‘Poverty has increased more in countries that have liberalized’ (A Row to Hoe). This statement perfectly encapsulates the dual nature of trade liberalization, deregulation and privatization of Third World food systems. Although initially intended to “free markets” and accrue benefits to all due to comparative advantage, free trade has morphed into a manipulative tool employed by developed economies to secure markets for their own excess produce. This in turn exacerbates the weaknesses in an already crippling food sector for third world economies, driving them towards greater reliance on imports, perpetuating the cycle of unemployment, debt and deficit.
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Owing to the fact that most developing countries have small scale subsistence farms, policies such as commodity boards, quantitative restrictions on imports, export taxes, price stabilization policies, production incentives and capital controls have to be established by governments in order to help ease their production process. Despite the fact that such policies promote dependency on the government, they are in fact implemented to usher farmers towards efficiency. As long as economies remained fairly insulated from imports, employment for such farmers remained secure. It was only when liberalization called for greater efficiency that already weak economies were dealt a severe blow.
A case in point is the example of cashew nut production in Mozambique (Liberalization, Gender and Livelihoods: the Cashew Nut Case). As it were, cashew farmers in Mozambique were struggling to sustain themselves financially with “banks regarding cashew processing as risky [hence] interest rates are high” (A Row to Hoe, 22). With the government liberalizing cashew production and processing practices in 1995, it developed reforms severely detrimental to the local cashew industry. The reforms included “reducing export tariffs and deregulating licensing, among other things” (A Row to Hoe, 22) It is no surprise then, that “Mozambique experienced a large number of factory closings between 1995 and 2000” (A Row to Hoe, 22).
Lastly, due to the fact that weaker economies are not strong enough to sustain themselves initially coupled with the debilitating effects of trade liberalization, they are pushed so far back into a corner that they have no option but to apply for assistance from supranational financial institutions. Blinded by desperation, what these economies do not realize is that by doing so, they are unwittingly placing themselves at the mercy of stronger economies that fund such institutions such as the IMF and World Bank. Walden Bello’s article “Manufacturing a Food Crisis” investigates such an incident, where a benign act as requesting financial assistance exploded into a severe blow for Mexico, where “the quid pro-quo for a multibillion dollar bailout was what a member of the World Bank executive board described as "unprecedented thoroughgoing interventionism" designed to eliminate high tariffs, state regulations and government support institutions, which neoliberal doctrine identified as barriers to economic efficiency” (Bello, 1)
For the preservation of an already vulnerable Third World Economy, it is imperative that corrective measures be taken before these economies completely succumb to the almost neo-imperialistic nature of the global, liberalized economy. To make trade fairer, the first step is to make sure that all countries are subjected to the same regulations and held to the same standards. As A_ Row to Hoe_ explained, free trade has destroyed supportive agricultural institutions in Third World Countries under the premise that they do not...
