5 Ways Trade Can Deliver for the World’s Poor
It's time to take the conversation about trade and poverty to the next level.
by Ritu Sharma | Trade and Poverty Expert
Just about every day, UPS drops something at my doorstep. As a working mom with two busy boys, my store of convenience is the world as I shop online.
As an advocate for women in living in poverty worldwide, I often wonder if the goods I’ve just received through global trade made life better for the person who made them.
I am someone who believes that expanded trade in goods and services can provide opportunities for people in poverty to rise into a higher income group. But I do not believe that global trade automatically makes that happen. People in poverty need to connect to new opportunities, and they have the skills to seize and keep those opportunities.
A number of new trade agreements on the horizon, such as the Trans-Pacific Partnership (TPP) and the global Trade Facilitation Agreement (TFA), could have a dramatic impact on poverty reduction if they are implemented with the poor in mind. Here are five ways that governments and businesses can pursue new trade opportunities to maximize the impact on poverty reduction:
1. Create jobs with livable wages. Certainly a paying job beats no job, but to help whole families rise out of poverty, new jobs should help people increase their incomes above about $10 a day—the global average of middle class income.
2. Take the jobs to the people. The globalization of trade over the last several decades has emphasized the Export Processing Zone, which drew in workers from rural areas, many of them young women.
Better infrastructure in many developing countries now makes it possible to locate jobs near villages.
This expands opportunities to many more people, makes work safer for young women who can continue to live at home and supports the creation of local businesses that support production.
3. Help the community with production. Businesses can multiply positive impacts on communities by investing in start-ups that provide the variety of services factories require, such as maintenance, cleaning, local transport, food service, childcare, and the like.
4. Incentivize the hiring of low-income people. Governments can provide tax, customs, or other incentives to businesses that extend employment opportunities to people in poverty, who often need additional training and support to succeed in the workplace.
5. Grow production cooperatives. Many people in poverty are engaged in agricultural production, often inefficiently and unprofitably.
One of the best pathways for them to take advantage of trade is to join into a cooperative where they can improve techniques, make joint investments in facilities, and get better prices for their products. Cooperatives most certainly beat the alternative of farmers becoming day wage laborers on large farms.
Certainly, these are not new ideas. They have been used successfully in the United States and other countries to channel the benefits of economic growth to the “base of the pyramid.” But now is the right time to take the conversation about trade and poverty to the next level and get specific about how we can make trade work for everyone.
Ritu Sharma provides nongovernmental organizations and corporations strategic advice on trade and poverty.
