Monday, February 06, 2006

Good Sense on Trade and Development

At the end of this week at the historic Hotel National, which stands in the very heart of Moscow, finance ministers of the Group of Eight nations gather to discuss international economic and financial policy issues. As the ministers meet, we hope they reflect on two of the greatest challenges confronting the world: persistent poverty and the sometimes difficult adjustments associated with globalization.

The connection between trade and economic development was made 170 years ago by Adam Smith in his classic work "The Wealth of Nations." By capitalizing on what different countries do best, Smith explained, trade lowers costs, frees up capital and other resources to be used more productively, promotes growth and development, creates jobs and raises standards of living.

Trade also promotes peace because commerce requires communication, which leads to mutual understanding, respect, friendships and lasting partnerships.
And the results have been nothing short of phenomenal. Between 1950 and 1998, global economic output rose by 530 percent, while the volume of merchandise exports rose 1,840 percent. Over that nearly 50-year period, the ratio of trade to global output tripled, from about 7 percent to more than 20 percent. In what has been the most dynamic era of economic development in human history, trade has become the basis for a prosperous world economy.”

Don Evans, a former U.S. commerce secretary, is chief executive officer of Financial Services Forum, writes on “Taking a Stand for World Trade” in today’s Moscow Times (7 February).

Apart from the minor arithmetical error of ‘170’ years ago (it was 230 from when Smith’s “Wealth of Nations” was published, and 216 years since when Smith’s last edition edited by him, was completed in 1790), this short article is a model case for the deepening and extension of the market as the soundest road to social and economic development, under the rule of law, security of property and justice.

Read the article:


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