Following the recent debate on the effectiveness of systemic interventions, I assert that investments in global trade may be effectively altruistic. If quantified, the impacts of investments in world commerce facilitation may outcompete the effects of funding GiveWell’s charities by unit amounts.
Unlike investments in GiveWell’s charities, financing trade advancement of developing nations enables individuals who live in emerging economies to gain commercial competitiveness and thus join a virtuous cycle of income growth. An increased income enables the beneficiaries to purchase health-related goods and services which are currently provided by GiveWell’s charities. Further, internationally competitive domestic industries enable beneficiaries to find better employment and find market for their informal businesses.
Trade investments cannot be directly quantified by the quality-adjusted life year (QALY) measure. This is because Health-related quality of life (HRQoL) has not been associated with income. However, GiveWell reports that decreased poverty is valued higher than improved health. I rely on literature estimates that value a QALY as 50% of GDP per capita of that nation.[i]
1.
Investing in the negotiation of trade policies favorable to developing countries may present large returns on investment. For example, passing a bill through a registered lobbying firm in the United States costs about $200,000/bill.[ii] [iii] Assume that this bill contributes to a policy that reinstitutes the Generalized System of Preference (GSP) for India from which the United States withdrew in June. This will contribute $300 million to India.[iv]
This number assumes that other nations are not able to export to the United States in lieu of India, due to the lack of international competitiveness of their industries. Thus, the $300,000 million is assumed to be a pure efficiency loss, entirely borne by India.
In 2018, India’s GDP per capita was $2016.[v] That makes $2016 x 50% = $1008 per QALY. $300 million/$1008 = 298 000 (~300,000) QALYs. The cost per QALY is thus 200,000/300,000 = $0.66 per QALY. That is about $0.66 x 69.165 = $46 per statistical quality life (the life expectancy is India is 69.165 years[vi]). Lobbying for favorable trade policy is thus much more cost-effective than donating malaria nets thought Against Malaria Foundation (which provides a quality life for $3,337.06).[vii]
2.
Further, enabling emerging economies to grow their trade capacities may be also cost-effective in the long term. For example, assume that developing and implementing a “one-stop shop” import-export window costs $1,000,000 for a single nation. Further, assume that this would make importing and exporting 1% more efficient. This increased efficiency may take place due to reduction of red tape (paperwork substituted by electronic forms), decreases in travel time that is required to obtain export and import clearances (visiting one government office instead of several bureaus), and facilitation of obtaining trade information.
Additionally, assume that over the next ten years, this nation will export $1,000 million and import $2,300 million annually. These values are based on trade data of Malawi. Malawi exported $1,080 million worth of products in 2015 and imported $2,312 million of goods and services in that year.[viii]
Therefore, due to the “one-stop shop” cross-border trade investment, over the course of ten years, a nation will be able to sell $1,000 million/year x 1% x 10 years = $100 million more products abroad and import additional $2,300 million/year x 1% x 10 years $230 million worth of goods and services from foreign nations. In total, the nation will gain $100 million + $230 million = $330 million.
Since this nation is small, it can be assumed that the increases in exports will all accrue to domestic sellers without affecting world prices. Additionally, presume that the extra imports also benefit to the investing country in their entirety. Either the increased efficiency of import facilities reduces the price for consumers, increasing the consumers’ real income, or the reduced trade barrier enables domestic producers to source cheaper inputs from abroad, making their production more efficient. The increased production efficiency may attract foreign direct investment and further boost the domestic economy. However, I am not taking these possible secondary impacts into account.
Supposing that the GDP per capita (purchasing power parity adjusted) in the investing nation is $1,300 (based on $1,309, the 2018 value for Malawi[ix]), a QALY in that nation is valued at $1,300 x 50% = $650. This value may grow slightly over the next ten years, e.g. to an average of $850.
Thus, the $330 million efficiency gains provide $330 million/$850/QALY = 388,000 quality life-years equivalents. With an initial investment of $1,000,000, a single QALY in that nation costs $1,000,000/388,000 = $2.58. That is $2.58 x 70 = $180 per healthy life. (Life expectancy in that nation is assumed to be 70 years on average over the next 10 years. This is based on the 2017 value of 63.279 for Malawi[x]).
3.
Impact divestments, or diverting funds from purely profit-motivated investments to impact ventures, which enjoy the bottom lines of profit as well as of social and/or environmental return, may also outcompete GiveWell’s charities.
According to the United Nations Development Programme, 60% of impact investors accept returns on par with market returns.[xi] The consulting firm McKinsey estimates finds impact investment returns “comparable to market rate returns.”[xii] Assume that these values are adjusted for risk.
Shifting purely for-profit investments into impact investments does not reduce the investors’ wellbeing if these two types of financial allocation yield the same fiscal returns, adjusted for risk. However, divesting into impact brings additional benefit to those affected by this investment. Since at least 60% of impact investment enjoys market returns, then at least 60% of funds invested globally improve wellbeing of affected individuals without an additional cost.
This value assumes non-diminishing marginal returns on impact investment. This may not be an unreasonable assumption, given the unexplored consumer potential (which grows, rather than decreases with increased wealth) in underserved markets, such as those in impoverished areas.
Additionally, impact investment may yield the highest overall (socio-environmental) return in the poorest markets. However, these markets may provide the smallest return to the investor. Thus, effective altruists may invest into markets of different affluence depending on the relative values these individuals associate to their wealth (and ability to re-invest themselves) to that of others.[xiii]
4.
Unlike impact investment, which offers financial returns to investors, non-profit support of trade competitiveness of disadvantaged groups and nations provides returns to others exclusively. Non-profit market competitiveness may also prove effectively altruistic.
For example, One Acre Fund (OAF), which is supported by TheLifeYouCanSave, describes a 248% return on investment.[xiv] However, the beneficiaries, farmers in developing countries, as opposed to the investors, accrue the entirety of these investments. The 248% value considers all expenses and the medium-term increases of incomes of the benefiting farmers but neglects the environmental impacts of the investments and economic spillover effects. Both of the unaccounted factors are likely positive.
Thus, investing into trade competitiveness of disadvantaged groups may provide quality life years at a negative overall cost, although these investments prevent altruistically-minded individuals from re-investing their returns themselves.
5.
Publishing pro-corporate social responsibility (pro-CSR) agenda in major media costs $44,000 per year.[xv] If one article is published in a year in an outlet which enjoys 62 million readers per year,[xvi] and if every 1,000th reader is influenced to spend additional $10 on socially responsible purchases, on average, every dollar invested generates (62 million readers/1,000 x $10 per reader)/$44,000 = $1.41 of CSR-conscious spending. This constitutes a 141% return on investment. This return may carry vast economic spillovers alongside the supply chain.
Conclusion:
Thus, investing in international trade may be more effectively altruistic than donating to GiveWell’s charities. Negotiation of trade policies favorable to developing countries, supporting emerging economies’ trade governments, for-profit impact divesting, non-profit advancement of competitiveness of disadvantaged groups, and corporate social responsibility advocacy may all provide a higher number of quality life-years than organizations recommended by GiveWell, per unit amount spent.
NB:
This is my hypothesis. If you agree, please help me mobilize the global community to pursue cost-effective international development through trade. If you disagree, please provide constructive criticism. If you have any questions, ask. If you know other cost effective-trade-based development specialists, please refer me to these. I welcome any comments below as well as personal messages through the platform.
[i] Li Huang et al., “Life Satisfaction, QALYs, and the Monetary Value of Health,” Social Science & Medicine 211 (August 1, 2018): 131–36, https://doi.org/10.1016/j.socscimed.2018.06.009.
[ii] Lee Drutman, The Business of America Is Lobbying: How Corporations Became Politicized and Politics Became More Corporate, 1 edition (Oxford ; New York, NY: Oxford University Press, 2015), 86–87.
[iii] Williams, “182: I’m a Reformed Lobbyist. Ask Me Anything,” DecodeDC, February 23, 2017, https://omny.fm/shows/decodedc/182-im-a-reformed-lobbyist-ask-me-anything.
[iv] “Trump Terminates Preferential Trade Status for India under GSP,” The Hindu Businessline, accessed October 7, 2019, https://www.thehindubusinessline.com/economy/trump-terminates-preferential-trade-status-for-india-under-gsp/article27398318.ece.
[v] “GDP per Capita (Current US$) - India,” The World Bank Group, accessed October 7, 2019, https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=IN.
[vi] “Life Expectancy at Birth, Total (Years) - India,” The World Bank, accessed October 14, 2019, https://data.worldbank.org/indicator/SP.DYN.LE00.IN?locations=IN.
[vii] Chris Weller, “The World’s Best Charity Can Save a Life for $3,337.06,” Business Insider, July 29, 2015, https://www.businessinsider.com/the-worlds-best-charity-can-save-a-life-for-333706-and-thats-a-steal-2015-7.
[viii] “Malawi Trade at a Glance: Most Recent Values,” World Integrated Trade Solution, accessed October 14, 2019, https://wits.worldbank.org/countrysnapshot/en/MWI/textview.
[ix] “GDP per Capita, PPP (Current International $) - Malawi,” The World Bank, accessed October 14, 2019, https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?locations=MW.
[x] “Life Expectancy at Birth, Total (Years) - Malawi,” The World Bank, accessed October 14, 2019, https://data.worldbank.org/indicator/SP.DYN.LE00.IN?locations=MW.
[xi] “Impact Investment,” United Nations Development Programme, accessed September 15, 2019, https://www.sdfinance.undp.org/content/sdfinance/en/home/solutions/impact-investment.html.
[xii] “Impact Investment.”
[xiii] William MacAskill, “Effective Altruism: Introduction,” Essays in Philosophy 18, no. 1 (January 31, 2017), http://dx.doi.org/10.7710/1526-0569.1580.
[xiv] “Our Impact,” One Acre Fund, accessed September 14, 2019, https://oneacrefund.org/impact/.
[xv] “CSRwire Distribution,” CSRwire, accessed September 16, 2019, https://www.csrwire.com/distribution.
[xvi] “Bloomberg Media,” Bloomberg Finance, accessed October 14, 2019, https://www.bloomberg.com/impact/products/bloomberg-media/.

Meta note: I am talking about primary and secondary education which is equivalent to high school education is US. Some schooling systems have vocational/trade school in years 10-12, instead of college track courses. Either way kids are staying in school for twelve years.
The country examples of the fast path that I gave "violate the money = well being rule", and show how some countries had better education and health before they became rich.
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In all the examples that I gave Jamaica, Sri Lanka, Mauritius, Cuba, Japan(Meiji era), Kerala, China, Singapore, Hong Kong, Costa Rica etc.. people became much better educated than their counterparts in other countries with similar levels of income (GDP/per capita)
Educated citizens benefitted by being healthier, knowing how to avoid disease, when to go to doctor, how to follow instructions, being better able to advocate for themselves. Knowledge of human biology led to desire to control fertility, which in turn led to use of contraceptives, this also involves negotiating fertility in a marriage, which the husbands usually control in agricultural societies. Being able to understand and participate in modern societies is enhanced by education.
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Not true. Countries that prioritized trade and industrialization stayed on the slow path. E.g. India with its efforts on import substitution industrialization policies, while neglecting basic education and health, this has continued even after opening up the economy with the result that India is far behind China, and is behind Bangladesh in some human development indicators (life expectancy in India is 68 vs 72 in Bangladesh), despite rapid economic growth.
Also if trade is so important, why were China and India so far behind at independence? After all China opened its economy to free (opium) trade, and India was ruled by UK, the leading light of industrialization and trade.
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Costa Rica, my knowledge is from HPA (1989) where Sen and Dreze talk about Costa Rica as a model from which lessons could be learnt. This is prior to intel's investment in 1995.
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Regarding Singapore basic education was an important part of what it did right. This report sheds more light. Industrial policy, trade etc were the other things that they did right.
Countries that have universal primary education and 50% secondary education (high school equivalent) have done best, link.
Manufacturing jobs require 8-12 years of schooling. That may seem like low skill or little education, but it is an extraordinary achievement for countries that are primarily agricultural.
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Sen has a lot to say about China " By 1979, when the economic reform came, the Chinese life expectancy was already 68 years; the Indian life expectancy was 54 years, 14 years behind it."
"There are really major lessons there, and I might say also one of the unsung contributions of the pre-reform educational and health care expansion is, I believe, the radical economic expansion that took place in the 1980s. After the economic reform, it would have been very hard without the base of elementary education which China had and India did not at that time, which is still a factor which bothers India badly." https://asiasociety.org/amartya-sen-what-china-could-teach-india-then-and-now
"Look at Kerala’s policy for universal education and universal healthcare. The Communist Party first come into office in 1957, they declared their policy in 1960. 1963 I’m in Delhi teaching in Delhi School of Economics and people ask me “Do you think it’s feasible?” I said “absolutely feasible”. Primarily for one economic reason, namely that you need far less money than you would need in, say, Britain to provide that level of healthcare and education.
This argument is not very sophisticated but on the other hand it could make a dramatic difference between life and death. Many of my colleagues at Delhi School of Economics said that I’m just leading people up the garden path, as an economist I should criticise, because Kerala was the third poorest state in India then. How could they afford it? And my claim was the economic argument. Also there being externalities and the “public good feature” as economists call it. I was certain that on top of that, for reasons which we began with, that the policies would also stimulate economic growth and development. In the latest round of national sample survey, if you put the urban and rural together, Kerala has now the highest per capita income in the whole of India. I would have thought some people who thought I was leading people up the garden path would say that they were mistaken. Have I got such statements? I’m afraid I have not! Am I happy that my expectations have been fulfilled? Yes, very happy indeed. Not for myself, that’s a trivial thing. But the fact that a people-friendly education and health policy could make a difference, not only to their lives – which happened immediately, life expectancy shot up in Kerala straight away – but also ultimately on economic growth" https://blogs.lse.ac.uk/southasia/2015/11/19/india-is-the-only-country-in-the-world-trying-to-become-a-global-economic-power-with-an-uneducated-and-unhealthy-labour-force-amartya-sen/
Sure China could invest more in education once it became rich, but how was China in 1979 able to have universal primary education and more than 50% of its kids under 18 finish 9th grade?
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Japan under Meiji Restoration was 1860-1900, we can be sure that the rise of Japan pre first world war had nothing to do with US- Japan military alliance.
I am not talking about "development" which in EA means money, I am talking about how health and education levels changed in the timeframe 1860-1900 when the country was poor.
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Regarding South Africa and Japan, Japan today is an aging society with low fertility rate and hence less kids needing to be educated. It makes sense that they spend less on education. The other way in which Japan is different is that Japan has 4 generations of educated people for the last 100 years, South Africa is full of second generation learners even today, and virtually nobody has gone to college. It makes sense that they are spending money on education today.
I should have been more clearer the "developed" South Africa with its apartheid regime pre 1994 did not invest in education and those effects are still being felt today, good for them that the current democratic government is spending on education. Even so Bangladesh which is four times poorer has an additional 10 years of life expectancy over South Africa
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Deworming is so cheap because it leverages preexisting schools, I did donate to deworming charities a few years ago. The goal of deworming is two fold, to improve health and to improve education. If you read Give Wells reports they only place value on improvements in health!!! Why are the educational gains unimportant Give Well?
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The most respected and widely used index for measuring human well being is the human development index, it includes education as an outcome, valuable for its own sake, the EA community has to explain why it deems education not useful while the UNDP thinks that it is important.
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It's not for the lack of money that the world is in the state that is in today.
"The lack of political commitment not of financial resources, is often the real cause of human neglect. That is the main conclusion of Human Development Report 1991"
Human priority concerns according to UNDP are Basic Education, Basic Health, Water supply and sanitation, Nutrition programs and Family planning services.
The 1996 HDR is interesting http://hdr.undp.org/sites/default/files/reports/257/hdr_1996_en_complete_nostats.pdf
"Why is income part of the human development index? Longevity and education are clearly valuable aspects of a good life"
"A new measure of national wealth
Economists had long assumed that the main component of a country's productive wealth is physical capital ("produced assets"). But according to the World Bank's assessment for 192 countries, physical capital on average accounts for only 16% of total wealth. More important is natural capital, which accounts for 20%. And more important still is human capital, which accounts for 64%."
"In 1960 Pakistan and the Republic of Korea had similar incomes. Rut they had very different primary school enrolment ratios-30% in Pakistan, 94% in the Republic of Korea one of the main reasons that over the next 25 years the per capita GDP of the Republic of Korea grew to three times that of Pakistan."
"Even "unskilled" workers in a modern factory need the literacy, numeracy and discipline learned in primary and lower-secondary school"
"It generally is easier to deal with the "good human development and poor growth" problem than with the opposite-poor human development with good growth."
"Experience suggests that no country undergoes a structural transformation of the economy without raising basic education levels. The well-known links between female education and fertility, between education and productivity and between mother's education and children's educational attainment all explain why this is so"