Impact of global trade

Some developing countries have benefited more than others from global trade. Developing countries welcome global trade because it brings jobs and investment.

The World Bank suggests that trade reforms have reduced poverty in some countries, for example China, India, Uganda and Vietnam.

Many countries, particularly in Africa, have failed to benefit from globalisation because of unfair terms of trade, the actions of transnational corporations (TNCs), poor government or unfavourable physical geography, for example landlocked countries.

Current trading arrangements mean some producers are disadvantaged when trading globally.

They may not be able to receive a fair price for their products, or may be working in conditions that do not meet their basic living needs.

Various strategies have been employed to try and reduce inequalities.

Debt abolition

Debt abolition is when some or all of a countries debt is cancelled. The money can then be used to develop.Organisations like ‘Drop the Debt’ try to encourage developed countries to help developing countries by cancelling debt.

For example, in 2005, Zambia had $4 million of debt cancelled. In 2006, the country had enough money to start a free healthcare scheme for millions of people in rural areas. This improved quality of life.

Despite successful debt abolition campaigns, World Bank figures show external debts owed by developing countries have increased by $430 billion over 12 months to $4 trillion.

Conservation swaps

Conservation swaps is when parts of a country’s debts are paid off in exchange for investment in conservation.

For example, in 2008 the USA reduced Peru’s debt by $25million in exchange for Peru conserving its rainforests.