The book “Fair Trade for All: How Trade Can Promote Development” by Nobel Prize-winning economics professor Joseph E. Stiglitz looks at the current theories of free-market global trade and foreign aid, and how they relate to promoting economic development in the world’s poorer countries. In this book, Stiglitz questions the dominant view of laissez-faire economics and critiques the World Trade Organization (WTO) approach to increasing global trade. He suggests an alternative, more proactive, form of trade-driven development, arguing that the rich countries of the world must engage more proactively and fairly in the trading process.
Stiglitz brings forward economic arguments to explain why many of the rules and regulations of global trade status quo must be changed. He argues that the current system of rich countries imposing their trade laws, practices and regulations on poor countries is inefficient and unfair, as it does not actually benefit the poorer countries in terms of economic development. Stiglitz explains how the inequality between countries in terms of technology, human capital, and natural quality can undermine the effectiveness of trade in promoting development.
The professor looks at ways of improving the current international trading regime. In particular, he emphasizes the importance of protecting developing countries’ industries from unfair competition while at the same time enabling them to benefit from new technologies and markets. To this end, he proposes creating an International Technology and Trade Adjustment Fund which would help poor countries adapt their industries to new global markets, as well as an International Investment Adjustment Fund to help them finance investment.
Stiglitz also looks at how developing countries can use trade policy to promote their own economic development, arguing for the importance of adopting selective trade policies that recognize the need for adjustment and protection in some industries. He argues for the need to develop effective measures to manage capital flows, and recommends appropriate taxation of international corporate profits.
His book also discusses the problems associated with the increasing integration of economies across borders, such as the risk of contagion and crises, the insecurity of migrant labor, and the adverse effects on the environment. He argues that a new international trade system must be tailored to the needs of the different countries involved, taking into account their specific circumstances and constraints.
Finally, Stiglitz critiques foreign aid as a tool for development, showing that it is often a de facto subsidy to northern businesses. He argues that, while foreign aid and debt relief can be effective under certain conditions, in general it has failed to produce the hoped-for levels of development, and that trade rather than aid must be used as the primary tool for development.
Thus, “Fair Trade for All” offers an original and compelling vision for reshaping global trading patterns in order to promote economic development in the world’s poorer countries. It provides a useful counterpoint to the dominant view of laissez-faire economics and its implications for global trade, and it is an important contribution to the literature on international economic integration.
