kunming log

THE SCHWARTZ CENTER FOR ECONOMIC POLICY ANALYSIS RELEASES A NEW STUDY ON WORLD TRADE

The World Bank underestimates the risks and overestimates the benefits of multilateral trade liberalization, according to a powerful new study released this month by the Schwartz Center for Economic Policy Analysis. Written by Lance Taylor, the Arnhold Professor of International Cooperation and Development, the study comes as many economists and policymakers are debating the future of the Doha round, the world trade talks that began in Doha, Quatar, in November 2001 but have repeatedly collapsed.

Some commentators have cited intractable differences between poor and wealthy countries regarding protection and development policies as a salient reason for the collapse. Yet any possible Doha agreement, Taylor shows, would offer developing countries, particularly those in sub-Saharan Africa, only limited gains, given the variability of such macroeconomic indicators as employment, income, government deficits, and trade deficits.

“When the analysis allows for a changing rather than a fixed government budget deficit,” he observes, “the African public balance often deteriorates, whereas the rest of the world’s fiscal position improves. Our study finds that if employment and income are variable, they may increase in sub-Saharan Africa, but in tandem with mounting trade deficits and foreign debt, rendering such advances temporary.” Taylor's conclusion is therefore that “developing countries would be ill-advised to follow the radical recommendations of the World Bank’s liberalization strategy insofar as it rests on results from the current trade models. At this point, there is every reason to demand serious revisions to proposals from developed countries prior to any revival of the Doha process.”

SCHWARTZ CENTER FOR ECONOMIC POLICY ANALYSIS is here.

posted by Aki @ 1:38 PM