Trade and Poverty -- intriguing short articles in ISR

The December 2015 International Studies Review (vol 17, no. 4) has an interesting series of short pieces on the link between international trade and poverty alleviation. It remains a surprising non-surprise to hear Nita Rudra and Kristen Skillman point out that there is no convincing research that globalization and trade helps the poor. This despite the millions of people pulled out of poverty in China and India most notably; it seems likely, as the authors point out, that globalization and trade are only of many factors that have to interact in order to see the positive effects on poverty.

I was particularly intrigued by Helen Milner and Nita Rudra's point that states often have an incentive to retain their informal economy, even in the presence of a growing formal economy; the informal economy soaks up surplus labor, keeps wages low, and provides more flexibility. An example from Nigeria certainly seemed to fit with my own experience living and working there, admittedly many years ago, and also more recent work in India and Bangladesh. Edmund Malesky points out how transfer pricing can be manipulated to hide profits and spirit them out of countries: he recounts an interesting anecdote in which Coca Cola greatly expands their presence in Vietnam while denying that they have ever made a profit there! And Pablo Beramendi and Erik Wibbels show in another way the complexity of understanding corporate profits on pro-poor policies by showing the uncertainties inherent in the varying abilities of states to tax and spend in a pro-poor way. All worthwhile reading.

I was reminded of research I've done recently on the effect of democracy and human rights in economic growth. The rights-based approach is central now to most agencies, yet the connection is a hard one to make. My current manuscript, under review as I write, was criticized by the ever-challenging "reviewer number two" because I failed to mention the evidence that non-democratic, authoritarian governments might actually have better development outcomes than democratic ones; India and China, of course, being the exemplars. (Leaving aside exactly the nature of democracy and participation in India.) My point is that we want to see these connections, but they are awfully difficult to pin down, given the complexity of all that goes into national progress. Particularly all the politics that goes out outside the ballot-box. The ISQ articles reinforce that intuition.