Trade Barriers and Their Influence on Global Poverty

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SEATTLE, Washington — Since 1990, one billion people have been raised from poverty largely due to the increase of trade in developing countries. Trade has helped to increase growth and enable developing self-sustainability. Currently, other African countries purchase only five percent of Africa’s imported food. This is in part due to trade barriers between regions. Breaking down these barriers would improving food security and increase incomes for poor farmers.

Trade and Poverty

Trading is difficult for the rural poor because they lack access to modern seeds or fertilizers to boost their yield. Additionally, they often can’t afford the tariffs imposed on trading. Due to large gaps in funding, governments have been unable to support and promote trade by improving infrastructure, education and overall health.

“The Recent World Bank estimates that South Asia alone requires investments between $411 billion and $691 billion to connect the region better.” The World Trade Organization (WTO) and the World Bank Group have already taken large steps toward reducing poverty and increasing access to trade. The WTO’s Trade Facilitation Agreement lowers trading costs and sets policies to make markets more accessible for the poor with a focus on specific rural areas. However, there is still much more that can be done.

Data Analysis as a Solution

Better data collection and analysis is one way to improve poverty through trade. Increased mobile connectivity in rural areas has enabled Kenyan and Ethiopian farmers to benefit from more accurate information on prices and market conditions via SMS updates. With the addition of this feature, 75 percent of farmers reported an increase in their incomes. Also, poor traders gain a voice through SMS surveys, enabling them to identify any corruption in their area.

Improved collection and analysis of data can facilitate the design and implementation of new policies. For example, it can help governments and organizations to improve systems like social safety nets and trade policies. Social safety nets can increase a person’s ability to persevere through unexpected economic changes and help them find ways to improve their lifestyle. Trade policies can do more to manage risk. In East Africa, a reduction in trade barriers would help alleviate risks to food security.

Trade and Women in Poverty

In addition to the trade challenges, women in rural areas face limited access to education, finance, information and ownership of assets, including land. Statutory and customary laws limit female farmers from owning property. They are also expected to manage the household, which further limits their ability to extricate themselves from poverty. More must be done to empower women to participate fully in the labor market.

Increased openness of trade can create new job opportunities and incentives to remove gender biases and discrimination. This has been proven to increase financial security for women working in export-focused areas. For example, exporting firms in developing countries often employ more women than non-exporters. Decreases in trade barriers and new information/communication technologies have cut down on transaction costs and boosted access to markets for women, some going so far as to raise women’s wages relative to men’s.

Implementing and supporting domestic trade policies in developing countries will enable them to more actively participate in global trade. This ability will help in breaking the cycle of dependency on richer countries.

Nyssa Jordan
Photo: Europa

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