption (88th). efficiency of its overall border clearance process (14th), India ranks a low 100th overall, owing to a mixed especially the performance of customs (4th); its well- and weakening performance in the ETI. Indeed, since developed infrastructure (9th); and its widely available the last edition of the ETI, the country has dropped logistics services (7th). Furthermore, the United Kingdom 16 places in the rankings. This dramatic fall reflects a is able to harness ICTs for trade development in a business environment that is more difficult now, with substantial manner because business, government, and elements of the institutional framework such as the individuals all use the latest technologies, such as mobile protection of property rights, ethics and corruption, telephony or the Internet, extensively. Most importantly, undue influence on government and judicial decisions, the country’s regulatory environment ensures even- and the overall efficiency of the government deteriorating. handedness (15th), transparency (22nd), and openness In addition, the environment for foreign participation to foreign participation (8th). Moreover, its financial appears less open, with higher barriers to foreign markets remain efficient in international comparison ownership. Access to domestic and foreign markets also (18th). However, the cost of ensuring physical security appears more constrained than in previous years, with a still has room for improvement. In particular, protection lower share of imports entering the country duty-free and from terrorism is costly for business, ranking 91st out rising tariffs faced by Indian exporters abroad. of 132 countries on this indicator. As in other European Overall, India’s performance across the Index is countries, market access is constrained because the rather mixed. The trade-related regulatory environment, tariff structure is highly complex and difficult to navigate at 50th place, remains the country’s most important and exporters face, on average, higher tariffs than they relative strength. Among the most notable advantages do in other economies. here are its very efficient financial system (28th) and Germany, the world’s second largest exporter after the availability of trade finance (34th). Other advantages China, is placed 13th after losing one rank since the last include some aspects of its transportation infrastructure edition. As is the case in all EU Member States, Germany and logistics services, such as the quality of its railroads provides fairly strong protection through a highly (24th), the numerous shipping services available (India complex tariff structure (105th) that protects a small ranks 22nd on the Liner Shipping Connectivity Index), number of mainly agricultural products. As in many other and its high connectivity via maritime routes (18th on developed countries, tariffs faced by Germany abroad the transshipment connectivity index). At the same time, are fairly high in international comparison (79th), but the India remains one of the most protected economies in country performs well on all the other pillars of the ETI. the entire sample, ranking 130th out of 132 countries However, irregular payments in exports and imports on domestic market access. The weighted tariff rate appear to be more prevalent (27th) than would be amounts to 13 percent, with 42 percent for agricultural expected from a country with a rather strong regulatory products. The tariff structure is also difficult to navigate environment (21st). Further disadvantages include for business because it is complex and includes many difficulties in hiring foreign labor (83rd) and restrictions on specific tariffs as well as different tariff rates. India FDI (66th). Nevertheless, Germany’s excellent transport could benefit from more extensive use of ICTs for trade infrastructure (7th) and the high quality of the related development by fostering the use of the Internet (115th) services (4th) go a long way toward compensating for as well as mobile telephony (108th). these weaknesses. Other than the Philippines, which benefits greatly France places 20th in this year’s ETI, down by from its open trade policy and attains 72nd place, the one position since the previous edition. The country’s other countries in the region are found below the 100 overall trade environment remains characterized, as in mark, with Bangladesh at 109th, followed by Mongolia other EU economies, by high barriers to the domestic (114th), Pakistan (116th), and Nepal (124th). market by means of highly complex although low tariffs, The Global Enabling Trade Report 2012 | 23 @ 2012 World Economic Forum
- 46. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 which apply to a significant portion of imports. Access the country’s average weighted tariff rates have declined to foreign markets remains limited, with fairly high tariffs slightly and duties are applied to a smaller share of faced and low margins of preference in place. On a imports since the last edition, its tariff structure remains more positive note, France’s transport infrastructure complex (102nd) and the overall level of protection is plays an important role in facilitating trade: once again still high in international comparison (125th). At the same it is assessed as second to none, widely available, and time, Russian exporters face some of the highest tariffs of excellent quality. The high quality of its transport in the sample in export markets abroad (113th). Finalizing services, ranked 11th, also plays a key role in supporting the country’s accession to the WTO could help lower the country’s trade performance. Businesses operate in these trade barriers, thus helping Russian exports to be a largely suitable regulatory environment (26th), with the more competitive abroad. Russia’s low overall ranking only drawbacks being regulations on hiring foreign labor, partially obscures the strengths of its trade environment. which are rather restrictive (107th), and rules governing Given the country’s level of development, its transport FDI, which are not sufficiently conducive to investment infrastructure remains in fairly good condition, although (50th). Physical security is not a major disadvantage its availability is assessed more positively (at 39th) than (41th), although the threat of terrorism continues to pose its quality (at 79th). Russia also continues to benefit from relatively high and rising costs to business (81st, down the availability of ICTs in the context of trade (42nd), from 70th in 2010). with the use of these technologies spreading quickly by Dropping four places, the United States continues both businesses and government. On the other hand, its downward trend since the last edition and is ranked enabling trade in Russia would require an overhaul of the 23rd this year. The country’s performance has fallen in import export procedures (114th) and serious reform of international comparison in almost all areas assessed what is one of the most burdensome customs clearance by the Index, bar the efficiency of its border procedures processes in the world (127th). Russia also obtains poor and the availability of logistics services. The regulatory marks for its regulatory environment (117th), which bears environment appears less conducive to business than witness to the country’s rather protectionist stance with in previous years, falling by 10 ranks from 22nd to 32nd. regard to foreign participation (ranked 114th). Finally, Concerns regarding the protection of property rights, physical security should be improved, by equipping the undue influence on government and judicial decisions, police (122nd) better, for example, to enforce the rule of and corruption are on the rise. And as in previous law. years, protection from the threat of terrorism burdens the business sector with very high cost (112th), and US LATIN AMERICA AND THE CARIBBEAN exporters face some of the highest trade barriers abroad. The performance of the countries in Latin America and Yet overall the United States continues to benefit from the Caribbean places most of them in the middle of hassle-free import and export procedures (17th) and the ETI rankings, although individual countries spread efficient customs clearance (14th), thanks to excellent across the entire ETI sample. As highlighted in past customs services to business (3rd). The country also editions of the Report, the region’s outstanding domestic boasts excellent infrastructure, including ICTs, providing and foreign market access continuous to be the main a strong basis for enabling trade within the country. strength of many countries. However, the overall As in the previous edition, Turkey maintains its business environment remains an area for improvement, 62nd position overall. The country displays a fairly even particularly in terms of corruption and the lack of physical performance across the key categories for enabling security, which impose high costs on exporting and trade. For a country of its size, its trade policy is relatively importing enterprises. open—ranked 37th, with the only drawbacks being At 14th place overall, Chile improves by four the high tariffs on its agricultural products and its fairly positions, once again proving an exception to the complex tariff structure, although this structure applies to performance of most countries in Latin America and the only a fairly small share of imports (24 percent). And even Caribbean and leading the regional ETI rankings. Chile’s though Turkey’s exporters face fairly high tariffs abroad strong commitment to participating in international trade (116th), they benefit from a margin of preference that is is demonstrated by its extended participation in regional relatively higher than those of its peers. Other factors trade agreements (RTAs) as well as the government’s that position the country well for enabling trade are its continuous efforts to improve the country’s facilitation transport infrastructure—which is satisfactory and fairly of trade. Displaying an extraordinary performance in widely available, particularly for air and road transport— terms of market access (2nd), Chile benefits from both and its well-developed logistics services, which ensure its high share of duty-free imports (22nd) and the low that shipments are easy to arrange, affordable, and arrive tariffs (1st) faced by Chilean exporters abroad. Likewise, on time. Further enabling trade would require Turkey to Chile applies an almost uniform tariff on all its imports, reform its border administration to reduce the burden a measure that has considerably helped to reduce the of customs procedures (90th) and to raise transparency complexity of the country’s tariff structure (2nd). The at the border (86th). Moreover, the country’s low and country’s overall assessment of border administration deteriorating physical security, which is caused in part by (23rd) is also positive because of its transparency terrorism, remains a notable disadvantage. (18th) and efficiency (24st). The clearance process is The Russian Federation continues to occupy the characterized by seamless customs procedures (10th) lowest position among its BRIC peers, at 112th. Although as well as little corruption related to exports and imports 24 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 47. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 (16th). In fact, during the past few years, Chile has would also benefit from more broadly available trade made significant efforts toward modernizing its customs finance (74th). However, the most important obstacle regime. Yet despite these advances, its clearance to increasing the benefits of trade in the country is procedures remain time consuming and cumbersome. its escalating insecurity (126th). Common crime and For example, it takes 21 days to export goods from violence and terrorism impose significant and rising the country. With regard to Chile’s communications costs on business, where Mexico ranks 125th and 111th, infrastructure, the still-modest availability and use of ICTs respectively. in the country (44th) indicates room for improvement. Brazil occupies the 84th position in this year’s On the other hand, the country received a sound Report. A G-20 member and a major exporter of assessment of the overall quality of its transport agricultural products, the country has been much infrastructure (35th), thanks in large part to the solid involved in global trade negotiations, representing the quality of its roads (22nd), ports (34th), and air transport interests of both MERCOSUR and developing countries (32nd). Finally, Chile’s favorable business environment more generally.8 Despite the relative importance of (23rd) has also been key to the country’s success in trade for its economy, Brazil’s main weakness remains benefiting from trade. its high protectionism, as captured by the market Costa Rica, ranked 43rd for enabling trade across access pillar (104th). This is mainly the result of high borders, is up one position in this edition of the Report. tariffs (114th), which are imposed on the vast majority As a big contributor to national GDP, trade plays a of imports (98th). The country’s border administration significant role in Costa Rica’s social and economic could also be made more efficient (99th), particularly in development strategies. Like Chile, Costa Rica is an areas such as customs administration, which remains example of best practices in market access (3rd), burdensome (116th), and the overall cost of import and thanks to moderate tariffs (43rd) and a relatively simple export procedures, which has increased considerably tariff structure (36th). In addition, Costa Rica’s border over the past two years and now ranks 112th and 117th, administration is considered to be reasonably efficient respectively. (35th), even though some difficulties were identified by The general assessment of Brazil’s infrastructure the business community regarding irregular payments in is fairly positive (73rd), although the quality of its imports and exports (62nd). Going forward, Costa Rica transport infrastructure could be improved (109th), would benefit from upgrading the quality of its transport especially its ports (121st). Brazil also displays some and communications infrastructure (89th), which has strength with regard to the quality and availability of its deteriorated in the past years. In particular, the quality of transport services (48th) as well as the availability and roads and ports needs to be improved (ranked 115th and use of ICTs (53rd). As is the case for other countries 127th, respectively), and ICTs are still not widely available in the region, the general business environment (75th) or used (ranked 80th). could be improved by making the government more Mexico comes in at 65th place and stabilizes at this efficient (100th), further opening the country to foreign position, following an improvement of 10 positions in the participation through FDI and migration, and reducing previous edition of this Report. These improvements are the business costs of crime and violence (118th). in line with the importance that the Mexican government Argentina, at 96th, drops by one position in attached to trade facilitation and global integration in its this edition, presenting a mixed picture across the national competitiveness plan 2008–2012. Mexico’s trade different areas of the ETI. In order to improve its trade policy is fairly open overall in international comparison, performance, Argentina should address different aspects as reflected in its 18th rank for market access. Over affecting the country’s business environment (111th). In the past two years, the efficiency of its customs particular, regulations affecting property rights (123rd), administration and its overall border administration domestic competition (130th), and the low efficiency have risen from 65th to 58th and 71st to 57th position, of its financial markets (120th) increase the difficulty of respectively. Importing goods has become less costly, doing business in the country. At the border, procedures faster, and is associated with less administrative hassle. are perceived as a burden by business (129th), which Building on these improvements, reforms of the border encounters administrative difficulties across the entire administration should continue. Raising the transparency clearance process of imports and exports (85th). of administrative transactions related to imports and This results in a high cost of importing goods (104th, exports would benefit Mexico’s trade environment with fees of US$1,810 for a 20-foot container) and further. numerous documents required to export (80th). Other Among the areas of concern are the availability areas of concern include a lack of transparency at and quality of Mexico’s transport infrastructure, where the border (102nd), which is related to the frequent the country places 71st. The performance is somewhat irregular payments in exports and imports (112th). As more positive when it comes to transport services in Brazil, tariff rates (104th) that are high in international (66th), where advantages such as the competence of its comparison continue to affect Argentina’s ability to logistics industry (45th) and its ability to track shipments trade, although tariffs faced by Argentine exporters (50th) also helped Mexico’s overall performance. abroad (32nd) are relatively easy to overcome, allowing Further improving the regulatory environment, reducing them to access global markets. Relative to its level corruption (91st), and intensifying competition (100th) of development, the transport and communications would benefit the Mexican trade environment. Exports infrastructure (67th) and the availability and use of ICTs The Global Enabling Trade Report 2012 | 25 @ 2012 World Economic Forum
- 48. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 (52nd) can be considered strengths of the country’s framework with transparent (11th) and efficient (12th) trade environment. government institutions and well-defined property rights (22nd). The country’s recent accession to the WTO was THE MIDDLE EAST AND NORTH AFRICA an important step in opening up to foreign participation, The Middle East and North African region maintains yet Saudi Arabia maintains regulative barriers to foreign a high degree of diversity in terms of enabling trade, ownership (55th), and has signed only a small number of with the United Arab Emirates entering the top 20 trade-enabling multilateral treaties (113th). The positive while Algeria maintains its position at the bottom of the assessment applies equally to its transport sector, rankings. Yemen was added to this year’s sample at where Saudi Arabia did not commit to opening up 119th position. under the GATS provisions (59th). More openness to The United Arab Emirates (UAE) leads the region foreign competition in the logistics sector would support at a strong 19th position, ahead of economies such the development of an efficient logistics and transport as France, Ireland, and the United States. The country industry in the country, thereby providing a base for drops by three positions since the last assessment, further diversifying exports. however, mainly because its trade policy is assessed Israel occupies 4th position in the region and 28th as less open than in previous years. This assessment is worldwide in the ETI. The country’s border administration reflected in its decline from 81st to 102nd place in the is efficient and transparent compared with that of market access component of the Index. The country’s many other countries (22nd). Its import and export share of duty-free imports has decreased from 29 to procedures are fairly simple, and neither particularly 24 percent and its weighted tariff rate has increased, time consuming nor very costly. This efficiency is particularly for agricultural products. At the same time, reflected in the replies to the Survey, where business UAE exporters now face a lower margin of preference leaders ranked import and export procedures 32nd in key export markets (116th, down from 113th). A out of 132 countries. Other strengths that contribute number of factors provide a solid basis for further strong to an environment conducive to trade are the high growth of trade in the country and a strengthening of its penetration of ICTs, which are widely used by both positioning as a key international logistics hub. Clearance businesses for transactions (24th) and the government of goods at the border is very easy (15th), although the for online services (15th). The difficult security situation transparency of border administration lags behind these remains the single most important drawback in Israel’s excellent results somewhat (at 20th). In terms of the trade environment, ranked 75th overall and showing no availability and quality of transport infrastructure, the UAE improvement since the last edition of this Report. Trade outperforms most countries in the world (11th). Another could also be further enabled by more efficient transport distinct advantage is the country’s extremely high services (41st). More openness to foreign participation physical security (5th). (69th) could also contribute to raising the performance Despite progress achieved in these areas, the of the logistics sector and the economy as a whole by UAE could benefit more from trade and its favorable intensifying competition and thereby raising efficiency geographic location on the Europe-Asia trade route if it and stimulating innovation. continues to liberalize its transport services. The country Tunisia, although dropping six positions to 44th presently occupies the 22th position in this category, rank this year, remains the leading country in North up from 29th in the last edition. The government could Africa for enabling trade. The country’s association also place a higher priority on the use of broadband agreement with the European Union, which has created connections (45th), which would not only facilitate trade a free trade area between the two traders as of 2008, directly—for example, by expediting and facilitating has contributed significantly to liberalizing imports into customs clearance through online procedures—but also Tunisia. Nevertheless, Tunisia maintains quite high tariffs would increase Internet use, which would be beneficial (126th for its tariff rate), although the complexity of tariff given that the business sector presently lags behind a regulations has been reduced since the last edition of number of other countries in this area (34th). However, this Report. The country does not apply tariff peaks or the country’s main constraints remain its high domestic specific tariffs, and its share of duty-free imports remains tariffs (59th) and the high trade barriers faced by the high at 76 percent. In contrast to its domestic tariffs, country’s exporters abroad (122nd). Tunisia enjoys fairly easy access to foreign markets Saudi Arabia occupies 27th place globally and (33rd), supported by an important preference margin comes in 3rd in the region, moving up 13 positions (25th). Tunisia’s continued efforts to raise the efficiency in this year’s Report. Consistent improvements in all of its customs administration and simplify the clearance subindexes except for the market access component process are paying off, as reflected in its 30th rank contribute to this result. The efficiency of Saudi Arabia’s for its efficiency of import-export procedures (up from customs services (29th) and border administration 43rd). Overall, although Tunisia continues to benefit (24th) are important factors in facilitating trade. Customs from a business environment that is rather conducive to procedures are efficiently organized (22nd)—it is neither trade (37th), physical security and some aspects of the costly nor burdensome to import and export goods, institutional framework have deteriorated in the wake of although it may be time consuming (e.g., it takes 17 days the events of 2011. Given the importance of trade on to import goods, which corresponds to 59th place). Tunisia’s economic policy agenda, the country should Saudi Arabia also benefits from a solid institutional address these elements on a priority basis. In addition, 26 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 49. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 fostering more openness to foreign participation (58th) (ranked 69th and 82nd, respectively). The country’s and a more efficient financial market (43rd) could further fairly high level of openness to foreign participation contribute to developing trade, which in turn would (41st), in particular through FDI, highlights the country’s provide economic growth and jobs for the country’s commitment to participating in the global economy. population. Room for improvement also remains with Additionally, Mauritius benefits from, in regional respect to the availability and quality of transport comparison, very transparent and efficient governance services (69th) and the availability and use of ICTs (65th), structures and manageable levels of physical security sectors that would benefit from further liberalization and (56th). opening up to foreign participation. South Africa, a G-20 member and the region’s Egypt, the largest country in North Africa, has not most advanced economy, places 63rd with respect to yet fully realized its potential from international trade. As enabling trade across borders, moving up nine positions. reflected in its 90th rank in the ETI, important barriers This improvement is mainly attributable to improved to developing trade persist. Egypt’s most important transport services and a somewhat improving security disadvantage is its trade policy, which—despite situation.9 Compared with other countries in the region, considerable liberalization efforts—appears rather South Africa boasts a very efficient and transparent protectionist in international comparison. The country customs administration (33rd and 47th, respectively), applies high tariffs to 60 percent of total imports. At the a fairly strong regulatory framework (36th), and a high- same time, Egyptian exporters face low tariffs and a high quality transport infrastructure (33rd) and logistics preference margin abroad, placing the country well for services (26th). On the other hand, the simplification of developing exports. In order to take better advantage import and export procedures appears overdue and of growth and employment opportunities offered by would make trading across the border more efficient, as international trade, Egypt would need to enhance its this constitutes the country’s most important bottleneck. customs administration, which remains inefficient (80th) Importing goods into South Africa takes 32 days, and corruption-ridden (94th); address serious concerns requires 8 documents, and costs (for a standardized of the business community regarding the deteriorating container) US$1,795. The country would also benefit securing situation (104th); and further promote the use from being more open to foreign participation, as is of ICTs by business (90th) and individuals (Egypt ranks a evident from its restrictive regulations on FDI (51st) and low 82nd for the extent of Internet use by individuals). its extremely low rank for hiring foreign labor (131st). Furthermore, although physical security is rising, it SUB-SAHARAN AFRICA remains quite low in international comparison (100th), Sub-Saharan African countries enable trade to different particularly because of the costs incurred by businesses degrees, and the trade liberalization efforts of recent to protect their operations from common crime and decades have not been sufficient to significantly violence (126th). improve the trade performance of the region as a Nigeria occupies a low 123rd position in this year’s whole. Many African countries have liberalized trade Report, which reflects serious barriers to moving goods and enjoy significant preferences in target markets, but across borders across all the categories of the ETI. significant improvements in trade facilitation have not yet Domestic market access is restricted by some of the been achieved. As a result, it is still significantly more highest tariffs worldwide, and Nigerian exporters also expensive for countries—both inside and outside the face very high tariffs abroad (127th). Nigeria’s customs continent—to trade with Africa than with other regions; administration is among the least transparent (116th) in many cases, the cost of trading is a more important and least efficient in the world (115th), and transport obstacle to trade development than trade policies. infrastructure as well as a precarious security situation Mauritius, one of the African countries best inhibit trade development and diversification. The robust harnessing the benefits of international trade, maintains growth the country has experienced since 2005, which the top position in sub-Saharan Africa at 36th place, led to doubling trade between 2003 and 2009, could ahead of the rest of the region by a wide margin. With support momentum for continuing reforms that began in low domestic policy–related barriers (6th) and few the beginning of the last decade. Continuing to reform barriers in target markets (24th), the country is among the customs administration to bring it up to date and in the top performers in the entire sample on the market line with international best practice, along with continued access pillar (6th). Yet, although tariffs are very low, improvements to the infrastructure, would greatly benefit complexities in their structure (90th) make it difficult the trade environment for Nigeria’s trading companies for business to navigate. With rather efficient and and enable the country to continue on to grow. transparent border agencies (29th) and a solid transport infrastructure (40th), potential bottlenecks in getting CONCLUSIONS goods across borders could arise with respect to the This chapter has presented the results of the ETI for availability and quality of transport services, as well 132 economies and analyzed selected economies in as the quality of transport infrastructure, ranked 89th. more detail. This methodology, first published in 2008, International shipments are not easy and they are costly measures the ease of getting goods across borders to arrange from Mauritius (104th), and the country’s and to destination. It has been developed by the World tracking and tracing ability as well as overall logistics Economic Forum in collaboration with leading companies competence lag behind in international comparison from the logistics and transportation sector and experts The Global Enabling Trade Report 2012 | 27 @ 2012 World Economic Forum
- 50. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 from trade-related international organizations. The Index categorizes the obstacles into four categories: market access, border administration, transport and communication2, and the business environment. Recent developments in the trade agenda—such as the increase in the significance of emerging markets, the continued international fragmentation of the supply chains, and the impasse in the Doha Round—all raise the importance of practical measures that countries can take to enable trade and better participate in the global division of labor, with the ultimate aim of supporting economic growth. By ranking countries according to the barriers to trade they have in place, The Global Enabling Trade Report provides key information on one specific set of measures that could enable countries to further benefit from trade in this new and rapidly changing global environment. The Report is intended to be a motivator for change and a foundation for dialogue, by providing a yardstick of the extent to which countries have in place the factors that facilitate the free flow of goods and by identifying areas where improvements are most needed. NOTES 1 The BRIC countries are Brazil, the Russian Federation, India, and China. 2 We have focused on the flow of trade in goods in the Index for expository purposes, although we recognize that enabling in services is also important. By circumscribing the issue clearly, the Index provides a useful vehicle for analyzing policy on a clearly defined part of the issue. Trade in goods accounts for upwards of 80 percent of all trade, and is therefore highly relevant. 3 Everything but Arms (EBA) is an initiative of the European Union, entered into force in 2001, that stipulates that all imports to the European Union from least-developed countries are duty-free and quota free, with the exception of armaments. 4 For landlocked countries, the access to ports is measured. 5 The score of each subindex is derived as an unweighted average of the pillars that constitute it. 6 Tests were carried out using regression analysis in a gravity model of trade. See Lawrence et al. 2009. 7 It has to be noted that Japan’s 2012 assessment has benefitted from the exclusion of the indicator of non-tariff measures in this year’s ETI, and that the Survey was to a large extent carried out before the tsunami in March 2011. 8 The “Common Market of the South,” MERCOSUR is South America’s largest trading bloc. 9 Furthermore, South Africa has benefitted from the removal of the data on non-tariff measures. REFERENCES Lawrence, R., M. Drzeniek Hanouz, T. Geiger, and Q. He. 2009. “Enabling Trade in the Global Crisis.” The Global Enabling Trade Report 2009. Geneva: World Economic Forum. 3–35. Sala-i-Martin, X., B. Bilbao-Osorio, J. Blanke, M. Drzeniek Hanouz, and T. Geiger. 2011. “The Global Competitiveness Index 2011–2012: Setting the Foundations for Strong Productivity.” In The Global Competitiveness Report 2011–2012. Geneva: World Economic Forum. 3–74. World Economic Forum. 2010. The Global Enabling Trade Report 2010. Geneva: World Economic Forum. 28 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 51. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 Appendix A: Composition of the Enabling Trade Index This appendix provides details about the construction of SUBINDEX A: MARKET ACCESS the Enabling Trade Index (ETI). The ETI is composed of four subindexes: the market Pillar 1: Domestic and foreign market access access subindex; the border administration subindex; the A. Domestic market access transport and communications infrastructure subindex; 1.01 Tariff rate (hard data) and the business environment subindex. These 1.02 Non-tariff measures (hard data) subindexes are, in turn, composed of the nine pillars of 1.03 Complexity of tariffs (hard data) 3 the ETI: domestic and foreign market access, efficiency Tariff dispersion (hard data) of customs administration, efficiency of import-export Tariff peaks (hard data) procedures, transparency of border administration, Specific tariffs (hard data) availability and quality of transport infrastructure, Distinct tariffs (hard data) availability and quality of transport services, availability 1.04 Share of duty-free imports (hard data) and use of ICTs, regulatory environment, and physical B. Foreign market access security. These pillars are calculated on the basis of both 1.05 Tariffs faced (hard data) hard data and survey data. 1.06 Margin of preference in destination markets The survey data are mainly derived from the responses (hard data) to the World Economic Forum’s Executive Opinion Survey and range from 1 to 7. In addition, survey data from the World Bank’s Logistics Performance Index (LPI) have also SUBINDEX B: BORDER ADMINISTRATION been included. The hard data were collected from various recognized sources, such as the World Bank, the World Pillar 2: Efficiency of customs administration Trade Organization (WTO), the International Trade Centre 2.01 Burden of customs procedures (ITC), and the United Nations Conference on Trade and 2.02 Customs services index (hard data) Development (UNCTAD). The data are described in detail in the Technical Notes and Sources section at the end of this Pillar 3: Efficiency of import-export procedures Report. All of the data used in the calculation of the ETI can 3.01 Efficiency of the clearance process 4 be found in the Data Tables on the website of the Report 3.02 Time to import (hard data) 3.03 Documents to import (hard data) (www.weforum.org/getr). 3.04 Cost to import (hard data) The hard data indicators used in the ETI, as well as 3.05 Time to export (hard data) the results from the LPI survey, are normalized to a 1-to-7 3.06 Documents to export (hard data) scale in order to align them with the Executive Opinion 3.07 Cost to export (hard data) Survey results.1 Each of the pillars has been calculated as an unweighted average of the individual component Pillar 4: Transparency of border administration variables. The subindexes are then compounded as 4.01 Irregular payments in exports and imports unweighted averages of the included pillars. 4.02 Corruption Perceptions Index (hard data) In the case of the domestic and foreign market access pillar, the score in the domestic market subpillar accounts for two-thirds and the score in foreign market access accounts for one-third of the overall pillar. In (Con’td.) the case of the availability and quality of transport infrastructure pillar, which is itself composed of two subpillars (availability of transport infrastructure and quality of transport infrastructure), the overall pillar is the unweighted average of the two subpillars. The overall ETI is then calculated as the unweighted average of the four subindexes. The variables and the composition of pillars are described below. If a variable is one of hard data, this is indicated in parentheses after the description. The Global Enabling Trade Report 2012 | 29 @ 2012 World Economic Forum
- 52. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 SUBINDEX C: TRANSPORT AND COMMUNICATIONS NOTES INFRASTRUCTURE 1 The standard formula for converting each hard data variable to the 1-to-7 scale is Pillar 5: Availability and quality of transport infrastructure country score – sample minimum A. Availability of transport infrastructure 5.01 Airport density (hard data) 6x ( sample maximum – sample minimum ) +1 5.02 Transshipment connectivity index (hard data) 5.03 Paved roads (hard data) The sample minimum and sample maximum are the lowest and highest scores of the overall sample, respectively. For those hard B. Quality of transport infrastructure data variables for which a higher value indicates a worse outcome 5.04 Quality of air transport infrastructure (e.g., tariff barriers, road congestion), we rely on a normalization 5.05 Quality of railroad infrastructure formula that, in addition to converting the series to a 1-to-7 scale, 5.06 Quality of roads reverses it, so that 1 and 7 still correspond to the worst and best 5.07 Quality of port infrastructure possible outcomes, respectively: Pillar 6: Availability and quality of transport services country score – sample minimum 6.01 Liner Shipping Connectivity Index (hard data) 6.02 Ease and affordability of shipment 4 –6 x ( sample maximum – sample minimum ) +7 6.03 Logistics competence 4 In some instances, adjustments were made to account for 6.04 Tracking and tracing ability 4 extreme outliers in the data. 6.05 Timeliness of shipments in reaching 4 2 This indicator is not included in the pillar calculation. destination 6.06 Postal services efficiency 3 Complexity of tariffs is the average of the other four variables. 6.07 GATS commitments in the transport 4 The LPI data are derived from the World Bank’s Logistics sector (hard data) Performance Index Survey, which is based on a 1-to-5 scale. LPI Pillar 7: Availability and use of ICTs data were normalized to a 1-to-7 scale using the above formula in 7.01 Extent of business Internet use order to align it with the Executive Opinion Survey results. 7.02 Mobile telephone subscriptions (hard data) 5 These variables are composite indicators comprising multiple 7.03 Broadband Internet subscribers (hard data) variables used in the World Economic Forum’s Global 7.04 Government Online Service Index (hard data) Competitiveness Index. For details, see The Global 7.05 Internet users (hard data) Competitiveness Report 2010–2011. 6 Openness to foreign participation is the average of the other four variables. SUBINDEX D: BUSINESS ENVIRONMENT Pillar 8: Regulatory environment 8.01 Property rights 5 8.02 Ethics and corruption 5 8.03 Undue influence 5 8.04 Government efficiency 5 8.05 Domestic competition 5 8.06 Efficiency of the financial market 5 8.07 Openness to foreign participation 6 Ease of hiring foreign labor Prevalence of foreign ownership Business impact of rules on FDI Openness to multilateral trade rules (hard data) 8.08 Availability of trade finance Pillar 9: Physical security 9.01 Reliability of police services 9.02 Business costs of crime and violence 9.03 Business costs of terrorism 30 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 53. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 Appendix B: Enabling Trade Index 2012 and 2010 results compared The tables on the following pages compare the ranks and scores of the 2012 and 2010 Enabling Trade Index (ETI). The 2010 results have been recalculated with the non-tariff measure indicator excluded (indicator 1.02; see Box 2 for further explanation). The table also compares the ranks and scores of the market access pillar, which included non-tariff measures in the 2010 ETI. (Cont’d.) The Global Enabling Trade Report 2012 | 31 @ 2012 World Economic Forum
- 54. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 Table 1: Enabling Trade Index 2012 and 2010 Enabling Trade Enabling Trade Enabling Trade Index 2010 (excluding Enabling Trade Index 2010 (excluding Index 2012 non-tariff measures) Index 2012 non-tariff measures) Change in Change in Country/Economy Rank Score Rank Score score Country/Economy Rank Score Rank Score score Singapore 1 6.14 1 6.13 0.00 Greece 67 4.07 57 4.20 –0.13 Hong Kong SAR 2 5.67 2 5.70 –0.03 Vietnam 68 4.02 76 3.94 0.08 Denmark 3 5.41 3 5.48 –0.06 Romania 69 4.02 54 4.23 –0.21 Sweden 4 5.39 4 5.47 –0.08 El Salvador 70 3.99 59 4.16 –0.17 New Zealand 5 5.34 5 5.37 –0.03 Serbia 71 3.97 72 3.98 –0.01 Finland 6 5.34 8 5.31 0.02 Philippines 72 3.96 79 3.89 0.07 Netherlands 7 5.32 7 5.32 0.01 Sri Lanka 73 3.95 97 3.60 0.36 Switzerland 8 5.29 6 5.33 –0.04 Bulgaria 74 3.93 78 3.89 0.04 Canada 9 5.22 11 5.26 –0.04 Namibia 75 3.92 70 3.99 –0.07 Luxembourg 10 5.20 9 5.31 –0.11 Moldova 76 3.92 n/a n/a n/a United Kingdom 11 5.18 17 5.12 0.06 Guatemala 77 3.90 68 4.01 –0.11 Norway 12 5.17 12 5.26 –0.08 Honduras 78 3.89 71 3.98 0.09 – Germany 13 5.13 10 5.27 –0.13 Jamaica 79 3.89 77 3.92 –0.03 Chile 14 5.12 18 5.11 0.02 Bosnia and Herzegovina 80 3.87 82 3.85 0.02 Austria 15 5.12 13 5.23 –0.12 Azerbaijan 81 3.85 80 3.88 –0.04 Iceland 16 5.08 14 5.21 –0.13 Nicaragua 82 3.83 74 3.95 –0.12 Australia 17 5.08 15 5.13 –0.06 Ecuador 83 3.83 86 3.80 0.03 Japan 18 5.08 23 4.94 0.13 Brazil 84 3.79 83 3.84 –0.05 United Arab Emirates 19 5.07 16 5.12 –0.05 Malawi 85 3.79 88 3.76 0.03 France 20 5.03 20 5.08 –0.05 Ukraine 86 3.79 84 3.83 –0.05 Belgium 21 4.96 22 4.96 0.00 Dominican Republic 87 3.78 75 3.94 –0.16 Ireland 22 4.96 19 5.09 –0.13 Zambia 88 3.78 90 3.75 0.03 United States 23 4.90 21 5.02 –0.12 Colombia 89 3.78 87 3.80 –0.02 Malaysia 24 4.90 32 4.68 0.21 Egypt 90 3.78 69 4.00 –0.23 Oman 25 4.86 36 4.67 0.19 Gambia, The 91 3.74 85 3.83 –0.08 Estonia 26 4.85 24 4.94 –0.09 Senegal 92 3.72 81 3.86 –0.13 Saudi Arabia 27 4.84 43 4.47 0.37 Lebanon 93 3.71 n/a n/a n/a Israel 28 4.82 27 4.76 0.06 Tanzania 94 3.69 89 3.76 –0.08 Taiwan, China 29 4.81 30 4.72 0.09 Bolivia 95 3.68 96 3.61 0.07 Bahrain 30 4.80 25 4.88 –0.08 Argentina 96 3.68 91 3.74 –0.07 Spain 31 4.79 26 4.77 0.03 Mozambique 97 3.65 95 3.64 0.01 Qatar 32 4.74 33 4.68 0.06 Uganda 98 3.64 98 3.58 0.06 Slovenia 33 4.65 29 4.73 –0.08 Ghana 99 3.59 101 3.55 0.04 Korea, Rep. 34 4.65 31 4.72 –0.08 India 100 3.55 92 3.74 –0.19 Portugal 35 4.63 34 4.68 –0.05 Paraguay 101 3.53 100 3.56 –0.03 Mauritius 36 4.62 35 4.67 –0.04 Cambodia 102 3.52 107 3.46 0.07 Cyprus 37 4.61 28 4.76 –0.14 Kenya 103 3.52 103 3.49 0.03 Georgia 38 4.58 38 4.59 –0.01 Guyana 104 3.52 110 3.42 0.10 Montenegro 39 4.46 42 4.47 –0.01 Kazakhstan 105 3.50 93 3.69 –0.19 Uruguay 40 4.44 49 4.37 0.07 Ethiopia 106 3.49 106 3.47 0.02 Czech Republic 41 4.42 39 4.54 –0.12 Madagascar 107 3.48 94 3.67 –0.18 Jordan 42 4.42 37 4.66 –0.24 Syria 108 3.47 102 3.50 –0.03 Costa Rica 43 4.41 45 4.45 –0.04 Bangladesh 109 3.46 111 3.38 0.08 Tunisia 44 4.39 40 4.51 –0.12 Tajikistan 110 3.45 109 3.43 0.02 Lithuania 45 4.39 41 4.49 –0.10 Kyrgyz Republic 111 3.45 99 3.58 –0.13 Croatia 46 4.39 44 4.45 –0.06 Russian Federation 112 3.41 108 3.45 –0.04 Hungary 47 4.39 48 4.38 0.00 Lesotho 113 3.41 105 3.47 –0.06 Poland 48 4.37 56 4.22 0.16 Mongolia 114 3.40 113 3.33 0.07 Albania 49 4.36 62 4.11 0.26 Benin 115 3.39 104 3.49 –0.09 Italy 50 4.36 50 4.31 0.05 Pakistan 116 3.39 112 3.35 0.04 Rwanda 51 4.35 n/a n/a n/a Iran, Islamic Rep. 117 3.31 n/a n/a n/a Latvia 52 4.31 47 4.42 –0.11 Cameroon 118 3.28 118 3.21 0.06 Peru 53 4.31 63 4.09 0.21 Yemen 119 3.25 n/a n/a n/a Botswana 54 4.31 55 4.22 0.09 Algeria 120 3.22 117 3.25 –0.04 Slovak Republic 55 4.29 46 4.43 –0.15 Mali 121 3.18 116 3.30 –0.12 China 56 4.22 51 4.29 –0.07 Burkina Faso 122 3.15 114 3.31 –0.17 Thailand 57 4.21 53 4.23 –0.02 Nigeria 123 3.13 120 3.18 –0.05 Indonesia 58 4.19 65 4.07 0.12 Nepal 124 3.07 119 3.20 –0.13 Armenia 59 4.19 52 4.24 –0.05 Mauritania 125 3.06 115 3.30 –0.24 Panama 60 4.16 60 4.12 0.04 Côte d’Ivoire 126 3.02 122 3.03 –0.01 Macedonia, FYR 61 4.13 58 4.16 –0.03 Angola 127 3.01 n/a n/a n/a Turkey 62 4.13 64 4.07 0.06 Haiti 128 2.97 n/a n/a n/a South Africa 63 4.10 66 4.06 0.04 Zimbabwe 129 2.96 123 2.80 0.17 Morocco 64 4.08 73 3.98 0.10 Venezuela 130 2.95 121 3.05 –0.10 Mexico 65 4.08 61 4.11 –0.03 Burundi 131 2.95 124 2.79 0.16 Kuwait 66 4.07 67 4.01 0.06 Chad 132 2.63 125 2.74 –0.11 32 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 55. 1.1: Reducing Supply Chain Barriers: The Enabling Trade Index 2012 Table 2: Market access 2012 and 2010 Market access Market access Market access 2010 (excluding Market access 2010 (excluding 2012 non-tariff measures) 2012 non-tariff measures) Change in Change in Country/Economy Rank Score Rank Score score Country/Economy Rank Score Rank Score score Singapore 1 6.20 1 6.25 –0.04 Denmark 67 3.90 68 4.01 –0.11 Chile 2 5.69 2 5.86 –0.17 Sweden 67 3.90 68 4.01 –0.11 Costa Rica 3 5.53 7 5.37 0.15 Finland 67 3.90 68 4.01 –0.11 Peru 4 5.51 10 5.33 0.19 Netherlands 67 3.90 68 4.01 –0.11 Nicaragua 5 5.33 3 5.65 –0.32 Luxembourg 67 3.90 68 4.01 –0.11 Mauritius 6 5.30 11 5.28 0.02 United Kingdom 67 3.90 68 4.01 –0.11 El Salvador 7 5.18 4 5.55 –0.37 Germany 67 3.90 68 4.01 –0.11 Honduras 8 5.18 5 5.45 –0.27 Austria 67 3.90 68 4.01 –0.11 Georgia 9 5.10 6 5.43 –0.33 France 67 3.90 68 4.01 –0.11 Hong Kong SAR 10 5.08 14 5.12 –0.04 Belgium 67 3.90 68 4.01 –0.11 Guatemala 11 5.00 9 5.33 –0.33 Ireland 67 3.90 68 4.01 –0.11 Malawi 12 5.00 29 4.79 0.21 Estonia 67 3.90 68 4.01 –0.11 Armenia 13 4.94 8 5.33 –0.40 Spain 67 3.90 68 4.01 –0.11 Philippines 14 4.90 27 4.83 0.07 Slovenia 67 3.90 68 4.01 –0.11 Albania 15 4.87 25 4.85 0.02 Portugal 67 3.90 68 4.01 –0.11 Uganda 16 4.86 17 4.97 –0.11 Cyprus 67 3.90 68 4.01 –0.11 Indonesia 17 4.86 39 4.59 0.27 Czech Republic 67 3.90 68 4.01 –0.11 Mexico 18 4.84 12 5.19 –0.35 Lithuania 67 3.90 68 4.01 –0.11 Moldova 19 4.83 n/a n/a n/a Hungary 67 3.90 68 4.01 –0.11 Macedonia, FYR 20 4.81 38 4.62 0.19 Poland 67 3.90 68 4.01 –0.11 Rwanda 21 4.81 n/a n/a n/a Italy 67 3.90 68 4.01 –0.11 Ecuador 22 4.79 15 5.01 –0.22 Latvia 67 3.90 68 4.01 –0.11 Bolivia 23 4.77 13 5.13 –0.36 Slovak Republic 67 3.90 68 4.01 –0.11 Iceland 24 4.76 22 4.93 –0.17 Greece 67 3.90 68 4.01 –0.11 New Zealand 25 4.74 28 4.80 –0.06 Romania 67 3.90 68 4.01 –0.11 Ukraine 26 4.73 32 4.75 –0.02 Bulgaria 67 3.90 68 4.01 –0.11 Canada 27 4.68 35 4.74 –0.06 Lebanon 93 3.89 n/a n/a n/a Zambia 28 4.68 23 4.90 –0.22 Argentina 94 3.87 57 4.18 –0.31 Madagascar 29 4.66 19 4.96 –0.30 Qatar 95 3.87 97 3.93 –0.06 Tanzania 30 4.65 20 4.95 –0.30 Kuwait 96 3.83 96 3.94 –0.12 Mozambique 31 4.63 21 4.94 –0.31 Guyana 97 3.82 104 3.79 0.02 Malaysia 32 4.62 37 4.63 0.00 Japan 98 3.79 108 3.77 0.02 Oman 33 4.54 46 4.46 0.08 Panama 99 3.78 95 3.97 –0.19 Uruguay 34 4.50 18 4.96 –0.47 Tajikistan 100 3.72 61 4.12 –0.39 Burundi 35 4.49 105 3.78 0.71 Taiwan, China 101 3.70 112 3.71 0.00 Jordan 36 4.49 26 4.83 –0.34 United Arab Emirates 102 3.69 102 3.85 –0.16 Kenya 37 4.49 30 4.78 –0.29 Sri Lanka 103 3.68 110 3.73 –0.04 Montenegro 38 4.41 24 4.86 –0.45 Brazil 104 3.64 66 4.03 –0.40 Kyrgyz Republic 39 4.39 16 5.00 –0.61 Ethiopia 105 3.63 67 4.03 –0.40 Botswana 40 4.39 34 4.74 –0.35 Nepal 106 3.60 60 4.13 –0.54 Vietnam 41 4.37 52 4.33 0.04 Morocco 107 3.56 100 3.91 –0.35 Croatia 42 4.37 31 4.77 –0.40 China 108 3.55 107 3.77 –0.22 Israel 43 4.35 42 4.51 –0.15 Angola 109 3.55 n/a n/a n/a Paraguay 44 4.34 33 4.75 –0.41 Mongolia 110 3.52 114 3.63 –0.11 Colombia 45 4.33 40 4.55 –0.22 Burkina Faso 111 3.52 65 4.04 –0.53 Serbia 46 4.32 41 4.53 –0.22 Ghana 112 3.51 111 3.71 –0.20 Lesotho 47 4.32 45 4.49 –0.18 Egypt 113 3.48 98 3.92 –0.44 Bosnia and Herzegovina 48 4.26 44 4.50 –0.24 Mali 114 3.46 63 4.08 –0.62 Norway 49 4.24 50 4.40 –0.17 Korea, Rep. 115 3.42 115 3.63 –0.21 Namibia 50 4.23 36 4.69 –0.46 Senegal 116 3.40 103 3.84 –0.44 Turkey 51 4.22 49 4.42 –0.20 Cameroon 117 3.38 116 3.59 –0.21 Bahrain 52 4.22 43 4.50 –0.28 Mauritania 118 3.36 99 3.91 –0.55 Tunisia 53 4.17 48 4.44 –0.27 Venezuela 119 3.29 109 3.76 –0.47 Australia 54 4.12 56 4.18 –0.06 Kazakhstan 120 3.19 59 4.14 –0.96 Yemen 55 4.09 n/a n/a n/a Benin 121 3.17 106 3.77 –0.61 Switzerland 56 4.08 64 4.06 0.02 Syria 122 3.14 118 3.35 –0.21 Azerbaijan 57 4.07 55 4.20 –0.14 Côte d’Ivoire 123 3.07 117 3.39 –0.33 Jamaica 58 4.06 54 4.22 –0.16 Nigeria 124 3.06 119 3.33 –0.27 Thailand 59 4.03 101 3.89 0.14 Gambia, The 125 3.04 120 3.29 –0.25 United States 60 4.02 62 4.11 –0.09 Chad 126 3.04 113 3.67 –0.63 Saudi Arabia 61 4.02 94 4.00 0.01 Algeria 127 3.00 122 3.17 –0.16 Dominican Republic 62 4.01 47 4.44 –0.43 Pakistan 128 2.95 123 3.10 –0.16 Haiti 63 4.00 n/a n/a n/a Russian Federation 129 2.94 124 3.04 –0.09 Cambodia 64 4.00 58 4.16 –0.16 India 130 2.60 121 3.18 –0.57 Bangladesh 65 3.96 51 4.37 –0.41 Zimbabwe 131 2.57 125 2.64 –0.07 South Africa 66 3.95 53 4.24 –0.30 Iran, Islamic Rep. 132 2.17 n/a n/a n/a The Global Enabling Trade Report 2012 | 33 @ 2012 World Economic Forum
- 56. @ 2012 World Economic Forum
- 57. CHAPTER 1.2 Two broad, contradictory trends are at work in the global economy. First, economic globalization through multinational corporation (MNC) production networks The Rise of International continues apace. This dynamic promotes global economic convergence and integration. The global value Supply Chains: chains that the MNCs operate have become the world economy’s backbone and central nervous system. Implications for Global The increasing importance of global production chains is reflected in the rising trade in intermediate Trade inputs, which now represent more than half of the goods imported by economies in the Organisation for Economic Co-operation and Development (OECD) and Global Agenda Council on the Global Trade System close to three-quarters of the imports of large developing economies, such as China and Brazil.1 Imported inputs also account for a significant chunk of exports, blurring the line between exports and imports as well as between domestic products and imports. As part of global production chains, products at different stages of value- added may be imported and re-exported multiple times, increasing the size of reported exports and imports relative to global and national value-added. In advanced countries, this effect is reinforced by the fact that imports can contain a significant portion of inputs—including intellectual property, brand development, and so on— originally sourced at home; in developing countries, imports of components and machines are crucial vehicles for the absorption of technologies. According to OECD estimates, imported intermediate input content accounts for about one- quarter of OECD economies’ exports, and the European Central Bank (ECB) estimates that such imports accounted for about 44 percent of EU exports (or 20 percent for imports from outside of the European Union) in 2000, ranging from about 35 percent in Italy to about 59 percent in the Netherlands.2 In the United States, imported intermediate input content in exports reached about 10 percent in 2005. Among emerging economies, imported content’s share in exports is particularly high in China—about 30 percent, or twice that of India and Brazil. With globalization, the use of imported intermediates for exports has been growing.3 According to the OECD, all but one of its 34 member countries increased the import content of its exports over the period 1995– 2005. The increase was particularly marked in small countries such as Israel and Luxembourg, which saw increases of about 20 percentage points, compared with 3–8 percentage point increases in large countries such as Germany, Japan, and the United States. This is in keeping with the general trend of import content accounting for a larger share of exports in smaller economies. However, the second trend, which pertains to economic crisis policy responses, is one of divergence. This chapter provides a summary of the key points highlighted by the report of the World Economic Forum’s Global Agenda Council on the Global Trade System entitled The Shifting Geography of Global Value Chains: Implications for Developing Countries and Trade Policy. The full report is forthcoming and will be available at www.weforum.org/getr. The Global Enabling Trade Report 2012 | 35 @ 2012 World Economic Forum
- 58. 1.2: The Rise of International Supply Chains Associated with this is the ever-present threat of a 5. Southern markets will continue to grow in relative destructive spiral of protectionism and consequent importance, while growth in Europe is likely to disintegration. Such an escalation would have serious remain structurally repressed for the foreseeable consequences for the global economy, particularly future. This imbalance is likely to drive value the most vulnerable and trade-dependent states, and chain reorientation and relocation, potentially in highlights the critical role the World Trade Organization unpredictable ways. (WTO) has played in stemming the tide of protectionism. 6. Investment in infrastructure could be added to the Unfortunately, WTO member states remain unable to list of potential drivers of change. conclude the Doha Development Round, throwing the WTO’s continued centrality to the global trading system For these reasons, the geography of value chain into sharp relief. Fortunately, the resilience and increased location is likely to shift, potentially fundamentally, within interdependence of the global economy has also played the next decade. This has major implications for those a key role in containing protectionism: governments countries that have specialized in value chain niches, quickly realized the futility of discriminatory stimuli and and for developing countries looking to secure new the cost of raising barriers on intermediate goods on niches. The geographical shift will play out differently in which whole segments of domestic industries depend.4 different contexts: developed countries are increasingly However, fundamental changes to global value concerned about retaining jobs; some developing chains are taking place. In the next decade, the countries are attempting to retain their existing value underlying cost structures driving value chain location chain niches, while others are trying to establish value could change dramatically. At least five drivers are chain niches for the first time. evident: These dynamics will drive unilateral trade policy 1. Energy and associated transportation costs are responses centered on promoting competitiveness, likely to continue rising as the cost of fossil fuels efficiency, and attractiveness to value chain investments. increases and policy measures targeted at carbon In addition, the international rules governing value chain emissions intensify. The fracas over airlines operations need to be revisited with a view to updating associated with the European Union’s emissions them so that the new emerging context can evolve trading scheme is an early harbinger of the kinds optimally. Those rules apply at two levels: at the regional of issues that may arise. These cost pressures level, with preferential trade agreements (PTAs), and promote reductions in the “length” of value chains. internationally, in the WTO. Consequently, the World Economic Forum’s Global 2. In the same way, as new players from emerging Agenda Council on the Global Trade System (the markets secure access to various resources for Council) decided to consider these matters in more input into production processes, competition detail; the Council’s report, The Shifting Geography will increase and the prices of those resources of Global Value Chains: Implications for Developing are likely to rise. Export restrictions designed Countries and Trade Policy presents these efforts. The to secure domestic supplies of key industrial present chapter summarizes the main contributions inputs—both agricultural and mineral—if not of that report; then we provide some overall properly regulated, are also likely to intensify, thus recommendations. placing further upward pressure on prices. 3. China is at the center of global value chains in THE EMERGENCE OF SUPPLY CHAINS AND THEIR manufacturing, particularly in labor-intensive IMPLICATIONS FOR GLOBAL TRADE RULES sectors. But as China continues to shift its growth The main historical shifts in industrial location began model away from a reliance on exports toward with the industrial revolution in Britain and subsequently domestic consumption, wage costs are likely to spread to Western Europe, particularly Germany, and rise sharply and the currency should continue later to the United States, which developed an “American its appreciation. Other domestic costs, such as management” based on “scientific” techniques. An land, are also rising. Hence the “China cost” is alternative tradition, based on a different “scientific likely to continue mounting. To be sure, there management” paradigm, developed in the Soviet Union are moderating forces. Cost pressures can be but ultimately failed owing to the many shortcomings of mitigated by productivity growth, which in the command economics. Subsequently Japan perfected Chinese case has been rapid. Moreover, the its “compete out/protect in” model, which was centered western provinces still have hundreds of millions on giant keiretsu rather than value chain dispersion of workers eager to join the “new China,” so through arms-length relationships. The South Korean some caution is appropriate in predicting sharp chaebol then adopted the Japanese compete out/ changes. protect in model, with the significant exception of their ongoing sourcing of parts and components from outside 4. Information technology costs are likely to be the chaebol, particularly from Japan. Taiwan, China, driven down through intense technological by contrast, developed its industrial structure from the competition and innovation. This drop in costs bottom up on the basis of small and medium enterprises opens up opportunities for countries wishing to supplying parts and components to large corporate take advantage of the value chains action. 36 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 59. 1.2: The Rise of International Supply Chains original equipment manufacturers from Europe and are captured in the Chinese 12th Five Year Plan, the the United States as the process trade expanded into outcome of which remains to be seen. East Asia. As labor costs in South Korea and Taiwan, The services dimension of global value chains is China, rose, they too shifted production within the region equally important. Services provide the link at each point and so China became the latest and most significant of the manufacturing value chain, without which they beneficiary.5 could not function. These enabling services, particularly A different set of dynamics underpinned the business and ICT services, have grown the fastest in emergence of global value chains in recent decades. The world services trade and collectively constitute “other “first great unbundling” took place in the 19th century as commercial services.” More open services markets allow steam power drove innovations in shipping and railroads, for more efficient or higher-quality distribution or logistics thereby radically lowering transportation costs. That drop services, thus enabling greater participation in global in costs enabled the spatial separation of production and value chains and world trade. Similarly, better functioning consumption, while scale economies and comparative infrastructure services, such as transport, reduce the advantage promoted the unbundling process. Thus average times needed to import and export thereby goods were made in one country and shipped to reducing costs while promoting efficiency and reliability. consumers in another. Accordingly, economic policies Furthermore, a key objective for MNCs is to shift from and trade rules were designed on the basis of national manufacture and assembly into design, innovation, perspectives, in a world of selling goods.6 research and development, logistics, marketing, and The first unbundling required on-site coordination of branding. In this way, intangible things are becoming production and distribution. The 1980s information and increasingly important in global value chains.10 communication technologies (ICT) revolution promoted Services themselves are being unbundled and decentralization of information flows and therefore the traded as tasks. The quintessential examples are back- second great unbundling, whereby production stages office and data processing services, but other services were dispersed to geographically distinct locations, such as research are also being unbundled and traded thus harnessing comparative advantage and scale across national borders. Developing countries wishing economies. This process gave rise to what Baldwin to capture a share of services value chains may find it calls “21st-century trade,”7 or the trade-investment easier to capture one or more tasks in the chain, rather nexus. That nexus encompasses trade in parts and than attempt to compete along the entire spectrum. components; international investment in production As with manufacturing value chains, the key facilities and associated material and non-material inputs; challenge for MNCs is to move up the services value and strong demand for a range of services to coordinate chain. This requires strong human capital and electronic dispersed production processes. This diversity and infrastructure. It also requires open trade and investment interconnection of wide-ranging elements enabled firms policies to promote the competitive provision of such to combine their high technology with foreign workers.8 services. Regulatory simplicity and efficiency, key China typifies these forces par excellence. components of a good governance paradigm, are China’s success in global value chains is rooted in essential. And regulatory modal neutrality—allowing the ICT revolution, which greatly promoted production MNCs to switch freely between modes of supplying dispersion and undercut tight vertical control as services and to combine them when necessary—is exercised by Japan’s industrial keiretsu. Simultaneously a key enabler. All this needs to be underpinned by a global market emerged for the first time because the quality institutions, which in turn affect the regulatory communist bloc collapsed and developing countries environment.11 pursued unilateral trade liberalization. China’s success Giant manufacturing MNCs also tend to depend resembled the Taiwanese model rather than Japan’s, on services inputs. One example is General Electric’s with a key difference being its openness to foreign global web of research centers, through which globally direct investment (FDI) in order to pursue compressed integrated innovation is pursued in a 24-hour production development at a rapid pace.9 cycle made possible through advanced ICT linkages. However, nothing is pre-ordained. Japan dominated General Electric also has to provide maintenance and global manufacturing in the 1980s, just as the Europeans other services to its huge global network.12 (excepting Germany) and the United States had before What do big MNCs look for when taking their decline inevitably set in. In this context, it is likely locational decisions? Such investment decisions are that China will encounter several challenges in the not taken lightly, especially in a technology-intensive future. First, external market dynamism is undoubtedly company such as General Electric; rather they tend to repressed in the wake of the global financial crisis—a be significant resource commitments that are not easily major problem for China’s export-led model. Second, abandoned. In other words, firms such as General the docile rural-sourced labor force that fueled the initial Electric make a long-term forecast of location conditions wave of industrialization in the country is giving way to before locating a facility, and once the location decision a younger urban labor force with higher expectations. is made, it is not easily changed. These decisions are Third, there is great desire in the leadership to promote not based simply on cheap labor costs, or firms would more value-addition in China and thus to alter the terms be flocking to Haiti and Congo, which they patently are of the compressed development model. These pressures not. Rather, productivity is the key labor issue.13 The Global Enabling Trade Report 2012 | 37 @ 2012 World Economic Forum
- 60. 1.2: The Rise of International Supply Chains There are four key enabling elements or factors intermediate inputs in world trade. The first implication is that must be in place for making location decisions. that the importance of bilateral trade balances is greatly The first factor is the potential of the local market—“the exaggerated, because they do not reflect value-added. business case is simply more compelling when the This understanding has major political implications. For country at issue represents a large or potentially large example, some estimates place China’s trade surplus market.”14 The second factor is the availability of suitable with the United States between 20 and 40 percent human resources. For a technology-intensive company, lower than official data suggest, whereas Japan and productivity is more important than labor cost; for South Korea’s balances with the United States may design-intensive activities, access to the best possible be understated since China is a key plank in their knowledge is critical. The third factor is the availability of companies’ processing trade.17 physical infrastructure. And the fourth, and most crucial, Similarly, services are not adequately captured in factor is the strong and conducive legal and policy official trade statistics—one recent estimate reckoned environments that embed the rule of law. that services account for 40 percent of world trade on Absent these conditions, MNCs will be reluctant a value-added basis rather than the currently estimated to fully commit to the market in question. An emerging 20 percent.18 Unfortunately, although trade economists challenge is the trend toward promoting technology seem to be in broad agreement about the need to transfer through policy intervention in value chain location incorporate value-added and better measures of decisions, such as “buy local” or “indigenous innovation” services trade into trade statistics, it is a very complex policies as a precondition for access to procurement undertaking that is unlikely to gain traction soon. markets. It can be argued that MNCs will be reluctant to Nonetheless, the need to establish better data and commit to markets with these preconditions, particularly better measures deserves a great deal more official if the four enabling elements are not satisfied. By support and resources.19 contrast, or perhaps partly because of this trend, US The second implication of global value chain MNCs are increasingly “on-shoring” their investments growth is that the importance of exports as a driver of back into the United States, since the country provides demand is overestimated, while the importance of trade the four key elements.15 as a source of economic efficiency is underestimated. The case is very different when considering the Essentially, policymakers fail to recognize that exports labor-intensive apparel industry, with reference to sub- depend on imported inputs, whereas exported inputs Saharan Africa. Clothing is one of the most traded feed into others’ imports. Furthermore, imports are a commodities worldwide, and it is particularly sensitive critical channel through which developing countries to government policies governing trade, especially absorb technology.20 exchange rates. Nonetheless, it is possible to identify The third implication is that trade has become potential opportunities for African countries to plug more volatile and a larger source of external shocks, into niches in the global value chains that characterize largely owing to the fact that durable goods trade has this intensely competitive industry, particularly labor- grown rapidly and demand for durable goods fluctuates intensive garment manufacturing. In order to do so, more than that for other tradables (goods or services). such countries need to harness the abundant pool of Furthermore, since countries are increasingly specialized young, semi-skilled labor available at comparatively in certain manufacturing niches, external shocks are low wages; develop existing comparative advantages more rapidly transmitted through trade in durable goods. in the production of high-quality cotton with favorable The answer to this danger, however, lies not in reducing fiber characteristics; and tap into the huge potential trade, but in building better safeguards against financial reservoir of renewable energy resources available on instability and fostering more trade cooperation at the the subcontinent to power energy-intensive textiles multilateral level. The flipside of increased external production cycles.16 vulnerability is reduced vulnerability to domestic shocks. For these African countries to take advantage of Fourth, in addition to these negative implications, this opportunity, several conditions need to be satisfied. the cost of protection is now higher than generally One key barrier is that markets remain fragmented, and understood, and rising, especially for smaller economies this fragmentation has inhibited the development of where the share of intermediate imports in exports is competitive clothing and upstream textiles. It follows that large. This underscores the growing importance of trade regional integration focused on reducing transactions facilitation in its broadest sense—to reduce transaction costs is a key imperative—in other words, PTAs matter. costs associated with intermediate trade, and thereby More importantly, domestic governance reforms plug countries into global value chains more effectively.21 aimed at establishing quality public institutions that will deliver sustained economic, social, and environmental IMPLICATIONS FOR DEVELOPING COUNTRIES AND performance, thereby boosting investor confidence, TRADE RULES are critical. These will take African countries beyond It is clear that governments need to recognize that their current reliance on access to preferential trade exports are only part of the development story. It is schemes offered by developed countries into sustainable important for policymakers to develop better measures competitiveness. of trade flows net of intermediate imports, and more The growth of global value chains has four broad generally to develop a better appreciation of how a implications that are represented by the growing share of particular economy fits into global production chains. 38 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 61. 1.2: The Rise of International Supply Chains Failure to do so can lead to inaccurate policy conclusions rather than process-trade. As such, these rules do not about the importance of bilateral trade imbalances, to account for a range of policies and barriers that do not significant underestimates of the cost of protection, and inhibit selling things per se, but do hinder moving things. to a lack of appreciation of the importance of bilateral or This problem afflicts the WTO in particular, which has regional trading relationships. Generally, the existence struggled to advance beyond its traditional focus on of large and growing trade in intermediates, which is market access barriers to trade in goods. The global associated with FDI and the globalization of production, nature of today’s production chains; the intermingling greatly raises the stakes for countries to have open and they imply of exports of services, goods, and movement predictable trade and investment regimes, including of capital and of specialized workers; and the essential efficient logistics. If they do not adopt this perspective, role played in them by efficient trade logistics all point to then “old” policy approaches can have serious the increased importance of comprehensive multilateral consequences. For example, trade remedies often disciplines to facilitate the operation of such chains. The backfire by frustrating the efficiencies occasioned by WTO’s contribution potentially spans services, intellectual intermediate trade, disrupting supply chains, and costing property, trade facilitation, and tariffs on imported inputs. domestic jobs when the aim of applying trade remedies Furthermore, trade and investment are two sides of the is to save them. same economic coin: trade rules cannot work without This is inherently a unilateral perspective. The investment rules—and vice versa. developments described in The Shifting Geography Unfortunately our global trade rules fall considerably of Global Value Chains report present challenges for short of the 21st century, and our global investment rules industrial policies and require new thinking. Although it are, regrettably, nearly nonexistent. Furthermore, value may be attractive to some policymakers and domestic chains evolved historically as Southern export platforms constituents to promote import replacement or restrict to service Northern markets, but now we are seeing exports for industrial policy reasons, such policies shifts in Southern locations and increasing targeting of will inhibit both trade in intermediates and inward other southern markets. Yet the Doha Round is largely investment into value chain niches. For example, predicated on a North-South negotiating dynamic. As these developments point to the serious inaccuracies value chain relocation takes hold, driven by emerging- that occur when products and trade balances are market growth, so the new dynamics need to be classified as “high-tech” or “technologically intensive” reflected in the way the WTO conducts its business. with a view to drawing implications for industrial policies This argues for concluding the outstanding agreement or indicating technological prowess. For instance, the on trade facilitation at the WTO as soon as possible, United States is said to have large deficits in “advanced so that some of the logistical barriers to the operation technology” products with many developing countries, of global value chains can be removed and the costs especially China. Yet the failure to appreciate that US lowered. Despite the stasis in the Doha Round, a positive imported products that are attributed to developing outcome on a trade facilitation agreement would go very countries may actually contain large amounts of value- much in the right direction to facilitate the 21st-century added elsewhere—indeed in the United States—leads paradigm of world trade. to seriously erroneous conclusions. More generally, These issues raise an obvious question: how can the chains pose difficulties for industrial policies WTO rules be advanced in the absence of a conclusive because industries have become more fragmented multilateral trade round? In the perspective of the and unbundling suggests that they are not necessarily Council, the key to this is for the WTO’s membership to appropriate units for policy analysis. The more pursue plurilateral, or small group, negotiations under the often products cross borders in the course of their auspices of the WTO.22 The politics of this approach are manufacture, the more significant trade facilitation challenging, but the systemic implications of continued policies become. If only 20 percent of the value of the stasis in the WTO are arguably worse. final product is produced in a country, a 5 percent trade Two further implications relate to services trade cost is the equivalent of a 25 percent tax on that activity. and investment. First, trade rules should be updated However, an open trade regime is not enough to promote modal neutrality in services trade and on its own to benefit from being inserted into global investment. Specifically, modes 1 (cross-border trade) value chains. Countries need to invest in horizontal and 3 (cross-border investment) should be open and policy measures—notably education, infrastructure, therefore facilitate modal switching. Second, regulators and technology transfer—in order to enhance access need to promote regulatory coherence across borders to global value chains and the long-term benefits they so as not to establish bottlenecks in the value chain offer. Domestic governance and institutional reform are creation process. This could be done through the also essential preconditions, particularly in developing adoption of general or sector-specific principles, or both. countries. MNCs pay close attention to these softer Given these problems with updating WTO rules, issues when making long-term decisions about where to trade rules have advanced faster in PTAs than within locate key aspects of their global value chains. the multilateral framework or related vehicles such as Currently the rules that govern global value chains bilateral investment treaties. Production chains are are based on the first unbundling, or the notion that firms even more intense at the regional level, and regional in one nation sell things to customers in another nation. agreements can more easily deal with the complexity Hence the rules framework concerns product-trade they imply—pointing to regional negotiations as an The Global Enabling Trade Report 2012 | 39 @ 2012 World Economic Forum
- 62. 1.2: The Rise of International Supply Chains important complement to multilateral disciplines. 18 For the underlying data source, see the US Bureau of Economic Analysis, based on Stephenson 2012. Nonetheless, PTAs could add to transactions costs in the absence of multilateral disciplines advancing 19 Stephenson 2012. in the WTO. Furthermore, PTA rules are based on an 20 Dadush 2012. antiquated understanding of where goods are “from”— 21 Dadush 2012. hence the Byzantine networks of “rules of origin.” But 22 See the World Economic Forum, Global Agenda Council on Trade goods are now “from” everywhere—because of global 2010 report on plurilaterals, available at http://www3.weforum.org/ value chains. In a world of supply chains, the least- docs/GAC10/WEF_GAC_Trade_Paper_2009-10.pdf. developed countries have increased opportunities to 23 See the World Economic Forum, Global Agenda Council on Trade enter into processing activities, potentially on a large 2011 report on PTAs, available at http://www3.weforum.org/docs/ scale, but this implies their adding relatively small GAC11/WEF_GAC_Trade_Paper_2011.pdf. amounts of value-added to any particular product. Under these circumstances, rules of origin that REFERENCES require 30 or 40 percent of local value-addition or an Ali, S. and U. Dadush. 2011a. “The Rise of Trade in Intermediates: Policy Implications.” International Economic Bulletin, February extensive array of local production processes—such 10. Carnegie Endowment for International Peace. Available at as yarn-forward rules for clothing—may well preclude http://carnegieendowment.org/2011/02/10/rise-of-trade-in- underdeveloped countries from taking advantage of intermediates-policy-implications/458. such opportunities. This would mean that such assembly ———. 2011b. “Trade in Intermediates and Economic Policy.” VoxEU. operations would not qualify under many rules of origin org, February 9. Available at http://www.voxeu.org/index. php?q=node/6088. for preferential treatment. Rules such as those developed in the African Growth and Opportunities Act, which Baldwin, R. 2012 forthcoming. “Global Manufacturing Value Chains and Trade Rules.” In The Shifting Geography of Global Value Chains: allow much greater use of imported inputs by the least- Implications for Developing Countries and Trade Policy. Geneva: developed countries, are needed to avoid this problem. World Economic Forum. Therefore new approaches to negotiating PTAs, Bhatia. K. 2012 forthcoming. “Case-Study 1: General Electric with a view to making them more compatible with Corporation: Advanced Manufacturing in Perspective.” In The actual global value chain operations and ultimately Shifting Geography of Global Value Chains: Implications for Developing Countries and Trade Policy. Geneva: World Economic WTO disciplines, are also required. At the very least it Forum. suggests an approach rooted in reducing transactions Dadush, U. 2012 forthcoming. “Broader Implications of the Growing costs, not raising new barriers to trade. A key Trade in Intermediates.” In The Shifting Geography of Global Value question is how these bottom-up changes could be Chains: Implications for Developing Countries and Trade Policy. incorporated into the WTO’s architecture. The Council’s Geneva: World Economic Forum. recommendations in this regard are available in its report ECB (European Central Bank). 2005. “Competitiveness and the Export on PTAs.23 Performance of the Euro Area.” ECB Occasional Paper Series, No. 30, June. Frankfurt am Main: ECB. Available at http://www.ecb.int/ pub/pdf/scpops/ecbocp30.pdf. NOTES 1 This section is based on articles by Shimelse Ali and Uri Dadush in IBRD (International Bank for Reconstruction and Development)/ The Carnegie’s International Economics Bulletin (Ali and Dadush 2011a) World Bank. 2010. Global Value Chains in A Post-Crisis World: A and in VoxEU (Ali and Dadush 2011b). Development Perspective. Washington DC: IBRD/World Bank. 2 This estimate is based on five European economies—Germany, Ismail, S. 2012 forthcoming. “Case-Study 2: Socota Group: Sub- Italy, the Netherlands, Austria, and Finland—which account for Saharan Africa in the Global Apparel Value Chain.” In The Shifting around 60 percent of euro area GDP. See ECB 2005. Geography of Global Value Chains: Implications for Developing Countries and Trade Policy. Geneva: World Economic Forum. 3 For details of the calculation and sources of data, see Dadush 2012. Lehmann, J.-P. 2012 forthcoming. “China and the Global Supply Chain in Historical Perspective.” In The Shifting Geography of Global 4 IBRD/World Bank 2010, pp. 10–11. Value Chains: Implications for Developing Countries and Trade Policy. Geneva: World Economic Forum. 5 Lehmann 2012. Stephenson, S. 2012 forthcoming. “Services and Global Value Chains.” 6 Baldwin 2012. In The Shifting Geography of Global Value Chains: Implications for 7 Baldwin 2012. Developing Countries and Trade Policy. Geneva: World Economic Forum. 8 Baldwin 2012. World Economic Forum, Global Agenda Council on Trade. 2010. “A 9 Lehman 2012. Plurilateral ‘Club-of-Clubs’ Approach to World Trade Reform and New Issues.” Available at http://www3.weforum.org/docs/GAC10/ 10 Stephenson 2012. WEF_GAC_Trade_Paper_2009-10.pdf. 11 Stephenson 2012. ———. 2011. “Preferential Trade Arrangements and the World Trading 12 Bhatia 2012. System.” Available at http://www3.weforum.org/docs/GAC11/ WEF_GAC_Trade_Paper_2011.pdf. 13 Bhatia 2012. 14 Bhatia 2012, forthcoming. 15 Bhatia 2012. 16 Ismail 2012. 17 Dadush 2012. 40 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 63. CHAPTER 1.3 We live in an age of unprecedented economic integration in trade, capital flows, and knowledge. However, as the recent financial crisis has demonstrated, several gaps The Global Value Chain, in the existing system of economic measurement and related policymaking can present serious problems. the Enterprise-Based The existing economic measurement system, which includes national income and product accounts Operating Model, and related policy design in taxation and incentives, was established in the early 20th century when and Challenges to countries conducted trade and finance largely at arm’s length. Since then, technology breakthroughs the Sovereign-Based in transportation and communications, in combination with the development of the hub-and-spoke distribution system, have lifted economies of scale and dramatically Economic Measurement increased “system speed.” Standardization—a result of modern logistical design in the implementation of global System supply and value chains—has greatly accelerated the pace of global convergence. GENE HUANG FedEx Corporation GLOBAL JUST-IN-TIME VALUE CHAINS AND INCREASING SOPHISTICATION OF THE ECONOMY The mismatch between a sovereign-based measurement system and the globalized, enterprise- (or ownership-) based operating model currently prevails in both the real sector and the financial sector. This mismatch suggests the need for a new way of thinking about measuring economic activity to reflect 21st century realities and trends in order to facilitate access to opportunity, to highlight areas of risk, and to avoid unintended policy consequences. Effects of increasing transportation speed and lowering costs Starting in the early 1960s, the world shrank dramatically as the speed of jet air travel doubled from 300 miles per hour in 1950 to 600 miles per hour in 1960. A nonstop transatlantic airline flight fell to just six hours by 1960, a time that remains in effect today.1 A decade later, in the early 1970s, Fred Smith founded Federal Express (now FedEx Express) and incorporated the concept of the hub-and-spoke network into the company as an indispensable operation strategy for air cargo delivery. With this system, packages are collected at various pick-up points, routed to a central distribution point for sorting, and rerouted to reach their final destinations. This system maximizes the number of attainable connections, which is crucial to lowering costs because it exploits economies of scale in an industry with large fixed costs. The hub-and-spoke system also enables the economics of flow, which refers to the way average costs fall as a consequence of increases in the number of types of products offered. As a result, air shipments grew from virtually nonexistent in the 1970s to where they are today: accounting for a third of global trade by value—approximately US$3 trillion dollars worth—but only a little over 1 percent of global trade by weight.2 The author would like to thank FedEx Corporate Economics team mem- bers Steve Baker, Kellie Maske, and Tim Mullaly for their comments and contributions. The Global Enabling Trade Report 2012 | 41 @ 2012 World Economic Forum
- 64. 1.3: The Global Value Chain Complementary modes of transportation in the Advantage, first described as a value system and is now global distribution system referred to as a value chain.7 Supply chains focus on In the post–World War II period, ocean shipping has integrating supplier and producer processes, improving seen considerable technological and institutional efficiency, and reducing waste; value chains focus changes. Containerization, widespread adoption of on creating value for the customer. In a value chain open-registry shipping, and the economies of scale the customer is the starting point of value, and value that result from increased volume have all helped to flows from the customer, in the form of demand, to the lower costs.3 However, these cost savings have been supplier. The demand flow is manifested in the flow of for the most part offset by rising fuel and port costs. orders and money that parallel the flow of value, and The net effect is that, in the post-war period, real ocean flow in the opposite direction from the flow of supply.8 shipping rates have not seen the remarkable decline in This evolution from single-point delivery to system prices seen in airfreight.4 The fact that airfreight prices flexibility, to supply chain, and then to value chain has have fallen dramatically since 1945 (while ocean freight led to an increasing desire to create business through rates have not) strongly suggests that affordable, rapid each contact point, thus creating opportunities for new distribution has been a key driver of globalization. businesses and benefitting the communities in which Intercontinental airfreight and ocean shipping, along those businesses form. It has also directly contributed with cross-border trucking and rail shipping, are to the ever-growing economic pie and to an increasing complements in the process of globalization. Together sophistication in the global economic structure. Based they provide distribution options that enable firms to map on Angus Madison’s estimates, global gross domestic out their supply-chain portfolio in the most cost-effective product (GDP) doubled from the year 0 to the year 1500, way and to preserve system integrity. doubled again from 1500 to 1800, doubled yet again The need for rapid transport is especially valid in the from 1800 to 1900, and quadrupled from 1900 to 2000. modern economy, in which time sensitivity has increased This explosive growth in the 20th century in output and significantly as the composition of trade has shifted from wealth was greatly supported by the emergence of commodities to increasingly complex manufacturing. modern supply chains and value chains. Furthermore, consumers in the growing global middle Even as the value flowing to the customer becomes class have increased their demand for products with the focus of the distribution system, measuring that value highly varied characteristics. All else being equal, this creation does not fit with the current system of national would lend itself to economies of agglomeration in income accounting. If regulation follows innovation, production, where firms locate near their customers accounting also follows innovation. In this regard, we (both final and intermediate) to adapt rapidly to service- are facing new challenges and opportunities. Consider changing customer preferences. However, efforts transfer pricing, in which intra-firm transnational trade to lower cost have led to greater dispersion of the allocates profits and value to different nations—often production process as firms separate the stages of without the aid of true market prices. In another example production across countries according to comparative of the need for innovation in national accounting, trade advantage.5 Rapid expansion and sophistication of the credit is created where profits are registered in financial transportation network, along with the rising middle centers that are often in countries other than the country class in emerging countries, have also encouraged an in which the actual trade is taking place. Even the increasing focus on local markets and the coining of the seasonality of goods flow is changing and challenging term glocalization. current statistical methods. The rise in global value chains has enabled the rapid System speed of distribution and customer-focused growth seen in emerging markets. This growth in turn global value chains has created a new scope for finance. Portfolio managers The rapid increase in the system speed of transportation now diversify globally in increasingly sophisticated led by air cargo is the backbone of modern just-in-time emerging equity and bond markets, all the result of supply chains. As a result of just-in-time and fast cycle the expansion of “system speed,” which has brought logistics, inventory-to-sales ratios have declined steadily emerging economies into the global system. worldwide, reducing inventory carrying costs and increasing system-wide productivity. Today, the battle The importance of transit time in system cost in most industries and markets is not between firms so calculation much as it is between firms and their network Shipping costs and tariff barriers are the two main costs of suppliers, which are often supplying multiple firms of engaging in international trade. The reduction of tariff in the same industry. As the transportation guru John barriers, as a consequence of the General Agreement Kasarda explains, “Individual companies don’t compete. on Tariffs and Trade (GATT) and its successor the World Supply chains compete. Networks and systems Trade Organization (WTO), has sharply lowered the compete.”6 relative importance of tariff barriers. Consider that total In fact, a new vertical integration—not by direct transportation expenditures, which came to half as much ownership within one nation state as was typical in the as tariff duties for US imports in 1958, had climbed to past, but by contract between firms anywhere in the three times the aggregate tariff duty paid by 2004.9 This world—has transformed yesterday’s supply chain into increase highlights the relative importance in today’s what Michael Porter, in his seminal work Competitive economy of reducing transportation cost, and one of the 42 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 65. 1.3: The Global Value Chain most important factors driving shipping cost—broadly of global GDP.14 Foreign affiliates’ production now defined—is transit time. accounts for about one-tenth of global GDP, while their Extended shipping times impose inventory-holding exports account for about one-third of global exports of costs—financing costs for the goods and the need to goods and services. TNCs in developed countries make hold buffer stocks—as well as depreciation costs borne up nearly 80 percent of the TNCs in the world. However, by shippers. Depreciation, broadly defined, includes the number of TNCs based in developing countries has any reason that a newly produced good is preferable to steadily increased, while at the same time new players— an older good. Examples include physical spoilage of from both developing and developed countries— fresh fruits or cut flowers and the degradation in value continue to emerge onto the scene. of magazines as the information in them becomes “old In the early days of building global supply chains, news.” When countries or regions specialize in stages of TNC FDI was the preferred means of expanding production and trade intermediate goods, these costs production abroad. Foreign affiliates were owned and accrue throughout the duration of the production chain.10 managed by the parent firm. As firms have sought to The impact of time on trade is very important. increase cost advantages and remain competitive, Econometric studies estimate that each additional day TNCs began to turn to non-equity modes (NEMs) of spent in transport reduces the likelihood that the United international expansion. Examples of NEMs include States will source goods from that country by 1 to 1.5 contract manufacturing, services outsourcing, and percent, and that, for manufactured goods, a day of franchising and licensing, to name a few. These activities shipping time is worth 0.8 percent of the value of the are not recorded in FDI statistics, so we must look good per day. The decline over the past several decades beyond the traditional measures to understand the of airfreight costs has made this time-saving option depth of global value chains. NEMs play a major role more affordable, providing a compelling explanation in economic development: they employ an estimated for aggregate trade growth, compositional effects in 14–16 million workers in developing countries, and they trade growth, and the growth in time-intensive forms of create value-added up to 15 percent of GDP in some integration such as vertical specialization.11 countries.15 CHARACTERIZING THE EXTENT OF GLOBALIZATION Rising intra-firm and intermediate goods trade Globalization is a concept that touches many areas, With the rise in globalization and the increasing particularly trade, investment, and knowledge flows. Key complexity of global supply chains, intra-firm trade and aspects of the concept have evolved considerably over trade in intermediate goods have become an important the past decades, and our understanding of the impact part of global trade flows. In 2009 US affiliates of foreign of these trends on economic measurement systems firms accounted for 21 percent of US exports of goods benefits from a clear characterization of the main and 31 percent of US merchandise imports. Within channels of globalization. these parameters, the intra-firm trade of US affiliates accounts for between 8 and 10 percent of US exports Foreign direct investment and transnational and between 20 and 25 percent of US imports.16 corporations Lanz and Miroudot estimate that intra-firm exports Traditional foreign direct investment (FDI) statistics reveal represent 16 percent of total exports for nine countries the massive amount of globalization that has occurred in the Organisation for Economic Co-operation and over the past 20 years. Global FDI inflows stood at Development (OECD) and intra-firm exports make up US$207 billion in 1990; after riding the globalization about half of affiliate exports, on average. Their broad tidal wave they peaked in 2007 at US$1,971 billion. It estimate suggests global intra-firm trade makes up one- is easy to see the impact that the internationalization third of total world trade.17 of production has had on global FDI flows. Developing Measuring intra-firm trade is fraught with difficulties countries’ share of FDI inflows rose from 16 percent in and raises a number of complex issues. One of these 2000 to 46 percent in 2010, with developing countries is that the United States is the only country that has a making up half of the top 20 receiving countries. By detailed breakdown of trade flows between affiliates and 2010 another important shift was evident. Developing non-affiliates. Even in the case of the US data, different countries were not only recipients of FDI, but also global ownership thresholds are applied to counting imports investors themselves as their share in global outflows and exports of intra-firm activity. Intra-firm activities are reached 29 percent in 2010, up from 16 percent in also not at arm’s length, giving rise to transfer pricing 2007.12 issues. This creates a trade measurement issue because The number and presence of transnational firms seek to minimize the customs valuation to shift the corporations (TNCs) has increased considerably in burden of taxes to a lower-cost location. In addition, the recent times. Between 2001 and 2010, the number accounting and tax rules applied to transfer pricing vary of TNCs increased 62 percent to 103,353, while the by country, creating further distortion of trade values. number of foreign affiliates jumped from 595,725 in 2001 Intra-firm trade takes place between two related to 886,143 in 2010.13 The United Nations Conference on parties. Looking only at intra-firm trade can provide only Trade and Development (UNCTAD) estimates that TNCs’ an incomplete picture, because trade in intermediate operations worldwide (at home and abroad) in 2010 goods rises in step with an increase in contract generated value-added equivalent to more than a quarter manufacturing. Mirodout (2010) reports that 60 percent The Global Enabling Trade Report 2012 | 43 @ 2012 World Economic Forum
- 66. 1.3: The Global Value Chain of global trade consists of trade in intermediate goods.18 around the world, with some of the biggest single aid However, this proportion (of total trade to trade in recipients being non-US banks. intermediate goods) varies widely among countries. In another example, consider the European For Brazil, China, and India, for example, the share of sovereign debt crisis. Greece makes up roughly 2.25 intermediate goods in total flows in the manufacturing percent of euro zone GDP with an economy that is now sector was about 70 percent in 2005.19 Asia is the about the size of the economy of the US state of Indiana. second largest importer of intermediate goods behind Yet problems that began in Greece later transformed into Europe, but each geographic region tends to specialize fundamental questions over the future of the currency in certain types of intermediate imports and exports.20 union itself as crisis engulfed the region. Indeed, not only are countries integrated by government bonds and Knowledge infusion: Underappreciated and financial transfers, but also by the fact that business unmeasured enterprises, large and small, are increasingly dependent An uncounted and often unappreciated type of foreign on the global market. The size of the GDP of many small investment occurs in the form of knowledge transfers. economies, advanced or emerging, is smaller than the The remarkable rise of China and other emerging size of some of their TNCs. This poses an interesting markets over the past generation is the result, in large challenge to policymaking because national, boundary– part, of an infusion of knowledge about products and based thinking is no longer appropriate. services and management know-how from the West. A generation of young people in emerging markets has Accounting framework: Lagging behind the global been exposed to the knowledge accumulated and tested operating model as a result of 250 years of industrialization in the West. One of the biggest challenges we face is the mismatch Intangible assets and knowledge transfer are occurring between a sovereign-based measurement system and a on a massive scale with an impact that dwarfs the globalized, enterprise- (or ownership-) based operating monetary measure of FDI. Examples such as drivetrain model that encompasses both the real and the financial platforms, sales and after-sales network design, sectors. The measurement system needs to consider chain store design and management, port community the way the global operating model works—the “invisible systems, automated teller machines (ATMs), credit cards, hand” or endogenous market dynamism. We have electronic ticketing, business proposals, consulting seen how crisis scenarios can overwhelm the capacity reports, due diligence studies, accounting tables, and so of a national government. Government bailouts in a on have all largely been standardized across nations. globalized system can run the risk of socializing loss while allowing privatized profits, thus creating system- THE NEED FOR AN UP-TO-DATE MEASUREMENT wide incentive distortions. SYSTEM Technology revolution and innovation continue to The power unleashed through the knowledge infusion change economic structure. The number of economic and standardization is enormous—but it is not recorded sectors has increased from 37 described in the original in the current economic measurement system. It is also input/output table of the early 20th century to 1,176 in part of the reason that we tend to underestimate of the latest North American Industrial Classification System level of global integration and speed of value creation in (NAICS). New ideas and interdisciplinary efforts continue emerging markets. to create new segments, which—when proven to last— become new industries. This creates challenges and Global linkages highlighted only after crises opportunities not only for portfolio managers, but also The financial crisis of 2008–09 and the more recent for policy development and priorities. Global value chains European sovereign debt crisis both illustrate the extent have significantly increased opportunities and new of financial linkages in the global economy. They also frontiers, with new industries emerging as a result. reveal gaps in understanding and measurement of these Consider a nation’s GDP. In the United States, the linkages—gaps that continue to contribute to uncertainty gap between gross national product (GNP) and GDP has in policy and planning today. increased by a factor of 10 since the late 1990s, and as Looking back at the run-up to the financial crisis, of Q4 2011 stood at US$267 billion (annual rate), about a great number of policymakers and economists the size of Malaysia’s entire economy—the difference seemed confident that any fallout from stresses in the between GDP and GNP driven by the increase of the net US subprime mortgage market would remain fairly income generated in the rest of the world. This is one localized. The thinking was that subprime was a small of the clearest signs that the ownership-based global part of the overall mortgage market (it was 12 percent operating model is increasingly prevailing. A similar trend of US mortgage debt outstanding in 2007); even if 20 is underway in Japan: in Q3 2011, the country’s GNP percent of mortgage holders ran into trouble, this would was US$193 billion (on an annual basis) larger than GDP. still affect only a small corner of the market. As the crisis The year 2011 was also the first year since 1980 that made apparent, securitization and financial engineering Japan recorded a trade deficit. had transmitted risk well beyond subprime and well To reflect the changing global economic structure, beyond US borders. The bailout of the AIG Corporation, our system of measuring economic activity and our which had written insurance in the form of credit default policy orientation, which are still sovereign based, must swaps on many of these issues, was in turn transmitted be expanded and adjusted. This requirement does not 44 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 67. 1.3: The Global Value Chain contradict the need to build a domestic industrial base, rippled through auto and electronics supply chains but rather complements it. The world has become highly around the world, exposing the extent of real linkages in integrated by information technology, global supply production networks. The speed and intensity with which chains, and trade and capital flow linkages—in large part the financial crisis spread around the world in 2008–09 because of the ownership-based operating model. To highlights the need for a better understanding of linkages stick strictly to a model tailored to national boundaries from the standpoint of risk management. Knowledge is neither progressive nor realistic. How to adjust policy infusion and intangibles trade are key factors that are incentives to reflect ever-increasing GNP for maximum underappreciated and currently unmeasured. and sustainable growth in domestic labor markets is We are hopeful that we will see global convergence clearly a challenge. in economic measurement systems, much the same way we have witnessed global convergence in technology, Measuring trade in value-added: Complementing innovation, and standardization; this standardization itself trade statistics and reducing bilateral distortions may help create a base for consistency in the treatment The current system of trade and economic measurement of the measurement of economic activity. Doing so is a product of the international system of the past would be an important step forward in understanding century, when trade was largely conducted in finished the world of the 21st century, and would help ensure that goods at arms’ length. Over the past 25 years, the upward trend in access and living standards we have impressive increases in off-shoring, intra-firm trade, FDI, witnessed over the past two decades is not constrained and outsourcing have led to expanded supply chains of by an outdated way of looking at the world. greater complexity, in turn resulting in escalating trade in intermediate goods noted above, along with extensive NOTES linkages, both real and financial. 1 Osterholm 1998. Trade data as they stand today are adequate for 2 Kasarda 2011. capturing the gross value of goods flow, but there is a 3 Hummels 2007. significant degree of double-counting (or counting by higher multiples) because the same product crosses 4 Hummels 2007. borders many times as it moves through the supply 5 Hummels 2007. chain. This has been one of the forces behind trade 6 Kasarda 2011, p. 8. deepening, where the volume of international trade has 7 Porter 1985. grown two to three times faster than the global economy over much of the past two decades. From the standpoint 8 Feller et al. 2006. of a company such as FedEx, this has meant an 9 Hummels 2007. expanding market for transportation services and trade 10 Hummels 2001. facilitation. From the standpoint of economic research, 11 Hummels 2001. this has meant less clarity about the implications of what used to be more clear-cut trade drivers, such as policy 12 UNCTAD 2011. and exchange-rate movements. 13 UNCTAD 2011. By considering only gross goods flow at the 14 UNCTAD 2011. aggregate level, we end up with a distorted picture of 15 UNCTAD 2011. bilateral relationships and little reliable understanding of where value is being added beyond case studies 16 Anderson 2011. at the product level and colorful anecdotes. The lack 17 Lanz and Miroudot 2011. of a modern measurement framework is a probable 18 Miroudot 2010. contributor to the rapid proliferation of bilateral and 19 WTO 2009. regional free trade agreements in recent years. The pressing needs of commerce have essentially outpaced 20 Escaith 2010. the ability to measure and coordinate trade policy on a global level. REFERENCES Anderson, T. 2011. “U.S. Affiliates of Foreign Companies: Operations in Beyond value-added: The need for more explicit 2009.” Survey of Current Business, August. 211–26. US Bureau of Economic Analysis. measurement of linkages When considering a modern measurement framework, Corcoran, T. 2010. “The iPad Lesson for China Trade.” Financial Post, April 6. Available at http://www.nationalpost.com/ measuring trade in value-added would complement opinion/columnists/story.html?id=5a2d9936-8717-4e41-86a3- current trade statistics and better illustrate where nations 9954649bd3f2. have real advantages. The WTO and others are doing Dedrick, J., K. Kraemer, and G. Linden. 2008. “Who Profits from some important research along these lines. In addition, Innovation in Global Value Chains? A Study of the iPod and for both goods and services (especially finance) trade, Notebook PCs.” Alfred P. Sloan Foundation Industry Studies Annual Conference, May 1–2, Boston. more direct measurement of cross-border linkages would better reflect the complexity of our networked world. The tsunami that occurred in Japan in 2011 and the severe flooding in Thailand later that year both The Global Enabling Trade Report 2012 | 45 @ 2012 World Economic Forum
- 68. 1.3: The Global Value Chain Escaith, H. 2010. “The Transformation of Production in Developing Countries and Emerging Economies: The Asian Example.” Presentation at Globalization of Industrial Production Chains and Measurement of Trade in Value Added: Measuring International Trade in Value Added for a Clearer View of Globalization, October, Paris, pp. 20–23. World Trade Organization and Senate Finance Commission. Feller, A., D. Shunk, and T. Callarman. 2006. “Value Chains Versus Supply Chains.” Business Process Trends, March. Available at http://www.ceibs.edu/knowledge/papers/images/20060317/2847. pdf. Hummels, D. 2001. “Time as a Barrier to Trade.” Unpublished paper, Purdue University. ———. 2007. “Transportation Costs and International Trade in the Second Era of Globalization.” Journal of Economic Perspectives 21 (3): 131–54. Johnson, R. and G. Noguera. 2011. “Accounting for Intermediates: Production Sharing and Trade in Value Added.” Unpublished manuscript. Kasarda, J. D. 2011. Aerotropolis: The Way We’ll Live Next. New York, NY: Farrar, Straus and Giroux. Lanz, R. and S. Miroudot. 2011. “Intra-Firm Trade: Patterns, Determinants and Policy Implications.” OECD Trade Policy Working Papers, No. 114, OECD Publishing. Available at http://dx.doi. org/10.1787/5kg9p39lrwnn-en. Maurer, A. and C. Degain 2010. “Globalization and Trade Flows: What You See is Not What You Get!” Staff Working Paper ERSD-2010- 12. World Trade Organization Economic Research and Statistics Division. Available at http://www.wto.org/english/res_e/reser_e/ ersd201012_e.pdf. Miroudot, S. 2010. “The International Integration of Industrial Processes.” Presentation at Globalization of Industrial Production Chains and Measurement of Trade in Value Added: Measuring International Trade in Value Added for a Clearer View of Globalization, October. Paris, pp. 7–11. World Trade Organization and Senate Finance Commission. Osterholm, R. J. 1998. “How Jetliners Shrank the World About 1960.” Florida Conference of Historians, March 12–14, Embry-Riddle Aeronautical University, Daytona Beach, FL. Porter, M. 1985. Competitive Advantage: Creating and Sustaining Superior Performance. New York: Free Press. UNCTAD (United Nations Conference on Trade and Development). 2011. World Investment Report 2011. New York and Switzerland: United Nations. WTO (World Trade Organization). 1998. Annual Report 1998. Geneva: World Trade Organization. ———. 2009. International Trade Statistics 2009. Geneva: World Trade Organization. 46 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 69. CHAPTER 1.4 Although there is no question that trade depends heavily on logistics performance, the analytics available to analyze this dependency and to aid in optimizing Logistics Investment and decisions, particularly regarding logistics-related investments, is limited. There are three major groups of Trade Growth: The Need decision makers in this area. Public entities make many of the public infrastructure investment decisions (e.g., for Better Analytics better road networks, larger ports). Logistics service providers make decisions regarding investments in assets for services that are “public” in the sense that Donald Ratliff and Amar Ramudhin they are offered to multiple enterprises (e.g., investment SUPPLY CHAIN AND LOGISTICS INSTITUTE, in new liner services, the purchase of post-panamax GEORGIA INSTITUTE OF TECHNOLOGY container ships) as well as decisions regarding how these assets are employed. Shippers and private investors in shipper infrastructure make decisions about “private” infrastructure to support specific enterprises (e.g., building distribution centers to facilitate the movement of imported goods to stores) as well as decisions about how to utilize existing infrastructure and logistics services in supporting their businesses. Successful trade depends on all three of these groups making compatible decisions that enable high- performance supply chains. However, only the private investment groups have comprehensive methodologies and software that have been developed to optimize supply chain design with regard to the elements under their control. The goals and mechanisms for decision making vary greatly among the providers of logistics infrastructure to the public, but the decision-making abilities of all these providers could be dramatically improved by using models and analytics analogous to those that have been developed for supply chain design. In this chapter, we outline the requirements that such a model should fulfill and some of the obstacles faced in its construction. HISTORICAL CONTEXT The symbiotic relationship between logistics and trade has been evolving for more than 3,000 years. The development of boats capable of carrying goods on rivers enabled the first extensive trade routes on the Nile and other major rivers. Further improvements in small ships allowed expanded trade to the eastern Mediterranean. The development of ocean-going ships enabled the growth of great trading empires. The development of containers and cellular ships, together with specialized ports with container cranes and other supporting equipment, has enabled the vast global trade that exists today. Connecting these container ports with intermodal rail allows rapid movement of containers from China arriving at ports on the West Coast of the United States to be moved rapidly to East Coast population centers. Air transport is an important late addition, which has evolved from the single-engine planes of the early 1900s to today’s global air networks that enable trade in perishable products, including food and pharmaceuticals. Although we have retained the vocabulary of trade “routes” and supply “chains,” today’s logistics infrastructure is a complex network of physical infrastructure, information technology, logistics The Global Enabling Trade Report 2012 | 47 @ 2012 World Economic Forum
- 70. 1.4: Logistics Investment and Trade Growth services, and government participation. While much of What kinds of analytics are required to support the infrastructure (e.g., ports, highways, and railroads) so logistics investment decisions such as increasing the critical to today’s global trade was originally developed depth of Savannah harbor? How much additional primarily to facilitate military movement, most of today’s trade will this generate and where is that trade coming logistics infrastructure investment is motivated by the from? What type of logistics infrastructure and logistics desire to attract and increase trade. services should be developed around the harbor to Perhaps the most remarkable development about sustain this additional trade and reach the desired the evolution of logistics and trade has been the change markets in a timely and cost-effective manner? What are that has occurred since 1990, with China’s entry into the risks? This analysis cannot be done in isolation. It the export market. This seems to have been the “tipping involves understanding the interests of all stakeholders: point” when both governments and private entities • Government and local authorities want to develop began to realize that the logistics to enable international logistics infrastructure and services to attract trade trade was as important to economic well-being as the to their territories and lower the cost of doing capacity to generate products for trade. Since then, business. governments and private enterprises have increasingly realized that superior logistics performance provides a • Logistics service providers want to minimize costs and maximize profit. For example, the trend toward major advantage in the very competitive trade world. This larger ships is mainly motivated by an expectation of has led to a strong desire to influence logistics evolution reduced operating costs, but this will be profitable at all levels: only given adequate volume. • China’s successful investments in container ports • Shippers want their products delivered on time. have resulted in an increase from one port (Hong Given the choice, they will choose the route that Kong) in the top 15 in 1990 to six ports today. If we has the best trade-off among transportation costs, take into consideration that Hong Kong was not part inventory considerations, and reliability of service. of China in 1990, then that would mean an increase The most promising approach seems to be one from zero ports in the top 15 in 1990 to six ports that can factor in the dynamics of global trade and today. economics (e.g., changes in the magnitude of regional • Major government and private investments in trade growth) on models of existing and possibly new infrastructure have improved the connectivity of the infrastructure and services with the possibility of studying port of Los Angles so that it is now accessible to the various assumptions about both the level of services major population areas of the United States. to be provided and shippers’ behavior to understand • The growing trend in container shipping lines is to how the modes and routes utilized by trade will evolve order and operate larger-sized, post-panamax ships. over time. Such analytical models will require extensive data on trade, trade routes, modes of transportation, • The expansion of the Panama Canal, to be and numerous cost components that may not be readily completed in 2014, will allow the passage of ships three times as big as those permitted today. available today. These models could be used to generate best-case, worst-case, and most-probable scenarios for • Several East Coast ports in the United States are enlightened decision making. attempting to get approval and funding that will The next sections present some observations of enable them to handle the bigger container ships global and regional trade that, when viewed through that will be able to travel through the expanded simplistic models, could prove to be either very good or Panama Canal. very bad for logistics investment. These models generally • Plans for expanding rail infrastructure in the Middle provide good results if the current global trends continue East and Russia may result in new trade routes in the future, but they provide less reliable results if between Asia and Europe. anything changes in the global environment. Logistics improvement efforts not only require major TRADE DATA investments, but their impact on logistics performance Although there is a great deal of data related to is several years in the future and their justification international trade, they were not collected in order to depends on assumptions about how trade will grow support logistics investment decisions. Most of the with and without the investments. For example, an effort publicly available data (e.g., the UN Comtrade database, is underway to deepen the Port of Savannah in the US available at http://comtrade.un.org/db/) were collected state of Georgia to enable the larger post-panamax ships to support each country’s need to control shipments to call. The required investment is in excess of US$600 across its borders and to collect customs revenues. The million; the earliest estimate of project completion is three common classifications of products—the Broad 2016. To justify such a large investment requires an Economic Category (BEC), the Standard International assumption that trade growth through Savannah will Trade Classification (SITC), and the Harmonized System generate enough container flows to and from Asia to (HS)—are designed to reflect economic similarities of make it cost effective for the container line companies products but not necessarily similarities in logistics to utilize the much larger post-panamax ships on Asia- requirements. Much of the trade data express trade Savannah routes when the Panama Canal expansion is volumes in dollars and in weight; this conversion from complete. 48 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 71. 1.4: Logistics Investment and Trade Growth volume to dollars and weight introduces errors into the can be made: both imports and exports have been analysis of issues such as predicting the increase in increasing over time for each of the six regions container volumes. Some individual shippers have data considered. While trade with Asia is on the rise, Europe regarding the characteristics of their own shipments has been and continues to be both the biggest importing together with the specific modes, routes, times, and and the biggest exporting region of the world—although costs for each shipment from origin to destination. These the impact of the current economic turmoil in Europe are the ideal data for trade and logistics analytics, but may affect this trend going forward. The “big 3”—Europe, they are typically proprietary and therefore not generally Asia, and North America—represent about 80 percent available to support logistics investment analytics. The of all trade. Trade for the Commonwealth of Independent only current alternative is to work with the data available, States (CIS), the Middle East, and South and Central although these may not have the degree of specificity America and the Caribbean (SCAC) is increasing, but desired. In most cases it is critical to understand the more slowly than the big 3. limitations of the data in making investment decisions. Trends in regional trade tell us something about regional investment in logistics. For example, prior to GLOBAL MERCHANDISE TRADE 2008 both imports and exports for Europe and Asia Figure 1 represents data taken from the UN Comtrade were growing at similar rates so it would have seemed database; Figure 1a shows merchandise trade growth reasonable that similar amounts of logistics investment in US dollars and 1b presents the same data adjusted would have been required to support this growth in both for inflation. Inflation adjustment is desirable, but inflation regions. However, in 2010 Europe had recovered only to is not expected to impact the logistics requirements of a level below that of its 2007 trade volume, while Asia trade. Note that there is an approximately linear growth regained its 2008 level. This would indicate that there in total global merchandise trade except for the two is a slowdown or postponement in Europe’s growth, economic downturns in 2001 and 2009. As a result of so there will be less need for logistics investment there this growth, inflation-adjusted total global merchandise than in Asia. There is nothing in the data to address the trade approximately doubled between 2002 and 2008. question of exactly how this investment should be placed The economic dip in 2001 had only a minor impact on (i.e., the kind of infrastructure that should be developed global merchandise trade, but the 2009 impact was a or the new services that should be offered). major setback. It is particularly interesting to note that, in 2003, It is interesting to note that, if in 2008 we had used imports by Asia exceeded those of North America and a linear approximation of trade growth (from the data this the gap has widened every year since. Both imports and looks very reasonable), the estimate for 2010 would have exports for North America are increasing but at a slower been about US$13 trillion in inflation-adjusted dollars— rate than those of Europe and Asia. This raises the considerably more than the actual amount, which was question of whether the post-panamax ships currently on about US$9 trillion. This observation is very important to order can most profitably be applied to services in Asia take into account when using such forecasts for logistics rather than services between Asia and the East Coast of investments. In 2010 total trade recovered to reach close North America. to the 2008 levels, but an investment made on the 2008 Container traffic from the Pacific to the Atlantic forecast would be two years behind in terms of return transiting the Panama Canal increased 70 percent from on investment if it was possible to maintain the previous about 20 million long tons in 2002 to 34 million long tons trend. Although we do not know what forecasts the in 2008. This growth caused heavy congestion in the container lines used for predicting the need for additional Canal, which led to the decision for expansion. Had the capacity, we do know that they are currently seriously downturn not occurred, the Canal would have become over capacity on many lanes. Furthermore, they have a major barrier to increased trade until the expansion numerous orders for large post-panamax container was completed. Even with the downturn, if trade through ships, which, when they are in service, are likely to take the Canal again assumes a linear growth rate, serious at least two years longer than expected to operate at the congestion will likely to become an obstacle before planned capacity. This points to the need for analytics the expansion is complete. In this case, yet another that indicate not only how trade will change but also expansion would need to begin immediately to prevent when. While recognizing the risk of forecasting trade the Canal from becoming a bottleneck. growth based on time-series data, it is not clear how to Figure 3 provides the same basic data as Figure 2 account for the huge impact of a downturn such as the but from the perspective of each region’s share of world one that occurred in 2009 unless the downturn itself can trade. The observations from this perspective seem more be forecast. However, the new class of analytical models surprising. While Figure 2 suggests that the volumes should allow for quickly adapting to changing conditions of trade in and out of Europe and North America are and repositioning the level of investments required in increasing, both Europe and North America are declining logistics as well as the logistics services to be offered. in their share of world imports and world exports (see Figure 3). North America is losing significantly with TRADE BY REGION respect to both imports and exports. In 2003 Asian Another important factor that drives logistics investment imports caught up to North American imports; in 2010 is trade among various regions. Figure 2 shows imports and exports by region. The following observations The Global Enabling Trade Report 2012 | 49 @ 2012 World Economic Forum
- 72. 1.4: Logistics Investment and Trade Growth Figure 1: Total world merchandise trade, 1999–2010 1a: Total world merchandise trade 20 50 Total trade Percent yearly increase 26.9 15 21.7 25 16.9 15.5 14.1 15.3 15.8 13.2 US$ (trillions) 4.0 Percent 10 0 0 –3.0 5 –25 –23.6 0 –50 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1b: Total world merchandise trade, adjusted for inflation 20 50 24.9 15 25 18.5 14.4 10.3 9.6 11.6 12.3 11.6 US$ (trillions) 2.3 Percent 10 0 0 –5.5 5 –25 –23.4 0 –50 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Data from the UN Comtrade database; authors’ calculations. Asian exceeded North American imports by about 2011 were located outside North America and Western US$1.5 trillion. The share of both imports and exports in Europe.1 the CIS, the Middle East, and the SCAC are increasing, but the gain is not very significant since these regions INTRA- AND INTER-REGIONAL TRADE have only a small share of imports and exports as their Intra-regional trade accounts for about 52 percent of all base. trade worldwide. The big 3 combined—Europe, North Figure 3 also suggests that new investment in America, and Asia—account for 96 percent of intra- logistics in Asia is most likely to get higher returns, regional trade, while trade among European countries because the region sustains its development year after accounts for more than half (approximately 57 percent) year. This is confirmed by the fact that 90 percent of in intra-regional trade. The latter represent 70 percent the larger and faster-growing metropolitan economies in of all European exports. It is interesting to note that 50 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 73. 1.4: Logistics Investment and Trade Growth Figure 2: Merchandise imports and exports by region, 1999–2010 2a: Imports by region 7 SCAC 6 NA ME 5 Europe CIS US$ (trillions) 4 Asia Africa 3 2 1 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2b: Exports by region 7 6 5 US$ (trillions) 4 3 2 1 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Data from the UN Comtrade database; authors’ calculations. Notes: Values have not been adjusted for inflation. CIS = Commonwealth of Independent States; ME = Middle East; NA = North America; SCAC = South and Central America and the Caribbean. both intra-regional trade within Europe and within North grow faster than trade between Asia and North America. America have declining shares of global trade, whereas Figure 4 also shows the imbalance in regional trade, with Asia-Asia is increasing its share of global trade. exports from Asia to Europe and North America being The major inter-regional trade flows among North significantly higher than exports from these regions to America, Europe, and Asia account for 25 percent of Asia. The result is Asia’s positive trade balance with total trade. As can be seen from Figure 4, trade, as a Europe and North America. The reverse is true for North percentage of global trade, to and from North America America, which suffers from trade deficits with both and Europe and to and from North America and Asia is Asia and Europe. These imbalances result in significant declining, whereas trade from Asia to Europe and vice transportation price discounts on the weaker lanes. versa seems to be doing better. Asia-Europe trade is Moreover, the type of logistics infrastructure required now at the same level as Asia–North America trade: it to support intra-regional trade is quite different from the represents 6 percent of global trade and is expected to infrastructure required for inter-regional trade, as it is The Global Enabling Trade Report 2012 | 51 @ 2012 World Economic Forum
- 74. 1.4: Logistics Investment and Trade Growth Figure 3: Merchandise imports and exports by region as a percentage of total merchandise trade, 1999–2010 3a: Imports by region (percent of total trade) 50 SCAC NA 40 ME Europe CIS Total trade (%) 30 Asia Africa 20 10 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 3b: Exports by region (percent of total trade) 0.5 0.4 Total trade (%) 0.3 0.2 0.1 0.0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Data from the UN Comtrade database; authors’ calculations. Note: CIS = Commonwealth of Independent States; ME = Middle East; NA = North America; SCAC = South and Central America and the Caribbean. highly dependent on the geography, demographics, and with the fact that trade between Asia and Europe has cultures of the participating regions. increased steadily, may explain why most of the post- panamax container ships can be found on this route. TRADE ROUTE SELECTION Furthermore, because no binding capacity constraints Figure 5 shows the major inter-regional trade flows that currently exist, it is conjectured that the Asia-Europe govern today’s major trade routes. The main Asia-Europe route is not likely to change very much unless there are trade route is via the Suez Canal. The fact that the Suez geopolitical disruptions or macroeconomic changes. Canal can handle the largest container ships, combined Such changes would include higher transit fees, an 52 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 75. 1.4: Logistics Investment and Trade Growth Figure 4: Merchandise trade: Intra- and major inter-regional flows, 1999–2010 4a: Intra-regional trade as percent of global trade 35 SCAC–SCAC 30 NA–NA ME–ME 25 Europe–Europe CIS–CIS 20 Asia–Asia Percent Africa–Africa 15 10 5 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 4b: Major inter-regional trade as percent of global trade 8 7 NA–Europe NA–Asia Europe–NA 6 Europe–Asia Asia–NA Percent 5 Asia–Europe 4 3 2 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Data from the UN Comtrade database; authors’ calculations. Note: CIS = Commonwealth of Independent States; ME = Middle East; NA = North America; SCAC = South and Central America and the Caribbean. increase in piracy and political instability in the regions Canal but the operational savings do not look large along the trade route, and the introduction of much enough, given current volumes, to change the routing in larger post-Suez ships in an attempt to lower the costs any significant way. of shipping lines. The Asia–North America route in Figure 5 is split CHARACTERISTICS OF DESIRED ANALYTICS between the West and East Coasts, the flow to the East The analysis so far has focused on only one dimension: Coast being through the Panama Canal. The Panama merchandise trade data as a means of understanding Canal expansion will permit larger ships to transit the the evolution of trade routes and identifying where The Global Enabling Trade Report 2012 | 53 @ 2012 World Economic Forum
- 76. 1.4: Logistics Investment and Trade Growth Figure 5: Global inter-regional merchandise trade, US dollars (billions) 894 288 462 446 705 Supply Chain and Logistics Institute regions n Africa 351 n Asia n North America n CIS n Europe n Middle East n SCAC Note: CIS = Commonwealth of Independent States; ME = Middle East; NA = North America; SCAC = South and Central America and the Caribbean. logistics investment may be required. This is clearly not how products are sourced and shipped. A reasonable enough to make any meaningful infrastructure investment approximation of inventory cost associated with a lane decisions, although it is still quite complex because of is given by [(transit time) + (time spent at port calls)] × the multifaceted nature of trade. (inventory rate) × (product value). Inventory rates are A key element in a trade route is the container typically capital carrying rates and vary between 10 line service. Unless container lines are able to identify and 30 percent. For example, a container of product services that they believe will be profitable, improving valued at US$36,000 at an inventory rate of 10 percent port infrastructure will not result in increased trade would have an inventory cost per day of about US$10. through the port. Models are required to determine As a point of reference, a 40-foot container of sports the impact of creating or expanding a container line’s shoes, depending on the brand, typically have a value services (ship size, frequency, ports of call, pricing, of between US$350,000 and US$2,500,000, while a among others) under different assumptions of trade 40-foot container of appliances typically has a value of growth, inventory cost, and connectivity with other between US$30,000 and US$100,000. Obviously, the logistics services. Container services typically make inventory cost per day for high-end sports shoes at calls at each major port on the route at least weekly. US$685 per day is much more than for the appliances. For a route that takes 35 days to complete, this means The price of transporting a 40-foot container from Asia employing five container ships and crews. Bigger ships to the United States is typically US$3,500–US$4,000. means more potential revenue for each cycle, but only For higher-valued containers, the inventory cost may if there is sufficient volume to get reasonable utilization well exceed the transportation cost and will therefore of the ships. Shippers book containers on the ships influence routing decisions. based on the transportation price, the number of days in transit, the number of days between port calls, and CONCLUSION the connectivity to the points of origin in the exporting For the past 20 years, a steady evolution of software country and the destination in the importing country. systems has aided companies in locating and sizing Transportation price is a particularly difficult issue manufacturing and warehousing facilities. These software for the shipping lines, particularly since trade is often systems now include excellent geographic information imbalanced. This imbalance results in a much lower systems, road networks, transport cost estimators price in one direction than the other (e.g., the cost of (particularly for trucking), optimization routines, and shipping a container from Asia to the United States is scenario managers. Such systems allow systematic typically at least twice as much the cost of shipping the generation and evaluation of supply chain network same container from the United States to Asia). alternatives for companies under different scenarios. Another important consideration for shippers is the Although in the 1990s there were few data to support inventory carrying cost. This can influence where and these systems, excellent data are now available—at 54 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 77. 1.4: Logistics Investment and Trade Growth least in more-developed countries—that enable good investment decisions for this piece of the global logistics puzzle. For the other players (public policymakers and logistics service providers) there is a critical need for new systems and data to support decision making. The trade data mostly available today are not convenient for logistics analysis because they specify neither the points of origin and destination within countries, nor the mode and type of transport used. New systems with models and technology for assessing the analytics, similar to those used by shippers to design their supply chains, must be developed. The models will require additional data on pricing (by sea, land, and rail), tariffs, time, capacity, and frequency of service of lanes, and they must consider information on GDP, income trends, and population growth in various metropolitan areas. These new systems must combine statistical analysis, flow optimization models, and simulation capabilities, and must work on a geographic information system. They must also interface with trade and demographic databases, shipping line schedules and capacities, and other mode-pricing mechanisms. Although using simple analytics, as was done in this chapter, provides interesting insights into ways that trade is evolving, both the systems and data to support these systems are unable to predict with any confidence how trade routes will evolve or to determine how best to take advantage of billions of dollars of public and private investment. The best approach would be to develop systems with dynamic modeling capabilities for studying different scenarios, under varying assumptions and parameters. These systems could quantify the overall risks and payoffs of the various scenarios. NOTE 1 Istrate et al. 2012. REFERENCE Istrate, E., A. Berube, and C. A. Nadeau. 2012. Global MetroMonitor 2011: Volatility, Growth, Recover. Washington DC: The Brookings Institution Metropolitan Policy Program. Available at http://www. brookings.edu/~/media/Files/rc/reports/2012/0118_global_metro_ monitor/0118_global_metro_monitor.pdf. The Global Enabling Trade Report 2012 | 55 @ 2012 World Economic Forum
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- 79. CHAPTER 1.5 When did we start worrying about the origin of products we consume? Ethical, safety, and environmental concerns about products may seem to be a recent Illicit Trade, Supply Chain development—one that coincides with the acceleration of globalization. Yet a bit more than two hundred years Integrity, and Technology ago, during the Age of Enlightenment, contemporaries of Voltaire were shocked to learn how brutally supply chains of the time often operated: “it is at this price JUSTIN PICARD that you eat sugar in Europe,” says the maimed slave Advanced Track & Trace to Voltaire’s Candide. Receding further, one finds the CARLOS A. ALVARENGA famous German Law on Beer Purity—restricting the Accenture allowed ingredients in the production of beer to water, barley, and hops—which dates from 1516 and is still in existence today. Yet our interest in product authenticity is probably even older: in ancient Rome, for example, fraudulent wine was common and seals were faked to pass lower-grade Gallic wine off as more costly Roman wine. SUPPLY CHAIN INTEGRITY IS BECOMING A PRIMARY CONCERN With the development of mass production techniques during the Industrial Age, this interest in provenance seems to have been put on hold for the better part of the last century. The accompanying development of branding allowed consumers to differentiate products that were generally similar, and made them comfortable and familiar with essentially anonymous goods. Today we talk of “product identity,” but for a while consumers nearly forgot that things do, in fact, have an origin. And why would consumers have bothered to worry about such things? In the pre-Internet era, brands could essentially master the message that was sent to customers, and the essence of that message was: “Trust me.” And for this trusted relationship, whether real or perceived, customers were and are still willing to pay a premium. Thus for many decades the complexity and opacity of global supply chains made it very easy for some agents to hide, and for others to ignore, a wide array of illegal or unethical activities. This is a state that global markets can no longer sustain. Because supply chains have become an integral part of many a corporate strategy, supply chain integrity is no longer a marginal concern in the current legal, social, and business environment. Shareholders, consumers, civil society, and government have growing expectations that company executives be knowledgeable and accountable for what is happening in their extended supply chains. This goal, as every global brand manager knows in 2012, is much easier said than done. Today, for any business that manufactures or sells globally, part of the usual price of success is becoming a magnet for counterfeiters; another part is the risk that counterfeits will infiltrate legitimate supply chains. The complexity and interconnectivity of supply chains mean that it is often very difficult to know what is going on beyond first-tier suppliers. Nonetheless, in the public’s mind, a global company is increasingly expected to ensure that every one of its suppliers respects labor rights and safety standards, uses environmentally friendly The Global Enabling Trade Report 2012 | 57 @ 2012 World Economic Forum
- 80. 1.5: Illicit Trade, Supply Chain Integrity, and Technology practices, and provides safe and reliable components and stopped before they cause significant harm, but and raw materials. But the brands themselves are they continue because of negligence or lack of rigorous not the only ones with issues. Shipping and logistics protocols for controlling quality and provenance. companies may not consider themselves responsible Illicit trade is typically associated with organized for the illegal acts of producers and importers, yet they crime, or with seemingly legitimate actors who use are increasingly held accountable in cases of fraud or the cover of a legitimate business to deliberately illegal transshipment. And although retailers have limited perpetrate a profit-based crime. Quite often, however, abilities to monitor the origin of all of their incoming illicit trade involves multiple independent actors who do goods—and thus to guarantee their customers genuine, not necessarily work cohesively. Moreover, its harmful safe, and ethically produced goods—their reputation is at effects are the consequence not only of one crime, but stake each time the quality of products is compromised of a sequence of fraudulent activities or acts of criminal by one of their suppliers. negligence. For example, in 2007 the government of Supply chain integrity is increasingly at the top of Panama unknowingly used Diethylene Glycol falsely supply chain managers’ principal concerns. For example, labeled as Glycerine to make 260,000 bottles of cough in 2008 a PricewaterhouseCoopers study surveyed 59 syrup. The origin of the fake chemicals was traced global consumer and retail companies, and found that from Panama through trading companies in Spain to a large brand-owners were particularly sensitive to both source near the Yangtze Delta in China.3 The counterfeit the reputational and operational risks of supply chains. glycerin passed through three trading companies on Seventy-eight percent of respondents cited product three continents, yet not one of them tested the syrup safety as the most significant threat to their business; to confirm what was on the label. Along the way, a this was followed by concerns about business ethics certificate falsely attesting to the purity of the shipment including bribery, corruption and money laundering (61 was repeatedly altered, eliminating the name of the percent); working conditions (59 percent); intellectual manufacturer and previous owner. The result of this property (58 percent); broader human rights and series of acts of negligence and falsification is dramatic: community development issues (53 percent); carbon 100 people died in Panama from ingesting the deadly footprint (41 percent); local economic development cough syrup. and local sourcing (39 percent); and, last, broader Below are a few indicators of the scale at which environmental impact of product (34 percent). supply chains are tampered with: As if product integrity were not challenge enough, • The number of counterfeit incidents being detected the events of 9/11 had a global effect on supply chain in the US defense and industrial supply chain rose security, and businesses had to integrate a whole from 3,868 in 2005 to 9,356 incidents in 2008. This set of new requirements related to cargo security rise was facilitated by “demonstrated weaknesses and inspections. However, as extensive as these in inventory management, procurement procedures, efforts were, they often ignored a major, and growing, recordkeeping, reporting practices, inspection and concern: the origin and integrity of the product itself. testing protocols, and communication within and For example, according to the International Organization across all industry and government organizations.”4 for Standardization (ISO)’s specification for security management systems for the supply chain, “a supply • The medication supply chain of lower- to middle- chain is secure when it can resist, fend off, or withstand income countries appears to be corrupted to a unauthorized acts that are designed to cause intentional frightening level. According to various studies, harm or damage”—a definition that overlooks product including a collaborative investigation of the World origin and integrity.1 Health Organization and INTERPOL,5 50 percent In the meantime, the complexity of supply chains of medications for malaria and 10 percent for has increased at the pace of globalization. Furthermore, tuberculosis are fake, and an argument can be the skills of counterfeiters, and those who would embed made that these would kill approximately 700,000 malicious code or technologies in otherwise safe persons per year.6 products, have grown at the speed of technological • A worldwide analysis of illegal and unreported change. These new priorities were recognized in the fishing finds that current illegal and unreported United States National Strategy for Global Supply Chain fishing losses worldwide are between $10 billion Security, unveiled at Davos in early 2012 by the US and $23.5 billion annually (mean value of $16.75 Secretary of Homeland Security Janet Napolitano. As billion, or 20.55 percent of declared import value), stated in the Strategy, the number one goal will be to representing between 11 and 26 million tons.7 promote the efficient and secure movement of goods, Meanwhile, tests in stores and restaurants showed and this will be achieved by “enhancing the integrity of that fish was mislabeled 50 percent of the time.8 goods as they move through the global supply chain.”2 • Bottle refilling of wine, spirits, and food containers ILLICIT TRADE IN GLOBAL SUPPLY CHAINS is a pervasive problem in many countries, and in Illicit activities are, by nature, hard to monitor. They are the Far East it has become a big business.9 There often designed by perpetrators to avoid detection, and is a second market of empty spirit bottles, and victims do not necessarily have an interest in reporting some makers of spirits have had to launch costly them. Yet many of these illicit activities could be detected 58 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 81. 1.5: Illicit Trade, Supply Chain Integrity, and Technology consignment services to recover empty bottles the international level adds to the challenge that while competing with counterfeiters on pricing. And, executives face in managing their global supply chains. in a rather amusing twist, authentic empty bottles For example, the California Transparency in Supply of luxury wine are fetching such high prices that Chain Act, which was signed into law in 2010, requires even wine counterfeiters are sometimes cheated disclosures on corporate efforts to eliminate slavery and by the resellers of these empty bottles, who are human trafficking. The Dodd-Frank Wall Street Reform supplying them with counterfeit bottles. One and Consumer Protection Act of 2010 contains broad- knows that supply chain integrity has become a reaching transparency provisions for oil, gas, mining, concern for everyone when even counterfeiters get and other extractive industry companies. The Consumer counterfeited. Product Safety Improvement Act of 2008 imposes a variety of requirements on child-related products. In developed markets, supply chain integrity might Even when manufacturers can hardly be suspected still be seen—sometimes wrongly—as a manageable of complicity in illicit activities—they have no incentive issue of risk and compliance. However, in high-growth to be complicit, and in fact curtailing illicit trade would emerging markets, tampered supply chains are a daily be to their advantage—regulations can be far reaching. reality. As consumers become increasingly aware In July 2011, for example, the European Union adopted that the high level of corruption in emerging markets a directive intended to prevent falsified medicines from puts their health and safety at risk, they will expect entering the legal supply chain. From early 2013, EU manufacturers and retailers to be accountable for what Member States will have to mandate obligatory features they sell. on the outer packaging of medicines to demonstrate Incentives for illicit trade will continue to increase. that they are authentic, to strengthen requirements for Although the production of goods continues to be the inspection of the manufacturers of pharmaceutical commoditized, there will be a continuous switch toward ingredient, and to oblige manufacturers and distributors industries and markets that capture higher profit to report any suspicion of falsified medicines.10 margins. High margins are captured through innovation, Although regulations are expanding at the national brand development, and ethical business practices. level, little is done to harmonize these at the international Although, in most cases, consumers cannot or do not level. The official World Trade Organization position is make out the difference between products and their that, although it is concerned with licit trade, illicit trade lower-end substitute, they still care enormously about does not fall under its mandate. The topic is indeed origin. Many aspects of provenance are not visible in the sensitive, as different countries can have different finished product and provide free-riding opportunities for understanding of what constitutes “illicit trade,” and may infringing parties. have different interests at stake. Despite all its efforts, THE REGULATORY BURDEN AND THE the World Health Organization has not yet succeeded COMPLEXITIES OF COMPLIANCE in developing a definition of falsified medicine (the It is likely that terrorist attacks that either use or aim at term counterfeit itself is avoided as being a subject of global supply chains would bring disruption on a large controversy) that is acceptable to all its members. scale. The illicit trading of weapons of mass destruction This ambiguity at the international level generates through a legitimate distribution channel—not to mention two concerns. For multinational corporations, having to their ability to destroy critical infrastructure, such as a deal with different regulations as well as different sets of major port of entry—would probably force the temporary standards in each country generates costs, complexity, freeze and long-term reevaluation of security and and uncertainty. And suppliers from developing countries monitoring processes in the global supply chain. But a are worried that ever-growing regulations that are in subtler risk is that one major catastrophic event would place ostensibly to curb trade in illicit products may engender fears that “global supply chains are out of increase their cost of compliance, alter the conditions of control”—a reaction that would lead to sudden changes competition to their disadvantage, and in effect act as in regulations, which would place an increased burden protectionist barriers to international trade. on several industries. The Consumer Product Safety TOWARD THE TRANSPARENT SUPPLY CHAIN Improvement Act mentioned above is a US law that was Engaged consumers, nongovernmental organizations, passed hastily in the wake of several high-profile recalls and activists have little concern for the subtleties of in 2007 and 2008 of toys manufactured in China. If the international policymaking or for the complexities of public realizes that it is as exposed to threats coming compliance. They have strong feelings of right and the from poorly monitored global supply chains as it was wrong, and generally adhere to the principle that “if a exposed to terrorist attacks on planes before 9/11, party is not part of the solution, then it is part of the authorities might overreact by taking security measures problem.” Many activists believe that companies that do akin to those that slowed down the flow of people not proactively address the environmental and social through airport security following the terrorist attacks. practices of suppliers at all tiers of their supply chain In many industries, growing consumer expectations deserve to be “named and shamed,” and eventually over provenance are being translated into a dramatic boycotted, if they are within reach of consumers. As increase in international regulatory enforcement the speed and fluidity of information increases thanks actions. Furthermore, the lack of harmonization at to instant communication and social media, global The Global Enabling Trade Report 2012 | 59 @ 2012 World Economic Forum
- 82. 1.5: Illicit Trade, Supply Chain Integrity, and Technology companies will become increasingly vulnerable to these illicit activity will leave digital footprints that can be made reputational risks. nearly impossible to tamper with or erase. Since the supply chain is often part of a company’s competitive model, transparency is not necessarily a PRODUCT-TRACKING AND AUTHENTICATION term that has a positive connotation for supply chain TECHNOLOGIES managers. Transparency can be associated with the The paradigm of security printing, where banknotes reverse engineering techniques used to gain insights are produced behind closed walls and loaded with into a competitor’s manufacturing process and profit secret anti-counterfeiting technologies, does not adapt margin, and which are now part of the tactics of very well to the cost-constrained industrial world of nongovernmental organizations to determine whether outsourced production. Furthermore, traditional security suppliers with poor environmental or social records features such as holograms and security inks can be are involved. Whether they like it or not, companies will easily imitated, as the technology and skills to reproduce have to come to grips with transparency and accept them are now freely available on the market. However, that, whatever their marketing budget, they cannot new coding techniques are constantly developed to fully control the message delivered to their customers meet the needs of the corporate world and industrial unless it is harmonized with the product. If a company products. For example, Coats Textiles in the United does not make transparent information available to Kingdom has developed a “digital thread” with a security their customers, others will take care of it. For example, code embedded in the thread itself. It is invisible but GoodGuide provides a mobile phone application that can be scanned so it can be used to verify the integrity allows consumers to “shop their values” by scanning of clothing, parachutes, and so on—basically anything product barcodes in order to get information on a made from fabric. Invisible taggants, whether chemical product’s health, environmental, and social impacts. If it or biological, can be inserted into a variety of materials turns out that the washing powder a consumer is about or liquids. Spectral techniques have been developed to buy has a low environmental score, GoodGuide will to increase information capacity, allowing sources of propose a more environmentally friendly brand as an product diversion to be identified. Invisible laser-etched alternative. In the same way that consumers can bypass code inside a supplier’s manufacturing machines can a brand with GoodGuide, they can bypass retailers with verify the integrity of source down to the machine level. SnapShop, a mobile application that scans a barcode to There are now technology solutions for any type of determine which offline or online retailer offers a better product. Luxury goods such as high-end watches can deal. Understandably, some businesses may feel they be assigned a Smartcard, and can be authenticated more have to lose than to gain with transparency. instantly through the Internet via a Smartcard reader that In the fight against illicit trade, technology is a is provided to customers. For fast-moving consumer double-edged sword. For years, anti-fraud experts, goods, which can afford only a very low per-item as well as enforcement authorities, have repeated protection cost, small digital graphics can be inserted warnings that new technologies provide an edge to into the packaging during the production process, criminals. New technologies allow criminals to encrypt and printed with standard industrial printers. One such their communications, to operate from countries beyond type of secure graphic, called STAMPS (for “Secure the reach of law enforcement and reach a mass of Tracking and Authentication through Matrix Printing and anonymous consumers through the Internet, or to Scanning”), is mathematically impossible to copy and hack the protections developed to make counterfeiting can be authenticated through an image capture with a difficult. In a session on cybercrime held in Davos earlier mobile phone. this year, Moisés Naím summed up this advantage by If coding beforehand is not possible, alternative saying that “criminals move at the speed of Internet and techniques can be used to check the product’s countries move at the speed of democracy—that’s the characteristics. For example, Raman spectroscopic discrepancy.”11 readers can verify whether the spectral profile of a Many illicit activities take place because their medication or wine matches a reference profile. And perpetrators believe that they will remain unnoticed, or while radio-frequency identification (RFID) tags are that there will not be enough evidence to demonstrate currently undergoing trials in Malaysian and Brazilian their responsibility. In other words, the rewards are high forests as a means of monitoring tree growth, tracking and the risks of getting caught and punished are low. logged trees during transportation and finding and However, there are two reasons why digital technologies, stopping illegal loggers,12 Mother Nature provides us with as they become more pervasive, can make the free “DNA barcodes.” DNA barcoding is a new scientific corruption of supply chains increasingly difficult. First, the discipline that can be applied to detect illegal wildlife development of product-tracking technologies, and their trade. Illegal logging can be detected from a piece of convergence with mobile communication technologies, furniture, because wood from different species and also is allowing an increasingly large number of parties to from different regions have distinct DNA barcodes. A obtain reliable item-level information on provenance and project known as “The Barcode of Life” aims to produce to securely discern the licit from the illicit. Second, as a DNA barcode for every tree and grass species on processes in a supply chain get digitally recorded and Earth. Within a few years, the DNA barcode would allow managed with the proper data granularity, any licit or the source of any sample to be identified.13 60 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 83. 1.5: Illicit Trade, Supply Chain Integrity, and Technology For the foreseeable future, the range of options code) and Data Matrix—are free to use and based on for product tracking and authentication will continue open ISO standards. Open source code for encoding to grow. But the large number of authentication and decoding the symbols is available, allowing any solutions already on the market can increase the programmer to launch a mobile phone barcode effort to determine which is the most appropriate to decoding application. In the meantime, the optics and a given situation. This is why ISO standard 12931 on processing power of mobile phones have tremendously the performance criteria for authentication solutions, improved, and consumers have started to read those as well as other standards currently in preparation, barcodes as they shop. When those codes contain can guide brand owners in the selection of the most a Web address, the decoding software automatically appropriate technologies for their needs. Yet, however redirects the user to the Web page. If codes are helpful these tools are, many of them remain accessible serialized, item-level traceability can be pushed to the only to a small minority of authorized parties. The real consumer who, in return, can provide feedback that is breakthrough may actually come from open standards connected to a specific product. and technologies that may seem more basic, but are 2D barcodes and RFID cannot be forged as long firmly established and accessible to the masses through as they use encryption or have a random part that is their mobile phones. matched with a database. That is, a non-authorized party such as a counterfeiter cannot guess new valid THE CONVERGENCE OF PRODUCT codes. Yet these technologies have one fundamental AUTHENTICATION AND MOBILE COMMUNICATION weakness: there is nothing that prevents them TECHNOLOGIES from being copied. However, active monitoring can Consider the simple scratch codes that are typically compensate for this weakness. Counterfeiters typically found on lottery tickets. A handful of companies— use one or a few codes and massively replicate them. such as mPedigree in Ghana, Sproxil in Nigeria, and Counterfeit codes therefore generate an abnormally high PharmaSecure in India—are proposing to use these very number of scans, and can be automatically or manually codes as a simple solution to the scourge of counterfeit blacklisted. Once a counterfeit code is blacklisted, the drugs in developing countries. As a consumer buys a authentication system becomes foolproof. Because drug, he or she can reveal the code, short message retailers and consumers vastly outnumber the small service (SMS) it to a toll free phone number, and receive investigation teams deployed by brand owners, they can feedback on its authenticity within seconds. As the potentially multiply the deterring effect of authentication codes are random and “verify once,” they cannot be technologies. guessed or reused by counterfeiters. Similar 12-digit codes are used by the tobacco industry to address DIGITAL FOOTPRINTS the problems of tax avoidance, smuggling, and The convergence of mobile communication, product counterfeiting, which cost governments an estimated tracking, and authentication empowers a larger $50 billion in lost taxes each year. number of stakeholders to access relevant traceability User convenience and consumer adoption are information. Each time a product is checked, a feedback key to the success of any consumer-based anti-fraud loop that enriches information flows and reinforces the system, and typing a code on a mobile phone or system is created. However, the fact that a manufacturer through an online service might in the end be slightly adds a code or label to the product does not in itself too inconvenient for integration into consumer habits. guarantee that all the product-claimed attributes are RFID chips automate the scanning process, and the idea respected. How is reliable traceability information created of using them on products at the item level has been in the first place? around for years. Although they are still too expensive On some goods, outbound logistics provenance for many product categories, the main limiting factor is vital. This is typical of cold chains for vaccines and today is that only a small number of mobile phones medical products, frozen food, and agricultural produce. are equipped with near field communication (NFC) Simple solutions involve placing time-temperature readers. If, as expected—or at least rumored—the next indicators that change color to signal the occurrence generation of smart phones integrates NFC, placing RFID of a potentially damaging heat or freeze event, or the chips on higher-end products will start to become more presence of food-borne pathogens. More sophisticated common. systems use RFID sensors to monitor or record 2D barcodes are high-capacity optical data carriers temperature, geographical position, and other events— that might offer the right compromise between the low such as a container opening—at any point along global cost of implementation and the convenience of scanning. distribution channels. Such systems are now in use for Although they were initially developed to help item fine wines, for example, since it was realized that all the identification and traceability in various industries, 2D effort put into wine making can be destroyed through barcodes are increasingly used for mobile marketing. a careless distribution system. Indeed, according to There are now tens of different symbologies (i.e., experts, 10 to 25 percent of the wines sold in America methods to represent data), and although that could be are damaged during transport because of their exposure a handicap for streamlining adoption, this large number to extreme temperatures. indicates serious interest in these technologies. The With basic “Ok/Not Ok” monitoring systems, a most popular formats—the QR (for “Quick Response” food or product safety crisis can be prevented. But The Global Enabling Trade Report 2012 | 61 @ 2012 World Economic Forum
- 84. 1.5: Illicit Trade, Supply Chain Integrity, and Technology digital footprints have a deeper impact because they In the end, the strategic shift is that information create conditions for continuous improvement and regarding the integrity of the product in the future will accountability, as each stakeholder in the supply be provided not by the supply chain but by the product chain receives objective feedback on his performance. itself. Gone are the notions that counterfeiting and Moreover, if the required transport conditions are not fraud on the “illegitimate” supply chain is a tolerable maintained, responsibilities can be unambiguously cost of doing business, and that there would be an assigned. impenetrable, well-controlled legitimate supply chain The sources of legitimate product and illegitimate in which consumers are encouraged to make their goods are often intermingled. For example, there are purchases. In the future, a consumer will have to be cases where a manufacturer produces two versions able to trust a product coming from the back of a of its product: one destined for the legitimate supply pickup truck in an unregulated nation with the same chains and one, made during the “ghost shift,” destined confidence as if he or she were taking it off the shelf of a for illegal ones. The unlicensed version of the legitimate reputable retailer. That may sound far-fetched, but there product is sold often at a higher margin. Yet if the is now an ecosystem of tracking and communication problem comes from a supplier, legitimate quantities technologies that has an incredible potential to provide can be simply controlled by providing counterfeit-proof more transparency of supply chains, easier access serialized labels that must be attached to the legitimate to information, richer and more granular traceability, products, according to the ordered quantities. enriched communication with consumers, and the ability Of course, dealing with a multi-tier supply network throughout the supply chain to discern the licit from the involves a different level of complexity. In this case, illicit. The technology is here now. It just needs to be put placing a simple tag on a component does not to work. necessarily fix problems with suppliers, but it can be an enabler. The important thing is to fit technology into NOTES a process that records relevant traceability information, 1 ISO 28000:2007. holds the supplier accountable, and makes successful 2 whitehouse.gov 2012. fraud much more difficult because the coherence of the 3 Bogdanich and Hooker 2007. digital trail must be maintained. For example, if a tag is 4 US Department of Commerce 2010. provided to the supplier and assigned to each supplied component, the quality control can be digitally recorded 5 Newton et al. 2008. by reading the tag, thereby leaving a permanent trace. 6 Harris et al. 2009. The very act of reading the tag can be made equivalent 7 Agnew et al. 2009. to a digital signature, testifying that, for instance, the 8 Styles et al. 2011. supplier has respected a specific quality-control process. 9 Pierson 2012. CONCLUSION 10 European Parliament 2011. The problem of supply chain integrity is an old one in 11 The Times 2012. society but a relatively new one in global supply chain management. Its importance has mounted because 12 Springwise.com 2011. of the increasing global reach of brands and the lack 13 Luntz 2011. of accountability in supply chains that operate in many parts of the world. Combined with the new supply REFERENCES chain security risks that use products as vehicles— Agnew, D.J., J. Pearce, G. Pramod, T. Peatman, R. Watson, et al. such as malicious embedded software, bombs in ink 2009. « Estimating the Worldwide Extent of Illegal Fishing. » PLoS ONE 4 (2): e4570. Available at http://www.plosone.org/article/ cartridges—a new sub-discipline is needed within info:doi/10.1371/journal.pone.0004570. supply chain risk that might be called “chain of custody Bogdanich, W. and J. Hooker. 2007. “From China to Panama: A Trail of management” or “supply chain integrity management.” Poisoned Medicine.” May 6. 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- 87. CHAPTER 1.6 Despite the global decline of tariff rates to historically low levels, trade is far from being free. Other factors, such as technical regulations, product standards, and customs Business Perspectives procedures, still prevent the limitless exchange of goods across countries. Such non-tariff measures (NTMs) are on Obstacles to Trade: less visible and more complex than measures of tariff protection, and have proved particularly burdensome for Evidence from New companies in developing countries, which sometimes do not have the capacity to support their firms in complying Survey Data with the imposed rules and regulations. The business sector as well as trade policymakers are therefore more and more concerned about the fact that NTMs can JULIA SPIES pose real obstacles to trade. Any preferential market International Trade Centre (ITC) access that firms from developing countries might enjoy on international markets could easily vanish without delivering the desired effect. Existing studies use data at the country level but do not capture the experiences of exporters in their daily operations.1 Recent analyses of firm-level datasets have convincingly shown, however, that companies differ with respect to their international competitiveness, even when operating in the same country and sector. Whether a manager considers a measure to be burdensome or not depends to a large extent on the situation of the particular firm. The recent literature provides robust evidence that only the most productive firms within an industry are able to serve “difficult” markets that are geographically remote and that feature unfavorable economic conditions or a lower level of institutional quality.2 A similar reasoning applies to firms’ experience with NTMs, thus the perception of such NTMs as burdensome in export markets may eventually be subject to firm-specific characteristics. Following this line of argumentation, we will present new evidence from recently conducted firm-level surveys on NTMs.3 As part of a broader initiative of the International Trade Centre (ITC), in these surveys, trading companies in developing countries are asked about the barriers they face in their daily business, as well as the reasons that firms experience a measure as burdensome. The dataset is unique in that it provides comparable and consistent cross-country and cross- sector information on firms from developing countries as well as, at the product-level, the measures these firms perceive as barriers when doing business in their foreign markets. We focus on 12 countries for which data have already been fully processed and harmonized.4 In each country, between 150 and 1,000 telephone screening and up to 300 face-to-face interviews were carried out, sometimes representing the entire population of trading firms. The analyses in this chapter focus on information obtained during the telephone-screening stage, but are complemented with information obtained during the face-to-face stage. This study was conducted under the supervision of Mondher Mimouni, Chief Ad-Interim of ITC’s Market Analysis and Research Section. The author would also like to thank her colleagues for their valuable contribu- tions to this chapter. The Global Enabling Trade Report 2012 | 65 @ 2012 World Economic Forum
- 88. 1.6: Business Perspectives on Obstacles to Trade Figure 1: Shares of NTM-affected firms by export and import sector 1a: Export sectors 1b: Import sectors Leather products Leather products Electronic components Wood products n NTM Textiles Textiles n No NTM Chemicals Electronic components Wood products Basic manufactures Basic manufactures Chemicals Clothing Miscellaneous manufacturing Transport equipment Non-electronic machinery Miscellaneous manufacturing IT & consumer electronics IT & consumer electronics Processed food Processed food Clothing Fresh food Fresh food Non-electronic machinery Transport equipment 0 20 40 60 80 100 0 20 40 60 80 100 Percent Percent Source: ITC’s NTM survey data; author’s calculations. LINKING NON-TARIFF MEASURES TO TRADE By construction, the survey contains only those NTMs Our study comprises 12 developing countries and 13 that enterprises perceive as serious hindrances having sectors across which the share of firms that report a negative impact on their trade. Figure 2 confirms the burdensome NTMs differs substantially (see Tables close negative correlation between trade and NTMs. A1 and A2 in Appendix A).5 Out of the 12 countries Figure 2a shows that countries with a low share of considered, Malawi, Kenya, and Rwanda record the exporters that face NTMs (such as Egypt, Morocco, highest percentages of exporters facing NTMs. Out of a and Peru) export substantially more than countries total of 73 Malawian exporters in the sample, 57 claim with a high share of exporters that face NTMs (such to experience problems related to NTMs in their daily as Rwanda and Malawi). Kenya and Sri Lanka report business. Figure 1 ranks export and import sectors a comparatively large number of NTMs given their according to their NTM affectedness. On the export high export levels. Figure 2b presents a similar picture side (Figure 1a), firms in non-electronic machinery, as for imports: again, Peru, Egypt, and Morocco are the well as firms in the fresh and processed food industry, countries with the highest imports and the lowest NTM most often face obstructive NTMs, whereas they are shares. Rwanda, in turn—both a landlocked and a less problematic for firms in the leather and textile least-developed country—suffers simultaneously from industry. On the import side (Figure 1b), the transport low imports and high NTM shares. Note that causality equipment industry faces the highest share of firms could go two ways: on the one hand, a low share of reporting obstacles from NTMs, again closely followed NTMs may encourage a country’s trade activities. On the by the food industry. These country- and sector-specific other hand, a high trade activity may simply reflect the differences are likely to be related to the nature of NTMs. capacity of a country to support its firms in dealing with Previous analyses by the ITC demonstrated that a NTMs, thereby making them appear to be only slightly substantial portion of NTMs are “homemade,” meaning burdensome. that firms experience impediments domestically rather The negative relation of NTMs to trade argues in than abroad. Furthermore, these are more likely to occur favor of these measures being a vital determinant of in the agricultural sector, where food and feed control market access for firms in developing countries. Even are essential for ensuring the health and well-being of though substantial differences exist between sectors consumers and the protection of the environment.6 and countries, the question of whether an individual firm The sometimes high shares of NTM reports found considers a measure to be an obstacle or not depends in certain countries or sectors would not call for any finally on its individual ability to deal with it. Against this action if NTMs did not translate into real obstacles to background, a business-sector perspective appears trade. For instance, a tolerance limit for residues may indispensable for defining national strategies that help be set at a level that exporters find easy to comply with. different types of firms to overcome these hindrances. 66 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 89. 1.6: Business Perspectives on Obstacles to Trade Figure 2: The relation of NTMs to a country’s exports and imports 2a: Exports 2b: Imports 20 20 18 18 Egypt Egypt Peru Morocco Morocco Peru Paraguay Sri Lanka 16 16 Ln imports Ln exports Uruguay Sri Lanka Uruguay Kenya Paraguay Kenya Mauritius Mauritius Madagascar Malawi 14 14 Burkina Faso Rwanda Madagascar Malawi Burkina Faso 12 12 Rwanda 10 10 0.2 0.4 0.6 0.8 0.2 0.4 0.6 0.8 1.0 Share of NTM-affected exporters Share of NTM-affected importers Source: ITC’s NTM survey data, author’s calculations. Trade data come from ITC’s Trade Map. Service trade and trade of arms and minerals are deducted from the total trade values to match the sectors covered in the survey. Note: Exports and imports are expressed in natural logarithms (ln). COMPANY TYPES AFFECTED BY NON-TARIFF so-called product-markets). The probability that they MEASURES would encounter at least one obstructive NTM appears A few firm characteristics are determined at the therefore to be high, even though they have much telephone-screening stage; these can therefore be used greater capacities than small firms to deal with export to study variations in the likelihood that an individual firm procedures in general. will face a cumbersome NTM. For example, firms were In addition to firm size and export status, the asked to specify their number of employees, their export location of firms may play a role. Since government and status, their location, and their main activity (“producing” public agencies are often clustered within the capital or “other,” which mainly entails “trading/forwarding”). of a country, having a firm’s head office situated in the Since not all of these variables are available for each of capital as well could facilitate its access to information. the 12 countries (in particular, information on the activity Challenging this argument, Figure 3c reveals that the of the firm is sometimes gathered only at the face-to- share of NTM-affected exporters is slightly higher for face interview stage), we focus on information from three firms located in the region of the capital city than for countries—Egypt, Madagascar, and Mauritius—for which firms located elsewhere in the country. Finally, we look we can also identify the entity responsible for managing for differences concerning the activity of the firm. On the the export and import procedures. In what follows, we one hand, trading firms may be more specialized and limit the sample to exporters that are responsible for have more experience in dealing with export procedures dealing with export procedures themselves. than producing firms. On the other hand, producers have Figure 3 shows the share of firms facing at least detailed knowledge of their products and production one NTM while exporting according to their respective processes, which may facilitate their compliance with size, export status, and geographic location as well as (international) standards.7 Indeed, Figure 3d suggests their activity. Somewhat surprisingly, Figure 3a indicates that the share of producers facing burdensome NTMs is a U-shaped pattern, with the largest share of firms considerably lower than the share of other types of firms, reporting burdensome NTMs both among the smallest including traders. Recall that we have restricted our firms with fewer than 11 employees and among the sample to firms that deal with export procedures on their biggest firms with more than 250 employees. Figure 3b own responsibility. does not indicate any difference with respect to export Even though Figure 3 gives a first impression of status, suggesting that pure exporters and firms that the probability of facing obstructive NTMs according simultaneously export and import are affected to a to major firm characteristics, the data do not allow any very similar extent. Both of these results are likely to be broader conclusions to be drawn. For instance, it might influenced by the observation that large firms and two- easily be the case that the food industry, which reports a way traders serve more products and more markets (i.e., high share of NTM-facing firms, consists predominantly The Global Enabling Trade Report 2012 | 67 @ 2012 World Economic Forum
- 90. 1.6: Business Perspectives on Obstacles to Trade Figure 3: Share of NTM-affected firms according to firm characteristics 3a: Firm size 3b: Export status Micro n NTM n No NTM Exports only Small Medium Exports and imports Large 0 20 40 60 80 100 0 20 40 60 80 100 Percent Percent 3c: Location 3d: Firm actiity Elsewhere Other Capital Producing 0 20 40 60 80 100 0 20 40 60 80 100 Percent Percent Source: ITC’s NTM survey data; author’s calculations. of micro businesses that frequently encounter NTMs. this exercise will enable us to produce conditional results Hence, with the basic analyses conducted so far, it obtained by looking at all factors simultaneously. is impossible to distinguish whether the high share of Table 1 describes the variables considered to be NTMs is caused by the size of the firm or the sector in potentially relevant as well as their presumed and actual which it operates. To address this issue, we conduct relation to the likelihood of a firm facing a burdensome a regression analysis that allows us to assess how NTM. The expected and estimated effects in Table 1 changing one factor influences the probability of a firm show how likely it is, on average, that firms with a certain encountering a troublesome NTM while all other factors characteristic will encounter an NTM, as compared with are held fixed.8 Thus, in contrast to the unconditional firms belonging to the reference group. For firm size, the results obtained by looking at each factor separately, reference group comprises micro firms (hence firms in 68 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 91. 1.6: Business Perspectives on Obstacles to Trade Table 1: Firm characteristics and their relation to the probability of facing an NTM Variable Definition Expected effect Estimated effect Firm size Categorical variable: -/+ + 1 = micro firms with < 11 employees 2 = small firms with 11–50 employees 3 = medium firms with 51–250 employees 4 = large firms with > 250 employees Export status Dummy variable: –/+ + 0 = firm only exports 1 = firm exports and imports Location Dummy variable: – (–) 0 = firm is not located in the country’s capital 1 = firm is located in the country’s capital Activity Dummy variable: – – 0 = firm does not engage in production 1 = firm engages in production Notes: Parentheses indicate that the estimated effect is statistically not different from 0 at the 10 percent significance level (compare Table A3). Column 4 corresponds to Column 4 of Table A3. groups 2 to 4 are compared with firms in group 1); for factors that might be correlated with both the incidence the other three variables, the reference group comprises of an NTM and our main variables of interest. Indeed, firms falling into the “0” categories. Although economic we find that the country of origin of the firm as well as theory suggests that large and more experienced traders the sector in which it operates matter. For example, (such as two-way traders) are better able to overcome exporters from Egypt and Mauritius are less likely to face bottlenecks to trade, they tend at the same time to burdensome NTMs than exporters from Madagascar. export a broader range of products to a greater number Also agricultural firms (comprising firms operating in the of destinations. Hence, these firms are more likely to fresh and processed-food industries) are more likely than face a troublesome NTM in at least one of their export non-agricultural firms to face cumbersome NTMs. activities, a circumstance that naturally conflicts with As previously outlined, the results of the study potential advantages given by their larger resources and/ on firm size and export status may hinge on the or greater experience. For this reason, we do not have difficulty of distinguishing firm-level capabilities to a clear hypothesis on the direction of the link between overcome bottlenecks from the likelihood of being firm size and export status on the one hand, and the confronted with at least one NTM when the product probability of encountering an NTM on the other hand and market dimension is not taken into account. Figure (see Column 3 of Table 1). Since we suppose that A1 in the appendix uses information from the face- information is more easily accessible in the capital of a to-face stage to scale the number of NTMs by the country, we expect a lower likelihood of facing an NTM number of product-markets. Indeed, the relative for firms located in the capital. Finally, we expect firms share of NTMs is highest for micro firms and for that engage in production to be—on average—less likely pure exporters, which face on average 0.74 and 0.68 to face burdensome NTMs than firms that do not engage burdensome NTMs per product-market (in contrast to in production. 0.55 and 0.60 NTMs per product-market faced by large Summarizing the main findings, whereas small firms and two-way traders, respectively). Also, Figure firms are less likely to encounter troublesome NTMs A2 shows that the types of burdensome NTMs differ than micro firms (which build the reference group), large across size classes. Technical requirements, which firms have a higher probability of being confronted represent a fixed market-entry cost, are particularly with an NTM (for detailed results, please refer to Table troublesome for micro firms. Their small export volumes A3 in the appendix). Likewise, two-way traders seem translate into large per-unit costs of compliance with to be confronted more often with NTMs than pure these requirements. In turn, charges, taxes, and para- exporters. Finally, producing firms are less likely to face tariff measures—representing variable costs that an obstructive NTM than non-producing firms. This last increase in the export level of a firm—account for a finding strongly confirms our presumption that firms significant share of large firms’ reports on obstructive find it easier to cope with export procedures when they NTMs. Even though we do not have this information for are familiar with the products they want to export. We all interviewed firms at the telephone-screening stage additionally account for sector- and country-specific and cannot therefore control for it in the regression The Global Enabling Trade Report 2012 | 69 @ 2012 World Economic Forum
- 92. 1.6: Business Perspectives on Obstacles to Trade 3 When we refer to NTMs throughout this study, procedural analysis, Figures A1 and A2 support our general obstacles are included. perspective that affectedness varies greatly with firm 4 The initiative foresees the conduction of interviews in more than 30 characteristics. developing countries. Summing up, our descriptive and regression 5 Note that the sector classification refers to the sector of the main analyses point out that the country and sector affiliation Harmonized System (HS) 6-digit export product. Service exports of the firm is crucial. Nevertheless, we also identify and exports of arms and minerals are excluded from the survey. a role for firm characteristics in determining the risk 6 See ITC 2010. of encountering a troublesome NTM. Although we 7 Furthermore, customs issues affect a larger share of traders’ and control for the fact that the firm operates, for example, forwarders’ activities. Even though selected carefully, a producing in the agricultural sector, it is more likely to perceive firm’s interviewee may for this reason perceive NTMs to be less an NTM as trade-impeding if it does not produce the burdensome. export good itself. Given these insights, we consider 8 Please refer to Appendix A for a technical description of this our results at the firm level to be complementary rather method. than substitutionary to the findings of previous studies conducted at the country or sector level. REFERENCES CONCLUSIONS Ferrantino, M. 2006. “Quantifying the Trade and Economic Effects of The elimination of NTMs has been gaining importance Non-Tariff Measures.” OECD Trade Policy Working Paper No. 28, OECD Publishing. in the international trade agenda. In the light of low overall levels of tariff protection, there is a fear that Greenaway, D. and R. Kneller. 2007. “Firm Heterogeneity, Exporting and Foreign Direct Investment.” The Economic Journal 117 (517): NTMs could represent real trade obstacles and therefore F134–F161. influence market access conditions. Our descriptive ITC (International Trade Centre). 2010. Market Access, Transparency and analyses strongly confirm this. Countries at the lower Fairness in Global Trade: Export Impact for Good. Geneva: ITC. end of the export (import) rankings are confronted with a higher share of firms that report burdensome NTMs than countries at the top of the export (import) rankings. Differences between sectors are also remarkable, with agricultural firms among the most seriously affected by obstructive NTMs. Evidence from the ITC’s recent firm-level surveys on NTMs suggests, however, that not all firms in the same sector are affected to the same extent. Even within one sector and one country, substantial differences persist. This chapter has shown that a firm’s perception of its confrontation with a burdensome NTM is at least partly influenced by its particular situation. We were able to identify the firm’s production activity as a firm characteristic that strongly correlates with the incidence of NTMs beyond what can be explained by sector or country characteristics. Furthermore, there is some evidence of a U-shaped relation to firm size, with the smallest and the largest firms being the most highly affected; the latter finding is potentially related to the greater number of served product-markets. These findings have important policy implications that complement earlier insights gained at the country or sector level. An attempt to mitigate NTMs should therefore not be tackled merely at an aggregate level. While a sector- or a countrywide approach may be a very useful starting point, it will not be suitable for every firm. Instead, our findings stress the need to design policies aimed at moderating the impact of trade obstacles that fit different firm types. NOTES 1 See Ferrantino 2006 for an overview of existing studies and methods. 2 See Greenaway and Kneller 2007 for a synthesis of the literature on the new theories of firms in an open economy context as well as on the rapidly growing microeconomic evidence. 70 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 93. 1.6: Business Perspectives on Obstacles to Trade Appendix A: Country and sector distributions of surveyed firms This appendix provides specific data for the 12 countries country decreases its risk of encountering burdensome in the study. Table A1 considers the distribution of NTMs. The effect is, however, statistically not different exporters and importers by country; Table A2 considers from zero—that is, we cannot exclude the possibility the distribution of exporters and importers by sector. that we have obtained the result due to a random Next a regression analysis is applied and Table A3 distribution of NTM-facing firms across locations. Finally, provides the results of the estimations. Figures A1 and producing firms are less likely to face an obstructive A2 present additional results obtained from the face-to NTM than non-producing firms. As shown in Table A3, face stage of the survey. this finding is statistically significant and robust across all different specifications. It therefore strongly confirms our REGRESSION ANALYSIS presumption that firms find it easier to cope with export In order to obtain results based on conditional procedures when they are familiar with the products they probabilities, we estimate the incidence of a firm want to export. encountering an obstructive NTM according to its Despite the presented evidence that firm characteristics while controlling for the sector and characteristics play a role, we also report results for the country of origin. We apply a simple probit model the relationship between firm characteristics (size, (equation 1): export status, location, and activity) and NTMs without controlling for sector and country effects. Table Pr(NTM=1) = f(b0+ b1 size + b2 status A3 contains the detailed results of all four different + b3 cap + b4 Ssector (1) specifications. Two findings are remarkable: first, the + b5 Scountry) explanatory power of our model (as captured by the pseudo R2) increases, particularly as we add country where the dependent variable is set equal to 1 whenever effects, underscoring their importance in determining the firm indicates that it faces at least one NTM while the existence of NTMs. The negative coefficient exporting and 0 otherwise. indicates that exporters from Egypt and Mauritius are The factors we consider to be relevant for the less likely to face burdensome NTMs than exporters likelihood of a firm confronting a burdensome NTM from Madagascar. Second, the positive and significant are summarized in Table 1: first, we take into account coefficient suggests that agricultural firms are more firm sizes, ranging from 1 for “micro firms with fewer likely to face cumbersome NTMs. Given these additional than 11 employees” to 4 for “large firms with more than insights, we consider our results at the firm level to 250 employees.” Second, we assign the value of 1 be complementary rather than substitutionary to the to firms that export and import at the same time and findings of previous studies conducted at the country or combine pure exporters together in the 0 category. sector level. Third, we set the location variable to 1 if the firm is situated in a country’s capital and to 0 if it is situated elsewhere. Fourth, we expect producers to be better able to comply with standards. Since production firms are assigned a value equal to 1, while all other firms are assigned a value equal to 0, we expect, again, a negative relationship. Detailed results are presented in Table A3. Whereas small firms are less likely to encounter troublesome NTMs than micro firms (which build the reference group), large firms have a higher probability of being confronted with an NTM. Likewise, two-way traders seem to be confronted more often with NTMs than pure exporters. These results are likely to correlate with the number of product-markets. A firm’s location in the capital of a The Global Enabling Trade Report 2012 | 71 @ 2012 World Economic Forum
- 94. 1.6: Business Perspectives on Obstacles to Trade Table A1: Country distribution of firms Export rank Country No. of exporters No. of exporters with NTMs Share of exporters with NTMs (%) 1 Malawi 73 57 78.08 2 Kenya 567 424 74.78 3 Rwanda 138 98 73.68 4 Sri Lanka 412 286 69.93 5 Madagascar 245 171 69.80 6 Burkina Faso 106 67 63.21 7 Paraguay 283 170 60.93 8 Uruguay 365 206 56.44 9 Peru 712 298 41.85 10 Mauritius 272 108 39.71 11 Egypt 719 274 38.16 12 Morocco 560 194 34.64 Total 4,452 2,353 53.05 Import rank Country No. of importers No. of importers with NTMs Share of importers with NTMs (%) 1 Rwanda 339 282 83.19 2 Kenya 548 406 74.09 3 Sri Lanka 363 257 70.99 4 Malawi 116 77 66.38 5 Paraguay 297 185 62.50 6 Burkina Faso 84 51 60.71 7 Uruguay 351 182 51.85 8 Madagascar 241 117 48.55 9 Mauritius 368 155 42.12 10 Morocco 697 286 41.03 11 Egypt 630 250 39.68 12 Peru 749 286 38.18 Total 4,783 2,534 53.01 Source: ITC data; author’s calculations. Note: The figures of the export and the import tables (A1 and A2) do not add up to the total number of firms, since firms engaging in both export and import activities are included in both tables. 72 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 95. 1.6: Business Perspectives on Obstacles to Trade Table A2: Sector distribution of firms Export rank Sector of main export product No. of exporters No. of exporters with NTMs Share of exporters with NTMs (%) 1 Non-electronic machinery 70 46 65.71 2 Fresh food 853 552 65.02 3 Processed food 585 360 61.54 4 IT & consumer electronics 33 20 60.61 5 Miscellaneous manufacturing 635 348 54.98 6 Transport equipment 35 17 48.57 7 Clothing 454 219 48.45 8 Basic manufactures 350 165 47.28 9 Wood products 303 140 46.20 10 Chemicals 448 198 44.20 11 Textiles 383 167 43.60 12 Electronic components 81 34 41.97 13 Leather products 98 38 38.78 Total 4,328 2,304 53.35 Import rank Sector of main import product No. of importers No. of importers with NTMs Share of importers with NTMs (%) 1 Transport equipment 205 139 67.80 2 Fresh food 241 154 63.90 3 Clothing 123 78 63.41 4 Processed food 291 180 61.86 5 IT & consumer electronics 166 101 60.84 6 Non-electronic machinery 298 165 55.37 7 Miscellaneous manufacturing 798 420 52.63 8 Chemicals 738 381 51.63 9 Basic manufactures 426 219 51.41 10 Electronic components 221 113 51.13 11 Textiles 584 285 48.80 12 Wood products 235 111 47.44 13 Leather products 54 13 24.07 Total 4,380 2,359 53.87 Source: ITC’s NTM survey data; author’s calculations. Note: The figures of the export and the import tables (A1 and A2) do not add up to the total number of firms, since firms engaging in both export and import activities are included in both tables. The Global Enabling Trade Report 2012 | 73 @ 2012 World Economic Forum
- 96. 1.6: Business Perspectives on Obstacles to Trade Table A3: Estimation results Firm characteristic Base Sector effects Country effects Sector & country effects Size 2 –0.136 –0.151 –0.132 –0.148 (0.147) (0.147) (0.153) (0.152) Size 3 0.051 0.033 0.116 0.102 (0.155) (0.155) (0.16) (0.16) Size 4 0.21 0.205 0.297* 0.294* (0.162) (0.163) (0.174) (0.174) Status –0.089 –0.015 0.143 0.206* (0.103) (0.107) (0.112) (0.115) Location 0.107 0.093 –0.099 –0.109 (0.097) (0.097) (0.104) (0.105) Activity –0.281** –0.216 –0.366*** –0.310** (0.137) (0.139) (0.141) (0.144) Constant 0.094 –0.081 0.761*** 0.602*** (0.162) (0.176) (0.188) (0.204) Agriculture 0.272** 0.247** (0.108) (0.11) Mauritius –1.020*** –1.002*** (0.165) (0.166) Egypt –0.852*** –0.851*** (0.13) (0.131) No. of observations 718 718 718 718 pseudo R2 0.0106 0.0171 0.061 0.0661 Source: ITC’s NTM survey data; author’s calculations. Note: Size class 1 (micro firms with < 11 employees) builds the reference group. Robust standard errors are reported in parentheses with significance levels ***p < 0.01, **p < 0.05, * p < 0.1. 74 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 97. 1.6: Business Perspectives on Obstacles to Trade ADDITIONAL RESULTS FROM THE FACE-TO-FACE STAGE Figure A1: NTMs to product-markets ratio according to firm characteristics Panel a: Firm size Panel b: Export status Large Exports and imports Medium Small Exports only Micro 0.0 0.2 0.4 0.6 0.8 0.0 0.2 0.4 0.6 0.8 No. of NTMs/no. of product-markets No. of NTMs/no. of product-markets Source: ITC’s NTM survey data; author’s calculations. The Global Enabling Trade Report 2012 | 75 @ 2012 World Economic Forum
- 98. 1.6: Business Perspectives on Obstacles to Trade Figure A2: Types of NTMs by firm size Panel a: Micro Panel b: Small 1% 3% 13% 13% 22% 36% 13% 31% 5% 21% 7% 3% 20% 7% 2% 3% Panel c: Medium Panel d: Large 2% 12% 12% 10% 33% 12% 19% 24% 9% 11% 6% 12% 19% 8% 8% 3% n Technical requirements n Conformity assessment n Pre-shipment inspection and other entry formalities n Charges, taxes, and other para-tariff measures n Rules of origin and related certificate of origin n Export-related measures n Procedural obstacles n Other Source: ITC’s NTM survey data; author’s calculations. 76 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 99. CHAPTER 1.7 Customs is uniquely placed among border agencies as being empowered to access information on every cross- border transaction and to stop those that are illegitimate. Expansion of Traditionally, most customs administrations are concerned with collecting duties and taxes at the border, Customs-Business controlling goods entering and leaving national territories, and imposing penalties on unlawful actions. In the Partnerships in the face of such regulatory mandates, business often feels frustrated with customs officers when doing business. 21st Century In addition, business perception indexes frequently consider customs to be among the most corrupt public institutions,1 and complicated border procedures are KUNIO MIKURIYA considered to be a major non-tariff barrier that hinders World Customs Organization business activities. As a result of these factors, as well as other complaints such as unnecessary delays at borders, business and customs officers are often in conflict.2 However, the 21st century has seen an improvement in relations between customs and business worldwide. One noticeable change is that more customs authorities have adopted client-centric policies.3 The main aim of this approach is to make customs more responsive to stakeholders by guaranteeing specific standards for service delivery, providing a substitute for competition and a benchmark for measuring service quality.4 The roles and functions of customs have evolved with the ever-changing domestic and international environment. As a result, trade facilitation—which entails the simplification and harmonization of customs procedures—is now one of the key challenges for many customs administrations (Figure 1). Effective and efficient customs administrations contribute to facilitating legitimate trade, which is an engine of sustainable economic development. Accordingly, experiences to date suggest that many customs authorities in both developed and developing countries have recognized that productive interaction with business is essential for effective and efficient customs administrations. Many customs administrations around the world have endeavored to work together with business. Good partnerships are important for any function of customs authorities, including revenue collection, trade facilitation, protection of industry/citizens, and trade security. These partnerships are equally important to anti-corruption and customs reform as well as modernization efforts. Customs’ experiences show that closer cooperation and collaboration with business are beneficial to both customs and business. Benefits to customs may include improved trade security, trade efficiency, and effective enforcement. The trade community is able to benefit from prompt customs clearance, low trade transaction costs, transparency, and predictability of customs procedures. In essence, trade facilitation is a common objective and mutual trust is vital. To this end, customs should be cognizant of the complexity and vulnerability of the international trade supply chain, and understand the needs and priorities of the business. At the same time, businesses should be aware of border regulations and how customs systems operate in order to maintain a high level of compliance with customs laws and regulations. The Global Enabling Trade Report 2012 | 77 @ 2012 World Economic Forum
- 100. 1.7: Expansion of Customs-Business Partnerships in the 21st Century Figure 1: Evolution of customs functions and international standards and tools Revenue Package Revenue collection Fair and efficient collection of revenue, clas- sification valuation, origin, etc. Protection of industry RILO & CEN Exchange of information and joint operations for drug trafficking, precursor chemicals, counterfeit trademarks and pirated copyrights goods, etc. Protection of citizens CUSTOMS FUNCTION Revised Kyoto Convention, technology, and risk management Trade facilitation SAFE standards, Authorized Economic Operator, etc. Trade security Green customs initiative, etc. Environmental issues Source: WCO. 78 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 101. 1.7: Expansion of Customs-Business Partnerships in the 21st Century A common challenge for customs administrations This pillar consists of six standards: partnership, is to develop and maintain good relationships with security, authorization, technology, communication, business. The next section of this chapter covers and facilitation. Built on the RKC’s authorized person international instruments and tools related to customs- concept, the authorized economic operator (AEO) business partnerships. The following section highlights concept entails providing benefits to businesses that key activities undertaken by the World Customs have been validated by customs as meeting certain Organization (WCO) to strengthen the relationship regulatory standards. This is particularly relevant under of customs with the business community.5 Several circumstances where customs relies more on audit- lessons learned from customs administrations are then based controls than on transaction-based controls. presented, and the conclusion follows. Partnerships with business are also stressed in the customs reform and modernization process. In the INTERNATIONAL INSTRUMENTS AND TOOLS WCO Customs Capacity Building Strategy, the private International standards can inculcate a common sector is identified as playing an important role in language between customs and business. The WCO capacity-building activities.12 The private sector could has developed and maintains a variety of international use its influence with governments to direct necessary customs-related instruments and tools, several of which resources to customs reform and modernization efforts, directly address the partnership between customs and it could support sound capacity-building initiatives and business.6 This section summarizes several of the either through training and technical assistance or key instruments and tools developed by the WCO for through direct funding support. The private sector also customs-business partnerships. has a responsibility to provide support by participating in The WCO strategy document Customs in the 21st consultative forums or by adopting modern and ethical Century identifies customs-trade partnerships as one business standards. of the ten building blocks that serve as fundamentals of Border enforcement against goods that infringe modern customs administrations in the 21st century.7 In intellectual property rights (IPRs) is another area in which particular, it states that: closer cooperation between customs and business is needed. Seizing infringing goods at the border is an efficient and effective means of protecting IPRs, as Customs in the 21st Century should enter into international trade reportedly accounts for over half strategic pacts with trusted economic operators. of global counterfeiting and piracy.13 A secure tool for Customs needs to understand the concerns communication between customs and IPR holders, called Interface Public-Members (IPM),14 was launched of business, while business needs to know the in 2010 to facilitate the exchange of information between requirements of Customs. Most importantly, customs and IPR holders (Figure 2). The IPM contains there is a need to translate this relationship into numerous functions, including a genuine/fake database a partnership that results in mutually beneficial that provides frontline customs officers at the border with outcomes.8 real-time information to help them distinguish genuine products from fakes and counterfeits. The Revised Kyoto Convention (RKC) provides for a series of standards aimed at enhancing the transparency WCO ACTIVITIES and predictability of customs procedures for business.9 WCO activities directed at strengthening the relationship Among these are Standard 3.32 concerning special of customs with the business community have their procedures for authorized persons, Standard 9.2 origins in the economic declaration of the G-7 London concerning prior publication of new or amended Summit in 1991, in which the WCO was invited to legislation, Standard 9.9 concerning binding rulings,10 strengthen its cooperation with business associations and Standards 10.1 through 10.5 concerning appeals in order to “improve the capacity of law enforcement procedures. In particular, the general principles include agencies to target illicit drug movements without the mandatory Standard 1.3, which states: hindering the legitimate circulation of persons and goods.”15 To date, the WCO has signed Memoranda of Understanding (MOUs) with more than 30 business Customs shall institute and maintain formal associations, including the International Chamber of consultative relationships with the trade to Commerce (ICC) and the Global Express Association (GEA). Most of these MOUs have been revised recently increase co-operation and facilitate participation to broaden the scope of information-sharing from illegal in establishing the most effective methods of drug–related areas to include wider operations and working commensurate with national provisions and performance. In 2011, for example, the ICC and the international agreements. WCO renewed their understanding about promoting and supporting efficiency in customs control and facilitation. That MOU also sets out a list of agreed activities and Customs and business partnership is the second improved channels of communication.16 pillar of the SAFE Framework of Standards to Secure Given its importance, the WCO selected customs- and Facilitate Global Trade (SAFE Framework).11 business partnerships as the theme for International The Global Enabling Trade Report 2012 | 79 @ 2012 World Economic Forum
- 102. 1.7: Expansion of Customs-Business Partnerships in the 21st Century Figure 2: Interface Public-Members (IPM) IPM enables Right Holders... to communicate... IPM with a multitude of stakeholders (customs, representatives and others) in an effort to prevent counterfeiting Source: WCO. Customs Day in 2010, under which the international Close cooperation on the part of business customs community collectively supported and improved is a precondition for most of the WCO’s customs these relationships in order to assist the achievement enforcement and trade facilitation programs. For of key objectives, especially effective customs controls example, using a secure communication tool called coupled with trade facilitation. Under the theme for 2011, the “WCO Customs Enforcement Network (CEN) which was “Knowledge,” the importance of sharing and applications,” the customs community—in cooperation accumulating knowledge for a better understanding with business and relevant international organizations— between customs and business was emphasized. The collectively conducted more than 30 border enforcement theme selected for 2012 is “Connectivity.” Although operations in the second half of 2011, targeting specific it covers broader issues than previous themes—in high-risk goods such as narcotics and tobacco, the areas of people, institutions, and information, for counterfeit trademark and pirated copyright goods, and example—the customs-business partnership remains an environmentally sensitive goods. Moreover, in order to essential element. facilitate measuring the time required for the release of The WCO makes a maximum effort to seek the goods, the WCO’s Time Release Study Guide calls for views of the private sector when developing or revising special cooperation and collaboration from the trade and its customs instruments and tools. A number of business transport community.18 associations attend various WCO meetings as observers. Last but not least, the WCO has regularly organized In addition, the Private Sector Consultative Group many training sessions for business on technical (PSCG),17 whose membership is composed of private matters such as rules of origin, the classification of companies and associations related to the trade and goods, and IPR border enforcement. For example, both transport industries, provides collective advice. In fact, events of the Open Day for Trade and the Knowledge many of the PSCG’s valuable suggestions and proposals Academy for Customs & Trade provide opportunities have been reflected in new or revised WCO tools and for the private sector to learn more about the WCO, instruments. international customs standards, and the international 80 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 103. 1.7: Expansion of Customs-Business Partnerships in the 21st Century customs community, leading to improved compliance developed countries. In this model, business acts as a with customs requirements. In addition, many events stakeholder in the development and implementation of are organized jointly with business, or for business. customs legislation and policies. When the European Among others, the Global Congress on Combating Commission develops proposals for customs policy Counterfeiting and Piracy is convened every two years and legislation, consultations with business are jointly by the International Criminal Police Organization institutionalized in its procedures.25 In accordance (ICPO– INTERPOL), the WCO, the World Intellectual with these procedures, for example, the European Property Organization (WIPO), the ICC/BASCAP,19 and Commission sought contributions from stakeholders the International Trademark Association (INTA). Two when reviewing the EU legislation on customs annual technology-related events—the IT Conference enforcement of IPRs; the proposed texts, which take & Exhibition and the Technology & Innovation Forum— those contributions into account, are currently under attract hundreds of participants from customs, business, consideration.26 and academia. As one of the WCO’s pilot projects on integrity, Moroccan Customs has established the Observatory LESSONS LEARNED to fight corruption and enhance integrity for traders A public-private partnership (PPP) is generally defined and customs officials.27 The Observatory—with as “a venture between a government agency and one representatives from customs and relevant business or more private companies in which the private party associations—is tasked with consolidating complaints provides a public service or project and assumes from the customs and business sides regarding corrupt either partial or full responsibility in the area of financial, behaviors, identifying problems, analyzing those technical and operational risks.”20 In the customs problems, and finding solutions. context, this can be interpreted as meaning that the stakeholder assumes greater responsibility in traditional Collaboration customs work. Because of the wide assortment of PPP Customs-business collaboration at the border is models, a close partnership between customs and effective in the trade security and customs enforcement business can be achieved in a variety ways. In many in particular. Information provided by business is countries, the private sector plays an important role as extremely useful when identifying high-risk cargoes and a stakeholder, as a partner, and as a service provider, passengers/crews. For close cooperation, customs and customs is able to benefit from the private sector’s administrations often conclude individual partnership involvement through consultation, collaboration, and arrangements with business through MOUs or in an contracting.21 informal way. Each customs administration has its own programs and operations. Hong Kong Customs, for Consultation example, launched the Strategic Control Scheme on Consulting with business is one of the most prevalent Hazardous Waste, under which a joint examination ways to promote customs-business partnerships; this of high-risk shipments is conducted with shipping consultation may take place at the national and local companies. A substantial amount of illegal hazardous levels, and in both formal and informal ways.22 A joint waste has been denied entry thanks to this cooperative forum or group with representatives of both the public arrangement with shipping companies.28 and the private side is common; a public comment Enhancing voluntary compliance by the private system on a specific topic is another method frequently sector also becomes a key strategy of customs used. The actual voices of users are valuable assets administrations. For instance, Irish Customs has created for customs when it comes to assessing and improving a customer-oriented system coupled with a strategy customs services. Representatives from the private to maximize voluntary compliance by the business, sector join forums or groups as stakeholders, and an particularly small-medium enterprises.29 Since creating important mechanism for dialogue is provided in order to good will as partners in the private sector is essential ensure that interests and strategic directions are mutually in order to improve compliance, regular business understood, where appropriate. perception surveys on customs work have become a In particular, consultation or dialogue with benchmarking tool for Irish Customs. business plays an important role in customs reform and Further examples that rely on voluntary compliance modernization efforts. In Peru, for example, the success by the private sector are trusted/authorized trader of the customs modernization process can be explained programs and AEO programs. In both types of partly by the transformation of a relationship with the program, customs shares its responsibilities with private sector into a solid partnership based on dialogue those private companies that have a high level of to the benefit of all sides.23 The role of the private sector compliance. In trusted/authorized trader programs, in customs modernization programs was also highlighted those who demonstrate good compliance with customs in connection with the strengthening of capacities in requirements and meet conditions specified by customs each member state of the East African Community.24 are entitled to benefit from special procedures such as Prior consultation—described as consultation on a low frequency of customs intervention, depending new or amended customs rules and regulations prior on national laws and regulations. Assuming that cargo to their entry into force—is another trend, particularly in dealt by the trusted/authorized trader is low risk enables customs to focus its resources on the high-risk cargoes. The Global Enabling Trade Report 2012 | 81 @ 2012 World Economic Forum
- 104. 1.7: Expansion of Customs-Business Partnerships in the 21st Century Under AEO programs, on the other hand, if AEO status (PSI) or Destination Inspection (DI) activities. As is awarded to economic operators,30 they must meet their names suggest, PSI activities are conducted in minimum standards of trade supply-chain security under exporting countries in order to verify the quality, the an accreditation process managed by customs. As of quantity, the price, and/or the customs classification May 2011, 16 AEO programs were operational in 42 of exported goods,35 while DI activities are carried out, countries, including Argentina, Canada, China, Costa in combination with scanning technology, on imported Rica, Guatemala, Japan, Jordan, the Republic of Korea, goods in importing countries. PSI/DI is introduced to Malaysia, New Zealand, Norway, Singapore, Switzerland, enhance customs functions as a stop-gap measure the United States, and 27 EU Member States, although while waiting for customs reform and modernization. their scope, the type of operator, and the benefits According to the WTO, as of November 2011 at least 25 granted vary from program to program.31 countries, most of which are in sub-Sahara Africa, had Considering the financial constraints of governments contracts with private inspection entities for PSI/DI.36 and their frequent lack of technical capacity and It is important to note, however, that such services infrastructure, customs-business partnerships often should be considered not as a permanent substitute provide a solution in developing and maintaining for the customs authority, but as a temporary measure. customs IT systems. In addition, the electronic single- Primarily as a consequence of critical assessments window concept—where a single electronic submission of the performance of inspection companies and of information fulfills all cross-border regulatory inefficient capacity-building and training activities, many requirements—is considered to be an effective trade customs administrations have exited these outsourcing facilitation measure. Although in most cases customs contracts. With its accumulated knowledge, the administrations manage IT systems for single-window WCO is able to assist its Members with the process service, either alone or jointly with other government of discontinuing the contracts. There are certain agencies, in several cases a single-window service is circumstances where the hiring of inspection companies run by a private company. The WCO 2011 survey on could be justified because of the lack of expertise, as single-window implementation revealed that the private in the case of a post-conflict reconstruction situation. sector provides the single-window service in 14 percent In such cases, contracts with PSI/DI companies as of the countries surveyed, and its maintenance and service providers should be accompanied by active operation are funded by a PPP in 10 percent of the planning for an exit strategy within the context of a countries surveyed.32 Ghana, Mauritius, Senegal, and capacity-building or customs modernization program, Singapore are among the countries that have set up a and the PSI/DI companies should work in compliance PPP enterprise for a single-window platform. with the WTO Agreement on PSI and relevant WTO’s In another instance of collaboration, in Mozambique recommendations. an innovative initiative has been launched to optimize revenue collection.33 Various cooperative mechanisms CONCLUSION that act between customs and the informal sector Effectively and efficiently facilitating legitimate trade stimulate the informal trade sector to become part of the without compromising customs controls is a common formal tax environment. Because informal traders with challenge shared by all customs administrations. The a maximum of 10 employees and not registered with continuous modernization and reform of customs in the the tax authority account for a significant proportion of face of the ever-changing circumstances of international Mozambique’s economy, this initiative is expected to trade is also essential. To this end, a good partnership have a significant positive impact on revenue collection with business is a key to success. However, a variety as well as trade facilitation. of options exist for achieving a good partnership with business. One size does not fit all, and all customs Contracting authorities should make every effort to find the best Governments may choose private-sector services solutions for their particular situation. In support of to complement or augment government resources their efforts, the WCO has provided its Members with and capabilities. Supporting operations ranging from various opportunities to share their experiences and printing customs legislation and tariffs to designing best practices. It has also developed customs tools and customs websites, repairing and maintaining facilities instruments and conducts capacity-building activities and equipment, and conducting research into specific and organizes events jointly with business. The WCO topics are typically outsourced to private companies.34 will continue to move forward in this direction with its This option may be more cost effective than in-house Members. operations for reasons of economic scale, expertise, Customs-business partnerships have expanded technology, and the stimulation provided by competition and evolved to reach a new phase, which includes in the private sector. In addition, the outsourcing of more proactive engagement of the private sector supporting functions to the private sector enables in traditional customs work. The result is a shared customs administrations to focus their scarce resources responsibility with the public sector through consultation, on their core activities. collaboration, and contracting. Customs authorities Through a contract with a government, certain should work with business in order to achieve their core customs activities may be outsourced to private common and respective goals. To this end, more companies that conduct Preshipment Inspection customs administrations have adopted service charters 82 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 105. 1.7: Expansion of Customs-Business Partnerships in the 21st Century that place a client-centric approach at the heart of their 30 Economic operators include, among others, manufacturers, importers, exporters, brokers, carriers, consolidators, operations. Performance indicators are introduced to intermediaries, ports, airports, terminal operators, integrated regularly monitor outputs and outcomes to serve as operators, warehouses, and distributors. feedback to improve the commitment. With diligent work, 31 Polner 2011. the business perception of customs can be improved, 32 Choi 2011. a development that is reflected in business perception indexes—including the Enabling Trade Index of The 33 WCO 2010f. Global Enabling Trade Report. 34 Grainger 2011. 35 Article 1 of the WTO Agreement on Preshipment Inspection. NOTES 36 WTO 2011. 1 Transparency International 2009. 2 Grainger 2011. REFERENCES 3 Jeannard 2010. APEC. 2006. Customs-Business Partnership Programmes (revised in 4 Ireland et al. 2011 September 2006). APEC Sub-Committee on Customs Procedures (SCCP), September 2006, Singapore. 5 The WCO was established in 1952 as the intergovernmental organization dealing with customs matters. It currently represents Choi, J. Y. 2011. “Survey of Single Window Implementation.” WCO 177 customs administrations, which together process over 98 Research Paper No.17 (August). Brussels: WCO. percent of world trade. For further information, visit www.wcoomd. org. EC (European Commission). 2010. Consultation Paper: Review of EU Legislation on Customs Enforcement of Intellectual Property 6 Zhang et al. 2010. Rights, March. Brussels: European Commission. 7 WCO 2008. Feehily, J. 2009. Ireland Experience. Presentation at the Revenue Management Conference, December 10–11, Brussels. 8 WCO 2008, p. 7. Frontier Economics Ltd. 2011. Estimating the Global Economic 9 The RKC is the international convention with the formal title of and Social Impacts of Counterfeiting and Piracy: A Report “INTERNATIONAL CONVENTION ON THE SIMPLIFICATION AND Commissioned by Business Action to Stop Counterfeiting and HARMONIZATION OF CUSTOMS PROCEDURES (as amended)” Piracy (BASCAP), February. London: Frontier Economics Ltd. (WCO 1999). It entered into force in February 2006, and currently has 77 contracting parties. Grainger, A. 2011. “The Role of the Private Sector in Border Management Reform.” In Border Management Modernization, ed. 10 RKC’s Standard 9.9 concerning binding rulings is supported G. McLinden, E. Fanta, D. Widdowson, and T. Doyle. Washington by two WCO Recommendations: RECOMMENDATION DC: World Bank. Chapter 10. ON THE IMPROVEMENT OF TARIFF CLASSIFICATION WORK AND RELATED INFRASTRUCTURE (25 June 1998) Ireland, R., T. Cantens, and Yasui, T. 2011. “An Overview of Performance and RECOMMENDATION ON THE INTRODUCTION OF Measurement in Customs Administrations.” WCO Research Paper PROGRAMMES FOR BINDING PRE-ENTRY CLASSIFICATION No. 13 (April). Brussels: WCO. INFORMATION (18 June 1996). Further information is available at www.wcoomd.org. Jeannard, S. 2010. “Focusing Customs on Client Service.” WCO News 61 (February): 24. 11 The SAFE Framework is a non-binding instrument, adopted in 2005 and revised in 2007 and 2011. See WCO 2011a. Ministry of Foreign Affairs of Japan. 1991. Documents of Summit Meeting in the Past, 17 London Summit, Economic Declaration. 12 WCO 2003. Available at http://www.mofa.go.jp/policy/economy/summit/2000/ past_summit/17/e17_a.html. 13 Frontier Econmics Ltd 2011. Polner, M. 2011. “Compendium of Authorized Economic Operator 14 Further information on IPM is available at http://ipmpromo. Programmes: 2011 Edition.” WCO Research Paper No.14 (August). wcoomdpublications.org. Brussels: WCO. 15 Ministry of Foreign Affairs of Japan 1991, para 62. TI (Transparency International). 2009. Corruption Perceptions Index 16 WCO 2011b. 2009. Geneva: Transparency International. 17 Further information on PSCG is available at www.wcopscg.org. WCO (World Customs Organization). 1999. International Convention on the Simplification and Harmonization of Customs Procedures (as 18 WCO 2011c. Amended), June. Brussels: WCO. 19 BASCAP (Business Action to Stop Counterfeiting and Piracy) is an ———. 2003. WCO Customs Capacity Building Strategy, submitted to initiative launched by the ICC. the WTO Council for Trade in Goods, G/C/W/467, July 2, Geneva. 20 Public-Private Partnerships: Global Trade Facilitation Partnership ———. 2008. Customs in the 21st Century, June. Brussels: WCO. for Transportation and Trade (GFP). Further information is available at www.gfptt.org. ———. 2010a. “Transforming Customs-Business Relations: Peru’s Experience.” WCO News 61 (February): 32. 21 Grainger 2011. ———. 2010b. “Trade Facilitation and Customs Modernization Through 22 Grainger 2011; APEC 2006. a Partnership with the Trade.” WCO News 61 (February): 29. 23 CO 2010a. ———. 2010c. “TAXUD Talks Business.” WCO News 61 (February): 21–23. 24 WCO 2010b. ———. 2010d. “A Public-Private Partnership on Integrity: Morocco 25 WCO 2010c. Opens Its Observatory.” WCO News 61 (February): 33. 26 EC 2010. ———. 2010e. “Customs and Business: Partners in Fighting Illegal 27 WCO 2010d. Movements of Hazardous Waste.” WCO News 61 (February): 23. 28 WCO 2010e. ———. 2010f. “Mozambique Maximizes Revenue Collection and Enhances Trade Facilitation Through an Innovative Public-Private 29 Feehily 2009. Cooperation Initiative.” WCO News 61 (February): 28. The Global Enabling Trade Report 2012 | 83 @ 2012 World Economic Forum
- 106. 1.7: Expansion of Customs-Business Partnerships in the 21st Century ———. 2011a. SAFE Framework of Standards to Secure and Facilitate Global Trade: 2011 edition, June. Brussels: WCO. ———. 2011b. “WCO Open Day for Trade Reinforces Customs-Business Partnership.” WCO Press Release, June 28. Brussels: WCO. ———. 2011c. Guide to Measure the Time Required for the Release of Goods: Version 2, October. Brussels: WCO. WTO (World Trade Organization). 2011. Preshipment Inspection, G/ VAL/W/63/Rev.14, November 8. Geneva: WTO. Zhang, S. and R. Preece. 2010. “Designing and Implementing Customs- Business Partnerships: A Possible Framework for Collaborative Governance.” World Customs Journal 5 (1): 43–62. 84 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 107. CHAPTER 1.8 This chapter attempts to present the world merchant fleet in the context of world trade, to explain some of the challenges the industry is facing, and to consider how The Merchant Fleet: A some of these challenges can work as potential trade barriers. Facilitator of World Trade The analysis will include a brief overview of recent maritime industry history and the current cost of seaborne trade, followed by a look at the opportunities HANS OUST HEIBERG to be found in terms of coping with three key issues: DNB Bank ASA (1) fuel cost, (2) an expected decade of environmental regulation, and (3) fleet renewal. SHIPPING AND WORLD TRADE The merchant fleet broadly consists of bulk carriers (bulkers), which are designed to transport unpackaged bulk cargo; tankers, which are designed to transport liquid cargo; and container ships. Together these vessels account for 85 percent of the fleet. Niche segments— such as gas carriers, car carriers, and refrigerated vessels—account for the remaining 15 percent. The entire fleet comprises more than 50,000 seagoing vessels, with a total carrying capacity of close to 1.4 billion metric tons.1 The economic life expectancy of a ship is typically 25 years. In 1950 the world seaborne trade comprised about 0.5 billion metric tons, whereas today it has expanded to about 9 billion metric tons. Thus seaborne trade has grown about 18-fold, while GDP has grown roughly eight- or ninefold in the same period. In volume terms, according to Lloyd’s Marine Intelligence, 75 percent of world trade is by sea whereas 16 percent is rail and road, 9 percent by pipeline, and 0.3 percent by air. The expansion of world trade has accelerated in the last decade, coinciding with China joining the World Trade Organization. Shipowners and shipyards reacted to this by building more ships to accommodate the growth in demand. As a result, from a historical perspective, the current fleet is very modern. In value terms, seaborne trade accounts for about 60 percent of world trade. The value of all of world trade today is about US$15 trillion, of which US$9 trillion is by sea. To put this into perspective, total world GDP is about US$63 trillion. GDP growth influences trade growth, but GDP growth is in turn affected by factors such as trade barriers, foreign direct investment, and infrastructure development. The primary development seen in the shipping industry since the 1950s is the appearance of the container ship. Over the last 60 years, the seaborne container trade has grown from zero to about 1.5 billion metric tons. In 2010, the global value of the seaborne container trade we believe is about US$5.6 trillion, which is about 60 percent of the world’s seaborne trade. The remaining US$3.4 trillion, or 40 percent of world seaborne trade, is comprised mainly of commodities such as oil and oil products, iron ore, coal, grain, and other minor bulk cargoes. Data in this chapter come from Clarksons Research Services Ltd, DNB Bank ASA, Lloyds Marine Intelligence, and the World Trade Organization. The Global Enabling Trade Report 2012 | 85 @ 2012 World Economic Forum
- 108. 1.8: The Merchant Fleet: A Facilitator of World Trade Figure 1: Daily cost of moving 65,000 metric tons of coal 60,000 l Total daily cost of running the vessel 50,000 l Daily cost of hiring the vessel l Daily cost of fueling the vessel 40,000 US dollars per day 30,000 20000 10,000 0 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Sources: Clarksons Research Services Ltd; DNB Bank ASA. THE CURRENT COST OF SHIPPING GOODS AND The graph in Figure 1 shows that the current cost BUILDING SHIPS of fuel for the transportation of coal is the key cost The cost of seaborne transportation today for major component and currently stands at about 80 percent commodities is in the region of 2 to 15 percent of the of the cost of the coal. It can be further noted that fuel cost of the commodity. Transportation distance is the cost has been higher than transportation cost in the last main driver of this cost: for example, transporting iron two decades except during the last 5 years. In the last ore from Brazil to China would cost about 15 percent of 10 years, the average bunker price was about US$340 the cost of the ore itself, whereas transporting the iron per metric ton; today the price is more than US$700 ore from Australia to China would cost only 6 percent of per metric ton. Currently the daily breakeven cost of the cost of the ore. moving such a coal cargo is in excess of US$30,000 There is no specific fixed value for the contents per day when including fuel, operating costs, and vessel of a container, because contents vary. But a crude amortizing costs. At breakeven, fuel accounts for about approximation of average content value can be derived 60 percent of total cost. by dividing the global seaborne container trade of Back in 2002, for example, the cost of building a US$5.6 trillion by 140 million containers: this gives an very large crude carrier (VLCC) was US$64 million. At average content value of US$42,000. A container can the peak of the market in 2008, the price was US$150 be shipped from the Far East to Europe for US$1,000, million. The construction cost for such a vessel today is which means that the cost of shipping is roughly 2.4 quoted at US$90 million. Current prices for constructing percent of the value of the contents. new ships are now between 30 percent and 45 percent The daily cost of transporting the foremost higher than they were in 2002. Such an increase over commodities—iron ore and oil—is historically high, even 10 years, when taking into account the rise in steel though the actual earnings of the shipowners operating prices and in the costs of compliance with regulations in the spot market are below their breakeven point. introduced during the period to improve the quality of The Clarksons’ ClarkSea earnings index has fallen ships, is not excessively high. In fact, we may be at a low from a peak in excess of 46,000 points in mid 2008 to point in terms of new ship construction cost. 8,761 points on average so far in 2012. In comparison, Port congestion, however, is one variable that is not the last low point occurred in 2002, when the index controlled by the shipowner. Port congestion is primarily stood at 10,341 points. The average for 2002–11 was a problem for dry commodities, such as ore and coal. 21,000 points, whereas the average for the last three The dry cargo fleet currently spends about 6 percent of years (2009–11) was 12,000 points. its time idle in ports because of the lack of infrastructure for getting the cargo onboard in a timely fashion. This 86 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 109. 1.8: The Merchant Fleet: A Facilitator of World Trade Figure 2: Savings opportunities with new technology: Fuel price US$500 per metric ton— illustration of savings with new technology versus old technology 30 10 n Savings per vessel per day 24 n Present value of savings over 15 years at 9 percent discount rate 8 15-year savings (US$, millions) Daily savings (US$, thousands) 18 6 12 4 6 2 0 0 5 10 15 20 Metric tons of fuel per day Source: Author’s estimates. equates to roughly 20 days of lost efficiency. Assuming total cargo value of US$420 million. Slowsteaming with 9,000 bulk carriers at a cost of US$10,000 per day, the such valuable cargoes seems to be beneficial even after annual global cost of this inefficiency is about US$18 compensating the cargo owners for costs associated billion. With possible future increases in demand, with holding such inventory. Thus there is an opportunity congestion is likely to increase. to reduce cost by reducing speed and at the same time In summary, in the current market situation freight financially compensating the cargo owner for the loss of rates are high but not sufficient for shipowners to break time caused by slower speeds. even because of the high cost of fuel. Thus demand for The rise in bunker price, coupled with the ships has dropped, resulting in substantially lower ship implementation of new emission control regulations, values and in a lower cost of building new ships. is making the industry focus more on fuel efficiency. Already new designs promise a 20 percent reduction in ADJUSTING TO HIGH FUEL PRICES fuel consumption. The whole industry is adjusting to high fuel costs by For a new-design VLCC, the reduction in reducing speed (a method called slowsteaming) in order consumption over that of a five-year-old vessel is in the to reduce consumption. In general, existing vessels region of 20 metric tons of fuel per day, which implies a in similar segments of the fleet have rather similar fuel daily savings of US$10,000 on average. On an annual consumption needs, regardless of their age. basis, this savings comes to US$3.65 million. Assuming By slowing a vessel down from 15 knots to 11 knots, 15 years of trading, a constant fuel price, and a discount fuel consumption may well be reduced by 50 percent. rate of 9 percent, the present value of the savings is On the run from Brazil to China, for example, this means close to US$30 million (see Figure 2). This is about a round-trip increase from 65 days to 86 days. For a 33 percent of the cost of the asset, currently priced typical ship carrying iron ore on this route, the fuel cost at US$90 million. It may be a fair assumption that the would be reduced by close to US$1 million. The cargo shipowner will retain half of these savings. Recently is worth close to US$25 million. Assuming a 10 percent delivered vessels that are built with the previous year’s holding cost of the cargo value for the additional 10.5 technology should then be valued at US$75 million. sailing days on the laden leg, the cost increase in sailing Resale value for a ship to be delivered this year (one built time is about US$80,000. with old technology) is estimated by some to be US$85 The value of the cargo on board a VLCC at today’s million. oil prices (April 2012) of about US$120 per barrel is Doing a similar exercise for a large dry cargo vessel, about US$240 million. A container ship with 10,000 annual savings are in the region of US$1.8 million with containers with a value of US$42,000 each yields a a net present value of US$18 million, which equates The Global Enabling Trade Report 2012 | 87 @ 2012 World Economic Forum
- 110. 1.8: The Merchant Fleet: A Facilitator of World Trade to 37 percent of the cost of the asset. Doing the same is in line with the cost of a scrubber. In order to comply for a 10,000 twenty-foot equivalent container ship, the with the 2015 ECA sulfur limit, the need for fuel oil annual savings is in the region of US$5.8 million with a segregation on board will be an issue for some vessels. net present value of US$46 million, which equates to 42 Alongside emission control, the merchant fleet has percent of the cost of the asset. Across the sectors of to adapt to ballast water treatment in order to prevent the fleet, substantial savings are possible by using an contaminated water and unwanted species from being eco ship. The present value is in the range of 30 to 40 carried from one region to another. Implementation is percent of the value of the asset. at the early stages, and some newly constructed ships It is important to note that there is a difference have been fitted with the system. The system will be between shipyards’ research and development compulsory by 2015, but suppliers and yards will have to departments, and they are not equally good on design. have the capacity in terms of production and the logistics Many yards have traditionally focused on producing to retrofit the existing fleet. Prices of ballast water tonnage as cheaply as possible; these yards have not treatment systems are in the region of US$1 to 4 million, paid much attention to fuel efficiency. There is already depending on the size of the vessel, and such a system a two-tier, or perhaps even a three-tier, market in the requires 30 to 45 days in a yard to be fitted. In the case quality of vessels that shipyards produce. This will be of a VLCC, spending 45 days in a yard represents a intensified as eco ships become prevalent because the million dollars in lost revenue in today’s market. top-quality yards are typically those with good research Both scrubbers and ballast water treatment and development capability. will demand a great deal from suppliers and yards In sum, the fuel-cost challenge is likely to have three for retrofits. Timelines are likely to be pushed back. main consequences. First will be a reduction of speed, However, investment decisions will be difficult because which reduces fuel consumption. Second, pressure technology is still under development, cut-off dates is being felt to build ships that are more fuel efficient. uncertain, and it is difficult to know when and how Third, inefficient vessels will lose ground to fuel-efficient to choose MDO or HFO as fuel. The cost of fitting vessels, and the rate of scrapping older ships is therefore the necessary equipment is likely to come down as likely to increase. technology improves, but there will still be the logistical issue of fitting equipment and downtime, which will RULES AND REGULATIONS IN THE COMING DECADE necessarily lead to a one-off loss of income. Regulators are moving onto the high seas with Even if HFO remains the primary fuel for the strict emission controls for sulfur and ballast water. merchant fleet, it will become more expensive because The regulations are likely to be delayed because of it will have a lower sulfur content than the fuel currently technological and logistical issues, but by 2015 owners in use. Older ships are likely to be scrapped because will have to adhere to a stricter regime. upgrading them will be uneconomical. Furthermore, fuel However, the initial phase of requiring less than 1 cost will rise as consequence of having to burn cleaner percent sulfur in the fuel oil when trading in Emission fuel. Control Areas (ECA) in coastal areas such as the Baltic The lack of clarity in implementation dates and and the North Sea has worked smoothly. The global exactly what the requirements and limits will be deep-sea limit of 3.5 percent sulfur in fuel oil has also contributes to an uncertainty that itself may become come into force. Beginning in August, 2012, the United a trade barrier. Not being able to plan increases risk. States will be introducing an ECA within 200 nautical Not being able to implement new technology hampers miles. It is expected that Tokyo Bay, Singapore, Hong development when it cannot be tested in real life. Kong, the Mediterranean, and the Caribbean will follow shortly. The challenge for the fleet is to meet the 2015 RENEWAL OF THE FLEET limit of 0.1 percent sulfur content within ECAs. By the Rates and ship values are linked, and thus in bad year 2020, the limit of sulfur in international waters is to markets, values come down. High scrap steel prices come down to 0.5 percent. In effect, the 2015 and 2020 may also entice shipowners to scrap old vessels. Often limits will mean that the industry will have to burn marine scrapping coincides with an expensive docking and diesel oil (MDO) or marine gas oil instead of heavy fuel oil when expensive upgrades are needed in order to comply (HFO). Currently there is not sufficient refining capacity to with regulation (see Figure 3). take the industry from residual fuel to middle distillates. The cost of a VLCC ordered today is US$90 The price difference between HFO and MDO million; a five-year-old vessel today is valued at US$58 is about US$300 per metric ton. The technology— million. On average, from 2002 to 2011 a five-year-old scrubbers that can clean the exhaust in order to reduce vessel was priced at 84 percent of the price of a new sulfur content—does exist. It appears that the price construction. Now a five-year-old vessel is priced at 60 for average size ships (smaller than capesize vessels percent of a new ship, and a 15-year-old vessel at 25 and VLCCs) is in the region of US$3.5 million for new percent of the cost of building new. A 10-year historic construction and US$4 million plus for a retrofit. average is not available for 15-year-old vessels, because Assuming a fuel consumption of 30 metric tons per double-hull tankers came into production early in the day on an average size ship, the annual price of HFO 1990s. However, the 2002–11 average ratio of 10-year- is US$7.7 million whereas the annual price of MDO is old to new construction price was 64 percent. Scrap US$11 million. The one-year differential of US$3.3 million value is now historically high, and VLCC scrap value is 88 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 111. 1.8: The Merchant Fleet: A Facilitator of World Trade Figure 3: Scrapping and scrapping indicators 800 80 l BFI index, rebased l Heavy fuel oil, US$/metric ton 600 l Demolition deadweight tons (millions) 60 Deadweight tons (millions)* l Scrap steel price, US$/metric ton US$/metric ton 400 40 200 20 0 0 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Sources: Clarksons Research Services Ltd; DNB Bank ASA. * Demolition in million deadweight tons and Baltic Freight Index (BFI) is rebased by dividing the index by 100. now at 20 percent of the cost of new construction. We per annum—or 150 million DWT over the two years—is see similar trends in the dry cargo and the container equal to the entire fleet’s vessels that are older than 25 segments. years. But, more importantly, by 2015, 50 million DWT It seems that the fleet is depreciating faster in value of large tankers will pass the 15-year age mark and 75 than before. It may be the case that the useful life of a million DWT of large bulk carriers will pass the 20-year non–fuel-efficient ship is 15 years for a VLCC and 20 mark. This level of scrapping for large tankers is equal years for a capesize. When they reach this age, the to 100 percent of the vessels currently on order with value of the vessels is close to their scrap value. For the shipyards’ orderbooks. In terms of the bulkers, such crude tankers, many charterers will not take ships older scrapping is equal to about 60 percent of the order for than 15 years. Every five years, ships need to dock and large bulk carriers. pass a special survey with a classification society.2 The Scrapping 200 million DWT over the next three cost of making any modifications necessary to pass this years is not unlikely. Current orders are for 340 million survey for 15- and 20-year-old vessels may be high. The DWT, with building capacity for more tonnage in 2013 cost of drydocking a 15-year-old VLCC and a 20-year- and 2014. The key to further ordering, apart from what old capesize vessel is easily US$3.5 million; 40 days has so far been discussed, is financing capacity. in a shipyard with no income must also be taken into Most numbers concerning bank capacity in consideration. shipping include offshore units such as rigs and supply As we saw earlier, the earnings of the world global vessels. An aggregate value of the world fleet—including fleet have dropped dramatically. Even the last three specialized ships such as chemical tankers, gas tankers, years—with average earnings of 60 percent of the 10- and offshore units—is probably in the region of US$800 year average—have witnessed 115 million deadweight to 900 billion. Bank commitments are probably in the tonnage (DWT) of the fleet being scrapped. This region of US$400 to 450 billion. It is likely that this is amounts to about 8 percent of the fleet—not a very high shrinking because some banks wish to reduce exposure. percentage, but it has been increasing during the period, Over the next couple of years, loan repayments will and last year some 40 million DWT was scrapped. probably be in the range of US$70 billion per annum, Earnings have deteriorated since last year by 25 percent of which US$40 billion is likely to be committed by and bunker prices have come up by 15 percent. It is not the banks to new business. Pure shipping orders are unlikely, then, that scrapping will continue at more than to the tune of US$190 billion, or US$270 billion when 40 million DWT per annum the next couple of years. including offshore units (oil rigs and vessels supporting Assume a sluggish world economy and high oil the offshore industry). It is likely that half of this amount prices for two years, and scrapping 75 million DWT is financed, thus some US$135 billion will need to be The Global Enabling Trade Report 2012 | 89 @ 2012 World Economic Forum
- 112. 1.8: The Merchant Fleet: A Facilitator of World Trade funded over the next two years. At 50 percent of the pressure on shipping cost unless there is a shortage of value of the asset being financed, this represents some tonnage. For the dry cargo business, better infrastructure US$40 billion per annum. This amount leaves little around ports will reduce the cost of transportation room for financing either further new construction or because ships will wait less time for cargo, thus making secondhand tonnage. However, export credit agencies the fleet more efficient. are expected to play a greater role in new construction These factors—high fuel cost, congestion in ports, because countries such as China, the Republic of Korea, lack of financing, and ability to innovate—will determine and Brazil are expected to assist in financing ships built the degree to which shipping cost will serve as a at their local yards. Furthermore, the bond market is significant trade barrier in the future. expected to be part of the funding equation, although that will probably have a greater impact on the offshore NOTES side than the shipping side. 1 A metric ton is equal to 1,000 kilograms. There has been a substantial reduction of values 2 All ships need to be of a certain quality. Classification societies and earnings since the height of the market. However, such the American Bureau of Shipping, Det Norske Veritas, owners with low financial gearing or low operational Bureau Veritas, and so on check compliance and issue compliance certificates. gearing have weathered the volatile market fairly well. Thus far there have not been many casualties, and most of the ordering spree at high prices has been absorbed into the fleet. However, a prolonged downturn will be a further damper on banks’ ability to fund new tonnage. We expect high scrapping and ships as young as 15 years to be scrapped. We do expect more tonnage to be ordered for 2013/14, but only in limited numbers. A substantial part of the funding will have to come from equity and nonbank debt. It is also to be expected that shipyards that cannot build competitive tonnage will go bankrupt. CONCLUSION Continued high oil prices and requirements for cleaner fuel are expected to place an upward pressure on transportation cost. More fuel-efficient tonnage will ease this pressure somewhat over time. However, because of capital constraints and low earnings, the renewal of the fleet in any meaningful way will take time. The current low rates, coupled with high scrap prices, will increase demolition to new peaks—possibly as high as 70 million DWT a year. A further reduction in speed will reduce the availability of tonnage and put upward pressure on rates. A bit further out in time, tonnage availability will also reduce somewhat because of ships going to shipyards to be upgraded with emissions and ballast water treatment systems. Once financing is more available, tonnage renewal will accelerate. With fuel costs above US$500 per metric ton, fuel savings of 20 percent or more will be appealing to shipowners. A savings of 10 metric tons per day on average, at US$500 per metric ton, currently has a present value of US$15 million. Thus it is not unlikely that a capesize vessel at a current new construction cost of US$48 million can reduce consumption on average by 10 metric tons daily when slowsteaming. This will be enticing for both owner and charterer. Clarity on emissions technology and improved fuel efficiency will also be catalysts for accelerated renewal, and a pattern of a two-tier merchant fleet will evolve. The actual cost of the shipping assets is expected to be lower than it was in the last decade. Operating shipping cost inflation is not expected to be high. Thus the cost of the ship itself is not expected to put upward 90 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 113. CHAPTER 1.9 The Global Express Association represents the four global express carriers: DHL Express, FedEx Express, TNT Express, and UPS. These carriers’ sophisticated Benefits of Trade networks, which provide time-guaranteed delivery of express shipments in 220 countries and territories, are Facilitation: The Case of an essential component of the global supply chains that define present-day trade patterns. Costa Rica As such, they are strong advocates of advances in trade facilitation. Very frequently, whether a shipment CARLOS GRAU TANNER can be delivered at a specific time in a specific location depends on its ability to get clearance at the border. Global Express Association In other words, trade facilitation measures are also essential for the functioning of global supply chains, which traverse many countries or continents in most sectors. In such a context, a country with modern, efficient border management is likely to be an attractive location for investment because of its favorable positioning within the global supply chains. The benefits of trade facilitation have been amply demonstrated by a number of studies conducted by international agencies and academia. The numbers are there and speak for themselves. Most recently, the Organisation for Economic Co-operation and Development (OECD) estimated that the adoption of the trade facilitation package being discussed at the World Trade Organization (WTO) could result in a 10 percent reduction in trading costs. This is a very substantial amount.1 This figure refers to trading costs in OECD Member States, which are developed economies. One can only guess at the (much higher) savings figures a similar study would yield if it were applied to less- developed economies. Rather than quoting more such studies or embarking on another defense of the benefits of trade facilitation, the Global Express Association would like to take a look at a real-world example—a case study, if you will. This approach has the benefit of testing the various studies’ assumptions in practice. It also shows what went well and what did not. Costa Rica is a case in point. Granted, with a population of about 4.5 million people and a GDP of around US$30 billion, Costa Rica may not spring to mind immediately when thinking about global supply chains. The C in BRICS is not for Costa Rica. Yet this country’s recent success in fostering trade provides an example of what a country’s commitment to foreign trade can do to transform its economy, and demonstrates the importance of trade facilitation to such a strategy. Costa Rica has signed Free Trade Agreements with a number of countries, most of them from the Americas (including Canada, Chile, Mexico, and the United States) but also with the European Union, China, and Singapore. In all, its 52 preferential trade partners represent 83 percent of its total foreign trade and 86 percent of exports. Costa Rica has also been an early proponent of trade facilitation measures. It ranks 43rd on the 2012 Enabling Trade Index (and 3rd in that Index in Latin America). Costa Rica has had a “single-window” system (called TICA) for border management since 2002. The system has been a good start, although there is room for The Global Enabling Trade Report 2012 | 91 @ 2012 World Economic Forum
- 114. 1.9: The Case of Costa Rica Table 1: Top 10 exports from Costa Rica, 1994 and 2010 1994: Top 10 Export Products 2010: Top 10 Export Products Bananas 22% Computer microchips 10% Coffee 12% Computer parts 9% Pineapple 2% Bananas 8% Jewelry 2% Serum infusion and transfusion equipment 5% Hair dryers 2% Medical prosthesis 3% Melons 2% Pharmaceuticals 3% Boned beef 1% Food preparations 3% Shrimp 1% Coffee 3% Ornamental plants 1% Textiles and apparel 2% Other 32% Other 46% Source: COMEX, using data from BCCR and PROCOMER. Reprinted with permission of the Costa Rican Government. improvement, as will be shown below. Costa Rica also these high-value-added, time-sensitive products are has a US$25 de minimis threshold, coupled with a bi- typically carried by express delivery companies. These yearly de minimis tax exemption for a single import under companies would not have been able to provide their US$500. This entire approach to trade facilitation—which service absent modern border management. The lack includes both the thresholds described and the TICA of modern border management, in turn, would have system, among other things—has allowed for relatively reduced the appeal of Costa Rica as a production fast clearance times, especially when compared with the location. clearance times of other countries in the region. The Costa Rican government estimates that As far as the express delivery sector is concerned, industrial sectors operating in a global value chain the figures speak for themselves. According to the context now represent 42.8 percent of total exports by national express delivery association (Asociación de value, which is around US$3.5 billion. The country has Empresas de Entrega Rápida de Costa Rica, a member moved from being an exporter primarily of agricultural of the Latin American express trade association goods to being the top high-tech exporter in Latin CLADEC), 250,000 express shipments were handled in America. Needless to say, this has had a very favorable Costa Rica in 2005. Six years later, in 2010, the figure impact on job creation in the country. had increased eightfold to 2,000,000 express shipments. The Costa Rican government intends to further For the government, this increased duty collection improve the present situation, in an effort to increase the tenfold, from US$2 million to US$20 million per annum value added by Costa Rica in the global supply chain. over the same period. Perhaps the most visible project is the future rollout Naturally, the Government of Costa Rica did not of a new, improved single window. And there is room introduce trade facilitation and a single-window system for improvement: the TICA system does not now allow to merely please express carriers. The system is part of advance transmission of electronic data for clearance. a much wider policy that attempted to place Costa Rica In other words, the shipment must be in the country for firmly on the global supply chain map. And the policy the transmission to take place. Nor does TICA come with succeeded. The current Costa Rican Minister for Trade, an automated risk assessment system. Recent attempts Anabel González, recently delivered a presentation on to introduce such an automated system have not been this issue at the WTO’s Public Forum. conclusive. An inspector still determines manually Costa Rica’s policies have attracted a number of which shipments must be inspected. This is not in line foreign investors from high-tech sectors, mainly from with international best practice and has the effect of the electronics, medical devices, aeronautics, and slowing down the logistics chain. Furthermore, although automotive industries. By 2008, foreign direct investment TICA accepts (and, in principle, demands) paperless inflows amounted to over US$2 billion, about a fourfold documentation and stores data, formal entries must be increase since 1998. This has led to a dramatic change made on paper because customs still requires an original in the composition and value of Costa Rican exports. signature on the document. In 1994, Costa Rica’s top export were bananas, In cooperation with donor agencies, the Costa Rican followed by coffee and pineapples. By 2010, computer authorities are working on a fully automated border chips and parts topped that list, bananas having fallen management concept, one that will automatically link to third place and representing a much smaller share the databases of all 16 border-related agencies and be of the total exports. Whereas in 1994 the list of the top truly paperless. This should eliminate human intervention 10 Costa Rican exports included mostly agricultural from the clearance process and increase its speed, products and low-tech manufactured goods, in 2010 the from same-day clearance to clearance within hours or list included transfusion equipment, medical prostheses, minutes. The Costa Rican government expects the new and pharmaceuticals (Table 1). For instance, electronic system to reduce clearance costs by 90 percent. components now represent over 25 percent of total It is also important to note that the improvement of exports, and their main destination is China. All of border management has not been a consistently linear 92 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 115. 1.9: The Case of Costa Rica process. Late in the evening on the eve of Black Friday 2011, the Costa Rican Ministry of Finance changed the interpretation of the US$500 per semester de minimis clause. Although the measure was aimed at Internet shopping, it had led to a backlog of 5,000 shipments being held at customs. This backlog, coupled with a return to manual inspections, affected not only shipments from individual to individual but it affected business-to-business supply chains as well. A seemingly technical issue quickly turned into a political one. It is to be hoped that this issue will soon be considered a mere hiccup in an otherwise positive process. One can draw several conclusions from this case. First, it provides real-world evidence that supports the findings of the numerous academic studies on the importance of policy that facilitates trade. Costa Rica’s experience also proves that benefits from improved trade facilitation flow to all players. The country has successfully taken advantage of its inclusion into global value chains and improved trade facilitation measures have significantly contributed to this outcome. Customs revenue has multiplied; employment has improved, both in quantity and quality, as have exports. This improvement in the environment, in turn, has led to further increases in foreign investment. The country, its citizens, and its corporations—both domestic and international—all three are winners. However, Costa Rica’s experience also shows that even in the presence of strong and well-executed policies, setbacks can occur. There is constant room for improvement, especially after a few years of operation. Facilitating trade is not an easy process, and is one that requires constant attention. In sum, the case of Costa Rica presents a very strong, practical argument for further multilateral trade facilitation measures, such as those discussed under the aegis of the WTO. It is tempting to repeat that trade facilitation leads to a win-win-win situation, a statement that has almost become a cliché. Costa Rica, however, has shown that, far from being a cliché, the benefits of trade facilitation are very real and widespread. NOTE 1 Moïsé et al. 2011. REFERENCE Moïsé, E., T. Orliac, and P. Minor. 2011. “Trade Facilitation Indicators: The Impact on Trade Costs.” OECD Trade Policy Working Papers No. 118. OECD Publishing. Available at http://dx.doi. org/10.1787/5kg6nk654hmr-en. The Global Enabling Trade Report 2012 | 93 @ 2012 World Economic Forum
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- 117. Part 2 Country/Economy Profiles @ 2012 World Economic Forum
- 118. @ 2012 World Economic Forum
- 119. How to Read the Country/Economy Profiles The Country/Economy Profiles section presents a two- page detailed profile of each of the 132 economies covered by The Global Enabling Trade Report 2012. Each profile summarizes an economy’s performance in the various dimensions of the Enabling Trade Index (ETI). PAGE 1 Key indicators The first section presents a selection of key indicators: • Population figures (millions) are from the United Nations Population Fund (UNFPA)’s State of World Population 2010. • GDP (US$ billions) data are from the International Monetary Fund (IMF)’s World Economic Outlook Online Database (September 2011 edition). • Foreign direct investment (FDI) inflows (US$ millions) are from the United Nations Conference on Trade and Development (UNCTAD)’s FDIstat database (retrieved January 26, 2012). FDI flows with a negative sign indicate a reverse investment or disinvestment, as data on FDI flows are presented on a net basis (capital transactions’ credits less debits between direct investors and their foreign affiliates). • Imports and exports share (%) of world trade • The chart on the upper right-hand side displays total is based on trade data from the World Trade the evolution of trade volumes and FDI as a Organization (WTO)’s Statistical Database, Time percentage of GDP from 1996 through 2010 (or Series on merchandise and commercial services over the subperiod for which data are available) for (retrieved January 25, 2012). Total trade is the sum the economy under review (blue line and bars). The of total imports and exports of merchandise and black line represents the evolution of world trade commercial services. For countries where 2010 as percentage of world GDP. Total trade is the commercial services trade data are not available, sum of total imports and exports of merchandise the imports and exports shares of world total are and commercial services. Data are from the WTO calculated based on 2009 data. These countries are (ibid). GDP figures come from the IMF (ibid). The Benin, Burkina Faso, Burundi, Chad, Côte d’Ivoire, bars represent the evolution of FDI inflows as a Ethiopia, Guyana, Lesotho, Malawi, Mali, Mauritania, percentage of GDP and are based on FDI data and Syria. Because of outdated commercial obtained from UNCTAD’s FDIstat database (retrieved services data, it was not possible to calculate the March 28, 2012). total trade value for Qatar and Zimbabwe. • Merchandise and commercial services export and import data shown to the left of the chart are for 2010 and are based on trade data obtained from the WTO (ibid). The table also reports the breakdown of the country’s merchandise exports and imports, respectively, by commodity group (Agriculture, Fuels and mining, and Manufactures). According to the WTO’s International Trade Statistics, these are as follows: The Global Enabling Trade Report 2012 | 97 @ 2012 World Economic Forum
- 120. Part 2: Country/Economy Profiles – Agriculture covers food products (SITC Rev. 3 sections 0, 1, 4, and division 22) and raw materials (SITC Rev. 3 divisions 21, 23, 24, 25, and 26). – Fuels and mining covers ores and other minerals, as well as fuels and non-ferrous metals. – Manufactures covers iron and steel, chemicals, other semi-manufactures, machinery and transport equipment, textiles, clothing, and other consumer goods. Note that the sum of shares does not necessarily add up to 100 because the world total merchandise trade includes other commodities and transactions that are not part of the three main commodity groups described above. These commodities are gold, arms and ammunition, and commodities and transactions not classified elsewhere (SITC Rev. 3, section 9). Further note that the breakdown by commodity group for Macedonia is reported for 2009. Enabling Trade Index The second section of page 1 summarizes the economy’s performance on the main components of the ETI 2012, and also provides its ETI 2010 overall ranking for comparison. The two columns show the economy’s PAGE 2 rank and score, respectively, out of the sample of 132 The Enabling Trade Index 2012 in detail economies. This section presents an economy’s performance (rank and score) in each individual indicator composing The most problematic factors for trade the ETI. The indicators are organized by pillar. This chart summarizes those factors seen by business Please refer to Appendix A of Chapter 1.1 for the executives as the most problematic for trading in detailed structure of the ETI and information about its their economy. The bars in the figure show the computation. Units or index ranges are indicated next responses weighted according to their rankings. The to the indicator’s name. Please refer to the Technical information is drawn from the 2011 edition of the Notes and Sources for a detailed description and World Economic Forum’s Executive Opinion Survey sources for all indicators. The detailed rankings by (the Survey). Respondents were asked to select the indicator can be found in the Data Tables, which five most problematic factors from a list of ten factors are available online at www.weforum.org/getr. when exporting from their country, and from a list Indicator 1.02 (Non-tariff measures) is presented in of eight factors when importing into their country. the country profiles, yet not included in the calculation of Respondents were further asked to rank these from the ETI as it is being revised by the International Trade 1 (most problematic) to 5. The results were tabulated Centre to provide a more updated data series. and weighted according to the ranking assigned Next to the rank, a colored square indicates whether by respondents. For a more detailed explanation of the indicator constitutes an advantage (a blue square) or the Survey methodology and data treatment, refer a disadvantage (a gray square) for the country. In order to Browne, C. and T. Geiger, 2011, “The Executive to identify a variable as an advantage or disadvantage, Opinion Survey: An Indispensable Tool in the the following rules apply: Assessment of National Competitiveness” in The Global • For the top 10 economies in the overall ETI, any Competitiveness Report 2011–2012 (available at www. variables on which the economy is ranked 10th or weforum.org/gcr). higher are considered to be competitive advantages. Any variables ranked below 10 are considered to be competitive disadvantages. • For those economies ranked from 11th through 50th on the overall ETI, any variables with a rank higher than the economy’s overall rank are considered to be competitive advantages. Any variables ranked equal to, or lower than, the economy’s overall rank are competitive disadvantages. 98 | The Global Enabling Trade Report 2012 @ 2012 World Economic Forum
- 121. Part 2: Country/Economy Profiles • For economies with an overall rank on the ETI lower than 50, any variables for which the economy ranks 50th or higher are considered to be competitive advantages. Any variables ranked below 50 are considered competitive disadvantages. For the sake of comparison, we report in the two right-most columns the score and name of the best- performing economy for each indicator. Given the recent events in Syria, the performance of the second-best performer, Saudi Arabia, is reported for indicator 9.02. However, Syria remains in the ETI sample. Multiple economies denotes a tie among several economies for the best score on a specific indicator. For these indicators, we provide below the list of best-performing economies. • Tariff peaks. A total of 23 economies have no tariff peaks: Algeria, Bangladesh, Benin, Burkina Faso, Cambodia, Cameroon, Chad, Chile, Côte d’Ivoire, Ethiopia, Gambia, Ghana, Hong Kong SAR, Madagascar, Malawi, Mali, Mauritania, Mozambique, Nigeria, Paraguay, Senegal, Tunisia, and Zambia. • Specific tariffs. A total of 49 economies have no specific tariffs: Albania, Algeria, Angola, Bahrain, Benin, Bolivia, Brazil, Burkina Faso, Cambodia, Cameroon, Chad, Chile, Colombia, Costa Rica, Côte d’Ivoire, Dominican Republic, Ecuador, El Salvador, Ethiopia, Gambia, Ghana, Guatemala, Guyana, Haiti, Honduras, Hong Kong SAR, the Islamic Republic of Iran, Jamaica, Madagascar, Malawi, Mali, Mauritania, Mongolia, Morocco, Mozambique, Nicaragua, Nigeria, Panama, Paraguay, Peru, the Philippines, Senegal, Syria, Tunisia, Uruguay, Venezuela, Vietnam, Yemen, and Zambia. • Customs services index. Two economies obtain the maximum score of 12 on this index: Singapore and the United Kingdom. • Time to export. It takes five days on average to export goods in Denmark, Estonia, Hong Kong SAR, and Singapore. • Paved roads. A total of 17 economies have 100 percent of their road network paved: Austria, the Czech Republic, Denmark, France, Germany, Hong Kong SAR, Ireland, Israel, Italy, Jordan, Latvia, Luxembourg, Singapore, Slovenia, Switzerland, United Arab Emirates, and the United Kingdom. • Government Online Service Index. Three economies obtain the Index score of 1: the Republic of Korea, Singapore, and the United States. The Global Enabling Trade Report 2012 | 99 @ 2012 World Economic Forum
- 122. @ 2012 World Economic Forum
- 123. Index of Countries/Economies Country/Economy Page Country/Economy Page Country/Economy Page Albania 102 Greece 190 Nicaragua 278 Algeria 104 Guatemala 192 Nigeria 280 Angola 106 Guyana 194 Norway 282 Argentina 108 Haiti 196 Oman 284 Armenia 110 Honduras 198 Pakistan 286 Australia 112 Hong Kong SAR 200 Panama 288 Austria 114 Hungary 202 Paraguay 290 Azerbaijan 116 Iceland 204 Peru 292 Bahrain 118 India 206 Philippines 294 Bangladesh 120 Indonesia 208 Poland 296 Belgium 122 Iran, Islamic Rep. 210 Portugal 298 Benin 124 Ireland 212 Qatar 300 Bolivia 126 Israel 214 Romania 302 Bosnia and Herzegovina 128 Italy 216 Russian Federation 304 Botswana 130 Jamaica 218 Rwanda 306 Brazil 132 Japan 220 Saudi Arabia 308 Bulgaria 134 Jordan 222 Senegal 310 Burkina Faso 136 Kazakhstan 224 Serbia 312 Burundi 138 Kenya 226 Singapore 314 Cambodia 140 Korea, Rep. 228 Slovak Republic 316 Cameroon 142 Kuwait 230 Slovenia 318 Canada 144 Kyrgyz Republic 232 South Africa 320 Chad 146 Latvia 234 Spain 322 Chile 148 Lebanon 236 Sri Lanka 324 China 150 Lesotho 238 Sweden 326 Colombia 152 Lithuania 240 Switzerland 328 Costa Rica 154 Luxembourg 242 Syria 330 Côte d’Ivoire 156 Macedonia, FYR 244 Taiwan, China 332 Croatia 158 Madagascar 246 Tajikistan 334 Cyprus 160 Malawi 248 Tanzania 336 Czech Republic 162 Malaysia 250 Thailand 338 Denmark 164 Mali 252 Tunisia 340 Dominican Republic 166 Mauritania 254 Turkey 342 Ecuador 168 Mauritius 256 Uganda 344 Egypt 170 Mexico 258 Ukraine 346 El Salvador 172 Moldova 260 United Arab Emirates 348 Estonia 174 Mongolia 262 United Kingdom 350 Ethiopia 176 Montenegro 264 United States 352 Finland 178 Morocco 266 Uruguay 354 France 180 Mozambique 268 Venezuela 356 Gambia, The 182 Namibia 270 Vietnam 358 Georgia 184 Nepal 272 Yemen 360 Germany 186 Netherlands 274 Zambia 362 Ghana 188 New Zealand 276 Zimbabwe 364 The Global Enabling Trade Report 2012 | 101 @ 2012 World Economic Forum
- 124. Part 2: Country/Economy Profiles Albania Key indicators Trade and FDI inflows, percent of GDP Population (millions), 2010 .................................................................... 3.2 GDP (US$ billions), 2010......................................................................11.9 Country FDI inflows (US$ millions), 2010 ........................................................ 1,097 Trade World Imports and exports as share (%) of world total, 2010 ....................... 0.03 100 80 10 4 80 8 Sources: IMF; UNCTAD; UNFPA; WTO 60 3 60 6 40 2 40 4 20 20 1 2 Imports Exports 00 0 Total trade (US$ millions), 2010 ................................... 6,593 3,742 1996 1996 1998 1998 2000 2000 2002 2002 2004 2004 2006 2008 2006 2010 2008 Services trade (US$ millions), 2010 ............................. 1,992 2,192 Merchandise trade (US$ millions), 2010 ...................... 4,601 1,550 Agriculture (% of merchandise trade), 2010................. 18.96 6.93 Fuels and mining (% of merchandise trade), 2010........17.42 30.77 Manufactures (% of merchandise trade), 2010 ............ 63.60 61.96 Enabling Trade Index Rank (out of 132) Score (1–7) 2012 Index ....................................................................... 49 4.4 2010 Index .......................................................................................................... 59 4.1 Subindex A: Market access ..................................................... 15 4.9 1st pillar: Domestic and foreign market access .................................. 15 4.9 Subindex B: Border administration ......................................... 54 4.3 2nd pillar: Efficiency of customs administration .................................. 38 4.6 3rd pillar: Efficiency of import-export procedures .............................. 63 4.8 4th pillar: Transparency of border administration ................................ 61 3.6 Subindex C: Transport & communications infrastructure..... 71 3.8 5th pillar: Availability and quality of transport infrastructure................ 94 3.6 6th pillar: Availability and quality of transport services ....................... 64 3.8 7th pillar: Availability and use of ICTs .................................................. 58 4.1 Subindex D: Business environment ........................................ 52 4.5 8th pillar: Regulatory environment ...................................................... 72 3.6 9th pillar: Physical security.................................................................. 44 5.3 1 2 3 4 5 6 7 The most problematic factors for trade Most problematic factors for exporting Percent of responses Identifying potential markets and buyers .........................................................23.1 Access to trade finance ...................................................................................18.6 Access to imported inputs at competitive prices.............................................13.9 Inappropriate production technology and skills ................................................ 9.8 Difficulties in meeting quality/quantity requirements of buyers ......................... 9.6 Technical requirements and standards abroad..................................................7.8 Burdensome procedures and corruption at foreign borders .............................5.7 Rules of origin requirements abroad ................................................................. 5.5 High cost or delays caused by domestic transportation .................................. 4.3 High cost or delays caused by international transportation ...............................1.8 0 20 40 60 80 100 Most problematic factors for importing Percent of responses Burdensome import procedures......................................................................21.5 Tariffs and non-tariff barriers............................................................................21.5 Corruption at the border ..................................................................................14.3 Domestic technical requirements and standards ............................................ 12.1 High cost or delays caused by international transportation ............................. 11.7 High cost or delays caused by domestic transportation ...................................7.7 Inappropriate telecommunications infrastructure.............................................. 6.3 Crime and theft ..................................................................................................5.1 0 10 20 30 40 50 Note: For descriptions of variables and detailed sources, and for a list of multiple best-performing economies for each indicator, please refer to “How to Read the Country/Economy Profiles” on page 95. 102 | The Global Enabling Report 2012 @ 2012 World Economic Forum
- 125. Part 2: Country/Economy Profiles Albania The Enabling Trade Index 2012 in detail n Competitive Advantage n Competitive Disadvantage INDICATOR, UNITS RANK/132 SCORE BEST PERFORMER SCORE 1st pillar: Domestic and foreign market access ................................... 15 .................. 4.9 Singapore ............................................6.2 1.01 Tariff rate, (%) ....................................................................................... 41 ......n ......... 3.1 Hong Kong SAR ..................................0.0 1.02 Non-tariff measures, index 0–100 (worst)1 .......................................... n/a .................. n/a Cambodia ...........................................4.7 1.03 Complexity of tariffs, index 1–7 (best)................................................... 75 ......n ......... 5.3 Hong Kong SAR ..................................7.0 Tariff dispersion, standard deviation ..................................................... 16 ......n ......... 5.7 Hong Kong SAR ..................................0.0 Tariff peaks, % ................................................................................... 130 ......n ....... 16.3 Multiple economies (23) .......................0.0 Specific tariffs, % ................................................................................... 1 ......n ......... 0.0 Multiple economies (49) .......................0.0 Distinct tariffs, number ......................................................................... 23 ......n ............ 6 Hong Kong SAR ..................................1.0 1.04 Share of duty-free imports, % .............................................................. 12 ......n ....... 85.0 Hong Kong SAR ..............................100.0 1.05 Tariffs faced, % .................................................................................. 117 ......n ......... 5.9 Chile ....................................................3.6 1.06 Margin of preference in destination mkts, index 0–100 (best) ............... 16 ......n ....... 56.1 Malawi ...............................................93.8 2nd pillar: Efficiency of customs administration .................................. 38 .................. 4.6 Singapore ............................................6.6 2.01 Burden of customs procedures, 1–7 (best) .......................................... 62 ......n ......... 4.2 Singapore ............................................6.2 2.02 Customs services index, 0–12 (best).................................................... 36 ......n ......... 8.7 Multiple economies (2) .......................12.0 3rd pillar: Efficiency of import-export procedures................................ 63 .................. 4.8 Singapore ............................................6.4 3.01 Efficiency of the clearance process, 1–5 (best) ..................................... 84 ......n ......... 2.4 Singapore ............................................4.1 3.02 No. of days to import ........................................................................... 66 ......n .......... 18 Singapore ............................................4.0 3.03 No. of documents to import ................................................................. 74 ......n ............ 8 France .................................................2.0 3.04 Cost to import, US$ per container ....................................................... 18 ......n ........ 730 Malaysia ..........................................435.0 3.05 No. of days to export ........................................................................... 74 ......n .......... 19 Multiple economies (4) .........................5.0 3.06 No. of documents to export ................................................................. 80 ......n ............ 7 France .................................................2.0 3.07 Cost to export, US$ per container ....................................................... 29 ......n ........ 745 Malaysia ..........................................450.0 4th pillar: Transparency of border administration................................. 61 .................. 3.6 New Zealand........................................6.7 4.01 Irregular payments in exports and imports, 1–7 (best) .......................... 49 ......n ......... 4.3 New Zealand .......................................6.7 4.02 Corruption Perceptions Index, 0–10 (best) ........................................... 79 ......n ......... 3.1 New Zealand .......................................9.5 5th pillar: Availability and quality of transport infrastructure ............... 94 .................. 3.6 France..................................................6.3 5.01 Airport density, number per million pop. ............................................... 93 ......n ......... 0.3 Iceland ..............................................21.9 5.02 Transshipment connectivity, index 0–100 (best).................................... 97 ......n ....... 54.2 United States...................................100.0 5.03 Paved roads, % of total ....................................................................... 75 ......n ....... 39.0 Multiple economies (17) ...................100.0 5.04 Quality of air transport infrastructure, 1–7 (best) ................................... 53 ......n ......... 5.1 Singapore ............................................6.9 5.05 Quality of railroad infrastructure, 1–7 (best) ....................................... 129 ......n ......... 1.1 Switzerland ..........................................6.8 5.06 Quality of roads, 1–7 (best) .................................................................. 53 ......n ......... 4.2 France .................................................6.6 5.07 Quality of port infrastructure, 1–7 (best) ............................................... 78 ......n ......... 3.9 Singapore ............................................6.8 6th pillar: Availability and quality of transport services ....................... 64 .................. 3.8 Singapore ............................................6.1 6.01 Liner Shipping Connectivity Index, 0–152.1 (best) ................................ 97 ......n ......... 4.5 China...............................................152.1 6.02 Ease and affordability of shipment, 1–5 (best) ...................................... 70 ......n ......... 2.8 Hong Kong SAR ..................................4.2 6.03 Logistics competence, 1–5 (best) ........................................................ 87 ......n ......... 2.6 Finland ................................................4.1 6.04 Tracking and tracing ability, 1–5 (best).................................................. 86 ......n ......... 2.6 Finland ................................................4.1 6.05 Timeliness of shipments in reaching destination, 1–5 (best) ................. 45 ......n ......... 3.6 Singapore ............................................4.4 6.06 Postal services efficiency, 1–7 (best) .................................................... 51 ......n ......... 5.2 Japan ..................................................6.8 6.07 GATS commitments in the transport sector, index 0–1 (best) ................. 6 ......n ......... 0.5 Jamaica...............................................0.7 7th pillar: Availability and use of ICTs................................................... 58 .................. 4.1 Netherlands .........................................6.3 7.01 Extent of business Internet use, 1–7 (best)........................................... 69 ......n ......... 4.9 Sweden ...............................................6.5 7.02 Mobile phone subscriptions/100 pop. .................................................. 18 ......n ..... 141.9 Hong Kong SAR ..............................195.6 7.03 Broadband Internet subscriptions/100 pop. ......................................... 74 ......n ......... 3.3 Netherlands .......................................38.1 7.04 Government Online Service Index, 0–1 (best)....................................... 84 ......n ......... 0.4 Multiple economies (3) .........................1.0 7.05 Individuals using Internet, %................................................................. 50 ......n ....... 45.0 Iceland ..............................................95.0 8th pillar: Regulatory environment ....................................................... 72 .................. 3.6 Singapore ............................................5.7 8.01 Property rights, 1–7 (best) .................................................................... 98 ......n ......... 3.3 Finland ................................................6.4 8.02 Ethics and corruption, 1–7 (best) ......................................................... 56 ......n ......... 3.4 Singapore ............................................6.5 8.03 Undue influence, 1–7 (best).................................................................. 84 ......n ......... 3.0 New Zealand .......................................6.1 8.04 Government efficiency, 1–7 (best) ........................................................ 40 ......n ......... 4.0 Singapore ............................................5.9 8.05 Domestic competition, 1–7 (best)......................................................... 57 ......n ......... 4.3 Saudi Arabia ........................................5.5 8.06 Efficiency of the financial market, 1–7 (best) ....................................... 123 ......n ......... 2.6 Qatar ...................................................5.4 8.07 Openness to foreign participation, index 1–7 (best) .............................. 14 ......n ......... 5.2 Luxembourg ........................................5.9 Ease of hiring foreign labor, 1–7 (best) ................................................... 1 ......n ......... 5.9 Albania ................................................5.9 Prevalence of foreign ownership, 1–7 (best) ......................................... 74 ......n ......... 4.6 Luxembourg ........................................6.5 Business impact of rules on FDI, 1–7 (best) ......................................... 32 ......n ......... 5.1 Singapore ............................................6.4 Openess to multilateral trade rules, index 0–100 (best) ........................ 46 ......n ....... 71.8 Slovenia.............................................93.1 8.08 Availability of trade finance, 1–7 (best)................................................ 103 ......n ......... 3.2 Hong Kong SAR ..................................5.6 9th pillar: Physical security................................................................... 44 .................. 5.3 Finland .................................................6.5 9.01 Reliability of police services, 1–7 (best) ................................................ 52 ......n ......... 4.5 Finland ................................................6.7 9.02 Business costs of crime and violence, 1–7 (best) ................................. 42 ......n ......... 5.3 Saudi Arabia ........................................6.5* 9.03 Business costs of terrorism, 1–7 (best) ................................................ 41 ......n ......... 6.0 Slovenia...............................................6.8 1 This indicator is not included in the pillar calculation. * Syria was replaced with second-best Saudi Arabia; see “How to Read the Country/Economy Profiles” for details. The Global Enabling Report 2012 | 103 @ 2012 World Economic Forum
- 126. Part 2: Country/Economy Profiles Algeria Key indicators Trade and FDI inflows, percent of GDP Population (millions), 2010 .................................................................. 35.5 GDP (US$ billions), 2010....................................................................157.8 Country FDI inflows (US$ millions), 2010 ........................................................ 2,291 Trade World Imports and exports as share (%) of world total, 2010 ....................... 0.30 80 2.5 4 2.0 Sources: IMF; UNCTAD; UNFPA; WTO 70 60 3 1.5 60 40 2 1.0 50 20 1 0.5 Imports Exports 40 0 0.0 0 Total trade (US$ millions), 2010 ................................. 51,588 60,426 1996 1998 1998 2000 2000 2002 20022004 2004 2006 2008 2006 2010 2008 Services trade (US$ millions), 2010 ............................11,376 3,373 Merchandise trade (US$ millions), 2010 .................... 40,212 57,053 Agriculture (% of merchandise trade), 2010................. 18.28 0.58 Fuels and mining (% of merchandise trade), 2010......... 3.71 98.60 Manufactures (% of merchandise trade), 2010 ............ 78.00 0.81 Enabling Trade Index Rank (out of 132) Score (1–7) 2012 Index ..................................................................... 120 3.2 2010 Index .........................................................................................................119 3.1 Subindex A: Market access ................................................... 127 3.0 1st pillar: Domestic and foreign market access .................................127 3.0 Subindex B: Border administration ....................................... 108 3.1 2nd pillar: Efficiency of customs administration .................................116 2.9 3rd pillar: Efficiency of import-export procedures .............................. 93 4.0 4th pillar: Transparency of border administration .............................. 120 2.4 Subindex C: Transport & communications infrastructure..... 93 3.4 5th pillar: Availability and quality of transport infrastructure................ 65 4.2 6th pillar: Availability and quality of transport services ....................... 96 3.3 7th pillar: Availability and use of ICTs ................................................ 105 2.6 Subindex D: Business environment ...................................... 120 3.4 8th pillar: Regulatory environment .................................................... 123 2.9 9th pillar: Physical security................................................................ 106 3.9 1 2 3 4 5 6 7 The most problematic factors for trade Most problematic factors for exporting Percent of responses Access to trade finance ................................................................................... 17.0 Inappropriate production technology and skills ...............................................14.5 Burdensome procedures and corruption at foreign borders ...........................12.7 Difficulties in meeting quality/quantity requirements of buyers ........................ 11.8 Identifying potential markets and buyers ......................................................... 11.5 High cost or delays caused by domestic transportation .................................10.3 Access to imported inputs at competitive prices.............................................. 8.5 High cost or delays caused by international transportation .............................. 4.8 Technical requirements and standards abroad................................................. 4.5 Rules of origin requirements abroad ................................................................. 4.2 0 10 20 30 40 50 Most problematic factors for importing Percent of responses Burdensome import procedures......................................................................24.9 Corruption at the border ..................................................................................21.0 Tariffs and non-tariff barriers............................................................................19.5 High cost or delays caused by international transportation .............................14.7 Domestic technical requirements and standards ............................................. 6.8 Inappropriate telecommunications infrastructure.............................................. 5.9 Crime and theft ................................................................................................. 4.4 High cost or delays caused by domestic transportation .................................. 2.8 0 10 20 30 40 50 Note: For descriptions of variables and detailed sources, and for a list of multiple best-performing economies for each indicator, please refer to “How to Read the Country/Economy Profiles” on page 95. 104 | The Global Enabling Report 2012 @ 2012 World Economic Forum
- 127. Part 2: Country/Economy Profiles Algeria The Enabling Trade Index 2012 in detail n Competitive Advantage n Competitive Disadvantage INDICATOR, UNITS RANK/132 SCORE BEST PERFORMER SCORE 1st pillar: Domestic and foreign market access ................................. 127 .................. 3.0 Singapore ............................................6.2 1.01 Tariff rate, (%) ..................................................................................... 124 ......n ....... 14.0 Hong Kong SAR ..................................0.0 1.02 Non-tariff measures, index 0–100 (worst)1 .......................................... n/a .................. n/a Cambodia ...........................................4.7 1.03 Complexity of tariffs, index 1–7 (best)................................................... 28 ......n ......... 6.6 Hong Kong SAR ..................................7.0 Tariff dispersion, standard deviation ..................................................... 90 ......n ....... 10.1 Hong Kong SAR ..................................0.0 Tariff peaks, % ....................................................................................... 1 ......n ......... 0.0 Multiple economies (23) .......................0.0 Specific tariffs, % ................................................................................... 1 ......n ......... 0.0 Multiple economies (49) .......................0.0 Distinct tariffs, number ........................................................................... 3 ......n ............ 4 Hong Kong SAR ..................................1.0 1.04 Share of duty-free imports, % ............................................................ 107 ......n ....... 22.6 Hong Kong SAR ..............................100.0 1.05 Tariffs faced, % .................................................................................. 127 ......n ......... 6.1 Chile ....................................................3.6 1.06 Margin of preference in destination mkts, index 0–100 (best) ............... 66 ......n ....... 24.9 Malawi ...............................................93.8 2nd pillar: Efficiency of customs administration ................................ 116 .................. 2.9 Singapore ............................................6.6 2.01 Burden of customs procedures, 1–7 (best) ........................................ 128 ......n ......... 2.8 Singapore ............................................6.2 2.02 Customs services index, 0–12 (best).................................................... 86 ......n ......... 5.0 Multiple economies (2) .......................12.0 3rd pillar: Efficiency of import-export procedures................................ 93 .................. 4.0 Singapore ............................................6.4 3.01 Efficiency of the clearance process, 1–5 (best) ................................... 108 ......n ......... 2.3 Singapore ............................................4.1 3.02 No. of days to import ........................................................................... 96 ......n .......... 27 Singapore ............................................4.0 3.03 No. of documents to import ............................................................... 101 ......n ............ 9 France .................................................2.0 3.04 Cost to import, US$ per container ....................................................... 69 ......n ..... 1,318 Malaysia ..........................................435.0 3.05 No. of days to export ........................................................................... 64 ......n .......... 17 Multiple economies (4) .........................5.0 3.06 No. of documents to export ................................................................. 95 ......n ............ 8 France .................................................2.0 3.07 Cost to export, US$ per container ....................................................... 79 ......n ..... 1,248 Malaysia ..........................................450.0 4th pillar: Transparency of border administration............................... 120 .................. 2.4 New Zealand........................................6.7 4.01 Irregular payments in exports and imports, 1–7 (best) ........................ 130 ......n ......... 2.1 New Zealand .......................................6.7 4.02 Corruption Perceptions Index, 0–10 (best) ........................................... 88 ......n ......... 2.9 New Zealand .......................................9.5 5th pillar: Availability and quality of transport infrastructure ............... 65 .................. 4.2 France..................................................6.3 5.01 Airport density, number per million pop. ............................................... 45 ......n ......... 0.8 Iceland ..............................................21.9 5.02 Transshipment connectivity, index 0–100 (best).................................... 57 ......n ....... 72.0 United States...................................100.0 5.03 Paved roads, % of total ....................................................................... 50 ......n ....... 73.5 Multiple economies (17) ...................100.0 5.04 Quality of air transport infrastructure, 1–7 (best) ................................... 98 ......n ......... 3.8 Singapore ............................................6.9 5.05 Quality of railroad infrastructure, 1–7 (best) ......................................... 66 ......n ......... 2.6 Switzerland ..........................................6.8 5.06 Quality of roads, 1–7 (best) .................................................................. 70 ......n ......... 3.8 France .................................................6.6 5.07 Quality of port infrastructure, 1–7 (best) ............................................. 113 ......n ......... 3.0 Singapore ............................................6.8 6th pillar: Availability and quality of transport services ....................... 96 .................. 3.3 Singapore ............................................6.1 6.01 Liner Shipping Connectivity Index, 0–152.1 (best) ................................ 33 ......n ....... 31.1 China...............................................152.1 6.02 Ease and affordability of shipment, 1–5 (best) ...................................... 89 ......n ......... 2.7 Hong Kong SAR ..................................4.2 6.03 Logistics competence, 1–5 (best) ...................................................... 124 ......n ......... 2.1 Finland ................................................4.1 6.04 Tracking and tracing ability, 1–5 (best)................................................ 105 ......n ......... 2.5 Finland ................................................4.1 6.05 Timeliness of shipments in reaching destination, 1–5 (best) ............... 108 ......n ......... 2.9 Singapore ............................................4.4 6.06 Postal services efficiency, 1–7 (best) .................................................. 114 ......n ......... 3.4 Japan ..................................................6.8 6.07 GATS commitments in the transport sector, index 0–1 (best) .............. n/a ......n ......... n/a Jamaica...............................................0.7 7th pillar: Availability and use of ICTs................................................. 105 .................. 2.6 Netherlands .........................................6.3 7.01 Extent of business Internet use, 1–7 (best)......................................... 131 ......n ......... 3.1 Sweden ...............................................6.5 7.02 Mobile phone subscriptions/100 pop. .................................................. 76 ......n ....... 92.4 Hong Kong SAR ..............................195.6 7.03 Broadband Internet subscriptions/100 pop. ......................................... 80 ......n ......... 2.5 Netherlands .......................................38.1 7.04 Government Online Service Index, 0–1 (best)..................................... 116 ......n ......... 0.3 Multiple economies (3) .........................1.0 7.05 Individuals using Internet, %................................................................. 97 ......n ....... 12.5 Iceland ..............................................95.0 8th pillar: Regulatory environment ..................................................... 123 .................. 2.9 Singapore ............................................5.7 8.01 Property rights, 1–7 (best) .................................................................. 118 ......n ......... 2.8 Finland ................................................6.4 8.02 Ethics and corruption, 1–7 (best) ....................................................... 105 ......n ......... 2.6 Singapore ............................................6.5 8.03 Undue influence, 1–7 (best)................................................................ 109 ......n ......... 2.6 New Zealand .......................................6.1 8.04 Government efficiency, 1–7 (best) ...................................................... 112 ......n ......... 2.9 Singapore ............................................5.9 8.05 Domestic competition, 1–7 (best)....................................................... 123 ......n ......... 3.5 Saudi Arabia ........................................5.5 8.06 Efficiency of the financial market, 1–7 (best) ....................................... 127 ......n ......... 2.3 Qatar ...................................................5.4 8.07 Openness to foreign participation, index 1–7 (best) ............................ 118 ......n ......... 3.7 Luxembourg ........................................5.9 Ease of hiring foreign labor, 1–7 (best) ............................................... 118 ......n ......... 3.3 Albania ................................................5.9 Prevalence of foreign ownership, 1–7 (best) ....................................... 115 ......n ......... 3.7 Luxembourg ........................................6.5 Business impact of rules on FDI, 1–7 (best) ....................................... 121 ......n ......... 3.4 Singapore ............................................6.4 Openess to multilateral trade rules, index 0–100 (best) ........................ 85 ......n ....... 59.4 Slovenia.............................................93.1 8.08 Availability of trade finance, 1–7 (best)................................................ 128 ......n ......... 2.6 Hong Kong SAR ..................................5.6 9th pillar: Physical security................................................................. 106 .................. 3.9 Finland .................................................6.5 9.01 Reliability of police services, 1–7 (best) ................................................ 82 ......n ......... 3.7 Finland ................................................6.7 9.02 Business costs of crime and violence, 1–7 (best) ............................... 100 ......n ......... 4.0 Saudi Arabia ........................................6.5* 9.03 Business costs of terrorism, 1–7 (best) .............................................. 125 ......n ......... 3.9 Slovenia...............................................6.8 1 This indicator is not included in the pillar calculation. * Syria was replaced with second-best Saudi Arabia; see “How to Read the Country/Economy Profiles” for details. The Global Enabling Report 2012 | 105 @ 2012 World Economic Forum
- 128. Part 2: Country/Economy Profiles Angola Key indicators Trade and FDI inflows, percent of GDP Population (millions), 2010 ...................................................................19.1 GDP (US$ billions), 2010..................................................................... 82.5 Country FDI inflows (US$ millions), 2010 ........................................................ 9,942 Trade World Imports and exports as share (%) of world total, 2010 ....................... 0.24 210 80 60 4 Sources: IMF; UNCTAD; UNFPA; WTO 60 3 140 40 40 2 70 20 20 1 Imports Exports 00 0 Total trade (US$ millions), 2010 ................................. 37,896 54,143 1996 1996 1998 1998 2000 2000 2002 2002 2004 2004 2006 2008 2006 2010 2008 Services trade (US$ millions), 2010 ........................... 16,396 643 Merchandise trade (US$ millions), 2010 .................... 21,500 53,500 Agriculture (% of merchandise trade) .............................. n/a 0.06 Fuels and mining (% of merchandise trade) .................... n/a 99.01 Manufactures (% of merchandise trade) .......................... n/a 0.77 Enabling Trade Index Rank (out of 132) Score (1–7) 2012 Index ..................................................................... 127 3.0 2010 Index ......................................................................................................... n/a n/a Subindex A: Market access ................................................... 109 3.6 1st pillar: Domestic and foreign market access ................................ 109 3.6 Subindex B: Border administration ....................................... 129 2.4 2nd pillar: Efficiency of customs administration ................................ 128 2.7 3rd pillar: Efficiency of import-export procedures .............................124 2.2 4th pillar: Transparency of border administration .............................. 122 2.4 Subindex C: Transport & communications infrastructure... 128 2.4 5th pillar: Availability and quality of transport infrastructure.............. 129 2.5 6th pillar: Availability and quality of transport services ......................127 2.5 7th pillar: Availability and use of ICTs ................................................ 120 2.2 Subindex D: Business environment ...................................... 104 3.6 8th pillar: Regulatory environment .................................................... 129 2.6 9th pillar: Physical security.................................................................. 78 4.7 1 2 3 4 5 6 7 The most problematic factors for trade Most problematic factors for exporting Percent of responses Inappropriate production technology and skills .............................................. 22.2 High cost or delays caused by domestic transportation .................................16.9 Access to imported inputs at competitive prices.............................................14.3 Burdensome procedures and corruption at foreign borders ...........................13.5 Difficulties in meeting quality/quantity requirements of buyers ........................12.0 Access to trade finance .................................................................................... 9.4 Technical requirements and standards abroad................................................. 3.8 Identifying potential markets and buyers .......................................................... 3.4 High cost or delays caused by international transportation .............................. 3.0 Rules of origin requirements abroad ..................................................................1.5 0 10 20 30 40 50 Most problematic factors for importing Percent of responses Burdensome import procedures..................................................................... 23.3 Corruption at the border ..................................................................................18.9 Tariffs and non-tariff barriers............................................................................18.0 High cost or delays caused by domestic transportation ................................. 14.1 High cost or delays caused by international transportation .............................12.9 Crime and theft ................................................................................................. 6.8 Inappropriate telecommunications infrastructure.............................................. 4.6 Domestic technical requirements and standards ..............................................1.5 0 10 20 30 40 50 Note: For descriptions of variables and detailed sources, and for a list of multiple best-performing economies for each indicator, please refer to “How to Read the Country/Economy Profiles” on page 95. 106 | The Global Enabling Report 2012 @ 2012 World Economic Forum
- 129. Part 2: Country/Economy Profiles Angola The Enabling Trade Index 2012 in detail n Competitive Advantage n Competitive Disadvantage INDICATOR, UNITS RANK/132 SCORE BEST PERFORMER SCORE 1st pillar: Domestic and foreign market access ................................. 109 .................. 3.6 Singapore ............................................6.2 1.01 Tariff rate, (%) ....................................................................................... 92 ......n ......... 8.9 Hong Kong SAR ..................................0.0 1.02 Non-tariff measures, index 0–100 (worst)1 .......................................... n/a .................. n/a Cambodia ...........................................4.7 1.03 Complexity of tariffs, index 1–7 (best)................................................... 43 ......n ......... 6.5 Hong Kong SAR ..................................7.0 Tariff dispersion, standard deviation ..................................................... 24 ......n ......... 6.7 Hong Kong SAR ..................................0.0 Tariff peaks, % ..................................................................................... 60 ......n ......... 2.8 Multiple economies (23) .......................0.0 Specific tariffs, % ................................................................................... 1 ......n ......... 0.0 Multiple economies (49) .......................0.0 Distinct tariffs, number ......................................................................... 23 ......n ............ 6 Hong Kong SAR ..................................1.0 1.04 Share of duty-free imports, % ............................................................ 131 ......n ......... 0.0 Hong Kong SAR ..............................100.0 1.05 Tariffs faced, % .................................................................................... 27 ......n ......... 5.2 Chile ....................................................3.6 1.06 Margin of preference in destination mkts, index 0–100 (best) ............... 74 ......n ....... 20.8 Malawi ...............................................93.8 2nd pillar: Efficiency of customs administration ................................ 128 .................. 2.7 Singapore ............................................6.6 2.01 Burden of customs procedures, 1–7 (best) ........................................ 130 ......n ......... 2.7 Singapore ............................................6.2 2.02 Customs services index, 0–12 (best)................................................... n/a ......n ......... n/a Multiple economies (2) .......................12.0 3rd pillar: Efficiency of import-export procedures.............................. 124 .................. 2.2 Singapore ............................................6.4 3.01 Efficiency of the clearance process, 1–5 (best) ..................................... 93 ......n ......... 2.3 Singapore ............................................4.1 3.02 No. of days to import ......................................................................... 121 ......n .......... 45 Singapore ............................................4.0 3.03 No. of documents to import ................................................................. 74 ......n ............ 8 France .................................................2.0 3.04 Cost to import, US$ per container ..................................................... 117 ......n ..... 2,690 Malaysia ..........................................435.0 3.05 No. of days to export ......................................................................... 126 ......n .......... 48 Multiple economies (4) .........................5.0 3.06 No. of documents to export ............................................................... 130 ......n .......... 11 France .................................................2.0 3.07 Cost to export, US$ per container ..................................................... 110 ......n ..... 1,850 Malaysia ..........................................450.0 4th pillar: Transparency of border administration............................... 122 .................. 2.4 New Zealand........................................6.7 4.01 Irregular payments in exports and imports, 1–7 (best) ........................ 107 ......n ......... 2.6 New Zealand .......................................6.7 4.02 Corruption Perceptions Index, 0–10 (best) ......................................... 129 ......n ......... 2.0 New Zealand .......................................9.5 5th pillar: Availability and quality of transport infrastructure ............. 129 .................. 2.5 France..................................................6.3 5.01 Airport density, number per million pop. ............................................. 129 ......n ......... 0.1 Iceland ..............................................21.9 5.02 Transshipment connectivity, index 0–100 (best).................................... 56 ......n ....... 72.3 United States...................................100.0 5.03 Paved roads, % of total ..................................................................... 117 ......n ....... 10.4 Multiple economies (17) ...................100.0 5.04 Quality of air transport infrastructure, 1–7 (best) ................................. 125 ......n ......... 3.1 Singapore ............................................6.9 5.05 Quality of railroad infrastructure, 1–7 (best) ....................................... 114 ......n ......... 1.6 Switzerland ..........................................6.8 5.06 Quality of roads, 1–7 (best) ................................................................ 118 ......n ......... 2.5 France .................................................6.6 5.07 Quality of port infrastructure, 1–7 (best) ............................................. 128 ......n ......... 2.3 Singapore ............................................6.8 6th pillar: Availability and quality of transport services ..................... 127 .................. 2.5 Singapore ............................................6.1 6.01 Liner Shipping Connectivity Index, 0–152.1 (best) ................................ 76 ......n ....... 11.3 China...............................................152.1 6.02 Ease and affordability of shipment, 1–5 (best) .................................... 122 ......n ......... 2.3 Hong Kong SAR ..................................4.2 6.03 Logistics competence, 1–5 (best) ...................................................... 128 ......n ......... 2.0 Finland ................................................4.1 6.04 Tracking and tracing ability, 1–5 (best)................................................ 128 ......n ......... 2.0 Finland ................................................4.1 6.05 Timeliness of shipments in reaching destination, 1–5 (best) ............... 125 ......n ......... 2.6 Singapore ............................................4.4 6.06 Postal services efficiency, 1–7 (best) .................................................. 131 ......n ......... 2.1 Japan ..................................................6.8 6.07 GATS commitments in the transport sector, index 0–1 (best) .............. n/a ......n ......... n/a Jamaica...............................................0.7 7th pillar: Availability and use of ICTs................................................. 120 .................. 2.2 Netherlands .........................................6.3 7.01 Extent of business Internet use, 1–7 (best)......................................... 130 ......n ......... 3.4 Sweden ...............................................6.5 7.02 Mobile phone subscriptions/100 pop. ................................................ 116 ......n ....... 46.7 Hong Kong SAR ..............................195.6 7.03 Broadband Internet subscriptions/100 pop. ....................................... 111 ......n ......... 0.1 Netherlands .......................................38.1 7.04 Government Online Service Index, 0–1 (best)..................................... 100 ......n ......... 0.3 Multiple economies (3) .........................1.0 7.05 Individuals using Internet, %............................................................... 107 ......n ....... 10.0 Iceland ..............................................95.0 8th pillar: Regulatory environment ..................................................... 129 .................. 2.6 Singapore ............................................5.7 8.01 Property rights, 1–7 (best) .................................................................. 126 ......n ......... 2.6 Finland ................................................6.4 8.02 Ethics and corruption, 1–7 (best) ....................................................... 114 ......n ......... 2.4 Singapore ............................................6.5 8.03 Undue influence, 1–7 (best)................................................................ 124 ......n ......... 2.2 New Zealand .......................................6.1 8.04 Government efficiency, 1–7 (best) ...................................................... 129 ......n ......... 2.6 Singapore ............................................5.9 8.05 Domestic competition, 1–7 (best)....................................................... 126 ......n ......... 3.3 Saudi Arabia ........................................5.5 8.06 Efficiency of the financial market, 1–7 (best) ....................................... 129 ......n ......... 2.1 Qatar ...................................................5.4 8.07 Openness to foreign participation, index 1–7 (best) ............................ 129 ......n ......... 3.3 Luxembourg ........................................5.9 Ease of hiring foreign labor, 1–7 (best) ............................................... 129 ......n ......... 2.4 Albania ................................................5.9 Prevalence of foreign ownership, 1–7 (best) ......................................... 79 ......n ......... 4.5 Luxembourg ........................................6.5 Business impact of rules on FDI, 1–7 (best) ....................................... 108 ......n ......... 3.7 Singapore ............................................6.4 Openess to multilateral trade rules, index 0–100 (best) ...................... 130 ......n ....... 27.9 Slovenia.............................................93.1 8.08 Availability of trade finance, 1–7 (best)................................................ 130 ......n ......... 2.4 Hong Kong SAR ..................................5.6 9th pillar: Physical security................................................................... 78 .................. 4.7 Finland .................................................6.5 9.01 Reliability of police services, 1–7 (best) ................................................ 94 ......n ......... 3.5 Finland ................................................6.7 9.02 Business costs of crime and violence, 1–7 (best) ................................. 88 ......n ......... 4.4 Saudi Arabia ........................................6.5* 9.03 Business costs of terrorism, 1–7 (best) ................................................ 35 ......n ......... 6.1 Slovenia...............................................6.8 1 This indicator is not included in the pillar calculation. * Syria was replaced with second-best Saudi Arabia; see “How to Read the Country/Economy Profiles” for details. The Global Enabling Report 2012 | 107 @ 2012 World Economic Forum
- 130. Part 2: Country/Economy Profiles Argentina Key indicators Trade and FDI inflows, percent of GDP Population (millions), 2010 .................................................................. 40.4 GDP (US$ billions), 2010................................................................... 370.0 Country FDI inflows (US$ millions), 2010 ........................................................ 6,337 Trade World Imports and exports as share (%) of world total, 2010 ....................... 0.40 80 12 4 Sources: IMF; UNCTAD; UNFPA; WTO 60 93 40 62 20 31 Imports Exports 0 00 Total trade (US$ millions), 2010 ................................. 69,974 81,023 1996 1998 1998 2000 2000 2002 20022004 2004 2006 2008 2006 2010 2008 Services trade (US$ millions), 2010 ............................13,471 12,890 Merchandise trade (US$ millions), 2010 .................... 56,503 68,133 Agriculture (% of merchandise trade), 2010................... 3.75 50.71 Fuels and mining (% of merchandise trade), 2010....... 10.63 11.62 Manufactures (% of merchandise trade), 2010 ............ 84.32 31.93 Enabling Trade Index Rank (out of 132) Score (1–7) 2012 Index ....................................................................... 96 3.7 2010 Index .......................................................................................................... 95 3.6 Subindex A: Market access ..................................................... 94 3.9 1st pillar: Domestic and foreign market access .................................. 94 3.9 Subindex B: Border administration ......................................... 92 3.5 2nd pillar: Efficiency of customs administration .................................. 93 3.5 3rd pillar: Efficiency of import-export procedures .............................. 85 4.2 4th pillar: Transparency of border administration .............................. 102 2.7 Subindex C: Transport & communications infrastructure..... 67 3.9 5th pillar: Availability and quality of transport infrastructure................ 84 3.8 6th pillar: Availability and quality of transport services ....................... 75 3.5 7th pillar: Availability and use of ICTs .................................................. 52 4.2 Subindex D: Business environment .......................................111 3.5 8th pillar: Regulatory environment .....................................................124 2.9 9th pillar: Physical security.................................................................. 97 4.1 1 2 3 4 5 6 7 The most problematic factors for trade Most problematic factors for exporting Percent of responses Access to imported inputs at competitive prices.............................................14.9 Access to trade finance ...................................................................................13.9 Inappropriate production technology and skills ...............................................12.5 Identifying potential markets and buyers .........................................................10.7 Burdensome procedures and corruption at foreign borders ...........................10.6 High cost or delays caused by domestic transportation .................................10.4 Technical requirements and standards abroad................................................. 8.4 High cost or delays caused by international transportation .............................. 6.6 Rules of origin requirements abroad ................................................................. 6.4 Difficulties in meeting quality/quantity requirements of buyers ......................... 5.6 0 10 20 30 40 50 Most problematic factors for importing Percent of responses Tariffs and non-tariff barriers............................................................................31.7 Burdensome import procedures..................................................................... 20.8 Domestic technical requirements and standards ............................................15.2 Corruption at the border ..................................................................................13.1 High cost or delays caused by international transportation ...............................7.4 High cost or delays caused by domestic transportation .................................. 5.9 Crime and theft ................................................................................................. 3.3 Inappropriate telecommunications infrastructure.............................................. 2.5 0 10 20 30 40 50 Note: For descriptions of variables and detailed sources, and for a list of multiple best-performing economies for each indicator, please refer to “How to Read the Country/Economy Profiles” on page 95. 108 | The Global Enabling Report 2012 @ 2012 World Economic Forum
- 131. Part 2: Country/Economy Profiles Argentina The Enabling Trade Index 2012 in detail n Competitive Advantage n Competitive Disadvantage INDICATOR, UNITS RANK/132 SCORE BEST PERFORMER SCORE 1st pillar: Domestic and foreign market access ................................... 94 .................. 3.9 Singapore ............................................6.2 1.01 Tariff rate, (%) ..................................................................................... 104 ......n ....... 10.9 Hong Kong SAR ..................................0.0 1.02 Non-tariff measures, index 0–100 (worst)1 ........................................... 27 ................ 58.4 Cambodia ...........................................4.7 1.03 Complexity of tariffs, index 1–7 (best)................................................... 87 ......n ......... 4.7 Hong Kong SAR ..................................7.0 Tariff dispersion, standard deviation ..................................................... 91 ......n ....... 10.2 Hong Kong SAR ..................................0.0 Tariff peaks, % ..................................................................................... 37 ......n ......... 0.7 Multiple economies (23) .......................0.0 Specific tariffs, % ................................................................................. 98 ......n ......... 7.0 Multiple economies (49) .......................0.0 Distinct tariffs, number ......................................................................... 96 ......n ........ 707 Hong Kong SAR ..................................1.0 1.04 Share of duty-free imports, % .............................................................. 76 ......n ....... 55.0 Hong Kong SAR ..............................100.0 1.05 Tariffs faced, % .................................................................................... 32 ......n ......... 5.3 Chile ....................................................3.6 1.06 Margin of preference in destination mkts, index 0–100 (best) ............... 41 ......n ....... 43.3 Malawi ...............................................93.8 2nd pillar: Efficiency of customs administration .................................. 93 .................. 3.5 Singapore ............................................6.6 2.01 Burden of customs procedures, 1–7 (best) ........................................ 129 ......n ......... 2.7 Singapore ............................................6.2 2.02 Customs services index, 0–12 (best).................................................... 61 ......n ......... 7.2 Multiple economies (2) .......................12.0 3rd pillar: Efficiency of import-export procedures................................ 85 .................. 4.2 Singapore ............................................6.4 3.01 Efficiency of the clearance process, 1–5 (best) ..................................... 81 ......n ......... 2.4 Singapore ............................................4.1 3.02 No. of days to import ........................................................................... 54 ......n .......... 16 Singapore ............................................4.0 3.03 No. of documents to import ................................................................. 52 ......n ............ 7 France .................................................2.0 3.04 Cost to import, US$ per container ..................................................... 104 ......n ..... 1,810 Malaysia ..........................................435.0 3.05 No. of days to export ........................................................................... 43 ......n .......... 13 Multiple economies (4) .........................5.0 3.06 No. of documents to export ................................................................. 80 ......n ............ 7 France .................................................2.0 3.07 Cost to export, US$ per container ....................................................... 94 ......n ..... 1,480 Malaysia ..........................................450.0 4th pillar: Transparency of border administration............................... 102 .................. 2.7 New Zealand........................................6.7 4.01 Irregular payments in exports and imports, 1–7 (best) ........................ 112 ......n ......... 2.5 New Zealand .......................................6.7 4.02 Corruption Perceptions Index, 0–10 (best) ........................................... 84 ......n ......... 3.0 New Zealand .......................................9.5 5th pillar: Availability and quality of transport infrastructure ............... 84 .................. 3.8 France..................................................6.3 5.01 Airport density, number per million pop. ............................................... 31 ......n ......... 1.1 Iceland ..............................................21.9 5.02 Transshipment connectivity, index 0–100 (best).................................... 50 ......n ....... 73.6 United States...................................100.0 5.03 Paved roads, % of total ....................................................................... 85 ......n ....... 30.0 Multiple economies (17) ...................100.0 5.04 Quality of air transport infrastructure, 1–7 (best) ................................. 111 ......n ......... 3.5 Singapore ............................................6.9 5.05 Quality of railroad infrastructure, 1–7 (best) ......................................... 91 ......n ......... 2.0 Switzerland ..........................................6.8 5.06 Quality of roads, 1–7 (best) .................................................................. 89 ......n ......... 3.2 France .................................................6.6 5.07 Quality of port infrastructure, 1–7 (best) ............................................... 86 ......n ......... 3.7 Singapore ............................................6.8 6th pillar: Availability and quality of transport services ....................... 75 .................. 3.5 Singapore ............................................6.1 6.01 Liner Shipping Connectivity Index, 0–152.1 (best) ................................ 34 ......n ....... 30.6 China...............................................152.1 6.02 Ease and affordability of shipment, 1–5 (best) ...................................... 32 ......n ......... 3.3 Hong Kong SAR ..................................4.2 6.03 Logistics competence, 1–5 (best) ........................................................ 51 ......n ......... 3.0 Finland ................................................4.1 6.04 Tracking and tracing ability, 1–5 (best).................................................. 39 ......n ......... 3.3 Finland ................................................4.1 6.05 Timeliness of shipments in reaching destination, 1–5 (best) ................. 73 ......n ......... 3.3 Singapore ............................................4.4 6.06 Postal services efficiency, 1–7 (best) .................................................. 108 ......n ......... 3.6 Japan ..................................................6.8 6.07 GATS commitments in the transport sector, index 0–1 (best) ............... 59 ......n ......... 0.0 Jamaica...............................................0.7 7th pillar: Availability and use of ICTs................................................... 52 .................. 4.2 Netherlands .........................................6.3 7.01 Extent of business Internet use, 1–7 (best)........................................... 79 ......n ......... 4.8 Sweden ...............................................6.5 7.02 Mobile phone subscriptions/100 pop. .................................................. 19 ......n ..... 141.8 Hong Kong SAR ..............................195.6 7.03 Broadband Internet subscriptions/100 pop. ......................................... 49 ......n ......... 9.6 Netherlands .......................................38.1 7.04 Government Online Service Index, 0–1 (best)....................................... 57 ......n ......... 0.5 Multiple economies (3) .........................1.0 7.05 Individuals using Internet, %................................................................. 69 ......n ....... 36.0 Iceland ..............................................95.0 8th pillar: Regulatory environment ..................................................... 124 .................. 2.9 Singapore ............................................5.7 8.01 Property rights, 1–7 (best) .................................................................. 123 ......n ......... 2.7 Finland ................................................6.4 8.02 Ethics and corruption, 1–7 (best) ....................................................... 124 ......n ......... 2.2 Singapore ............................................6.5 8.03 Undue influence, 1–7 (best)................................................................ 123 ......n ......... 2.2 New Zealand .......................................6.1 8.04 Government efficiency, 1–7 (best) ...................................................... 128 ......n ......... 2.6 Singapore ............................................5.9 8.05 Domestic competition, 1–7 (best)....................................................... 130 ......n ......... 3.0 Saudi Arabia ........................................5.5 8.06 Efficiency of the financial market, 1–7 (best) ....................................... 120 ......n ......... 2.6 Qatar ...................................................5.4 8.07 Openness to foreign participation, index 1–7 (best) .............................. 63 ......n ......... 4.6 Luxembourg ........................................5.9 Ease of hiring foreign labor, 1–7 (best) ................................................. 41 ......n ......... 4.5 Albania ................................................5.9 Prevalence of foreign ownership, 1–7 (best) ......................................... 31 ......n ......... 5.2 Luxembourg ........................................6.5 Business impact of rules on FDI, 1–7 (best) ....................................... 126 ......n ......... 3.2 Singapore ............................................6.4 Openess to multilateral trade rules, index 0–100 (best) ........................ 45 ......n ....... 72.0 Slovenia.............................................93.1 8.08 Availability of trade finance, 1–7 (best)................................................ 108 ......n ......... 3.1 Hong Kong SAR ..................................5.6 9th pillar: Physical security................................................................... 97 .................. 4.1 Finland .................................................6.5 9.01 Reliability of police services, 1–7 (best) .............................................. 116 ......n ......... 2.9 Finland ................................................6.7 9.02 Business costs of crime and violence, 1–7 (best) ............................... 111 ......n ......... 3.5 Saudi Arabia ........................................6.5* 9.03 Business costs of terrorism, 1–7 (best) ................................................ 39 ......n ......... 6.0 Slovenia...............................................6.8 1 This indicator is not included in the pillar calculation. * Syria was replaced with second-best Saudi Arabia; see “How to Read the Country/Economy Profiles” for details. The Global Enabling Report 2012 | 109 @ 2012 World Economic Forum
- 132. Part 2: Country/Economy Profiles Armenia Key indicators Trade and FDI inflows, percent of GDP Population (millions), 2010 .................................................................... 3.1 GDP (US$ billions), 2010....................................................................... 9.4 Country FDI inflows (US$ millions), 2010 ........................................................... 577 Trade World Imports and exports as share (%) of world total, 2010 ....................... 0.02 100 80 12 4 Sources: IMF; UNCTAD; UNFPA; WTO 60 3 80 8 40 2 60 4 20 1 Imports Exports 40 0 0 Total trade (US$ millions), 2010 ................................... 4,756 1,748 1996 1996 1998 1998 2000 2000 2002 2002 2004 2004 2006 2008 2006 2010 2008 Services trade (US$ millions), 2010 ................................ 973 737 Merchandise trade (US$ millions), 2010 ...................... 3,783 1,011 Agriculture (% of merchandise trade), 2010................. 18.39 16.43 Fuels and mining (% of merchandise trade), 2010....... 20.83 47.82 Manufactures (% of merchandise trade), 2010 ............ 55.49 30.99 Enabling Trade Index Rank (out of 132) Score (1–7) 2012 Index ....................................................................... 59 4.2 2010 Index .......................................................................................................... 52 4.2 Subindex A: Market access ..................................................... 13 4.9 1st pillar: Domestic and foreign market access .................................. 13 4.9 Subindex B: Border administration ......................................... 85 3.5 2nd pillar: Efficiency of customs administration ...................................74 4.0 3rd pillar: Efficiency of import-export procedures .............................. 96 4.0 4th pillar: Transparency of border administration .............................. 100 2.7 Subindex C: Transport & communications infrastructure..... 63 3.9 5th pillar: Availability and quality of transport infrastructure................ 59 4.4 6th pillar: Availability and quality of transport services ....................... 62 3.8 7th pillar: Availability and use of ICTs .................................................. 67 3.6 Subindex D: Business environment ........................................ 61 4.4 8th pillar: Regulatory environment ...................................................... 85 3.5 9th pillar: Physical security.................................................................. 49 5.2 1 2 3 4 5 6 7 The most problematic factors for trade Most problematic factors for exporting Percent of responses High cost or delays caused by international transportation .............................15.8 Identifying potential markets and buyers .........................................................14.5 Access to imported inputs at competitive prices.............................................13.3 Burdensome procedures and corruption at foreign borders ...........................12.8 Inappropriate production technology and skills ...............................................10.9 Difficulties in meeting quality/quantity requirements of buyers ......................... 8.6 Access to trade finance .....................................................................................7.7 Technical requirements and standards abroad..................................................7.6 High cost or delays caused by domestic transportation ...................................5.7 Rules of origin requirements abroad ................................................................. 3.0 0 10 20 30 40 50 Most problematic factors for importing Percent of responses Burdensome import procedures......................................................................24.0 Corruption at the border ................................................................................. 23.6 Tariffs and non-tariff barriers............................................................................ 17.1 High cost or delays caused by international transportation .............................12.6 High cost or delays caused by domestic transportation .................................12.5 Inappropriate telecommunications infrastructure.............................................. 5.0 Domestic technical requirements and standards ............................................. 4.2 Crime and theft ..................................................................................................1.0 0 10 20 30 40 50 Note: For descriptions of variables and detailed sources, and for a list of multiple best-performing economies for each indicator, please refer to “How to Read the Country/Economy Profiles” on page 95. 110 | The Global Enabling Report 2012 @ 2012 World Economic Forum
- 133. Part 2: Country/Economy Profiles Armenia The Enabling Trade Index 2012 in detail n Competitive Advantage n Competitive Disadvantage INDICATOR, UNITS RANK/132 SCORE BEST PERFORMER SCORE 1st pillar: Domestic and foreign market access ................................... 13 .................. 4.9 Singapore ............................................6.2 1.01 Tariff rate, (%) ....................................................................................... 34 ......n ......... 2.2 Hong Kong SAR ..................................0.0 1.02 Non-tariff measures, index 0–100 (worst)1 .......................................... n/a .................. n/a Cambodia ...........................................4.7 1.03 Complexity of tariffs, index 1–7 (best)................................................... 77 ......n ......... 5.1 Hong Kong SAR ..................................7.0 Tariff dispersion, standard deviation ..................................................... 36 ......n ......... 7.2 Hong Kong SAR ..................................0.0 Tariff peaks, % ................................................................................... 132 ......n ....... 27.0 Multiple economies (23) .......................0.0 Specific tariffs, % ................................................................................. 68 ......n ......... 0.5 Multiple economies (49) .......................0.0 Distinct tariffs, number ......................................................................... 63 ......n .......... 32 Hong Kong SAR ..................................1.0 1.04 Share of duty-free imports, % .............................................................. 27 ......n ....... 75.5 Hong Kong SAR ..............................100.0 1.05 Tariffs faced, % .................................................................................... 63 ......n ......... 5.6 Chile ....................................................3.6 1.06 Margin of preference in destination mkts, index 0–100 (best) ............... 20 ......n ....... 53.7 Malawi ...............................................93.8 2nd pillar: Efficiency of customs administration .................................. 74 .................. 4.0 Singapore ............................................6.6 2.01 Burden of customs procedures, 1–7 (best) ........................................ 122 ......n ......... 2.9 Singapore ............................................6.2 2.02 Customs services index, 0–12 (best).................................................... 39 ......n ......... 8.5 Multiple economies (2) .......................12.0 3rd pillar: Efficiency of import-export procedures................................ 96 .................. 4.0 Singapore ............................................6.4 3.01 Efficiency of the clearance process, 1–5 (best) ................................... 107 ......n ......... 2.3 Singapore ............................................4.1 3.02 No. of days to import ........................................................................... 66 ......n .......... 18 Singapore ............................................4.0 3.03 No. of documents to import ................................................................. 74 ......n ............ 8 France .................................................2.0 3.04 Cost to import, US$ per container ..................................................... 111 ......n ..... 2,195 Malaysia ..........................................435.0 3.05 No. of days to export ........................................................................... 43 ......n .......... 13 Multiple economies (4) .........................5.0 3.06 No. of documents to export ................................................................. 29 ......n ............ 5 France .................................................2.0 3.07 Cost to export, US$ per container ..................................................... 109 ......n ..... 1,815 Malaysia ..........................................450.0 4th pillar: Transparency of border administration............................... 100 .................. 2.7 New Zealand........................................6.7 4.01 Irregular payments in exports and imports, 1–7 (best) ........................ 100 ......n ......... 2.8 New Zealand .......................................6.7 4.02 Corruption Perceptions Index, 0–10 (best) ......................................... 104 ......n ......... 2.6 New Zealand .......................................9.5 5th pillar: Availability and quality of transport infrastructure ............... 59 .................. 4.4 France..................................................6.3 5.01 Airport density, number per million pop. ............................................... 60 ......n ......... 0.6 Iceland ..............................................21.9 5.02 Transshipment connectivity, index 0–100 (best)................................... n/a ......n ......... n/a United States...................................100.0 5.03 Paved roads, % of total ....................................................................... 28 ......n ....... 90.5 Multiple economies (17) ...................100.0 5.04 Quality of air transport infrastructure, 1–7 (best) ................................... 69 ......n ......... 4.5 Singapore ............................................6.9 5.05 Quality of railroad infrastructure, 1–7 (best) ......................................... 70 ......n ......... 2.5 Switzerland ..........................................6.8 5.06 Quality of roads, 1–7 (best) .................................................................. 85 ......n ......... 3.3 France .................................................6.6 5.07 Quality of port infrastructure, 1–7 (best) ............................................. 123 ......n ......... 2.7 Singapore ............................................6.8 6th pillar: Availability and quality of transport services ....................... 62 .................. 3.8 Singapore ............................................6.1 6.01 Liner Shipping Connectivity Index, 0–152.1 (best) ............................... n/a ......n ......... n/a China...............................................152.1 6.02 Ease and affordability of shipment, 1–5 (best) ...................................... 95 ......n ......... 2.7 Hong Kong SAR ..................................4.2 6.03 Logistics competence, 1–5 (best) ...................................................... 105 ......n ......... 2.4 Finland ................................................4.1 6.04 Tracking and tracing ability, 1–5 (best).................................................. 96 ......n ......... 2.6 Finland ................................................4.1 6.05 Timeliness of shipments in reaching destination, 1–5 (best) ................. 92 ......n ......... 3.1 Singapore ............................................4.4 6.06 Postal services efficiency, 1–7 (best) .................................................... 69 ......n ......... 4.6 Japan ..................................................6.8 6.07 GATS commitments in the transport sector, index 0–1 (best) ............... 14 ......n ......... 0.5 Jamaica...............................................0.7 7th pillar: Availability and use of ICTs................................................... 67 .................. 3.6 Netherlands .........................................6.3 7.01 Extent of business Internet use, 1–7 (best)......................................... 105 ......n ......... 4.3 Sweden ...............................................6.5 7.02 Mobile phone subscriptions/100 pop. .................................................. 30 ......n ..... 125.0 Hong Kong SAR ..............................195.6 7.03 Broadband Internet subscriptions/100 pop. ......................................... 78 ......n ......... 2.8 Netherlands .......................................38.1 7.04 Government Online Service Index, 0–1 (best)..................................... 102 ......n ......... 0.3 Multiple economies (3) .........................1.0 7.05 Individuals using Internet, %................................................................. 54 ......n ....... 44.0 Iceland ..............................................95.0 8th pillar: Regulatory environment ....................................................... 85 .................. 3.5 Singapore ............................................5.7 8.01 Property rights, 1–7 (best) .................................................................... 86 ......n ......... 3.5 Finland ................................................6.4 8.02 Ethics and corruption, 1–7 (best) ......................................................... 84 ......n ......... 2.9 Singapore ............................................6.5 8.03 Undue influence, 1–7 (best).................................................................. 92 ......n ......... 2.8 New Zealand .......................................6.1 8.04 Government efficiency, 1–7 (best) ........................................................ 57 ......n ......... 3.7 Singapore ............................................5.9 8.05 Domestic competition, 1–7 (best)....................................................... 110 ......n ......... 3.8 Saudi Arabia ........................................5.5 8.06 Efficiency of the financial market, 1–7 (best) ....................................... 100 ......n ......... 3.0 Qatar ...................................................5.4 8.07 Openness to foreign participation, index 1–7 (best) .............................. 43 ......n ......... 4.8 Luxembourg ........................................5.9 Ease of hiring foreign labor, 1–7 (best) ................................................... 5 ......n ......... 5.4 Albania ................................................5.9 Prevalence of foreign ownership, 1–7 (best) ......................................... 97 ......n ......... 4.3 Luxembourg ........................................6.5 Business impact of rules on FDI, 1–7 (best) ......................................... 88 ......n ......... 4.2 Singapore ............................................6.4 Openess to multilateral trade rules, index 0–100 (best) ........................ 38 ......n ....... 74.4 Slovenia.............................................93.1 8.08 Availability of trade finance, 1–7 (best).................................................. 73 ......n ......... 3.7 Hong Kong SAR ..................................5.6 9th pillar: Physical security................................................................... 49 .................. 5.2 Finland .................................................6.5 9.01 Reliability of police services, 1–7 (best) ................................................ 97 ......n ......... 3.5 Finland ................................................6.7 9.02 Business costs of crime and violence, 1–7 (best) ................................. 23 ......n ......... 5.7 Saudi Arabia ........................................6.5* 9.03 Business costs of terrorism, 1–7 (best) ................................................ 16 ......n ......... 6.4 Slovenia...............................................6.8 1 This indicator is not included in the pillar calculation. * Syria was replaced with second-best Saudi Arabia; see “How to Read the Country/Economy Profiles” for details. The Global Enabling Report 2012 | 111 @ 2012 World Economic Forum
- 134. Part 2: Country/Economy Profiles Australia Key indicators Trade and FDI inflows, percent of GDP Population (millions), 2010 .................................................................. 22.3 GDP (US$ billions), 2010.................................................................1,237.4 Country FDI inflows (US$ millions), 2010 ...................................................... 32,472 Trade World Imports and exports as share (%) of world total, 2010 ....................... 1.35 90 80 8 4 Sources: IMF; UNCTAD; UNFPA; WTO 60 3 60 4 40 2 30 0 20 1 Imports Exports 0 –4 0 Total trade (US$ millions), 2010 ............................... 251,858 259,787 1996 1998 1998 2000 2000 2002 20022004 2004 2006 2008 2006 2010 2008 Services trade (US$ millions), 2010 ........................... 50,218 47,233 Merchandise trade (US$ millions), 2010 .................. 201,640 212,554 Agriculture (% of merchandise trade), 2010................... 5.50 12.73 Fuels and mining (% of merchandise trade), 2010....... 14.35 61.04 Manufactures (% of merchandise trade), 2010 .............67.72 12.64 Enabling Trade Index Rank (out of 132) Score (1–7) 2012 Index ....................................................................... 17 5.1 2010 Index ...........................................................................................................15 5.1 Subindex A: Market access ..................................................... 54 4.1 1st pillar: Domestic and foreign market access .................................. 54 4.1 Subindex B: Border administration ......................................... 14 5.6 2nd pillar: Efficiency of customs administration .................................. 16 5.6 3rd pillar: Efficiency of import-export procedures .............................. 28 5.4 4th pillar: Transparency of border administration ................................ 14 6.0 Subindex C: Transport & communications infrastructure..... 23 5.2 5th pillar: Availability and quality of transport infrastructure................ 27 5.2 6th pillar: Availability and quality of transport services ....................... 16 4.9 7th pillar: Availability and use of ICTs .................................................. 23 5.5 Subindex D: Business environment ........................................ 18 5.4 8th pillar: Regulatory environment .......................................................17 4.9 9th pillar: Physical security...................................................................17 5.8 1 2 3 4 5 6 7 The most problematic factors for trade Most problematic factors for exporting Percent of responses Identifying potential markets and buyers .........................................................19.0 High cost or delays caused by international transportation .............................14.2 Access to imported inputs at competitive prices.............................................14.0 Technical requirements and standards abroad................................................10.7 High cost or delays caused by domestic transportation .................................. 9.4 Rules of origin requirements abroad ................................................................. 9.3 Burdensome procedures and corruption at foreign borders ............................ 6.7 Inappropriate production technology and skills .................................................5.7 Access to trade finance .................................................................................... 5.5 Difficulties in meeting quality/quantity requirements of buyers ......................... 5.4 0 10 20 30 40 50 Most problematic factors for importing Percent of responses High cost or delays caused by international transportation .............................26.1 Tariffs and non-tariff barriers............................................................................21.3 Domestic technical requirements and standards ............................................19.2 Burdensome import procedures...................................................................... 17.4 High cost or delays caused by domestic transportation .................................12.3 Inappropriate telecommunications infrastructure...............................................2.7 Crime and theft ................................................................................................. 0.9 Corruption at the border ....................................................................................0.1 0 10 20 30 40 50 Note: For descriptions of variables and detailed sources, and for a list of multiple best-performing economies for each indicator, please refer to “How to Read the Country/Economy Profiles” on page 95. 112 | The Global Enabling Report 2012 @ 2012 World Economic Forum
- 135. Part 2: Country/Economy Profiles Australia The Enabling Trade Index 2012 in detail n Competitive Advantage n Competitive Disadvantage INDICATOR, UNITS RANK/132 SCORE BEST PERFORMER SCORE 1st pillar: Domestic and foreign market access ................................... 54 .................. 4.1 Singapore ............................................6.2 1.01 Tariff rate, (%) ....................................................................................... 39 ......n ......... 2.9 Hong Kong SAR ..................................0.0 1.02 Non-tariff measures, index 0–100 (worst)1 .......................................... n/a .................. n/a Cambodia ...........................................4.7 1.03 Complexity of tariffs, index 1–7 (best)................................................... 49 ......n ......... 6.4 Hong Kong SAR ..................................7.0 Tariff dispersion, standard deviation ....................................................... 6 ......n ......... 3.2 Hong Kong SAR ..................................0.0 Tariff peaks, % ..................................................................................... 66 ......n ......... 4.0 Multiple economies (23) .......................0.0 Specific tariffs, % ................................................................................. 65 ......n ......... 0.3 Multiple economies (49) .......................0.0 Distinct tariffs, number ......................................................................... 53 ......n .......... 21 Hong Kong SAR ..................................1.0 1.04 Share of duty-free imports, % .............................................................. 75 ......n ....... 55.6 Hong Kong SAR ..............................100.0 1.05 Tariffs faced, % .................................................................................. 123 ......n ......... 6.0 Chile ....................................................3.6 1.06 Margin of preference in destination mkts, index 0–100 (best) ............. 132 ......n ......... 0.0 Malawi ...............................................93.8 2nd pillar: Efficiency of customs administration .................................. 16 .................. 5.6 Singapore ............................................6.6 2.01 Burden of customs procedures, 1–7 (best) .......................................... 20 ......n ......... 5.1 Singapore ............................................6.2 2.02 Customs services index, 0–12 (best).................................................... 15 ......n ....... 10.3 Multiple economies (2) .......................12.0 3rd pillar: Efficiency of import-export procedures................................ 28 .................. 5.4 Singapore ............................................6.4 3.01 Efficiency of the clearance process, 1–5 (best) ..................................... 16 ......n ......... 3.6 Singapore ............................................4.1 3.02 No. of days to import ........................................................................... 15 ......n ............ 8 Singapore ............................................4.0 3.03 No. of documents to import ................................................................. 18 ......n ............ 5 France .................................................2.0 3.04 Cost to import, US$ per container ....................................................... 51 ......n ..... 1,119 Malaysia ..........................................435.0 3.05 No. of days to export ........................................................................... 22 ......n ............ 9 Multiple economies (4) .........................5.0 3.06 No. of documents to export ................................................................. 47 ......n ............ 6 France .................................................2.0 3.07 Cost to export, US$ per container ....................................................... 58 ......n ..... 1,060 Malaysia ..........................................450.0 4th pillar: Transparency of border administration................................. 14 .................. 6.0 New Zealand........................................6.7 4.01 Irregular payments in exports and imports, 1–7 (best) .......................... 21 ......n ......... 5.6 New Zealand .......................................6.7 4.02 Corruption Perceptions Index, 0–10 (best) ............................................. 8 ......n ......... 8.8 New Zealand .......................................9.5 5th pillar: Availability and quality of transport infrastructure ............... 27 .................. 5.2 France..................................................6.3 5.01 Airport density, number per million pop. ................................................. 6 ......n ......... 5.8 Iceland ..............................................21.9 5.02 Transshipment connectivity, index 0–100 (best).................................... 37 ......n ....... 76.3 United States...................................100.0 5.03 Paved roads, % of total ....................................................................... 76 ......n ....... 38.7 Multiple economies (17) ...................100.0 5.04 Quality of air transport infrastructure, 1–7 (best) ................................... 26 ......n ......... 5.9 Singapore ............................................6.9 5.05 Quality of railroad infrastructure, 1–7 (best) ......................................... 28 ......n ......... 4.3 Switzerland ..........................................6.8 5.06 Quality of roads, 1–7 (best) .................................................................. 32 ......n ......... 5.1 France .................................................6.6 5.07 Quality of port infrastructure, 1–7 (best) ............................................... 37 ......n ......... 5.1 Singapore ............................................6.8 6th pillar: Availability and quality of transport services ....................... 16 .................. 4.9 Singapore ............................................6.1 6.01 Liner Shipping Connectivity Index, 0–152.1 (best) ................................ 39 ......n ....... 28.3 China...............................................152.1 6.02 Ease and affordability of shipment, 1–5 (best) ...................................... 28 ......n ......... 3.4 Hong Kong SAR ..................................4.2 6.03 Logistics competence, 1–5 (best) ........................................................ 16 ......n ......... 3.7 Finland ................................................4.1 6.04 Tracking and tracing ability, 1–5 (best).................................................. 19 ......n ......... 3.8 Finland ................................................4.1 6.05 Timeliness of shipments in reaching destination, 1–5 (best) ................. 17 ......n ......... 4.0 Singapore ............................................4.4 6.06 Postal services efficiency, 1–7 (best) .................................................... 27 ......n ......... 6.0 Japan ..................................................6.8 6.07 GATS commitments in the transport sector, index 0–1 (best) .............. n/a ......n ......... n/a Jamaica...............................................0.7 7th pillar: Availability and use of ICTs................................................... 23 .................. 5.5 Netherlands .........................................6.3 7.01 Extent of business Internet use, 1–7 (best)........................................... 16 ......n ......... 6.0 Sweden ...............................................6.5 7.02 Mobile phone subscriptions/100 pop. .................................................. 65 ......n ..... 101.0 Hong Kong SAR ..............................195.6 7.03 Broadband Internet subscriptions/100 pop. ......................................... 23 ......n ....... 24.2 Netherlands .......................................38.1 7.04 Government Online Service Index, 0–1 (best)......................................... 9 ......n ......... 0.9 Multiple economies (3) .........................1.0 7.05 Individuals using Internet, %................................................................. 19 ......n ....... 76.0 Iceland ..............................................95.0 8th pillar: Regulatory environment ....................................................... 17 .................. 4.9 Singapore ............................................5.7 8.01 Property rights, 1–7 (best) .................................................................... 20 ......n ......... 5.5 Finland ................................................6.4 8.02 Ethics and corruption, 1–7 (best) ......................................................... 17 ......n ......... 5.3 Singapore ............................................6.5 8.03 Undue influence, 1–7 (best).................................................................. 16 ......n ......... 5.2 New Zealand .......................................6.1 8.04 Government efficiency, 1–7 (best) ........................................................ 25 ......n ......... 4.4 Singapore ............................................5.9 8.05 Domestic competition, 1–7 (best)......................................................... 18 ......n ......... 4.9 Saudi Arabia ........................................5.5 8.06 Efficiency of the financial market, 1–7 (best) ......................................... 19 ......n ......... 4.5 Qatar ...................................................5.4 8.07 Openness to foreign participation, index 1–7 (best) .............................. 19 ......n ......... 5.1 Luxembourg ........................................5.9 Ease of hiring foreign labor, 1–7 (best) ............................................... 101 ......n ......... 3.6 Albania ................................................5.9 Prevalence of foreign ownership, 1–7 (best) ......................................... 10 ......n ......... 5.8 Luxembourg ........................................6.5 Business impact of rules on FDI, 1–7 (best) ......................................... 44 ......n ......... 4.9 Singapore ............................................6.4 Openess to multilateral trade rules, index 0–100 (best) .......................... 9 ......n ....... 83.8 Slovenia.............................................93.1 8.08 Availability of trade finance, 1–7 (best).................................................. 42 ......n ......... 4.4 Hong Kong SAR ..................................5.6 9th pillar: Physical security................................................................... 17 .................. 5.8 Finland .................................................6.5 9.01 Reliability of police services, 1–7 (best) ................................................ 16 ......n ......... 5.9 Finland ................................................6.7 9.02 Business costs of crime and violence, 1–7 (best) ................................. 18 ......n ......... 5.9 Saudi Arabia ........................................6.5* 9.03 Business costs of terrorism, 1–7 (best) ................................................ 58 ......n ......... 5.7 Slovenia...............................................6.8 1 This indicator is not included in the pillar calculation. * Syria was replaced with second-best Saudi Arabia; see “How to Read the Country/Economy Profiles” for details. The Global Enabling Report 2012 | 113 @ 2012 World Economic Forum
- 136. Part 2: Country/Economy Profiles Austria Key indicators Trade and FDI inflows, percent of GDP Population (millions), 2010 .................................................................... 8.4 GDP (US$ billions), 2010....................................................................377.4 Country FDI inflows (US$ millions), 2010 ........................................................ 6,613 Trade World Imports and exports as share (%) of world total, 2010 ....................... 1.06 120 80 10 4 100 8 Sources: IMF; UNCTAD; UNFPA; WTO 60 3 80 6 40 2 60 4 20 40 1 2 Imports Exports 20 0 0 Total trade (US$ millions), 2010 ............................... 195,508 206,304 1996 1996 1998 1998 2000 2000 2002 2002 2004 2004 2006 2008 2006 2010 2008 Services trade (US$ millions), 2010 ........................... 36,756 53,990 Merchandise trade (US$ millions), 2010 .................. 158,752 152,313 Agriculture (% of merchandise trade), 2010................... 9.66 9.52 Fuels and mining (% of merchandise trade), 2010....... 15.47 6.91 Manufactures (% of merchandise trade), 2010 .............73.11 81.80 Enabling Trade Index Rank (out of 132) Score (1–7) 2012 Index ....................................................................... 15 5.1 2010 Index ...........................................................................................................14 5.2 Subindex A: Market access ..................................................... 67 3.9 1st pillar: Domestic and foreign market access .................................. 67 3.9 Subindex B: Border administration ......................................... 13 5.6 2nd pillar: Efficiency of customs administration .................................... 7 5.9 3rd pillar: Efficiency of import-export procedures .............................. 19 5.6 4th pillar: Transparency of border administration ................................ 22 5.5 Subindex C: Transport & communications infrastructure..... 12 5.5 5th pillar: Availability and quality of transport infrastructure................ 16 5.7 6th pillar: Availability and quality of transport services ......................... 9 5.3 7th pillar: Availability and use of ICTs .................................................. 16 5.7 Subindex D: Business environment ........................................ 16 5.4 8th pillar: Regulatory environment ...................................................... 25 4.7 9th pillar: Physical security.................................................................. 13 6.0 1 2 3 4 5 6 7 The most problematic factors for trade Most problematic factors for exporting Percent of responses Identifying potential markets and buyers ........................................................ 18.2 Access to imported inputs at competitive prices.............................................13.8 Access to trade finance ................................................................................... 11.0 Burdensome procedures and corruption at foreign borders ...........................10.7 High cost or delays caused by international transportation .............................10.3 Technical requirements and standards abroad................................................. 9.6 Rules of origin requirements abroad ................................................................. 8.4 Inappropriate production technology and skills .................................................7.0 High cost or delays caused by domestic transportation .................................. 6.3 Difficulties in meeting quality/quantity requirements of buyers ..........................4.7 0 10 20 30 40 50 Most problematic factors for importing Percent of responses Tariffs and non-tariff barriers........................................................................... 26.5 High cost or delays caused by international transportation ............................ 20.9 Domestic technical requirements and standards ........................................... 16.8 Burdensome import procedures......................................................................16.6 High cost or delays caused by domestic transportation .................................. 8.8 Crime and theft ................................................................................................. 4.5 Inappropriate telecommunications infrastructure.............................................. 3.5 Corruption at the border ................................................................................... 2.4 0 10 20 30 40 50 Note: For descriptions of variables and detailed sources, and for a list of multiple best-performing economies for each indicator, please refer to “How to Read the Country/Economy Profiles” on page 95. 114 | The Global Enabling Report 2012 @ 2012 World Economic Forum
- 137. Part 2: Country/Economy Profiles Austria The Enabling Trade Index 2012 in detail n Competitive Advantage n Competitive Disadvantage INDICATOR, UNITS RANK/132 SCORE BEST PERFORMER SCORE 1st pillar: Domestic and foreign market access ................................... 67 .................. 3.9 Singapore ............................................6.2 1.01 Tariff rate, (%) ......................................................................................... 3 ......n ......... 0.9 Hong Kong SAR ..................................0.0 1.02 Non-tariff measures, index 0–100 (worst)1 ........................................... 32 ................ 68.8 Cambodia ...........................................4.7 1.03 Complexity of tariffs, index 1–7 (best)................................................. 105 ......n ......... 3.0 Hong Kong SAR ..................................7.0 Tariff dispersion, standard deviation ..................................................... 57 ......n ......... 8.8 Hong Kong SAR ..................................0.0 Tariff peaks, % ..................................................................................... 95 ......n ....... 10.8 Multiple economies (23) .......................0.0 Specific tariffs, % ............................................................................... 102 ......n ....... 10.6 Multiple economies (49) .......................0.0 Distinct tariffs, number ....................................................................... 104 ......n ..... 1,592 Hong Kong SAR ..................................1.0 1.04 Share of duty-free imports, % .............................................................. 39 ......n ....... 64.6 Hong Kong SAR ..............................100.0 1.05 Tariffs faced, % .................................................................................... 79 ......n ......... 5.7 Chile ....................................................3.6 1.06 Margin of preference in destination mkts, index 0–100 (best) ............... 89 ......n ......... 9.7 Malawi ...............................................93.8 2nd pillar: Efficiency of customs administration .................................... 7 .................. 5.9 Singapore ............................................6.6 2.01 Burden of customs procedures, 1–7 (best) .......................................... 21 ......n ......... 5.0 Singapore ............................................6.2 2.02 Customs services index, 0–12 (best)...................................................... 5 ......n ....... 11.5 Multiple economies (2) .......................12.0 3rd pillar: Efficiency of import-export procedures................................ 19 .................. 5.6 Singapore ............................................6.4 3.01 Efficiency of the clearance process, 1–5 (best) ....................................... 9 ......n ......... 3.8 Singapore ............................................4.1 3.02 No. of days to import ........................................................................... 15 ......n ............ 8 Singapore ............................................4.0 3.03 No. of documents to import ................................................................. 18 ......n ............ 5 France .................................................2.0 3.04 Cost to import, US$ per container ....................................................... 57 ......n ..... 1,195 Malaysia ..........................................435.0 3.05 No. of days to export ............................................................................. 8 ......n ............ 7 Multiple economies (4) .........................5.0 3.06 No. of documents to export ................................................................... 8 ......n ............ 4 France .................................................2.0 3.07 Cost to export, US$ per container ....................................................... 70 ......n ..... 1,180 Malaysia ..........................................450.0 4th pillar: Transparency of border administration................................. 22 .................. 5.5 New Zealand........................................6.7 4.01 Irregular payments in exports and imports, 1–7 (best) .......................... 28 ......n ......... 5.3 New Zealand .......................................6.7 4.02 Corruption Perceptions Index, 0–10 (best) ........................................... 16 ......n ......... 7.8 New Zealand .......................................9.5 5th pillar: Availability and quality of transport infrastructure ............... 16 .................. 5.7 France..................................................6.3 5.01 Airport density, number per million pop. ............................................... 52 ......n ......... 0.7 Iceland ..............................................21.9 5.02 Transshipment connectivity, index 0–100 (best)................................... n/a ......n ......... n/a United States...................................100.0 5.03 Paved roads, % of total ......................................................................... 1 ......n ..... 100.0 Multiple economies (17) ...................100.0 5.04 Quality of air transport infrastructure, 1–7 (best) ................................... 23 ......n ......... 5.9 Singapore ............................................6.9 5.05 Quality of railroad infrastructure, 1–7 (best) ......................................... 14 ......n ......... 5.3 Switzerland ..........................................6.8 5.06 Quality of roads, 1–7 (best) .................................................................... 8 ......n ......... 6.2 France .................................................6.6 5.07 Quality of port infrastructure, 1–7 (best) ............................................... 45 ......n ......... 4.7 Singapore ............................................6.8 6th pillar: Availability and quality of transport services ......................... 9 .................. 5.3 Singapore ............................................6.1 6.01 Liner Shipping Connectivity Index, 0–152.1 (best) ............................... n/a ......n ......... n/a China...............................................152.1 6.02 Ease and affordability of shipment, 1–5 (best) ........................................ 7 ......n ......... 3.7 Hong Kong SAR ..................................4.2 6.03 Logistics competence, 1–5 (best) .......................................................... 3 ......n ......... 4.1 Finland ................................................4.1 6.04 Tracking and tracing ability, 1–5 (best).................................................. 11 ......n ......... 4.0 Finland ................................................4.1 6.05 Timeliness of shipments in reaching destination, 1–5 (best) ................. 31 ......n ......... 3.8 Singapore ............................................4.4 6.06 Postal services efficiency, 1–7 (best) .................................................... 16 ......n ......... 6.4 Japan ..................................................6.8 6.07 GATS commitments in the transport sector, index 0–1 (best) ............... 18 ......n ......... 0.5 Jamaica...............................................0.7 7th pillar: Availability and use of ICTs................................................... 16 .................. 5.7 Netherlands .........................................6.3 7.01 Extent of business Internet use, 1–7 (best)........................................... 18 ......n ......... 5.9 Sweden ...............................................6.5 7.02 Mobile phone subscriptions/100 pop. .................................................. 12 ......n ..... 145.8 Hong Kong SAR ..............................195.6 7.03 Broadband Internet subscriptions/100 pop. ......................................... 24 ......n ....... 23.9 Netherlands .......................................38.1 7.04 Government Online Service Index, 0–1 (best)....................................... 26 ......n ......... 0.8 Multiple economies (3) .........................1.0 7.05 Individuals using Internet, %................................................................. 23 ......n ....... 72.7 Iceland ..............................................95.0 8th pillar: Regulatory environment ....................................................... 25 .................. 4.7 Singapore ............................................5.7 8.01 Property rights, 1–7 (best) .................................................................... 15 ......n ......... 5.8 Finland ................................................6.4 8.02 Ethics and corruption, 1–7 (best) ......................................................... 23 ......n ......... 5.0 Singapore ............................................6.5 8.03 Undue influence, 1–7 (best).................................................................. 28 ......n ......... 4.7 New Zealand .......................................6.1 8.04 Government efficiency, 1–7 (best) ........................................................ 23 ......n ......... 4.5 Singapore ............................................5.9 8.05 Domestic competition, 1–7 (best)......................................................... 30 ......n ......... 4.6 Saudi Arabia ........................................5.5 8.06 Efficiency of the financial market, 1–7 (best) ......................................... 34 ......n ......... 4.1 Qatar ...................................................5.4 8.07 Openness to foreign participation, index 1–7 (best) .............................. 46 ......n ......... 4.8 Luxembourg ........................................5.9 Ease of hiring foreign labor, 1–7 (best) ............................................... 109 ......n ......... 3.5 Albania ................................................5.9 Prevalence of foreign ownership, 1–7 (best) ......................................... 40 ......n ......... 5.1 Luxembourg ........................................6.5 Business impact of rules on FDI, 1–7 (best) ......................................... 57 ......n ......... 4.8 Singapore ............................................6.4 Openess to multilateral trade rules, index 0–100 (best) ........................ 25 ......n ....... 80.0 Slovenia.............................................93.1 8.08 Availability of trade finance, 1–7 (best).................................................. 35 ......n ......... 4.4 Hong Kong SAR ..................................5.6 9th pillar: Physical security................................................................... 13 .................. 6.0 Finland .................................................6.5 9.01 Reliability of police services, 1–7 (best) ................................................ 18 ......n ......... 5.9 Finland ................................................6.7 9.02 Business costs of crime and violence, 1–7 (best) ................................. 28 ......n ......... 5.6 Saudi Arabia ........................................6.5* 9.03 Business costs of terrorism, 1–7 (best) .................................................. 7 ......n ......... 6.5 Slovenia...............................................6.8 1 This indicator is not included in the pillar calculation. * Syria was replaced with second-best Saudi Arabia; see “How to Read the Country/Economy Profiles” for details. The Global Enabling Report 2012 | 115 @ 2012 World Economic Forum
- 138. Part 2: Country/Economy Profiles Azerbaijan Key indicators Trade and FDI inflows, percent of GDP Population (millions), 2010 .................................................................... 9.2 GDP (US$ billions), 2010..................................................................... 54.4 Country FDI inflows (US$ millions), 2010 ........................................................... 563 Trade World Imports and exports as share (%) of world total, 2010 ........................0.10 200 80 460 Sources: IMF; UNCTAD; UNFPA; WTO 150 60 340 100 40 220 50 20 1 0 Imports Exports 00 –20 0 Total trade (US$ millions), 2010 ................................. 10,459 28,444 1996 1996 1998 1998 2000 2000 2002 2002 2004 2004 2006 2008 2006 2010 2008 Services trade (US$ millions), 2010 ..............................3,714 1,968 Merchandise trade (US$ millions), 2010 ...................... 6,746 26,476 Agriculture (% of merchandise trade), 2010................. 19.79 2.28 Fuels and mining (% of merchandise trade), 2010..........2.74 95.73 Manufactures (% of merchandise trade), 2010 ............ 74.63 1.99 Enabling Trade Index Rank (out of 132) Score (1–7) 2012 Index ....................................................................... 81 3.8 2010 Index .......................................................................................................... 77 3.9 Subindex A: Market access ..................................................... 57 4.1 1st pillar: Domestic and foreign market access .................................. 57 4.1 Subindex B: Border administration ....................................... 107 3.1 2nd pillar: Efficiency of customs administration .................................. 46 4.5 3rd pillar: Efficiency of import-export procedures ............................ 123 2.3 4th pillar: Transparency of border administration .............................. 108 2.6 Subindex C: Transport & communications infrastructure..... 69 3.8 5th pillar: Availability and quality of transport infrastructure................ 73 4.1 6th pillar: Availability and quality of transport services ....................... 53 3.9 7th pillar: Availability and use of ICTs .................................................. 76 3.6 Subindex D: Business environment ........................................ 59 4.4 8th pillar: Regulatory environment ...................................................... 60 3.7 9th pillar: Physical security.................................................................. 59 5.0 1 2 3 4 5 6 7 The most problematic factors for trade Most problematic factors for exporting Percent of responses Difficulties in meeting quality/quantity requirements of buyers ........................19.7 Inappropriate production technology and skills ...............................................14.5 Technical requirements and standards abroad................................................13.1 Access to imported inputs at competitive prices.............................................12.5 Identifying potential markets and buyers ......................................................... 11.6 Burdensome procedures and corruption at foreign borders ............................ 9.0 Access to trade finance .................................................................................... 6.2 High cost or delays caused by domestic transportation .................................. 5.8 High cost or delays caused by international transportation ...............................4.1 Rules of origin requirements abroad ................................................................. 3.3 0 10 20 30 40 50 Most problematic factors for importing Percent of responses Corruption at the border ..................................................................................26.1 Tariffs and non-tariff barriers............................................................................24.7 Burdensome import procedures......................................................................19.0 High cost or delays caused by international transportation .............................. 9.2 High cost or delays caused by domestic transportation ...................................7.9 Domestic technical requirements and standards ............................................. 6.4 Inappropriate telecommunications infrastructure.............................................. 4.9 Crime and theft ..................................................................................................1.7 0 10 20 30 40 50 Note: For descriptions of variables and detailed sources, and for a list of multiple best-performing economies for each indicator, please refer to “How to Read the Country/Economy Profiles” on page 95. 116 | The Global Enabling Report 2012 @ 2012 World Economic Forum
- 139. Part 2: Country/Economy Profiles Azerbaijan The Enabling Trade Index 2012 in detail n Competitive Advantage n Competitive Disadvantage INDICATOR, UNITS RANK/132 SCORE BEST PERFORMER SCORE 1st pillar: Domestic and foreign market access ................................... 57 .................. 4.1 Singapore ............................................6.2 1.01 Tariff rate, (%) ....................................................................................... 79 ......n ......... 7.1 Hong Kong SAR ..................................0.0 1.02 Non-tariff measures, index 0–100 (worst)1 .......................................... n/a .................. n/a Cambodia ...........................................4.7 1.03 Complexity of tariffs, index 1–7 (best)................................................... 65 ......n ......... 5.9 Hong Kong SAR ..................................7.0 Tariff dispersion, standard deviation ..................................................... 53 ......n ......... 8.3 Hong Kong SAR ..................................0.0 Tariff peaks, % ..................................................................................... 48 ......n ......... 1.1 Multiple economies (23) .......................0.0 Specific tariffs, % ................................................................................. 81 ......n ......... 2.6 Multiple economies (49) .......................0.0 Distinct tariffs, number ......................................................................... 86 ......n ........ 266 Hong Kong SAR ..................................1.0 1.04 Share of duty-free imports, % .............................................................. 93 ......n ....... 39.7 Hong Kong SAR ..............................100.0 1.05 Tariffs faced, % .................................................................................... 61 ......n ......... 5.6 Chile ....................................................3.6 1.06 Margin of preference in destination mkts, index 0–100 (best) ............... 48 ......n ....... 39.1 Malawi ...............................................93.8 2nd pillar: Efficiency of customs administration .................................. 46 .................. 4.5 Singapore ............................................6.6 2.01 Burden of customs procedures, 1–7 (best) ........................................ 101 ......n ......... 3.5 Singapore ............................................6.2 2.02 Customs services index, 0–12 (best).................................................... 28 ......n ......... 9.3 Multiple economies (2) .......................12.0 3rd pillar: Efficiency of import-export procedures.............................. 123 .................. 2.3 Singapore ............................................6.4 3.01 Efficiency of the clearance process, 1–5 (best) ................................... 129 ......n ......... 1.9 Singapore ............................................4.1 3.02 No. of days to import ......................................................................... 119 ......n .......... 42 Singapore ............................................4.0 3.03 No. of documents to import ............................................................... 121 ......n .......... 10 France .................................................2.0 3.04 Cost to import, US$ per container ..................................................... 124 ......n ..... 3,405 Malaysia ..........................................435.0 3.05 No. of days to export ......................................................................... 119 ......n .......... 38 Multiple economies (4) .........................5.0 3.06 No. of documents to export ................................................................. 95 ......n ............ 8 France .................................................2.0 3.07 Cost to export, US$ per container ..................................................... 124 ......n ..... 2,905 Malaysia ..........................................450.0 4th pillar: Transparency of border administration............................... 108 .................. 2.6 New Zealand........................................6.7 4.01 Irregular payments in exports and imports, 1–7 (best) ........................ 102 ......n ......... 2.7 New Zealand .......................................6.7 4.02 Corruption Perceptions Index, 0–10 (best) ......................................... 117 ......n ......... 2.4 New Zealand .......................................9.5 5th pillar: Availability and quality of transport infrastructure ............... 73 .................. 4.1 France..................................................6.3 5.01 Airport density, number per million pop. ............................................... 81 ......n ......... 0.4 Iceland ..............................................21.9 5.02 Transshipment connectivity, index 0–100 (best)................................... n/a ......n ......... n/a United States...................................100.0 5.03 Paved roads, % of total ....................................................................... 67 ......n ....... 50.6 Multiple economies (17) ...................100.0 5.04 Quality of air transport infrastructure, 1–7 (best) ................................... 54 ......n ......... 5.0 Singapore ............................................6.9 5.05 Quality of railroad infrastructure, 1–7 (best) ......................................... 35 ......n ......... 3.9 Switzerland ..........................................6.8 5.06 Quality of roads, 1–7 (best) .................................................................. 71 ......n ......... 3.8 France .................................................6.6 5.07 Quality of port infrastructure, 1–7 (best) ............................................... 67 ......n ......... 4.1 Singapore ............................................6.8 6th pillar: Availability and quality of transport services ....................... 53 .................. 3.9 Singapore ............................................6.1 6.01 Liner Shipping Connectivity Index, 0–152.1 (best) ............................... n/a ......n ......... n/a China...............................................152.1 6.02 Ease and affordability of shipment, 1–5 (best) .................................... 111 ......n ......... 2.4 Hong Kong SAR ..................................4.2 6.03 Logistics competence, 1–5 (best) ...................................................... 122 ......n ......... 2.1 Finland ................................................4.1 6.04 Tracking and tracing ability, 1–5 (best).................................................. 79 ......n ......... 2.8 Finland ................................................4.1 6.05 Timeliness of shipments in reaching destination, 1–5 (best) ................. 75 ......n ......... 3.2 Singapore ............................................4.4 6.06 Postal services efficiency, 1–7 (best) .................................................... 43 ......n ......... 5.5 Japan ..................................................6.8 6.07 GATS commitments in the transport sector, index 0–1 (best) .............. n/a ......n ......... n/a Jamaica...............................................0.7 7th pillar: Availability and use of ICTs................................................... 76 .................. 3.6 Netherlands .........................................6.3 7.01 Extent of business Internet use, 1–7 (best)........................................... 98 ......n ......... 4.5 Sweden ...............................................6.5 7.02 Mobile phone subscriptions/100 pop. .................................................. 70 ......n ....... 99.0 Hong Kong SAR ..............................195.6 7.03 Broadband Internet subscriptions/100 pop. ......................................... 67 ......n ......... 5.0 Netherlands .......................................38.1 7.04 Government Online Service Index, 0–1 (best)....................................... 93 ......n ......... 0.4 Multiple economies (3) .........................1.0 7.05 Individuals using Internet, %................................................................. 49 ......n ....... 46.0 Iceland ..............................................95.0 8th pillar: Regulatory environment ....................................................... 60 .................. 3.7 Singapore ............................................5.7 8.01 Property rights, 1–7 (best) .................................................................... 76 ......n ......... 3.8 Finland ................................................6.4 8.02 Ethics and corruption, 1–7 (best) ......................................................... 72 ......n ......... 3.1 Singapore ............................................6.5 8.03 Undue influence, 1–7 (best).................................................................. 64 ......n ......... 3.3 New Zealand .......................................6.1 8.04 Government efficiency, 1–7 (best) ........................................................ 61 ......n ......... 3.7 Singapore ............................................5.9 8.05 Domestic competition, 1–7 (best)......................................................... 88 ......n ......... 4.0 Saudi Arabia ........................................5.5 8.06 Efficiency of the financial market, 1–7 (best) ......................................... 66 ......n ......... 3.4 Qatar ...................................................5.4 8.07 Openness to foreign participation, index 1–7 (best) .............................. 76 ......n ......... 4.5 Luxembourg ........................................5.9 Ease of hiring foreign labor, 1–7 (best) ................................................. 71 ......n ......... 4.1 Albania ................................................5.9 Prevalence of foreign ownership, 1–7 (best) ......................................... 98 ......n ......... 4.3 Luxembourg ........................................6.5 Business impact of rules on FDI, 1–7 (best) ......................................... 92 ......n ......... 4.2 Singapore ............................................6.4 Openess to multilateral trade rules, index 0–100 (best) ........................ 38 ......n ....... 74.4 Slovenia.............................................93.1 8.08 Availability of trade finance, 1–7 (best).................................................. 47 ......n ......... 4.2 Hong Kong SAR ..................................5.6 9th pillar: Physical security................................................................... 59 .................. 5.0 Finland .................................................6.5 9.01 Reliability of police services, 1–7 (best) ................................................ 79 ......n ......... 3.8 Finland ................................................6.7 9.02 Business costs of crime and violence, 1–7 (best) ................................. 45 ......n ......... 5.3 Saudi Arabia ........................................6.5* 9.03 Business costs of terrorism, 1–7 (best) ................................................ 45 ......n ......... 5.9 Slovenia...............................................6.8 1 This indicator is not included in the pillar calculation. * Syria was replaced with second-best Saudi Arabia; see “How to Read the Country/Economy Profiles” for details. The Global Enabling Report 2012 | 117 @ 2012 World Economic Forum
- 140. Part 2: Country/Economy Profiles Bahrain Key indicators Trade and FDI inflows, percent of GDP Population (millions), 2010 .................................................................... 1.3 GDP (US$ billions), 2010..................................................................... 22.7 Country FDI inflows (US$ millions), 2010 ........................................................... 156 Trade World Imports and exports as share (%) of world total, 2010 ....................... 0.08 200 80 440 160 30 Sources: IMF; UNCTAD; UNFPA; WTO 60 3 120 20 40 2 80 10 20 40 1 0 Imports Exports 00 –10 0 Total trade (US$ millions), 2010 ................................. 11,905 17,694 1996 1996 1998 1998 2000 2000 2002 2002 2004 2004 2006 2008 2006 2010 2008 Services trade (US$ millions), 2010 ............................. 1,905 4,047 Merchandise trade (US$ millions), 2010 .................... 10,000 13,647 Agriculture (% of merchandise trade), 2010................. 10.00 2.27 Fuels and mining (% of merchandise trade), 2010....... 26.26 90.47 Manufactures (% of merchandise trade), 2010 .............61.70 10.31 Enabling Trade Index Rank (out of 132) Score (1–7) 2012 Index ....................................................................... 30 4.8 2010 Index .......................................................................................................... 22 4.9 Subindex A: Market access ..................................................... 52 4.2 1st pillar: Domestic and foreign market access .................................. 52 4.2 Subindex B: Border administration ......................................... 26 5.2 2nd pillar: Efficiency of customs administration .................................. 12 5.7 3rd pillar: Efficiency of import-export procedures .............................. 49 5.0 4th pillar: Transparency of border administration ................................ 30 4.9 Subindex C: Transport & communications infrastructure..... 41 4.5 5th pillar: Availability and quality of transport infrastructure................ 36 5.0 6th pillar: Availability and quality of transport services ....................... 67 3.7 7th pillar: Availability and use of ICTs .................................................. 38 4.7 Subindex D: Business environment ........................................ 19 5.3 8th pillar: Regulatory environment ...................................................... 10 5.2 9th pillar: Physical security.................................................................. 35 5.4 1 2 3 4 5 6 7 The most problematic factors for trade Most problematic factors for exporting Percent of responses Access to imported inputs at competitive prices.............................................18.4 Identifying potential markets and buyers .........................................................18.4 Technical requirements and standards abroad................................................12.7 Difficulties in meeting quality/quantity requirements of buyers ......................... 9.4 High cost or delays caused by international transportation ...............................9.1 Inappropriate production technology and skills .................................................9.1 Access to trade finance .....................................................................................7.9 Rules of origin requirements abroad ..................................................................7.3 Burdensome procedures and corruption at foreign borders ............................ 4.5 High cost or delays caused by domestic transportation ...................................3.1 0 10 20 30 40 50 Most problematic factors for importing Percent of responses High cost or delays caused by international transportation ............................ 29.8 Tariffs and non-tariff barriers........................................................................... 20.6 Burdensome import procedures..................................................................... 18.2 Domestic technical requirements and standards ............................................16.9 High cost or delays caused by domestic transportation .................................. 9.0 Inappropriate telecommunications infrastructure.............................................. 3.6 Corruption at the border ....................................................................................1.5 Crime and theft ................................................................................................. 0.4 0 10 20 30 40 50 Note: For descriptions of variables and detailed sources, and for a list of multiple best-performing economies for each indicator, please refer to “How to Read the Country/Economy Profiles” on page 95. 118 | The Global Enabling Report 2012 @ 2012 World Economic Forum
- 141. Part 2: Country/Economy Profiles Bahrain The Enabling Trade Index 2012 in detail n Competitive Advantage n Competitive Disadvantage INDICATOR, UNITS RANK/132 SCORE BEST PERFORMER SCORE 1st pillar: Domestic and foreign market access ................................... 52 .................. 4.2 Singapore ............................................6.2 1.01 Tariff rate, (%) ....................................................................................... 51 ......n ......... 4.4 Hong Kong SAR ..................................0.0 1.02 Non-tariff measures, index 0–100 (worst)1 .......................................... n/a .................. n/a Cambodia ...........................................4.7 1.03 Complexity of tariffs, index 1–7 (best)................................................... 29 ......n ......... 6.6 Hong Kong SAR ..................................7.0 Tariff dispersion, standard deviation ..................................................... 47 ......n ......... 7.9 Hong Kong SAR ..................................0.0 Tariff peaks, % ..................................................................................... 45 ......n ......... 0.9 Multiple economies (23) .......................0.0 Specific tariffs, % ................................................................................... 1 ......n ......... 0.0 Multiple economies (49) .......................0.0 Distinct tariffs, number ......................................................................... 18 ......n ............ 5 Hong Kong SAR ..................................1.0 1.04 Share of duty-free imports, % ............................................................ 101 ......n ....... 28.3 Hong Kong SAR ..............................100.0 1.05 Tariffs faced, % .................................................................................... 71 ......n ......... 5.7 Chile ....................................................3.6 1.06 Margin of preference in destination mkts, index 0–100 (best) ............... 54 ......n ....... 36.2 Malawi ...............................................93.8 2nd pillar: Efficiency of customs administration .................................. 12 .................. 5.7 Singapore ............................................6.6 2.01 Burden of customs procedures, 1–7 (best) ............................................ 8 ......n ......... 5.5 Singapore ............................................6.2 2.02 Customs services index, 0–12 (best).................................................... 19 ......n ......... 9.8 Multiple economies (2) .......................12.0 3rd pillar: Efficiency of import-export procedures................................ 49 .................. 5.0 Singapore ............................................6.4 3.01 Efficiency of the clearance process, 1–5 (best) ..................................... 59 ......n ......... 2.7 Singapore ............................................4.1 3.02 No. of days to import ........................................................................... 48 ......n .......... 15 Singapore ............................................4.0 3.03 No. of documents to import ................................................................. 52 ......n ............ 7 France .................................................2.0 3.04 Cost to import, US$ per container ....................................................... 45 ......n ........ 995 Malaysia ..........................................435.0 3.05 No. of days to export ........................................................................... 33 ......n .......... 11 Multiple economies (4) .........................5.0 3.06 No. of documents to export ................................................................. 47 ......n ............ 6 France .................................................2.0 3.07 Cost to export, US$ per container ....................................................... 48 ......n ........ 955 Malaysia ..........................................450.0 4th pillar: Transparency of border administration................................. 30 .................. 4.9 New Zealand........................................6.7 4.01 Irregular payments in exports and imports, 1–7 (best) .......................... 19 ......n ......... 5.8 New Zealand .......................................6.7 4.02 Corruption Perceptions Index, 0–10 (best) ........................................... 36 ......n ......... 5.1 New Zealand .......................................9.5 5th pillar: Availability and quality of transport infrastructure ............... 36 .................. 5.0 France..................................................6.3 5.01 Airport density, number per million pop. ............................................... 48 ......n ......... 0.8 Iceland ..............................................21.9 5.02 Transshipment connectivity, index 0–100 (best).................................... 98 ......n ....... 53.7 United States...................................100.0 5.03 Paved roads, % of total ....................................................................... 42 ......n ....... 81.5 Multiple economies (17) ...................100.0 5.04 Quality of air transport infrastructure, 1–7 (best) ................................... 17 ......n ......... 6.1 Singapore ............................................6.9 5.05 Quality of railroad infrastructure, 1–7 (best) ......................................... 95 ......n ......... 1.9 Switzerland ..........................................6.8 5.06 Quality of roads, 1–7 (best) .................................................................. 21 ......n ......... 5.7 France .................................................6.6 5.07 Quality of port infrastructure, 1–7 (best) ............................................... 12 ......n ......... 6.0 Singapore ............................................6.8 6th pillar: Availability and quality of transport services ....................... 67 .................. 3.7 Singapore ............................................6.1 6.01 Liner Shipping Connectivity Index, 0–152.1 (best) ................................ 79 ......n ......... 9.8 China...............................................152.1 6.02 Ease and affordability of shipment, 1–5 (best) ...................................... 72 ......n ......... 2.8 Hong Kong SAR ..................................4.2 6.03 Logistics competence, 1–5 (best) ........................................................ 53 ......n ......... 2.9 Finland ................................................4.1 6.04 Tracking and tracing ability, 1–5 (best).................................................. 34 ......n ......... 3.4 Finland ................................................4.1 6.05 Timeliness of shipments in reaching destination, 1–5 (best) ................. 62 ......n ......... 3.4 Singapore ............................................4.4 6.06 Postal services efficiency, 1–7 (best) .................................................... 18 ......n ......... 6.4 Japan ..................................................6.8 6.07 GATS commitments in the transport sector, index 0–1 (best) ............... 59 ......n ......... 0.0 Jamaica...............................................0.7 7th pillar: Availability and use of ICTs................................................... 38 .................. 4.7 Netherlands .........................................6.3 7.01 Extent of business Internet use, 1–7 (best)........................................... 37 ......n ......... 5.5 Sweden ...............................................6.5 7.02 Mobile phone subscriptions/100 pop. .................................................. 34 ......n ..... 124.2 Hong Kong SAR ..............................195.6 7.03 Broadband Internet subscriptions/100 pop. ......................................... 66 ......n ......... 5.4 Netherlands .......................................38.1 7.04 Government Online Service Index, 0–1 (best)......................................... 9 ......n ......... 0.9 Multiple economies (3) .........................1.0 7.05 Individuals using Internet, %................................................................. 39 ......n ....... 55.0 Iceland ..............................................95.0 8th pillar: Regulatory environment ....................................................... 10 .................. 5.2 Singapore ............................................5.7 8.01 Property rights, 1–7 (best) .................................................................... 17 ......n ......... 5.6 Finland ................................................6.4 8.02 Ethics and corruption, 1–7 (best) ......................................................... 18 ......n ......... 5.3 Singapore ............................................6.5 8.03 Undue influence, 1–7 (best).................................................................. 21 ......n ......... 5.0 New Zealand .......................................6.1 8.04 Government efficiency, 1–7 (best) .......................................................... 9 ......n ......... 4.9 Singapore ............................................5.9 8.05 Domestic competition, 1–7 (best)........................................................... 3 ......n ......... 5.4 Saudi Arabia ........................................5.5 8.06 Efficiency of the financial market, 1–7 (best) ........................................... 4 ......n ......... 5.1 Qatar ...................................................5.4 8.07 Openness to foreign participation, index 1–7 (best) .............................. 12 ......n ......... 5.3 Luxembourg ........................................5.9 Ease of hiring foreign labor, 1–7 (best) ................................................. 32 ......n ......... 4.6 Albania ................................................5.9 Prevalence of foreign ownership, 1–7 (best) ......................................... 13 ......n ......... 5.7 Luxembourg ........................................6.5 Business impact of rules on FDI, 1–7 (best) ........................................... 3 ......n ......... 6.0 Singapore ............................................6.4 Openess to multilateral trade rules, index 0–100 (best) ........................ 79 ......n ....... 60.3 Slovenia.............................................93.1 8.08 Availability of trade finance, 1–7 (best).................................................... 3 ......n ......... 5.5 Hong Kong SAR ..................................5.6 9th pillar: Physical security................................................................... 35 .................. 5.4 Finland .................................................6.5 9.01 Reliability of police services, 1–7 (best) ................................................ 24 ......n ......... 5.8 Finland ................................................6.7 9.02 Business costs of crime and violence, 1–7 (best) ................................. 39 ......n ......... 5.4 Saudi Arabia ........................................6.5* 9.03 Business costs of terrorism, 1–7 (best) ................................................ 89 ......n ......... 5.1 Slovenia...............................................6.8 1 This indicator is not included in the pillar calculation. * Syria was replaced with second-best Saudi Arabia; see “How to Read the Country/Economy Profiles” for details. The Global Enabling Report 2012 | 119 @ 2012 World Economic Forum
- 142. Part 2: Country/Economy Profiles Bangladesh Key indicators Trade and FDI inflows, percent of GDP Population (millions), 2010 ................................................................ 148.7 GDP (US$ billions), 2010................................................................... 105.6 Country FDI inflows (US$ millions), 2010 ........................................................... 913 Trade World Imports and exports as share (%) of world total, 2010 ........................0.14 80 1.5 4 70 1.2 Sources: IMF; UNCTAD; UNFPA; WTO 60 3 60 0.9 40 2 50 0.6 20 40 1 0.3 Imports Exports 30 0 0.0 0 Total trade (US$ millions), 2010 ..................................31,918 20,404 1996 1998 1998 2000 2000 2002 20022004 2004 2006 2008 2006 2010 2008 Services trade (US$ millions), 2010 ............................. 4,099 1,213 Merchandise trade (US$ millions), 2010 .....................27,819 19,191 Agriculture (% of merchandise trade), 2010................. 21.54 5.28 Fuels and mining (% of merchandise trade), 2010......... 9.84 1.28 Manufactures (% of merchandise trade), 2010 ............ 67.95 93.32 Enabling Trade Index Rank (out of 132) Score (1–7) 2012 Index ..................................................................... 109 3.5 2010 Index .........................................................................................................113 3.4 Subindex A: Market access ..................................................... 65 4.0 1st pillar: Domestic and foreign market access .................................. 65 4.0 Subindex B: Border administration ....................................... 100 3.3 2nd pillar: Efficiency of customs administration ................................ 103 3.3 3rd pillar: Efficiency of import-export procedures .............................. 86 4.2 4th pillar: Transparency of border administration ...............................115 2.5 Subindex C: Transport & communications infrastructure... 123 2.7 5th pillar: Availability and quality of transport infrastructure.............. 126 2.7 6th pillar: Availability and quality of transport services ..................... 104 3.1 7th pillar: Availability and use of ICTs .................................................110 2.5 Subindex D: Business environment ........................................ 95 3.8 8th pillar: Regulatory environment ...................................................... 92 3.5 9th pillar: Physical security.................................................................. 96 4.1 1 2 3 4 5 6 7 The most problematic factors for trade Most problematic factors for exporting Percent of responses Identifying potential markets and buyers ........................................................ 18.2 Inappropriate production technology and skills ...............................................14.0 Difficulties in meeting quality/quantity requirements of buyers ........................12.5 Access to imported inputs at competitive prices............................................. 12.1 High cost or delays caused by domestic transportation ................................. 11.5 Technical requirements and standards abroad................................................10.7 Access to trade finance .....................................................................................7.9 Rules of origin requirements abroad ................................................................. 5.3 High cost or delays caused by international transportation .............................. 5.3 Burdensome procedures and corruption at foreign borders ............................ 2.6 0 10 20 30 40 50 Most problematic factors for importing Percent of responses Burdensome import procedures..................................................................... 23.9 Tariffs and non-tariff barriers........................................................................... 20.4 Corruption at the border ................................................................................. 16.8 High cost or delays caused by domestic transportation ................................. 11.7 High cost or delays caused by international transportation .............................10.3 Crime and theft ..................................................................................................7.6 Domestic technical requirements and standards ..............................................7.6 Inappropriate telecommunications infrastructure...............................................1.7 0 10 20 30 40 50 Note: For descriptions of variables and detailed sources, and for a list of multiple best-performing economies for each indicator, please refer to “How to Read the Country/Economy Profiles” on page 95. 120 | The Global Enabling Report 2012 @ 2012 World Economic Forum
- 143. Part 2: Country/Economy Profiles Bangladesh The Enabling Trade Index 2012 in detail n Competitive Advantage n Competitive Disadvantage INDICATOR, UNITS RANK/132 SCORE BEST PERFORMER SCORE 1st pillar: Domestic and foreign market access ................................... 65 .................. 4.0 Singapore ............................................6.2 1.01 Tariff rate, (%) ..................................................................................... 121 ......n ....... 13.1 Hong Kong SAR ..................................0.0 1.02 Non-tariff measures, index 0–100 (worst)1 .......................................... n/a .................. n/a Cambodia ...........................................4.7 1.03 Complexity of tariffs, index 1–7 (best)................................................... 38 ......n ......... 6.6 Hong Kong SAR ..................................7.0 Tariff dispersion, standard deviation ..................................................... 56 ......n ......... 8.8 Hong Kong SAR ..................................0.0 Tariff peaks, % ....................................................................................... 1 ......n ......... 0.0 Multiple economies (23) .......................0.0 Specific tariffs, % ................................................................................. 69 ......n ......... 0.5 Multiple economies (49) .......................0.0 Distinct tariffs, number ......................................................................... 65 ......n .......... 38 Hong Kong SAR ..................................1.0 1.04 Share of duty-free imports, % ............................................................ 112 ......n ....... 19.0 Hong Kong SAR ..............................100.0 1.05 Tariffs faced, % .................................................................................... 11 ......n ......... 4.9 Chile ....................................................3.6 1.06 Margin of preference in destination mkts, index 0–100 (best) ............... 23 ......n ....... 53.0 Malawi ...............................................93.8 2nd pillar: Efficiency of customs administration ................................ 103 .................. 3.3 Singapore ............................................6.6 2.01 Burden of customs procedures, 1–7 (best) ........................................ 111 ......n ......... 3.4 Singapore ............................................6.2 2.02 Customs services index, 0–12 (best).................................................... 84 ......n ......... 5.1 Multiple economies (2) .......................12.0 3rd pillar: Efficiency of import-export procedures................................ 86 .................. 4.2 Singapore ............................................6.4 3.01 Efficiency of the clearance process, 1–5 (best) ..................................... 97 ......n ......... 2.3 Singapore ............................................4.1 3.02 No. of days to import ......................................................................... 100 ......n .......... 31 Singapore ............................................4.0 3.03 No. of documents to import ................................................................. 74 ......n ............ 8 France .................................................2.0 3.04 Cost to import, US$ per container ....................................................... 72 ......n ..... 1,370 Malaysia ..........................................435.0 3.05 No. of days to export ........................................................................... 99 ......n .......... 25 Multiple economies (4) .........................5.0 3.06 No. of documents to export ................................................................. 47 ......n ............ 6 France .................................................2.0 3.07 Cost to export, US$ per container ....................................................... 49 ......n ........ 965 Malaysia ..........................................450.0 4th pillar: Transparency of border administration............................... 115 .................. 2.5 New Zealand........................................6.7 4.01 Irregular payments in exports and imports, 1–7 (best) ........................ 117 ......n ......... 2.4 New Zealand .......................................6.7 4.02 Corruption Perceptions Index, 0–10 (best) ......................................... 101 ......n ......... 2.7 New Zealand .......................................9.5 5th pillar: Availability and quality of transport infrastructure ............. 126 .................. 2.7 France..................................................6.3 5.01 Airport density, number per million pop. ............................................. 132 ......n ......... 0.0 Iceland ..............................................21.9 5.02 Transshipment connectivity, index 0–100 (best).................................... 96 ......n ....... 55.1 United States...................................100.0 5.03 Paved roads, % of total ..................................................................... 120 ......n ......... 9.5 Multiple economies (17) ...................100.0 5.04 Quality of air transport infrastructure, 1–7 (best) ................................. 109 ......n ......... 3.5 Singapore ............................................6.9 5.05 Quality of railroad infrastructure, 1–7 (best) ......................................... 74 ......n ......... 2.5 Switzerland ..........................................6.8 5.06 Quality of roads, 1–7 (best) ................................................................ 102 ......n ......... 2.9 France .................................................6.6 5.07 Quality of port infrastructure, 1–7 (best) ............................................. 105 ......n ......... 3.4 Singapore ............................................6.8 6th pillar: Availability and quality of transport services ..................... 104 .................. 3.1 Singapore ............................................6.1 6.01 Liner Shipping Connectivity Index, 0–152.1 (best) ................................ 83 ......n ......... 8.2 China...............................................152.1 6.02 Ease and affordability of shipment, 1–5 (best) ...................................... 54 ......n ......... 3.0 Hong Kong SAR ..................................4.2 6.03 Logistics competence, 1–5 (best) ...................................................... 102 ......n ......... 2.4 Finland ................................................4.1 6.04 Tracking and tracing ability, 1–5 (best).................................................. 87 ......n ......... 2.6 Finland ................................................4.1 6.05 Timeliness of shipments in reaching destination, 1–5 (best) ................. 58 ......n ......... 3.5 Singapore ............................................4.4 6.06 Postal services efficiency, 1–7 (best) .................................................. 104 ......n ......... 3.7 Japan ..................................................6.8 6.07 GATS commitments in the transport sector, index 0–1 (best) ............... 59 ......n ......... 0.0 Jamaica...............................................0.7 7th pillar: Availability and use of ICTs................................................. 110 .................. 2.5 Netherlands .........................................6.3 7.01 Extent of business Internet use, 1–7 (best)......................................... 109 ......n ......... 4.2 Sweden ...............................................6.5 7.02 Mobile phone subscriptions/100 pop. ................................................ 117 ......n ....... 46.2 Hong Kong SAR ..............................195.6 7.03 Broadband Internet subscriptions/100 pop. ....................................... 117 ......n ......... 0.0 Netherlands .......................................38.1 7.04 Government Online Service Index, 0–1 (best)....................................... 81 ......n ......... 0.4 Multiple economies (3) .........................1.0 7.05 Individuals using Internet, %............................................................... 121 ......n ......... 3.7 Iceland ..............................................95.0 8th pillar: Regulatory environment ....................................................... 92 .................. 3.5 Singapore ............................................5.7 8.01 Property rights, 1–7 (best) .................................................................. 104 ......n ......... 3.2 Finland ................................................6.4 8.02 Ethics and corruption, 1–7 (best) ....................................................... 118 ......n ......... 2.4 Singapore ............................................6.5 8.03 Undue influence, 1–7 (best)................................................................ 101 ......n ......... 2.7 New Zealand .......................................6.1 8.04 Government efficiency, 1–7 (best) ........................................................ 79 ......n ......... 3.3 Singapore ............................................5.9 8.05 Domestic competition, 1–7 (best)......................................................... 59 ......n ......... 4.3 Saudi Arabia ........................................5.5 8.06 Efficiency of the financial market, 1–7 (best) ......................................... 63 ......n ......... 3.5 Qatar ...................................................5.4 8.07 Openness to foreign participation, index 1–7 (best) ............................ 106 ......n ......... 4.2 Luxembourg ........................................5.9 Ease of hiring foreign labor, 1–7 (best) ............................................... 115 ......n ......... 3.4 Albania ................................................5.9 Prevalence of foreign ownership, 1–7 (best) ....................................... 105 ......n ......... 4.0 Luxembourg ........................................6.5 Business impact of rules on FDI, 1–7 (best) ......................................... 24 ......n ......... 5.2 Singapore ............................................6.4 Openess to multilateral trade rules, index 0–100 (best) ...................... 107 ......n ....... 51.0 Slovenia.............................................93.1 8.08 Availability of trade finance, 1–7 (best).................................................. 45 ......n ......... 4.3 Hong Kong SAR ..................................5.6 9th pillar: Physical security................................................................... 96 .................. 4.1 Finland .................................................6.5 9.01 Reliability of police services, 1–7 (best) .............................................. 111 ......n ......... 3.1 Finland ................................................6.7 9.02 Business costs of crime and violence, 1–7 (best) ................................. 92 ......n ......... 4.2 Saudi Arabia ........................................6.5* 9.03 Business costs of terrorism, 1–7 (best) ................................................ 87 ......n ......... 5.2 Slovenia...............................................6.8 1 This indicator is not included in the pillar calculation. * Syria was replaced with second-best Saudi Arabia; see “How to Read the Country/Economy Profiles” for details. The Global Enabling Report 2012 | 121 @ 2012 World Economic Forum
- 144. Part 2: Country/Economy Profiles Belgium Key indicators Trade and FDI inflows, percent of GDP Population (millions), 2010 .................................................................. 10.7 GDP (US$ billions), 2010....................................................................467.8 Country FDI inflows (US$ millions), 2010 ....................................................... 61,714 Trade World Imports and exports as share (%) of world total, 2010 ....................... 2.54 250 80 50 4 200 40 Sources: IMF; UNCTAD; UNFPA; WTO 60 3 150 30 40 2 100 20 20 50 1 10 Imports Exports 00 0 Total trade (US$ millions), 2010 ............................... 467,952 493,923 1996 1996 1998 1998 2000 2000 2002 2002 2004 2004 2006 2008 2006 2010 2008 Services trade (US$ millions), 2010 ........................... 77,509 81,700 Merchandise trade (US$ millions), 2010 ..................390,443 412,223 Agriculture (% of merchandise trade), 2010....................9.74 10.23 Fuels and mining (% of merchandise trade), 2010....... 18.33 12.45 Manufactures (% of merchandise trade), 2010 ............ 70.63 76.19 Enabling Trade Index Rank (out of 132) Score (1–7) 2012 Index ....................................................................... 21 5.0 2010 Index .......................................................................................................... 24 4.9 Subindex A: Market access ..................................................... 67 3.9 1st pillar: Domestic and foreign market access .................................. 67 3.9 Subindex B: Border administration ......................................... 27 5.1 2nd pillar: Efficiency of customs administration .................................. 41 4.6 3rd pillar: Efficiency of import-export procedures .............................. 32 5.3 4th pillar: Transparency of border administration ................................ 21 5.6 Subindex C: Transport & communications infrastructure..... 13 5.5 5th pillar: Availability and quality of transport infrastructure................ 15 5.7 6th pillar: Availability and quality of transport services ......................... 5 5.4 7th pillar: Availability and use of ICTs .................................................. 21 5.5 Subindex D: Business environment ........................................ 24 5.3 8th pillar: Regulatory environment ...................................................... 27 4.7 9th pillar: Physical security.................................................................. 18 5.8 1 2 3 4 5 6 7 The most problematic factors for trade Most problematic factors for exporting Percent of responses Identifying potential markets and buyers .........................................................18.6 Technical requirements and standards abroad................................................14.0 Access to imported inputs at competitive prices.............................................14.0 Rules of origin requirements abroad ................................................................10.8 High cost or delays caused by international transportation .............................. 9.4 Burdensome procedures and corruption at foreign borders .............................9.1 Access to trade finance .................................................................................... 8.3 Inappropriate production technology and skills ................................................ 6.5 Difficulties in meeting quality/quantity requirements of buyers ......................... 5.9 High cost or delays caused by domestic transportation .................................. 3.5 0 10 20 30 40 50 Most problematic factors for importing Percent of responses High cost or delays caused by international transportation .............................21.4 Tariffs and non-tariff barriers............................................................................21.0 Burdensome import procedures..................................................................... 20.6 Domestic technical requirements and standards ........................................... 20.4 High cost or delays caused by domestic transportation .................................10.7 Inappropriate telecommunications infrastructure.............................................. 5.2 Crime and theft ................................................................................................. 0.6 Corruption at the border ................................................................................... 0.2 0 10 20 30 40 50 Note: For descriptions of variables and detailed sources, and for a list of multiple best-performing economies for each indicator, please refer to “How to Read the Country/Economy Profiles” on page 95. 122 | The Global Enabling Report 2012 @ 2012 World Economic Forum
- 145. Part 2: Country/Economy Profiles Belgium The Enabling Trade Index 2012 in detail n Competitive Advantage n Competitive Disadvantage INDICATOR, UNITS RANK/132 SCORE BEST PERFORMER SCORE 1st pillar: Domestic and foreign market access ................................... 67 .................. 3.9 Singapore ............................................6.2 1.01 Tariff rate, (%) ......................................................................................... 3 ......n ......... 0.9 Hong Kong SAR ..................................0.0 1.02 Non-tariff measures, index 0–100 (worst)1 ........................................... 40 ................ 70.3 Cambodia ...........................................4.7 1.03 Complexity of tariffs, index 1–7 (best)................................................. 105 ......n ......... 3.0 Hong Kong SAR ..................................7.0 Tariff dispersion, standard deviation ..................................................... 57 ......n ......... 8.8 Hong Kong SAR ..................................0.0 Tariff peaks, % ..................................................................................... 95 ......n ....... 10.8 Multiple economies (23) .......................0.0 Specific tariffs, % ............................................................................... 102 ......n ....... 10.6 Multiple economies (49) .......................0.0 Distinct tariffs, number ....................................................................... 104 ......n ..... 1,592 Hong Kong SAR ..................................1.0 1.04 Share of duty-free imports, % .............................................................. 39 ......n ....... 64.6 Hong Kong SAR ..............................100.0 1.05 Tariffs faced, % .................................................................................... 79 ......n ......... 5.7 Chile ....................................................3.6 1.06 Margin of preference in destination mkts, index 0–100 (best) ............... 89 ......n ......... 9.7 Malawi ...............................................93.8 2nd pillar: Efficiency of customs administration .................................. 41 .................. 4.6 Singapore ............................................6.6 2.01 Burden of customs procedures, 1–7 (best) .......................................... 40 ......n ......... 4.6 Singapore ............................................6.2 2.02 Customs services index, 0–12 (best).................................................... 52 ......n ......... 7.7 Multiple economies (2) .......................12.0 3rd pillar: Efficiency of import-export procedures................................ 32 .................. 5.3 Singapore ............................................6.4 3.01 Efficiency of the clearance process, 1–5 (best) ....................................... 7 ......n ......... 3.8 Singapore ............................................4.1 3.02 No. of days to import ........................................................................... 15 ......n ............ 8 Singapore ............................................4.0 3.03 No. of documents to import ................................................................. 18 ......n ............ 5 France .................................................2.0 3.04 Cost to import, US$ per container ....................................................... 89 ......n ..... 1,600 Malaysia ..........................................435.0 3.05 No. of days to export ........................................................................... 17 ......n ............ 8 Multiple economies (4) .........................5.0 3.06 No. of documents to export ................................................................... 8 ......n ............ 4 France .................................................2.0 3.07 Cost to export, US$ per container ....................................................... 89 ......n ..... 1,429 Malaysia ..........................................450.0 4th pillar: Transparency of border administration................................. 21 .................. 5.6 New Zealand........................................6.7 4.01 Irregular payments in exports and imports, 1–7 (best) .......................... 22 ......n ......... 5.6 New Zealand .......................................6.7 4.02 Corruption Perceptions Index, 0–10 (best) ........................................... 19 ......n ......... 7.5 New Zealand .......................................9.5 5th pillar: Availability and quality of transport infrastructure ............... 15 .................. 5.7 France..................................................6.3 5.01 Airport density, number per million pop. ............................................... 78 ......n ......... 0.5 Iceland ..............................................21.9 5.02 Transshipment connectivity, index 0–100 (best)...................................... 7 ......n ....... 97.3 United States...................................100.0 5.03 Paved roads, % of total ....................................................................... 48 ......n ....... 78.2 Multiple economies (17) ...................100.0 5.04 Quality of air transport infrastructure, 1–7 (best) ................................... 13 ......n ......... 6.2 Singapore ............................................6.9 5.05 Quality of railroad infrastructure, 1–7 (best) ......................................... 13 ......n ......... 5.4 Switzerland ..........................................6.8 5.06 Quality of roads, 1–7 (best) .................................................................. 28 ......n ......... 5.4 France .................................................6.6 5.07 Quality of port infrastructure, 1–7 (best) ................................................. 4 ......n ......... 6.5 Singapore ............................................6.8 6th pillar: Availability and quality of transport services ......................... 5 .................. 5.4 Singapore ............................................6.1 6.01 Liner Shipping Connectivity Index, 0–152.1 (best) .................................. 8 ......n ....... 88.5 China...............................................152.1 6.02 Ease and affordability of shipment, 1–5 (best) ........................................ 6 ......n ......... 3.7 Hong Kong SAR ..................................4.2 6.03 Logistics competence, 1–5 (best) .......................................................... 8 ......n ......... 4.0 Finland ................................................4.1 6.04 Tracking and tracing ability, 1–5 (best).................................................... 8 ......n ......... 4.0 Finland ................................................4.1 6.05 Timeliness of shipments in reaching destination, 1–5 (best) ................... 9 ......n ......... 4.2 Singapore ............................................4.4 6.06 Postal services efficiency, 1–7 (best) .................................................... 30 ......n ......... 6.0 Japan ..................................................6.8 6.07 GATS commitments in the transport sector, index 0–1 (best) ............... 33 ......n ......... 0.4 Jamaica...............................................0.7 7th pillar: Availability and use of ICTs................................................... 21 .................. 5.5 Netherlands .........................................6.3 7.01 Extent of business Internet use, 1–7 (best)........................................... 25 ......n ......... 5.8 Sweden ...............................................6.5 7.02 Mobile phone subscriptions/100 pop. .................................................. 50 ......n ..... 113.5 Hong Kong SAR ..............................195.6 7.03 Broadband Internet subscriptions/100 pop. ......................................... 12 ......n ....... 31.5 Netherlands .......................................38.1 7.04 Government Online Service Index, 0–1 (best)....................................... 39 ......n ......... 0.7 Multiple economies (3) .........................1.0 7.05 Individuals using Internet, %................................................................. 20 ......n ....... 75.0 Iceland ..............................................95.0 8th pillar: Regulatory environment ....................................................... 27 .................. 4.7 Singapore ............................................5.7 8.01 Property rights, 1–7 (best) .................................................................... 23 ......n ......... 5.3 Finland ................................................6.4 8.02 Ethics and corruption, 1–7 (best) ......................................................... 28 ......n ......... 4.8 Singapore ............................................6.5 8.03 Undue influence, 1–7 (best).................................................................. 30 ......n ......... 4.7 New Zealand .......................................6.1 8.04 Government efficiency, 1–7 (best) ........................................................ 52 ......n ......... 3.7 Singapore ............................................5.9 8.05 Domestic competition, 1–7 (best)......................................................... 26 ......n ......... 4.7 Saudi Arabia ........................................5.5 8.06 Efficiency of the financial market, 1–7 (best) ......................................... 20 ......n ......... 4.5 Qatar ...................................................5.4 8.07 Openness to foreign participation, index 1–7 (best) .............................. 16 ......n ......... 5.2 Luxembourg ........................................5.9 Ease of hiring foreign labor, 1–7 (best) ................................................. 60 ......n ......... 4.2 Albania ................................................5.9 Prevalence of foreign ownership, 1–7 (best) ......................................... 14 ......n ......... 5.7 Luxembourg ........................................6.5 Business impact of rules on FDI, 1–7 (best) ......................................... 40 ......n ......... 5.0 Singapore ............................................6.4 Openess to multilateral trade rules, index 0–100 (best) ........................ 18 ......n ....... 82.1 Slovenia.............................................93.1 8.08 Availability of trade finance, 1–7 (best).................................................. 28 ......n ......... 4.7 Hong Kong SAR ..................................5.6 9th pillar: Physical security................................................................... 18 .................. 5.8 Finland .................................................6.5 9.01 Reliability of police services, 1–7 (best) ................................................ 27 ......n ......... 5.6 Finland ................................................6.7 9.02 Business costs of crime and violence, 1–7 (best) ................................. 22 ......n ......... 5.7 Saudi Arabia ........................................6.5* 9.03 Business costs of terrorism, 1–7 (best) ................................................ 28 ......n ......... 6.2 Slovenia...............................................6.8 1 This indicator is not included in the pillar calculation. * Syria was replaced with second-best Saudi Arabia; see “How to Read the Country/Economy Profiles” for details. The Global Enabling Report 2012 | 123 @ 2012 World Economic Forum
- 146. Part 2: Country/Economy Profiles Benin Key indicators Trade and FDI inflows, percent of GDP Population (millions), 2010 .................................................................... 8.8 GDP (US$ billions), 2010....................................................................... 6.6 Country FDI inflows (US$ millions), 2010 ............................................................111 Trade World Imports and exports as share (%) of world total, 2009 ...................... 0.01 90 80 54 80 4 Sources: IMF; UNCTAD; UNFPA; WTO 60 3 70 3 40 2 60 2 20 50 11 Imports Exports 40 0 00 Total trade (US$ millions), 2009 ................................... 2,539 1,394 1996 1998 1998 2000 2000 2002 20022004 2004 2006 2008 2006 2010 2008 Services trade (US$ millions), 2009 ................................ 475 204 Merchandise trade (US$ millions), 2010 ...................... 2,200 1,200 Agriculture (% of merchandise trade), 2010..................24.13 31.50 Fuels and mining (% of merchandise trade), 2010....... 16.45 0.03 Manufactures (% of merchandise trade), 2010 ............ 10.65 0.51 Enabling Trade Index Rank (out of 132) Score (1–7) 2012 Index ......................................................................115 3.4 2010 Index ........................................................................................................ 106 3.5 Subindex A: Market access ................................................... 121 3.2 1st pillar: Domestic and foreign market access .................................121 3.2 Subindex B: Border administration ....................................... 104 3.2 2nd pillar: Efficiency of customs administration .................................113 3.0 3rd pillar: Efficiency of import-export procedures .............................. 94 4.0 4th pillar: Transparency of border administration .............................. 103 2.7 Subindex C: Transport & communications infrastructure... 103 3.1 5th pillar: Availability and quality of transport infrastructure...............115 3.1 6th pillar: Availability and quality of transport services ....................... 63 3.8 7th pillar: Availability and use of ICTs ................................................ 109 2.5 Subindex D: Business environment ........................................ 79 4.1 8th pillar: Regulatory environment ...................................................... 88 3.5 9th pillar: Physical security.................................................................. 76 4.7 1 2 3 4 5 6 7 The most problematic factors for trade Most problematic factors for exporting Percent of responses Access to trade finance .................................................................................. 20.0 Identifying potential markets and buyers .........................................................14.2 Inappropriate production technology and skills ...............................................13.9 Burdensome procedures and corruption at foreign borders ...........................10.9 High cost or delays caused by domestic transportation .................................. 9.4 Difficulties in meeting quality/quantity requirements of buyers ......................... 9.4 Access to imported inputs at competitive prices.............................................. 8.3 High cost or delays caused by international transportation .............................. 6.2 Rules of origin requirements abroad ................................................................. 4.6 Technical requirements and standards abroad..................................................3.1 0 10 20 30 40 50 Most problematic factors for importing Percent of responses Burdensome import procedures..................................................................... 22.9 Tariffs and non-tariff barriers............................................................................21.9 Corruption at the border ................................................................................. 20.8 High cost or delays caused by international transportation ............................. 11.1 High cost or delays caused by domestic transportation .................................. 9.9 Inappropriate telecommunications infrastructure.............................................. 5.3 Domestic technical requirements and standards ............................................. 4.4 Crime and theft ................................................................................................. 3.7 0 10 20 30 40 50 Note: For descriptions of variables and detailed sources, and for a list of multiple best-performing economies for each indicator, please refer to “How to Read the Country/Economy Profiles” on page 95. 124 | The Global Enabling Report 2012 @ 2012 World Economic Forum
- 147. Part 2: Country/Economy Profiles Benin The Enabling Trade Index 2012 in detail n Competitive Advantage n Competitive Disadvantage INDICATOR, UNITS RANK/132 SCORE BEST PERFORMER SCORE 1st pillar: Domestic and foreign market access ................................. 121 .................. 3.2 Singapore ............................................6.2 1.01 Tariff rate, (%) ..................................................................................... 107 ......n ....... 11.4 Hong Kong SAR ..................................0.0 1.02 Non-tariff measures, index 0–100 (worst)1 .......................................... n/a .................. n/a Cambodia ...........................................4.7 1.03 Complexity of tariffs, index 1–7 (best)..................................................... 6 ......n ......... 6.8 Hong Kong SAR ..................................7.0 Tariff dispersion, standard deviation ..................................................... 26 ......n ......... 6.8 Hong Kong SAR ..................................0.0 Tariff peaks, % ....................................................................................... 1 ......n ......... 0.0 Multiple economies (23) .......................0.0 Specific tariffs, % ................................................................................... 1 ......n ......... 0.0 Multiple economies (49) .......................0.0 Distinct tariffs, number ........................................................................... 3 ......n ............ 4 Hong Kong SAR ..................................1.0 1.04 Share of duty-free imports, % ............................................................ 129 ......n ......... 4.4 Hong Kong SAR ..............................100.0 1.05 Tariffs faced, % .................................................................................... 39 ......n ......... 5.4 Chile ....................................................3.6 1.06 Margin of preference in destination mkts, index 0–100 (best) ............. 126 ......n ......... 4.0 Malawi ...............................................93.8 2nd pillar: Efficiency of customs administration ................................ 113 .................. 3.0 Singapore ............................................6.6 2.01 Burden of customs procedures, 1–7 (best) .......................................... 93 ......n ......... 3.7 Singapore ............................................6.2 2.02 Customs services index, 0–12 (best).................................................. 105 ......n ......... 3.5 Multiple economies (2) .......................12.0 3rd pillar: Efficiency of import-export procedures................................ 94 .................. 4.0 Singapore ............................................6.4 3.01 Efficiency of the clearance process, 1–5 (best) ..................................... 69 ......n ......... 2.6 Singapore ............................................4.1 3.02 No. of days to import ......................................................................... 104 ......n .......... 32 Singapore ............................................4.0 3.03 No. of documents to import ................................................................. 74 ......n ............ 8 France .................................................2.0 3.04 Cost to import, US$ per container ....................................................... 82 ......n ..... 1,496 Malaysia ..........................................435.0 3.05 No. of days to export ......................................................................... 108 ......n .......... 30 Multiple economies (4) .........................5.0 3.06 No. of documents to export ................................................................. 80 ......n ............ 7 France .................................................2.0 3.07 Cost to export, US$ per container ....................................................... 54 ......n ..... 1,049 Malaysia ..........................................450.0 4th pillar: Transparency of border administration............................... 103 .................. 2.7 New Zealand........................................6.7 4.01 Irregular payments in exports and imports, 1–7 (best) ........................ 111 ......n ......... 2.5 New Zealand .......................................6.7 4.02 Corruption Perceptions Index, 0–10 (best) ........................................... 86 ......n ......... 3.0 New Zealand .......................................9.5 5th pillar: Availability and quality of transport infrastructure ............. 115 .................. 3.1 France..................................................6.3 5.01 Airport density, number per million pop. ............................................. 125 ......n ......... 0.1 Iceland ..............................................21.9 5.02 Transshipment connectivity, index 0–100 (best).................................... 52 ......n ....... 73.2 United States...................................100.0 5.03 Paved roads, % of total ..................................................................... 120 ......n ......... 9.5 Multiple economies (17) ...................100.0 5.04 Quality of air transport infrastructure, 1–7 (best) ................................... 99 ......n ......... 3.8 Singapore ............................................6.9 5.05 Quality of railroad infrastructure, 1–7 (best) ......................................... 94 ......n ......... 1.9 Switzerland ..........................................6.8 5.06 Quality of roads, 1–7 (best) ................................................................ 100 ......n ......... 2.9 France .................................................6.6 5.07 Quality of port infrastructure, 1–7 (best) ............................................... 74 ......n ......... 3.9 Singapore ............................................6.8 6th pillar: Availability and quality of transport services ....................... 63 .................. 3.8 Singapore ............................................6.1 6.01 Liner Shipping Connectivity Index, 0–152.1 (best) ................................ 67 ......n ....... 12.7 China...............................................152.1 6.02 Ease and affordability of shipment, 1–5 (best) .................................... 110 ......n ......... 2.4 Hong Kong SAR ..................................4.2 6.03 Logistics competence, 1–5 (best) ........................................................ 58 ......n ......... 2.9 Finland ................................................4.1 6.04 Tracking and tracing ability, 1–5 (best).................................................. 65 ......n ......... 2.9 Finland ................................................4.1 6.05 Timeliness of shipments in reaching destination, 1–5 (best) ................. 36 ......n ......... 3.7 Singapore ............................................4.4 6.06 Postal services efficiency, 1–7 (best) .................................................... 73 ......n ......... 4.5 Japan ..................................................6.8 6.07 GATS commitments in the transport sector, index 0–1 (best) ............... 13 ......n ......... 0.5 Jamaica...............................................0.7 7th pillar: Availability and use of ICTs................................................. 109 .................. 2.5 Netherlands .........................................6.3 7.01 Extent of business Internet use, 1–7 (best)......................................... 106 ......n ......... 4.2 Sweden ...............................................6.5 7.02 Mobile phone subscriptions/100 pop. .................................................. 94 ......n ....... 79.9 Hong Kong SAR ..............................195.6 7.03 Broadband Internet subscriptions/100 pop. ....................................... 118 ......n ......... 0.0 Netherlands .......................................38.1 7.04 Government Online Service Index, 0–1 (best)..................................... 123 ......n ......... 0.2 Multiple economies (3) .........................1.0 7.05 Individuals using Internet, %............................................................... 122 ......n ......... 3.1 Iceland ..............................................95.0 8th pillar: Regulatory environment ....................................................... 88 .................. 3.5 Singapore ............................................5.7 8.01 Property rights, 1–7 (best) .................................................................... 69 ......n ......... 3.9 Finland ................................................6.4 8.02 Ethics and corruption, 1–7 (best) ....................................................... 104 ......n ......... 2.6 Singapore ............................................6.5 8.03 Undue influence, 1–7 (best).................................................................. 88 ......n ......... 2.9 New Zealand .......................................6.1 8.04 Government efficiency, 1–7 (best) ........................................................ 63 ......n ......... 3.6 Singapore ............................................5.9 8.05 Domestic competition, 1–7 (best)......................................................... 87 ......n ......... 4.0 Saudi Arabia ........................................5.5 8.06 Efficiency of the financial market, 1–7 (best) ......................................... 73 ......n ......... 3.3 Qatar ...................................................5.4 8.07 Openness to foreign participation, index 1–7 (best) .............................. 55 ......n ......... 4.7 Luxembourg ........................................5.9 Ease of hiring foreign labor, 1–7 (best) ................................................. 11 ......n ......... 5.0 Albania ................................................5.9 Prevalence of foreign ownership, 1–7 (best) ......................................... 72 ......n ......... 4.6 Luxembourg ........................................6.5 Business impact of rules on FDI, 1–7 (best) ......................................... 76 ......n ......... 4.5 Singapore ............................................6.4 Openess to multilateral trade rules, index 0–100 (best) ........................ 95 ......n ....... 57.4 Slovenia.............................................93.1 8.08 Availability of trade finance, 1–7 (best)................................................ 114 ......n ......... 3.0 Hong Kong SAR ..................................5.6 9th pillar: Physical security................................................................... 76 .................. 4.7 Finland .................................................6.5 9.01 Reliability of police services, 1–7 (best) ................................................ 46 ......n ......... 4.6 Finland ................................................6.7 9.02 Business costs of crime and violence, 1–7 (best) ................................. 96 ......n ......... 4.1 Saudi Arabia ........................................6.5* 9.03 Business costs of terrorism, 1–7 (best) ................................................ 77 ......n ......... 5.4 Slovenia...............................................6.8 1 This indicator is not included in the pillar calculation. * Syria was replaced with second-best Saudi Arabia; see “How to Read the Country/Economy Profiles” for details. The Global Enabling Report 2012 | 125 @ 2012 World Economic Forum
- 148. Part 2: Country/Economy Profiles Bolivia Key indicators Trade and FDI inflows, percent of GDP Population (millions), 2010 .................................................................... 9.9 GDP (US$ billions), 2010..................................................................... 19.8 Country FDI inflows (US$ millions), 2010 ........................................................... 622 Trade World Imports and exports as share (%) of world total, 2010 ....................... 0.03 80 15 4 Sources: IMF; UNCTAD; UNFPA; WTO 60 10 3 40 5 2 20 0 1 Imports Exports 0 –5 0 Total trade (US$ millions), 2010 ................................... 6,423 6,821 1996 1998 1998 2000 2000 2002 20022004 2004 2006 2008 2006 2010 2008 Services trade (US$ millions), 2010 ............................. 1,062 531 Merchandise trade (US$ millions), 2010 ...................... 5,361 6,290 Agriculture (% of merchandise trade), 2010................... 8.58 17.31 Fuels and mining (% of merchandise trade), 2010....... 12.98 75.03 Manufactures (% of merchandise trade), 2010 ............ 77.85 6.84 Enabling Trade Index Rank (out of 132) Score (1–7) 2012 Index ....................................................................... 95 3.7 2010 Index .......................................................................................................... 98 3.6 Subindex A: Market access ..................................................... 23 4.8 1st pillar: Domestic and foreign market access .................................. 23 4.8 Subindex B: Border administration ......................................... 89 3.5 2nd pillar: Efficiency of customs administration .................................. 76 3.9 3rd pillar: Efficiency of import-export procedures .............................. 95 4.0 4th pillar: Transparency of border administration .............................. 107 2.6 Subindex C: Transport & communications infrastructure... 104 3.1 5th pillar: Availability and quality of transport infrastructure.............. 106 3.3 6th pillar: Availability and quality of transport services ..................... 103 3.1 7th pillar: Availability and use of ICTs .................................................. 99 2.8 Subindex D: Business environment .......................................118 3.4 8th pillar: Regulatory environment .....................................................115 3.1 9th pillar: Physical security.................................................................115 3.7 1 2 3 4 5 6 7 The most problematic factors for trade Most problematic factors for exporting Percent of responses Identifying potential markets and buyers ........................................................ 28.2 Access to trade finance ................................................................................... 21.1 Access to imported inputs at competitive prices.............................................16.4 Inappropriate production technology and skills ...............................................10.9 Difficulties in meeting quality/quantity requirements of buyers .......................... 7.7 Rules of origin requirements abroad ................................................................. 5.3 Technical requirements and standards abroad................................................. 3.5 High cost or delays caused by international transportation ...............................3.1 High cost or delays caused by domestic transportation ...................................3.1 Burdensome procedures and corruption at foreign borders .............................0.7 0 10 20 30 40 50 Most problematic factors for importing Percent of responses Tariffs and non-tariff barriers........................................................................... 30.2 Burdensome import procedures......................................................................23.1 Corruption at the border .................................................................................. 17.4 High cost or delays caused by international transportation .............................13.4 High cost or delays caused by domestic transportation .................................. 8.2 Domestic technical requirements and standards ............................................. 3.2 Crime and theft ................................................................................................. 2.6 Inappropriate telecommunications infrastructure.............................................. 2.0 0 10 20 30 40 50 Note: For descriptions of variables and detailed sources, and for a list of multiple best-performing economies for each indicator, please refer to “How to Read the Country/Economy Profiles” on page 95. 126 | The Global Enabling Report 2012 @ 2012 World Economic Forum
- 149. Part 2: Country/Economy Profiles Bolivia The Enabling Trade Index 2012 in detail n Competitive Advantage n Competitive Disadvantage INDICATOR, UNITS RANK/132 SCORE BEST PERFORMER SCORE 1st pillar: Domestic and foreign market access ................................... 23 .................. 4.8 Singapore ............................................6.2 1.01 Tariff rate, (%) ....................................................................................... 90 ......n ......... 8.6 Hong Kong SAR ..................................0.0 1.02 Non-tariff measures, index 0–100 (worst)1 ............................................. 8 ................ 26.9 Cambodia ...........................................4.7 1.03 Complexity of tariffs, index 1–7 (best)................................................... 58 ......n ......... 6.3 Hong Kong SAR ..................................7.0 Tariff dispersion, standard deviation ..................................................... 51 ......n ......... 7.9 Hong Kong SAR ..................................0.0 Tariff peaks, % ..................................................................................... 67 ......n ......... 4.5 Multiple economies (23) .......................0.0 Specific tariffs, % ................................................................................... 1 ......n ......... 0.0 Multiple economies (49) .......................0.0 Distinct tariffs, number ......................................................................... 23 ......n ............ 6 Hong Kong SAR ..................................1.0 1.04 Share of duty-free imports, % .............................................................. 73 ......n ....... 56.7 Hong Kong SAR ..............................100.0 1.05 Tariffs faced, % .................................................................................... 16 ......n ......... 5.0 Chile ....................................................3.6 1.06 Margin of preference in destination mkts, index 0–100 (best) ............... 14 ......n ....... 56.9 Malawi ...............................................93.8 2nd pillar: Efficiency of customs administration .................................. 76 .................. 3.9 Singapore ............................................6.6 2.01 Burden of customs procedures, 1–7 (best) ........................................ 119 ......n ......... 3.0 Singapore ............................................6.2 2.02 Customs services index, 0–12 (best).................................................... 42 ......n ......... 8.2 Multiple economies (2) .......................12.0 3rd pillar: Efficiency of import-export procedures................................ 95 .................. 4.0 Singapore ............................................6.4 3.01 Efficiency of the clearance process, 1–5 (best) ..................................... 86 ......n ......... 2.4 Singapore ............................................4.1 3.02 No. of days to import ........................................................................... 84 ......n .......... 23 Singapore ............................................4.0 3.03 No. of documents to import ................................................................. 52 ......n ............ 7 France .................................................2.0 3.04 Cost to import, US$ per container ....................................................... 99 ......n ..... 1,747 Malaysia ..........................................435.0 3.05 No. of days to export ........................................................................... 74 ......n .......... 19 Multiple economies (4) .........................5.0 3.06 No. of documents to export ................................................................. 95 ......n ............ 8 France .................................................2.0 3.07 Cost to export, US$ per container ....................................................... 88 ......n ..... 1,425 Malaysia ..........................................450.0 4th pillar: Transparency of border administration............................... 107 .................. 2.6 New Zealand........................................6.7 4.01 Irregular payments in exports and imports, 1–7 (best) ........................ 113 ......n ......... 2.5 New Zealand .......................................6.7 4.02 Corruption Perceptions Index, 0–10 (best) ........................................... 93 ......n ......... 2.8 New Zealand .......................................9.5 5th pillar: Availability and quality of transport infrastructure ............. 106 .................. 3.3 France..................................................6.3 5.01 Airport density, number per million pop. ............................................... 24 ......n ......... 1.4 Iceland ..............................................21.9 5.02 Transshipment connectivity, index 0–100 (best)................................... n/a ......n ......... n/a United States...................................100.0 5.03 Paved roads, % of total ..................................................................... 127 ......n ......... 7.0 Multiple economies (17) ...................100.0 5.04 Quality of air transport infrastructure, 1–7 (best) ................................. 100 ......n ......... 3.8 Singapore ............................................6.9 5.05 Quality of railroad infrastructure, 1–7 (best) ......................................... 71 ......n ......... 2.5 Switzerland ..........................................6.8 5.06 Quality of roads, 1–7 (best) .................................................................. 97 ......n ......... 3.0 France .................................................6.6 5.07 Quality of port infrastructure, 1–7 (best) ............................................. 112 ......n ......... 3.1 Singapore ............................................6.8 6th pillar: Availability and quality of transport services ..................... 103 .................. 3.1 Singapore ............................................6.1 6.01 Liner Shipping Connectivity Index, 0–152.1 (best) ............................... n/a ......n ......... n/a China...............................................152.1 6.02 Ease and affordability of shipment, 1–5 (best) .................................... 100 ......n ......... 2.6 Hong Kong SAR ..................................4.2 6.03 Logistics competence, 1–5 (best) ........................................................ 93 ......n ......... 2.6 Finland ................................................4.1 6.04 Tracking and tracing ability, 1–5 (best).................................................. 81 ......n ......... 2.7 Finland ................................................4.1 6.05 Timeliness of shipments in reaching destination, 1–5 (best) ................. 97 ......n ......... 3.0 Singapore ............................................4.4 6.06 Postal services efficiency, 1–7 (best) .................................................. 120 ......n ......... 3.3 Japan ..................................................6.8 6.07 GATS commitments in the transport sector, index 0–1 (best) ............... 59 ......n ......... 0.0 Jamaica...............................................0.7 7th pillar: Availability and use of ICTs................................................... 99 .................. 2.8 Netherlands .........................................6.3 7.01 Extent of business Internet use, 1–7 (best)......................................... 118 ......n ......... 3.9 Sweden ...............................................6.5 7.02 Mobile phone subscriptions/100 pop. .................................................. 98 ......n ....... 72.3 Hong Kong SAR ..............................195.6 7.03 Broadband Internet subscriptions/100 pop. ......................................... 92 ......n ......... 1.0 Netherlands .......................................38.1 7.04 Government Online Service Index, 0–1 (best)....................................... 88 ......n ......... 0.4 Multiple economies (3) .........................1.0 7.05 Individuals using Internet, %................................................................. 88 ......n ....... 20.0 Iceland ..............................................95.0 8th pillar: Regulatory environment ..................................................... 115 .................. 3.1 Singapore ............................................5.7 8.01 Property rights, 1–7 (best) .................................................................. 122 ......n ......... 2.7 Finland ................................................6.4 8.02 Ethics and corruption, 1–7 (best) ......................................................... 97 ......n ......... 2.8 Singapore ............................................6.5 8.03 Undue influence, 1–7 (best).................................................................. 87 ......n ......... 2.9 New Zealand .......................................6.1 8.04 Government efficiency, 1–7 (best) ........................................................ 98 ......n ......... 3.1 Singapore ............................................5.9 8.05 Domestic competition, 1–7 (best)....................................................... 127 ......n ......... 3.2 Saudi Arabia ........................................5.5 8.06 Efficiency of the financial market, 1–7 (best) ......................................... 78 ......n ......... 3.3 Qatar ...................................................5.4 8.07 Openness to foreign participation, index 1–7 (best) ............................ 121 ......n ......... 3.5 Luxembourg ........................................5.9 Ease of hiring foreign labor, 1–7 (best) ................................................. 92 ......n ......... 3.7 Albania ................................................5.9 Prevalence of foreign ownership, 1–7 (best) ....................................... 118 ......n ......... 3.5 Luxembourg ........................................6.5 Business impact of rules on FDI, 1–7 (best) ....................................... 122 ......n ......... 3.3 Singapore ............................................6.4 Openess to multilateral trade rules, index 0–100 (best) ...................... 122 ......n ....... 41.8 Slovenia.............................................93.1 8.08 Availability of trade finance, 1–7 (best).................................................. 81 ......n ......... 3.6 Hong Kong SAR ..................................5.6 9th pillar: Physical security................................................................. 115 .................. 3.7 Finland .................................................6.5 9.01 Reliability of police services, 1–7 (best) .............................................. 119 ......n ......... 2.7 Finland ................................................6.7 9.02 Business costs of crime and violence, 1–7 (best) ............................... 104 ......n ......... 3.9 Saudi Arabia ........................................6.5* 9.03 Business costs of terrorism, 1–7 (best) .............................................. 115 ......n ......... 4.4 Slovenia...............................................6.8 1 This indicator is not included in the pillar calculation. * Syria was replaced with second-best Saudi Arabia; see “How to Read the Country/Economy Profiles” for details. The Global Enabling Report 2012 | 127 @ 2012 World Economic Forum
- 150. Part 2: Country/Economy Profiles Bosnia and Herzegovina Key indicators Trade and FDI inflows, percent of GDP Population (millions), 2010 .................................................................... 3.8 GDP (US$ billions), 2010..................................................................... 16.5 Country FDI inflows (US$ millions), 2010 ............................................................. 63 Trade World Imports and exports as share (%) of world total, 2010 ....................... 0.04 120 80 16 4 Sources: IMF; UNCTAD; UNFPA; WTO 90 60 12 3 60