Can Trade Drive Development?

On March 15^th Wilson Center on the Hill and the Program on America and the Global Economy (PAGE) hosted a discussion on the impact of trade and international markets on developing countries. With almost a third of the world’s population living on less than $2 per day, the need to reduce poverty is critical. The panel focused on the prospects for economic growth through the expansion of trade, and the related policy challenges facing United States lawmakers.  Kent Hughes, PAGE director, moderated the discussion.

Ambassador Peter Allgeier, President of C&M International and a veteran of the Office of the U.S. Trade Representative, opened the event by stressing the unique aspects of modern trade and placing the current policy challenges within that updated framework. Unlike in the 20^th century, most products today are involved in a complex supply chain where goods travel to several different countries before they come to market.  The modern diversified modes of production make it easier for emerging nations to “plug in to small parts of a bigger supply chain,” and increase manufacturing capability more efficiently.

Developing countries must “play by the rules,” Allgeier pointed out, by maintaining low tariffs and working to create a favorable investment climate.  Many expanding markets lack the physical and institutional capacity to support large-scale trade, which can preclude international investment; proper sanitation, rule-of-law, and a stable trade policy are all important factors in economic development, and are lacking in many small markets.