NCPA - National Center for Policy Analysis

Lifting Trade Barriers Would Aid Developing Countries

November 1, 2001

Liberalizing global trade barriers could result in lifting 900 million people out of poverty by 2015, according to the World Bank's "Global Economic Outlook 2002" report for developing countries.

To make this happen, developed countries must be willing to negotiate liberalized trade in agriculture and textiles because those are the products that the world's poor produce.

Removing barriers in agriculture, advancing the timetable on removing tariffs and restrictions on textile imports, and curtailing antidumping will be discussed at World Trade Organization meetings to be held in early November.

  • If trade is liberalized, it could increase annual growth in Gross Domestic Product in developing countries by an additional 0.5 percent over the long run -- and by 2015 lift 300 million people out of poverty in addition to the 600 million escaping poverty with normal growth.
  • Developing countries stand to gain an estimated $1.5 trillion of additional income in the 10 years after liberalization policies are begun.
  • Developed countries would see their incomes rise by some $1.3 trillion.

The report, which takes into account the even further slowdown the global economy will see following September 11, found trade has also slowed:

  • Growth in trade in 2001 has undergone one of the severest decelerations in modern times, from 13 percent in 2000 to perhaps 1 percent in 2001.
  • As a result, developing countries are confronting a 10 percentage point drop in the growth of demand for their exports, seriously undermining their growth this year.
  • However, the volume of world exports is expected to grow at a 7.2 percent rate over 2002-2003.

As the developed countries return to higher growth rates in 2002, says the report, growth will pick up in the developing world as well.

Source: Richard Newfarmer et al., "Global Economic Prospects and the Developing Countries 2002: Making Trade Work for the World's Poor," October 2001, World Bank.


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