Trade, Not Aid, For Africa

Monday, July 21, 2008

The man regarded by many as the world’s leading expert on global poverty is Oxford academic Paul Collier. He dedicates his recent book, winner of the Lionel Gelber Prize, to Daniel, apparently his young son. Collier says it’s Daniel’s world that could face massive global upheaval if a solution isn’t found to relieve the ever deepening poverty of almost 50 African states whose populations taken together number a billion people. World poverty is declining, and some countries (China and India the best known) are on the way to affluence. But Collier, an African specialist, who is also a graceful writer, fears that the states he knows so well are headed in the opposite direction: Things are getting worse year by year. “By the turn of the millennium they were therefore poorer than they had been in 1970.”

His book has numerous strengths, but the most important one is that it’s based on rigorous and tested analysis, statistical evaluations and highly credible scholarship. There is none of the half-baked theorizing or demagoguery that mars much public discussion on Africa as special-interest groups blame the problem on Western society, particularly international business. (Many disdain, sometimes even hate international business.) In fact, these countries are usually left behind because of internal factors: corruption, coups, civil wars, geography and governance. The solution is discernible, but difficult. Collier puts it this way: “We cannot rescue them. The societies of the bottom billion can only be rescued from within. In every society of the bottom billion there are people working for change but usually they are defeated by the powerful internal forces stacked against them. We should be helping the heroes.”

Collier is not opposed to programs of financial aid, but even when well managed, they can’t bring about what’s required. Aid is helpful (if well stewarded), but trade is the more effective vehicle: regional trade and international trade that, over time, create the economic context and local governance wherein jobs develop and poverty diminishes. But he faults his fellow citizens of Western societies for ignorance of the role and value of trade policy. The consequence is that ill-informed (if not mischievous) advocacy groups seize upon African poverty and prescribe solutions that are catastrophic, for example, an encouragement of trade barriers plus an increase in foreign aid. Talk about a disincentive.

Or take a case Collier reveals of a large church-related charity in Britain whose campaign a few years ago claimed that a slight reduction in African trade barriers had promptly cost the region a disastrous $272-billion. This number, the group said, came from an “expert in econometrics” whose work was then verified by a “panel of academic experts.” However, when Collier read the actual study and uncovered the panel, he concluded the charity was “a little economical with the truth.” (Its author was a young but unpublished Marxist and the panel was two men he chose himself who weren’t even known for trade expertise.) Collier, dismayed that a large charity funded by donations from church people would act this way, decided to respond. He sent the study to three world-respected trade authorities, one from Columbia University, one from the London School of Economics, one the editor of the journal The World Economy. The result: They all decided the study was deeply misleading and wrote a joint letter warning against it.

There’s a lesson in that for Canadians. We ought to learn — on our own, not by swallowing superficial ideological preachments — more about the impact that trade, regional and global, can have on the future of the poverty-stricken people of our world. The perspective of our greatest living expert, Paul Collier, so deserving of his Gelber Prize, is the natural place to start.

Source: National Post (link opens in a new window)

international trade