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1071. Thought for Food: The Challenges of Coping with Soaring Food Prices

Author:
Nora Lustig
Publication Date:
11-2008
Content Type:
Working Paper
Institution:
Center for Global Development (CGD)
Abstract:
World food commodities prices increased 130 percent from January 2002 to July 2008. Individual agricultural commodities show even more pronounced increases: corn, wheat, rice and soybeans rose by 190, 162, 318 and 246 percent, respectively. Since July, food commodities prices began to fall. While this decline comes as a relief, prices are likely to stay high in the foreseeable future. Available evidence suggests that the decline in living standards of net consumers caused by higher food prices outweighs the benefits accruing to poor net sellers in the majority of countries that have been analyzed so far. The time to implement measures to help the poor net consumers cope with higher food prices is now. However, too many developing countries lack the instruments, administrative capacity and fiscal space to implement safety nets fast enough and in the required scale. This is one of the most pressing policy challenges that we face. For the poor who are net sellers, governments should seize the opportunity to convert the short-run windfall into longer-term gains. Multilateral financial institutions can play a key role in providing financial resources to countries facing negative terms of trade shocks, technical assistance in the design of safety nets and resources to add fiscal space to countries to fund safety net programs. International organizations can also help countries design the appropriate macroeconomic policy response. This will call for greater flexibility in the menu of policy options traditionally deployed by the Bretton Woods institutions.
Topic:
Security, Agriculture, International Political Economy, International Trade and Finance, Markets, and Poverty

1072. Rainfall Shocks, Markets, and Food Crises: Evidence from the Sahel

Author:
Jenny C. Aker
Publication Date:
12-2008
Content Type:
Working Paper
Institution:
Center for Global Development (CGD)
Abstract:
How do markets respond to extreme rainfall in West Africa? This paper examines the effect of weather on grain market performance in Niger, a country increasingly affected by drought and severe food crises over the past two decades. Using a dataset that combines information on rainfall, agricultural production, prices and transaction costs, I exploit rainfall variation to estimate the impact of drought on grain market performance between 1997 and 2006. Time series tests suggest that grain markets in Niger respond to supply shocks and that markets are more integrated during drought years. Exploiting the exogeneity of extreme rainfall in a difference-in-differences framework supports these findings: drought reduces grain price dispersion across markets. This impact is stronger as a higher percentage of markets are affected by drought, as was the case in 2004/2005, the year of a severe food crisis. The results suggest that early warning systems in West Africa should focus on the spatial impact of drought at the sub-regional level, as well as monitor prices in key forecasting markets during the harvest period.
Topic:
Agriculture, International Political Economy, and Markets
Political Geography:
Africa and Nigeria

1073. The Coming Oil Supply Crunch

Author:
Paul Stevens
Publication Date:
08-2008
Content Type:
Working Paper
Institution:
Chatham House
Abstract:
This report argues that unless there is a collapse in oil demand within the next five to ten years, there will be serious oil 'supply crunch'–not because of below-ground resource constraints but because of inadequate investment by international oil companies (IOCs) and national oil companies (NOCs). An oil supply crunch is where excess crude producing capacity falls to low levels and is followed by a crude 'outage' leading to a price spike. If this happens then the resulting price spike will carry serious policy implications with long-lasting effects on the global energy picture.
Topic:
Security, Economics, Energy Policy, Markets, and International Security

1074. Synchronized Dive into Recession: Focus on Damage Limitation

Author:
Vanessa Rossi
Publication Date:
10-2008
Content Type:
Policy Brief
Institution:
Chatham House
Abstract:
The global financial system has suffered a once-in-a-century meltdown that almost brought the world economy to a halt in late September. Confidence and trust have been shattered. In spite of concerted and extraordinary efforts on the part of central banks and political leaders, including recapitalizing the banks, it is not yet certain that the waves of panic and destruction have been halted. Many of the repercussions have yet to emerge, including possible legal action as well as economic damage. Even before this latest explosion, the leading OECD economies were plunging into an unusually synchronized recession, driven by the simultaneous collapse in consumer and business spending. This will now get worse.
Topic:
Debt, Economics, Globalization, International Political Economy, and Markets

1075. Mobility of Labor and Services across the Baltic Sea after EU Enlargement: Trends and Consequences

Author:
Jon Erik Dølvik
Publication Date:
01-2008
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
The enlargement of the EU/EEA area on 1 May 2004 to comprise 28 countries – including eight Central and Eastern European countries, in 2007 followed by Bulgaria and Romania – was a milestone. The subsequent opening of the markets for labor and services between countries with gaps in wages and living conditions comparable to those along the U.S./Mexican border has no modern precedent, prompting new patterns of competition, migration and adjustment in national labor market regimes. This paper reviews developments in labor migration after enlargement and the implications for the labor markets in the Baltic States and Poland, which have accounted for a predominant share of the intra-EU/EEA migration flows since 2004. Besides the UK and Ireland, where almost one million EU8 citizens had registered in 2007, the booming Nordic economies have become important destinations, having granted more than 250,000 permits and seen sizeable additional flows of service providers and self-employed from the Baltic states and Poland. In the sending countries, rising demand for labor has, alongside strong outmigration – especially among young and well-educated groups – engendered falling unemployment, soaring wage growth, and made shortages of skills and labor an obstacle to further economic recovery. Yet, while better paid temporary work abroad may weaken the incentives for employment, mobility and training in the home country, aging will lead to shrinking working-age populations in the coming years. Unless the Baltic states and Poland can entice a larger share of the population to work in their home countries – and/or can attract substantial labor migration from third countries – the declining work force may easily entail economic stagnation and reinforce the outflow of human resources. These countries are thereby facing a critical juncture in their economic and social development. In the recipient Nordic countries, the growing labor and service mobility, low cost production, and competition for labor in Europe, as well as emerging lines of division in the labor markets, have, on the other hand, raised new questions as to how the principles of free movement and the egalitarian Nordic models can be made reconcilable in the open European markets.
Topic:
Demographics, Markets, and Migration
Political Geography:
Europe

1076. The Nordic Path of Spain's Mediterranean Welfare

Author:
Luis Moreno
Publication Date:
01-2008
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
Despite the fact that the Nordic welfare model has become less exceptional in recent times, it continues to offer numerous examples for “best practices” in social policy provision, together with a high degree of welfare political legitimacy. This paper explores Nordic “benchmarking” as reference to the case of welfare development in Spain. In the general process of convergence of the European welfare states towards the middle, the Spanish case stands out as the one Mediterranean EU country which has gone further in incorporating inputs and traits of the social-democratic Nordic world of welfare capitalism. While Spain's welfare state has become more liberal in macroeconomic policies, and social policymaking has followed a pattern of universalization of welfare entitlements and provision, there has been a detachment from the Bismarckian principle of income maintenance. This paper deals with Spain's evolution in two main areas, which have distinctively characterized Nordic welfare in contemporary times: fiscal resources, and female employment. The analytical purpose of the first section is to ponder the claim as to whether or not Spanish welfare has intensified a socioeconomic path in the direction of the Nordic model. Subsequently, Spain's societal changes and welfare reforms are reviewed with relation to the two areas identified as having the greatest impact in the future evolution of Spain's welfare: conciliation of work and family life, and the territorial politics of welfare provision. Concluding remarks speculate on the hypothesis that countries with fragmented political institutions and a decentralized state organization, such as Spain, may move faster and be more responsive in the development of new welfare Polices. Likewise, the emergence of gender and family issues into the political arena is also regarded as generating pressure for major changes in Spain's Mediterranean welfare, and possibly intensifying its Nordic path or component.
Topic:
Security, Economics, Markets, Migration, and Poverty
Political Geography:
Europe and Spain

1077. Foreign Trade Specialization and International Competitiveness Of Greece, Portugal, Spain, Turkey and the EU 12

Author:
Bahri Yilmaz
Publication Date:
01-2008
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
The main purpose of this paper is to examine the foreign trade patterns and/or specialization in foreign trade of three EU member countries – namely, Greece, Portugal, Spain, and candidate country Turkey – and to compare the foreign trade patterns with the EU/12 in the period 1995- 2005. The paper is divided into seven main sections. The first section summarizes the export and import developments of the countries in question between the years 1995 and 2005. The second section describes the methodology and data sets. Empirical analysis is found in the third section, where in five subsections we investigate international competitiveness and trade specialization using different indices. In the fourth part of the research we compare the dynamic products in world exports with dynamic products in the exports of the four countries. The final section gives brief conclusions drawn from the results and considers the future position of Turkey within the enlarged EU. In this research we do not intend to explain why the foreign trade patterns are different in the considered countries. We simply try to show whether and where there are any differences in foreign trade specialisation among the four countries and EU/12.
Topic:
International Relations, Emerging Markets, International Trade and Finance, Markets, Regional Cooperation, and Treaties and Agreements
Political Geography:
Europe, Turkey, Spain, Portugal, and South Sudan

1078. Hawk and handsaws: What can France learn from the "Nordic Model"?

Author:
Éloi Laurent and Jean-Paul Fitoussi
Publication Date:
01-2008
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
In this paper, we try to point out some important weaknesses of the contemporary French social-economic model, focusing on relevant elements of comparison with Nordic countries. In doing so, we rely on the idea that large and small countries differ in terms of growth and governance strategies. Hence, while a look at the “Nordic model” can be a good way to reveal of some of France's major problems, it is also an ambiguous template for reform. The paper starts by examining the question of growth strategy (macroeconomic management and structural reforms), then goes on to investigate governance strategy (trust, confidence, governance quality) and finally explores the issues of diversity and integration policy.
Topic:
Economics, Markets, Political Economy, and Political Theory
Political Geography:
Europe

1079. An Accounting Method-Based Cost-Benefit Analysis of Conformity to Certified Organic Standards for Spices in Tanzania

Author:
Evelyne Lazaro and Adam Akyoo
Publication Date:
12-2008
Content Type:
Working Paper
Institution:
Danish Institute for International Studies (DIIS)
Abstract:
Certified organic farming has emerged as a market channel providing participating African small-holders with access to high value markets in the EU. The benefits may include not only a guaranteed produce market, but also premium prices, and higher net revenues. Where training in organic farming techniques is provided there may be also benefits in terms of increased yield. The major cost challenges are those for certification, although in many cases donor support to exporters is available to cover these.
Topic:
Agriculture and Markets
Political Geography:
Africa and Tanzania

1080. Prices in Emissions Permit Markets: The Role of Investor Foresight and Capital Durability

Author:
Bryan K. Mignone
Publication Date:
11-2008
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
Of the many regulatory responses to climate change, cap-and-trade is the only one currently endorsed by large segments of the scientific, economic and political establishments. Under this type of system, regulators set the overall path of carbon dioxide (CO2) reductions, allocate or auction the appropriate number of emissions allowances to regulated entities and – through trading – allow the market to converge upon the least expensive set of abatement opportunities. As a result, the trading price of allowances is not set by the regulator as it would be under a tax system, but instead evolves over time to reflect the underlying supply and demand for allowances. In this paper, I develop a simple theory that relates the initial clearing price of CO2 allowances to the marginal cost premium of carbon-free technology, the maximum rate of energy capital replacement and the market interest rate. This theory suggests that the initial clearing price may be lower than the canonical range of CO2 prices found in static technology assessments. Consequently, these results have broad implications for the design of a comprehensive regulatory solution to the climate problem, providing, for example, some intuition about the proper value of a possible CO2 price trigger in a future cap-and-trade system.
Topic:
Climate Change, Economics, Environment, and Markets