Failed Policies Lead to Food Shortages

Havard development economist C. Peter Timmer:

World food prices are pushing higher—the United Nations overall food index shows a 28.3% annual increase, with cereals up 44.1%—sparking concerns that a new food crisis may be emerging, just three years after the last one. Does this mean the world is running out of food?

(…) The only sustainable pathway out of rural and urban poverty is a structural transformation of the economy that is driven by higher agricultural productivity, the gradual shift of jobs from farms to factories, and the rise of a knowledge-based and skill-intensive service sector that is mostly urban-centered. Of course, this structural transformation has country-specific dimensions. But its general pattern has been remarkably uniform, from the early transformations of Western Europe and its overseas offshoots, to the rapid rise of Japan, Korea, and now China, and much of the rest of Asia.

A successful structural transformation requires a long-term vision on the part of both public and private investments, a degree of stability in the macro-economic environment, and an openness to trade in goods, services and ideas. England figured this out in the late 18th century, Germany and Japan in the mid-19th century, and much of East Asia managed this combination of long-term investments, stability and openness in the 20th century. Early in the 21st century, Brazil, Ghana and Indonesia seem to be on the path to successful structural transformations and sharp reductions in hunger and poverty.

(…) The tragedy is that the poor pay the price of their policy makers’ failures. Without higher productivity on their farms, off-farm job opportunities for their children, and with the constant threat of food shortages, the poor end up trapped in enduring poverty. Food crises hit the poor doubly hard—through their short-run hunger and their long-run loss of opportunities and hope.