Country experiences and empirical studies show that private investment and integration into global markets for goods, services, and labour go hand in hand and reinforce each other as engines of economic development. Finding ways to leverage private-sector know-how, innovation, technology, services, and finance provision is fundamental to promoting sustainable development and prosperity.
Improving the efficiency of trade across borders and developing new trading routes is one area where the private sector can harness its capabilities for the benefit of all. Where such partnerships occur, it is essential to monitor their performance, evaluate their impact on trade flows and other economic variables, and draw lessons from their experience. Three main econometric techniques can be used to that end, the Gravity Model, the Synthetic Control Method, and the Difference-in-Differences approach, each well-grounded in the theoretical and empirical literature; the choice among them depends on data availability and timeliness.
Recent events, including the COVID-19 pandemic, supply-chain bottlenecks, and military conflicts, are prompting countries and companies to rethink their trade and sourcing policies. Sustainability targets add further complexity to the choices facing policymakers and businesses. Perhaps more than ever, ex-ante qualitative, quantitative, and hybrid approaches that complement each other are needed to assess the potential environmental, social, and economic impact of different strategies, followed by stakeholder consultations that explore opportunities for public-private partnerships grounded in solid analysis.
A case in point is the World Logistics Passport (WLP), a trade-PPP initiative launched just before the pandemic. Two years into its operation, it is time to estimate its impact.
That task is complicated by the need to focus on the different parties involved:
- the businesses that are active in the initiative;
- the job opportunities they provide;
- the growth impetus they generate.
Current econometric techniques need to be adjusted to capture all of these aspects. The full report offers some ideas on how this upgrade can be undertaken.
