New study explores strengthening links between trade, growth and poverty reduction

A study on Trade, Growth and Poverty Reduction by T N Srinivasan, the Samuel Park Jr Professor of Economics at Yale University, was commissioned by the Commonwealth Secretariat, prompted by concern that the poorest people and the most vulnerable and marginalised countries are failing to benefit sufficiently from the global economic system.

This is despite the various action programmes such as the Doha Development Round of the World Trade Organization (WTO), the United Nations-led Millennium Development Goals, and the Monterrey consensus. Some observers have questioned whether these countries have made sufficient efforts to contribute to achieving their developmental objectives.

Professor Srinivasan explores the scope for strengthening the links between trade, growth and poverty reduction through partnership between developed and developing nations, including co-operation beyond trade talks and regional trading arrangements.

He argues that a coherent analytical framework is essential for understanding the mechanics of the interaction between trade and development in the specific context of each country and the scope for public policy innovation. He firmly rejects the ‘one-size-fits-all’ approach to co-operation between developed and developing nations.

Among his specific recommendations for making the global partnership more effective is for “transparent mechanisms that would select the most qualified candidates” to head the international financial institutions. He called for scrapping the conventions that the President of the World Bank is nominated by the USA and the Director of the International Monetary Fund by Europe.

Another of his concerns is that each round of multilateral trade talks takes a long time to conclude and because of this “WTO rules remain on the books for a long time after they have become irrelevant or are in urgent need of amendment.”

The study findings were first presented in August 2008 at a conference in New Delhi, India.

Edwin Laurent, Head of Trade at the Secretariat, who was one of the discussants at that conference, said: “This study should result in a fuller and a more holistic appreciation of the underlying challenges facing the most vulnerable and marginalised developing countries that are failing to share in the fruits of globalisation.

“It is a noteworthy contribution to the search for optimal domestic and international policies to advance the economic interests of those countries and contribute to their growth and development.”

Secretariat Links:

• Economic Development

Related Websites:

• Publications