Growing, Growing Special Interest

CBS news released an article stating that the UN Anti-Poverty goals are at risk by reducing the international aid to developing countries that began in 2011. International aid fell to $133 billion, less than half of the $300 billion needed annually to meet the millennium development goals. The secretary-general claims that we need a heightened global partnership in order to implement this goal, a concept supported by Stiglitz. While Stiglitz does support free and fair trade, he firmly advocates that we need to enhance our global governance and reciprocity if fairness is to succeed in the world economy. His ideas are being seen here, as the lack of global partnerships have contributed to a decline in international aid. This ties back to the foundations of microeconomics, that state that actors in the market operate out of self-interest, which, in theory, leads to balanced trade. However, when some actors (developing countries) lack the opportunity and the means to participate fairly in the international market, global governance is needed to compensate for this inequality.

The global economic crisis contributed greatly to the decline in international trade, as said in the article, and led governments to develop protectionist policies that hurt developing countries. Our Coughlin article supports this in claiming that protected industries/countries always have a special interest. By countries protecting their domestic economy, they decrease imports, which reduces foreign incomes. This not only reduces aid that industrialized countries give to developing countries; it prohibits the developing countries from exporting to offset their debts (Coughlin). Thus, protectionist policies of developed nations create a detrimental externality when enacting protectionism.

The article warns that the $167 billion gap in foreign aid could worsen as a result of a delayed economic impact in the donor country budgets from 2013 to 2015 as the international economy has a very slow adjustment time. With this in mind, international governance must increase quickly and protectionism must decrease in order to attempt to offset this probable continued decline in foreign aid.