Is Free Trade the solution to Third World Poverty?
 

I was hanging out recently at a cafe near my office and got into an interesting conversation with an investment banker vacationing from the US. He was emphatic that free trade and open markets and open competition are the best solution for third world poverty. I, for one, am very concerned with this topic since chronic poverty afflicts a large majority of the globe.

While, in theory, neo-liberal free trade prescriptions seem attractive aren't there cultural and political barriers to making it happen? Even if a country were to adopt such a system wouldn't it be defeated by corrupt self-dealing and crony capitalism and monopolist practices? What other systems need to be in place or arise simultaneously for this scheme to work? Aren't the major existing economic powerhouses creatures NOT of free markets but protected local markets?

An element which is clearly missing in most grandiose plans currently being presented in support of "free trade" is the motivation of those presenting them.

"Free trade" was never the concept of "grab as much as I can by using cheap labor and force our overpriced products on the cheap labor force and drain more money out of them". That's not free trade - it's abuse.

It would also benefit those in poverty if your merchant banker friend could remember to pay the bills owing to those in lower economic circumstances.

In theory, free trade benefits everyone. FDI investments from multinational corporations with favoring cultrual and political conditions will help foreign countries establish a stronger "temporary" economy. It will be upto these countries to build some sort of competitive advantage thru education or skilled workers or economy of scale in order to bounce from 3rd world status IMO.

third world countries have to get rid of their corruption and political barriers of entry before any non government money to roll in.

No more 3rd world povery = kiss 1st world riches buh-bye

Eventually, anyway. :)

You think it's just third world countries who have this problem chowda?? :winkwink:

well, he asked about third world countries :)

any country with a favorable currency and political stability that has some sort of competitive advantage that a country lacks should get some sort foreign direct investments.

i should open a factory in vietnam to prove that i still remember this material

Free trade only benifits those who are able to trade in the first place.
free trade has nothing really to do with poverty is you ask me. The problem with with poverty is not many people in the postision to do anything really care. Poverty can be wiped out in a day if people really wanted it to be. There is enough money in private hands to do tons of good stuff but that will never happen.

The global mentality is you are what you have and everyone wants a 1 up on the other guy. Plus third world country = third world rules which the govt cant do anything about, if you know what i mean.

There is too much money in the business of poverty to end poverty

Watch the movie/documental 'darwin's nightmare' and you've got your answer.

i mean it pretty much sums up your question, free trade at full steam at an unbelievably poor tasmanian town that's exporting 500 TONS of fish every DAY.

And children are dying of famine every day on the streets literally steps away from that factory.

Big russian cargo planes come in with weapons and ammunition from europe for the war in angola and sierra leone and whatnot and lifts up with tons of fish, leaving war and poverty behind.

yay for free trade, i'm not saying communism or some other system is an option, but capitalism doesn't help one bit to 'third world poverty' and this movie is the best example, UN, IRC, HTC, UNICEF and whatever the fuck nice acronym they can come up with is just another business (i know this first hand)

-education- would be your best bet as a solution.

:thumbsup

An interesting point: the Japanese, South Korean, and Singaporean economies evolved from poor economies to developed economies through MIXED economic policies. Ie., modified markets and using import controls.

Free trade world wide and the eliminations of poverty.

Or me having a 12 inch dick and being 25 again.

Which one do you think the more likely?

Take away the subsidies and trade protections so many enjoy, mostly farmers, and what do you have?

More food imports coming from poor third world countries and more third world billionaires.

Gordon Brown actually thinks the solution to illiteracy in Africa is to pump into it billions of dollars. The arm salesmen were on the first plane they could find, usually their own, to visit all their new and old customers.

Sorry for being a realist.

Is there any space in this equation for the economic reality of comparative advantage?

You're kidding, right? Although one of the most intuitive theories within economics, the theory of comparative advantage is very unlikely to be successfully put into practice, because it would create far too many ripples, free trade or not. I don't think it's realistic to take it into account at macro level. It's much more useful (and easier practiced) at micro level these days.