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Reducing Global Poverty and International Trade

Reducing Global Poverty
According to recent economic forecasts, the global economy is facing a period of increasing uncertainty, making it crucial to revitalize trade and boost economic opportunities. Trade has been a key driver of economic growth and poverty reduction, with more than 1 billion people lifting themselves out of poverty since 1990 due to growth spurred by trade. As such, it is important to prioritize measures that promote trade, as this can help in reducing global poverty and fostering economic growth.

Reducing Global Poverty and International Trade

Developing countries have increasingly benefited from international trade as it serves as a powerful tool for driving economic growth, generating job opportunities and reducing global poverty. Today, these nations account for 48% of global trade, up from 33% in 2000, as they gain access to foreign investment and technology transfer which can increase productivity and promote economic growth.

International trade plays a crucial role in boosting economic growth, creating job opportunities and increasing incomes, especially for those living in poverty. Samsung is an excellent example of a company that has contributed significantly to the economic growth of many countries by creating millions of jobs through its electronics and mobile phone businesses. The company employs a total of 266,673 people worldwide. Walmart, the world’s largest retailer, operates in 24 countries with more than 10,000 stores and has played a role in reducing global poverty through its use of international trade. As the largest employer in the world, Walmart has a total of 2.3 million employees.

However, certain limitations still impede the capacity of the extremely poor to benefit from the broader economic gains. These constraints include rural poverty, fragility and conflict, informality and gender disparities.

Mitigating Downsides of International Trade

While international trade liberalization can lead to enhanced efficiency and sustained economic expansion, it may also trigger short-term adjustment costs and negative consequences for specific groups of workers. To mitigate these potential downsides, it is crucial to foster supply capacity and implement social safety nets.

One way to provide technical and financial aid to developing countries is through the Aid for Trade Initiative. Aid for Trade is an initiative that has the aim of supporting developing countries, particularly the least developed countries, in overcoming trade-related obstacles and increasing their ability to engage in international commerce.

Many developing countries face supply-side and infrastructure barriers that constrain their trade potential. The Aid for Trade Initiative encourages developing country governments and donors to recognize the role of trade in development and mobilize resources to address trade-related constraints. Aid for Trade also provides technical and financial assistance to developing countries, helping them build supply-side capacity, improve trade-related infrastructure and strengthen institutions.

The initiative seeks to minimize negative impacts on vulnerable populations while maximizing the economic benefits of trade, such as reducing global poverty. It also promotes deeper coherence among Aid for Trade partners and an ongoing focus on Aid for Trade among the trade and development community. By doing so, the initiative helps countries to better leverage the benefits of trade while minimizing the negative effects on vulnerable populations.

Next Steps in Reducing Global Poverty Through Trade

To unlock the full potential of trade, reforms are necessary to remove constraints, decrease transaction costs, promote competition and establish clear guidelines for cross-border commerce. Efforts should be redoubled to lower tariff barriers, eliminate trade-distorting regulations and encourage investment in infrastructure that facilitates market access.

It is also necessary to lower trade costs, improve the enabling environment, intensify the poverty-reducing effects of integration policies, manage and mitigate risks that the poor face, as well as improve data analysis to inform policy decisions. Furthermore, it is urgent to address the root causes of global trade tensions, bolster the rules-based trading system and pursue further trade liberalization to drive inclusive and sustainable economic growth, bringing the world closer to reducing global poverty.

In conclusion, the connection between global poverty and international trade is clear, with trade being a key driver of economic growth and reducing global poverty. However, challenges remain in ensuring that the benefits of trade reach those living in poverty. It is essential to promote a fair and equitable global trade system that supports developing countries in overcoming trade-related obstacles and increasing their ability to engage in international commerce. By pursuing these efforts, individuals can continue to leverage the benefits of trade while minimizing the adverse effects on vulnerable populations and ultimately, drive inclusive and sustainable economic growth that reduces global poverty.

– Nkechi First
Photo: Flickr

10 Facts About the Cycle of Poverty

10 Facts About the Cycle of Poverty
Poverty and homelessness spread throughout the world, despite efforts being made to alleviate these issues. Social psychology studies explain factors that contribute to the cycle of poverty, as well as what to focus to prevent them. Below are 10 facts about the cycle of poverty for consideration.

10 Facts About the Cycle of Poverty

  1. Homeless and poor people often elicit a neural reaction of disgust, according to fMRI studies conducted by looking at brain activity. These studies were done by psychologists Lasana Harris and Susan Fiske. This creates a process of dehumanization. These outgroups (i.e. impoverished persons) are considered to experience different complex human emotions, which feeds into acceptance of poverty. People in poverty can be viewed as responsible for their situation and not being “as human” as more privileged people, Harris and Fiske found.
  2. In a certain way, media attempts to humanize these people by giving personal stories of homelessness or poverty. However, this has a backfiring effect. Media over-exposes human suffering to the point of desensitization, leading citizens to ignore it and decrease caring attitudes, according to studies conducted by psychologists Elizabeth Paluk, Eldar Shafir, and Sherry Wu.
  3. Most poverty alleviation methods focus on only one factor, such as income per capita. However, poverty should be assessed not only by economic factors, but social, moral and political as well. “The use of income alone draws policy attention away from the underlying causes of poverty and processes that perpetuate poverty and obscures the social and health dimensions of poverty,” social psychologists Parthiban Gopal and Nor Malina Malik stated.
  4. Evaluating poverty in Malaysia, Gopal and Malik found out that women who escaped poverty relied on herself, planned long term, took risks, used her resources and was courageous about trying new ventures and possibilities to make life better. Programs should not just provide aid for those in need but should facilitate mechanisms of self-reliance that teach people in poverty ways to take risks and use their resources to escape the cycle, according to Gopal and Malik.
  5. The cycle of poverty perpetuates disease due to inaccessibility to resources and poor living environments, that in turn perpetuates the cycle of poverty due to inability to work and costs of treatments.  According to Health Poverty Action, diarrhea, pneumonia and malaria account for nearly half of all child deaths globally. These are very treatable diseases but are often life-threatening in impoverished areas.
  6. Health Poverty Action (HPA) is a global project that strives to relieve health issues in impoverished countries. In Ethiopia, 7,412 women were able to access government health services in the areas this organization works. This represents an increase of 38 percent since the start of the project in 2016. In Nambia, for example, HPA facilitated a 55 percent reduction of multi-drug resistant tuberculosis cases compared to 2016.
  7. According to Gopal and Malik, the main causes of urban poverty were the low level of education, lack of job opportunities, large family size and lack of access to social facilities. Organizations such as the HPA, that are providing more health, reproductive and education access to these impoverished areas can help break this cycle.
  8. The lack of jobs in rural poor environments causes the poor to migrate to urban areas in hope of finding jobs, furthering perpetuating urban poverty. Therefore, policies should focus on creating more employment opportunities in rural areas as well.
  9. The World Bank is partnering with China, where employment opportunities have been flourishing, to promote job creation and economic development in struggling countries. They work with developing countries’ governments to advise them in creating a better economy and society for the poor, according to Axel van Trotsenburg, Vice President of Development Finance.
  10. Climate change also gravely affects impoverished countries. In Africa, where the years of life lost to climate changes are predicted to be 500 times higher than in Europe, two-thirds of the workforce work in agriculture. However, countries can adapt to this by reducing their emissions and promoting a more sustainable way of living. HPA suggests wealthy countries, like the U.S., need to step up and set an example for developing countries.

These 10 facts about the cycle of poverty can improve understanding of this important issue. It is important to understand humans unconscious bias of dehumanization towards impoverished people so that they can consciously change it.

In order to reduce poverty, solutions must focus on the multi-dimensional causes of poverty. It is also vital to examine examples of people who have escaped the poverty cycle. Projects like HPA are facilitating much positive change by increasing accessible health services and reducing poverty in countries around the world. With a greater focus on sustainable living and more funding for programs like HPA, organizations can combat the global poverty cycle.

Anna Power

Photo: Flickr

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The Era of Inclusive Business

Inclusive_Business
In Fall 2015, the Sixth Annual Forum of the group Business Call to Action (BCtA) was held in New York City to discuss the increasingly popular concept of inclusive business.

The inclusive business model consists of private sector companies collaborating with people at the “base of the pyramid” — that is, those in developing countries with low incomes or who live in poverty — to improve livelihoods and expand market opportunities.

In this model, the global poor are not viewed simply as consumers or recipients of charity. Rather, they are involved in every level of business from production to distribution to management.

The benefits to the global poor of this business strategy are obvious. By connecting with successful companies from more developed nations, participants gain access to goods and services that are better, cleaner and more cost-effective. Furthermore, the model creates new jobs and provides resources for people to learn marketable skills.

Businesses are also able to access new markets, customer bases and sources of supply. In addition, partnering with NGOs and other businesses in more developed nations often helps build reputation and credibility.

Speakers at the BCtA Forum stressed that business interests and development goals are closely intertwined. The Forum also highlighted the importance of improving the health of people in developing nations. BCtA explained that a healthier population leads to more stable consumer markets and more productive workers.

Untapped Potential for Developed Countries

Accenture’s Financial Services Operating Group has estimated that the inclusive business model presents a $380 billion market opportunity. However, generally speaking, companies in developed nations have underestimated the value of inclusive business.

A Care International poll showed that 77 percent of 30 banks surveyed were largely uninterested in establishing long-term financial connections with poor people in developing nations.

The concept of inclusive business is not just theoretical in nature — its success has already been proven. For instance, agronomists from German chemicals giant BASF ran training programs in India for smallholder Samruddhi farmers and the results were staggering. Within just three years, the farmers nearly doubled their grain yields and their incomes increased by 64 percent. In addition, BASF saw sales of crop protection products consequently increase by 60 percent.

In order to successfully leverage this business model, companies should work in collaboration with the global poor instead of simply in their service. Including communities’ voices ensures that the products, training and technology being introduced are useful and appropriate. Moreover, these communities are sources of talent, so folding them into the business process will encourage profitable innovation relevant to their respective regions.

Perspectives on the relationship between business interests and SDGs are changing. There is a consensus among groups like BCtA that government, NGOs and civil society need to collaborate with the private sector in order to able to achieve SDGs. Indeed, fully embracing the era of inclusive business could be the next step in reducing global poverty.

– Joe D’Amore

Sources: Business Fights Poverty 1, Business Fights Poverty 2, Business Fights Poverty 3, G20 Challenge
Photo: Flickr