Tuesday, September 22, 2009

African Trade Links and Poverty - Chicken or Egg ?

A couple of weeks ago AidWatch of NYU posted three interesting graphics depicting the dearth of African trade links with the rest of the globe, then extrapolated causation for African poverty.

Indeed the pinkos would have you believe that if these trade links and infrastructure magically appeared, it would solve the problem. A form of "build it and they will come".

It's easy to see with these propositions that there is certainly positive correlation between trade linkages/ infrastructure and poverty. But there is much less visibility on the causation - and this is what's important.

I posit that the rule of law, an independent judiciary, property rights, lack of corruption and other similar constructs that support an open and free market are: a) the first step in establishing a prosperous society and economy; and b) will result in increased levels of foreign direct investment and trade links - which will both then lead to reducing poverty. Egg before chicken. . . .

The graphics are well worth a look (link at top).

No comments: