gl-schach-blog

9. April 2021

Free Trade Agreements And Poverty

Filed under: Allgemein — @ 20:04

In general, these and other studies have shown that, in most cases, trade reform increases the incomes of the poor as a group and that transitional costs are generally low relative to overall benefits. Nevertheless, there are cases where the short-term effects of liberalization on the poor and others are negative and significant. While these negative results cannot be updated, it is important to recognize that in many cases they are affected by initial protection models. Opening up their economies to the global economy has been essential to enable many developing countries to develop competitive advantages in the manufacture of certain products. In these countries, defined by the World Bank as the „new globalizers“, the number of people living in absolute poverty has decreased by more than 120 million (14%) 1993-19981. Developing countries now account for 48% of world trade, up from 33% in 2000, and the number of people living in extreme poverty has halved since 1990, reaching nearly one billion people. Trade has helped to increase the number and quality of employment in developing countries, boost economic growth and boost productivity gains, a new WTO Secretariat study released today (19 June) shows that trade liberalization helps poor countries catch up with rich countries and that faster economic growth helps reduce poverty. WTO Director-General Mike Moore said the report confirms that while trade alone is not enough to eradicate poverty, it is essential that the poor have hope for a better future. 30 years ago, for example, South Korea was as poor as Ghana. Today, thanks to commercial growth, it is as rich as Portugal. Sensitivity to negative external shocks. Trade liberalization will make an economy more open and deepen its economic integration with the rest of the world.

In many cases, this will help an economy diversify its exports based on its comparative advantages and become less dependent on different markets or export products. In addition, integration into foreign markets contributes to making an economy less dependent on the domestic market, so that domestic economic slowdowns are offset by the growth of the international economy. However, openness can also make an economy more vulnerable to external shocks, such as sudden changes in terms of trade, which can significantly reduce growth. If shocks directly affect certain sectors, such as agriculture or informal production, they can have a significant impact on the poor. Playwright George Bernard Shaw once wrote that poverty is „the greatest evil and the worst of crimes.“ While Shaw wrote these moving words more than a century ago, the reality is that too many people are still living a life filled with hunger and distress. In recent decades, the global economy has grown rapidly. This growth was partly driven by an even faster rise in international trade. Trade growth, in turn, is the result of both technological developments and concerted efforts to reduce trade barriers.

Some developing countries have opened up their own economies to fully exploit economic development opportunities through trade, but many have not. Other trade barriers in industrialized countries are concentrated in agricultural products and labour-intensive industries, in which developing countries have a comparative advantage. Continued trade liberalization in these areas, particularly by developed and developing countries, would help the poorest to escape extreme poverty, while benefiting the industrialized countries themselves. „The sustainable fight against poverty depends on economic growth, which depends on a reformed trade policy.“ At UPS, we have always believed in the power that allows trade, and I am pleased that this feeling is gaining importance in development circles.

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