Was the global food crisis really a crisis?: Simulations versus self-reporting

Estimates by the U.N. Food and Agriculture Organization (FAO), the U.S. Department of Agriculture (USDA), and the World Bank concerning the welfare impact of the 2007/08 global food crisis conclude that between 75 million and 160 million people were thrown into hunger or poverty. However, these simulation-based approaches suffer from inherent deficiencies as well as insufficient coverage of the largest developing countries, especially China and India. This paper therefore assesses the usefulness of an alternative to simulation-based approaches, self-reported food insecurity data from the Gallup World Poll (GWP), a survey conducted before, during, and after the 2007/08 crisis. While these data are still less than ideal, we show that trends in self-reported food insecurity are statistically explained by both food inflation (positively) and economic growth (negatively). This validation motivates us to employ the GWP data as a barometer for the welfare impacts of the global food crisis. Our findings suggest that while there was tremendous variation in trends across countries, global self-reported food insecurity fell from 2005 to 2008, with the most plausible lower- and upper-bound estimates ranging from 60 million to 250 million fewer food-insecure people over that period. These results are clearly driven by rapid economic growth and very limited food price inflation in the world's most populous countries, particularly China and India. Hence, self-reported indicators of food insecurity reveal a trend opposite that of simulation-based approaches.global food crisis, Hunger, Poverty, self-reported indicators,

Foreign Aid and Foreign Policy: How donors undermine the effectiveness of overseas development assistance

Previous aid effectiveness studies have typically attempted to identify recipient-side conditions of aid effectiveness � such as �good policies�, political and economic stability, and �tropical effects� � using cross-country growth regressions. An obvious omission from this list of conditions is the extent by which donors are concerned with achieving geopolitical rather than developmental objectives, which may reduce aid effectiveness insofar as strategic donors have less incentive to hold the recipient government accountable for the developmentally effective use of aid receipts. Aid allocation regressions can (and are) used to demonstrate the importance of geopolitical considerations, but the author also shows that such regressions cannot be used to instrument for aid in a second stage growth regression, as is standard practice in this literature, because to do so would invoke the untested assumption that strategically motivated aid is just as effective as developmentally motivated aid. Instead the author tests the effect of lagged aid flows on growth, and subsequently demonstrates that: aggregate aid flows are estimated to have significant but moderately sized effects on growth; multilateral aid flows have roughly twice the effect of bilateral flows; but that the lower average effects of bilateral aid nevertheless obscure a substantial degree of heterogeneity in the bilateral aid coefficient which is again explained by the degree to which these flows are indeed strategically motivated.

What Professor Rodrik Means by Policy Reform: Appraising a Post-Washington Paradigm

This article reviews Professor Dani Rodrik’s work on growth and development. The review first provides an outline of Rodrik’s critique of the Washington Consensus and his alternative ‘post-Washington’ paradigm for formulating and implementing growth strategies. The remainder of the paper then critically assesses some key elements of this alternative vision for development. In particular, the critical analysis focuses on Rodrik’s institutionalist revision of the existing growth evidence, his proposed changes to the way in which economists formulate policies in a post-Washington era, and his call for greater democratization as a universal institutional reform.

Anatomy of a crisis: The causes and consequences of surging food prices

"Although the potential causes and consequences of recent increases in international food prices have attracted widespread attention, many existing appraisals are superficial and/or piecemeal. This paper attempts to provide a more comprehensive review of these issues based on the best and most recent research, and includes fresh theoretical and empirical analysis. We first analyze the causes of the current crisis by considering how well standard explanations hold up against relevant economic theory and important stylized facts. Some explanations, especially rising oil prices, the depreciation of the US dollar, biofuel demand, and some commodity-specific explanations, hold up much better than some others. We then provide an appraisal of the likely macro- and microeconomic impacts of the crisis in developing countries. We observe a large gap in the effects of macro and micro factors, and note that when these factors are used to identify the most vulnerable countries, the results often point in different directions. We conclude with a brief discussion of what ought to be learned from this crisis." from authors' abstractFood prices, global food crisis, oil prices, Biofuels, poverty impacts, macroeconomic impacts,

Reflections on the global food crisis: How did it happen? How has it hurt? And how can we prevent the next one?

Cheap food has been taken for granted for almost 30 years. From their peak in the 1970s crisis, real food prices steadily declined in the 1980s and 1990s and eventually reached an all-time low in the early 2000s. Rich and poor governments alike therefore saw little need to invest in agricultural production, and reliance on food imports appeared to be a relatively safe and efficient means of achieving national food security. However, as the international prices of major food cereals surged upward from 2006 to 2008 these perceptions quickly collapsed. Furthermore, although food prices are now lower than their 2008 peak, real prices have remained significantly higher in 2009 and 2010 than they were prior to the crisis, and various simulation models predict that real food prices will remain high until at least the end of the next decade.food crisis, Food supply, food security, Food prices,

The Short-Run Macroeconomic Impact of Foreign Aid to Small States: An Agnostic Timeseries Analysis

This study econometrically evaluates the short-run impact of aid in small developing countries (SDCs) by applying a VAR model to study aid's impact on 'absorption' (increasing import demand) and 'spending' (increased domestic demand) across countries. Whilst our approach allows parameters to vary across countries, the focus is on average country effects and differential effects within certain subgroups of countries. In particular, we find substantial differences between 'aid-dependent' SDCs and other SDCs which are more dependent on mineral resources and financial services. In the latter group, aid seems to be neither absorbed nor spent in any systematic fashion. But in the aid-dependent SDCs, aid receipts seem to be used more in the textbook 'absorb and spend' fashion.foreign aid, small developing countries, macroeconomic adjustment, absorption, spending, VAR models, panel data

The short-run macroeconomic impact of foreign aid to small states: An agnostic time series analysis

"We herein investigate the short-run macroeconomic impact of aid in small developing countries (SDCs) by using a vector auto regression (VAR) model to study the impact of aid on net import (absorption) and domestic demand (spending). We focus on average country effects within two country sub-groups, and find substantial differences between ‘aid-dependent' SDCs and other SDCs that are more dependent on natural resources, tourism or financial services. In aid-dependent SDCs, aid absorption more or less equals spending, although only half of the aid flow is absorbed and spent. In the non-aid-dependent group, aid does not seem to be absorbed or spent in any systematic fashion." from authors' abstractForeign aid, Small states, Vector auto regression, Mean group estimator, Macroeconomic impacts, Development strategies, Public investment,

Something of a Paradox: The Curious Neglect of Agriculture in Development

This paper argues that investment in agriculture has a large and continuing developmental importance in terms of both economic growth and poverty reduction. Moreover, targeted public resources have proven to be indispensable in achieving these results. Both arguments are supported with novel analyses which update and strengthen the traditional case for agriculture-led development with public-sector involvement. But despite the strong case for agriculture-led development strategies, the authors find that over the last three decades the financial resources allocated towards this sector have strongly declined. It is suggested that a shift towards new development paradigms since 1980 might be a significant explanation for this apparent Agricultural Paradox. This conjecture is tested with data on market reform impacts, PRSP contents and analyses of the intellectual resources devoted to the study of agriculture in development by both practitioners and researchers. The authors conclude with a critical discussion of these disturbing trends.

Something of a Paradox: The Neglect of Agriculture in Economic Development

This paper argues that investment in agriculture has a large and continuing developmental importance in terms of both economic growth and poverty reduction. Moreover, targeted public resources have proven to be indispensable in achieving these results. Both arguments are supported with novel analyses which update and strengthen the traditional case for agriculture-led development with public-sector involvement. But despite the strong case for agriculture-led development strategies, the authors find that the financial resources allocated towards this sector have strongly declined over the last three decades, and they suggest that a shift towards new development paradigms since 1980 might be a significant explanation for this apparent Agricultural Paradox. This conjecture is tested with data on foreign aid, public expenditure, PRSP contents, and empirical analyses of the intellectual resources devoted to the study of agriculture in development by World Bank researchers. The authors conclude with a critical discussion of these disturbing trends.Agricultural Productivity, Economic Growth, Poverty Alleviation, Urban Biases, Public Expenditure, Foreign Aid, Washington Consensus., International Development,