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Progress towards poverty alleviation

The Doha trade talks seem to be virtually dead. And with that the hope that the talks would end in an agreement substantially lowering trade barriers leading to mainstreaming of developing countries into global trade also appears to be virtually dead. Rich countries led by the US and the European Union have refused to make the needed concessions, especially to lower agricultural subsidies and on the other hand China and India have refused to budge from their positions in retaliation.

To safeguard its global trading interests the US has entered into Trans-Pacific Partnership and is also negotiating with the EU for Transatlantic trade and investment Partnership. China on the other hand has signed a 16-country trade deal which includes Japan and India.

These new global trading alignments seem to create very high walls of protection against exports from developing countries restricting the pace of growth and spread of global prosperity. For example, the US charges high tariffs on many products from developing countries (such as textiles, shoes, and apparel) and tightly restricts the imports of a range of agricultural products (including dairy, peanuts, and sugar).

In such a situation Pakistan needs to look around its own region for developing firmer trade links and at the same time try to exploit the US’ concerns for withdrawing its troops from Afghanistan at the earliest without any further loss of lives and limbs of US soldiers or leaving the war ravaged country in the hands of Taliban.

In this context, Pakistan should be focusing more on trade in its relations with the US rather than on aid. And if at all aid is needed then it should be restricted to obtaining new technologies through its universities, foundations, private companies, and local entrepreneurs.

On the trade front we should immediately start renegotiating with the US both the Reconstruction Opportunity Zones (ROZs) scheme and the Bilateral Investment Treaty (BIT). With improved management of the border areas between Afghanistan and Pakistan and the possibility of Fata-KPK merger in the near future, the ROZs would become highly feasible with both Pakistan and Afghanistan profiting from the arrangement both by way of income from trade as well as by the expected reintegration of the population susceptible to the lure of jihad into the respective mainstreams.

Pakistan needs also to restart negotiations on BIT to attract private US investment to our energy sector which is expected to open up with enormous possibilities with the coming on-stream of the China-Pakistan Economic Corridor (CPEC). In fact, with the expected opening up of the trade routes from South to North and from East to West and the other way round Pakistan is likely to become a hub of trade routes which the US would find highly profitable to exploit by investing in high-tech industries.

Meanwhile, let us kick-start the economy and join what appears to be theon-going global surge towards prosperity. Indeed, since the early 1990s, daily life in poor countries has been changing profoundly for the better: one billion people have escaped extreme poverty, average incomes have doubled, infant death rates have plummeted, millions more girls have enrolled in school, chronic hunger has been cut almost in half, deaths from malaria and other diseases have declined dramatically and the incidence of war – even with Syria and other conflicts – has fallen by half. This unprecedented progress goes way beyond China and India and has touched hundreds of millions of people in dozens of developing countries across the globe, from Mongolia to Mozambique, Bangladesh to Brazil.

All this did not happen because these countries had managed their socio-economic framework under the so-called IMF macroeconomic stability programmes but because they had followed growth-oriented liberal trade and economic policies.

According to an article (Prosperity Rising by Steven Radelet) in the latest edition of Foreign Affairs Today, global poverty is falling faster today than at any time in human history. In 1993, about two billion people were trapped in extreme poverty (defined by the World Bank as living on less than $1.90 per day); by 2012, that number had dropped to less than one billion. The industrialisation of China is a big part of the story, of course, but even excluding that country, the number of extreme poor has fallen by more than 400 million. Since the 1980s, more than 60 countries have reduced the number of their citizens who are impoverished, even as their overall populations have grown.

This decline, according to Radelet, in poverty has gone hand in hand with much faster economic growth. Between 1977 and 1994, the growth in per capita GDP across the developing countries averaged zero; since 1995, that figure has shot up to three percent. Again, the change is widespread: between 1977 and 1994, only 21 developing countries (out of 109 with populations greater than one million) exceeded two percent annual per capita growth, but between 1995 and 2013, 71 such countries did so.

The improvements in health have been even bigger. In 1960, 22 percent of children in developing countries died before their fifth birthday, but by 2013, only five percent did. Diarrhea killed five million children a year in 1990 but claimed fewer than one million in 2014. Half as many people now die from malaria as did in 2000, and deaths from tuberculosis and AIDS have both dropped by a third. The share of people living with chronic hunger has fallen by almost half since the mid-1990s. Life expectancy at birth in developing countries has lengthened by nearly one-third, from 50 years in 1960 to 65 years today. These improvements in health have left no country untouched, even the worst-governed ones. Consider this: the rate of child death has declined in every single country (at least those where data are available) since 1980.

There are good reasons to believe they can continue well into the future. These deep-seated changes have put enormous additional gains well within reach. If economic growth proceeds along the lines of most projections over the next two decades, Radelet believes some 700 million more people will escape extreme poverty. Per capita incomes in poor countries will double again, millions of childhood deaths will be avoided, tens of millions of children will get the education they deserve, hunger will decline, and basic rights and freedoms will spread further.

M. Ziauddin, "Progress towards poverty alleviation," Business Recorder. 2016-01-06.
Keywords: Economics , Interstate agreements , Concession bargaining , Vocational interests , Investment analysis , Tariff preferences , Command of troops , Taliban members , China , Europe , America , BIT , CPEC , IMF , AIDS