WTO's trade liberalisation, agricultural growth, and poverty alleviation in Pakistan

Abstract

A theory-based graphical analysis of trade liberalisation policies (opening of closed-economy to international trade and cuts in price-supports, import-tariffs, and export-subsidies) suggests that most of such policies would yield net social gains to the society, as a whole. The adverse effects and losses in producer surpluses of some of the policies would be balanced out by gains in consumer surpluses of other policies; hence, policies would have to be enforced, not in isolation, but in a simultaneous fashion. Trade liberalisation would help minimise control of individuals on trade, leave less room for individual policy-makers, tax collectors, and interest groups to exploit situations in their own interest and lead the economy to be run in accordance with the supply and demand forces based on the long-lasting general tendency of human nature. This would achieve sustainable and stable agricultural growth; however, more durable sustained growth would depend on how effectively trade liberalisation is pursued and enforced the world over. Opening of a closed economy for exportables and withdrawal of export subsidies by foreign exporters would be pro-producers, and would directly contribute to poverty alleviation. Opening of the economy for importables, withdrawal of price supports, and tariff-cuts on imports would yield savings to consumers and positively contribute towards poverty reduction.