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The G8 leaders gathering in L’Aquila, Italy for their annual summit have an opportunity to help developing countries escape the worst impacts of the financial downturn. Italian Prime Minister Silvio Berlusconi’s ambitious agenda for the meeting outlines a list of priorities that directly affect short- and long-term development in these countries. The agenda includes climate change, development in Africa, dialogue with developing countries, and the Millennium Goals.
The economic crisis is hitting the world’s poorest countries through falling trade and commodity prices. This column argues that the US should respond by further opening its market to exports from small, poor economies. That would not only provide an additional stimulus to those economies but also strengthen US global leadership, give a boost to the Doha Round, and serve broader US national interests by helping to promote political stability in some very shaky parts of the world.
“The World’s poorest developing nations have a special place in the Obama trade agenda.”
-US Trade Representative Ron Kirk, Georgetown University, 29 April 2009
While welcome, it is not yet clear how Ambassador Kirk’s words, and the President’s commitment, will be turned into action – and the need for action is urgent.
When I was writing my book, Delivering on Doha: Farm Trade and the Poor, I came across a 2004 poll showing that Americans, including in farm states, support subsidies only for small farmers and only in bad years. Last week, another poll by the Program on International Policy Attitudes at the University of Maryland was released showing that attitudes haven’t changed. The reality, as I discussed in my book, is that the top 20 percent of recipients receive 80 percent of all payments.
As President Obama was making his way to the Fifth Summit of the Americas in Trinidad and Tobago last week, many hoped for something more concrete than just a fresh start with our neighbors in Latin America, who felt neglected and ignored for the past eight years. Those of us hoping that the president might take the opportunity to announce plans to seek congressional approval for two trade agreements that have been pending for two years or more--with Panama and Colombia--were disappointed.
The outcome of today’s G20 summit has become even more critical for developing countries as the World Bank revised the 2009 forecast for GDP growth in the developing world to 2.1 percent down from 5.8 percent in 2008. But a draft copy of the G20 communiqué published by the Financial Times could go farther in its commitment to help the world’s most vulnerable countries.
Would a “Crisis Round” of trade talks launched at the London Summit next week be a useful mechanism for averting a further beggar-thy-neighbor protectionism? My colleague Arvind Subramanian and his frequent co-author, World Bank economist Aaditya Mattoo, think so. They argued for such a move in an interesting piece in the Wall Street Journal Asia earlier this week (A Crisis Calls for a Crisis Round):
Countries importing Chinese goods should be responsible for the heat-trapping gases released during manufacturing, a top Chinese official said yesterday…. "As one of the developing countries, we are at the low end of the production line for the global economy. We produce products, and these products are consumed by other countries.... This share of emissions should be taken by the consumers, but not the producers."
This is a joint posting with David Beckmann, originally appearing on the Huffington Post Web site on March 17, 2009.
In the face of big global challenges, President Obama has rightly called for a new, smarter U.S. foreign policy that focuses on bolstering our long-term security, building our alliances, and expanding global prosperity. A central element of his new approach is elevating U.S. support for global development and balancing it with defense and diplomacy, which in practice means strengthening U.S. foreign assistance and other programs that fight poverty, disease, and lack of opportunity in developing nations.
In early 2009, before the inauguration of President Obama, Kim Elliott and I decided it was time to think seriously and coherently about the future direction of U.S. trade policy, especially as it relates to developing countries.