International eco: Trade policy in practice Lect 10 part 5 (Anti …
International eco: Trade policy in practice Lect 10 part 5
Export led growth?
Difficult to say
: did high volume of exports and imports cause rapid economic growth or was it merely correlated with rapid economic growth:
High saving and investment rates could have led to both rapid economic growth in general and rapid economic growth in export sectors.
Rapid growth in education led to high literacy and numeracy rates important for a productive labor force.
These nations also undertook other economic reforms, besides opening up to trade
But, evidence points towards:
yes, they did
Are these associations enough to say that free trade leads to growth?
No free trade: Anti-globalization!? or anti-market failure..?!
Free trade is bad, because it allows rich-countries to abuse low-wage workers in developing countries
Yes, workers in developing countries are typically paid much less than those in rich countries
Yes, working conditions in developing countries are typically much worse than those in rich countries
But, question should be: would they be better off without trade?
Free trade = rich world taking advantage of poor workers ?!?
Typically, workers are better off
Hard to find protests against trade by developing country workers
Usually, developing countries are against labor standards, because they are afraid they will be used for protectionist motives by rich countries
''Why, all of a sudden, when third world labor has proved to be
competitive, do industrial countries start feeling concerned
about our workers?''
Youssef Boutros-Ghali, former Egyptian minister of Foreign Affair
Terrible labor standards (= market failure) are set by the country itself, whether there is trade or not
: But this doesn't mean: keeping quiet about working conditions
Solution? A system that monitors wages and working conditions and makes this information available to consumers
This policy would have a limited direct effect. A large majority of workers in low- and middle-income countries do not work in the export sector
it can set the example, and trickle down into policy changes in the country itself (workers in domestic sectors start to also demand better standards)
Products could be certified as made with acceptable wage rates and working conditions.
Anti -globalization (2
Trade is bad for the environment
Is it trade, or consumption and production itself?
effect is an issue!
Similar to labor standards, environmental standards are typically opposed by developing countries itsel
afraid that standards are used as protectionist measures
afraid for their own development