Growth lifts millions out of poverty

By Alex Singleton | 31 January 2005

On his blog, James Stewart wonders how I figure that the price of coffee is going to keep falling. He also says that he's left wondering "what the point of economic efficiency is. In the wake of unprecedented economic growth, can't we afford to slow down and invest in values which aren't quite so easily measured?"

We've seen the price of coffee drop for two principal reasons. Firstly, countries like Vietnam were encouraged by the World Bank to grow coffee. Secondly, mechanization in Brazil has massively increased their production.

It seems to me that mechanization is going to spread. All things being equal, that will cause the price of coffee to continue falling.

On the other hand, if we opened up our markets, that would help coffee producers switch to producing more profitable things, thereby increasing their incomes. Coffee farmers who exited the market would have an upward effect on the price of coffee, helping those who stay in the coffee industry.

Why slow down economic growth? Why not instead help poor countries grow too? We're seeing high economic growth in India and China - last year, this lifted millions out of poverty. Calls to slow down growth are misguided - and harmful.