Democracy Lab

Beggaring Thy Neighbors

Poorer countries no longer have rich ones to blame for inequalities in trade. Now they're the ones pulling the strings.

The miseries inflicted by colonial powers on Africa, Asia, and Latin America are undeniable to economic historians. Borders were drawn that made no economic or ethnic sense; little was invested in the human capital or the institutional structure needed for growth and stability. And while the sun set on the western colonial empires more than a half century ago, the leaders of what are today called developing countries all have reason to appreciate William Faulkner's line: "The past is never dead. It's not even past." 

One living legacy is a crazy quilt of trade preferences and protection buttressed by a mix of geopolitics, nostalgia, and rich-country interest group protectionism -- distortions that undermine growth in export-oriented agriculture and make it tough for women in some of the poorest countries in the world to sew their way out of poverty. Indeed, most developing country leaders view rich-country protectionism as the cause of the deadlock in the World Trade Organization's so-called Doha Round of negotiations aimed at sweeping trade liberalization. 

The advanced economies do indeed deserve a disproportionate share of the blame. But as economist Simon Evenett of Switzerland's University of St. Gallen has observed, "the beggar thy neighbor game is not confined to North-South trade." The African Development Bank recently reported that only about one-tenth of the continent's total trade is neighbor-to-neighbor. The numbers for Latin America and Asia are higher (22 percent and 50 percent respectively). Poor countries complaining about commerce-impeding barriers would be well advised to check the mirror to see where their troubles lay. 

Most levies imposed by America and Europe have fallen to just 2 to3 percent, while a handful of newly rich countries led by Hong Kong and Singapore have dispensed with tariffs on virtually everything. 

Now consider West Africa's Benin, one of the poorest countries in the world (GDP per person in terms of purchasing power: $1,700). Benin's meager trade and living standards are held back by agricultural and industrial tariffs averaging 14 and 12 percent respectively. And it's pretty much the same throughout the poorer corners of the world. In Cameroon (GDP per capita: $2,300), farmers hide behind agriculture tariffs averaging 22 percent, while manufactured goods are hit with 12 percent import levies. The parallel figures for Burundi (GDP per capita: $600) are 20 percent and 11 percent; for Gambia (GDP per capita: $1,900) 17 percent and 16 percent. 

India's economic reforms, which included sharp reductions in industrial tariffs (to 10 percent) are widely credited for the quadrupling of average living standards over the last two decades. But India still protects food imports with 31 percent average tariffs, with peaks up to 56 percent (for coffee and tea). 

In the Doha negotiations, the rich countries have agreed to allow Benin, Burundi, and the rest of the world's poorest countries to maintain their tariffs. (Perhaps not surprisingly: They collectively represent a very modest market for western exports.) But more muscular emerging market economies -- notably India and South Africa -- have threatened to make further tariff reform a deal-breaker. In fact, they are demanding the right to raise tariffs sharply under some circumstances.   

Arguably, the greater barriers to intra-continental trade (especially in Africa) are bureaucratic and logistical. To carry goods from Kigali, Rwanda to Mombasa, Kenya, trucks "have to negotiate 47 roadblocks and weigh stations," the African Development Bank reported in 2012. At the time, the Bank also noted, there was usually a 36-hour wait at the South African border for trucks to cross the Limpopo River into Zimbabwe. It was much the same story getting through customs from Burkina Faso into Ghana, from Mali into Senegal --- actually, from just about anywhere to anywhere in Africa. 

Take your pick as to which misery is worst: The mud-plagued, potholed roads that drive up the costs of doing business, or the border checks with corrupt customs officials seeking alms.  Paying bribes is so common that the African Development Bank report published a table listing the borders where officials are the most corrupt (Ivory Coast-Mali seems to be the prizewinner). 

African reformers freely acknowledge such problems. Nigeria's trade minister, Olusegun Aganga, has publicly lamented that "billions of dollars" and "millions of jobs" have been lost due to the "the fragmentation of Africa in terms of trade." And some progress is being made. The World Bank noted that Ghana and Nigeria are discussing cuts in bilateral tariffs and otherwise making their cross-border trade flows more efficient. The New Times, a Rwanda newspaper, recently celebrated the fact that roadblocks between Kenya, Rwanda, Uganda, and Burundi had been pared from 30 to 15 (which are still way too many). 

Meanwhile, there is still a Sisyphusian quality to poor-on-poor trade disputes, with modest advances matched by threats of retrenchment. South Africa, which by virtue of its relative affluence and stability is the economic leader of southern Africa, has been railing against cheap chickens from Brazil, metal screws from China, and even artificial turf from rival soccer competitors India, Thailand, and Malaysia. When we do these things, we are only following "common sense," and not indulging in "protectionism," Pretoria officials insist. 

"Common sense" is apparently infecting middle-income countries not above the impulse to close the door behind them. Argentina is now considering stiff tariffs on plywood from Brazil and China. Turkey is in the process of imposing tax hikes on terephthalic acid (useful stuff that goes into plastic bottles and clothing) from more than a dozen trading partners including Indonesia and Brazil. Malaysia has imposed "antidumping duties" on newsprint from the Philippines and Indonesia. For their part, the Indonesians are in the process of "safeguarding" their domestic sorbitol industry (a versatile sweetener) against competitors in Malaysia, India -- and curiously, communist North Korea, which isn't known for offering sweet deals to anyone. 

The ongoing phenomenon of quasi-colonial economic ties has also been a major source of tension -- and a major impediment to a Doha-enabling compromise. Countries that were previously extorted for their resources are now receiving preferential treatment from their former colonizers, much to the chagrin of others. Ecuador, a major banana producer, has complained about preferential trade deals France has given its former colonial banana suppliers, notably Cameroon. Mauritius has railed against European farm subsidies, even as it maneuvered to retain its preference to export sugar to the European Union. 

Camps are also emerging as blocs of developing countries pit themselves against others. When the Doha talks last went into hibernation (2008), Uruguay and Paraguay were complaining that Indian-led demands, on behalf of 44 poor countries, for continued agricultural protectionism would cripple their exports to Latin neighbors. On the opposite end, Cambodia and Bangladesh's efforts through Doha to curb the United States' 15 and 17 percent respective tariff on their garment trade are facing stiff opposition from African countries that already enjoy duty-free access to U.S. apparel markets. 

Economists speak in unison on relatively few issues -- one of them being the critical role open trade has played in bringing a billion people out of poverty in the last two decades. And it's hard to imagine that, without more of the same, another billion will be given the means to live above subsistence in the next two. All the more ironic, then, that poor countries are way too often part of the problem in negotiating trade liberalization, rather than part of the solution. As Pogo, the once-celebrated bard of the newspaper comic strip world put it: "We have met the enemy, and he is us."    



The Disease Next Door

How the world’s nastiest and least-known outbreaks are afflicting some of the world’s wealthiest countries.

They're probably the most important diseases you've never heard of -- causing everything from greusome limb disfigurement and skin sores to bladder and liver cancers to  neurological damage -- and they're practically ubiquitous among world's poorest people. Typically, such infections last for years or even decades, causing chronic and permanent disabilities such as stunted growth and intellectual developments in children; blindness, heart disease, and disfigurement of adults; and pregnancy complications that can result in severe disease in both newborns and their mothers. In so doing, neglected tropical diseases (NTDs) have been shown to acutally cause poverty and even destabilize communities, leading to conflict.

Because they strike mostly forgotten people living on less than $2 per day, NTDs have traditionally been thought of as a problem exclusive to low-income countries, especially in sub-Saharan Africa (where indeed they are important public health threats). But our latest research shows that most cases of the worst NTDs (defined by disability-adjusted life years lost) actually occur among the extreme poor who live in the large emerging market economies that comprise the G-20, together with Nigeria, which has a GDP equivalent to several Western European countries (See Table).

For example, more than two-thirds of the reported cases of visceral leishmaniasis, which causes a leukemia-like chronic illness, are found in G-20 countries, led by India, Brazil, China, and Italy. Similarly, 60 percent of those who require treatment for lymphatic filariasis, responsible for elephantiasis, live in India, Indonesia, Nigeria, and Brazil; while more than 70 percent of food-borne trematode infections, which cause liver cancer and severe lung disease, are found in China, South Korea, and Russia. Almost two-thirds of the global cases of Chagas disease -- which causes cardiomyopathy and other life-threatening heart diseases -- are in Brazil, Argentina, Mexico, and the United States, and 77 pecent of the world's leprosy cases occur in G-20 countries, led by India, Indonesia, Brazil, and China. Together, the G-20 countries and Nigeria also account for almost half of the world's cases of hookworm infection, while a large number of schistosomiasis cases -- responsible for chronic renal disease, female genital ulcers, and liver disease -- are in Nigeria, South Africa, Brazil, China, and Saudi Arabia.

Much of the disease burden within G-20 countries falls on the poor in Indonesia and the BRICS (Brazil, Russia, India, China, and South Africa), but there are also several serious NTDs found in Eastern and Southern Europe, and in the southern United States, including Chagas disease (heart disease), cysticercosis (seizures and other neuologic illness), and dengue (breakbone fever). New U.S. poverty statistics indicate that today almost 1.5 million American families surive on $2 or less in income per person per day in any given month. Many of the poorest -- and most disease-prone Americans -- reside in Texas and other parts of the Gulf Coast region.

Other locations within the G-20 that are particularly hard hit include areas of extreme poverty in southern Mexico, Saudi Arabia, and the northern territories of Australia (which is heavily populated by aboriginal populations) (See Figure). Instead of thinking of global health in terms of "developing" and "developed," therefore, it makes more sense to conceptualize NTDs as pockets of disease endemicity in areas of intense poverty throughout the world. These pockets occur, of course, in sub-Saharan African and other low-income regions, but they also afflict the world's wealthiest and largest-GDP countries -- countries with enormous financial and scientific capacity to combat and eliminate NTDs.

I refer to this new mapping of global disease burden as "blue-marble health," invoking the iconic 1972 image of Earth taken by the crew of spacecraft Apollo 17. As a potent symbol of the need for global health cooperation, blue-marble health has important policy implications for disease control and science diplomacy. In particular, it has the potential to promote awareness among G-20 countries that NTDs represent a significant impediment to economic development. It also has the potential to encourage international cooperation between G-20 countries to jointly solve thorny NTD problems, while simultaneously galvanizing G-20 support for lower income countries in Africa, Asia, and the Americas.

Since 2007, support from USAID has enabled more than 250 million people in low- and middle- income countries to receive low-cost packages of essential medicines for NTDs -- a practice the World Health Organization (WHO) refers to as "preventive chemotherapy." In 2012, Britain expanded its support of preventive chemotherapy, with shared targets to eliminate NTDs such as lymphatic filariasis, onchocerciasis, trachoma, and leprosy. Beyond Britain and the United States, however, very little is being done to leverage preventive chemotherapy against NTDs. There is an urgent need to encourage all of the G-20 countries (and the Nigerian government) to make similar commitments.

Preventive chemotherapy is considered one of the world's most cost-efficient public health schemes, typically costing less than $0.50 per person annually. Ensuring full G-20 participation in financing preventive chemotherapy for NTDs -- whether it is for their own countries or for less fortunate disease-endemic countries -- should become a high priority for future G-20 summits and discussions. According to the WHO, approximately 1.9 billion people require preventive chemotherapy for NTDs worldwide, yet only about 700 million people (36 percent) currently receive access to essential NTD medicines. Global cooperation among the G-20 and Nigeria is essential for full NTD coverage.

At the same time, the G-20 should take the lead in developing new vaccines and treatments for NTDs. Almost all biotechnology and life-science products are currently developed, manufactured, and tested in G-20 countries, including Brazil, China, India, and Indonesia -- meaning that these countries could take leadership in developing new vaccines specifically for NTDs. Such antipoverty vaccines could target NTDs that can't be treated with preventive chemotherapy alone - such as leishmaniasis and Chagas disease, which cause more than 60,000 deaths per year, and economic losses that exceed $7 billion for Chagas disease alone.

Today, the United States and some European countries account for almost all of the world's public support for neglected disease research and development, with minimal contribution from the emerging market economies of the G-20. As such, there is an urgent need for these other G-20 nations to contribute, especially Russia, India, and China -- countries wich currently spend heavily on nuclear weapons technologies. Their nuclear activities could be redirected for peacetime purposes to develop new NTD technologies.

The recently established U.S. State Department Office of Global Health Diplomacy should lead diplomatic efforts to pressure all of the G-20 countries to expand preventive chemotherapy efforts in order to ensure 100 percent global NTD drug coverage, while simultaneously promoting international scientific cooperation to produce NTD technologies. In some cases, these new scientific activities could be implemented in lieu of nuclear proliferation, similar to joint U.S.-Soviet efforts to collaborate on the development of an oral polio vaccine at the height of the Cold War. Ultimately, blue-marble health could become an important new theme for future G-20 summits as a highly cost-effective means to lift the world's poorest people out of a downward spiral of poverty and conflict.

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