Doha and the Poor

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The Economist's piece on trade negotiations and the poor bears careful reading. Here, they discuss the World Bank estimates for the benefits of trade liberalisation:

The Bank's most comprehensive trade model, for instance, estimates that if trade in industrial and farm products were fully freed, the one-off gains from reallocating resources more efficiently could boost income in developing countries by $86 billion by 2015 and pull an extra 30m people out of extreme poverty. Two-thirds of these would be in Africa.

A more plausible assumption, however, would split the difference between the American and European positions on farm trade and allow developing countries to cut their tariffs by much less than rich ones. This would raise developing countries' income by $16 billion by 2015. Only 2.5m more people would be freed from extreme poverty than if there were no deal at all. Sub-Saharan Africa would gain almost nothing and only 500,000 of its people would escape extreme poverty.

The Bank used to sound much more optimistic...

But note that:

Even the Bank's new estimates say that fully free trade in goods could boost Africa's income by more than, say, this year's much-hailed deal on debt relief.

The Bank's model is also known to understate long-term gains from innovation; it also leaves to one side any gains from trade liberalisation not stemming from the WTO process. Trade is still good for the poor.

Meanwhile, here's what the Bank is saying, and a recent speech by WB President, Paul Wolfowitz.

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