In This Review

Fair Trade for All: How Trade Can Promote Development
Fair Trade for All: How Trade Can Promote Development
By Joseph E. Stiglitz and Andrew Charlton
Oxford University Press, 2006, 352 pp

In this timely book, Stiglitz and Charlton summarize the extensive literature on the relationship between trade and development and describe the impact of previous rounds of multilateral trade liberalization on developing countries. They urge that the current Doha Round be tailored to help developing countries and argue that although free trade is good for development in the long run, liberalization must be encouraged pragmatically, with a view to its effects on the poor, rather than ideologically. In particular, significant trade liberalization entails adjustment costs that need to be addressed directly. And developing countries that have poor capital markets, as most do, cannot take full advantage of the new opportunities created by liberalization. Accordingly, trade is not a substitute for aid; poor countries need both technical and financial assistance. The authors also find that the greatest gains to developing countries would come not from freeing up trade in agricultural goods, but from liberalizing labor markets (particularly for low-skill contract labor) and from opening the markets of developing countries to products from other developing countries.