Trade and Poverty
In the discussion about economic growth and poverty alleviation it is necessary to point out that ‘free trade’ and ‘fair trade’ are not the same thing. ‘Free’ trade is not necessarily fair. There are a number of reasons for this. One is quite simply that so-called ‘free trade’ has never been tried on a completely equal basis. The developed world has insisted on free access for their industrial goods, but has always found ways to block reciprocal access for developing world goods which are mostly agricultural. They have done this in various ways such as farm subsidies (which agricultural exporters in New Zealand are also protesting), or by imposing prohibitive compliance requirements.
World Trade Organisation (WTO) policies have been manipulated by the developed countries to enable this to happen. Developing nations have woken up to this, which is why they have been baulking at the Doha Round of WTO negotiations. They want the West to stop distorting trade, and they see the WTO as being complicit in this! The developed nations keep putting pressure on for the conclusion of the Doha Round, but they have yet to show that they have dealt with the issues of their manipulation of trade terms.
In his book Bad Samaritans the Korean economist Ha-Joon Chang points out that in fact none of the developed countries reached that state by following free market policy. Since the start of the industrial revolution economic growth has happened behind the protection of trade regulation and trade tariffs. Click here for a review of Chang's book
Beyond such distortions however, ‘free trade’ has other equity issues. Globalisation can be good or bad. Much of the modern processes of globalisation are based on the exploitation of inequality. Yes, for the workers in the sweatshops of Nike and others any work is better than no jobs, but that does not make the conditions fair or right. A pro-poor policy by global companies can insist on reasonable conditions in their factories, instead of spiralling downward to the countries with cheapest labour costs and least regulation. The cost increase for a pair of shoes or jeans in NZ would be small.
So we come back to the question ‘How does economic growth affect poverty?’ Economic growth by itself can bypass the poor who don’t have the health, education or resources to be a part of it. A report from Bangladesh this year shows that despite steady economic growth over the last decade, levels of child health and nutrition have decreased (Centre for Social and Economic Rights, Fact Sheet 8). Statistics of rising average income can hide the fact that the poorest 20% of the people have been left behind.
To help the poor, economic growth must include a pro-poor focus and be backed by education and health programmes. Healthy, educated people can take advantage of the opportunities of economic growth.
Heart Life Voice
You believe in justice in your heart, you are working hard to live it in your life, now use your voice to sing it as well! Heart Life Voice is an album of songs reflecting the Biblical challenge to pursue JUSTICE, love KINDNESS and walk HUMBLY with God (Micah 6:8). The album is a project of Micah Challenge Australia.
Visit the Heart Life Voice site to hear some of the songs, find out about the project and to order the CD
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