Nicoletta Batini, Ian Parry, and Mr. Philippe Wingender
Denmark has a highly ambitious goal of reducing greenhouse gas emissions 70 percent below 1990 levels by 2030. While there is general agreement that carbon pricing should be the centerpiece of Denmark’s mitigation strategy, pricing needs to be effective, address equity and leakage concerns, and be reinforced by additional measures at the sectoral level. The strategy Denmark develops can be a good prototype for others to follow. This paper discusses mechanisms to scale up domestic carbon pricing, compensate households, and possibly combine pricing with a border carbon adjustment. It also recommends the use of revenue-neutral feebate schemes to strengthen mitigation incentives, particularly for transportation and agriculture, fisheries and forestry, though these schemes could also be applied more widely.
We identify key factors, from large set of potential determinants, that explain the variation in export diversification across countries and over time using Bayesian Model Averaging (BMA), which addresses model uncertainty and ranks factors in order of importance vis-a-vis their explanatory power. Our analysis suggests, in order to diversify, policy makers should prioritize human capital accumulation and reduce barriers to trade. Other policy areas include improving quality of institutions and developing the financial sector. For commodity exporters reducing barriers to trade is the most important driver of diversification, followed by improving education outcomes at the secondary level and
financial sector development.
France is the top agricultural producer in the European Union (EU), and agriculture plays a prominent role in the country’s foreign trade and intermediate exchanges. Reflecting production volumes and methods, the sector, however, also generates significant negative environmental and public health externalities. Recent model simulations show that a
well-designed shift in production and consumption to make the former sustainable and align the latter with recommended values can curb these considerably and generate large macroeconomic gains. I propose a policy toolkit in line with the government’s existing sectoral policies that can support this transition.
This issue of the IMF Research Bulletin features recommended readings from IMF Publications and an update on recent IMF Working Papers and IMF Staff Discussion Notes. It also includes a special announcement welcoming Linda Tesar (University of Michigan) as the new editor of “IMF Economic Review.” The Q&A section explores “Seven Questions on China-Africa Relations” (Luiz Almeida, Wenjie Chen, and Oral Williams). The Research Summaries surveys “Income Polarization in the United States” (Ali Alichi, Kory Kantenga, and Juan Sole); and “The Future Wealth of Nations: World Trade in Services” (Prakash Loungani, Saurabh Mishra, Chris Papageorgiou, and Ke Wang).
This Selected Issues paper discusses initiatives to promote export diversification and growth in Liberia. Liberia's exports have been very concentrated in the past, but some progress in export diversification has been made in recent years, mostly in the enclave sectors. The government has launched the Liberia Agricultural Transformation Agenda (LATA) to support diversification and transformation. LATA strives to build up the agricultural sector as well as adopt a supportive industrial policy. Improving business climate and external competitiveness could play an important role in increasing export diversification in Liberia. Efficiency could also be increased through better access to markets and technology, cheaper imported inputs, as well as more competition with imports.