Linkages between trade, development and poverty reduction (TDP)

About the Project

The debate on the linkages between trade, development and poverty reduction has received increased attention in the last years. Their complex dynamics have been well established in the economic literature, showing that trade policy affects poverty in manifold ways through its effects on economic growth and income distribution. Yet, despite the existence of theoretical literature on the linkages between trade, development and poverty reduction, insufficient empirical evidence exists to prove the robustness of this linkage.

Moreover, the relationship between trade and growth and trade and poverty is predominantly envisaged through an export-led growth strategy, following the theory that sustained export growth is the main engine of economic growth and a key factor for sustained poverty reduction.

A pro-poor growth policy has a greater impact on reducing poverty, than growth per se. The benefits of economic growth resulting from international trade can positively impact on the poor through increased spending in health, education and social welfare, an increase in employment opportunities and the acquisition of new skills and technologies.

However, the potential negative impact of trade due to the increased influence of transnational corporations on domestic economies and political decision-making has also become obvious. Such influence can lead to a loss of employment opportunities in formerly protected industries, the exploitation of vulnerable and marginalised groups, increased environmental degradation and threats to food security.

Thus, there are various dimensions to the linkages between trade, development and poverty reduction. With the emergence of new and unfolding theoretical and political economic dimensions of the global trade and investment regime, there is a need to further analyse their impact on the development of poor countries.

Some efforts are being made to look into the various dimensions of the issue, and making trade and investment liberalisation work for the poor. Unfortunately, many such efforts do not attempt to look into the issue holistically, i.e. in both theoretical and political economic terms, and does not incorporate civil society (Northern as well as Southern) to foster their understanding of the issue. Furthermore, issues relating to the effects of trade and investment liberalisation on the poor need to be looked into in a positive manner. Hence, an overarching purpose of all the activities is to find out the conditions necessary for mainstreaming international trade into coherent national development strategies to reduce poverty.

Realising this vacuum and pursuant to its mandate of building consensus on issues affecting the livelihoods of the poor, CUTS Centre for International Trade, Economics & Environment (CUTS-CITEE) is implementing this project on issues of linkages between trade, development and poverty reduction over a period of four years (from January 2005 to December 2008).

This project manifests the policy relevance of international trade on poverty reduction and thus, helps in articulating policy coherence, in particular between the international trading system and national development strategies. International trade has a major role to play in achieving the Millennium Development Goals (MDGs) and in reducing absolute poverty by half, by the year 2015.

Project activities include analyses of stakeholders’ perceptions on linkages between trade, development and poverty reduction, networking with partner organisations and other stakeholders, advocacy with policymakers and civil society organisations, information dissemination amongst policymakers, civil society organisation and other stakeholders, outreach aimed at trade diplomats, parliamentarians, and developmental agencies including donor agencies. An overarching aim of the project is to bridge the link between Southern and Northern civil society and policymakers.

CUTS CITEE is implementing these activities in association with its different centres and partner organisations in 15 countries in Sub-Saharan Africa, Asia and Europe. All activities are analysed in view of the role that international trade can and should play in reducing poverty in poor countries. By associating with the implementation of this project, the Southern and the Northern civil society will gain experience, aiding their development, as well as the cross-fertilisation of ideas and experiences.