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India's success will help halve world poverty: expert

business Updated: Oct 05, 2007 12:57 IST
India

Spectacular poverty-cutting gains made by India will help the United Nations meet its goal of halving world poverty by 2015, a renowned Singaporean public policy specialist has told the World Trade Organization (WTO).

But at the same time, the United States and the European Union must match the pace of trade liberalisation that India and China have unleashed rather than fear competition from them, Prof Kishore Mahbubani, Dean of the Lee Kuan Yew School of Public Policy at the National University of Singapore, said.

"We will probably reduce the number of people living on less than a dollar a day from 1.25 billion to just over 600 million by 2015," Mahbubani told the opening of the WTO Public Forum Wednesday.

"This would be a spectacular achievement and enhance significantly human happiness all round the world," he added.

The main reason for meeting the goal would be the gains made by India and China over the past few decades, Mahbubani told a distinguished audience of policymakers, diplomats, academics and civil society groups gathered for the annual event.

"In 30 years, the number of poor people in China has gone down from 600 million to 200 million. India started its economic liberalisation later. Hence the number in India has gone down from 323 million to 260 million.

"The success of China and India, the world's two most populous countries, in reducing global poverty explains why we will meet the UN Development Goals by 2015."

Mahbubani, former Singaporean Ambassador to the UN and a fervent advocate of economic liberalisation, said the reason why India and China are succeeding is that "they have bought into and are implementing the essential WTO vision that both they and the world will be better off by opening and liberalising their economies, especially in the field of trade."

The world was better off because the global trade had exploded from seven percent of the world Gross Domestic Product in 1940 to 30 percent in 2005, and total global exports had ballooned from $58 billion in 1948 to $9 trillion in 2004, he said.

But Mahbubani warned that the US and Europe were now in the process of withdrawing their traditional support for free trade - a move that could spoil global economic gains spurred by India and China.

"The great tragedy that the world could face today is that just when we have figured out how to eradicate global poverty and make the world a better place, the traditional champions of trade liberalisation - the EU and the US - are beginning to lose heart."

"Both the EU and the US are making a massive U-turn away from trade liberalisation while simultaneously pretending that they are not."

This about-turn, he added, explains why the WTO's Doha Round of negotiations - aimed at harnessing trade to benefit the developing world - is struggling.

Mahbubani's comments come amid considerable uncertainty over the future of the Doha negotiations - so called because it was launched in the Qatari capital - primarily due to the high subsidies paid out by the US and EU to their agricultural sector.

Developing countries such as India and China argue that these subsidies run against the WTO's belief in free trade because they skew global markets with their low prices and therefore risk making poor farmers in developing countries even poorer.

"I am amazed by the new trend of pessimism sweeping across America and Europe. More and more of their citizens believe that they cannot compete with China and India. Hence, instead of reducing trade barriers, they have begun to quietly increase them. If this trend gathers pace, it would be fatal - both for the developed countries and the world at large," Mahbubani said.

The Singaporean expert's optimism about China and India's role was shared by others among the 1700 experts gathered at the two-day WTO forum - an annual event where specialists thrash out urgent issues of international trade. But some warned that there were danger signals that should be heeded by both countries.

"While it is true that the number of poor in India and China has come down, there has also been a massive rise in economic inequality," said Amy Barry, head of media at Oxfam, an international nongovernment organisation.

"We must also remember that both China and India implemented economic and trade reforms at their own terms, at the time of their own choosing. We cannot cut poverty by forcing liberalisation down the throats of countries, as is happening in parts of Africa," she added.