Tuesday, January 30, 2007

World Economic Forum Davos 2007

I am very cheerful at the news from the just-finished World Economic Forum (Davos 2007) that the Doha Round talks will resume. These talks on the reform of global trade were suspended six months ago. They got stuck on the massive farm subsidies paid by rich countries to their own farmers, and the tariffs that protect their markets.

These subsidies and tariffs distort world markets and are a big factor in world poverty because farmers in poor countries can’t compete with heavily subsidised and tariff-protected farmers from rich countries.

Leaders of developed and industrialised nations have warned that a failure of the talks would be "catastrophic". And Tony Blair says a deal is now more likely than not, so perhaps we can hope for some progress.

Ellen Johnson Sirleaf, Tony Blair and Bono at The Promise of Africa session at Davos 2007

The end of world poverty needs action at both the individual level and the system level. The literate children of Tanzania and other extremely poor countries will need to find jobs in local businesses, and these businesses can’t develop if global trade is restricted by the entrenched protective practices of rich countries.

Bono points at some typical examples of trade rules that prevent African countries from developing stronger economies:
If Africans sell us orange juice instead of oranges we slap a tariff on; if they sell us chocolate instead of cocoa we slap a tariff on. THIS is corruption.

Why are open markets better?
  • Jeffrey Sachs and Andrew Warner found that developing countries with economies open to trade grew by 4.5% a year in the 1970s and 80s, while those closed to trade grew by only 0.7%.
  • Europe's farm subsidies are doomed because the EU is adding 10 new members and it cannot afford to extend its current lavish farm subsidies to the millions of Polish and Romanian farmers.

The Promise of Africa was a panel session held at WEO to review the progress made in the past year on the goals and promises made a year ago with respect to ending poverty in Africa. The panel of heavyweights (Tony Blair, Bill Gates, Bono, Hubert Burda, German media tycoon, Ellen Johnson Sirleaf, president of Liberia and Africa’s first female president, Donald Kaberuka, president of the African Development Bank, Thabo Mbeki, president of South Africa, Kumi Naidoo, boss of the Civicus, the World Alliance for Citizen Participation, Sadako Ogata, president of the Japan International Cooperation Agency) gave their perspectives.

I was particularly struck by one of the points made by Mbeki:
There is a capacity constraint across the board, and we need a radical increase in every respect: teachers in math, science, nurses, doctors, engineers, all sorts of people, so that we don’t have to go to Paul Wolfowitz, to borrow money from his World Bank and then hire consultants from him to say how we should spend it.

I thought straight away of the great work underway at the School of St Jude where the foundations are being laid for the future economists, lawyers, teachers, medical staff, program administrators, accountants and scientists who will provide the capacity needed by African countries to take each step along the path to prosperity. They don’t need our help to climb the ladder – they only need our help to step onto the first rung.

The BBC has a brief summary of The Promise of Africa session.

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