The Losses from Trade

Advertised in today's New York Times food section on-line, as part of an almost certainly multi-million-dollar product launch, is a heart-breaking example of how resource-rich countries lose tremendous economic development opportunities. Stevia is an herb native to Paraguay that is naturally very sweet. It has been used for hundreds and hundreds of years by Paraguay’s indigenous population in infusions, mate, and simply to chew. A calorie-free sweetener can be extracted from this leaf and has been commonly used in Paraguay for at least a decade if not more. Imagine the potential this has. Replace ubiquitous, cancer-causing, synthesized sweeteners with a naturally occurring, calorie-free sweetener. This is the sort of breakthrough product that could form the base to develop an entire food industry and development strategy in the country that is blessed with such an herb.

Ah, but this is no good, what about high fructose corn syrup? What about saccharine and sucralose and aspartame? No, Stevia was not safe for consumption, according to the FDA. No matter that it has had regulatory approval in Japan for decades with no evidence of worse side effects than synthetic sweeteners. Americans must be kept safe from the ill effects of stevia. That is, until Cargill and Coca-Cola invest in the research, product definition and design, and marketing that can assure that the economic gains from this product be captured in the U.S. Then suddenly stevia is a miracle herb that no readers of the New York Times food section can miss out on and we get Truvia: "the first great-tasting, zero-calorie natural sweetener that's a miracle of nature, not chemistry."

In the meantime China has far surpassed Paraguay as the main grower of Stevia, having had three decades to consolidate its supply links to the Japanese and Korean markets. No Paraguayan Denomination of Controlled Origin; no development of innovative marketing, product definition, logistics, packaging, and branding capacities in Paraguayan companies; no direct relationships between stevia producers and processors in Paraguay and the enormous international food processing industry that will jump all over Truvia to sweeten everything from that Odewalla sludge that gives professional women their healthy edge to the super-gulps at 7-eleven that give other women their healthy bottoms; no mention of Paraguay at all in Truvia's promotional activities.

As Paraguay yet again embraces its role as a primary product exporter, the government’s export promotion agency and ministry of commerce celebrate stevia's regulatory approval in the U.S., laud Coke and Cargill's 'research and development' of Truvia, and congratulate themselves for 'accessing' an enormous market that will soon open up and produce the latest in two centuries of successive export booms that promise to save Paraguay's ever-struggling "pequeños productores" from their perpetual underdevelopment.

Obviously, exploiting the opportunities afforded by Stevia to their fullest potential would require investment, research, development, planning, and coordination that far outstrip the capacities of any of the public or private sector institutions that currently exist in Paraguay. But that is the point. Instead of using this resource as a 'hook' to attract from abroad the resources necessary to develop themselves and upgrade their capacities, these organizations have thrown themselves entirely into the arms of foreign investors and the multinational monopolies supported by US regulatory regimes. What a waste.