Lower Trade Barriers In Developed Countries example essay topic

New York Times Date of Article: 04/14/03 Article by: The Associated Press The article states that the World Bank is urging well-off countries to lower their trade barriers. According to the World Bank, global poverty can be cut in half by 2015 if rich countries will lower their trade barriers and also increase foreign aid. The article also speaks of the need for developing countries to invest heavily in education, and that education, coupled with lower trade barriers in developed countries is the recipe for success. However, a new World Bank report states that even if worldwide economic growth attains its projected / anticipated growth levels, poverty will still be very severe in Africa where there is an expected increase in poverty levels. The U.S. has offered $100 million dollars for low interest, long-term loans to developing countries and is challenging the rest of the developed world to make contributions. According to the article, developed countries give its farmers an approximate total of $300 billion a year in subsidies.

As a result of these subsidies, it is very difficult for developing nations to compete with commodity prices set artificially low due to the size of the subsidies. If the agricultural products of developing nations cannot compete on a global level, it will be difficult for developing countries to improve their economies and the wealth of its citizens. Trade barriers in developed countries are making it very difficult for developing nations to play to their strength of growing and selling agricultural goods and producing textiles in their countries. I think that the World Bank is correct in urging developed nations to lower their trade barriers. $300 billion in farm subsidies is hurting the progress of developing countries by artificially driving the price of agricultural goods to low levels. These subsidies are also hurting the entire world because the world prices for these commodities are higher than they would be in the absence of subsidies.

This means that as consumers, we are paying more for these goods. For the U.S., higher commodity prices are of lesser concern due to the abundant wealth of this nation, but for the citizens of developing countries, this can be extremely serious due to the lack of wealth of these nations. The developed world needs to halt these farm subsidies and let the developing world play to their comparative advantage of producing agricultural goods. This will in turn, help these countries grow their economies, and lead to better conditions for many people. Subsidies have been created for political purposes and do not serve the interests of the entire world. While subsidies do help those that are entitled to receive them, subsidies also get in the way of the "invisible hand" that Adam Smith so often spoke of.

Those entitled to the farm subsidies need to evaluate their options, and move to industries that will pay a fair wage for their talents. Subsidies cause incorrect price information, and world markets need to determine the prices of commodities based on having correct price information.