NCPA - National Center for Policy Analysis


January 24, 2005

Opening markets in developed countries to trade from less developed ones is a more effective strategy to reduce poverty than foreign aid, say John Micklethwait and Adrian Wooldridge of the Los Angeles Times.

Foreign aid generally does little to alleviate structural poverty; instead, it usually falls into the hands of dictators. This explains, in part, why sub-Saharan real per capita income fell over the last three decades despite the world spending some $100 billion on aid.

Trade, by contrast, has a more reliable track record at improving living standards:

  • Trade has enabled poor countries, particularly China and India, to move millions of people out of poverty; in 2004, economies of developing nations grew by 6.1 percent, with China leading the way at 8.8 percent.
  • Through open markets flows access to better technology and goods; for example, over the last 15 years, vaccines have helped reduce the number of polio victims from 350,000 to 800 individuals.
  • The World Bank estimates that even modest liberalization of trade in farm goods and textiles between the West and developing nations could lift some 144 million people out of poverty by 2015.

Source: John Micklethwait and Adrian Wooldridge, "The Silent Disaster of World Poverty," Los Angeles Times, January 10, 2005.


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