OPINION: MAKING TRADE WORK FOR THE POOR
Patricia Francis, Executive Director International Trade Centre*
GENEVA - It could be argued that the moral challenge of the 19th century was ending slavery. In the 20th century it was to establish democracy. Today in the 21st century, our moral challenge is dealing with the disparity of wealth on this abundant planet.
The gap between the haves and have-nots has been with us since ancient times. However, the opportunity to address this problem and the challenge to close that gap have never been greater than today.
Globalization has made its mark, and trade between countries is skyrocketing. It’s gone from 2.3 trillion dollars in 1980 to 12.6 trillion dollars in 2005. According to a recent article in The Economist, the emerging world now accounts for over half of global economic output measured in purchasing power parity; accounted for well over half of the growth in global output last year; chewed up over half of the world’s energy; holds most of the world’s foreign-exchange reserves; produces 43 percent of world exports and buys half of the combined exports of the United States, Japan and the Euro area.
But the world’s 50 poorest countries have not had a share in it. Despite the great success of globalization the challenge remains the growing gap between rich and poor.
There is a perception that the poorest of the poor have little to contribute, but most analyses fail to take into account the importance of the informal economy which by some estimates accounts for 40 percent to 60 percent of all economic activity in developing countries.
Therefore, much like an iceberg with only its tip in plain view, this massive segment of the global population, along with its massive market opportunities, has remained largely invisible to the corporate sector, according to C.K. Prahalad (Professor of Business Administration at the University of Michigan Business School, Ann Arbor) and Stuart L. Hart (Professor of Strategic Management at the University of North Carolina).
They have said: "It is a time for multinational corporations to look at globalization strategies through a new lens of inclusive capitalism. For companies with the resources and persistence to compete at the bottom of the world economic pyramid, the prospective rewards include growth, profits, and incalculable contributions to humankind."
Tackling poverty will need to involve multiple players, including local government authorities, non-governmental organizations (NGOs), communities, financial institutions, international organizations and the corporate world. Interventions should address the shaping and managing of community aspirations, improving access, and tailoring local solutions. A one-size-fits-all approach will not work.
If we put our minds to work, we can all identify some striking examples where poor communities have managed to trade their way out of poverty. In Brazil, for example, ITC is part of a project with poor communities in the country’s most popular tourist resort. That project has allowed tourism to become a new source of exports for thousands of people in eight very poor communities. The project is an innovative partnership between big business, governments, NGOs and international organizations.
We also need to find ways to encourage and multiply entrepreneurs like Anita Roddick, CEO of The Body Shop, with her "trade not aid" programme of sourcing local raw materials and products from indigenous people. This has set a good example for others to follow. These are just a few innovative examples among many of how we can work together to change today’s business models, so that trade and globalization work for poor communities. ( . . . )
Coming from Jamaica, I know first-hand ( . . . ) that there is a difference between true poverty and statistical poverty. True poverty is a state of mind, not just a lack of money. Our people and our leaders are missing the "how" in taking advantage of the many opportunities presented by global trade and have yet to release the vast potential of those at the bott (END)
