In the last five years, higher food prices have provoked government interventions in agricultural markets across the globe, often in the name of protecting the poor. But do higher food prices actually hurt the rural poor?
Agriculture and Rural Development
In the past decade, economists such as Daron Acemoglu, Abhijit Banerjee, Nathan Nunn, and James Robinson have empirically validated the primacy of ‘good’ institutions in driving beneficial political and economic outcomes. While this has been a great leap for academic economics, the applicability to policy is debatable. Specifically, as the empirical techniques employed generally exclude components of institutional variation that change over the short- to medium-run (see Rohini Pande and Christopher Udry), the respective findings potentially don't have much to say about what can be expected from deliberate attempts to generate 'good' institutions.
Serious empirical investigation of the effects of institutional reform remains scant, and for good reason. Rigorously identifying the effects of democratization – or any other specific reform – is extremely difficult, particularly at the national-level. When and where societies enact democratic reforms (such as in Eastern Europe in 1989), such reforms go part in parcel with sweeping changes in economic policy, institutional frameworks, and political actors (in the technical lexicon, such reforms are ‘endogenous’). This makes it almost impossible to isolate the effects of the reform itself from the effects of the multitude of other contemporaneous changes.
In response to the problems of high coordination costs among the poor, efforts are underway in many countries to organize the poor through "self-help groups" (SHGs) -- membership-based organizations that aim to promote social cohesion through a mixture of education, access to finance, and linkages to wider development programs.
Food price spikes, price insulation, and poverty
This paper looks into the impact of changes in restrictions on staple foods trade during the 2008 food price crisis on global food prices and also analyzes the impact of such insulating behavior on poverty in various developing countries and globally.
In a new book released Monday, the World Bank's Africa Region convincingly argued for "Securing Africa's Land for Shared Prosperity" by recording land rights for both individuals and groups. That’s mainly because at a time when vastly-increased commodity demand has led to a series of widely publicized “land grabs” and urban expansion, the potential benefits from securing rights have greatly increased in several ways.
First, equity and efficiency. Poor and traditionally disadvantaged people, including women, have the least access to land rights, so securing their rights can provide them with access to a key productive resource. Also, if land rights are secured, land users will be more likely to invest in land improvement and modern technology to improve the efficiency of land use.
With spectacular growth of microfinance institutions (MFIs) in Bangladesh, there is a growing concern that borrowers might be borrowing from multiple sources and more than they are able to repay, and hence, they are trapped in poverty and debt. Microfinance programs, operating in Bangladesh for more than two decades, have reached more than 10 million households in 2008, nearly half the rural population, with an annual disbursement close to US$1.8 billion and an outstanding balance of US$1.5 billion. Multiple program membership has increased over the years: it was nonexistent in 1991/92, 11.9 percent in 1998/99 and 36 percent in 2010/11.
However, a recent study shows that increased borrowing, even from multiple sources, has not lowered loan recovery rates.
Also, another recent study observes that microcredit borrowers are not necessarily trapped in poverty and debt. This study analyzes data from a long panel survey over a 20-year period, and finds that although many participants have been with microcredit programs for many years they are not necessarily trapped in debt as the accrued assets due to borrowing outweigh accumulated debt for many borrowers.
With Alessandro Olper*
Mass media plays a crucial role in distribution of information and in shaping public policy. Theory shows that information provided by mass media reflects its incentives to provide news to different groups in a society and in turn shape these groups’ influence on policy making.
The potentially deleterious effects of gender disparities on growth and poverty reduction have been receiving progressively more policy attention (reflected, for instance, in the inclusion of the promotion of gender parity amongst the Millennium Development Goals and the 2012 World Development Report). Inequities in labor market opportunities are of particular concern since labor earnings are the most important source of income for the poor in the vast majority of developing countries.
Although the vast majority of the poor live in rural areas and rural non-farm enterprises account for about 35-50% of rural income and roughly a third of rural employment in developing countries, relatively little is known about gender inequities in rural non-agricultural labor market outcomes due to data-limitations. This is unfortunate given the proliferation and diversification of rural non-farm activities and their potential to alleviate poverty, especially in countries where the importance of agriculture as an employer is likely to diminish.
Policies that aim to improve the position of women relative to men are desirable not only on equity but also on efficiency grounds. While developing countries continue to improve economic opportunities for women, inheritance laws remain strongly biased against women in many societies. When the distribution of inherited wealth is highly unequal, the effect of this disparity on economic inequality is of considerable interest. Parental bequests of material wealth and human capital investments represent central forms of intergenerational transfers that affect long-term development in far reaching ways.
Three years from the deadline for reaching the Millennium Development Goals, two-thirds of countries will not reach MDGs 4 and 5 (child and maternal mortality, respectively). And now the second food price rise in three years is a wake-up call for the development community.
In this context, the Global Monitoring Report 2012: Food Prices, Nutrition, and the Millennium Development Goals examines some of the possible consequences of food price increases, such as a rise in poverty and undernourishment1. Households cope through a variety of mechanisms, including: eating less nutritious diets and then less food; making more household members work (women and children); and not seeking health care when ill. The most vulnerable (the poor, children, and pregnant women) bear the brunt of these adverse impacts. Moreover, as countries seek to maintain food prices, some increase food price subsidies and cut into other services.