Trade Policy and Global Poverty

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Trade Policy and Global Poverty

By William Cline
Institute for International Economics, 2004
344 pp. $29.95
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The Doha Round of trade negotiations has been called the "development round," because it is focused on trade liberalization that will help poor countries. Cline here attempts to answer the question of just how much help is possible through such liberalization. He draws extensively and imaginatively on scholarly research to estimate the static and dynamic impact of global free trade on developing countries. He finds that protection against imports from developing countries has a significant impact: global free trade would raise their GDP by 5.5 percent after 10 to 20 years and reduce world poverty by 20 percent-bringing more than 500 million people above the poverty line, defined as earning $2 a day. Roughly half of the benefit is due to liberalization of trade in agricultural products, which are much more important than textiles and apparel. And although much of the gain for developing countries comes from liberalization by rich countries, they also gain significantly (and increasingly over time) from liberalization among themselves. The study is well reasoned but closely argued, so much of it is difficult reading for non-economists. Still, its conclusions are accessible and noteworthy.