Though many developing countries around the world have been benefiting from aids from the developed nations and other donor agencies over the decades however, the new idea is that the capacity of third world nations such as Nigeria to witness rapid development, following the footsteps of China and India would be on its ability to engage in trading with foreign nations. Giles Bolton, author of Poor Story, on how globalisation and good intensions have failed the world’s poor elucidates that by embracing manufacturing and production of goods both for local consumption and export there may be hope.
Here’s a prediction: at some point in the 21st century, trade will make poverty history.
Much of Asia is already on the way to achieving this and, if it continues to grow at anything like its current rate, the regions left behind will eventually benefit. Their advantage in cheap labour costs will become large enough to draw in major new investment, despite problems of weak infrastructure and low capacity. Africa, together with other remaining poor markets, will finally boom...with a few exceptions.
The questions are: how long poor countries will have to wait for this to happen; what can they do to speed it up; and how those of us in rich countries can help?
There’s a rather facile question often asked about ending poverty — is it about aid or trade? The answer is that both have a role to play. But they are different. Where aid can only help to provide a better platform for long-term development (including a healthier and better-educated workforce), trade more- or-less is development.
Every single country that has banished mass poverty has done so by seeing its trade increase—— especially foreign trade. It’s not rocket science’— if you’re
a farmer or shirt-maker in a developing country, there’s more money to be made in selling to rich customers abroad than being restricted to dealing only with your poorer neighbours. Meanwhile, the foreign exchange earnings that this generates help other parts of the economy to import what they need to function effectively too.
If there’s any doubt about the potential of trade to reduce poverty, consider this: the main aim of the Millennium Development Goals — to halve the proportion of people in the world living in poverty by 2015 — is actually likely to be met. The reason is nothing to do with Africa, where recent improvements are relatively minor. It’s because of China and India’s progress — largely on the back of increased trade with rich Western markets — enabling poor producers to sell to many more wealthy consumers than they’d find at home.
In other words, it has been the custom of western shoppers and businesses that has helped hundreds of millions of Chinese and Indians out of poverty. This is not something we should take direct credit for (they did the hard work — we just bought stuff we wanted) but surely it is worth celebrating — the fastest reduction of mass poverty in the history of mankind.
The other element in this good news is that China and India offer us some clues, as individuals, about how we can also help other countries out of poverty.
What can we do to encourage Africa and other poor regions to move along the path trodden by China and India? Broadly, there are three ways western societies can help:
We can help countries to address internal problems such as weak infrastructure or slow customs posts (‘aid for trade’ can help here, and the good news is that it’s increasing, though not yet as quickly as is needed’.
• We can reform international trade rules to allow better access to our rich markets, and reduce our subsidies in the areas that hurt poorest countries most.
• We can consciously choose as consumers to buy more produce from the poorest countries, even if they currently come at a higher price. As individuals, it’s the third area where we could have the greatest direct impact— our actions as consumers — and the one which is the least explored.
Given that trading is the only way poor countries can actually achieve the economic growth that poverty reduction requires, what many of us have been missing is that we simply ought to buy more things made in poor countries. Doing so encourages industries to develop and become more globally competitive. It persuades shops and supermarkets to stock more produce from developing countries. It creates jobs and builds skills and experience. And it’s certainly more effective at promoting growth than funding charities to run projects. Two thousand years after the wise men made some Christmas purchases on the way to Bethlehem (see Africa’s gift below), perhaps the new holy grail is finding things to buy which aren’t just grown or mined in Africa and other poor countries, but processed and packaged there too. Benjamin Franklin once gave some advice to entrepreneurs which nowadays we’d be wise to take on more widely as a society of consumers: “Drive thy business, or it will drive thee”. So I suggest the slogan we need for 2008 is this: Buy African— and let poor people and countries truly help themselves.
More than two-thirds of all people surviving on less than $1 a day live and work in rural areas, either as small holder farmers or as agricultural workers.
International trade is worth $10 million a minute. But poor countries only account for 0.4% of this trade – half what it was in 1980.
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