Thursday, September 23, 2010

Rich Countries’ Protectionism Hits the Poorest Nations

“US consumers have long paid about twice the world price for sugar because of import quotas protecting about 9,000 domestic sugar producers. The European Union is similarly guilty. … Egregious subsidies are handed out to US cotton producers, which flood the world market, depressing export prices. These hit the lowest-cost cotton producers in the global economy, which also happen to be some of the poorest nations on earth: Mali, Burkina Faso, and Chad.”

Read the complete article by William Easterly in the Financial Times.

His punch line: “According to an Oxfam study, eliminating US cotton subsidies would “improve the welfare of over one million West African households – 1O million people – by increasing their incomes from cotton by 8 to 20 per cent”

Conclusion: Trade-fueled growth could help developing nations much.

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