While not an end in itself, trade is a means to an end. Niklas Johansson, State Secretary to the Swedish Minister of Enterprise and Innovation, focuses on open trade, making the case that, to the extent that trade contributes to peace and stability and supports growth and development, it creates some of the conditions essential to improving children’s lives and future prospects.
By supporting economic growth and alleviating poverty, trade can be an important engine for combating child poverty, thereby making a significant difference to children’s prospects. Johansson pointed to the experience of China, where pursuit of an export-led growth model has resulted in it becoming the world’s second largest economy and largest trading nation. At the same time, China reduced poverty levels from 60% to 12% between 1990 and 2010. Other economies have followed a similar trajectory, using the trading system to rapidly expand economic growth and slash rates of extreme poverty.
There is a caveat when it comes to children: “The rate of poverty reduction as a whole is not always matched in the area of child poverty. While economic growth is important, what matters more for children is the nature or quality of that growth.” Johansson sees a need to effectively harness growth and convert it into social change that benefits poor children and their families. Policy makers at the international level must provide the right frameworks and mechanisms to support quality growth, while on the domestic level, ensure that no one falls behind.
Indeed, if Agenda 2030 and the SDGs are to be fulfilled, Johansson sees a need to recognize trade’s role in cutting poverty and supporting growth to generate effective action against child poverty.
One of the worst effects of economic recession is high levels of youth unemployment, topping 50% in some countries. The negative effects of this go beyond the loss of productive capacity. Surveys of young people highlight the corrosive effect that unemployment can have on their confidence, motivation, and view of the future. Trade can be part of the solution because one of its key impacts is through job creation.
Countries where trade openness has failed to stimulate growth commonly have unstable macroeconomic policies, inadequate property rights, insufficient public investment, or other socio-political constraints. To be effective, trade reforms must be complemented with the proper flanking policies, such as education and social services to tackle youth unemployment.
Development in a broader context
Lifting children out of poverty is essential, but not sufficient: “We need to be wary of the narrowness of economic measurement, such as GDP, and look at children’s lives in a more holistic way,” according to Johansson. “This is where trade can help contribute to the broader development perspective. Trade can aid in the creation of conditions through which children can lead better lives by reducing the potential for conflict, helping to create a stable environment, predictable conditions, and supporting higher income levels. This in turn supports better education and healthcare, such as, for example, improved access to medicine.”