Openness to trade is key to development

By Alex Singleton | 12 October 2005

I was at the LSE on Monday evening taking part in a public debate on "Can free trade promote development or is fair trade in answer?". The other panelists were Harriet Lamb, director of the Fairtrade Foundation and Prof. Tony Venables (pictured), Chief Economist of the Department for International Development (though speaking as a LSE professor).

Ms Lamb claimed that while free trade had promoted economic growth, it had not promoted development. But Prof. Venables pointed out that it is openness to the international economy that is key to development, and referred to the unprecedented poverty-reduction that has occurred in past fifty years. He said it was not the case that Asia had got rich by protecting their economies, even if they had pursued unconventional policies at times. He said that it was a mistake to argue that developing countries should not open themselves up to imports because imports are the flipside of exports. He expressed a key economic truth that Christian Aid et al do not understand: if you cut exports, you cut imports.