Thoughts on food aid

Development requires fresh thinking. Throwing money at tried and failed programs is as deplorable as inaction. But new doesn't necessarily mean good.

Cash distribution is something that has been floating around among young(ish), forward thinking development scholars and practitioners for a while. Owen Barder makes the case:

American legislation requires that food aid be bought in the US, that  50 percent of commodities be processed and packed in the US before shipment, and that 75 percent of food aid managed by USAID and 50 percent of the food aid managed by the US Department of Agriculture be transported in “flag-carrying” US-registered vessels. The result is that only 40% of money spent on food aid by the US actually goes towards buying food; the rest goes to US transport companies. Buying the food locally would be better, but best of all might be something even more radical.  Why not give the money itself to people who are hungry?

Not a bad idea, but keep in mind that most countries that really, really need international food aid are often not open to the help: Burma after last year's Cyclone Nargis, Zimbabwe for the past 29 years, North Korea - the list goes on. De-tying food aid from American agricultural producers is a noble cause and a good idea, but that doesn't mean direct cash aid is its' logical, or even possible, conclusion.

What's in a poverty line?

Gini coefficients and poverty lines are helpful for forming estimates. But lest we forget, poverty, as informed by our social life, is contextual.

...being poor in a poor country means having an income that is not just low but variable and unpredictable. At least as much as a family’s average level of income (such as $2/person/day), the volatility around the average drives how the poor manage money. If you make $1 today, $4 tomorrow, and nothing the day after, but need to put food on the table every day, you will engage in complex strategies of borrowing and saving to smooth the mismatch between your income and outflows. Thus out of necessity poor people deploy more complex financial strategies than do the rich.

Sentences to ponder

Via the World Bank's Private Sector Development blog:

Mongolia is about the size of Alaska and has a population of fewer then 3
million people. This translates into one of the lowest population
densities in the world. With almost half the population living in
Ulaanbaatar, the capital city, and the rest spread out across the country,
it may seem that Mongolia is not the ideal landscape for mobile financial
services...[but] it is actually one of the most banked countries in the
world.

One question worth considering - do all these development finance programs (mobile banking, microfinance, crop insurance) get a free pass on regulation because they are seen as helping the poor? I sure hope not...

Practicing development: reason and results

Chris Blattman asks:

Why don't we write more about worst practices?

Well for one thing, agencies and consultancies that rely on government funds are loathe to air their dirty laundry when future funding is on the line. Even when they do screw up reports are written so as to subtly blame local partners and government participants. Just like politicians, development professionals and NGOs - meant to act in the long-term interests of their supposed constituencies - profit much more from acting in their own short-term interests (exhibit A - schools).

Well, what to do? We must incentivize frank admissions of errors. Those who openly and honestly declare mistakes and poor programs should actually be rewarded - at least to a certain degree. 

The World Bank already has an Independent Evaluation Group and randomized evaluations are all the rage among academics. For markets to be efficient (and yes, proposals for development funding indeed comprise a market), information must be freely available and accurate; let's hold development results to the same standard.

(Picture from Penguin Blog)

Spread the word. Global education action on HIV/AIDS in Mozambique

[ed. Malgorzata contacted zzzeitgeist and asked us to link to their film on HIV/AIDS in Mozambique.]

My name is Malgorzata Malak and I participated in a 3-month internship in a local Mozambican organisation, Kindlimuka http://www.kindlimuka.org.mz/ in August – November 2008. My sending organisation was GLEN http://www.glen-europe.org/.

During the internship together with my tandem partner, Verena Allinger, we made a documentary about HIV/AIDS in Mozambique. The film is called “Vida Positiva” and is an outline of the situation including reasons for HIV spread, national combat strategies, projects run by NGOs, ways of treating the disease and personal stories of HIV positive people and their relatives.

The film is available at: http://mlume.com/vida

Efficient institutions

Non-profit and development institutions have long been (fairly) critiqued for their inefficiency. Seemingly guaranteed funding tends to breed employee complacency and supplant any urgency or incentive to perform beyond expectations.

We've all heard the (impossible) assertion that government should be run like a business. Can one man actually make non-profits run like a business?

Fund-amentals

Plenty have highlighted the promises to the IMF as one of the greater success of the G20 Summit. Free Exchange doesn't agree:

In the quest for a big headline number to throw at the world and the press, and in an attempt to equate this to the missing globally coordinated fiscal stimulus, there's been a fair amount of hand-waving. Of the money that the IMF is supposedly getting, the only clear new commitment is a relatively small $40 billion from China.

True, the new commitments aren't as stellar as the media is reporting. But, the big change is not the new money; it's the Flexible Credit Line. To be fair, the author correctly notes that countries aren't exactly lining up for these IMF handouts. But if Mexico has a decent time with the revamped IMF system, you better believe a few more governments will be putting in a call to Mr. Strauss-Kahn.

Besides, the amount of money isn't that important: it's the fact that after years spent resisting change and asserting their right to essentially dictate monetary policies to countries (ahem, Thailand), the IMF is loosening its grip, albeit slowly. Countries still must have "sound monetary policies" to qualify for these new loans. But the definition of "sound" hasn't been spelled out and more importantly, the loans don't come with IMF staff. With nationalist rhetoric rising in the wake of the financial crisis, taking IMF money is going to be a much easier political sell if it doesn't come with resident Fund officials. The US and Europe may still have de facto veto power within the Bank group, but that's something most people won't know when they head to the ballot box.

(Photo from Kyrion)

G20 deliverables

There's been some grumbling about how the G20 London Summit's deliverables are disappointing. Regardless, I feel like one substantial achievement has been underreported: the G20 pledged $250 billion in new trade financing to help plug a $300 billion worldwide gap. Trade finance isn't as sexy as financial regulation, new global reserve currencies or fiscal stimulus coordination, but it is absolutely essential to world commerce, the engine of economic growth. As an added bonus, it will disproportionately benefit developing nations.

Buying bras shouldn't be this complicated...

One of the irony's of Saudi Arabia's gender segregation is the way in which women shop for lingerie - uncomfortably and inappropriately.

As a result of labor policies aimed at preventing women from dealing with male customers, women are not employed as salespeople. This means that in lingerie stores men end up talking to women about bras/thongs/etc and checking out their bodies to determine cup sizes. On top of that, fitting rooms are banned in the kingdom, since women undressing in the close vicinity of a man is unacceptable.

Not only does this not make sense in ANY way when you consider the conservative nature of Saudi society, (in a gender-segregated society, why would men not be banned from lingerie stores?), but even in the US and Europe, men typically do not sell lingerie to women. Well, as they say in the Arab-world, HALAS! Enough!

A group of Saudi women have launched a boycott of lingerie stores until they employ women. The women are not asking to work WITH men. Far from it - they are not demanding any major shifts in Saudi culture - in fact, they are supporting it. They don't want men to be involved in this type of intimate purchase at all. They want men completely removed from the process, as you would think conservative leaders would agree with.

The boycott was launched on Tuesday by approximately 50 women who gathered at the Al-Bidaya Breast-feeding Resource and Women's Awareness Center in Jeddah, run by founder Modia Batterjee. The aim of the boycott is to pressure the government to IMPLEMENT a law that has been in existence since 2006, which mandates that only women can be employed in women's clothing stores. Reem Assad, a finance professor at Dar Al Hekma College in Jeddah says: "We are raising awareness and calling for the implementation of the law." Assad started a Facebook group which now has 1,680 members, and posted an online petition which has at this point been signed by 1,700 people.

Since only a few Saudi papers have written about the boycott, it has depended largely on word-of-mouth and the internet. The women who launched this campaign knew how to leverage online communications and social media to disseminate their message quickly and effectively. The impact of the campaign remains to be seen, but I am curious to see how else Saudis will chose to utilize new and social media to initiate these types of activities in the Kingdom.

Doing business with the World Bank

Doing Business reports on the ease and openness of starting a business in 181 countries by providing reports and information on a variety of select indicators.

A useful resource for all young entrepreneurs.

Mobile education

I went to New York this past Friday and someone yelled at me on the bus for making a phone call. In the spirit of our age, it immediately inspired me to write a blog post on the topic (ok, ok - I was in the process of writing it already, but it seemed especially serendipitous).

For those of you who may chide me right away for my public chattering, read the whole post. But for those of you too lazy, here is a (long) excerpt.

The use of mobile phones has been used for all types of initiatives that typically fall under the umbrella of development work. Text messages have been used to monitor elections and share market prices for milk. As long as mobiles continue to improve daily life, their importance will grow. If monitored correctly, governments can harness this trend to garner another source of foreign and domestic direct investment to gain desperately needed capital. Doubly productive, the explosion of mobile technology also acts as a "leap frog" technology preventing governments from needing to expend huge sums for the development of traditional infrastructure needed for analog phones and land lines.

Despite all their benefits I would argue that cell phones are still underused in the developing world. In areas where education of youth is prevented either by conflict, distance or terrain, or simply a lack of time due to hours spent working, mobile technology can help provide educational materials and resources that may traditionally be unavailable.

It may sound a little unusual, but radio technology was used throughout Australia in the 1950s and 1960s to educate children where Outback distances prevented collective schooling. If countries are really going to ensure universal primary education by 2015, then governments may be better off distributing cell phones than laptops.

All this and more at Youthink!, the World Bank blog where I'm a regular contributor.

Feeding humanity

* Posts on agriculture represent my personal opinions on the subject.*

Yesterday, Rory made an important observation: the global food crisis isn’t over. Indeed, many of the long-term changes in global food supply and demand haven’t changed since last year’s price spikes. And as the world’s population continues to grow, finding a way to feed everyone will become an increasingly central challenge for humanity.

When it comes to the feasibility of significantly increased food production, I am no Malthusian. The great promise of genetically-modified crops, combined with current low levels of agricultural productivity in most of the developed world, suggest that current yields can be substantially increased. To this end, we should support programs that aim to increase productivity in the developing world through better rural infrastructure, mechanization of agriculture, increased fertilizer use, seed pilot programs, etc. We should also encourage biotechnology research and development in rich countries.

However, agricultural land, like any natural resource, is distributed unevenly. Some countries are better positioned to grow food than others. Because of this, we need to advocate strongly for total liberalization of international agricultural trade. This is the only way to ensure that every country, including those with poor resource endowments, has equal access to market-priced agricultural staples. Let’s not forget that a significant trigger of global food price spikes were temporary export controls enacted by major wheat and rice exporting countries. Improve agricultural productivity wherever possible and work simultaneously toward agricultural free trade.

But agricultural trade liberalization would require an unprecedented degree of global policy cooperation. I am particularly worried that the economic crisis will actually result in a breakdown of international cooperation, which could herald a significant domestic retrenchment of politics. History shows us that globalization is hardly the natural state of international affairs. However, some of the most dangerous problems that humanity faces, like climate change and food security, will require global solutions. If we can’t find a way to cooperate, our shared future will be bleak.

It starts with me, it starts with you, it starts with us.

Happy International Women's Day! (March 8th)



Since 1911, International Women's Day has celebrated the economic, political, and social achievements of women: past, present and future.

The progress women have made world-wide, and the critical contribution of women to the betterment of their societies in every corner of the world are indisputable.

IWD events are being held all over the world - check them out.

And don't forget: It starts with me, you... us.

The food crisis never ended

Christopher Delgado, an agricultural policy advisor at the World Bank, recently said of the global food crisis, "The food crisis has not gone away...In fact, it is coming back."

Combing through the media, it would be easy to assume that the food crisis had long ago subsided as demand for imports, commodity prices and economic growth declined. However, risks to food security and the possibility of famine are still very high in many countries. While food commodity prices have fallen from their record highs in 2007, the US Department of Agriculture forecasts that they will remain above historical levels in 2009. The combination of rising food prices, economic contraction, export/price controls and tight trade credit exposes many vulnerable countries, particularly LDCs, to serious risks of famine, poor crop yields and higher prices coinciding with falling income. This doesn't even begin to include the impact on food production by drought, land degradation and other environmental conditions; the UN recently warned that global food production may fall 25% by 2050.

Given the still prevalent risks, it is disconcerting that less is being done to combat the problems directly. Further, certain policy responses to the financial and economic crises, such as looser monetary policy in the developed world, or expropriation in countries like Venezuela, risk stoking the rising food commodity prices. Which brings me to the real danger on the horizon (beyond, of course, the human cost): that the financial, economic and food crises will reinforce each other in a vicious cycle. A food crisis is a likely second-round affect of the financial and economic crises, which in itself breeds political and economic instability, undermining the recovery process and further destabilizing the global economy.

Policy responses to the financial and economic crises are understandably driven by the need for immediate action; to stop the bleeding, so to speak. But what if the very policies necessary to bring us out of this downward spiral only reinforce it in the medium-term?

(photo from snake.eyes' photostream)

Quantifying culture

As a student with formal training in a variety of fields, most notably anthropology and economics, I often find myself flummoxed at how drastically the two fields seem to speak past each other. This sentence gives me hope. 

One interesting bit of research suggests that "group values" cultures will export products that don't require as much impersonal contract enforcement, and thus values is part of what makes you specialize.

Besides the verb disagreement, that's one of the most intriguing ideas I've heard in recent development theory. Easterly, at his new blog AidWatch, vastly oversimplifies the research (as he openly admits) but boils the ideas down nicely. Read the whole thing.

Russia and China: a Power House or Broken Home?

Russia and China seem pretty chummy of late. Both countries essentially head the Shanghai Cooperation Organization – an organization which frightens the West because it promotes cultural, security, and economic cooperation among China, Russia, and Central Asia. In the cultural arena, China has dubbed 2009 the year of the Russian language, and Russia will make 2010 the year of the Chinese language. To promote security, the two countries established a hotline between their heads of state.

Most recently, the countries displayed extraordinary economic cooperation. Russia secured $25bn in loans from China in return for supplying oil for the next 20 years. This deal is the largest trade financing agreement between the two countries to date: Russia desperately needs money and China desperately needs oil. Everyone’s happy, right?

Not exactly. Days after the historic agreement, a Russian warship opened fire on a Chinese cargo ship and sunk it. The two countries' foreign ministries blame each other. But Clifford Levy of the New York Times actually blames deteriorating bilateral relations. Why?

While both countries enjoy honoring agreements that are mutually beneficial (economic cooperation) or mutually benign (language exchange), Russia and China have a tendency to disregard cooperation when it affects domestic politics. Levy likens the sinking of the Chinese cargo ship to last year’s Russian-Georgian conflict. China didn’t support Russia because Russia recognized the autonomy of South Ossetia, and China didn’t want to encourage Tibet’s or Xinjiang’s calls for autonomy.

What's clear is that Russian-Chinese relations are only as simple as each country’s domestic politics, which is to say they're not all that simple. Notably, Russia and China don’t have an alliance or even an established method to resolve disputes and disagreements. They just have a mechanism for cooperation, which can be honored or ignored at either country’s whim. Hopefully, ignoring the cooperation won't lead to any more drowned sailors.

Tin miners and tourists?

Gabon, a small previously oil-rich country in Central Africa, needs some income. Having flittered away it's oil money on bureaucratic diners, the country is attempting to revamp itself as a holiday spot.

But with lacking infrastructure and inhospitable neighbors, Gabon is not a prime tourist destination and finds itself needing some quick cash to buoy the economy. 

Instead it's finding its forests overrun with Chinese prospectors instead of tourists. Chinese strategic interest in African resources is nothing new, but Gabon was once a reason for hope in Africa's dismal resource management record. 

History repeats itself.

(Photo via bear_in_va)

The paradox that is South Africa

The past week has laid bare the stark contrasts between South Africa's ambition and reality, progress and failures.

On February 21, tickets went on sale for the 2010 World Cup. ZA is the first African country to host the tournament. Its winning bid came to symbolize not just the country's post-apartheid progress, but a sense that the entire continent's development was turning a corner as well. While ZA is still racing to complete the massive infrastructure projects associated with the event, the dream many doubted would ever be realized seems all but assured. The importance of this event to a football-mad continent should not be underestimated.

If only the country's economic outlook was so hopeful. South Africa's post-apartheid economic progress is evident. But it's only part of the story. While the emergence of a growing black middle class has been one of its greatest measures of progress, it thinly veils a broader failure to bring economic empowerment to the millions of residents of townships from Soweto to Langa. The percentage of South Africans living with HIV has been estimated at 20%; in fact, life expectancy has fallen by 10 years since the end of apartheid. Crime is truly epidemic. Oh yeah, and there are the tricky issues of Jacob Zuma, the ANC civil war and rising political violence.

One would expect these persistent problems to only worsen now that the economy appears to be falling of a cliff. The government reported today that the economy contracted in Q4 2008, ending the country's longest economic expansion on record. Thousands of jobs are being shed by foreign mining firms. Manufacturing output has slumped to a 40-year low. Even gold production, in which South Africa was the world's leader until 2007, plummeted to its lowest level in 86 years. This is troubling for a sector that accounts for 2.5% of GDP.

I know- quite the pessimistic outlook for a country that has been hailed as a model for post-conflict reconciliation and economic development. But South Africa faces a difficult year, all the while preparing for a remarkable one in 2010. Like other emerging market stars, South Africa represents a bright future. But there are dark days ahead.

Protectionism coverage at the World Bank

Check out my new coverage on the rise of protectionism over at the World Bank's Youthink! blog.

Commodity price collapse: who wins and who loses?

One of the great back stories of the ongoing economic crisis is the collapse in commodity prices, which occurred in the second half of 2008 after a record boom period lasting at least five years. The bursting of the bubble has produced clear winners and losers. Thanks to our fantastic contributors, zzzeitgeist has had excellent coverage of these repercussions. I thought I’d try to tie things together.

The biggest winners are consumers, particularly first-world automobile drivers. In the last 7+ months, oil has fallen from $147/barrel to about $37/barrel now. Economists reckon that amounts to a ‘stimulus’ of more than $240 billion. Also, now that the world food crisis has largely subsided, developing-world consumers stand to benefit from cheaper food prices. This means a lot when you spend more than 50% of your budget on food.

The mining sector is obviously a huge loser. Mining is often a boom and bust industry, because it takes a long time to develop new mining projects. It’s hard to forecast future supply/demand fundamentals (remember when this seemed like a good idea?) and unfortunately they can change drastically and rapidly, which is exactly what has happened in the last year. As a result, a number of firms are closing mines, because prices are too low to justify operating costs. Mining firms often take on a lot debt out of necessity – digging mines ain’t cheap. But thanks to the financial crisis and the disappearance of cheap credit, heavily indebted companies are suddenly struggling to stay afloat. Case in point: Rio Tinto, the world’s second largest mining conglomerate. See Rory’s excellent treatment of Rio’s debt woes here.

Finally, commodity-dependent countries suffer perhaps the worst. When prices are high, resource-rich countries are suddenly flush with cash, which they can use to advance geopolitical aims, reward cronies, or invest in infrastructure, education and health to avoid the resource curse (don’t hold your breath). Falling commodity prices have scaled back these ambitions. See Dan’s analysis of Venezuela, Rory’s take on Russia, or this money quote about Iran.

In my mind, these are the biggest winners and losers, but this list is by no means exhaustive. Falling commodity prices also have an enormous effect on agricultural trade, international cooperation, foreign direct investment, Guinea, South Africa, Australia, several Latin American countries, etc. Who else am I missing?

(photo from jeff-o-matic’s photostream)