April 23, 2002 | Commentary on Foreign Aid and Development
But what should drive the global economy? One camp -- the United
States, Singapore, Hong Kong, New Zealand and others -- envisions a
global economy ruled by free-market forces such as open trade and
market competition. The other side -- exemplified by such
international pariahs as Iran, Iraq and North Korea -- clings to
protected economies. As time goes by, though, the evidence mounts
in favor of free markets.
Supporters can note, for example, that the more quickly former
Soviet republics abandoned their command economic ways, the more
quickly they expanded their economies. Estonia, with 5 percent or
more annual growth rate, personifies a reformed and now healthy
economy; Bulgaria and Belarus, with tiny or even negative growth
rates every year since 1991, signal the danger in "staying
Ireland, meanwhile, has frustrated its fellow European states
with its "unfair" (read: low) tax rates and its resistance to the
continent's statist institutions. But it has earned the gratitude
of the Irish people with economic growth rates at or near double
digits every year since 1995.
Leaders of economically successful countries wisely rely on
their entrepreneurs -- not international bureaucracies such as the
United Nations or the International Monetary Fund (IMF) -- to
produce economic growth.
They've discovered that openness brings wealth, not poverty.
According to the "2002 Index of Economic Freedom" (published by The
Heritage Foundation and The Wall Street Journal), countries that
maintain a "free" economy have an average per capita income of
$23,325 -- versus an anemic $3,829 in economies rated as
Small wonder, then, that aid agency Oxfam International (which
has long allied itself with the anti-globalization movement) noted
in a recent report that "trade can deliver much more [for poor
countries] than aid or debt relief." According to The Washington
Post, the left-leaning group has put its "considerable prestige
behind a pro-trade agenda that sets the organization apart from
groups that favor protection for labor unions and farmers in rich
Free trade leaders push for a strong rule of law (including
vigorous contract enforcement), limited government spending, low
barriers to business start-ups, lower taxes and limited
restrictions on foreign investment. They know these practices
promote trade, that trade promotes growth and that growth promotes
A World Bank study shows that when countries grow through free
trade, poor people benefit -- dollar-for-dollar -- as much as any
economic class. Just two arrangements that further free trade, the
North American Free-Trade Agreement (NAFTA) and the Uruguay Round,
boost the income of an American family of four by at least $1,300
And free-marketeers reject the black-pajama crew's efforts to
blame globalization for environmental problems. A landmark 2001
study by the World Economic Forum, the Center for International
Earth Science Information Network and the Yale Center for
Environmental Law and Policy shows that economically free countries
spend far more on clean-up efforts than poor countries -- and have
cleaner environments to show for it.
If protectionists truly seek to lift economies out of the
doldrums and people out of poverty, they should quit trying to
"protect" their citizens and take the proven route. They should
encourage freedom and entrepreneurship, and make it easier for
their people to find work.
Will it solve all their problems? No. But it certainly beats donning those black pajamas to protest "globalization."
Sara J. Fitzgerald is a policy analyst in the Center for International Trade and Economics at The Heritage Foundation, a Washington-based public policy research institute.