Ladies and gentlemen,
I wish to extend a warm welcome to the Ambassadors, to the Director of the Graduate Institute, Professor Philippe Burrin, and to the Chairman of the Graduate Institute’s Foundation Board, Prof. Jacques Forster.
Let me also welcome the professors, the students and the delegates that have joined us today.
And a special welcome goes to today’s special guest, Professor and Nobel laureate Amartya Sen.
Let me start by thanking the Graduate Institute for choosing the WTO to host this year’s opening lecture. This choice of venue reinforces the strong relationship that our two institutions enjoy. Indeed, the links between the WTO and the Graduate Institute run deep. We are long-time neighbours and share the good fortune of being located on the beautiful grounds of Parc Barton and its lakeshore.
But we also share some of our human resources in a successful two-way exchange. A number of WTO staff teach at the Graduate Institute, contributing both their experience and expertise and, at the same time, many among the WTO recruits are alumni of your institution, bringing their unique insight into the work of this organization.
Last, but by no means least, the WTO and the Graduate Institute share the same intellectual framework regarding the challenges inherent in global governance and trade opening, a proximity of opinions that has made our institutions ideal partners in many initiatives. We are therefore honoured to host this event.
It is also an honour and a privilege for me personally and for the WTO to have among us Professor Amartya Sen, whose work in economics has great relevance for the WTO.
Professor Sen does not need lengthy introductions. He is currently Professor of Economics and Philosophy at Harvard University and has collected extensive recognition, including the Nobel Prize in 1998 for his contributions to welfare economics. His name is linked to extensive research in the field of development economics, some of his areas of focus being famine, human development theory, poverty and gender inequality, just to name a few. As an economist and a philosopher, his theories have shaped — and continue to shape — much of today’s development thinking.
Many of Amartya Sen’s works bear relevance for us working in the house of trade.
In his work Development as Freedom, Prof. Sen defines development as a process that expands human freedom and removes those “unfreedoms” that leave people with little choice and few opportunities. International trade is recognized as a tool for generating opportunities for development. In this same spirit, the WTO does not advocate open trade for its own sake, but as a means for “raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand”.
Trade has been a vehicle for prosperity in many areas of the globe. By promoting economic growth and higher incomes and by offering access to better goods, services, capital, knowledge and technology, trade offers new and diverse opportunities for all.
However, the persistence of widespread poverty in many areas of the world and the growing inequalities in most of our societies are also a stark reminder that the benefits of the global economy have not accrued to everyone in an equal manner. Economic growth is a necessary but not sufficient tool for poverty alleviation. Skewed patterns of income distribution — both at international level and within a country — mean that economic growth does not often trickle down to the most vulnerable in our societies and that the poor are often denied access to the opportunities of trade opening.
What Prof. Sen teaches us is that to ensure that trade opening works for the poor, trade reforms need to be accompanied by policies that guarantee an equitable distribution of trade gains. Health and education, safety nets and access to credit are part of poverty reduction strategies as much as economic growth itself. These complementary policies protect the poor against the potentially destabilizing effects of trade opening, while ensuring that trade unlocks income-generating potential for all layers of society. This requires overall coordination between government institutions as well as multilaterally in all areas of international cooperation. In other words, it requires a strong domestic and international set-up. In many ways, we are all in dire need of institutional capacity building.
Prof. Sen’s work is also relevant for today’s discussion on food security and the debate between self-sufficiency and the integration of global food supplies. His book Poverty and Famines has changed the way famines are understood and can be addressed by showing why thousands of people might starve even when food is available. Thirty years on, in a world that is vexed by recurring food crises and food price volatility, his book remains extremely relevant in addressing food security concerns.
At the WTO Public Forum last week, we asked ourselves whether multilateralism is in crisis. Indeed, the current economic climate characterized by low growth, increasing unemployment rates, and the looming ghost of raising commodity prices has generated widespread instability, uncertainty and mistrust in the ability of governments to cooperate. But, whether pessimistic or carefully optimistic about the future, all speakers agreed that there is no real alternative to multilateralism. We must all be “activistic”. If the tools we have so far do not work as well as we had hoped, then we, collectively, need to find innovative and creative solutions to today’s challenges.
With his deep experience in both eastern and western wisdom, his consistent efforts to find ways to improve individual and social welfare and his ideas for addressing poverty and gender issues, Prof. Sen’s theories provide us with this much-needed creative thinking.
The title of today’s lecture asks “What is the use of Economics?” I will allow Prof. Sen to answer this question. Before I do that, please allow me to wish you all a great start to the new academic year.