Hunger: Both Aid and Trade
Khalid Hussain asked:
Hunger has many faces. It can be temporary or chronic. It can mean caloric inadequacy or nutrient deficiency. It can be rooted in failed governments or poorly performing markets. It can be lessening, as in Asia, or worsening, as in Africa. And so on. The essential point, however, is that ending hunger requires both the alleviation of specific problems and the eradication of its root cause, poverty. Aid is well-suited for relieving temporary deprivation through emergency assistance. It also can correct nutrient deficiencies through fortification. It often is a necessary response to dislocations from civil unrest, stagnant economies or natural disasters, as Hurricane Katrina so vividly illustrated. Aid is not well-suited for redressing chronic hunger or caloric deficits as donors will weary of it. Moreover, free food displaces commercial production and development. Aid also does not help well-functioning markets get established and grow. And, it can be disruptive to self-sustaining growth where hunger is declining. On the other hand, trade is ill-suited for emergencies, which by their nature reflect a breakdown in normal communications and commerce. It also is ineffective in serving populations that lack the means to help themselves, whether they are infants and children or the abject poor. Trade works best in jumpstarting economic development, creating wider markets for local production and increasing the reliability of supplies. Too many believe that developing countries have nothing to contribute to liberalization and little to gain from their own reforms. Nothing could be further from the truth. While the average U.S. agricultural tariff under the WTO is 12 percent, it is over 30 percent in the EU, over 50 percent in Japan, 66 percent in Korea and more than 110 percent in India. The world average is more than five times the U.S. level.
According to recent World Bank study we underline the need for mutual reductions in trade distortions:
• Comprehensive global trade reform would increase global welfare by nearly $300 billion per year;
• Developing countries stand to capture 45 percent of this gain;
• Agricultural trade reform accounts for roughly two-thirds of the welfare gain for developing countries, or about $100 billion; and
Market access reforms by developing countries increase their own welfare; they also will help prompt the developed-country reforms poor countries seek. It is a potential win-win for them. Developing countries should not be resisting market access concessions. Rather, they should exchange them for what they can gain in both trade and aid from agreeing to the reforms they need to make to accelerate their own development.
Larry
Hunger has many faces. It can be temporary or chronic. It can mean caloric inadequacy or nutrient deficiency. It can be rooted in failed governments or poorly performing markets. It can be lessening, as in Asia, or worsening, as in Africa. And so on. The essential point, however, is that ending hunger requires both the alleviation of specific problems and the eradication of its root cause, poverty. Aid is well-suited for relieving temporary deprivation through emergency assistance. It also can correct nutrient deficiencies through fortification. It often is a necessary response to dislocations from civil unrest, stagnant economies or natural disasters, as Hurricane Katrina so vividly illustrated. Aid is not well-suited for redressing chronic hunger or caloric deficits as donors will weary of it. Moreover, free food displaces commercial production and development. Aid also does not help well-functioning markets get established and grow. And, it can be disruptive to self-sustaining growth where hunger is declining. On the other hand, trade is ill-suited for emergencies, which by their nature reflect a breakdown in normal communications and commerce. It also is ineffective in serving populations that lack the means to help themselves, whether they are infants and children or the abject poor. Trade works best in jumpstarting economic development, creating wider markets for local production and increasing the reliability of supplies. Too many believe that developing countries have nothing to contribute to liberalization and little to gain from their own reforms. Nothing could be further from the truth. While the average U.S. agricultural tariff under the WTO is 12 percent, it is over 30 percent in the EU, over 50 percent in Japan, 66 percent in Korea and more than 110 percent in India. The world average is more than five times the U.S. level.
According to recent World Bank study we underline the need for mutual reductions in trade distortions:
• Comprehensive global trade reform would increase global welfare by nearly $300 billion per year;
• Developing countries stand to capture 45 percent of this gain;
• Agricultural trade reform accounts for roughly two-thirds of the welfare gain for developing countries, or about $100 billion; and
Market access reforms by developing countries increase their own welfare; they also will help prompt the developed-country reforms poor countries seek. It is a potential win-win for them. Developing countries should not be resisting market access concessions. Rather, they should exchange them for what they can gain in both trade and aid from agreeing to the reforms they need to make to accelerate their own development.
Larry
Tags: Cause Poverty, Natural Disasters, Root Cause