NCPA - National Center for Policy Analysis

FREE TRADE BENEFITS THE POOR

December 16, 2004

Free trade through capitalism and globalization are the best ways to help the world's poor, says author Johan Norberg in his book, "In Defense of Global Capitalism." Furthermore, he says, those who are opposed to free trade and "sweatshop labor" are usually Western elites, who expect developing countries to meet impossible labor standards equal to those of the Western world.

In an interview with Reason magazine's Nick Gillespie, Norberg argues that developing countries that have experienced the most progress over the years are ones that have increased trade with other countries:

  • Over the past 30 years, chronic hunger and child labor have been reduced by 50 percent; over 20 years, 200 million people have come out of absolute poverty (defined as earning less than $1 a day).
  • Globalization has helped promote the rights of women in business, education, property and other areas.
  • Boosting a country's gross domestic product (GDP) also improves environmental conditions; countries that reach a GDP of $10,000 per capita show a positive correlation of economic growth with cleaner air and water.
  • In a typical developing country, American multinational companies pay eight times the average wage of other employers in that country.

Norberg points out that every wealthy country began with sweatshop labor decades, even centuries ago. Likewise, developing countries, many of which have little infrastructure and capital to work with, are now going through the same transition. As multinational companies move in, they tend to improve working conditions through more capital and as a result, pay higher wages due to increased labor productivity.

Sources: Nick Gillespie (Reason magazine), "Globalization Stories, Poor Man's Hero: Part I," and "Globalization Stories, Poor Man's Hero: Part II," A World Connected; and Johan Norberg, "In Defense of Global Capitalism," Cato Institute; September 1, 2003.

 

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