Inequalities, trade and private sector development

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Free trade is sometimes described as a rising tide that lifts all boats, but the reality is that it can foster inequalities. The benefits are not always equitably shared between or within countries. Free trade is not always fair trade. Cheaper imports can undercut domestic sectors, destroy jobs, and harm the environment. But protectionism is not the answer either. How can we find the right balance to address the anxieties of those who are likely to end up on the losing side from globalisation? The new EU Policies Trade for All and Aid for Trade highlights how trade and development policy can complement one another. 

Having a decent job is widely recognised as the best way out of poverty. The private sector provides 90 per cent of jobs in developing countries, and is thus an essential partner in the fight against poverty. The private sector looks different in different countries, often there is a large informal sector of micro entrepreneurs that are key to provide employment. The private sector also provide access to essential products and services, as well as income to the state. Supporting a sustainable and inclusive private sector is key to tackling the challenge of income inequalities and poverty reduction. The EU policy a Stronger Role of the Private Sector in Achieving Inclusive and Sustainable Growth in Development Countries highlights the priorities areas for EU’s development action.