Presentation on theme: "By Miriam W O Omolo Institute of Economic Affairs Monday 22 June 2009, Country Inn, Jaipur, India."— Presentation transcript:
By Miriam W O Omolo Institute of Economic Affairs Monday 22 June 2009, Country Inn, Jaipur, India
Definition of terms: trade openness, poverty Linking trade openness and poverty African country experiences The Missing link(s) Conclusion and Way Forward
Moving from inward looking trade strategies to policies that facilitate integration to global economy ◦ Tariffication of quantitative restrictions ◦ Removal of trade barriers such as tariff and non-tariff barriers to trade ◦ Export promotion initiatives i.e. export processing zones Free Market Access for foreign goods and services ◦ Doha negotiations ◦ Economic partnership Agreement (ACP-EU) The Key Objective is to increase overall and individual welfare of those involved in trade.
Inability to meet one’s daily food consumption requirement-food poverty Inability to meet both food and non-food requirements- Absolute Poverty In expenditure terms-spending less than 1USD per day Poverty Indicators: ◦ Welfare-Income, expenditures ◦ Basic Needs-Clothing, education, nutrition, health etc ◦ Capability: perception, dignity, civil liberty and security
Trade liberalization is expected to raise the level of income since resources are reallocated as explained by the theory of comparative advantage. Trade liberalization affects the direct determinants of poverty i.e. income/wages, prices, government expenditure etc
TDP project: Kenya, South Africa, Tanzania, Uganda and Zambia Phases of Trade Liberalization: ◦ Import Substitution Industrialization ◦ Structural adjustment Programmes-unilateral liberalization (IMF and World Bank) ◦ Reciprocal Liberalization (WTO, regional and bilateral agreements) Trade Liberalization has resulted in different gainers and losers, ◦ e.g. Kenya, the cotton sub-sector vs. telecommunication
There is strong debate whether trade liberation has led to sustained economic growth Most countries have not achieved international competitiveness –especially with agricultural products being the main exports-Kenya, Uganda, Tanzania, Zambia There is no sufficient evidence to conclude that trade liberalization has resulted in poverty reduction
Wrong presumption ◦ Trade liberalization does not guarantee equitable distribution of gains/losses to individuals, sectors, countries or regions. Trade liberalization as a panacea for development-Trade is a component of development Export Diversification and intensification ◦ Continued trade in primary products with little progress in high value addition and movement into the global value chain
Concentration on export promotion with little focus on productivity growth through learning, knowledge accumulation and innovation through trade Innovation –strong missing link? The TDP Project – Empirical research establishing the impact of trade liberalization on poverty.
Examine trade liberalization as a component of development There is a lot of ongoing debate on trade liberalization and poverty…..There is need for a ‘big push’ ◦ Productivity growth through innovations ◦ Institutions and regulations to facilitate innovations