Free trade benefits the poor

Free trade through capitalism and globalisation are the best ways to help the world's poor, says author Johan Norberg in his book, "In Defence of Global Capitalism." Furthermore, he says, those who are opposed to free trade and "sweatshop labour" are usually Western elites, who expect developing countries to meet impossible labour standards equal to those of the Western world.

In an interview with Reason magazine's Nick Gillespie, Norberg argues that developing countries that have experienced the most progress over the years are ones that have increased trade with other countries:

  • Over the past 30 years, chronic hunger and child labour have been reduced by 50 percent; over 20 years, 200 million people have come out of absolute poverty (defined as earning less than $1 a day).

  • Globalisation has helped promote the rights of women in business, education, property and other areas.

  • Boosting a country's gross domestic product (GDP) also improves environmental conditions; countries that reach a GDP of $10,000 per capita show a positive correlation of economic growth with cleaner air and water.

  • In a typical developing country, American multinational companies pay eight times the average wage of other employers in that country.

    Norberg points out that every wealthy country began with sweatshop labour decades, even centuries ago. Likewise, developing countries, many of which have little infrastructure and capital to work with, are now going through the same transition. As multinational companies move in, they tend to improve working conditions through more capital and as a result, pay higher wages due to increased labour productivity.

    Sources: Nick Gillespie (Reason magazine), Globalisation Stories, Poor Man's Hero: Part I, and Globalisation Stories, Poor Man's Hero: Part II, A World Connected; and Johan Norberg, In Defence of Global Capitalism, Cato Institute; September 1, 2003.

    For Part I text

    For Part II text

    For more on Benefits of Trade

    FMF Policy Bulletin/ 21 December 2004
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