Dr. Stephen R. Humphrey, Director of Academic Programs,
School of Natural Resources and Environment,
Box 116455, 103 Black Hall, University of Florida
Gainesville, FL 32611-6455 USA
Tel. 352-392-9230, Fax 352-392-9748
From: Messina,William A,JR [mailto:[log in to unmask]]
Sent: Friday, March 27, 2009 12:25 PM
To: . IFAS-Announce-L
Subject: J. Wayne Reitz Seminar in FRE -- rising food prices and policy dilemmas in the developing world
J. Wayne Reitz Seminar in Food and Resource Economics
COPING WITH RISING FOOD PRICES: POLICY DILEMMAS IN THE DEVELOPING WORLD
By Dr. Nora Lustig, Shapiro Visiting Professor of International Affairs
at George Washington University
Friday, April 10, 2009
McCarty Hall, Room 1151
Open to the public.
Abstract: This paper examines the policy dilemmas and challenges faced by developing country governments when confronted with rising food prices, especially when it comes to the prices of basic foods such as rice and corn. One option for governments is to let domestic prices adjust to reflect the full change in international prices. However, this generates inflationary pressures, and if poor households lack savings or access to credit and social safety nets are inadequate, high food prices can cause severe hardship. Countries with large international reserves could mitigate these effects by appreciating their currency. But an exchange rate appreciation hurts the tradable sector and may cause macroeconomic imbalances down the road. Alternatively, governments can use food subsidies or export restrictions to stabilize domestic prices, shifting the burden of adjustment back on to international markets. The former measures exacerbate global food price fluctuations, hence are a "beggar-thy-neighbor" policy response which undermines a rules-based trading system and reduces welfare particularly in food importing countries. Without a multilateral solution to food price volatility in international markets, however, it is not surprising that developing countries pursue what is perceived as best for them even if the rest of the world is made worse off. With the introduction of biofuels, food commodity prices are likely to behave more like industrial commodity prices, so episodes of rapidly rising food commodity prices are bound to happen more frequently in the future. Biofuels not only lead to a rise in the long-term price of food staples but will also make food prices much more sensitive to the business-cycle much more than in the past. "Beggar-thy-neighbor" policies will become a common practice every time nonrenewable energy prices go up.
Biographical Sketch: Dr. Lustig is presently the J.B. and Maurice C. Shapiro Visiting Professor of International Affairs at George Washington University's Elliott School of International Affairs. Previously, she was the Director of the Poverty Group of the United Nations Development Programme (UNDP); President of the Universidad de las Americas, Puebla, Mexico, and Professor of its Department of Economics; Senior Advisor and Chief of the Poverty and Inequality Unit at the Inter-American Development Bank; Senior Fellow at the Foreign Policy Studies Program of the Brookings Institution; and Professor at the Center of Economic Studies of the Colegio de Mexico. During her sabbaticals, Dr. Lustig spent time as Visiting Scholar at MIT, Visiting Professor at the University of California, Berkeley, and at the United Nations Economic Commission of Latin America and the Caribbean (ECLAC). She has been a member of the Mexican Academy of Sciences since 1987 and was President of the "Mexican Commission of Macroeconomics and Health." She is a founder and former President of the Latin American and Caribbean Economics Association.
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