Selective Prosperity Essay example

Alex Leavell
4/1/2015
PLSC 102-001

Selective Prosperity

In reading chapter one of Controversies in Globalization, I came to agree with the no or rather “it depends” argument of Robert H. Wade; on the basis that the question posed “Does trade liberalization contribute to economic prosperity?” fails to specify whose economic prosperity is in question. Wade presents two main points highlighting the effect of trade liberalization on economic growth. His main point attests that new theoretical and empirical research contests the extensive “yes” agreement of economists. Secondly, Wade depicts Trade liberalization as “a prescription of freer trade and freer investment” that rests in the interest of collective advanced country firms’ rather than the global interest as a whole. (34) Global rules make it tougher for developing countries to expand production and advance into more industrially complex products, other than as subcontractors of the current advanced country firms. Trade liberalization endorses the mutual dominance scheme of the United States, European Union and Japan to preserve the lopsided dependency other countries have on them.
In the original “yes” argument presented by David Dollar, Dollar shows strict historical empirical evidence attributing countries’ increased growth rates to trade reform policies dealing with liberalization. An argument brought forth in class disputed the use of solely empirical evidence by stressing that the correlation between trade reform toward openness and increasing GDP does not necessarily imply that one causes the other. I found my classmate’s point interesting, while agreeable because I have dealt with various correlation and causation issues in my economic courses and learned from them that correlation does not equal causation. Wade conveyed a similar skeptical attitude towards Dollars findings by mentioning the existence of over eighty instances since 1950, in which a country’s rate of growth increased by at least two percent for at least seven years without preceding reforms or only slight ones. (31) Through the preexisting uncertainty of the empirical evidence I share with my peer coupled with the multiple occurrences of growth increases despite any reform, I am reluctant to put stock into the empirical evidence David Dollar presented because there is no clear cause to the effect. Wade’s argument disputing the majority of his opposition’s data leaves the case for trade liberalization without reliable evidence that increased trade openness promotes faster growth in developing countries. The persuasive case against historical evidence from development trajectories directly responds to, and discredits the information David Dollar uses to backup his claim. In the absence of dependable proof to support Dollar’s notion, I am averse to the belief that increasing openness to foreign trade and investment positively affects economic prosperity in developing countries.
Wade’s second claim states that trade liberalization is a tool of the United States, European Union, and Japan used to promote their collective economic prosperity while keeping other countries and firms disproportionately dependent on them. Wade bases this argument on the “Doha trade talks agenda, which was shaped by U.S. and European Union governments with the intentions of holding back developing countries from advancing into industrial and service areas now dominated by the developed countries.” (30) Additional information in conjunction with the Doha agenda suggest that trade openness can generate further income inequality in developing countries, as well as stunt developing countries domestic industrial growth because of

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