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:

  1. Openness to global trade and, usually, an eagerness to attract foreign investment.
  2. Political stability and “capable” governments “committed” to economic growth, though not necessarily democracy (China, South Korea and Indonesia all grew with authoritarian regimes).
  3. High rates of saving and investment, usually at least 25 percent of national income.
  4. Economic stability, keeping government budgets and inflation under control and avoiding a broad collapse in production.
  5. 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.