Wednesday, December 30, 2009

Development Gone Bananas

Via Paul Krugman, a note in the New York Times on the end of the "banana wars". A long-running trade dispute between European states and US/Latin American banana producers over whether Europe could impose quotas favouring their former colonies has finally ended, after the EU agreed to to reduce tariffs on Latin American bananas by 35 percent over seven years..

Op-ed writer Eduardo Porter comments that as often seems to be the case, this resolution has come about less through the capacity for intelligent compromise than because the whole issue has turned out to be less important than the antagonists thought.

He concludes:

China’s growth stands as a beacon for the power of trade. But others that have hitched their economic strategy to trade, like Mexico, have found prosperity elusive. Despite growing banana exports, both the Latin American banana exporters and Europe’s impoverished former colonies remain poor.

One thing we have learned over the past 15 years is that trade is necessary but not sufficient for development. Countries also need investment in infrastructure, technology and human capital. They need credit. They need legitimate institutions — like clean courts to battle monopolies — and help building them. Putting up a few barriers against banana imports, or tearing a few of them down, can’t do it all.

Credit for the conclusion. But isn't it a little disturbing that people think there wasn't any evidence about this until 15 years ago?

No comments: