You have reached iGreens.org.uk. In December 2006 we moved to iGreens.org with faster servers and discussion boards. Click here to follow us.
|
You have reached iGreens.org.uk. In December 2006 we moved to iGreens.org with faster servers and discussion boards. Click here to follow us. |
Globalisation is good for you.
The anti-globalisation brigade generally claims that poor
people and poor countries lose out from international trade. This was always implausible to people who understood that
the whole point of free trade is that both parties gain.
The market does not allocate the resources of a fixed size pie, and free
trade is not a zero sum game. The
idea of one group not benefiting became even less plausible 200 years ago with
the demonstration of Ricardo’s Law of Comparative Advantage, which showed that
even if one side is disadvantaged in all aspects of the relevant market, perhaps
by having both more expensive labour and more expensive raw materials, both
sides still benefit from trade liberalisation.
Perhaps it was the counterintuitive nature of Ricardo’s theory that has
led so many people to support futile and harmful protectionism.
Anyway, there is now strong empirical support from a World Bank report* click
here for details that even the dimmest bobble-hatted protester should be
able to understand. The World Bank classified poor countries according to their
degree of globalisation by the simple trick of measured the ratio of
international trade to national income.
The higher the ratio the more “globalised” the country. It turned out that international trade was largely confined
to rich countries until 1980. Prior
to that date most poor countries were hardly being “globalised” at all.
Since then abut 24 poor countries that are home to three billion people
became “gobalised” according to this simple trade:income ratio.
They include China, India and Mexico.
In the 1990s the GDP in these “globalised” countries rose at an
average annual rate of five percent. However, a large number of poor countries including many in
Africa remained “unglobalised”. In
fact their ratio of trade to income actually fell even from its starting low
level. Surprise,
surprise! In those countries
gross domestic product per person (expressed as purchasing power parity) not
only grew slower, on average it actually fell by an annual rate of one percent.
For those who are interested the GDP of rich countries grew at an annual
rate of two percent. The message is that if poor countries engage in
international trade they can expect growth rates more than twice the rate of
rich countries and they will soon be rich too.
If they don’t their GDP per person will actually shrink. People who care about the poor should not control global trade with poor countries but find ways to encourage it. The best way to do that is to remove artificial trade barriers. Jim Thornton Leeds 7 Dec 2001 * Globalization,
Growth, and Poverty: Building an Inclusive World Economy |
|
You have reached iGreens.org.uk. In December 2006 we moved to iGreens.org with faster servers and discussion boards. Click here to follow us.
Send mail to enquiries@igreens.org.uk
with
questions or comments about this web site.
|