|Picture Credit: John Hogg/World Bank|
Capitalist economic theory holds that a completely liberalized global market is the most efficient way to foster growth, because each country specializes in producing the goods and services in which it has a comparative advantage. Yet, in practice, cutting trade barriers and opening markets do not necessarily generate development. Rich countries and large corporations dominate the global marketplace and create very unequal relations of power and information. As a result, trade is inherently unequal and poor countries seldom experience rising well-being but increasing unemployment, poverty, and income inequality.
An additional problem is that free trade is not equally free. Agricultural subsidies and other trade barriers in the US and the EU prevent poor countries from gaining access to the most important markets. Meanwhile, poor countries open up their own markets to US and EU exports. Critics of free trade point out that many of the world's richest countries sheltered their economies by protection when they were at the start of their own growth. Further, trade is so dominated by transnational corporations that new trade rules mainly benefit those companies. A number of NGOs have started to promote "fair trade," arguing that trade can promote development if it is environmentally sustainable and includes respect for human and labor rights. This page provides information on trade issues, including how to make trade contribute to development.