Free Trade Fact of the Day
Conn Carroll /
Robert Samuelson pens a must-read op-ed today on trade and poverty:
What’s the world’s greatest moral challenge, as judged by its capacity to inflict human tragedy? It is not, I think, global warming, whose effects — if they become as grim as predicted — will occur over many years and provide societies time to adapt. … the most urgent present moral challenge, I submit, is the most obvious: global poverty.
The solution to being poor is getting rich. It’s economic growth. … Just recently, the 21-member Commission on Growth and Development — including two Nobel-prize winning economists, former prime ministers of South Korea and Peru, and a former president of Mexico — examined the puzzle. … The panel identified five common elements of success:
- Openness to global trade and, usually, an eagerness to attract foreign investment.
- Political stability and “capable” governments “committed” to economic growth, though not necessarily democracy (China, South Korea and Indonesia all grew with authoritarian regimes).
- High rates of saving and investment, usually at least 25 percent of national income.
- Economic stability, keeping government budgets and inflation under control and avoiding a broad collapse in production.
- A willingness to “let markets allocate resources,” meaning that governments didn’t try to run industry.
… [the] broad lessons are clear. … Globalization works. Countries don’t get rich by staying isolated. Those that embrace trade and foreign investment acquire know-how and technologies, can buy advanced products abroad, and are forced to improve their competitiveness.