Merchandise exports and imports by development region in Nepal

Here is an interesting chart that shows share of total merchandise exports and imports by development region during fiscal year 2010/11. Total merchandise exports in 2010/11 was Rs 64.56 billion and total merchandise imports was Rs 397.54 billion.

The highest merchandise exports originated from Eastern Development Region, which accounted for 47.83% of total exports (about Rs 30.88 billion). It was followed by Central Development Region (Rs 28.87 billion) and Western Development Region (Rs 3.11 billion).

The highest merchandise imports was by Central Development Region,which accounted for 68.49% of total imports (about Rs 272.28 billion). It was followed by Western Development Region (Rs 13.86 billion) and Eastern Development Region (Rs 13.81 billion).

Interesting (but unsurprising) observation is that highest exports has occurred from regions with highest concentration of industries. And, highest imports is by regions with highest population (and population density)/consumption. These could affect incentives such as tax holidays, supply of infrastructures, and other facilities aimed at promoting industrialization in different parts of the country.

Evaluating Aid for Trade on the Ground: Lessons from Nepal

Here is an abstract of a latest paper I co-authored.

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The paper assesses the effectiveness of the AfT initiative in Nepal. It demonstrates that AfT has played a role in enhancing the country’s export performance. Notably, AfT-supported capacity building programmes have, in some cases, improved the competitiveness of Nepali exporters and promoted small-scale industries for products such as tea, cardamom and ginger. However, the potential effectiveness of AfT in Nepal is also hampered by various factors, such as low absorptive capacity; limited progress in making AfT projects financially and institutionally sustainable; and the need for more ownership by government agencies and the private sector. Finally, building on the study’s findings, the paper provides concrete recommendations to assist Nepal in making AfT programmes more effective in achieving their trade and development goals.

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Read the full paper here (alternative link here).

8th WTO Ministerial: Where’s the “early harvest”?

In his opening address during the 8th Ministerial Conference in Geneva on December 15, 2011, the WTO Director-General Pascal Lamy called on members to “stand up for the values of multilateralism” and for major players to “exercise leadership and to muster political courage to act together for greater trade opening and reform.” Furthermore, he urged them to place the interests and needs of developing countries and, in particular, those of the poorest, at its heart. However, the wishes of Lamy were not fully reflected in the final outcome of the conference.

To avert tension over format of text and agenda to be agreed upon, there was no Ministerial declaration on December 17. Members made their individual statements during the sessions and the Chairman of the conference presented his own statement at the end of the session. Meantime, as a LDC chair, Nepal underscored the need for full, effective and immediate implementation of the Istanbul Programme of Action on LDCs.

The formal and informal meetings during the conference were a disappointment on two fronts. First, they failed to agree on how to conclude the Doha talks launched in 2001. While all countries said they were committed to taking Doha agenda to a logical conclusion, the major players stated this with some reservations. For instance, the US wanted emerging developing countries to further open up their markets, but the latter were disinclined to agree to that. The major players with substantial interests on Doha agenda initially proposed talks to continue based on plurilateral basis, i.e. it would involve only those members that are willing. But, this ran counter to the WTO’s foundation of multilateralism and inclusiveness and was subsequently rejected by a vast majority of the developing countries. Another issue that was also raised by the LDCs was an “early harvest”, which meant that countries would agree on some of the already agreeable issues rather than wait for the full Doha package.

Unfortunately, though most of the countries were receptive of this idea, they failed to act on it and failed to agree on issues that could be “harvested early”. In it as well, the often argued proposal of duty free market access for LDC products and slashing down of cotton subsidies were rejected by the US. Meanwhile, the developed countries argued that they could agree on trade facilitation measures and make it an “early harvest” in 2012. But, the developing countries stated that any such “early harvest” should be related to agendas touching upon their development goals. These are a special LDC package, enhanced special and differential treatment, resolving problems arising from the implementation of WTO agreements and reduction of agricultural subsidies.

Second, it failed to agree upon the future course of the WTO given the changing global dynamics after fuel, food, financial and economic crises. The conference also failed to launch discussion on new issues such as climate change, energy security and food security. It was initially proposed by the developed countries but the developing countries argued that this would lead to digression from the development components of the Doha agenda.

Though the conference failed to agree on long discussed issues, the major highlight was the accession of Russia, Montenegro and two LDC Pacific Islands - Vanuatu and Samoa to the WTO, which now boasts 157 members. In the upcoming talks related to Doha agenda, all countries should focus on putting development concerns at the core and deliver on something concrete, which is agreeable to all members, to boost faith in the multilateral system. Moreover, the WTO should also focus on moving forward by incorporating the evolving challenges posed by global economic crises, resource scarcity, food insecurity and effective implementation of Aid for Trade agenda.

For more on the same issue, see this piece by ODI’s Yurendra Basnett and this one by Martin  Khor at Triple Crisis blog.

Competitiveness of Nepalese Travel and Tourism Industry

Nepal ranked 112 out of 139 economies in the Travel & Tourism Competitiveness Index (TTCI) 2011.

See my earlier post on Nepal Tourism Year 2011 here.

What’s in the 17th SAARC Summit declaration?

I forgot to upload this post before. It is a bit dated but is still relevant.

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The seventeenth summit of the South Asian Association for Regional Cooperation (SAARC) was held on 10-11 November, 2011 in Addu City, the Maldives. The head of the eight member states attended the summit, whose theme was "Building Bridges"-- both in terms of physical connectivity and figurative political dialogue.

Founded in 1985, the SAARC is an organization of eight South Asian nations, namely Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan, Sri Lanka and Afghanistan.

The summit saw signing of the SAARC Agreement on Rapid Response to Natural Disasters, the SAARC Seed Bank Agreement, the SAARC Agreement on Multilateral Arrangement on Recognition of Conformity Assessment and the SAARC Agreement on Implementation of Regional Standards.

Moreover, it also decided to set the timeline for finalizing a framework for rail and sea connectivity. Specifically, the attending heads of state decided to finalize a Regional Railways Agreement and complete the preparatory work on an Indian Ocean Cargo and Passenger Ferry Service by the end of this year. The declaration also decided on early demonstration run of a Bangladesh-India-Nepal container train. Furthermore, the member states committed to conclude the inter-governmental framework agreement for energy cooperation and the study on regional power exchange concept.

Regarding economic integration and trade, the emphasis was on effective implementation of South Asia Free Trade Agreement (SAFTA), pruning sensitive lists, eliminating non-tariff barriers (NTBs) and harmonizing standards and customs procedures. These barriers have been partly contributing to limiting intra-regional exports to five percent of total world exports by South Asian economies.

Still, the member countries are sitting on a lengthy list of sensitive products and imposing various forms of NTBs. A mere call for grater trade cooperation and reduction of number of products in sensitive lists will not suffice. There has to be concrete action and the leaders have to walk the talk to show that they are genuinely committed to greater economic integration and cooperation in South Asia.

As per trade liberalization program under SAFTA, the non Least Developed Countries (LDCs) would reduce their tariffs to 0-5 percent by 2013 and LDCs of SAARC would reduce their tariffs to 0-5 percent by 2016. That being said, cooperation is happening albeit at a gradual pace, which needs to be sped up in the coming days. On the eve of the summit, Pakistan announced most-favored-nation (MFN) treatment in trade and commerce to India. Additionally, Pakistan has committed to reduce its sensitive list by 20 percent and allow tariff concessions on further 233 items under South Asia Free Trade Agreement (SAFTA) in February 2012. During the summit, India reduced sensitive products’ list by 20 percent.

With respect to cooperation in combating the negative impacts of climate change, the summit was a disappointment. It just made a passing reference to this very important issue. The declaration states that the member countries are “conscious of the environmental degradation and particular vulnerabilities of the region to the threat of climate change” and hoped for timely implementation of the Thimphu Statement on Climate Change. Similar is the case with the commitment to alleviate poverty and reduce income inequalities within the societies: It reaffirmed the member’s resolve “to improve quality of life and well-being of people through people-centred sustainable development”, but made no specific actions, activities and commitments.

Regarding regional security, it mentions of their concerns about the continuing threat of terrorism in all its forms and manifestations, transnational organized crimes, especially illegal trafficking in narcotic drugs and psychotropic substances, trafficking in persons and small arms and increased incidents of maritime piracy in the region; and reiterating their resolve to fight all such menaces.

The leaders also agreed to hold 18th SAARC Summit in Nepal.

Nepal Tourism Year 2011 concludes short of target

The much hyped Nepal Tourism Year (NTY) 2011 came to an end yesterday. When the campaign was launched in 2010, the target was to attract one million visitors, of which 40 percent were targeted to be from India and China.

So, how many visitors came to Nepal in 2010? Here are three different numbers from three different newspapers (Republica and TKP quoted the same source—TIA’s Immigration Office):

• Republica: 730,000 visitors
  • 544,985 tourists entered the country via air
  • Chinese 45,400; 145,000 Indian tourists
  • Share of Chinese tourists in total arrivals increased by 8.3 percent, second only to India that had market share of 26.7 percent.
• The Kathmandu Post: 737,597 visitors
  • Chinese 75,517 (45,400 by air and 30,117 overland); 145,338 (by air only)
• The Himalayan Times: 719,547 visitors (till November 2011)
  • 501,264 by air and 174,612 by land till November 2011
  • In 2011, 544,985 arrivals by air, only 96,216 more than a year ago

I tried to get the figures from official sources but they are not yet uploaded on the websites.

Anyway, the last time such a mega campaign was launched was in 1998 when around 464,000 tourists visited Nepal, earning US$24.8 US$248 million in revenue. The Nepali tourism industry has come a long way since 6,179 visitors visited Nepal in 1962. It increased to 509,752 (378,712 by air and 131,040 by land) in 2009. Here is a detailed report on 2010’s tourism activities.

My hasty comments on NTY 2011:

• The target of one million tourists was way too high, especially given the past record, political instability, quality of infrastructure and resources.
• Though number of tourists went up, tourism receipts of tourism enterprises did not go up as expected. We will have to wait to see the total tourism revenue earned in 2011. It could be that more restaurants, hotels, travel and trekking agencies were opened up expecting a surge in visitors. Surge did happen to some extent, but the increased total revenue was divided among these old and new enterprises. This might have caused low reported earnings (or less than expected) of tourism enterprises.
• Commitments to spare tourism sector from strikes and disturbances were not kept. Few days after making such commitments by all parties, a nationwide strike was organized. Leaders failed to walk the talk. Also, the tourism sector was battered by labor strikes and vandalism.
• The soring cost of production did not help to make our tourism sector competitive.

Does interest rate channel work? Evidence from Ghana

In short, it won’t work as expected. Why? Because of information asymmetries and imperfect markets. Here is the abstract from a recent paper by Arto Kovanen.

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This paper analyzes interest rate pass-through in Ghana. Time series and bank-specific data are utilized to highlight linkages between policy, wholesale market, and retail market interest rates. Our analysis shows that responses to changes in the policy interest rate are gradual in the wholesale market. Prolonged deviation in the interbank interest rate from the prime rate illustrate the challenges the Bank of Ghana faces when targeting a short-term money market interest rate. Asymmetries in the wholesale market adjustment possibly relate to monetary policy signaling, weak policy credibility, and liquidity management. In the retail market, pass-through to deposit and lending interest rates is protracted and incomplete.

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