Bitching Brew

Monday, October 10, 2005

Little-known fact about the poorest countries.

Did you know that - as of August 2004 - 45 of the world's (50) least developed countries are net food importers? No surprise that their people are starving. We're constantly told that liberalising trade and cutting farm subsidies will help these deeply impoverished countries to export their agricultural produce to us, the rich. In the medium to long-term, that's probably accurate. And certain developing countries would receive immediate benefits, no doubt. However, the issue is much more complicated than most people realise. Here's a brief extract from a newspaper article on this very topic, by Arvind Panagariya, a highly-respected economist.

"Current production and export subsidies flood world markets with the subsidised products and drive their prices down. The removal of these measures will raise the prices of the products in question. This will benefit the exporters and hurt the importers of these products."

Think about that for a second. Our current trade policies are ruining developing countries. Yet removing those policies, without applying the greatest care, could make many of those countries worse-off. It's a damnable catch-22.

I wrote an article on a related issue some months ago. In my opinion, it's one of the most important applied problems in economics right now. I may upload and link to the article at some stage, though it wasn't stellar by any means. I'll actually be writing my dissertation about the effects of EU trade policy on the textile exports of developing countries. I'll keep you updated on my research over the next several months, and I'll do my best to be pithy. (Or my few dozen readers may vanish.) A truly fascinating topic, I'm sure you'll agree. :p

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