Debating Global Development - Review: Chapter 7

Instructions: Chapter 7

• Identify and explain two distinct pieces of knowledge acquired from the chapter.
• Identify a specific assertion that you found to be in disagreement with, and provide a rationale for your dissent.
• Please indicate any terminology that you find to be unclear or insufficiently described.
• Enumerate any lingering inquiries you may have after to perusing the chapter.

Material that MUST be used:

Chapter 7: Is Liberalization Good for the Global South?

Why are some countries in the Global South still impoverished while others have escaped? As we discussed in the previous chapter, even development experts don't agree on the answers to fundamental questions about why some countries take off and others lag behind. The NICs experienced such dramatic growth that virtually every nation wanted to emulate them, but were the NICs' successes due to the policies they implemented, or simply opportune timing? If their growth was due to specific policies, what were they: liberalist, nationalist, social democratic, authoritarian, or some combination of all the above? Finally, should we even call a country "developed" if the economic growth created by these policies comes at the expense of human rights and environmental sustainability?

In the early 1980s, economists and policymakers based in Washington, DC seemed to have an answer to these questions, agreeing that liberalization was the best approach to development. They believed that the NICs were growing rapidly primarily because they liberalized their economies, and that if all countries in the Global South followed this formula, they could also modernize their societies, establish a booming export industry, and climb the ladder of development. Through the Washington Consensus, they advised the overwhelming majority of LICs to adopt liberalist reforms.

Around this time, most of the governments in the Global South were experiencing severe budget crises and economic stagnation after spending too much money on ISI policies. They needed loans to remain solvent and spur development. So they turned to the World Bank and IMF for help because they were unable to attract commercial loans or private investment. The World Bank and IMF were created as international financial institutions (IFIs) in 1944 under the auspices of the UN for exactly this purpose. The World Bank gives long-term loans to LICs for specific development projects, such as building a shipping port or hydroelectric dam. The IMF gives short-term loans to LICs (and some middle-income countries) when governments are experiencing an economic crisis so that they can pay their bills and prevent the crisis from spreading to neighboring countries. Both types of loans are concessional, meaning that LICs are charged a lower interest rate than those in the private market, in the hope that they will spark sufficient GDP growth for LICs to pay back the loans with plenty to spare.

Following the assumptions of the Washington Consensus, the World Bank and IMF lent money to dozens of LICs withconditionality stipulations, meaning that borrowers were obligated to adopt a set of liberalist policy reforms calledstructural adjustment programs (SAPs). Borrowing governments had little choice but to implement SAPs because the World Bank and IMF were the lenders of last resort, and LICs desperately needed credit to survive. The SAPs contained a wide range of liberalist reforms, but the most common conditions included:

Reducing government spending to control rising debt and inflation.

Privatizing state-owned businesses to spur investment and innovation.

Opening up to global trade by reducing tariffs, subsidies, and other realist protections.

Opening up to global investment by removing financial regulations.

Deregulating businesses, making it easier for them to operate.

All the SAPs were designed to reduce the government's role in managing the economy, which would ostensibly attract foreign investment, make private industries run more efficiently, and ignite economic growth.

In addition to taking on SAP loans, most LICs also agreed to liberalize their economies when they voluntarily joined the World Trade Organization (WTO). The WTO was established in 1995 to facilitate global trade, and it currently has 164 member states in both the Global North and South. Nations that join the WTO agree to open themselves to foreign trade and investment and respect the intellectual property rights (e.g., patents and copyrights) of other member states. If nations do not comply with the WTO's rules, the WTO has a quasi-court that can adjudicate disputes and authorize economic sanctions against violators. The member states of the WTO can create new rules to expand global trade through regular rounds of negotiations. Most of the world's governments have chosen to join the WTO because they see advantages in being able to trade openly with the world's largest economies, despite the limitations it places on their ability to regulate their own economy.

By engaging with the World Bank, IMF, and WTO, almost all countries in the Global South have liberalized their economies since the early 1980s. The Global North, especially the US, encouraged this process under the justification that it would prove mutually beneficial in promoting development in the South and throughout the world. Indeed, these deliberate policy decisions were the main cause of economic globalization, which is the dense and rapid flow of goods, services, money, information, and other things across increasingly permeable national borders. Globalization has also been facilitated by technological, social, and cultural changes, but these liberalist policy reforms were crucial in opening up national borders to global exchange. This chapter addresses the question: Has liberalization in recent decades resulted in economic growth and widespread prosperity in the Global South? Or has it caused more harm than good?

Argument #1: Liberalization Has Helped the Global South

According to this argument, liberal globalization has proven crucial in stimulating development for both the Global South and the entire world. Global trade has grown by an average of about 6% annually since the early 1980s, which has fueled a period of global economic growth of about 3% per year. Economic research has shown that LICs that liberalized their economies have grown faster than LICs that remained state-centric and closed. As the previous chapter discussed, the success of the NICs attests to this fact. Although the NICs varied somewhat in the policies they implemented, all of them engaged in at least some form of liberalization by reducing tariffs and relying on export-led growth. But, critics ask, what about the regions that have been left behind by globalization? Even though the 1980s-1990s have been described as "lost decades" for Africa because of its economic stagnation after implementing SAPs, the first two decades of the 2000s have seen far more robust growth. Africa is now the second-fastest growing region in the world, with increases in GDP outpacing both inflation and population growth. Thus, perhaps it took some time for economic reforms to take hold, but FDI is now flowing into Africa, trade is expanding, and African economies are thriving.

Liberalization facilitated growth because it repaired the macroeconomic problems that became endemic in underdeveloped nations. Before the World Bank and IMF promoted SAPs, many inward-looking nations were saddled with heavy debt burdens, hyperinflation, and noncompetitive industries. These nations were often called economic "basket cases" as opportunities for productive investment shrank and daily life became extremely expensive for their citizens. Governments that implemented SAP reforms successfully reduced their budget deficits, stabilized their currencies, and controlled rising inflation, putting them on a pathway toward growth. For example, average inflation across the African continent was cut by over half in the two decades following their adoption of SAP loans. Although SAPs were not universally successful, several nations that liberalized have been able to climb Rostow's ladder of development by moving out of a dependence on primary commodities into secondary and tertiary industries like manufactured goods and high-tech services.

The economic growth fueled by liberalization has directly impacted poverty reduction. In the NICs, economic growth pulled over a billion people out of extreme poverty. Although GDP growth does not always directly correlate with poverty reduction, it is extremely difficult to achieve long-term poverty reduction without economic growth. An increase in a nation's GDP over time allows governments to widen their sources of revenue, escape their debt burden, and pay for social welfare programs that support their most vulnerable citizens.

Experts acknowledge that the positive impacts of liberalization also depend on other factors, such as good governance and a fair distribution of public benefits. But liberalization also makes these features more likely to emerge in LICs as economic growth over time empowers more citizens to advocate for transparent and responsible government. For example, an increase in FDI is correlated with an increase in the protection of civil and political rights in the recipient country. Economic integration leads to cultural integration, as foreign workers and tourists spread global norms about human rights. The opportunity to attract foreign investment also serves as an incentive for countries to protect human rights, as more FDI tends to flow to democracies than to autocracies. Likewise, while FDI tends to be correlated with more income inequality in the short term, eventually FDI makes incomes more equal as the host country becomes wealthier (this is called the Kuznets curve). The positive linkage between liberalization, economic growth, and social and political development is consistent with the predictions offered by modernization theory.

By increasing global trade and investment, liberalization has resulted in an expanded role fortransnational corporations (TNCs) in the global economy. These large companies that operate in multiple countries have created tremendous wealth and brought social benefits to the Global South. Since they can work across national borders, TNCs can produce goods efficiently and cheaply, taking advantage of economies of scale. This benefits consumers who can buy more affordable products, and it spurs growth in countries where TNCs operate. By operating in the Global South, TNCs bring much-needed foreign capital, create jobs for local workers, transfer new technologies, and generate tax revenues for host governments.

Although the working conditions in factories throughout the Global South are not ideal, jobs in the globalized economy typically provide local workers with better standards of living than alternatives such as subsistence farming, and they represent an opportunity to build workers' skills and improve their incomes. Of course, not all TNCs are equally beneficial, and some even engage in extractive or exploitative activities, but overall, their impact on development is positive. Finally, critics claim that liberalization results in environmental degradation in the Global South because TNCs can evade local regulations and pollute at will. However, there is some evidence showing that environmental harms worsen early on in development but eventually improve as nations get wealthier and reduce their reliance on environmentally destructive industries (i.e., the environmental Kuznets curve).

In sum, liberalization has created an integrated world economy that brings foreign investment, trade, and economic growth to the Global South. In addition, increased globalization has meant a rise in migration around the world, which can positively impact development in LICs (See Figure 7.1 for a discussion on the liberalization of migration). Nations that adopted liberalist reforms have benefited economically, socially, and politically, while nations that remain closed off from the global economy have lagged behind. The developmental gains from liberalization are not uniform or universal, but on balance, they are overwhelmingly positive.

[Insert Figure 7.1]

[Box] Figure 7.1 Should Migration be Liberalized?

A key tenet of liberalist theory states that economic growth is fueled when the inputs of production (e.g., goods, services, money, and information) flow freely across national borders. Without barriers to stop them, inputs can flow where they are employed most efficiently. Since people form the basis of economic production as its workforce, liberalists also tend to argue in favor of relatively open migration policies. If that is the case, why do you think that the Global North has enacted new restrictions on the migration of people, even as it has pushed for the opening of national borders to economic goods? Do immigrants represent a security threat or economic challenge? Are immigrants a scapegoat that is blamed for a country's other economic problems?

Immigration is important for global development for other reasons beyond economic efficiency. When highly educated people migrate from the Global South to the North, it often results in abrain drain, which is a dearth of expertise and innovation in their home countries. Conversely, migrants working in the Global North frequently send money back to their families in the form of remittances, which are an important source of income to promote development in the South.

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Argument #2: Liberalization Has Harmed the Global South

This perspective disagrees wholeheartedly with the arguments above. Not only has liberalization failed to produce reliable economic growth in the Global South, it has harmed the most vulnerable people the most. Free markets inherently create winners and losers, exacerbating the gap between the rich and the poor. While some relatively advantaged countries have benefitted from liberal globalization, the majority have been left behind.

Although supporters of liberalization provide evidence showing that countries which adopted SAPs grew economically, other studies contradict that notion. In the two decades after implementing SAPs, most countries in Latin America and Africa had weak or no economic growth. Although their exports grew slightly, they grew at a slower pace than in the period before adopting SAPs. A positive correlation between liberalization and economic growth only exists under very narrow conditions (for example, when researchers weigh the results by population size, which gives China and India's success more value, or when they only select countries with certain political attributes). As we saw in the previous chapter, even the success of the NICs was due less to liberalization than to the preexisting advantages that those states had, and the way the NICs carefully managed their integration into the global economy. The World Bank and IMF imposed a one-size-fits-all formula of liberalization onto the rest of the Global South that was not appropriate for most countries. With meager growth to show for it, the SAP loans simply exacerbated the long-term debt burden that many LICs faced. Indeed, by the end of the 1990s, the IMF designated about three dozen LICs (primarily in Africa) as unable to pay off their debts.

The World Bank itself admitted that the economic results of the SAPs were "below expectations." The Washington Consensus assumed that liberalization would trigger a set of positive trends in LICs, such as the emergence of an entrepreneurial class, a growth in domestic and foreign investment, a reduction in corruption due to privatization, and economic growth that would trickle down to the most vulnerable. These assumptions did not materialize in most countries, especially those in Africa. This is why the 1980s and 1990s, when economic growth declined in several African countries, were called the "lost decades." African countries began to achieve robust growth again in the early 2000s after the World Bank and IMF broadened their lending policies to focus less on structural adjustment. Indeed, it is debatable whether the more recent growth in Africa is sustainable, as it has been linked to a temporary boom in commodity prices, and 89% of African countries remain dependent on primary commodity exports. Thus, the hope that liberalization would help LICs move away from a dependence on raw materials and into manufactured goods and high-tech services has not proven true.

Overall, liberalization has led to greater divergence between higher- and lower-income countries, and perhaps more importantly, between the wealthiest and poorest people within a country. On average, countries that adopted SAPs have seen a higher poverty rate and a more unequal income distribution. For example, while Chile is often referred to as a success of the Washington Consensus, it is also one of the most unequal countries among its peers. Liberalization worsened poverty in LICs because it deliberately removed the government support that the most vulnerable people rely upon, such as agricultural subsidies that provide a basic income for farmers, health subsidies that keep medical costs affordable, and public utilities that provide clean water and electricity. The Washington Consensus viewed these forms of government spending as wasteful and inefficient, and so it removed them in the hopes that economic growth would obviate the need for government welfare. Even in many countries that achieved economic growth, the benefits did not trickle down to the most vulnerable people, and their quality of life suffered. Often, SAPs hurt women and children the most because liberalization policies increased their daily workload while reducing their sources of public support.

Similarly, SAPs encouraged governments to privatize and deregulate industries to achieve growth. Privatization failed to reduce corruption as wealthy capitalists with personal connections to government ministers made large profits by buying discounted companies previously owned by the government. Local workers who worked for state-owned industries that were privatized lost their jobs, so unemployment increased as a result. As governments weakened protections for labor and environmental rights, TNCs flocked to the least-regulated places around the globe, which is known as therace to the bottom. The race to the bottom has forced LICs to compete with each other to lower their standards to attract foreign investment. If a country raises its working conditions or environmental protections too much, TNCs will source their products elsewhere. In EPZs of liberalized countries, where foreign companies are exempt from regulations, factories are nothing more thansweatshops. In sweatshops, employees are underpaid and overworked with no right to unionize, working conditions are unsafe and degrading, and pollution is rampant. However, some argue that sweatshops actually benefit people living in poverty (See Figure 7.2 to see both sides of the debate). Nonetheless, as the Global South continues to depend on the export of primary commodities, much of the foreign investment it attracts flows intoextractive industries that deplete the South of its natural resources, amplify the resource curse, and exacerbate environmental destruction. Even if liberalization produced economic growth, it would not have been worth these human and environmental costs.

[Insert Figure 7.2 ]

[Box] Figure 7.2Are Sweatshops Bad?

A "sweatshop" is a pejorative term for a factory that has substandard working conditions: underpaid workers, long hours, no labor rights, and an unhealthy environment. As nations have deregulated their industries, and low-tech manufactured exports have exploded in the global economy, these kinds of factories have also proliferated.

It seems intuitive that sweatshops are degrading, unsafe, and bad for development. But some experts argue that they are actually a sign of progress. Workers (often young women) line up to take jobs in these factories because they offer a better source of income than subsistence farming. Although working conditions are sub-optimal, they may improve over time, and workers can gain new skills, increase their social mobility, and begin to advocate for their rights. Nations like China began their take-off with factories like this but eventually graduated to high-tech industries as they climbed the ladder of development. Sweatshops may be the unpleasant but necessary first rung on the ladder.

Indeed, ending or improving sweatshops is not so simple or straightforward. Nations that enact better labor and environmental standards may see foreign investment flee to countries with lower standards (i.e., the race to the bottom). Large TNCs argue that they can't control what happens in sweatshops because they don't own the factories; they are often run by local subcontractors who are more difficult to regulate. Consumers may choose to boycott the goods that are produced in sweatshops, but this would just deprive the workers of the jobs they desperately need. The most commonly proposed solutions won't actually solve the problem.

Perhaps sweatshops could be ended at the global level by enforcing the same labor and environmental standards in every country, which would make TNCs unable to race to the bottom since all countries would be the same. There are two problems with this approach. First, it would be difficult to get LICs to agree to these standards because it could reduce their competitive advantage in trade and shift production to wealthier countries. Second, no global institution has anything close to the power needed to enforce these standards everywhere. Global institutions like the International Labor Organization (ILO) can promote better labor standards around the world, but they have little power to enforce them.

Anti-sweatshop activists have adopted an innovative approach over the past three decades: shaming TNCs publicly for sourcing their products in sweatshops. Since TNCs care about their brand's reputation, this approach has proven effective in pressuring almost all the largest TNCs to adoptcorporate social responsibility (CSR) guidelines. From Walmart to ExxonMobil, large TNCs increasingly review their sourcing of products to reduce their negative social and environmental impacts. They publish annual reports for activists to hold them accountable. In general, TNCs have found that adopting more ethical practices has not dramatically increased their costs and that most consumers are willing to cover the difference. Of course, it is difficult for a TNC to adequately review all of its global operations, so many companies get accused of "greenwashing," or marketing themselves as socially responsible while still employing abusive practices abroad. Nevertheless, the movement toward CSR has been an important step toward reforming economic globalization.

The global anti-sweatshop movement has also sparked another trend towardsocial enterprise and fair trade (see Chapter 15). Unlike CSR, a social enterprise orients the entire purpose of their company around social and environmental goals, such as providing high wages and excellent working conditions in the Global South. A prominent example of a social enterprise is Patagonia, a global apparel TNC that is owned by a trust that dedicates 100% of its profits toward combating climate change. Rather than rely on government policies, social enterprises use private business practices to target development.

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This perspective acknowledges that TNCs bring important value to the Global South. Every nation needs to attract foreign capital, create new jobs, establish new industries, and trade with the rest of the world to develop. However, since LIC governments were forced to deregulate TNCs, they have been unable to reap the benefits of that investment. TNCs use lax regulation to avoid paying local taxes, so they repatriate most of their profits back to the Global North. According to one study, tax avoidance by TNCs costs the Global South over $160 billion per year, more than the total amount of aid given by the Global North. Additionally, TNCs often collude with authoritarian and corrupt regimes in the South, paying bribes to gain access to valuable resources, or turning a blind eye when governments suppress workers' rights. Thus, given the way that liberalist rules have been imposed upon the South, TNCs currently cause more harm than good.

Liberalization has also made LICs more vulnerable to economic shocks that happen both domestically and globally. If a nation elects new leaders who promise policy changes, foreign investors can get spooked and quickly withdraw their money, causing an economic crisis (this is called capital flight). Similarly, a crisis in one country can spill over into others that are closely integrated, as occurred in the 1997 Asian financial crisis, the 2008 global recession, and the 2020 COVID pandemic.

In sum, liberalization policies imposed by the World Bank, IMF, and WTO on the Global South have not only failed to produce robust economic growth, they have harmed the most vulnerable people in LICs. It is no wonder whyanti-globalization protests have become a regular feature of the politics of LICs in the past three decades. People in the South are not opposed to globalization per se, but they have frequently fought back against liberalization policies such as the privatization of public services, decreases in government subsidies for basic consumer needs, and exploitative working conditions in export-oriented factories. Anti-globalization protests have occurred in dozens of LICs, often leading to political instability and even violent conflict, which further threatens development in those countries.

Why did liberalization fail to produce sustainable growth throughout the Global South? According to dependency theory, it is because the playing field of the global economy is still tilted against the South. The Global North imposes liberalist rules on the South that they do not follow themselves, which results in unequal (rather than free or fair) global trade. For example, the US, Japan, and EU continue to subsidize their large agricultural corporations while telling LICs to remove subsidies that protect their farmers. As a result, Northern agricultural products flood Southern markets, outcompeting local farmers and taking away their main source of income. Northern governments also engage in tariff escalationi.e., taxing manufactured imports at a higher rate than raw materials, thus discouraging the development of manufacturing industries in LICs. The North imposes high tariffs and other non-tariff barriers on the South, which stifles the South's ability to export their products to the North. Northern governments also fail to crack down on their own TNCs who sign corrupt deals to extract natural resources from the South or avoid paying their fair share of taxes. Finally, the North jealously guards the intellectual property rights of their corporations, which funnels profits to the North and prevents innovative technologies from spreading to the South. For these and other reasons, dependency theorists call the liberalized global economy "neocolonialist" because more wealth is still being extracted from the South to facilitate the North's development, rather than vice-versa. According to some studies, unequal trade results in over $2 trillion in wealth flowing from the South to the North each year, which is 10 times the amount needed to end all extreme poverty in the world. By fashioning an unequal system of globalization, the North has pushed most of the economic risks and environmental costs onto the South, while reaping most of the advantages.

[Insert Think Again box here]

Think Again: Can you think of something you've purchased recently that isn't connected to the global economy in some way, in its materials, manufacturing, or packaging? The global economy is deeply integrated whether we're aware of it or not.

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Conclusion: Reforming Globalization

It is striking how polemical the debate over liberalization has become. One side views liberalization as the key to economic growth and poverty reduction. The other side views liberalization as a wolf in sheep's clothing, disguising a neocolonial economic system that weakens and further impoverishes the Global South.

How is it possible for development experts to ask the same questions, look at the same world, and come to such opposite conclusions? Part of the reason is that global development is complex, and results in the real world are often mixed. Researchers will find different outcomes depending on what they choose to measurefor example, what time frame they study, which countries they include, which policies and outcomes they focus on, or what statistical tests they employ. If you are confused about how contradictory the evidence is on each side of the debate, you're in the right place. In global development, the simplest answer is often not the correct one. For example, see the debate on the effects of liberalization in the Global North, which are similarly controversial (Figure 7.3).

[Insert Figure 7.3 here]

[Box] Figure 7.3 Did Liberalization Benefit the Global North?

One way to measure whether liberalization has benefited people is to track the growth in their incomes over time. In 2013, economists Franko Milanovic and Christoph Lakner did just that, graphing global income growth from 1988-2008 in a chart later known as the "Elephant Chart" (because it resembled the outline of an elephant).This data revealed that the outcomes of liberalization have varied widely among different groups of people, depending on how wealthy they were to begin with.

As this chapter discusses, economic growth has not been the same for everyone in the Global South. People in the lowest-income countries saw their incomes stagnate over the past two decades. However, incomes for people in low- to middle-income countries such as China and the NICs grew significantly. Results in wealthy countries have also diverged. The lower and middle classes in the Global North have seen their real incomes decline over the past two decades, while the upper classes have seen their incomes skyrocket.

Policymakers in the Global North disagree about why globalization has economically weakened their own middle class. Realists claim that it is because their jobs are outsourced to the South or taken by immigrants. Leaders like Donald Trump and Boris Johnson have argued in favor of new protections against the South that would retain more of the benefits of trade in the North. On the other hand, democratic socialists claim that the middle class is hurt because the profits of global trade have been captured by the wealthy elite. Leaders like Bernie Sanders and Jeremy Corbyn have argued in favor of progressive taxes against the upper class to redistribute some of their wealth in the form of better social support. Whichever side you agree with, it is vital to understand that the results of globalization have not been the same for everyone, and that there are very different policies offered as solutions.

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Even if it isn't conclusive, the debate over liberalization has had a significant impact on global finance. In response to years of criticism, the World Bank and IMF began to reform their lending conditions to deemphasize liberalization by the early 2000s. For example, they created the Highly Indebted Poor Countries (HIPC) initiative to provide debt relief for dozens of countries stuck in an unsustainable debt trap. To receive debt forgiveness, recipient governments must consult with civil society organizations to produce a Poverty Reduction Strategy Paper (PRSP), i.e., a plan for directly addressing poverty beyond just stimulating economic growth. Although PRSPs have been criticized for bypassing true public dialogue and mostly reflecting the preferences of donor institutions, there is some evidence to show that countries adopting PRSPs have achieved better poverty reduction and social development than other LICs. Similarly, in 1999 the World Bank adopted a "Comprehensive Development Framework" to analyze its lending strategies through a more holistic lens. Under this framework, rather than simply funding large infrastructure projects, the World Bank has supported a broader range of initiatives in the Global South, such as health, education, and civil society development. The World Bank's new approach was strengthened by the adoption of an "Environmental and Social Framework" in 2016, which provides oversight on loans based on criteria that include labor rights, gender equality, community health, and environmental sustainability.

Reforms have not been as forthcoming in the area of global trade. Although the overwhelming majority of the Global South still participates in the WTO, they have generally not been able to negotiate better terms of trade with the Global North. As a result, progress at the WTO toward expanding global trade has been stalled for the past two decades. At the Doha Round of WTO negotiations in 2001, nations of the Global South (in a group known as theG-77) banded together to bargain collectively for lower tariffs and trade barriers from the North, particularly for an end to the North's agricultural subsidies. However, the North has not offered any major trade concessions. In fact, in response to economic recessions, the COVID pandemic, and the rise of realist politics in the North, wealthy countries have erected new trade barriers. As a result, the pace of growth in global trade has slowed somewhat over the past decade.

Whether globalization helps or hurts the Global South, most LICs have little choice but to engage in at least some form of liberalization. It is extremely difficult for nations to develop without allowing private ownership, sparking innovation, attracting foreign capital, and exchanging goods and services with the rest of the world. However, each nation should be free to choose the proper mix of policies that are tailored to its unique situation, rather than following a supposed formula imposed by global institutions. The proper mix of policies for each country is likely to borrow from a range of theories of IPE.

Finally, if governments of the Global North are committed to ending extreme poverty, they can make the global economic system fairer to LICs. They can sign preferential trade agreements that encourage the Global South to produce high-value exports. They can end subsidies that compete with low-income producers from the South, ensure that TNCs pay their fair share of taxes, or include human rights and environmental protections in trade agreements. A common theme of this book is that global development involves much more than just foreign aid. However, the debate over foreign aid is also crucial, and we turn to this in the next chapter.