Editorials

Evidence now shows that the best prescription for global good health and affordable food prices is free trade, says Roger Bate of the American Enterprise Institute.

“As the United States heads into recession, protectionists are smiling,” Bate says. “As always, they hide their self-interest behind concern for the environment, labor standards and health.”

But new data from economists Ann Owen and Stephen Wu of Hamilton College shows enormous health benefits from free trade, Bate points out.

“By analyzing a variety of data from 219 countries over 35 years, they demonstrate that the citizens of economically freer nations are healthier than those where the economy is more tightly controlled,” Bate says. “They conclude that openness to trade and higher volumes of trade are robustly associated with reductions in infant mortality and increases in life expectancy, particularly among males in developing nations. Interestingly, the effect is even more marked for the poorest of the poor: a small opening of trade in the poorest developing countries gives disproportionately larger health benefits to that country’s citizens, than to the citizens of richer nations. In terms of health, the worst off gain the most from more open trade.”

The findings seem intuitive.

“If medications and vaccines are allowed free movement across borders, it makes sense that they would therefore save more lives,” Bate says. “But Owen and Wu also suggest that the transfer of something less concrete matters more: beneficial knowledge that spills over simply from the act of trading with other nations.”

It’s a careful study of the statistics, Bate notes.

“The authors spend nearly half the paper testing its validity,” he says. “In their successful quest to demonstrate that variables omitted from their model, such as income inequality and resource endowments across countries, and fiscal aid received by poorer countries, do not undermine its accuracy, they unveil several startling points of discussion.”

These findings are somewhat less intuitive, but far more important.

“Most notably, they find that most foreign aid has no significant impact on a country’s health (assistance providing clean water appears to be an exception); and that opening up trade causes improvements in health, but improving health does not lead to open trade (and hence wealth),” he says. “These two findings undermine the economic arguments put forward by aid activists for increases in health care spending by donors. International aid cheerleaders such as economist Jeffrey Sachs say that we must vastly increase aid in order to improve health so that people can trade, create better institutions and draw themselves out of diseased poverty. But research supports Owen and Wu’s conclusions.”

So does history.

“Numerous countries have been given foreign aid to improve health but only those which have developed sensible domestic policies and embraced international trade have sustained improvement,” Bate says. “This idea gives extra impetus for nations to open their borders, and for the World Trade Organization (WTO) to complete the Doha Round of trade talks. My own research has demonstrated that tariffs on medicines significantly lower access to those medicines, notably in places with high tariffs such as Nigeria. The U.S. Trade Representative (along with representatives of Singapore and Switzerland) has tried to encourage their removal through the WTO. Owen and Wu add extra impetus to this effort and expand the target areas to a far greater range of tariffs.”

The implications for the United States are clear.

“Owen and Wu’s analysis implies that a future U.S. president could do more for global health simply by lowering agricultural subsidies, and increasing trade with poorer nations than all its worthy aid programs will do,” Bate says.