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Trade and the MDGs: how trade can help developing countries eradicate poverty.

Article Excerpt
Developing countries depend on national and global economic growth to achieve the Millennium Development Goals (MDGs) by 2015. In this regard, international trade is recognized as a powerful instrument to stimulate economic progress and alleviate poverty. Trade contributes to eradicating extreme hunger and poverty (MDG 1), by reducing by half the proportion of people suffering from hunger and those living on less than one dollar a day, and to developing a global partnership for development (MDG 8), which includes addressing the least developed countries' needs, by reducing trade barriers, improving debt relief and increasing official development assistance from developed countries.

Poverty is the most crucial plague of our times. It is commonly agreed that in order to reduce the proportion of people living on less than $1 a day, developing countries need to substantially accelerate their economic growth by carefully opening their markets. The standard rationale is that trade liberalization improves efficiency in the allocation of scarce resources, enhances economic welfare and contributes to long-term economic growth. However, while there might well be long-term gains from opening their markets, liberalizing economies are likely to face some short-term adjustment costs. This is because, as economies open up, a country's imports use existing channels, while its new exports opportunities often come from different sectors that have yet to sufficiently develop production capacity.

The international community recognizes the importance of trade for development...

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