How Poverty Reduction Can Survive Deglobalization
By sharply curtailing international trade, the COVID-19 pandemic has accelerated a trend that was already underway. It is now more important than ever for developing countries to seek alternatives to export-led growth.
NEW HAVEN – The COVID-19 pandemic seems to have curtailed globalization in ways that the current US administration could scarcely have dreamed up even a year ago. But, viewed in a broader context, this year’s retreat from globalization is merely the latest chapter in an ongoing process that has left the developing world increasingly pessimistic about pursuing export-driven growth as a path out of poverty.
Before COVID-19 arrived, the latest World Bank estimates showed that the share of the world’s population living in extreme poverty (less than $1.90 per day in 2011 dollars) had declined from 36% in 1990 to 10% in 2015. But the pandemic has since threatened to reverse some of this progress; and even without the current crisis, poverty would have remained an important challenge in many parts of the world, not least Sub-Saharan Africa.
Advanced economies – particularly the United States and the United Kingdom – have increasingly been turning inward, restricting trade, undermining multilateralism, and closing their borders to immigrants. And it is exceedingly unlikely that these trends will be reversed any time soon.