WIN–WIN How International Trade Can Help Meet the Sustainable Development Goals Edited by Matthias Helble and Ben Shepherd ASIAN DEVELOPMENT BANK INSTITUTE Win–Win How International Trade Can Help Meet the Sustainable Development Goals Edited by Matthias Helble Senior Economist, Co-Chair, Research Department Asian Development Bank Institute Ben Shepherd Principal, Developing Trade Consultants ASIAN DEVELOPMENT BANK INSTITUTE © 2017 Asian Development Bank Institute All rights reserved. First printed in 2017. ISBN 978-4-89974- 081-0 (Print) ISBN 978-4-89974- 082-7 (PDF) The views in this publication do not necessarily reflect the views and policies of the Asian Development Bank Institute (ADBI), its Advisory Council, ADB’s Board or Governors, or the governments of ADB members. The responsibility for opinions expressed in signed chapters rests solely with their authors, and publication does not constitute an endorsement by ADBI, other international organizations and secretariats which employ the authors, or their respective Board of Governors or the governments they represent, or their member countries or economies, of the opinions expressed in them. ADBI does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. ADBI uses proper ADB member names and abbreviations throughout and any variation or inaccuracy, including in citations and references, should be read as referring to the correct name. By making any designation of or reference to a particular territory or geographic area, or by using the term “recognize,” “country,” or other geographical names in this publication, ADBI does not intend to make any judgments as to the legal or other status of any territory or area. Users are restricted from reselling, redistributing, or creating derivative works without the express, written consent of ADBI. ADB recognizes “China” as the People’s Republic of China. Note: In this publication, “$” refers to US dollars. The Asian Development Bank Institute, located in Tokyo, is the think tank of the Asian Development Bank. The institute aims to identify effectivestrategies to improve policy and development management in Asia and the Pacific. We work with an extensive network of partners in the region and globally to influence policies on poverty reduction, inclusive growth, the environment, regional cooperation, infrastructure development, middle-income countries, and private sector development. Contents Figures, Tables, and Boxes v Contributors x Abbreviations xi Preface xv Acknowledgments xvii 1. Introduction 1 Matthias Helble and Ben Shepherd 2. From MDGs to SDGs: The Role of Trade 9 Patrick Messerlin 3. Trade and the Post-2015 Development Agenda 32 Bernard Hoekman PART I: Poverty, Hunger, and Inclusive Growth 4. Trade and Poverty Reduction 61 Irene Brambilla and Guido Porto 5. Agricultural Trade and Hunger 87 Will Martin 6. Trade and Women 118 Ben Shepherd and Susan Stone 7. Can Trade Benefit Employment? 139 Paul Vandenberg 8. Trade and Inequality 175 Shujiro Urata and Dionisius A. Narjoko PART II: Sustainable Growth 9. Trade and Environment 207 Dale Andrew 10. Trade and Climate Change 252 Andrew Prag iii ivContents 11. Trade and Sustainable Fisheries 272 U. Rashid Sumaila 12. The Trade and Water Nexus 294 Alexandre le Vernoy 13. Trade, Labeling, and Food Safety 317 Norbert Wilson PART III: Education and Health 14. Trade in Education Services and the SDGs 337 Aik Hoe Lim, Pamela Apaza, and Alin Horj 15. Trade in Medical Products and Pharmaceuticals 375 Matthias Helble and Ben Shepherd 16. Trade in Health Services 400 Rupa Chanda PART IV: Other Linkages between Trade and the SDGs 17. Trade and Urbanization 439 Yuan Zhang and Guanghua Wan 18. Trade, Infrastructure, and Development 466 Marcelo Olarreaga 19. Facilitating Trade for Development: Aid for Trade 488 William Hynes and Frans Lammersen 20. Conclusion: Directions for Future Research and Policy Making 530 Matthias Helble and Ben Shepherd Index 542 Figures, Tables, and Boxes Figures 3.1 Services Share of Manufacturing Value Added (%) 35 3.2 Trade Policy Impacts: Conceptual Framework 36 3.3 Trade-Income Elasticity and Export/GDP Ratio and Trade Growth since 1970 39 3.4 Services and Sustainable Development 44 3.5 How Trade Costs Matter 47 3.6 Services Trade Restrictiveness Index 48 4.1 Nigeria 77 4.2 Ghana 78 4.3 Malawi 78 4.4 The Gambia 79 4.5 Uganda 79 4.6 South Africa 80 5.1 Supply and Demand for a Storable Commodity, Region 1 94 5.2 Indexes of Staple Food Prices (%) 100 5.3 Price Insulation for Rice 100 5.4 Price Insulation for Wheat 101 5.5 Price Insulation for Soybeans 101 5.6 Special Safeguard Mechanism Duties for Rice under the Doha Proposals (%) 106 6.1 Simple Average Applied Tariff Rate on Agricultural versus Non-Agricultural Products, by Developing Region, Latest Available Year 123 6.2 Share of Female Production and Non-Production Workers, by Firm Type, All Countries and Years (%) 131 6.3 Female Workers as a Share of the Total Number of Workers, Simple Average by Sector (%) 132 6.4 Percentage of Firms with at Least One Woman Owner that Engages in International Activity, Compared with Other Firms, All Countries and Years (%) 133 7.1 Share of Employed Persons Living on Less than $1.25 per Day (%) 141 7.2 Employment-to-Population Ratio (%) 142 7.3 Services Sector Share of Total Exports (%) 155 7.4 Bilateral and Regional Trade Agreements with Labor Provisions (number of agreements) 167 8.1 Trade–Gross Domestic Product Ratios (%) 176 v viFigures, Tables, and Boxes 8.2 Gross Domestic Product per Capita Growth Rates for Developed and Developing Countries (%) 179 8.3 Trade–Gross Domestic Product Ratios and Gini Index for Selected East Asian Countries 185 9.1 Global Export Values for Important Forest Risk Commodities 230 10.1 GHG Emissions of Selected Countries on a Production and Consumption Basis 254 10.2 Services Trade Restrictiveness Index by Policy Area: Engineering Services 266 11.1 Share of Fisheries Exports in Total Exports in Top LDCs and SIDS Exporters (%, 1990–2009) 275 11.2 Fishery Trade Flows by Regions ($ ‘000) 276 11.3 Fisheries Subsidies by Type 281 12.1 Water Scarcity and Share of World’s Water-Related Inventions, 2000–2010 (%) 305 12.2 Private Investment Commitments in Infrastructure (1990–2013) 307 13.1 Total Technical Barriers to Trade Notifications, 1995–2015 322 13.2 New Notifications by Development Status, 1995–2015 322 13.3 Notifications Submitted per Year 325 13.4 Share of Total Notifications Submitted by Developing Country Members (including Least Developed Countries)(%) 325 14.1 Share of Private Expenditure on Tertiary Educational Institutions in Selected Economies (2002 and 2012) 342 14.2 Key Education Policy Priority Areas for Supporting Participation in Global Value Chains 346 15.1 Product Groups Related to Public Health 377 15.2 Trade in Health Products 2002–2014 by Region (measured by imports reported by countries) 378 15.3 Shares of Trade in Health Products 2002–2014 by Region (measured by imports reported by countries) 379 15.4 Applied Most Favored Nation Tariff on Health Product Groups (%) 380 15.5 Applied Most Favored Nation Tariff on Health Product Groups by World Region (%) 381 15.6 Correlation between Logistics Competence and Diphtheria, Pertussis, and Tetanus Immunization Rate, latest available year 393 15.7 Evolution of Volumes and Values of Harmonized System Code 300431, 1995–2013 394 15.8 Evolution of Imports of Harmonized System Code 300431 ($, indexed to 1995 = 100) 395 Figures, Tables, and Boxesvii 15.9 Evolution of Average Import Unit Prices of Harmonized System Code 300431, 1995–2013 (simple average) 396 16.1 Triad of Health and Sustainable Development 404 17.1 Equilibrium between Grain Surplus and Urbanization in Closed Economies 447 17.2 Total Grain Output and Urbanization in the People’s Republic of China (1955–1965) 447 17.3 Equilibrium between Grain Surplus and Urbanization in Open Economies 449 17.4 Total Population and Urbanization of the World (1000–1900) 449 17.5 Cereals Trade and Population Urbanization in Asia 452 17.6 Ratios of Export and Import to Gross Domestic Product in the People’s Republic of China and India (1970–2008) 458 18.1 Gross Domestic Product Growth before and after Trade Liberalization 468 18.2 Gains from Trade with and without Entry Costs 470 18.3 Sum of Squared Residuals of the Estimation of the Threshold Model 482 19.1 Aid-for-Trade Creditor Reporting System Proxies 493 19.2 Aid-for-Trade Disbursements 494 19.3 Official Development Assistance and Other Official Flows Trade-Related Commitments 2002–2014 Sector Distribution ($ billion 2015 prices) 494 19.4 Aggregate Results from 111 Aid-for-Trade Case Stories 497 19.5 Success Factors Mentioned in the Case Stories 498 19.6 The Pillars of Sustainable Development 499 19.7 Contribution of Aid for Trade to the Sustainable Development Goals 501 19.8 Aid for Economic Infrastructure ($ million 2015 prices) 502 19.9 Aid for Building Productive Capacities($ million 2015 prices) 504 19.10 Aid-for-Trade Policy and Regulations($ million 2015 prices) 505 19.11 Aid-for-Trade-Related Adjustment ($ million 2015 prices) 506 19.12 Aid for Trade with a Gender or Environment Objective (shares in total aid for trade) 507 19.13 Flows to Developing Country by Development Assistance Committee Members and Multilateral Agencies (2015 constant, $ billion) 511 19.14 External Financial Flows to Developing Countries by OECD Members and International Financial Institutions (Share of total, 2013) 513 19.15 Aid-for-Trade