Poor Countries, Agriculture, and IMF Policies

There has been a rapid increase in food prices over the last couple of years, seen most dramatically in the recent 30% one-day rise in the price of rice worldwide.  This is putting tremendous pressure on the poor and is leading to instability in countries around the world.  There have been violent demonstrations–and equally violent government responses–to food rioting in Egypt and Haiti in the last couple of weeks.  They may be but a harbinger of the economic and political instability to come.  Here is a report from the BBC, in which an expert argues that IMF policies have contributed to the rise in food prices:

“Poor countries need to invest heavily in agriculture to feed their people.  There’s been a dearth of investment in agriculture in poor countries, mainly because of IMF and World Bank policies…”

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The IMF and the World Bank–The New “Global Masters”

Here is an excerpt from a documentary on the World Bank and the IMF, entitled “The New Rulers of the World,” by John Pilger.

…And at no extra cost, US Congressman Ron Paul (R-TX) unloads on the World Bank with both barrels:

“The World Bank is an organization that is not devoted to capitalism, or to the free market, but to state-run corporate capitalism…the World Bank promotes managed trade by which politically connected individuals and corporations enrich themselves at the expense of the poor and the middle class.”

The Bretton Woods System and the International Financial System

Anticipating the end of World War II, world leaders gathered in the New Hampshire town of Bretton Woods to create the financial architecture of the post-war global financial system.  The three main pillars were the World Bank, the IMF (both of which were created) and the International Trade Organization (this was never built but the governing philosophy behind it eventually gave rise to the General Agreement and Trade and Tariffs (GATT), which morphed into the World Trade Organization (WTO).  We’ll discuss these institutions in much more detail beginning Monday.

Here is an excerpt from a newsreel describing the meetings at Bretton Woods in 1944:

Data Sources on Development, Poverty, Economics, Environment, etc.

For your edification, but also to help you with your assignments, papers, and blogs, here are some data sources that will allow you to compare levels of development and poverty across the globe. The United Nations Development Programme’s Human Development Report is an excellent source of information on indicators related to development. Click here if you would like to look up data and/or statistics. You can search for statistics by country, indicator, or table.

Another excellent data source is the World Bank Development Indicators collected by the World Bank. This link provides access to the Education, Gender, Health & Nutrition & Population, and Poverty databases as well as Country Statistical Information, and Development Gateway Data and Statistics.

Finally, the United Nations maintains a statistical division, whose website can be found here, and which collects a wide range of data from social and demographic statistics, through economic, environmental and energy statistics, to statistics related to Millennium goal indicators.

Worldwide Governance Indicators from the World Bank

Probably the best compilation of data related to governance can be found here .  The data can be viewed interactively (this is how I created the world map above that is being used as the page header for my website) here. The data include measures for most of the world’s countries on the following:

The Worldwide Governance Indicators (WGI) project
reports aggregate and individual governance indicators for 212 countries and territories over the period 1996–2006, for six dimensions of governance:

Voice and Accountability

Political Stability and Absence of Violence

Government Effectiveness

Regulatory Quality

Rule of Law

Control of Corruption

The aggregate indicators combine the views of a large number of enterprise, citizen and expert survey respondents in industrial and developing countries. The individual data sources underlying the aggregate indicators are drawn from a diverse variety of survey institutes, think tanks, non-governmental organizations, and international organizations.

The six aggregate indicators and the underlying data sources can be viewed interactively on the Governance Indicators webpage of this site. Documentation of the latest update of the WGI can be found in “Governance Matters VI: Governance Indicators for 1996–2006.” Further documentation and research using the WGI is available on the Resources page of this website or at www.worldbank.org/wbi/governance.

What is governance? From the website we find this definition of governance:

Governance consists of the traditions and institutions by which authority in a country is exercised. This includes the process by which governments are selected, monitored and replaced; the capacity of the government to effectively formulate and implement sound policies; and the respect of citizens and the state for the institutions that govern economic and social interactions among them.

Foreign Direct Investment(FDI)–an Indicator of Globalization

As we will see, globalization is a word (and phenomenon) that is analogous to a Rorschach test in that everyone seems to have his, or her, own slightly unique definition of what it actually means. There is wide agreement, however, that an important characteristic of contemporary globalization is the level of economic integration internationally. One such component of that integration is foreign direct investment (FDI). From the World Resources Institute, here is a map that shows the differing levels of FDI around the globe. The patterns should, by now, be exceedingly familiar.

world_fdi_map_450.jpg

Here is the map description:

Foreign direct investment data do not give a complete picture of international investment in an economy. Balance of payments data on foreign direct investment do not include capital raised locally, which has become an important source of financing for investment projects in some developing countries. In addition, foreign direct investment data capture only cross-border investment flows involving equity participation and thus omit nonequity cross-border transactions such as intrafirm flows of goods and services. For a detailed discussion of the data issues see the World Bank’s World Debt Tables 1993-1994 (volume 1, chapter 3). Also, cross-country comparisons may not be accurate, because of differences in the definition of what constitutes foreign direct investment.

Source: World Bank Group. 2004, World Development Indicators Online. Washington, DC:World Bank.
Available On-line at: Source Link