Jayati Ghosh
It is clear that the raging policy debate on allowing multinational companies a greater role in the Indian retail sector, particularly food retail, is not yet over. Already Commerce Minister Anand Sharma has declared that the decision to hold back on liberalising rules of foreign direct investment (FDI) in this sector following the political backlash is only to provide breathing space for the government. It is only too likely that the United Progressive Alliance (UPA) government will seek to push through this “reform” at some point over the next two years of its term.
This makes it all the more important for Indian citizens to become aware of the extent of concentration and control of multinational companies in global food distribution, and the implications of this for both producers and consumers of food. These aspects are drawn out in some recent studies that deserve much more public attention.
A new report produced by Timothy Wise and Sophia Murphy (“Resolving the Food Crisis: Assessing Global Policy Reforms since 2007”, GDAE and IATP, January 2012) makes several interesting points about how the global food crisis is related not just to medium-term supply factors that reflect the effects of more open trade and the policy neglect of agriculture, but also to the biofuel subsidies that have diverted grain acreage and production. Recently, financial speculation too has played a role in pushing up prices of food. But Wise and Murphy also highlight a feature that is often ignored in policy discussion on the food crisis: market power in the food system.
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What We’re Reading
Bruno S. Frey, What Europe might look like without the Eurozone and EU
Pierre-Olivier Gourinchas and Maurice Obstfeld, Understanding past and future financial crises
David Warsh, A Narrowing Gyre
The Economist’s Free exchange blog, Hysteresis: The cost of sustained unemployment
James Felkerson, $29,000,000,000,000: A Detailed Look at the Fed’s Bailout by Funding Facility and Recipient
Aaditya Mattoo and Arvind Subramanian, A China Round of Multilateral Trade Negotiations
Bilge Erten, José Antonio Ocampo, Super-Cycles of Commodity Prices Since the Mid-Nineteenth Century
Anna Locke, Gates and innovation in agriculture – is money the issue?
What We’re Writing
Martin Khor,Seminar warns of effects of economic downturn
Jayati Ghosh, Recipe for disaster
C.P. Chandrasekhar, Emerging Asia Next?
Ali Kadri, Notes on the fall of fertility in Russia
Kevin P. Gallagher, Will the U.S.-Colombia FTA benefit Colombia? No.
Kevin P. Gallagher
The now-official U.S.–Colombia Free Trade Agreement (FTA) will dampen growth and make it harder for Colombia to put in place policies for innovation and industrialization. Colombia will also have fewer tools to confront financial instability, thus forcing it to work twice as hard to maximize the benefits of the agreement.
The agreement will bring only small gains to Colombia—and these will come at a significant cost. In terms of growth, the impact will be negligible, given that much of the U.S. market was already open to Colombia. Indeed, the impact may even be slightly negative. The Economic Commission for Latin America and the Caribbean (ECLAC) estimated in a 2007 study that Colombia will suffer losses of up to $75 million, or 0.1 percent of GDP, as a result of the trade agreement. According to the study, competition from U.S. imports will generate losses to Colombia’s textiles, apparel, food, and heavy manufacturing industries, outweighing the gains from increased petroleum, mining and other exports to the United States.
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Ali Kadri
Not all bad economic policies kill people slowly, some do so very quickly. One such policy was the lifting of subsidies on fuel and other essentials in Yemen in 2005. Immediately after a presidential decision to bypass parliament and remove subsidies, people demonstrated their anger and many died as police and army forces fired into the crowds. The advice to carry out these draconian reforms was contemplated late in 2004 at a conference organised by the World Bank aimed at reducing the government deficit by removal of subsidies.
At the time of the conference, real GDP growth was anticipated at 3.9 percent. Inflation had gone down to 12 from 14 percent. Reserves were at 17 months of imports (7.5 billion) and the deficit was at 5.5 percent of GDP. External debt was at 41 percent of GDP or about 5 billion US$. Unemployment figures were flimsy, but there were two figures set forth: either 18 or 34 percent with the latter estimate being slightly more acceptable. These were relatively encouraging figures for Yemen, which is a Least Developed Country. In the midst of abjection, unemployment figure are meaningless anyways. Nearly half of Yemeni children suffer malnutrition. The average salary for a family of six was about one hundred dollars a month in the city- while conditions are worse in the countryside. More than half of the population reside in absolute poverty.
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Patrick Bond and Khadija Sharife, guest blogger
With International Monetary Fund (IMF) managing director Christine Lagarde in Tunisia last week, the stage was set for ideological war over the progress of democratic revolutions.
Until 27-year-old fruit seller Mohamed Bouazizi committed suicide by immolation in the provincial town of Sidi Bouzid, Tunisia was packaged as an IMF success story. In 2008, dictator Zine El Abidine Ben Ali was embraced by Lagarde’s predecessor, Dominique Strauss-Kahn: “Economic policy adopted here is a sound policy and is the best model for many emerging countries.”
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Jayati Ghosh
For a while, in the immediate aftermath of the Global Financial Crisis of late 2008, the G20 came into its own. This group of (self-styled) leaders of the global economy, representing governments in nations contributing more than half of global GDP, came together in April 2009 to pledge a co-ordinated response to unprecedented global economic threats. This not only had a role in staving off immediate disaster through the implementation of broadly Keynesian responses, but also promise more for the future. This was not just vainglorious self-importance on the part of these governments. There was a genuine absence of global institutions that were sufficiently small as to be coherent (something that was not as possible in the United Nations, given its size and structure) or even seen as generally reliable, flexible and aware (given how the IMF has discredited itself by awarding good marks to so many economies just before they imploded financially).
But since then, the drama in the world economy could even have been Hamlet without the Prince of Denmark, as Act 2 of the global financial crisis unfolds. In its subsequent meetings, the G20 has been much more about style than substance – and sometimes the style has also been lacking. At least, in its Seoul meeting in 2010, the G20 committed themselves to promoting inclusive and sustainable economic growth. They argued that ‘for prosperity to be sustained it must be shared’ and also endorsed ‘green growth’, which promised to decouple economic expansion from environmental degradation.
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The Global Development and Environment Institute at Tufts University has an immediate opening, a great opportunity for someone with background in globalization, economics, and the environment and experience in communications. The position is Outreach Coordinator, an 80%-time position in our Medford, Massachusetts office managing the institute’s growing outreach and communications work, from books and publications to the Triple Crisis Blog. We’re looking for a motivated person who has a good understanding of economics and the issues GDAE works on and brings good training and hands-on experience in communications and outreach. This is a particularly good opportunity for someone who might want to pursue an advanced degree at Tufts part time, because Tufts’ benefits include tuition coverage for most courses.
This is an immediate opening. To see the full job description and to apply, go to:
http://www.ase.tufts.edu/gdae/resources/index.html
There you will find instructions for submitting your application through Tufts’ online application process.
Read more on GDAE and on the institute’s Globalization and Sustainable Development Program.
Sunita Narain
Many years ago, in a desperately poor village in Rajasthan, people decided to plant trees on the land adjoining their pond so that its catchment would be protected. But this land belonged to the revenue department and people were fined for trespass. The issue hit national headlines. The stink made the local administration uncomfortable. They then came up with a brilliant game plan—they allotted the land to a group of equally poor people. In this way the poor ended up fighting the poor. The local government got away with the deliberate murder of a water body.
I recall this episode as I watch recent developments on climate change. At the recent Durban climate change conference small island nations—from the Maldives to Granada —believed, rightly so, that the world has not delivered on its promise to cut emissions and is jeopardising their future. But they do not have the power to fight the powerful. So, this coalition of climate victims turned against its partner developing countries, targeting India, for instance, for inaction. These nations pushed for India to take legal commitments to reduce emissions, dismissing its concerns of equity as inconsequential.
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What We’re Reading
Yu Yongding, Rattling the Renminbi
Robert Johnson, Economists: A Profession at Sea
Thomas Cate, Keynes’s General Theory: Seventy-Five Years Later
Michael Hudson, Banks Weren’t Meant to Be Like This. What Will their Future Be – and What is the Government’s Proper Financial Role?
Lex, Sany Heavy: China digs in, and Beyondbrics on land grabs
Raghuram Rajan, A Crisis in Two Narratives
Andrés Velasco, Latin America’s Stymied Innovators
Josh Fischman, As Journal Boycott Grows, Elsevier Defends Its Practices
What We’re Writing
Martin Khor, Rising risk of Western war on Iran
Patrick Bond and Michael Dorsey, Steer clear of this climate ‘Ponzi scheme’
Jeff Madrick, Will Germany Bully Europe Over the Brink?
Sunita Narain, The inconvenient truth
Frank Ackerman
What will the presidential election in November mean for U.S. environmental policy? Although we don’t yet know who the Republican candidate will be, we know all too well what will be on his environmental agenda. The endless televised debates have exposed what the New York Times called “the broken windows of the Republican idea factory.” It’s not a pretty sight.
The candidates all share the same approach to the environment. Ron Paul plans to govern primarily by abolishing things. His hit list includes America’s foreign wars, but also the Federal Reserve, most federal taxes, the Environmental Protection Agency (EPA), and all limits on offshore drilling and the use of coal and nuclear power. Rick Santorum agrees that energy companies must be entirely deregulated. Newt Gingrich will build a moon colony by 2020, and will replace the EPA with a new agency that “will operate on the premise that most environmental problems can and should be solved by states and local communities.” Mitt Romney promises to “eliminate the regulations promulgated in pursuit of the Obama administration’s costly and ineffective anti-carbon agenda,” and to slow down or block regulations in general whenever industry complains about their costs (i.e., always).
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