DEVELOPING COUNTRIES NEED TRADE, NOT AID Aid provided The table below shows the amount of trade

given by various countries in 2009 and 2010 through OECD (an international organi ation aimed at !romoting !olicies that will im!rove the economic and social well"being of !eo!le around the world#$ The money was used for various causes including education% healthcare and infrastructure$

OECD Development Assistance Committee Statistics on Resource Flows to Developing Countries (1#

All DAC donors 2010 (Total aid = US 12!"# $illion%

OECD Development Assistance Committee Statistics on Resource Flows to Developing Countries (1#

Other than OECD% countries !rovide aid through other organi ations$ &or e'( )a!an donated *+D 10,%-9. (about C/& 110%000# to the +tandards and Trade Develo!ment &acility (+TD&# (0 1oint initiative of the 2orld Trade Organi ation% the 2orld /ealth Organi ation% the 2orld 3an4% the 2orld Organi ation for 0nimal /ealth% and the &ood and 0griculture Organi ation# a !rogramme set u! to hel! develo!ing countries im!rove their e'!ertise and their ca!acity to analy e and im!lement international standards on food safety and animal and !lant health$ Why is aid not sufficient for the countries? Temporary relief( 0id acts a tem!orary relief$ 5t does not !rovide any !ermanent solution$ 0 develo!ing country can e'!ect hel! in the form of aid from develo!ed countries only in the case of emergencies li4e famine% diseases etc which cannot be e'!ected all times$ /owever if develo!ing countries are !rovided with the 4now"how re6uired for T70DE% then they will not de!end much on other countries and it will also hel! them rise globally and financially$ 5t is seen that roughly 890 billion international assistance goes to 0frica each year$ :et evidence demonstrates that aid to 0frica has made the !oor !oorer% and the growth slower$ The insidious aid culture has left 0frican countries more debt"laden% more inflation"!rone% more vulnerable to the vagaries of the currency mar4ets and more unattractive to higher"6uality investment$ 0id is an unmitigated !olitical% economic and humanitarian disaster$ (2# Corruption by middle men( Corru!tion by !eo!le at higher levels leads to im!ro!er distribution of resources because of which aids !rovided from different sources do not reach the re6uired destination$ Thus the !ur!ose of !roviding aid is not served$ Tal&nts not d&'&lo(&d( 5f an aid is !rovided% it means the talents in the !eo!le are not given sufficient o!!ortunities to e'!and and these talents remain to be of no use$ 2hen there is trade% these talents are !ut to !ro!er use which will also hel! in growing new talents$ Resources are not valued: 0id may not be given its due value when not !rovided to the right !eo!le$ The &7EE 75DE7 !roblem is one issue that arises when !eo!le receive resources without the need to wor4 for it$ Aid always comes with restriction: 0id received by any country is not the right of the receiving country$ Thus every aid received is cou!led with a set of restrictions !laced by the giving !arties$ This was evident in 1990 when 5ndia liberali ed its !olicies as !art of which aid was received from countries including )a!an$ 0id disbursements from all !roviders for &: 1990 were 7s -; billion$ Why is Trade needed instead of aid? Sustainable Growth: 0id is an instant remedy or a !ain 4iller to any !roblem% not the cure$ The root cause of economic !roblems in any country is lac4 of o!!ortunities of em!loyment and financial instability$ )a!an<s 0mbassador to the 2TO% :oichi Otabe% stated =5m!roving their (develo!ing countries# !artici!ation in international trade is 4ey% es!ecially in these difficult times% as trade is an im!ortant engine for sustainable growth and develo!ment>$ Trade encourages foreign investments and em!loyment o!!ortunities along with !um!ing more funds into any country$ Thus trade acts as a cure to the !roblem faced by any country$ Trade !aves

the way for overall growth because once a country has a strong system of trade and commerce% the growth of the country will not de!end on the benefits derived from any other country$ Thus it !rovides a sustainable growth for any country Economic rowth: Trade !rovides o!!ortunities for growth$ Develo!ing countries always need trade and not aid to become a develo!ed country$ China liberali ed its financial sector in 1990<s and within a s!an of 20 years it has established itself as a su!er !ower with the hel! of its strong trade relations$ Only trade can enhance the economic growth of the country and it also develo!s a better understanding between the nations$ 3etween 2000 and 200.% ?D@ !er ca!ita increased from 8A29 to over 8-29 in Beast"Develo!ed Countries$ Cuch of this can be attributed to an increase in trade and foreign investment$(;# !aster pace of rowth: 0id is a short term desire while trade is the long term goal$ Trade has hel!ed the many countries li4e 5ndia and China grow from a under develo!ed country to growing economies with nearly ;$9D and 9$9D growth rates when many develo!ed countries have their growth rates at only A",D$ Self sufficient and independent( Trade facilitates e'!ort diversification by allowing develo!ing countries to access new mar4ets and new materials which o!en u! new !roduction !ossibilities$ Trade liberates economy$ 5t earns on the assets% and ma4es develo!ers self sufficient and !ave way to e'!lore their !otential$ Thus it reduces the de!endence on others$ 5ndia cut im!ort duties from an average of 90D in 1991 to A0D in 199;$ This gave 5ndian manufacturers access to a variety of intermediate and ca!ital goods$ 5m!orts of intermediate goods increased by 22;D over the !eriod$ Two thirds of the intermediate goods im!orted were !roducts 5ndian !roducers could not buy before 1991$ 0s a result% industrial out!ut grew by 90D with new !roducts accounting for 29D of the total$(;# Ensures welfare of society: Trade hel!s !eo!le by em!owering them with basic 4nowledge and education$ Thus increasing trade ensures the formation of a society of !eo!le with at least minimum level of education and 4nowledge about ha!!ening around the world$ This hel!s in creating a strong society of !eo!le who are well informed and well connected with the world$ This further hel!s in sharing of ideas% mi'ing of cultures and sharing of 4nowledge$ Through its 0id for Trade% the E* has hel!ed +outh 0sian countries li4e 3angladesh and +ri Ban4a benefit from the im!rovement of 6uality standards for te'tiles and other e'!orts$ Over the last decade 3angladesh has increased its e'!orts by more than .0D$ (;# Raise employment levels and standard of livin : Trade !rovides entry of many !layers into economic environment !roviding !eo!le to with many em!loyment o!!ortunities$ This hel!s the society as it hel!s in raising the standard of living of the society$ Canufacturing wor4ers in o!en economies received !ay rates A to 9 times greater than those in closed economies% de!ending on the region$ 5n Chile% a wor4er in a sector o!en to trade and investment gains an average E1%100 more !er year than a wor4er in a relatively closed sector$ (;# Reduces the chances for corruption( 0 society of well informed !eo!le can !rotect themselves from corru!tion and other atrocities that are im!osed on them by society$ Reduces ap between economies: Trade strengthens ties between nations by bringing !eo!le together in !eaceful and mutually beneficial e'changes and as such contributes to !eace and stability$ This intuitive notion is confirmed by evidence$ 0 study underta4en by the Centre for Economic @olicy 7esearch on em!irical data showed that the !robability of dis!utes

escalating to conflict is lower for countries that trade more because of the o!!ortunity cost associated with the loss of trade gains$ (;# "i h Competition( ?lobali ation has even made an environment of high com!etition in develo!ing countries$ /ence to struggle and com!ete with global standards% com!anies have to increase the trade activities they are involved in$ Emerging economies li4e China% 3ra il% 5ndia and +outh 0frica are steadily catching u! with develo!ed countries% than4s to increased trade$ The ?D@ !er ca!ita increase of ?20 develo!ing countries stands at 119D for the decade 2000"2010$ (;# Enables #nowled e transfer and innovation: 3etter trade relations hel! better transfer and sharing of 4nowledge between countries$ This hel!s faster transfer of technological information which hel!s countries% es!ecially the develo!ing ones to ride on the train to faster economic develo!ment$ The statistics from Eurostat suggest that trade fairs are com!aratively im!ortant information sources for innovation$ 0n article by +ch1Fnsby% /G4on of *niversity of Oslo titled =Trade fairs and transfer of 4nowledge H ?reen energy and home design on dis!lay> focuses on this idea$ /e has ta4en the case of two trade fairs conducted in Cadrid% Casa @asarela and ?enera and has !roved that trade fairs hel! in the transfer of 4nowledge$ 5nvestment and trade have facilitated the de!loyment of information and communication technology% with mobile cellular coverage reaching .-D of the world<s !o!ulation in 200.% including -9D of the 0frican !o!ulation$ (;# !ocus on infrastructure and s#illful labor increases: 5ncrease in trade related activities ma4es it necessary for the state to invest heavily in infrastructure and trans!ortation facilities$ This acts as catalyst for the further develo!ment of trade$ Thus a circle of benefits are derived from develo!ment of trade$ E$amples of rowth%& China: China is the fastest growing economy in the world not because it was aided by any country but because it aids even the develo!ed countries by its trade$ 5n China the evolution from an inefficient !lanned economy began in 19;.$ 2ithin A2 years% by 0!ril 2012 the ?D@ has increased u! to 8 992--10 million *+ dollars and the trade to ?D@ ratio (200."2010# was 99$2$ (A# 0 crucial role in favouring the recent Chinese economic ImiracleI is mainly attributed to the increasing degree of trade and trade o!enness$ 'ndia( 0ny country that has moved from the underdevelo!ed country to a develo!ing one only because of trade$ Jo better e'am!le will !rove it other than 5ndia$ The ?ross Domestic @roduct (?D@# in 5ndia was worth 1.,;$9. billion *+ dollars in 2011% according to a re!ort !ublished by the 2orld 3an4$ The ?D@ value of 5ndia is roughly e6uivalent to 2$9. !ercent of the world economy (,#$ 5ndia is now growing at the rate of ;$9D which is drastic increase since its 1990<s$ China and 5ndia have achieved high rate of growth since few years$ The im!act of trade and e'!orts on ?D@ of both the countries is evident from the gra!h below$ E)(orts o* Goods and Non*a+tor S&r'i+&s as a S,ar& o* GDP, -

+ource( 2orld 3an4% 2orld Develo!ment 5ndicators database$ (9#

(ot aid but Aid for trade is needed%% The 2TO 0greements recogni e the lin4 between trade and develo!ment$ Director" ?eneral @ascal Bamy said( =The 2TO does not advocate o!en trade for its own sa4e% but as a means for Kraising standards of living% ensuring full em!loyment and a large and steadily growing volume of real income and effective demand<$>Thus KThe 0id for Trade< 5nitiative was launched by 2TO% to hel! develo!ing countries build su!!ly"side ca!acity in order to e'!and trade$ 0id for Trade aims to hel! develo!ing countries% develo! the trade"related s4ills and infrastructure that is needed to e'!and their trade$ (-# Thus develo!ing countries re6uirs 05D for T70DE and not 05D$ R&*&r&n+& 1$ +tatistics from OECD website( (n$d$#$ 7etrieved from htt!(LLwww$oecd$orgLdevelo!mentLaidstatisticsLstatisticsonresourceflowstodevelo!ingcou ntries$htm 2$ 0rticle based on 2hy foreign trade is hurting 0frica( (n$d$#$ 7etrieved from htt!(LLonline$ws1$comLarticleL+312A;9..999992000.A$html A$ Data related to economic condition of China from 2orld Trade Organi ation( (n$d$#$ 7etrieved from htt!(LLstat$wto$orgLCountry@rofileL2+D3Country@&Miew$as!'N CountryOCJP ,$ Data related toeconomic condition of 5ndia( (n$d$#$ 7etrieved from htt!(LLwww$tradingeconomics$comLindiaLgd!

9$ Report by World Bank titled C!ina" #ndia" and t!e Future o$ t!e World Economy" Fierce Competition or S!ared %rowt!& -$ 0rticle based one benefit of 0id for Trade( (n$d$#$ 7etrieved from htt!(LLwww$wto$orgLenglishLtrato!QeLdevelQeLa,tQeLaid,tradeQe$htm ;$ 0rticle based one benefit Trade( (n$d$#$ 7etrieved from htt!(LLtrade$ec$euro!a$euLdoclibLdocsL2012L1anuaryLtradocQ1,.991$!df