Your excellency, Dear Sir / Madam,

We have just published our eighth set of papers, this time focused on Trade.

What’s the smartest target?

As reported today in for instance India's Economic Times, The Japan Times and Germany's Die Welt, implementing the Doha Development Agenda will make the world $500 trillion dollars richer and by 2030 lift a staggering 160 million more people out of extreme poverty.

Every dollar spent will do thousands of dollars worth of good. Expanding free trade would also dampen price spikes in food markets, contributing to better outcomes for hunger and nutrition. It would increase wealth in the developing world reducing inequality among nations. It would spur economic growth, which is correlated to a number of important development indicators such as lower crime, better governance and improved health.
 
Furthermore, a disproportionate amount of the benefits will go to developing countries. By 2030, the world will be $11 trillion better off each year, and $7 trillion will go to the developing world. On average, the increased GDP is equivalent to $1,000 more for every person in the developing world in 2030.
 
Therefore, the paper argues, expanding free trade may be the most valuable post-2015 development target we can envisage.
 
  World Developing Countries
Trade Targets Total Benefits ($trillion) Total Costs ($trillion) Benefit for Every Dollar Spent Benefit for Every Dollar Spent
Complete the languishing Doha Development Agenda process at the World Trade Organization. $533 $0.28 $2,011 $3,426
Implement a free trade agreement between member states of the free trade area of the Asia Pacific. $371 $0.22 $1,728 $2,559
Implement a free trade agreement between selected APEC countries (known as the Trans-Pacific Partnership). $91 $0.07 $1,229 $1,870
Implement a free trade agreement between ASEAN countries and China, Japan and South Korea (known as ASEAN+3). $243 $0.13 $1,914 $3438

 

Implementing free trade is not costless. It will cost about $300 billion in supporting the losers of liberalization in unemployment benefits and re-schooling, along with negotiating expenses and reform advocacy. But these, mainly one-off costs, are small in comparison to the ongoing stream of benefits.
 
So if the economic case is clear, why isn’t it implemented? Because the anticipated losses in jobs and wealth are very obvious and concentrated, whereas the gains are thinly spread and less-easily identifiable. The few losers are prepared to support politicians who resist protection cuts, while the gains are sufficiently small per person that they do not act collectively to lobby for reform.

You can read the all the reports at www.post2015consensus.com/trade 

Here, Kym Anderson, Professor of Economics at the University of Adelaide writes the main report, peer-reviewed in perspective papers by Bernard Hoekman, Robert Schuman Chair and Research Area Director of Global Economics at European University Institute and by Patrick Low, Vice President for Research and Senior Fellow at Fung Global Institute, Hong Kong. Additionally, NGOs and stakeholders such as UNCTAD, International Center for Trade and Sustainable Development, and Australia National University present viewpoint papers concerning Anderson’s analysis.

Best regards,
 
Bjorn Lomborg
PhD and Adjunct Professor
President of Copenhagen Consensus Center

PS. The Post-2015 Consensus  project brings together 62 teams of economists with NGOs, international agencies and businesses to identify the targets with the greatest benefit-to-cost ratio for the UN's post-2015 development goals.  If you have questions about the project, send an email to Research Project Manager Brad Wong by replying to this email.
Each day on twitter we will be releasing the benefit-cost evaluation of a current UN OWG post-2015 target. Follow us to see how all 169 current targets rate according to leading economists.
Each day on twitter we will be releasing the benefit-cost evaluation of a current UN OWG post-2015 target. Follow us to see how all 169 current targets rate according to leading economists.
In a hurry?
Download the one page PDF summary here.


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