There
is a little agreement on the
relationship between trade
liberalization and poverty
with many economists presuming
that trade liberalization
contributes to both growth
as well as inequality reduction,
although there is little incontrovertible
evidence supporting this.
This article contains author’s
observations on Seminar Series
C on Trade & Poverty,
Closing Ceremony, Asian Development
Forum, Seoul, 5 November 2002.
Most of this discussion is
centered on trade and growth,
and only indirectly on inequality
and on poverty.
(There was an argument that
poverty has fallen considerably
in the last decade due to
growth (courtesy liberalization)
(Bhalla). Anderson advocated
agricultural trade liberalization,
which Yamazawa noted, will
primarily benefit the rich
countries. Anderson also showed
greater terms of trade (ToT)
losses due to trade liberalization
for most tropical developing
countries.)The depreciation
of the terms of trade (TOT)
for primary products against
manufactures puts a greater
significance on the international
inequalities compared to intra-national
inequalities in apparently
growing world inequality.
Meanwhile Kharas insists that
trade liberalization is good
for growth and for poverty
reduction and side by side
stressed on the need to focus
on the vulnerable. On the
other hand, Quibria noted
that short-term impacts of
trade liberalization may be
very bad, even if ameliorated
in the medium or long term.)
There is growing concern that
trade liberalization under
WTO has been more onerous
than under GATT, especially
for the least developed countries
which are obliged to implement
liberalization programs determined
by powerful governments for
influential transnational
corporate interests.
With the recent global slowdown
in economic growth, export
markets have shrunk, reducing
the viability of export-led
growth. Hence, developing
countries are being urged
to develop social safety nets
requiring fiscal and targeting
capacities already eroded
by ongoing liberalization.
The author asserts that with
the erosion of earlier productive
capacities by trade liberalization,
renewed reliance on domestic-led
growth has not been easily
achieved as many trade policy
instruments are no longer
available. |