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Free Trade Fact of the Day

Posted By Conn Carroll On March 25, 2008 @ 11:29 am In International | Comments Disabled

Today’s Free Trade Fact of the Day [1] comes from University of Adelaide economics professor Kym Anderson and Copenhagen Consensus organizer Bjorn Lomborg who write in the Taipei Times [2]:

Free trade would lead to an overwhelming boost to welfare everywhere, but especially in the developing world. Grasping these benefits is potentially one of this generation’s greatest challenges. Increased negative sentiment could have the worst possible result: not just Doha’s failure, but also the raising of trade and immigration barriers. These barriers remain largely because further liberalization would redistribute jobs, income, and wealth in ways that governments fear would reduce their chances of remaining in power — and their own wealth in countries where corruption is rife.

The greatest hope is thus getting the Doha round back on track.

But there is a big difference between a low-quality result and one that is more comprehensive. If little more is achieved than phasing out farm export subsidies and a modest reduction in agricultural domestic support, our analysis shows that developing countries as a group would gain nothing, while high-income countries would gain just US$18 billion per year by 2015.

By contrast, if developing countries cut their tariffs by the same proportion as high-income countries, and services and investment were also liberalized, the global annual gains could climb as high as US$120 billion, with US$17 billion going to the world’s poorest countries. Moreover, the long-term impact of free trade is huge. Recast as after calculating the net present value of the stream of future benefits, a realistic Doha outcome could increase global income by more than US$3 trillion per year, US$2.5 trillion of which would go to the developing world.


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URL to article: http://blog.heritage.org/2008/03/25/free-trade-fact-of-the-day-14/

URLs in this post:

[1] Free Trade Fact of the Day: http://www.foundry.org/2008/03/06/free-trade-fact-of-the-day/

[2] Taipei Times: http://www.taipeitimes.com/News/editorials/archives/2008/03/25/2003407045

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