Institute Notes: A Dialogue on Overcoming Hunger and Poverty

The Real Cost of Rising Food Prices

Liberian Finance Minister Antoinette Sayeh, likely in town for the  IMF/World Bank Spring Meetings, spoke to an audience this morning in a presentation hosted by the Center for Global Development entitled Liberia on the Move: Economic Growth, Debt Relief and Poverty Reduction. The Spring Meetings are themselves interesting as the current economic moment is one of deep uncertainty and volatility. One of the key concerns at the Bank and for countries around the world is the steep rise in food prices experienced over the past year (and dramatically over the past six months). World Bank President Robert Zoellick provided an interview this morning on NPR’s All Things Considered. It’s worth a listen (even if I think the biofuels aspect is somewhat overemphasized), and the Recent Bank report on rising food prices is also worth reading.

On the broader issue of what to do about rising food prices, I think the policy interventions recommended by Joachim Von Braun of the International Food Policy Research Institute are spot on. Recognizing that the price increase is largely structural and will not likely reverse course in the short term Von Braun recommends the following:

Will China’s soft loans to Africa replace IFI’s conditional loans?

China’s recent announcement of investments totaling $5.5 billion in the Standard Bank of South Africa signals a remarkable moment. This will be the largest foreign direct investment in Africa, and one of the largest foreign investments China has ever made. This week's Financial Times carried a comment, “A Role for New Actors in the Global Economy”, identifies China’s emerging role as a financier in risky markets, many of them in sub-Saharan Africa. The comment notes that,

the risks or challenges of investing in emerging markets have disappeared. Nor is it to diminish the importance of maintaining reciprocity of access to markets, and a sound regulatory and legal framework to provide confidence in the rule of law. It is to suggest that the next stage of globalisation will likely require the global economy to accommodate a greater diversity of market models if we are to take full advantage of the new flows, new actors and new partnerships that will drive global growth in the future.

World Development Report Released

The World Bank released its annual World Development Report today, this years theme focusing on Agriculture for Development. Given that a large share of the world's poorest people live in rural areas and rely on agriculture for their livelihoods, it is a positive sign that the the Bank is returning to this important topic. (Incidentally, the last time the Bank focused on agriculture in their WDR was in 1982.)

Renewed attention to agriculture is needed to help developing countries increase economic growth, improve food security, and reduce hunger and poverty. Ample evidence exists to show that growth in agricultural productivity can result in pro-poor economic growth and poverty reduction.

Unfortunately, public investments in and attention to agriculture do not align with its importance. Developed countries have failed to reform their farm support programs to ensure that they do not distort trade and harm farmers in developing countries. In terms of development assistance, many developed countries are not providing adequate development funding for agriculture. A groundbreaking report by the Partnership to Cut Hunger and Poverty in Africa released in 2005 found that since 2000 US support to foreign agriculture development projects has largely been stagnant.

If this report succeeds in helping to renew the attention of the World Bank and donor countries to renew investments in agriculture, it will have provided a tremendous service to the development community and poor people around the world.