According to a 2013 study by the World Bank, 75% of the income gains accruing to the bottom 40% of income earners in 118 were a result of economic growth, not labor unions, not minimum wages, etc. [1] If you want to enrich the poor of the world, than your first priority should be economic growth. And economic and trade liberalization is what can deliver that growth. According to a study presented to the Asian Development Bank, which examined poverty reduction in 40+ developing countries: ...openness to trade and small size of the government are robustly associated with poverty reduction...civil liberties that encompass various types of important economic freedom such as property rights, rule of law, etc., also contribute significantly to poverty reduction...All these suggest that economic freedom is as much important for economic growth as for poverty reduction. [2] Two economists examined 141 episodes of trade liberalization, and after controlling for other well-known determinants of growth, found that the impact of liberalization (lowering barriers to free trade) on economic growth was both positive and substantial. Acording to a summary of their research, “Per capita growth of countries liberalization was some 1.5 percentage points higher than before liberalization, and investment rates were 1.5- 2.0 percentage points higher.” [3] According to a review of the literature on trade and poverty: The large body of empirical work on the topic strongly supports the theoretical presumption that rade liberalization reduces poverty on average and in the long run. Moreover, there is no evidence that it leads to an increase in poverty. [4] Property rights have also been found to decrease poverty pretty dramatically. According to one study, “[the results] show unequivocally that well-specified property rights enhance the well-being of the world’s poorest inhabitants” [5]. Lastly, according to research from economist James Gwartney: ...countries with higher levels of economic freedom in 1980 and larger increases in economic freedom during the 1980s and 1990s achieved larger poverty rate reductions than countries that were less free. [6] In short, economic freedom can end world poverty. Citations: [1] elibrary.worldbank.org/doi/pdf/10.1596/1813-9450-6568 [2] eastwestcenter.org/sites/default/files/private/ECONwp060.pdf [3] oecd.org/site/tadicite/50286917.pdf [4] oecd.org/trade/benefitlib/46353240.pdf [5] object.cato.org/sites/cato.org/files/serials/files/cato-journal/1998/11/cj18n2-4.pdf [6] https://campus.fsu.edu/bbcswebdav/orgs/econ_office_org/Institutions_Reading_List/10._Economic_Freedom,_Political_Institutions_and_Poverty/Connors,_J._and_J._D._Gwartney-_Economic_Freedom_and_Global_Poverty
Posted on: Mon, 22 Sep 2014 16:00:01 +0000
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