Food prices: World Bank warns millions face poverty

BBC News today carries the current warning from the World Bank that rising food prices, driven partly by rising fuel costs, are pushing millions of people into extreme poverty:

World food prices are 36% above levels of a year ago, driven by problems in the Middle East and North Africa, and remain volatile, the bank said. That has pushed 44 million people into poverty since last June. A further 10% rise would push 10m more below the extreme poverty line of $1.25 (76p) a day, the bank said. And it warned that a 30% cost hike in the price of staples could lead to 34 million more poor.

"More poor people are suffering and more people could become poor because of high and volatile food prices," said World Bank president Robert Zoellick. Mr Zoellick was speaking before IMF and World Bank spring meetings later this week.

The World Bank says prices of basic commodities remain close to their 2008 peak, with the prices of wheat, maize and soya all rocketing. The only exception is rice, which has fallen slightly in price in the past year.

The bank suggests a number of measures to help alleviate the impact of high food prices on the poor. They include encouraging food-producing countries to ease export controls, and to divert production away from biofuels production when food prices exceed certain limits.

Other recommendations include targeting social assistance and nutritional programmes to the poorest, better weather forecasting, more investments in agriculture, the adoption of new technologies - such as rice fortification to make it more nutritious, and efforts to address climate change. It also said financial measures were needed to prevent poor countries being subject to food price volatility.

World Bank urges new focus on global development in fragile states

From today's Guardian newspaper:

The World Bank is calling for a new focus in global development efforts towards providing justice, law and order to the estimated 1.5 billion people living in fragile and failed states.

In its World Development Report 2011 (link), the bank warns that one of the biggest threats to development in the 21st century is chronic insecurity caused by cycles of criminal and political violence that defy easy answers.

The report asks: "How is it that, almost a decade after renewed international engagement with Afghanistan the prospects of peace seem distant? How is it that entire urban communities can be terrorised by drug traffickers? How is it that countries in the Middle East and north Africa could face explosions of popular grievances despite, in some cases, sustained high growth and improvement in social indicators?"

Patterns of global violence have changed in recent years, with fewer conventional conflicts between two identifiable sides. The number of deaths from civil wars are only a quarter of what they were 30 years ago. In their place, since the end of the cold war, is what Sarah Cliffe, one of the report's directors, calls more fluid types of violence, often driven by cross-border crime, such as drug trafficking.

"Peace processes in southern Africa and central America have been threatened by criminal violence," Cliffe said. "In Guatemala you have more people dying now from criminal violence and from drug trafficking than you did during the civil war."

In such circumstances, conventional development spending may do little or nothing to improve the situation for ordinary people.

Cliffe said: "The message is that getting the basics in place is crucial. Without a basic functioning justice system, for instance, and an economic stake in society for people, then more sophisticated plans to improve education or health systems or infrastructure tend not to work, because they get undermined by turbulence and instability."

Escaping from repeated cycles of violence in fragile or failed states could take a generation at best, the report argues, but it is possible through the gradual rebuilding of legitimate institutions. It says the priority should be placed on those institutions that provide three crucial ingredients of a stable society: citizen security, justice and jobs.

This means outside assistance is often best provided by specialists in human rights, mediation and policing, alongside traditional humanitarian and development aid workers. The international community has a role in trying to cushion an affected society from the external stress of conflicts on its borders or drug trafficking.

The report cites Ethiopia, Mozambique and Rwanda as countries that have successfully emerged from violent conflict and are making rapid progress towards reducing poverty.

"What we look at in the experience of countries which have gone through these transformations is the emphasis on what it takes to keep the peace during periods of dramatic change," Cliffe said. "It's very much less linked to technocratic approaches to how to build the best schools or dams."

Profile: IMF and World Bank (BBC News)

Very helpfully, the BBC News website has put together a profile page for the two most important institutions responsible for economic governance and development on a global basis: the International Monetary Fund and the World Bank.

This concise but useful guide provides an overview of the two bodies, a brief fact sheet, a profile of the institutions' leaders and an insight into issues arising from their work. The BBC profile is particularly useful in providing examples of the latter, both positive and critical. As you hopefully know, the policies and actions of both institutions have provoked protests world-wide, particularly on the occasion of IMF-World Bank summits.

Take a look: This is a convenient source for the revision of notes generated for these key, high profile institutions. The right sidebar also provides links to recent and current (!) news stories in which these examples can be explored in greater detail by motivated students.

Cautious welcome to the World Bank's rejection of old orthodoxies

The one-size-fits-all development strategy is dead, says Robert Zoellick. But will the World Bank therefore be run differently? - asks The Guardian newspaper in its PovertyMatters Blog [link]:

The World Bank provided one of the three pillars of the Washington consensus. Along with the International Monetary Fund (IMF) and the US Treasury, it was the source of an economic orthodoxy exported, often ruthlessly, from America to the rest of the world.

Put simply, the Washington consensus provided a one-size-fits-all solution to the problems of development. Countries were told to privatise and to liberalise, to slim down the size of the state, bear down on inflation, reduce their budget deficits and concentrate on exports. "We know what works", the advocates of the consensus said. "Free markets work."

So it was fascinating yesterday to find the World Bank's president, Robert Zoellick (pictured), acting as the gravedigger for the once-all powerful dogma. Urging a rethink of development economics, Zoellick said in a speech in Georgetown: "This is no longer about the Washington consensus. One cannot have a consensus about political economy from one city applying to all. This is about experience regarding what is working – in New Delhi, in Sao Paolo, in Beijing, in Cairo, and Accra. Out of experience may come consensus. But only if it is firmly grounded – and broadly owned."

Some might say this is simply bowing to the inevitable, since one big casualty of the crisis has been the economics profession, with its over-elaborate mathematical models and its messianic belief in the invisible hand of the price mechanism. But, as Zoellick rightly noted, even before the crisis broke there was a questioning of the orthodoxy and a sense that development economics needed to be rethought.

Critics such as the Cambridge economist Ha-Joon Chang said that no country in history had ever based a successful development strategy on the free-trade model: all protected their fledgling industries. It was also noted that the countries most successful in riding out the economic storm, India and China, were those that had defied the Washington consensus and kept controls on capital flows in place.

There is, though, a bit more to it than that. The rapid growth of the bigger emerging nations – China, India and Brazil in particular – has given them added clout on the world stage. The first manifestation of this was at the World Trade Organisation, where it is no longer possible for the US and the European Union to cook up a private deal and then present it to the rest of the world on a take-it-or-leave-it basis.

Now the developing world wants a bigger say in the running of the World Bank and the IMF. Change to the anachronistic governing structure – which reflects the world as it was in 1944 rather than as it is in 2010 – is happening, even if at a somewhat glacial pace. Developing countries are also reluctant to see the World Bank take charge of a new fund that will help poorer nations adapt to climate change, and want it to be run out of the United Nations instead. So when Zoellick says, as he did yesterday, that a multi-polar economy requires multi-polar knowledge, a cynic might say he was trying to ingratiate himself with the policy makers in Beijing and New Delhi.

There was a sense of genuine humility in Zoellick's speech. "We need to democratise and demystify development economics, recognising that we do not have a monopoly on the answers. 

"We need to throw open the doors, recognising that others can find and create their own solutions. And this open research revolution is underway. We need to recognise that development knowledge is no longer the sole province of the researcher, the scholar, or the ivory tower."

All absolutely true, and very welcome. Talk, of course, is cheap. The real test is whether Zoellick's openness to new ideas makes a difference to how the World Bank is run and how it acts.

Important news for our current understanding of how the World Bank operates in the present-day world—vital insights for World Economic Governance in Unit 3D, particularly in regard to criticisms that have been made of the past approach to economic development and governance by the World Bank!