EO Clinic support requested by: World Bank Group (WBG) Global Trade and Regional Integration Unit
Requesting activity: Central Asia: Regional Trade Connectivity Linkages
Requesting activity type: Other: ASA (Advisory Services and Analytics)
EO Clinic relevant Thematic Groups: TG8 (Transport), TG9 (Urban), TG11 (Non-EO Information and Analytics)
Work Order number: EOC0014
Work Order status: Completed
Work Order start: 2021 Apr 09
Work Order end: 2021 Jun 29
The World Bank Group is supporting client countries in Central Asia with the objective of enhancing regional trade, investment and connectivity. Regional trade, in these geographies, is characterized by a large presence of informal trade (informal activity, which involves undeclared cross-border trade) mostly along borders and in markets and so-called bazaars. This form of trade is known to provide a large amount of employment in these countries. But this economic activity involving cross-border trade, taking place in these markets, is generally not recorded in official statistics. This “shadow” economy, often representing a large proportion of economic transactions is difficult to measure and its omission can lead to wrongful policy design and recommendations, the undermining of tax collection and the hurting of law-abiding local firms that compete with undeclared goods. Sometimes, ad hoc surveys are conducted, but they generally aren’t done on a regular basis and are prone to different methodological shortcomings, such as underreporting.
The current EO Clinic support would be incorporated to an ongoing 2-year analytical project implemented by the World Bank (Central Asia: Regional Trade Connectivity Linkages – project number P171131) aimed at improving regional trade integration in Central Asia, that will have as main deliverable a publication but also policy dialogue with all governments in the region.
Capturing the size of the informal trading sector in certain Central Asian regions, even roughly, could represent a big leap forward in terms policy design in border compliance, and fiscal management for resource-starved countries.
Sustained growth in informal cross-border trade typically leads to densification of man-made structures in the local hinterland, usually in the form of commercial real estate, small shops and warehousing structures. Increased trade is also most noticeable in terms of vehicle presence (e.g. trucks, cars, motorbikes, bicycles) and pedestrians shopping in these markets. Usually these markets are contained within a very small geographical area, of a few square kilometres at most, which makes them easier to observe in time with satellite Earth Observation methods.
The objective of the present work is to use remote sensing methods to observe the peri-urban landscape of inland bazaars as a conduit to estimate current and past informal trade (directly or indirectly). Conceptually speaking, EO methods to fill in these gaps are not very different from those currently used in predictive analytics (e.g. estimation of retailer chains’ revenues by means of vehicle count in parking lots).