Global Monitoring Report 2012
Food Prices, Nutrition, andthe Millennium Development Goals Published by World Bank
Global Monitoring Report 2012 68171
Food Prices, Nutrition, and the Millennium Development Goals
Global Monitoring Report 2012 Food Prices, Nutrition, and the Millennium Development Goals
Global Monitoring Report 2012
Food Prices, Nutrition, and the Millennium Development Goals
© 2012 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org All rights reserved 1 2 3 4 15 14 13 12 This volume is a product of the staffs of The World Bank and The International M onetary Fund. The ?ndings, interpretations, and conclusions expressed in this volume do not necessari ly re ect the views of the Board of Executive Directors of The World Bank, the Board of Executive Directors of The International Monetary Fund, or the governments they represent. The World Bank and The International Monetary Fund do not guarantee the accu racy of the data included in this work. The boundaries, colors, denominations, and other informat ion shown on any map in this work do not imply any judgement on the part of The World Bank or The Int ernational Monetary Fund concerning the legal status of any territory or the endorsement or acceptan ce of such boundaries. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting por tions or all of this work without permission may be a violation of applicable law. The International Bank for Reconstruction and Development / The World Bank encourages dissemination of its work and will norma lly grant permission to reproduce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; telephone: 978-750-8400; fax: 978-750-4470; Internet: www.copyright.com. All other queries on rights and licenses, including subsidiary rights, shoul d be addressed to the Of ?ce of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; f ax: 202-522-2422; e-mail: email@example.com. ISBN: 978-0-8213-9451-9 eISBN: 978-0-8213-9523-3 DOI: 10.1596/978-0-8213-9451-9 The painting on the cover is by Sue Hoppe, an artist based in South Africa. Titl ed “Resolution, ? the painting explores the idea that people who seem irreversibly divided and with little in common can unite if they focus on what they have in common instead of what divides them. Hoppe’s work exami nes war, con ict, and the plight of children and women in Africa, but is also inspired by nature a nd architecture. To learn more about Sue Hoppe and her work, visit www.southafricanartists.com/home/SueHop pe.
Cover design by Debra Naylor of Naylor Design Photo credits: page xvi: Masuru Goto/World Bank; clockwise for pages 10–11, beginn ing at top: Liang Qiang / World Bank, Curt Carnemark / World Bank, Curt Carnemark / World Bank, an d Steve Harris / World Bank; page 15: Curt Carnemark / World Bank; page 16: Curt Carnemark / Worl d Bank; page 19: Curt Carnemark / World Bank; page 21: John Isaac / World Bank; page 23: John Isa ac / World Bank; page 25: Curt Carnemark / World Bank; page 27: Curt Carnemark / World Bank; page 28: Michael Foley; page 62: Arne Hoel/World Bank; page 94: Shehzad Noorani/World Bank; page 116: Al ex Baluyut/World Bank; page 136: Michael Foley.
Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii Abbreviations and Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Progress toward the MDGs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 1 Poverty and Food Price Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 2 Nutrition, the MDGs, and Food Price Developments . . . . . . . . . . . . . . . . . . . . . . . . . . 63 3 Growth and Macroeconomic Adjustment in Developing Countries . . . . . . . . . . . . . . . 95 4 Using Trade Policy to Overcome Food Insecurity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 5 Aid and International Financial Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 Appendix: Classi . . . . . 169 ?cation of Economies by Region and Income, Fiscal 2012 . . . . . .
GLOBAL MONITORING REPORT 2012
CONTENTS GLOBAL MONITORING REPORT 2012
BOXES 1 The MDG target of halving extreme poverty—reached in 2010! . . . . . . . . . . . . . . . . .2 1.1 Crisis in the Horn of Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32 1.2 How rising food prices affect the citizens of Dar es Sala am . . . . . . . . . . . . . . . . . . . .33 1.3 How many more are poor because of higher food prices? . . . . . . . . . . . . . . . . . . . . .35 1.4 Actions by women made the most difference but were invisi ble to policy makers . . .36 1.5 World price impacts across regions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38 1.6 Sustainable increase in food production is required to si multaneously ?ght global hunger and reduce the pressure on biodiversity . . . . . . . . . . . . . . . . . . . . . . . .43 1.7 Ethiopia’s food security programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48 1.8 Building foundations for social safety net systems . . . . . . . . . . . . . . . . . . . . . . . . . . .49 1.9 Managing supply and price risks for maize in Malawi . . . . . . . . . . . . . . . . . . . . . . . .55 1.10 Linking changes in productivity and climate to poverty: t he use of Envisage and GIDD for long-term scenario building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56 2.1 Impact of higher food prices and undernutrition on the MD Gs . . . . . . . . . . . . . . . . .64 2.2 The impact of the 2007–08 food price spike on a rural commu nity in northern Bangladesh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68 2.3 Malnutrition and chronic disease in India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71 2.4 Consequences of early childhood growth failure over lifet imes in Guatemala . . . . . .73 2.5 The global SUN movement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76 2.6 Community-based growth promotion programs . . . . . . . . . . . . . . . . . . . . . . . . . . . .77 2.7 Breaking the low-priority cycle: how nutrition can become a public sector priority for Sub-Saharan African governments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82 2.8 The implications of various spending and ?nancing decisions on the MDGs of a low-income country using MAMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83 2.9 Nutrition security in Haiti after the earthquake of 2010: priorities and ?rst steps . . .88 3.1 Dealing with shocks: Risk management and contingent ?nancin g instruments. . . . .107 3.2 Fiscal policy responses to food price shocks . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .113 3.3 Food price volatility and monetary policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .114 4.1 Russia’s export ban on grains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .124 4.2 Government imports of maize during the Southern Africa fo od crisis . . . . . . . . . . .125 4.3 The Middle East and North Africa region faces high trade costs in food . . . . . . . . .126 4.4 Quantifying the effects of non-tariff measures on trade i n African food staples . . . .126 4.5 Open border policies for trade in food . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .127 4.6 Defragmenting Africa: What will stimulate regional trade integration? . . . . . . . . . .130 5.1 Examples of independent initiatives to improve aid effect iveness . . . . . . . . . . . . . . .149 5.2 Better statistics for all: Monitoring the millennium deve lopment goals. . . . . . . . . . .151 5.3 The World Bank has made signi ?cant progress on the aid effe ctiveness agenda, but there is room for improvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .154 5.4 CGIAR: Improved collaboration and harmonization to streng then delivery. . . . . . .155
GLOBAL MONITORING REPORT 2012 CONTENTS vii
5A.1 Food price hikes and nutrition: The United Kingdom’s response . . . . . . . . . . . . . . .165 5A.2 EU initiatives on agriculture, food security, and nutrition. . . . . . . . . . . . . . . . . . . . .166 FIGURES 1 Global progress toward the MDGs varies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 2 Food prices spiked again for the second time in three years . . . . . . . . . . . . . . . . . . . . .4 1.1 Food, grain, agricultural, and energy price developments . . . . . . . . . . . . . . . . . . . . .31 1.2 The impact of higher food prices on poverty differs across socioeconomic groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 1.3 Countries’ vulnerability to global food price shocks tracked by share of ce real imports in domestic consumption and food share in household expenditure . . . . . . .37 1.4 Demand responsiveness to food price declines as per capita income increas es . . . . . .44 1.5 Ratio of cereal production to consumption in 2010 and 2025 . . . . . . . . . . . . . . . . . .57 2.1 Mean height for age, relative to WHO standards, by region . . . . . . . . . . . . . . . . . . .71 2.2 Percentage of stunted children and overweight women in selected Latin American countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72 2.3 Bene ?t-cost ratios of various interventions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .80 2.4 Impact of policy responses to food import price shock for food net import er . . . . . . .85 3.1 GDP per capita growth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96 3.2 Global current account imbalances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .97 3.3 Low-income countries: Imports, exports, and current account balance, including FDI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .98 3.4 Of ?cial reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99 3.5 Commodity price indexes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99 3.6 Fiscal de ?cits in emerging and low-income economies . . . . . . . . . . . . . . . . . . . . . . .100 3.7 Monetary policy loosening in emerging market and low-income countries . . . . . . .100 3.8 Average year-on-year growth in money and the money gap in emerging market countries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101 3.9 Macroeconomic policy mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101 3.10 Quality of macroeconomic policies in low-income countries, 2005 and 2009–11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . 3.11 . . 3.12 . . 3.13 . . 3.14
. . . . . . . . . . . . . . . . . . . . . .102 Commodity prices and macroeconomic movements, 2007–12 . . . . . . . . . . . . . . .103 Selected macroeconomic indicators for low-income countries, 2007–12 . . . . . . .109 Tail-risk scenarios for low-income countries. . . . . . . . . . . . . . . . . . . . . . . . . . . . .110 Composition of the Consumer Price Index basket in low-income and OECD countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .114 4.1 Most cereal production is consumed domestically and not traded . . . . . . . . . . . . . .118 4.2 Food trade matters most for low-income countries . . . . . . . . . . . . . . . . . . . . . . . . .118 4.3 Trade in key cereals is dominated by just a few countries . . . . . . . . . . . . . . . . . . . . .119 4.4 Net-food-importing regions lose from higher food prices while net-exporti ng regions gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .120
CONTENTS GLOBAL MONITORING REPORT 2012
4.5 od products are
The most frequent users of trade-restrictive measures on fo
G-20 countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .122 4.6 Some countries have also sought to lower domestic food pric es by temporarily lowering trade restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .123 4.7 Producer support to farmers in most developed countries has fallen but is rising in emerging economies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .123 5.1 DAC members’ net ODA bilateral disbursements. . . . . . . . . . . . . . . . . . . . . . . . . . .139 5.2 DAC ODA as a share of GNI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .140 5.3 Net ODA disbursements to low- and middle-income countries a nd by region . . . . .141 5.4 Net ODA received per capita by groups of countries ranked b y MDG targets met or on track to be met by 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .142 5.5 Share of committed ODA to food, nutrition, and agriculture by donor . . . . . . . . . .143 5.6 Composition of committed ODA and commitments by donors in y ear 2010 . . . . . .143 5.7 ODA commitments by income group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .145 5.8 ODA from Brazil, Russia, India, China, and South Africa . . . . . . . . . . . . . . . . . . . .146 5.9 Changes in sources of estimated global concessional develop mental ows . . . . . . . .147 5.10 Country programmable aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .157 5.11 CPA ows to developing regions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .158 5.12 CPA received by number of MDG targets achieved or on track . . . . . . . . . . . . . . . .159 5.13 CPA by low- and middle-income countries, 2003–13 . . . . . . . . . . . . . . . . . . . . . . . .159 5.14 Eurobarometer surveys. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .159 MAPS 3.1 As global growth slows, growth outcomes across countries co nverge. . . . . . . . . . . .104 3.2 With higher commodity prices, few countries are able to mai ntain price stability. . .105
TABLES 1.1 Common coping responses to food, fuel, and
?nancial crises in
13 countries . . . . . . .34 1.2 Pass-through of international rice prices to local prices i n selected Asian countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38 1.3 Price volatility across products in the countries of Sub-Sa haran Africa . . . . . . . . . . . .39 1.4 Major drivers of world cereal prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41 1.5 Higher consumption growth of corn has offset slowing growth in rice and wheat, while increases in area planted to food offset s lowing yield growth . . . . .41 1.6 Policy measures adopted in 81 selected countries in respons e to 2006–08 price spike . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45 1.7 Fiscal implications of policy responses to 2006–08 price spik e, selected countries . . .46 1.8 Main measures to limit the growth and volatility of world c ereal prices . . . . . . . . . . .50 1.9 Poverty forecast, 2015–25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58 2.1 The annual per capita cost of various nutrition interventio ns is very low . . . . . . . . . .80
GLOBAL MONITORING REPORT 2012 CONTENTS ix
3.1 Global output . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96 3.2 Net ?nancial ows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .98 5.1 Decadal changes in bilateral of ?cial development assistance . . . . . . . . . . . . . . . . . .139 5.2 Composition of committed ODA to nutrition, food, and agriculture . . . . . . . . . . . .144 5.3 Key characteristics of BRIC ?nancing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .146 5.4 Aid fragmentation by income group and fragile and con ict-affected states . . . . . . .148 5.5 Progress toward Paris Declaration targets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .152 5.6 Multilateral development bank progress on Paris Declaration survey indica tors . . .156 5.7 CPA by region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .157 5A.1 Responses from the international donor community to recent food price spi kes . . .161
E very year, the Global Monitoring cal factor for Report (GMR) gauges progress across f life, when the Millennium Development Goals nutritional (MDGs), so we can better understand whether velopment. This we are delivering on basic global needs. These , set back a whole needs include affordable, nutritious food; access to health services and education; and e solutions for the ability to tap natural resources sustaines more resilably—whether clean water, land for urban pikes. Strategies expansion, or renewable energy sources. We icies to encourassess how well the world is doing by looking n; using social at income poverty, schooling levels, the health nce; strengthening of mothers and children, and inroads in treatthe implications ing HIV/AIDS, malaria, and tuberculosis, as ; and designwell as assessing how the international develaccess to food opment community delivers aid. We also try atility, and to measure levels of malnutrition and hunger in the world. Food prices can affect all these nd more volatile indicators. regional and For these reasons, the Global Monitoring rters of food— Report 2012 takes the theme of “Food Prices, , North Africa, Nutrition, and the Millennium Development rt bills, Goals. ? This year’s edition highlights the need nsmission to help developing countries deal with the s for imported harmful effects of higher and more volatile hurt consumers, food prices. are of their In 2007–08 and again in 2011, soaring n much of food prices held back millions of households porting counand quality of nutrition—a criti children in the ?rst two years o
even a temporary reduction in intake can affect long-term de loss of nutrition can, in turn generation. The GMR details some of th making countries and communiti ient in the face of food price s include using agricultural pol age farmers to boost productio safety nets to improve resilie nutritional policies to manage of early childhood development ing trade policies to improve markets, reduce food price vol make productivity gains. The implications of high a food prices vary widely at the country levels. Large net impo such as those in the Middle East and West Africa—face higher impo reduced ?scal space, and greater tra
of world prices to local price rice and wheat. Higher prices who need to spend a greater sh income on food, as is the case i Africa and Asia. Larger net ex
from escaping poverty. Poor people in cities America, Eastern remain especially vulnerable to higher food d to bene ?t. But prices, as do households headed by women. essure to help Higher food prices also affect the quantity a large share of
tries, such as those in Latin Europe, and Central Asia, stan they may also face internal pr households that need to spend
GLOBAL MONITORING REPO RT 2012 xi
xii FOREWORD MONITORING REPORT 2012
their budgets on food. The sequencing and pric performance will play a oritization of policy initiatives depends critin meeting the MDGs. Progress cally on a country or region’s initial situation. sible by the relatively strong Going forward, all of us—including tradif developing countries tional donors, new donors, philanthropists, obal ?nancial crisis has been and NGOs—must do better in ?ghting hunt weakening of the global ger, particularly by making more resources nment has implications for available for basic nutrition. For a start, this rty in emerging and developmeans including nutrition interventions in and it is important that the projects and programs when and wherever ies undertake the necessary possible. At the same time, we need to design olicies to bring about strong more effective policies, strengthen accountal growth. ability, and ensure that recipients can absorb n lies with the low-income vital assistance. e macroeconomic policy bufThe GMR’s assessment of progress on the ebt, and current account MDGs offers grounds for optimism. Global t yet been rebuilt to levels targets for overcoming extreme poverty and is. If they have to confront access to safe drinking water have been lobal slowdown or another reached well ahead of schedule. Goals related r fuel prices, these countries to primary school completion rate and gender m a weaker position. equality in primary and secondary education important progress in pushalso appear within reach. Other goals, howard meeting the MDGs—but ever, require a real push, particularly regards just around the corner. We ing child and maternal mortality, and access to s to ensure that billions more improved sanitation facilities. MDG gaps are e the opportunity to bene ?t starker when the focus is on individual couneconomy. The need for cooptries and achievements per region, where dissed steps to achieve these goals
Macroeconomi critical role i that was made pos economic growth o prior to the gl set back. The recen economic enviro overcoming pove ing economies, advanced econom macroeconomic p and stable glob A key concer countries, wher fers—such as ?scal, d
positions—have no before the cris another sharp g surge in food o would start fro We have made ing forward tow the year 2015 i have three year people will hav from the global eration on focu
parities persist. greater.
has never been
Robert B. Zoellick de President or The World Bank Group onetary Fund
Christine Lagar Managing Direct International M
T his report has been prepared jointly s provided by by the staff of the World Bank and ld. the International Monetary Fund. In consultants preparing the report, staff have collaborated cluding the folclosely with partner institutions—the African Adugna, Development Bank, the Asian Development ine, Jean Bank, the European Bank for Reconstruction swati Bora, and Development, the Inter-American Develro Caropment Bank, the Organisation for Economic Chen, Loriza Co-operation and Development, the Food li Demirgüçand Agriculture Organization, the European , Ariel Fiszbein, Union, the UK Department for International ko Hiraga, Development, and various NGOs, such as rman Oxfam International and Save the Children. nique van The cooperation and support of the staff of ibanda, these institutions is gratefully acknowledged. avallion, Jos Verbeek was the lead author and manulie Ruel ager of the report. Lynge Nielsen led the team liam Shaw, from the IMF. The principal authors and conoberg, tributors to the various parts of the report orth, and include Mohini Datt, Annette I. De Kleine Feige, Ian Gillson, Rasmus Heltberg, Maros itutions Ivanic, Bénédicte de la Briere, Hans Lofgren, King Maryla Maliszewska, William J. Martin, Jose te of DevelAlejandro Quijada, Eric V. Swanson, and Serd Daphne giy Zorya (World Bank), and Sibabrata Das, Fredrik EricsStefania Fabrizio, Yasemin Bal Gunduz, Svite Steensen lana Maslova, and John Simon (IMF). Sachin elopment Bank. Supervision at the IMF wa Hugh Bredenkamp and Brad McDona A number of other staff and made valuable contributions, in lowing from the World Bank: Abebe Harold Alderman, Lystra N. Anto Francois Arvis, John Baffes, Sa Andrew Burns, Grant Cameron, Ge letto, Iride Ceccacci, Shaohua Dagdag, Christopher Delgado, As Kunt, Leslie Elder, Neil Fantom Del ?n Sia Go, Anna Herforth, Masa
Hans Hoogeveen, Alma Kanani, No Loayza, Alessandra Marini, Domi der Mensbrugghe, Menno Mulder-S Israel Osorio-Rodarte, Martin R Anna Reva, Bruce Ross-Larson, J Bergeron, Cristina Savescu, Wil Meera Shekar, Yurie Tanimichi H Robert Townsend, Jonathan Wadsw Ruslan Yemtsov. Contributors from other inst included: Duncan Green and Richard (Oxfam); Naomi Hossain (Institu opment Studies); Kate Dooley an Jayasinghe (Save the Children); son, Kimberly Smith, and Suzann (OECD); Indu Bhushan (Asian Dev
Shahria assisted with the overall preparation ican Develand coordination of the report. The work was uckley and carried out under the general guidance of Jusion); Chris tin Yifu Lin and Hans Timmer at the World adraliyev
Bank); Amy M. Lewis (Inter-Amer opment Bank); Jennifer Keegan-B Jean-Pierre Halkin (European Un Penrose-Buckley (DFID); Murat J
GLOBAL MONITORING REPORT 2012 xiii
xiv ACKNOWLEDGMENTS MONITORING REPORT 2012
(EBRD); Anita Taci (EBRD); and Patricia N. ing of the report, with Aziz GokLaverley (Africa Development Bank). the process. Others assisting Guidance received from the Executive publication included Denise Directors of the World Bank and the IMF and Graham, Stephen McGroarty, their staff during discussions of the draft report mbo-Bejarano. is gratefully acknowledged. The report also issemination and outreach bene ?ted from many useful comments and y Indira Chand and Merrell suggestions received from the Bank and Fund working with Vamsee Kanchi, management and staff in the course of its prepappan, and Roula Yazigi. aration and review. The World Bank’s Of ?ce of the Publisher managed the editorial services, design, produc-
tion, and print demir anchoring with the report’s Bergeron, Susan and Santiago Po The report’s d was coordinated b Tuck-Primdahl, Malarvizhi Veer
Abbreviations and Acronyms ADB Asian Development Bank mmunode ?ciency virus AfDB African Development Bank merican Development Bank AIDS acquired immune de ?ciency syndrome onal Finance Corporation AMIS Agricultural Market Information tional ?nancial institution System tional Food Policy Research BMI body mass index te BRICS Brazil, Russia, India, China, and Standards Measurement Study South Africa e for MDG simulations CGIAR Consultative Group on International teral development bank Agricultural Research iff measure CPA country programmable aid OAP d Partnership DAC Development Assistance Committee ODA evelopment assistance DFID Department for International OECD ation for Co-operation and Development (U.K.) Develop ment EBRD European Bank for Reconstruction PFM ance management and Development PPP ing power parity EU European Union PSE r support estimates FAO Food and Agriculture Organization (of the United Nations) pment instructions FDI foreign direct investment ase option G-8 Group of Eight l trade agreement G-20 Group of 20 y and phytosanitary GATT General Agreement on Tariffs and Up Nutrition Trade al barriers to trade GFRP Global Food Crisis Response Program Nations Conference on Trade PSI REPO RTA SPS SUN TBT UNCTAD produce pre-shi repurch regiona sanitar Scaling technic United purchas public ?n Organis of ?cial d Open Ai HIV IDB IFC IFI IFPRI human i Inter-A Internati interna Interna Institu LSMS MAMS MDB NTM Living maquett multila non-tar
GIDD Global Income Distribution Dynamics elopment GMR Global Monitoring Report ood Programme GNI gross national income rade Organization GTAP Global Trade Analysis Project
and Dev WFP WTO World F World T
All amounts are presented in U.S. dollars, unless otherwise indicated. xv
What has been the impact of yet another alue in 2010. food price spike on the ability of developing 7.c—to countries to make progress toward the Milith no safe lennium Development Goals (MDGs)? How 015 many poor people were prevented from lifting various themselves out of poverty? How many peorcent of the ple, and how many children, saw their pernder parity sonal growth and development permanently k, and MDG harmed because their families could not is close to afford to buy food? How did countries react sely linked to the last two food price spikes of 2007–08 particularly and 2010–11, and how did their reaction al moraffect their progress toward the MDGs? And for country what can countries do to respond to higher 44 monitored and more volatile food prices? The 2012 and 94 are Global Monitoring Report (GMR) addresses these basic questions. It summarizes effects of food prices on several MDGs. It reviews policy responses—including domestic social safety nets, nutritional programs, agriculs spiked for tural policies, regional trade policies, and igniting consupport by the international community. And food price it outlines future prospects. the poor. The The world has met two MDGs, while 184 perglobal progress varies across the other 008 ( ?gMDGs ( ?gure 1). Preliminary survey-based reached the estimates for MDG 1.a in 2010—based on n 2009, and a smaller sample than the global update in h September. box 1—indicate that the $1.25 a day poverty in 2007–
had fallen below half its 1990 v Also in 2010, the world met MDG halve the proportion of people w drinking water—well ahead of the 2 deadline. And global progress on MDGs is on track or within 10 pe on-track trajectory. MDG 3.a (ge in school enrollment) is on trac 2.a (primary school completion) being on track. But the MDGs clo to food and nutrition are lagging, child mortality (MDG 4) and matern tality (MDG 5). The same is true progress: 105 countries of the 1 are not expected to reach MDG 4, off track on MDG 5.
Food prices spike once again In 2011 international food price the second time in three years, cerns about a repeat of the 2008 crisis and its consequences for World Bank Food Price Index rose cent from January 2000 to June 2 ure 2). In February 2011 it again 2008 peak, after a sharp decline i stayed close to that peak throug The international food price spike
rate (2005 purchasing power parity, or PPP) pushed 105 1
08 is estimated to have kept or
OVERVIEW GLOBAL MONITORING REPORT 2012
FIGURE 1 Global progress toward the MDGs varies Developing countries, weighted by population 100 90 87 80 80 80 Distance to 2015 goal, % 78 100 94 87 87 96 100 96
68 72 70 60 51 52 50 40 38 30 20 10 0 MDG 4.a MDG 7.c Mortality rate, Improved ys d infants sanitation (per 1,000 facilities live births) (% population without access) 2005 PPP) live births) nding target Latest available value (%) Correspo MDG 4.a Mortality rate, children under 5 (per 1,000) MDG 1.a MDG 2.a MDG 5.a Extreme Primary Maternal MDG 3.a MDG 7.c Ratio of Improved
poverty completion girls to bo mortality water source (% population rate (% in primary an ratio (modeled (% population below relevant estimate, secondary without
$1.25 a day, age group) education per 100,000 access)
Source: World Bank staff calculations based on data from the World Development I ndicators database. Note: A value of 100 percent means that the respective MDG has been reached. “Corr esponding target ? indicates progress currently needed to reach the goal by 2015. “La test available value ? denotes current progress as illustrated by the most recent availa ble data: extreme poverty, 2010; primary completion rate, total, 2009; ratio of girls to boys in primary and secondary education, 2009; mortality rate, infants, 2010; mortality rate, ch ildren under 5, 2010; maternal mortality ratio, 2008; improved water source, 201 0; improved sanitation facilities, 2008. PPP stands for purchasing power parity.
BOX 1 y—reached in 2010!
The MDG target of halving extreme povert
10. , on. e s
d on t of le on eople
The World Bank has been regularly monitoring the to less than half of its 1990 value by 2010. So the ? rst progress of developing countries in reducing ext MDG target of halving extreme poverty has been poverty. Drawing on data and expertise from all achieved well before the 2015 deadline. East Asia and regions, the Bank has updated the global and reg Paci ?c, Middle East and North Africa, and Europe poverty numbers for 1981–2008 and prepared preand Central Asia have attained MDG 1.a, while povliminary estimates (for a smaller sample) for 20 erty in South Asia and Sub-Saharan Africa remains in The latest estimates draw on more than 850 house double digits. Current estimates for 2015 show that hold surveys for almost 130 developing countries poverty will further decline to 16.3 percent for the with 90 percent of the developing world populati world as a whole. Mostly produced by national statistical of ?ces, th Looking back to 1990, East Asia and Paci ?c was results for 2005 and 2008 are based on interview the region with the highest number of poor people with 1.23 million randomly sampled households. in the world, with 926 million living below $1.25 a An estimated 1.29 billion people in 2008 live day. By 2008 that level had fallen to 284.4 million. less than $1.25 a day, equivalent to 22.4 percen In China alone, 510 million fewer people were living the developing world population (see the box tab in poverty by the $1.25 standard. In 2008, 13 perthe next page). Contrast that with 1.9 billion p cent (173 million people) of China’s population still in 1990, or 43.1 percent. lived below $1.25 a day. In South Asia, the $1.25 a Preliminary survey-based estimates for 2010— day poverty rate fell from 54 percent to 36 percent based on a smaller sample than the global update— between 1990 and 2008. The proportion of poor is
indicate that the $1.25 a day poverty rate had f lower now in South Asia than at any time since 1981.
GLOBAL MONITORING REPORT 2012 OVERVIEW 3
The MDG target of halving extreme poverty—reached in 2010! (continued)
The number of poor had been generally rising in frica was living below $1.25 a day in 2008. FortyLatin America and the Caribbean until 2002. But the even and a half percent lived below this poverty line poverty count (and the percentage of poor) has fallen n 2008, as compared with 56.5 percent in 1990, a sharply since then. The rising incidence and number percentage point drop. of poor in Europe and Central Asia has also been Good news, but a great many people remain poor reversed since 2000. The Middle East and North nd vulnerable in all regions. At the current rate of Africa had 8.6 million people—or 2.7 percent of the gress, around 1 billion people will still be living population—living on less than $1.25 a day in 2008, ow $1.25 a day in 2015. Most of the 619 million down from 10.5 million in 2005 and 13 million in oor lifted above the $1.25 a day standard during 1990. Less than half the population of Sub-Saharan 990–2008 are still poor by middle-income standards. Estimates of poverty on a poverty line of $1.25, by region Region 1990 2005 2008 2015 Share of population living on less than $1.25 a day (2005 PPP) East Asia and Paci ?c 56.2 16.8 14.3 7.7 of which, China 60.2 16.3 13.1 — Europe and Central Asia 1.9 1.3 0.5 0.3 Latin America and the Caribbean 12.2 8.7 6.5 5.5 Middle East and North Africa 5.8 3.5 2.7 2.7 South Asia 53.8 39.4 36.0 23.9 Sub-Saharan Africa 56.5 52.3 47.5 41.2 Total 43.1 25.0 22.4 16.3 Total, excluding China 37.2 27.7 25.2 — Millions of people below $1.25 a day (2005 PPP) East Asia and Paci ?c 926.4 332.1 284.4 159.3 of which, China 683.2 211.9 173.0 — Europe and Central Asia
A s i 9
a pro bel p 1
8.9 6.3 2.2 1.4 Latin America and the Caribbean 53.4 47.6 36.8 33.6 Middle East and North Africa 13.0 10.5 8.6 9.7 South Asia 617.3 598.3 570.9 418.7 Sub-Saharan Africa 289.7 394.9 386.0 397.2 Total 1,908.6 1,389.6 1,289.0 1,019.9 Total, excluding China 1,226.8 1,177.7 1,116.0 — Source: World Bank sta calculations from PovcalNet database. For additi onal information and data, see http://iresearch.worldbank .org/PovcalNet/index.htm. — = not available.
million people below the poverty line, and ds on whether it is a net exporter in the spike of 2010–11, 48.6 million people. r. Large net importers of Poverty typically rises initially with higher s those in the Middle East and food prices, because the supply response to and in West Africa, face higher higher prices takes time to materialize and , reduced ?scal space, and greater many poor (farm) households are net food of world prices to local prices buyers, so higher food prices lowers their real rice and wheat. Higher prices incomes. rs with high shares of houseThe regional and national implications g on food, as in much of Africa of high and volatile food prices vary widely. rger net-exporter countries, How vulnerable a country is to food price America and in Eastern Europe
spikes depen or net importe food, such a North Africa import bills transmission for imported hurt consume hold spendin and Asia. La as in Latin
OVERVIEW GLOBAL MONITORING REPORT 2012
FIGURE 2 Food prices spiked again for the second time in three years 300 Current Price Index (monthly, 2005 = 100)
250 200 150 100 50 0 Jan Apr Jul Oct Jan Apr Ju l Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Ju l Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Ju l Oct Jan Feb 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Agriculture Energy Food
Source: World Bank. Note: The World Bank Food Price Index includes wheat, maize, rice, barley, sugar , coconut oil, soybean oil, groundnut oil, palm oil, copra, soybeans, soybean me al, orange, banana, beef, and chicken. Unlike the well-known Food and Agriculture Organizati on food price index, it does not include other meat and dairy.
and Central Asia, stand to bene ?t. But they international prices—and thus require an may also fac e internal pressure to mitigate effort to improve resilience using social safety the adverse effects if households spend large nets. Both require time to implement, so the
shares of th eir budgets on food. sequencing of actions needs to avoid hardship A multise ctoral approach is needed, taifor the poor and vulnerable. lored to eac h country’s conditions, taking into account the social and political environment. This G lobal Monitoring Report advoHow the poor cope cates agricu ltural policy mainly to orchesHigh and volatile food prices hurt food secutrate a supp ly response, social safety nets rity. Large, sudden, and particularly unexto improve r esilience, nutritional policy to pected food price increases make it dif mplications of early childhood for households to adjust—eroding consumer development, and trade policy to improve purchasing power, reducing calorie intake access to fo od markets, reduce volatility, and and nutrition, and pushing more people into induce produ ctivity gains. But one size does poverty and hunger. The poor bear a dispronot e priority and sequence of variportionate burden in adjusting to high food ous policy i nitiatives depends on a country’s prices. This is especially true for poor houseor a region’s initial conditions. holds in urban settings and those headed by Combinati ons of policies in the four areas women, who typically spend more than half can provide positive synergies and spur their incomes on food and are more likely improvements on the MDGs. Targeting the to curtail consumption in the face of higher expansion an d productivity of crops that add prices. nutritional value is one example. At the same The higher prices also have indirect effects. ?t all. Th ?cult manage the i
time, improv ements in the value chain of food Poor people have experienced global shocks products thr ough, say, investing in infrain recent years, from the spikes in fuel and structure an d streamlining regulation related food prices to the economic contraction startto trade can lead to faster pass-throughs of ing in 2008 and the consequent reductions in
GLOBAL MONITORING REPORT 2012 OVERVIEW 5
remittances. And droughts have made things hooling were even worse in many countries and locales. ost of eduQualitative survey-based research shows that and the availthe responses of poor people to past global ed whether shocks produced severe indirect impacts.1 Less nutritious diets caused malnourishment and made people more susceptible to failing health. The sudden in ux of workers into the informal economy lowered earnings. The hardships even led to criminal activities, nd 2011 have eroding trust and cohesion in communities. om escaping Reducing the quality of food and the numlarge shares ber of meals was one of the most common use responses, often the first, in study sites in s of food. countries surveyed. In addition, reducing nonand femalefood consumption, working more hours, and e food prices diversifying income sources (say, by entering e ? nancial a new informal occupation) were common and by early nearly everywhere. Migration, sometimes 2008 levels. reverse migration to the home area, was also s harmful for fairly common in response to the food price use farmers spikes. Asset sales were common, and loans oor housefrom family, friends, and moneylenders were wages. also important. An inability to service microikes also ? nance and moneylender debts was a major tted source of distress in some East and South le, about 75 Asian countries, where many people had to locally proborrow at high interest rates to service these and teff), debts or live in fear of creditors taking posprices of
on the whole, the impacts on sc more muted than expected. The c cation, the distance to school, ability of school feeding in uenc children stayed in school.
What higher prices mean for poverty The food price spikes in 2008 a prevented millions of people fr poverty because the poor spend of their incomes on food—and beca many poor farmers are net buyer The price spikes hit urban poor headed households hardest. Whil dropped sharply in 2009 with th crisis, they quickly rebounded 2011 prices were almost back at But high food prices may be les the poor in the longer run beca can increase their output and p holds may bene ?t from higher farm
The impact of world price sp depends on how prices are transmi locally. In Ethiopia, for examp percent of food consumption is duced staples (such as sorghum dampening the impact of rising
session of their property. Collecting food and people in Banfuel from common property was important e rice, only in some low-income countries. for 40–64 Sales of productive assets and forgone edumore cation and health care will have long-lasting . Changes in consequences and impede people’s ability to ickling down recover. And coping with economic crises has egrees, but the eroded the savings and asset base of many atly in uenced households, leaving them with few resources to manage future shocks. Continuing high an be expected and volatile global food prices are thus a s in two ways: major concern. and by switchMany parents sought to protect children’s e prices food consumption and schooling, with adult For short-run household members preserving the quanr outputs are tity and quality of food to ensure that chilrs’ revenue dren had proper diets. Yes, there were many nly by the instances of erratic attendance and school er time outwithdrawals because of the need for children ore labor to contribute to household income or because al land is availeducation costs had become prohibitive. But, of different
imported cereals. By contrast, gladesh, Cambodia, and Kenya—wher wheat, maize, and beans account percent of food expenditures—are exposed to higher import prices international prices have been tr to national prices to varying d higher national prices have gre national policies. In the longer run, farmers c to respond to rising food price by raising their overall output ing to producing commodities whos have risen relative to others. price volatility, where produce likely ? xed, the change in farme
from production is determined o change in output prices. But ov puts can be expanded by using m and inputs, even if no addition able. Where the relative prices
6 OVERVIEW MONITORING REPORT 2012
commodities change, switching between outr daily activities. Higher food puts is another way for farmers to increase main effects on net buyers of returns. In general, it is easier for farmers effect through reductions in to switch production to a more profitable power of poor households, crop than to increase aggregate agricultural ion effect through shifts to output. food. The poor often have no Policies that promote higher yields can educe their overall food conlimit the average rise in food prices over ponse to higher prices, even the long term as well as dampen food price eady too low. For households volatility. Such policies include supporting tence and already consuming research, extension, and water management; urces of calories (less nutriimproving the ef ?ciency of land markets and substitution possibilities are strengthening property rights; increasing ith the poorest suffering farmers’ access to ef ?cient tools to manage ehold discrimination risk; and increasing market integration, globnd children disproportionally as well as regionally, through investments heir access to food. in infrastructure and facilitating the operarily high food prices can tions of supply chains. Policies to limit food long-term development. price volatility include developing weatheritions (from conception to tolerant varieties, improving the management e) provide the foundations for of stocks, opening markets to trade, improvital. Vicious circles of maling market transparency, and using markethealth, and impaired cognibased price-hedging mechanisms. And polit set children on lower, often cies to reduce the impact of high and volatile evelopment paths. Child malfood prices on the poor include strengthennts for more than a third of ing a country’s social safety nets to protect lity—and malnutrition the poor and supporting smallholders in y, for more than a fifth of
needed for thei prices have two food: an income the purchasing and a substitut less nutritious choice but to r sumption in res from levels alr close to subsis the cheapest so tious food), the more limited, w most. And intrahous against women a ately reduces t Even tempora affect children’s Early life cond two years of ag adult human cap nutrition, poor tive developmen irreversible, d nutrition accou the under?ve morta
strengthening the supply response to higher ity. Other hard-to-reverse food prices. faltering growth (stunting, Balancing the rise in domestic prices (to age), and low school attainbene ?t producers) with consumer protection hed child has on average is a major challenge. Because of ? scal conay in starting school, a straints, many countries use trade measures in schooling, and potentially to limit the transmission of higher world eduction in lifetime earnmarket prices to domestic markets. Scaling ure human capital and up safety nets to support vulnerable consuml GDP losses estimated at 2–3 ers without also insulating markets has been lnutrition is not just a result rare, hurting long-term food security. The also a cause. Malnourmost sustainable policies focus on encouragldren are also more at risk ing climate-resilient production, strengthenease such as diabetes, obesity, ing domestic and regional markets, mainnd cardiovascular disease in taining open trade, and boosting resources to social protection. sehold and individual resilate long-term effects, interven-
maternal mortal impacts include low height-forment. A malnouris a seven-month del 0.7 grade loss a 10–17 percent r ings—damaging fut causing nationa percent. So, ma of poverty—it is ished young chi for chronic dis hypertension, a adulthood. To build hou ience and mitig tions can work
through multiple pathways, Higher undernourishment o keep prices low. In the short Higher prices of food staples increase undershould be on maintaining nourishment, as poor consumers ? nd theming power through cash selves unable to purchase the minimum and nutrient transfers, school amount of calories, nutrients, and proteins rkfare-with-nutrition. In the
beyond trying t run, the focus household purchas transfers, food feeding, and wo
GLOBAL MONITORING REPORT 2012 OVERVIEW 7
longer term, the focus should broaden to countries it rose strengthening the link between smallholder e than triagriculture and nutrition, addressing sea15 percent sonal deprivation, and promoting girls’ eduies sought to cation and women’s income. Some specific of imported interventions to target vulnerable children on douinclude hygiene, micronutrients, deworming, nt. breastfeeding, feeding during illness, and preal economic ventive and therapeutic feeding. erging and rogress toward
over this period, but in many sharply. In Burundi in ation mor pled from 4½ percent in 2009 to in 2011 as the monetary authorit contain the second-round effects in ation. And in Bangladesh in ati bled from 5½ percent to 11 perce A weaker-than-expected glob environment would challenge em developing countries as they p the MDGs. Should downside risk
s such as a Weaker global growth and high er surge in food prices may impede progress low-income toward the MDGs nt the situThe global recovery shows signs of stallin 2009. In ing amid deteriorating ? nancial conditions. urn, the Global growth slowed to 3.8 percent in herefore be 2011 and is projected to decline further to ufficient fis3.3 percent in 2012. The strongest slowdown spending to is being felt in advanced economies, but the impact of a worsening external environment and some food price weakening in internal demand is expected to countries lead to lower growth in emerging and develrice stabiloping countries as well. This outlook is subctives. A pragject to downside risks, such as a much larger measures to and more protracted bank deleveraging in the e while largely Euro Area or a hard landing by key emerging impact on economies.
sharp global slowdown or anoth food prices materialize, many countries would have to confro ation with weaker buffers than the event of another sharp downt scope for ?scal stimulus would t
more limited, but those with s cal room should aim to protect soften the economic and social global downturn. A new global spike would present low-income with dif ?cult trade-offs among p ity, external, and social obje matic response should include protect the poor and vulnerabl accommodating the first-round in ation. The ?scal policy respons
e should be Strengthening the recovery will require rdability, and sustained policy adjustment at a measured e appropriate pace that depends heavily on a country’s cirepend on cumstances. There are risks in some places of hrough from inadequate medium-term ?scal adjustment, the availand in some of overly aggressive short-term uch as reserves. ?scal adjustment. In the advanced economies, cial attention while fiscal policy consolidation proceeds, al community. monetary policy should continue to support growth as long as unemployment remains high and in ation expectations are anchored. This policy stance should be accompanied by steady progress toward repairing and reformkes increased the ing ? nancial systems and by steps to avoid come foodexcessively rapid bank deleveraging. ssure on their As food and fuel prices rose in 2010 and l import bill of the ? rst half of 2011, consumer prices rose as $31.8 in tandem in many countries. In emerging ore than and developing countries the median in ation in tion rate rose from 4 percent in 2009 to 6 ereal imports percent in 2011, but experiences were mixed. Paci ?c Islands In about a third of countries in ation abated pact, paying
well targeted, ensure
avoid economic distortions. Th monetary policy response would d the in ation outlook, the pass-t food prices to other prices, and ability of external buffers, s Fragile states would require spe including from the internation
Using trade policy to overcome food insecurity International cereal price spi food import bills of some low-in deficit countries, putting pre balance of payments. The cerea low-income food-de ?cit countries w
billion in 2010–11 (29 percent m in 2009–10), despite higher produc 2010 and the lower volume of c required. North Africa and the suffered the largest negative im
8 OVERVIEW MONITORING REPORT 2012
higher prices and importing more cereals to isolated from i nternational shocks by ensurmeet domestic demand. Although the estiing self-suf ?cien cy in food production. mated cereal import bill of the food-de ?cit Self-suf ?ciency should be weighed against countries is still below the record set during the benefits of cheaper imports. A country the 2008 food crisis, the increase in cereal that is a natur al exporter should not encumcosts, combined with price increases for ber its compara tive advantage with export other food and fertilizer imported by these bans. A country that tends to import food countries, is cause for concern. should allow it s domestic market to remain Higher food prices can upset the ballinked to the w orld market. Encouraging ance between needed spending to mitigate more trade—not le ss—can thus promote food the immediate impact of the crisis and longsecurity, which requires a more open, rulesterm development. Recurrent food crises based multilate ral trade regime best achieved may require additional social spending; to be by concluding t he Doha Round of negotiacost-effective, such spending should emphations at the Wo rld Trade Organization. size targeted social safety nets rather than Efforts to e xtend trade integration to universal producer and consumer subsidies. developing coun tries should also focus on Most developing countries preserved their promoting more effective regional integracore spending on health, education, and tion, including that for food products. Faciliinfrastructure during 2008–09, increasing tating food trade is also important through their resilience to food and ? nancial crises. increased Aid for Trade to promote frictionIn the period since, however, many countries less borders an d facilitate a supply response have not adequately rebuilt their ?scal policy to rising prices, particularly in Sub-Saharan buffers and thus may ?nd it more dif ?cult to Africa. preserve core spending in the face of another major shock. To maintain this resilience in the composition of expenditures, much Aid flows, comp osition, and will depend on the cost and availability of effectiveness resources going forward. Of ?cial developme nt assistance (ODA) has
Trade is an excellent buffer for domesantly over the past decade, tic uctuations in food supply. There is no s a share of donor gross global food shortage: the problem is regional But it has fallen short of a or local, one of moving food, often across nationally agreed targets. borders, from surplus to de ?cit areas, cour 2011–13 indicates that pled with affordability. The world output of DA disbursements is on track a given food commodity is far less variable terms and indeed shrink on a than the output in individual countries. So s for recipient countries. greater trade integration holds considerable , the aid directed toward potential for stabilizing food prices, boosting od, and nutrition—10 perreturns to farmers, and reducing the prices ommitments in 2010 —has facing consumers. n response to the recent food Trade liberalization protects national food since the MDGs were agreed markets against domestic shocks by allowsistance for nutrition repreing more food to be imported in times of action of these commitments shortage and exported in times of plenty. But t of total aid ows to agriculhistorically—and despite a host of regional utrition), despite widespread trade agreements—most countries have taken roving nutrition and makthe opposite approach. They restrict food rly childhood development are imports and discourage exports in oftenseveral MDGs and to makfailed attempts to keep domestic markets rogress in development.
increased signi nearly doubling a nation income. number of inter
Programmed aid fo the growth of O to slow in real per capita basi Surprisingly agriculture, fo cent of total c not increased i price spikes or in 2000. And as sents a mere fr (about 3 percen ture, food, and n evidence that imp ing gains in ea keys to meeting ing long-term p
GLOBAL MONITORING REPORT 2012 OVERVIEW
Looking ahead, aid flows appear set to lanthropists slow, likely re ecting the need for sharp ?scal number consolidation for many large donors. Based The sharp rise on reported donor plans during 2011–13, way developdisbursements for country programmable aid t of tools and (accounting for roughly 60 percent of total ODA) will actually fall slightly by a real 0.2 d as only one of percent a year on average. s (such as trade Meeting the MDGs requires that aid ows ong-term susare used as effectively as possible. In the Paris erty alleviaDeclaration on Aid Effectiveness (2005) and instrument for the Accra Agenda for Action (2008), agreeinternational ments reached at the Third and Fourth High nue to improve Level Forums, the international community acilitate the parset out several principles and committed to ODA agents in speci ?c actions under each principle, with the agenda—to goal of increasing the effectiveness of the aid the poor, includdelivered—as well as the level of disburseod and nutrition. ments. Some progress toward greater aid effectiveness has been made. But only 1 of the Paris Declaration’s 13 targets for 2010 has been met, with progress limited for the other ws were carried out 12. Even so, the goals and associated policy ondents representing adjustments made at the forums seem to have c shocks, such as contributed to the signi ?cant rise in aid ows. ctors, informal Efforts to improve aid effectiveness are rs. The research being pursued against the backdrop of funich people were able damental changes in aid architecture. The st the recent economic aid agenda is shifting, with calls for stronger used to do so. Data
organizations (including phi and corporations) and a growing of middle-income countries. in stakeholders highlights the ment demands an extensive se partnerships. ODA is increasingly viewe many international activitie and investment) that support l tainable development and pov tion. But it remains a major development cooperation. The aid community needs to conti information-sharing and to f ticipation of the expanding setting the global development better address the needs of ing such critical issues as fo
Note 1. Focus groups and intervie in 17 countries with resp groups exposed to economi workers in export-oriented se sector workers, and farme explored the extent to wh to remain resilient again shocks and the means they
leadership and ownership by recipients, more ds of qualitative harmonization and coordination among ladesh, Cambodia, donors, and greater transparency. The donor Ghana, Indonesia, community has dramatically expanded and a, Mongolia, Philbecome much more diverse. Many new priThailand, Ukraine, vate and public donors are coming onto Yemen, and Zambia the stage, among them nongovernmental
came from up to four roun research at sites in Bang Central African Republic, Jamaica, Kazakhstan, Keny ippines, Senegal, Serbia, Vietnam, the Republic of (see chapter 1).
Goals and Targets from the Millennium Declaration 2 Achieve universal primary education TARGET 2.A Ensure that by 2015, children everywhere, boys and girls a like, 1 e of primary schooling 4 Eradicate extreme child Reduce ch poverty and hunger mortality TARGET 1.A Halve, between 1990 and 2015, TARGET 4.A Reduce by two-thirds, the proportion of people whose income is between 1990 and 2015, the underless than $1.25 a day TARGET 1.B Achieve full and productive employment and decent work for all, including women and young people 3 ?ve mortality rate will be able to complete a full cours
TARGET 1.C Halve, between 1990 and 2015, the proportion of people who su er from hunger
Promote ggender equality and empower women TARGET 3.A Eliminate gender disparity in primary and secondary education, preferably by 2005, and at all levels of education no later than 2015
6 Combat HIV/AIDS, malaria, and other diseases 8 TARGET 6.A Have halted by 2015 Develop a global and begun to reverse the spread partnership for of HIV/AIDS TARGET 6.B Achieve by 2010 universal development access to treatment for HIV/AIDS for TARGET 8.A Develop further an o pen, ruleall those who need it based, predictable, nondiscrimi natory trading 5 TARGET 6.C Have halted by 2015 and begun to reverse the incidence of malaria and other major diseases and commitment to good governance, development , and poverty reduction, nationally and internationally) TARGET 8.B Address the special needs of the Improve maternal I least-developed countries (incl uding tari and quota-free access for expor ts of the leasthealth developed countries; enhanced d ebt relief TARGET 5.A Reduce by three-quarters, for heavily indebted poor count ries and between 1990 and 2015, the maternal mortality ratio TARGET 5.B Achieve by 2015 universal access to reproductive health 7 cancellation of o cial bilateral debt; and more generous o cial development assis tance for ?nancial system (including a
countries committed to reducing poverty) TARGET 8.C Address the special needs of Ensure landlocked countries and small island developing states (through the Programme environmental of Action for the Sustainable D evelopment sustainability of Small Island Developing Stat es and the outcome of the 22nd special ses sion of TARGET 7.A Integrate the principles of the General Assembly) sustainable development into country TARGET 8.D Deal comprehensively with policies and programs and reverse the the debt problems of developing countries loss of environmental resources through national and internatio nal measures TARGET 7.B Reduce biodiversity loss, to make debt sustainable in the long term achieving by 2010 a signi ?cant reduction TARGET 8.E In cooperation with ph armaceutiin the rate of loss cal companies, provide access t o a ordable, TARGET 7.C Halve by 2015 the proportion essential drugs in developing c ountries of people without sustainable access TARGET 8.F In cooperation with the private on s of new ion and improvement by 2020 in the lives of at communications least 100 million slum dwellers Source: United Nations. 2008. Report of t he Secretary-General on the Indicators for Monitoring the Millennium Development Goals. E/CN.3/2008/29. New York. to safe drinking water and basic sanitati sector, make available the bene TARGET 7.D Have achieved a signi ?cant technologies, especially informat ?t
Note: The Millennium Development Goals an d targets come from the Millennium Declaration, signed by 189 countries, includi ng 147 heads of state and government, in September 2000 (http://www.un.org/millennium/declaration /ares552e.htm) and from further agreement by member states at the 2005 World Sum mit (Resolution adopted by the General Assembly– A/RES/60/1). The goals and targets are in terrelated and should be seen as a whole. They represent a partnership between t he developed countries and the developing countries “to create an environment—at the national and global levels alike—which is conducive to development and the elimination of pove rty. ?
Progress toward the MDGs Global progress toward the 2015 Millennium Develop2015. Child and maternal mortality are the ment Goals (MDGs) varies across targets and regions. At ing the most. the global level, current estimates indicate that targets d Central Asia the proportion of poor has related to extreme poverty (MDG 1.a) and access to safe been halved since 1990, and the target on access to drinking water (MDG 7.c) have been reached (figure 1). water has be en reached. Progress toward achieving uniAccordingly, the proportion of people whose income versal prima ry education and promoting gender equality is less than $1.25 a day has decreased by at least 50 peris currently on track. Increased e orts must be undertaken cent since 1990, when global poverty was estimated at with regard to improving maternal health and access to 43.1 percent. Similarly, the proportion of people without basic sanita tion. sustainable access to safe drinking water has been halved from the 24 percent estimated for 1990. a and the Caribbean has already Progress is also significant for primary completion targets on extreme poverty, primary (MDG 2.a) and gender equality in primary and secondary gender equality, and access to safe education (MDG 3.a). Latest available data suggest that egion is performing better than the rest developing countries are within 10 percentage points of oping world in relation to child mortality, the on-track trajectory ( ?gure 1), meaning that at current d more than 60 percent of the progtrends these two development goals will likely be reached to reduce under-5 mortality by two-thirds. by the year 2015. in America and the Caribbean faces serious On the other hand, progress has been lagging for egarding maternal mortality, as progress in health-related MDGs. Global targets related to infant and been signi ?cantly slow. maternal mortality (MDGs 4.a and 5.a), and to a lesser and North Africa has reached the extent, access to basic sanitation (MDG 7.c) are signifipoverty targ et as well as the target on access to cantly o -track ( ?gure 1). Current progress in reducing by improved san itation facilities. The region is making three-quarters the maternal mortality ratio roughly reprefast progres s toward achieving universal primary educaLatin Americ reached the completion, water. The r of the devel having achieve ress needed However, Lat challenges r this MDG has Middle East remaining to targets lagg In Europe an
sents half of the required improvement needed to reach tion and gen der equality. Nevertheless, progress toward the 2015 goal. ensuring acc ess to safe drinking water and eradicating Progress toward the 2015 goals is related to income tality is lagging. and institutions. Nonfragile upper-middle-income counas reached the target on access to safe tries have reached or are on track to achieve, on average, water and wi ll probably eliminate gender disparity in six development targets, whereas countries in fragile primary and secondary education by 2015. Progress situation are considerably lagging behind, with only two has also bee n made with respect to primary completion goals achieved or on track. Nonfragile low- and lowerand, to a le sser extent, extreme poverty reduction. Faster middle-income countries (with three and four goals, progress is required in terms of reducing child and materrespectively, achieved or on track) have also performed nal mortalit y and improving access to sanitation facilities if better than countries in fragile situations, although not as the region i s to reach these goals by 2015. well as upper-middle-income countries. Sub-Saharan Africa is lagging with respect to other At the regional level, progress toward the MDGs is regions and most MDGs. However, the region has more diverse, although health-related targets will achieved mor e than 60 percent of the progress required likely be missed in most regions ( ?gure 2). In East Asia to reach, by 2015, goals such as gender parity, primary and Paci ?c the targets on extreme poverty, gender completion, access to safe water, and extreme poverty. parity, and access to water and sanitation have been As for other regions, health-related MDGs, particularly reached. Progress is substantial with regard to primary maternal mor tality, require urgent attention. completion, and the goal should be achieved in the years 12 maternal mor South Asia h
FIGURE 1 Global progress toward the MDGs varies (developing countries, weighted by population) Percent 100 90 80 70 60 50 40 30 20 10 0 MDG 1.a MDG 2.a MDG 3.a MDG 4.a MDG 4.a MDG 5.a MDG 7.c MDG 7.c Extreme Primary Ratio of Mortality rate, Mortality rate, Maternal Improved Improved poverty completion girls to boys infants children mortality water source sanitation (population rate (total in primary and (per 1,000 under 5 ratio (modeled (population facilities below of relevant secondary live births) (per 1,000) estimate, without (population $1.25 day, age group) education per 100,000 access) without access) 2005 PPP) live births) Corresponding target Latest available value Source: World Bank sta calculations based on data from the World Development Indi cators database. Note: A value of 100 percent means that the respective MDG has been reached. “Corr esponding target ? indicates progress presently needed to reach the goal by 2015. “Latest available value ? denotes present progress as illustr ated by most recent available data: extreme poverty, 2010; primary completion rate, 2009; ratio of girls to boys in primary and secondary e ducation, 2009; mortality rate, infants, 2010; mortality rate, children under 5, 2010; maternal mortality ratio, 2008; improved water source, 2 010; improved sanitation facilities, 2008). FIGURE 2 Regional progress toward the MDGs (developing countries, weighted by population) Distance to 2015 goal achieved (%) 100
0 East Asia & Pacific Europe & Central Latin America & Middle East & South Asia Sub-Saharan Africa Asia the Caribbean North Africa MDG 1.a Extreme poverty MDG 4.a Mortality rate, in fants MDG 7.c Improved water source MDG 2.a Primary completion rate MDG 4.a Mortality rate, ch ildren under-5 MDG 7.c Improved sanitation facilities MDG 3.a Ratio of girls to boys in MDG 5.a Maternal mortality ratio primary and secondary education Source: World Bank sta calculations based on data from the World Development Indi cators database. Note: A value of 100 percent means that the respective MDG has been reached. Val ues denote present progress as illustrated by most recent available data: extreme poverty, 2010; primary completion rate, 2009; ratio of g irls to boys in primary and secondary, 2009; mortality rate, infants, 2010; mortality rate, children under 5, 2010; maternal mortality ratio, 2008; im proved water source, 2010; improved sanitation facilities, 2008). 13
MDG 1 Eradicating extreme poverty and hunger Poverty and hunger remain, but fewer people live in environmental resources have been depleted or spoiled; extreme poverty. The proportion of people living on and where corruption, con ict, and misgovernance waste less than $1.25 a day fell from 43.1 percent in 1990 to 2 2.2 public resources and discourage private investment. percent in 2008. While the food, fuel, and ?nancial crises The most rapid decline in poverty occurred in East over the past four years have worsened the situations of Asia and Paci ?c, where extreme poverty in China fell from vulnerable populations and slowed the rate of poverty 60 percent in 1990 to 13 percent. In the developing world reduction in some countries, global poverty rates kept outside China, the poverty rate fell from 37 percent to falling. Between 2005 and 2008 both the poverty rate and 25 percent. Poverty remains widespread in Sub-Saharan the number of people living in extreme poverty fell in al l Africa and South Asia, but progress in both regions has six developing regions, the ?rst time that has happened. been substantial. In South Asia the poverty rate fell from Preliminary estimates for 2010 show that the extreme 54 to 36 percent. In Sub-Saharan Africa the poverty rate fell poverty rate fell further, reaching the global target of the by 4.8 percentage points to less than 50 percent between MDGs of halving world poverty five years early. Three 2005 and 2008, the largest drop in Sub-Saharan Africa regions—East Asia and Paci ?c, Europe and Central Asia, since international poverty rates have been computed. and the Middle East and North Africa—met or exceeded In 2008 1.28 billion people lived on less than $1.25 a the target by 2008. day. Since 1990 the number of people living in extreme Further progress is possible and likely before the 2 015 poverty has fallen in all regions except Sub-Saharan Africa, target date of the MDGs, if developing countries maintain where population growth exceeded the rate of poverty the robust growth rates achieved over much of the past reduction, increasing the number of extremely poor decade. But even then, hundreds of millions of people wil l people from 290 million in 1990 to 356 million in 2008. remain mired in poverty, especially in Sub-Saharan Africa The largest number of poor people remain in South Asia, and South Asia and wherever poor health and lack of eduwhere 571 million people live on less than $1.25 a day, cation deprive people of productive employment; where down from a peak of 641 million in 2002. Undernourishment measures the availability of food to FIGURE 1a Poverty rates fell sharply in the new millennium meet people’s basic energy needs. The MDGs call for cutting the proportion of undernourished people in half, but Poverty rates at $1.25 a day (%) few countries will reach that target by 2015. Rising agricul70
tural production has kept ahead of population growth, but rising food prices and the diversion of food crops to 60 fuel production have reversed the declining rate of under50 nourishment since 2004–06. The FAO estimates that in 40 2008 there were 739 million people without adequate 30 daily food intake. Rates of malnutrition have dropped substantially since 20 1990, but over 100 million children under age 5 remain 10 malnourished. Only 40 countries, out of 90 with adequate 0 data to monitor trend, are on track to reach the MDG tar1990 1993 1996 1999 2002 2005
get. Malnutrition in children often begins at birth, when South Asia Sub-Saharan Africa poorly nourished mothers give birth to underweight East Asia & Pacific Latin America & the Caribbean babies. Malnourished children develop more slowly, enter Middle East & North Africa Europe & Central Asia school later, and perform less well. Programs to encourSource: World Bank sta estimates. age breastfeeding and improve the diets of mothers and children can help. 14
FIGURE 1b Fewer people living in extreme poverty URE 1c Progress toward reducing undernourishment People living on $1.25 a day or less (millions) 2,400 re of countries in region making progress (%) 2,000
Sha 100 75
1,600 50 1,200 25 800 0 400 –25 0 1990 1993 1996 1999 2002 2005 South 2008 Sub-Saharan –50
East Asia Europe
Latin Middle East
& Pacific & Central America & & North South Asia Asia the Caribbean Africa East Asia & Pacific Achieved Off track Middle East & North Africa On track Seriously off Source: World Bank sta estimates. e: World Bank sta estimates.
Asia Africa Sub-Saharan Africa Latin America & the Caribbean No data Europe & Central Asia track Sourc
FIGURE 1d Many children remain malnourished Percent 50 Low-income countries 40 Lower-income countries High-income economies 30 20 10 0 1990 2010 Source: World Health Organization; World Development Indicators database. Note: “Malnourishment ? is the measure of underweight children.
MDG 2 Achieve universal primary education The commitment to provide primary education to every child is the oldest of the MDGs, having been set down at the ?rst Education for All conference in Jomtien, Thailand, more than 20 years ago. This goal has been reached only in Latin America and the Caribbean, although East Asia and Pacific and Europe and Central Asia are close. Progress among the poorest countries, slow in the 1990s, has accelerated since 2000, particularly in South Asia an d Sub-Saharan Africa, but the goal of full enrollment remai ns elusive. And even as countries approach the target, the educational demands of modern economies expand. In the 21st century, primary education will be of value only as a stepping stone toward secondary and higher education. In 2009 87 percent of children in developing counPacific are within striking distance but have made little tries completed primary school. In most regions school progress in the last ?ve years. enrollments picked up after the MDGs were promulgated Sixty developing countries, one-half the number in 2000, when the completion rate stood at 80 percent. of countries for which there are adequate data, have Sub-Saharan Africa and South Asia, which started out farachieved or are on track to achieve the MDG target of a full thest behind, have continued to make substantial progcourse of primary schooling for all children. Twelve more ress but will still fall short of the goal. The Middle Ea will miss the 2015 deadline, but are making slow progress. North Africa has stalled at completion rates of around 90 That leaves at least 48 countries seriously o track, making percent, while Europe and Central Asia and East Asia and little or no progress, 30 of them in Sub-Saharan Africa.
FIGURE 2a The last step toward education for all FIGURE 2b Progress toward primary education for all Primary school completion rate (%) 110 Share of countries in region making progress (%) 100 100 75 90 50 80 25 70
0 60 –25 50 –50 1991 2015 1999 East Asia Europe 2005 2010 Latin Middle East South Sub-Saharan
& Pacific & Central America & & North Asia Africa South Asia Sub-Saharan Africa Asia the Caribbean Africa East Asia & Pacific Latin America & the Caribb Achieved O track No data Middle East & North Africa Europe & Central Asia
On track Seriously o track Target South Asia Target Sub-Saharan Africa Target East Asia & Pacific Target Latin America & the Caribbean Source: World Bank sta calculations. Target Middle East & North Africa Target Europe & Central As ia Source: UNESCO Institute of Statistics and World Development Indicators da tabase. 16
MDG 3 Promote gender equality and empower women Women are making progress. The MDGs monitor progress ent rates outnumber boys’, particularly in secondary toward gender equity and the empowerment of women But the comparison of enrollment rates obscures along three dimensions: education, employment, and parerlying problem of underenrollment. Girls are still ticipation in public decision making. These are important, kely to enroll in primary school or to stay in school until but there are other dimensions. E orts are underway to f the primary stage. In some countries the situaimprove the monitoring of women’s access to ?nancial s at the secondary stage. Girls who complete services, entrepreneurship, migration and remittances, school may be more likely to stay in school, while and violence against women. Time use surveys, for examop out. In Europe and Central Asia and Latin Ameriple, can do much to illuminate di erences in the roles of he Caribbean the di erences between boys’ and women and men within the household and the workrollments in higher education are substantial. This is place. Disaggregation of other statistical indicators by sex tisfactory path to equity. Rapid growth and poverty can also reveal patterns of disadvantage or, occasionally, on truly requires education for all. advantage for women. Whatever the case, women make bstantial progress has been made toward increasing important contributions to economic and social developportion of girls enrolled in primary and secondary ment. Expanding opportunities for them in the public and on. By the end of the 2009/10 school year, 96 counprivate sectors is a core development strategy. And good ad achieved equality of enrollment rates, and 7 statistics are essential for developing policies that e econ track to do so by 2015. That leaves only 27 tively promote gender equity and increase the welfare es o track or seriously o track, mostly low- and and productivity of women. iddle-income countries in the Middle East and Girls have made substantial gains in primary and secfrica, South Asia, and Sub-Saharan Africa. Fourteen ondary school enrollments. In many countries, girls’ lacked adequate data to assess progress. enrollm school. the und less li the end o tion change primary boys dr can and t girls’ en an unsa reducti Su the pro educati tries h more were countri lower-m North A countries
FIGURE 3a Increasing participation by girls at all levels of education FIGURE 3b Progress toward gender equality in primary and secondary education Ratio of girls’ to boys’ enrollment rate, 2009 (%) 125 Share of countries in region making progress (%) 100
100 80 60 75 40 20 50 0 –20 25 East Asia Europe Latin Middle East South Sub-Saharan Asia Africa & Pacific & Central America & & North Asia the Caribbean Africa 0 East Asia Saharan & Pacific ica Achieved Europe Latin On track & Central America & Off track No data Middle East South SubSeriously off track & North Asia Afr
Asia the Caribbean Africa Primary Secondary Tertiary Source: UNESCO Institute of Statistics and World Development Indicators (WDI) da tabase. a. Data for primary and tertiary enrollment are from 2008. 17
MDG 4 Reduce child mortality Deaths in children under age 5 have been declining since points, the greatest in the region, while Seychelles’ fell by 3 1990. In 2006, for the ?rst time, the number of children who points. In proportional terms, Niger experienced a 54 perdied before their fifth birthday fell below 10 million. In cent reduction—second greatest in the region—and Seydeveloping countries the mortality rate has declined from chelles a 16 percent reduction. Both fall short of the MDG 98 per 1,000 in 1990 to 63 in 2010. Still, progress toward target, but Niger, starting in last place, has progressed MDG target of a two-thirds reduction has been slow. In somewhat faster. Has this been the general rule? Figure 4c Sub-Saharan Africa, one child in 8 dies before their fifth shows the 1990 under-5 mortality rates for all low- and birthday. The odds are somewhat better in South Asia, middle-income countries in Sub-Saharan Africa in 1990 where one child in 15 dies before their ?fth birthday. Even and the improvement to 2010. Only one country, Zimbain regions with relatively low mortality rates, such as Lat bwe, moved backward. Two countries, Malawi and MadaAmerica and the Caribbean and Europe and Central Asia, gascar are on track to achieve the MDG target. Several othslow improvements leave most countries well short of the ers, including Niger, Eritrea, and Tanzania are close. The MDG target. downward sloping regression line (white dots) shows the Thirst-six developing countries have achieved or are expected reduction in mortality rates, given countries’ now on track to achieve the target of a two-thirds reducstarting position. On average, countries starting in worse tion in under- ?ve mortality rates. positions in Sub-Saharan Africa have done better, possibly because large scale vaccination programs, the introduction of treated bed nets as a malaria preventative, and Distribution of progress campaigns to encourage exclusive breastfeeding have In 1990 the under-5 mortality rate in Niger stood at 311 pe been able to reach a large number of people, even in poor 1,000, the worst in the world. In the same year, Seychelles countries. But as Figure 4c also reveals, the experience has with an under-5 mortality rate of 16, was the best in Subbeen highly mixed: Con ict-a ected countries, like SomaSaharan Africa. How have they fared since? In the 20 years lia and the Democratic Republic of the Congo, have made since the MDG baseline, Niger’s mortality rate fell by 168 almost no progress, while similarly situated countries such as Zambia and Uganda have done much better. FIGURE 4a Still far to go Under-5 mortality rate (per 1,000 live births) 175
150 125 100 75 50 25 0 0 1990 2002 1992 2004 2006 1994 1996 2008 1998 2010 200
l Asia atabase. 18
East Asia & Pacific South Asia Middle East & North Africa Latin America & the Caribbean Europe & Centra Sub-Saharan Africa Source: World Health Organization; World Development Indicators d
FIGURE 4b Most deaths happen in the ?rst year GURE 4c For some, better than expected improvements Child deaths, 2010 (thousands) Seychelles 4,000 Mauritius Botswana Deaths age 1 to 5 Cape Verde Infant deaths South Africa 3,000 Namibia Zimbabwe Lesotho 2,000 Gabon São Tomé and Príncipe Swaziland Kenya 1,000 Congo, Rep. Ghana Mauritania Sudan 0 Comoros East Asia Europe Latin Middle East Cameroon & Pacific & Central America & & North Senegal Asia the Caribbean Africa Eritrea South Asia Sub-Saharan Africa Target for 2010 Reduction since 1990 Reduction since 2010 Predicted value in 2010
Togo Source: World Health Organization; World Development Indicators database. Côte d’Ivoire Tanzania Madagascar Rwanda C entral African Republic FIGURE 4d Progress toward reducing child mortality Gambia, The
Uganda Share of countries in region making progress (%) Benin 100 Somalia Congo, Dem. Rep. Zambia 75 Burundi Ethiopia 50 Equatorial Guinea Burkina Faso Chad 25 Guinea-Bissau Nigeria 0 Mozambique Malawi Liberia –25 Guinea East Asia Europe Latin Middle East South Sub-Saharan Angola & Pacific & Central America & & North Asia Africa Asia the Caribbean Africa Mali Sierra Leone Achieved Off track No data Niger On track Seriously off track –50 0 50 100 150 200 250 Source: World Bank sta calculations. Source: World Bank sta calculations.
MDG 5 Reduce maternal mortality An estimated 358,000 maternal deaths occurred worldAbout half of all maternal deaths occur in Sub-Saharan wide in 2008, a 34 percent decrease since 1990. Most ica and a third in South Asia. but mothers face submaternal deaths occurred in developing countries. What ntial risks in other regions as well. Among fragile and makes maternal mortality such a compelling problem is ct-a ected states, the mortality ratio may be many that it strikes young women experiencing a natural life es higher. event. They die because they are poor. Malnourished. Progress in reducing maternal mortality ratios has been Weakened by disease. Exposed to multiple pregnancies. w, far slower than imagined by the MDG target of a 75 And they die because they lack access to trained health cent reduction from 1990 levels. Accurate measurement care workers and modern medical facilities. Death in maternal mortality is di cult, requiring accurate reportchildbirth is a rare event in rich countries, where there are of vital events and specialized surveys. Recent e orts by typically fewer than 15 maternal deaths for every 100,000 tisticians have improved estimates, but for many counlive births, an average that has remained essentially cones the need for improved monitoring of maternal health stant for the past 18 years. And because women in poor l continue long past 2015. countries have more children, their lifetime risk of materWomen who give birth at an early age are likely to bear nal death may be more than 200 times greater than for e children and are at greater risk of death or serious women in Western Europe and North America. plications from pregnancies. In many developing counReducing maternal mortality requires a comprehenes, the number of women ages 15–19 is still increasing. sive approach to women’s reproductive health, starting nting unintended pregnancies and delaying childbirth with family planning and access to contraception. Many ng young women increase the chances of their attendhealth problems among pregnant women are preventschool and eventually obtaining paid employment. able or treatable through visits with trained health workHaving skilled health workers present for deliveries is key ers before childbirth. Good nutrition, vaccinations, and reducing maternal mortality. In many places women have treatment of infections can improve outcomes for mother y untrained caregivers or family members to attend and child. Skilled attendants at time of delivery and access m during childbirth. Skilled health workers are trained to to hospital treatments are essential for dealing with lifee necessary care before, during, and after delivery; they threatening emergencies such as severe bleeding and conduct deliveries on their own, summon additional hypertensive disorders. p in emergencies, and provide care for newborns.
Afr sta con i tim
slo per of ing sta tri wil
mor com tri Preve amo ing
to onl the giv can hel
FIGURE 5a Maternal mortality ratios have been falling but large regional di erences persist Maternal mortality ratio, modeled estimate (per 100,000 live births) 1,000 1990 800 1995 2000 2005 600 2008 400 200 0 Middle East & North Africa East Asia South Asia & Pacific Europe & Sub-Saharan Central Asia Africa Latin America & the Caribbean
Source: World Health Organization; World Development Indicators database. 20
FIGURE 5b Progress in reducing maternal mortality FIGURE 5c Help for mothers Share of countries in region making progress (%) Births attended by skilled health staff, 2010 (% of total) 100 75 East Asia & 50 Pacific 25 0 Europe & –25 Central Asia –50 East Asia Europe Latin Middle East South Sub-Saharan & Pacific & Central America & & North Asia Africa Asia the Caribbean Africa Achieved Off track No data tin America & On track Seriously off track he Caribbean Source: World Bank sta calculations.
FIGURE 5d Fewer young women giving birth iddle East & North Africa Adolescent fertility rate (births per 1,000 women ages 15–19) 150 125 South Asia 100 75 50 Sub-Saharan Africa 25 0 2000 0 2002 25 2004 50 2006 75 2008 100 2010
Source: World Health Organization; World South Asia Sub-Saharan Africa Development Indicators database. East Asia & Pacific Latin America & the Caribbean Middle East & North Africa Europe & Central Asia
Source: World Health Organization; World Development Indicators database. ase.
MDG 6 Combat HIV/AIDS, malaria, and other diseases Epidemic diseases exact a huge toll in human su ering Sub-Saharan Africa remains at the center of the HIV/ and lost opportunities for development. Poverty, armed AIDS epidemic, but the proportion of adults living with con ict, and natural disasters contribute to the spread of AIDS has begun to fall even as the survival rate of those disease and are made worse by it. In Africa the spread of with access to antiretroviral drugs has increased. In Africa HIV/AIDS has reversed decades of improvement in life 58 percent of the adults with HIV/AIDS are women. The expectancy and left millions of children orphaned. It is region with the next-highest prevalence rate is Latin draining the supply of teachers and eroding the quality America and the Caribbean, where 0.5 percent of adults of education. are infected. There are 300 million to 500 million cases of malaria In 2009 between 31 million and 33 million people each year, leading to more than 1 million deaths. Nearly were living with HIV/AIDS. Of these approximately 1.5 all the cases occur in Sub-Saharan Africa, and most million were under the age of 15. Another 16.9 million deaths from malaria are among children younger than 5. children, of which 14.8 million live in Sub-Saharan Africa, Tuberculosis kills some 2 million people a year, most lost one or both parents to AIDS. By the end of 2009, 5.25 of them 15–45 years old. The disease, once controlled by million people were receiving antiretroviral drugs, repreantibiotics, is spreading again because of the emergence senting 36 percent of the population for which the of drug-resistant strains. People living with HIV/AIDS, World Health Organization recommends treatment. which reduces resistance to tuberculosis, are particularly The MDGs call for halting and then reversing the vulnerable as are refugees, displaced persons, and prisspread of HIV/AIDS by 2015. This progress assessment is oners living in close quarters and unsanitary conditions. based on prevalence rates for adults ages 15–49. Countries with declining prevalence rates since 2005 are assessed to have halted the epidemic; those with prevaFIGURE 6a Bringing HIV/AIDS under control lence rates less than their earliest measured rate have reversed the epidemic. Countries with prevalence rates Prevalence of HIV, total (% of population ages 15–49) of less than 0.2 percent were considered to be stable. Malaria is endemic in most tropical and subtropical 7 regions, but 90 percent of the malaria deaths occur in 6 Sub-Saharan Africa. Those most severely affected are 5
children under age 5. Even those who survive malaria do not escape unharmed. Repeated episodes of fever and 3 anemia take a toll on their mental and physical develop2 ment. Insecticide-treated bed nets have proved to be an effective preventative. Their use has grown rapidly. 1 Between 2008 and 2010, 290 million nets were distrib0 uted in Sub-Saharan Africa, but coverage remains 1990 1993 1996 1999 2002 2005
uneven. In some countries with large numbers of Sub-Saharan Africa Other developing regions reported cases, use of bed nets for children remains at Latin America & the Caribbean High-income economies less than 20 percent. Source: World Health Organization/UNAIDS; World Development Indicators database.
FIGURE 6b Millions of people still a icted FIGURE 6c Protecting children from malaria with HIV/AIDS Adults and children living with HIV, 2009 (millions) of insecticide-treated bed nets of under-5 population) 00) Cameroon Swaziland China Mauritania 0 Côte d’Ivoire Malawi Guinea 0 Russian Federation Congo, Rep. 0 Most recent observation Zambia Comoros 0 (2006 or later) Burkina Faso 0 Uganda Chad 0 Zimbabwe Somalia Mozambique Cameroon 0 Tanzania tral African Republic 0 1.4 Zimbabwe Kenya Angola 0 India Benin 0 Nigeria Mozambique 0 3.3 2.4 1.2 1.2 1.0
(% 2008 Notified cases (per 100,0 0.6 100 0.7 17,30 36,500 0.9 First observation 40,60 1.0 (2000 or earlier) 34,30
39,50 8,700 1.4 27,80 Cen 35,80
7,500 1.5 21,60 35,60 32,60
Sudan 0 South Africa Sierra Leone 0 Liberia 0 Source: World Health Organization/UNAIDS; World Development Ghana 0 Indicators database. Nigeria 0 Senegal Uganda 0 FIGURE 6d Progress toward reversing the HIV/AIDS epidemic Ethiopia 0 Namibia Share of countries in region making progress (%) Guinea-Bissau 0 100 Congo, Dem. Rep. 0 Burundi 0 80 Madagascar 60 Kenya 0 40 Eritrea Gambia, The 0 20 Zambia 0 0 Gabon 0 Tomé and Príncipe –20 Malawi –40 Togo Toanzania 0
12,80 5.6 36,10 30,00 31,20 38,30 7,100 36,20 11,50 4,600 34,00 37,40 48,50
3,700 30,30 800 31,90 13,50 29,50 São 2,000 33,800 30,400 24,10
–60 Niger East Asia Europe Rwanda 0 & Pacific & Central America & & North Asia the Caribbean Africa Mali 0 Halted and reversed 0 10 Halted or reversed 20 Stable low prevalence 30 40 50 Not improving No data 60 70 Asia Africa 25,40 38,000 Latin Middle East South Sub-Saharan 11,40
Source: World Health Organization; World Development Source: World Bank sta calculations. Indicators database. 23
MDG 7 Ensure environmental sustainability Sustainable development can be ensured only by prorapidly growing upper-middle-income countries are not tecting the environment and using its resources wisely. far behind. Measured by emissions per capita, however, Poor people, often dependent on natural resources for emissions by high-income economies are more than their livelihood, are the most a ected by environmental three times as high as the average of low- and middledegradation and natural disasters (fires, storms, earthincome countries. quakes)—the e ects of which are worsened by environLoss of forests threatens the livelihood of poor people, mental mismanagement. Poor people also suffer from destroys habitats that harbor biodiversity, and eliminates shortcomings in the built environment; whether in urban an important carbon sink that helps to moderate the clior rural areas, they are more likely to live in substandard mate. Net losses since 1990 have been substantial, espehousing, to lack basic services, and to be exposed to cially in Latin America and the Caribbean and Sub-Saharan unhealthy living conditions. Africa, and these losses are only partially compensated by Most countries have adopted principles of sustainable increases in Asia and high-income economies. development and have agreed to international accords The MDGs call for halving the proportion of the on protecting the environment. But the failure to reach population without access to improved sanitation and a comprehensive agreement on limiting greenhouse gas water sources by 2015. As of 2010, 2.7 billion people still emissions leaves billions of people and future generalacked access to improved sanitation, and more than 1 tions vulnerable to the impacts of climate change. Growbillion people practiced open defecation, posing enoring populations put more pressure on marginal lands and mous health risks. At the present pace only 37 countries expose more people to hazardous conditions that will be are likely to reach the target—a pickup of 2 since the last exacerbated by global warming. measurement in 2008. East Asia and Paci ?c and Middle Annual emissions of carbon dioxide reached 32 East and North Africa are the only developing regions on million metric tons in 2008 and are still rising. Hightrack to reach the target by 2015. income economies remain the largest emitters, but the In 1990 more than 1 billion people lacked access to drinking water from a convenient, protected source, but the situation is improving. The proportion of people in FIGURE 7a Carbon dioxide emissions continue to rise developing countries with access to an improved water source increased from 71 percent in 1990 to 86 percent in CO2 emissions (kt)
2008. The MDG target is to reduce by half the proportion of people without access to an improved water source. 30,000 Seventy-three countries have reached or are on track to reach the target. At this rate, only the developing regions of the Middle East and North Africa and Sub-Saharan 20,000 Africa will fall short. In 1990, 63 percent of the people living in low- and 10,000 middle-income countries lacked access to a ush toilet or other form of improved sanitation. By 2010 the access rate had improved by 19 percentage points to 44 percent. The 0 situation is worse in rural areas, where 57 percent of the 1990 1995 2000 2005
population lack access to improved sanitation. The large High-income economies Lower-middle-income countries urban-rural disparity, especially in Sub-Saharan Africa and Upper-middle-income countries Low-income countries South Asia, is the principal reason the sanitation target of Source: CDIAC; World Development Indicators database. the MDGs will not be achieved.
FIGURE 7b Forest losses and gains FIGURE 7c Progress toward improved sanitation Share of countries in region making progress (%) East Asia & Pacific 100 Europe & Central Asia 75 Latin America & the Caribbean 50 Middle East & North Africa 25 South Asia 0 Sub-Saharan Africa –25 –50 High Income East Asia Europe an & Pacific & Central America & & North Asia Africa –50,000 –40,000–30,000 –20,000–10,000 0 10,000 20,000 30,000 40,000 50,000 Asia the Caribbean Africa Change in forest area (sq. km per annum), 2010 Achieved Off track No data On track Seriously off track Source: FAO; World Development Indicators database. Source: World Bank sta calculations. Latin Middle East South Sub-Sahar
FIGURE 7d Many still lack access to sanitation FIGURE 7e Progress toward improved water sources Share of population with access to improved sanitation, 2008 (%) Share of countries in region making progress (%) 100 East Asia & Pacific ral Ur ban 75 Europe & Central Asia 50 Latin America & 25 the Caribbean Middle East & 0 North Africa –25 South Asia –50 Ru
East Asia Europe an
Latin Middle East
South Sub-Sahar Asia Africa
Sub-Saharan Africa & Pacific & Central America & & North Asia the Caribbean Africa 100 0 Achieved 20 Off track 40 60
80 No data
On track Seriously off track Source: World Health Organization; World Development Indicators database. Source: World Bank sta calculations.
MDG 8 Develop a global partnership for development The eighth and ?nal goal distinguishes the MDGs from ancial crisis that began in 2008 and ?scal ausprevious sets of resolutions and targeted programs. It in many high-income economies have threatened recognizes the multidimensional nature of development ermine commitments to increase o cial developand the need for wealthy countries and developing ssistance. So far, leading donors have maintained countries to work together to create an environment in level of e ort. Total disbursements by members of which rapid, sustainable development is possible. FolCD Development Assistance Committee reached lowing the 2002 Millennium Summit in Monterrey, Mexillion in 2010, a real increase of 4.3 percent over 2008. ico, world leaders agreed to provide ?nancing for develcountries (which include some upper-middleopment through a coherent process that recognized countries such as Mexico and Chile) spend more the need for domestic as well as international resources. port to domestic agricultural producers than they Subsequent high-level meetings expanded on these o cial development assistance. In 2010 the OECD commitments. Along with increased aid ows and debt support estimate stood at $227 billion, down by relief for the poorest, highly indebted countries, MDG 8 10 percent from the previous three years. recognizes the need to reduce barriers to trade and to e growth of ?xed-line phone systems has peaked in share the bene ?ts of new medical and communication ome economies and will never achieve the same technologies. MDG 8 also reminds us that development of use in developing countries, where mobile cellular challenges differ for large and small countries and for iptions continue to grow at a rapid pace. In highthose that are landlocked or isolated by large expanses economies, with more than one subscription per of ocean. Building and sustaining a partnership is an , the pace of growth appears to be slowing. ongoing process that does not stop on a speci ?c date ing economies, better debt management, and or when a target is reached. However it is measured, a elief for the poorest countries have allowed develstrong commitment to partnership should be the concountries to substantially reduce their debt burtinuing legacy of the MDGs. Despite the ?nancial crisis, which caused the global y to contract by 2.3 percent in 2009, debt service ratios continued to fall in most developing regions. FIGURE 8a Most donors have maintained their aid levels Selected DAC donors: official development assistance as share of GNI (%) 1.25
The terity to und ment a their the OE $130 b OECD income on sup do on producer about Th high-inc level subscr income person Grow debt r oping dens. econom
1.00 0.75 0.50 0.25 0 2002 1990 2004 Japan Germany Norway Source: Organisation for Economic Co-operation and Development 26 United States 1992 2006 1994 2008 All DAC donors 1996 2010 1998 2000 United Kingdom
FIGURE 8b But domestic subsidies to agricultural E 8c Cellular phones are connecting are greater developing countries Selected DAC donors agricultural support as share of GDP (%) line and mobile cellular subscriptions (per 100 people) 10 8 6 4 2 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 All DAC donors Switzerland Japan Low-income country telephone lines Canada United States Korea, Rep. Lower-middle-income country telephone lines Norway Upper-middle-income country telephone lines High-income economy telephone lines Source: Organisation for Economic Co-operation and Development. Low-income country mobile subscriptions Lower-middle-income country mobile subscriptions Upper-middle-income country mobile subscriptions FIGURE 8d Debt service burdens have been falling High-income economy mobile subscriptions Total debt service (% of exports of goods, services, and income)
Fixed 100 80 60 40 20 0
Sourc e: World Development Indicators database. 50 40 30 20 10 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 South Asia Sub-Saharan Africa East Asia & Pacific Latin America & the Caribbean Middle East & North Africa Europe & Central Asia Source: International Telecommunication Union and World Development Indicators database.
1 Poverty and Food Price Developments
Summary and main messages s have reduced the e yields less stable. The food price spikes have prevented milo have become lions of people from escaping extreme povble. Low erty. The record prices in 2008 kept or ed to price volapushed 105 million people below the povshortfalls. Moreerty line in the short run. They hit urban ant to stabilize poor and female-headed households hardad the adverse est. While food prices dropped sharply in olatility globally. 2009 with the ? nancial crisis, they quickly ss countries. rebounded and by early 2011 were almost fferent effects back to 2008 levels. Sudden, unexpected depending increases in food prices impose particularly net importer or severe hardship on many households because ct on a counthey need time to adjust to higher prices. The subsidy prolarge, initial impact on poverty of a rise in ventions. In food prices tends to decline over time as proed of transmisduction increases and the income of the poor onal food prices in rural areas rises, but it is usually not large es to domestic enough to offset the initial negative impact ly across counon poverty in the short run. s has been limThe factors that caused the price spikes e trade barriers also have the potential to make prices more . This isolates volatile and thus less predictable. Biofuel markets and mandates, which have boosted demand for atility in domestic grains, despite slowing demand for food price controls, globally, have reduced the price elasticity of
the extent that higher price use of fertilizers, have mad Adverse weather patterns als more frequent and more varia global stocks have contribut tility at time of production over, trade interventions me domestic prices often have h effect and increased price v The challenges differ acro Food price increases have di on a country’s current account on whether the country is a net exporter, while the impa try’s ?scal position depends on
grams and other market inter addition, the extent and spe sion of changes in internati during the recent price spik prices has varied considerab tries. Transmission of price ited in countries that impos and have poor infrastructure domestic from international potentially raises price vol markets. Trade restrictions, and rationing can limit the
rise in domestic demand for grains. Sharp increases in fernternational price tilizer prices, linked to energy prices, have roding producer made production costs more volatile and, to of export bans, 29
food prices in response to i spikes, but at the cost of e incentives and, in the case
30 POVERTY AND FOOD PRICE DEVELOPMENTS NITORING REPORT 2012
perhaps encouraging responses by exportyields is needed, especially ers that could increase international prices. ica. Yields there are well A more ef ?cient and sustainable response to d in other parts of the international food price spikes would permit ow what is achievable domestic prices to rise while increasing assisica. At the same time, tance to the poor. remains high and Africa Characteristics of each country determine ingly dependent on the most appropriate policy mix for addresseased public and private ing the implications of higher and more volawater management, and tile food prices, although the content of the ractices to more fully chosen policies will not differ greatly among echnology, as well as further countries. The chosen policy mix at the counntial to raise yields. It is also try level depends critically on how much of the trade infrastructure, a country’s food needs to be imported, how within Africa (World much of their income the poor spend on g productivity could have food, the socioeconomic characteristics of the ct on prices and income of poor affected, and the political environment. rural poverty and making It depends equally on a country’s integration for the urban vulnerwith regional and world markets, on its level of productivity compared with what is achievGMR 2011 pointed to able, and on its government’s capacity to tarstrong economic growth get the poor and vulnerable through mitigateconomic environment in ing interventions, which vitally depends on the MDGs. Seen in this the adoption of such programs before a crisis. g economic performance In addition, the government’s ability to raise loping countries in the public expenditures or provide tax incentives and their resilience in the in response to a food price shock without ? nancial crisis are major jeopardizing ?scal sustainability depends on
An increase in in Sub-Saharan Afr below levels achieve world and well bel in Sub-Saharan Afr population growth has become increas food imports. Incr investment, better improved farming p exploit existing t research, are esse crucial to improve to enable more trade Bank 2009). Raisin a substantial impa farmers, lowering food more affordable able and poor. Evidence in the the critical role of and a stable macro progressing toward context, the stron of emerging and deve past several years face of the global accomplishments. How
ever, a weaker, more initial macroeconomic conditions. conomy in 2012, comIn the long term, the policy mix needs to igh food prices, may pose address the main bottlenecks to the functioncomplicate emerging and ing of the domestic food markets and profes’ quest to further reduce itability of farmers. This would include the . Developing countries use of technological innovations to improve e recent global downproductivity. Over the long term, policies current global economic that would limit the average rise in food epleted policy buffers. prices, without undermining farmer pro ?tto the outlook is a furability, include promoting increased yields n in global growth and a through research, extension, and improved ike in food prices. Should water management; improving the ef ?ciency ze, possible responses of land markets and strengthening property oward protecting the most rights; using more ef ?cient technologies for people within a stable producing biofuels; increasing farmers’ access oeconomic framework. to ef ?cient tools to manage risk; and increasing the integration of domestic markets with world markets. Policies that would limit food have price volatility include the development of
uncertain global e bined with still-h new challenges and developing countri poverty and hunger coped well with th turn but face the environment with d Among possible risks ther sharp slowdow new or extended sp such risks materiali must be directed t vulnerable and poor and sustainable macr
Rising food prices prevented millions of people weather-tolerant grain varieties, increases in from escaping pove rty the size and improvements in the manages in 2011 exceeded their ment of stocks, the opening markets to trade, ercent. Food prices and improvements in market transparency. nt in nominal terms and Agricultural price 2008 peaks by 17 p increased 92 perce
GLOBAL MONITORING REPORT 2012 POVERTY AND FOOD PRICE DEVELOPMENTS 31
FIGURE 1.1 Food, grain, agricultural, and energy price developments (in nominal and real terms) 300 a. Current price index (monthly, 2005 = 100)
250 200 150 100 50 0 Jan Apr Jul l Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul l Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul l Oct Jan Feb 2000 2002 2003 2004 2005 2006 2007 2008 2011 2012 Agriculture Grains Oct Jan Apr Ju Oct Jan Apr Ju Oct Jan Apr Ju 2001 2009 2010
Source: World Development Indicators database. 57 percent in real terms from December 2005 b. to January 2012 ( ?gure 1.1). The World Bank 250 Agriculture Price Index peaked in FebruConstant price ind ex (annual, 2005 = 100)
ary 2011, exceeding levels reached in 2008. 200 The 2010–11 international price increases were more widespread across agricultural 150 commodities than in 2008, when they were mainly concentrated in grain crops.1 Since 100 June 2010 agricultural price increases have been broad-based, affecting sugar, edible oils, beverages, animal products, and raw 50 materials such as cotton. High and volatile food prices can hurt 0 food security. Large, sudden, and particu2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20 10 2011 larly unexpected food price increases make Agriculture Energy it dif ?cult for households to adjust—eroding consumer purchasing power, reducing calorie t Indicators database. intake and nutrition, and pushing more people into poverty and hunger. Overall impacts depend on the proportions of households that are net buyers and households that sell sursupply shocks such as dr oughts can seriously plus production (net sellers). Net buyers will derail food consumption and lead to all-out see their purchasing power decrease. Because famine (box 1.1). the poor spend much of their income on food Qualitative survey-ba sed research shows (50–70 percent), they bear a disproportionate that responses of poor peo ple in 13 counburden in adjusting to high food prices. This tries to global shocks l ead to severe indirect is especially true for poor urban households impacts. 2 Poor people h ave experienced a and those headed by women, who typically series of global shocks in recent years, from Food Grains
Source: World Developmen
spend more than half their incomes on food the spikes in fuel and f ood prices, to the and are more likely to curtail consumption in economic contraction tha t started in 2008, the face of higher prices. At the same time, while droughts have exac erbated problems
POVERTY AND FOOD PRICE DEVELOPMENTS GLOBAL MONITORING REPORT 2012
Crisis in the Horn of Africa
Below average rainfall since 2010, compounded by ts, while in urban areas high food rising and more volatile food and fuel prices, protecloyment have increased poor housetionist policies, political instability and con ict, and food aid. Moderate malnutrideteriorating conditions in refugee camps have exacren under ?ve tripled in poor urban erbated the food crisis in the Horn of Africa. Nearly y 2010 and May 2011, affecting 13 million people in Djibouti, Ethiopia, Kenya, and ,000 children.d Somalia face food insecurity; famine af icts about 4 million people in Somalia. l development community is
among pastoralis prices and unemp holds’ dependence on tion among child areas between Ma approximately 26
The internationa responding to th e crisis but more funds are needed Higher food prices and malnutrition remain severe 6, 2011, funding coverage for problems in all of these countries istance in the four drought-affected In Somalia domestic supply appears to cover only Horn of Africa was estimated at 79 15–20 percent of demand, a local grain prices have Increased support is particularly more than doubled since June 2010 in some areas, itarian assistance in Djibouti and and continued instability is driving refugee ows to quirements in Ethiopia. neighboring countries. According to the Food Secuk’s International Development rity and Nutrition Analysis Unit-Somalia, recent data donor-funded Global Facility for suggest that around 34 percent of children under age on and Recovery, and the State and five are malnourished, of whom 40 percent suffer und are making available $1.88 bilfrom severe acute malnutrition. short-term crisis mitigation and longFood price in ation in Ethiopia reached 47 percent bjectives. A total of $288 milin July 2011, and some areas are facing exceptionally located for the rapid response phase, harsh conditions: wasting among children under age de health services (health screenings ?ve in the south and southeast regions ranges from mes) and safety net programs (cash 10 to 22 percent. However, the number of people h transfer programs) through early As of December 1 humanitarian ass countries in the percent of need.e needed for human refugee-related re The World Ban Association, the Disaster Reducti Peace Building F lion to address term development o lion has been al which will provi and nutrition sche for work and cas
affected and total economic cost of the current ic recovery phase will provide drought are low compared with previous food crises,b r a two-year period, to support agriin part because the most affected areas account for a stock production by improving land small share of domestic agricultural production and rrigation. The ?nal, drought resillivestock population. The World Bank and the Interallocate $1.2 billion to drought-resilnational Monetary Fund (2010) estimates that the , risk ? nancing, resilience planning drought could reduce gross domestic product (GDP) g social safety nets.f by only about 0.5 percent, provided that rainfall conrly Warning System Network. 2011. “Special ditions improve. nctioning in Southern Somalia. ? U.S. Agency The price of maize in Kenya doubled in the year l Development, Washington, DC (July 28). ending October 2011. Livestock is the main source of k. 2011. “Impact of the Drought and the Rise livelihood in the drought-affected areas and accounts Ethiopia, ? Country Assessment, Washington, for about 5 percent of total GDP. Estimated livestock k. 2011. “The Drought and Food Crisis in mortality as a result of the drought is about 10–15
2012. The econom $384 million ove culture and live management and i ience phase will ient agriculture and strengthenin a. Famine Ea Brief: Market Fu for Internationa b. World Ban in Food Prices: DC (November). c. World Ban the Horn of Afri
ca: Impacts and Proposed Policy Responses percent above normal in the affected areas, equivaconomic Premise 71, Washington, DC lent to 5 percent of Kenya’s livestock population.c The Dadaab camp for Somali refugees has faced a dif ?cult ons Of ?ce for the Coordination of Humanisecurity situation. Overall, the direct negative impact 2012; UNICEF. 2011. “Feeding Centers Aim to of the drought is estimated at approximately 0.2 perc Malnutrition in Drought-Affected Djibouti. ? bouti, August 18. cent of GDP.
? PREM E
(November). d. United Nati tarian Affairs, Alleviate Chroni At a Glance: Dji e. United Na
tions Of ?ce for the Coordination of HumaniA ?fth of Djibouti’s population is in need of food , p. 6. relief. Low rainfall in the northwest and southeast has k. 2011. “Response Plan, Drought in the Horn kept food prices high and exacerbated food insecurity ber 10.
tarian Affairs, 2012 f. World Ban of Africa. ? Septem
GLOBAL MONITORING REPORT 2012 D PRICE DEVELOPMENTS
POVERTY AND FOO 33
How rising food prices affect the citizens of Dar es Salaam
In 2011 Tanzanians were hit by substantial increases old consumption patterns in commodity prices. The country’s in ation rate rose throughout the year, reaching 18 percent by December. How did rising food prices affect the citizens of Dar es Salaam, and did they change their consumption patterns? The World Bank worked with the
Changes in househ 15 10 5 0
% change NGO Twaweza to use mobile phones to survey households on their perceptions. The number of low-income households that could afford three meals a day has fallen by about 20 percent since the end of 2010. The reported consumption of a number of food types also decreased for individual households (box ?gure). Meat –5 –10 –15 –20 –25
Fish Chicken Rice Milk High in ation and rising commodity prices were also re ected in citizens’ general assessment of their Cha nge for the better a Change for the worseb economic situation. In 2010 about half the respondents (51.3 percent) were negative about their ecoa. Percentage of h ouseholds that reported this type of food as part of a typical family meal in the current study, but not in the baseline. nomic situation. In 2011 the proportion rose to nearly b. Percentage of h ouseholds that reported this type of food as part of a typical three in four (72.5 percent). And the percentage of family meal in the baseline, but not in the current study. citizens who thought Tanzania’s economic situation was bad or very bad rose from 65.7 percent in 2010 to 85.7 percent in the current study.
at the local level (Heltberg, Hossain, and y countries. Reva 2012, forthcoming). The shocks often ance and moneyresulted in severe hardships, and responses led ource of distress in to second-order impacts. Less nutritious diets countries, where caused malnourishment and made people
were also important in man Inability to service micro ?n lender debts was a major s some East and South Asian many people had to borrow
at very high intermore susceptible to health shocks. The sudden ance debts or live in ux of workers into the informal economy possession of their lowered earnings. Such extreme hardship can and fuel from comeven lead to criminal activities, eroding trust rces was imporand cohesion in communities (box 1.2). me countries. Reducing the quality of food and the (sales of producnumber of meals was one of the most comtion, and health mon responses, often the ? rst to be used, in consequences study sites in all countries surveyed (table to recover. And 1.1). In addition, reducing nonfood consumps has eroded the tion, working more hours, and diversifying many households, sources of income (say, by entering a new urces to cope with informal occupation) were common nearly igh and volatile everywhere. Migration, sometimes as reverse s a major source of migration to the home area, was also a fairly common response to the food price spikes. protect children’s Asset sales were common in many sites. ling, with adult Loans from family, friends, and moneylenders n the quantity
est rates to service micro in fear of creditors taking property. Collecting food mon property natural resou tant only in some low-inco Some of these hardships tive assets, forgone educa
care) will have long-lasting and impede people’s ability coping with economic crise savings and asset base of leaving them with few reso other shocks. Continuing h global food prices are thu concern. Many parents sought to food consumption and schoo household members saving o
POVERTY AND FOOD PRICE DEVELOPMENTS GLOBAL MONITORING REPORT 2012
TABLE 1.1 Common coping responses to food, fuel, and financial crise s in 13 countries Number of Number of Behavior-based responses countries Asse t-based responses countries Reduce the quality and quantity of food 8 Reduce nonfood expenditures from formal lender 2 Stop primary or secondary education o ?nance loan 2 Stop higher education from family/friends 7 Work more from moneylender 4 assets common property natural resources 4 Take up illicit occupations: fuel and food Sex work Drug dealing stance-based responses Crime/theft ce of assistance: Income diversi ?cation ment 4 Migration overnmental organization 4 gious organization al solidarity group tives 5 Mutu 7 Rela 13 Frie nds and neighbors 11 Source: Heltberg, Hossain, and Reva 2012, forthcoming. 13 13 6 2 12 Sell Loan Micr Loan Loan Use for 2 2 10 9 6 Assi Sour Govern Nong Reli
and quality of food to ensure that children hort-term impact on poverty. Some net buyhad proper diets. Yet, there were many rs become net sellers, and higher farm wage instances of erratic attendance and school ncome can offset some or all of the negative withdrawals because of the need for children mpact of higher food prices on the incomes to contribute to household income or because f net consumers (see box 1.3). For this posieducation costs had become prohibitive. But,
s e i i o t
ive effect to occur, prices need to remain on the whole, the impacts on schooling were elatively stable and at their elevated levels, so more muted than expected. The cost of eduhat farmers are comfortable shifting to more cation, the distance to schools, and the availro ?table crops and expanding production. ability of school feeding in uenced whether ce, increased food price volatility could children stayed in school. erail this positive development. Food price spikes have an immediThe impact of higher food prices differs ate impact on progress toward eradicating cross socioeconomic groups. Urban, nonextreme (income) poverty. The international arm, and female-headed households are food price spike of 2007–08 is estimated to ected the most in the short term (see ?gure have kept or pushed 105 million into poverty, .2 and box 1.4). In the short term, the povand that of 2010–11 by 48.6 million people y impact of a doubling of food prices is on in the short run (box 1.3). Poverty typically verage 16.7 percent larger in female-headed increases initially with higher food prices, ouseholds than in male-headed households. because the supply response to rising prices hort-term changes in poverty are likely to be takes time to materialize and many poor .4 times higher for nonfarm households than (farm) households are net food buyers, so or farm households, and the poverty impact higher food prices lower their real incomes. n urban areas in the short term is likely to Once farm wages and farm production e 44.3 percent higher than in rural areas. adjust, the impact of higher food prices he short-term effect is reduced when wages on poverty is greatly ameliorated. Higher ncrease and farmers switch to those products farm wages and supply responses by both hat increase their pro ?tability the most; this smallholder and large commercial farmers an begin to lift farmers and rural households dampen the impact on poverty, but it is usuut of poverty, but on average it becomes ally not suf ?cient to fully offset the negative e dif ?cult to escape poverty ( ?gure 1.2).
r t p Hen d
a f aff 1 ert a h S 2 f i b T i t c o mor
GLOBAL MONITORING REPORT 2012 TY AND FOOD PRICE DEVELOPMENTS
How many more are poor because of higher food prices?
Most analyses conclude that in the short term higher d. The first crisis was estimated to keep or food prices raise the poverty headcount in most 5 million people into poverty in low-income developing countries because not enough poor farmes (Ivanic and Martin 2008), and the second ing households bene ?t from the higher sales prices 4 million people in low- and middle-income of their production (De Hoyos and Medvedev 2011, es (Ivanic and Martin 2012a). Ivanic and Martin 2008; Ivanic and Martin 2012a) g published information on the observed to offset the negative impact of higher food prices on c price changes between June 2010 and net consumers. This is so despite the well-known fact 011a together with the techniques outlined that three-quarters of the world’s poor live in rural and Martin 2012b, the implied poverty areas, and most of them depend on agriculture for of the most recent food crisis was calcutheir livelihoods. box table). The new estimates are calculated A key to this apparent contradiction is that many immediate short-run impacts, taking into of the poorest farming households are net buyers of demand responses by consumers, mediumstaple foods. Over the long run, the negative impact of acts with wage adjustments, and long-run higher food prices on poverty is ameliorated through including supply responses. The results sugwage adjustments and household supply adjustments at changes in both wages and farmers’ output in response to rising food prices. Even in the long run, es reduce the negative impact of higher food however, higher food prices appear to raise poverty in on extreme poverty. But none of these long-run most poor countries and for the world as a whole— s is large enough to offset the initially large but the impact varies among population groups. impact on poverty. The two recent food price crises—in 2007–08 and in 2010—were researched extensively soon after they crisis Millions of people Impact 2011 shocka Short-run impact
occurre push 10 countri crisis, 4 countri Usin domesti March 2 in Ivanic changes lated ( for the account run imp impacts gest th respons prices reduction adverse
Estimated poverty impacts of the 2010–11 food price
48.6 Medium-run impact with wage adjustments only 45.5 Long-run impact including supply response 34.1 a. Refers to poverty change among low- and middleincome countries. a. The calculations in Ivanic and Martin (2012a) used price changes until De cember 2010. The updated sample used includes more countries, 29, versus 9 than in 2008, and includes a range of household survey updates.
The aggregate impacts vary by region. l higher tax revenues from Large net importers of food, such as those modities (figure 1.3 and in the Middle East, North Africa, and West Africa, face higher import bills, reduced ?sof international to cal space, and greater transmission of world s varied greatly across prices to local prices for imported goods such largest pass-through as rice and wheat. Higher prices particularly untries of Latin America, hurt consumers with high shares of houseopen to international trade. hold expenditure on food (as in many Afriica the pass-through of can and Asian countries). Large net-exportces to countries importing countries, as in Latin America, Eastern has been relatively fast. The Europe, and Central Asia, stand to bene ?t, in rnational maize prices has
part from potentia (agricultural) com box 1.5). The pass-through domestic prices ha regions, with the observed in the co which are largely In Sub-Saharan Afr rice and wheat pri ing these cereals transmission of inte
36 POVERTY AND FOOD PRICE DEVELOPMENTS LOBAL MONITORING REPORT 2012
BOX 1.4 Actions by women made the most difference but were invisible to policy makers
Much of the response to a rise in food prices is crisis has meant that many poor re ected in additional care work by (mainly) women a serious decline in the quality that is unpaid and not measured. Increases in food ood, as well as in caloric intake. prices oblige women to invest greater time and energy es directly reduced the quantity of to achieve the same level of nourishment and care people and often forced them to of children, the sick, and the elderly. Examples of either unpalatable or unsafe. Some increased effort include more distant travel to hunt rkable efforts to maintain nutrifor bargains and more frequent shopping to purexample, in rural Zambia women chase smaller quantities; more time devoted to chop small ? sh with protein-rich but or gather ?rewood because households can no longer afford other sources of energy; more time required crises, gender inequality can be to collect wild foods, and to beg and borrow money; ncreased in part because women having to undertake jobs considered hard or demeann the first to cut their food and ing; and having to manage more stressful domestic in the face of falling real incomes. family relationships, including drug or alcohol abuse, everal communities a note of gender as well as violence. with young parents (particularly One hopeful note is that across various coml jobs) stressing that both parmunity sites, parents and schools are working hard their children had eaten well before to keep children in school and provide essential food. Although teachers in Bangladesh and Zambia ising that the additional effort that reported that local school dropout rates increased e had to expend to cope with the when food prices spiked, there was a much stronger ne unnoticed. This phenomenon emphasis than researchers expected on keeping chilneral neglect of women’s unpaid dren in school. In Kenya school feeding programs importance of its contribution to were often very accommodating of the poorest famiand to the achievement of the Millies, allowing them to bring younger siblings along
The food price people have suffered and diversity of f Food price increas food eaten by poor eat food that was families made rema tional levels: for replaced expensive cheap caterpillars. As in previous expected to have i have generally bee other consumption Nevertheless, in s equality emerged, those not in manua ents waited until themselves eating. It is not surpr (mainly) women hav food crisis has go reflects a more ge care work and the social protection lennium Developmen
t Goals. A key lesson from this at mealtimes. Nevertheless, higher food prices affect hat protecting progress toward the children’s ability to learn. In Bekasi near Jakarta, ting caregiving. This should for example, mothers were concerned that reducupport to women in their roles ing pocket money for snacks was putting their chilrs, which entails recognizing and dren off going to school; some mothers in Kingston, ir work is affected by food price Jamaica, had to pack children off to school with only er economic shocks. a glass of water. ed on Hossain and Green 2011.
crisis should be t MDGs requires protec mean more direct s as unpaid caregive monitoring how the volatility and oth Source: Oxfam, bas
been much weaker, however, because most large, both immediately on the rise countries in Eastern and Southern Africa, ernational price and three months main producers of white maize, fill their (table 1.2). The pass-through in import needs through cross-border trade, India, the countries with high not from overseas (Minot 2010). In Asia the tection, was small. Overall, for transmission of changes of international rice more open to trade (Dawe 2008; prices to local prices differed signi ?cantly by , and with a larger share of cerecountry during the 2007–08 food price spike. in total domestic consumption, In Bangladesh and Cambodia, the countries and larger is the transmission of the open to trade, the pass-through was fast and nal prices into local prices.
relatively in the int afterward China and import pro countries Robles 2011) als imports the faster internatio
GLOBAL MONITORING REPORT 2012 POVERTY AND FOOD PRICE DEVELOPMENTS 37
FIGURE 1.2 The impact of high er food prices on poverty differs across socioeconomic groups
Farmer Rura l household Household with m ale head Average Household with fe male head Nonfarmer Urban household –10 0 15 5 20 10 25 –5
Percentage change in headcount poverty for a 100% change increase in food prices uding supply response) age adjustments) Long term (incl Medium term (including w Short term
Source: Ivanic and Martin 201 2b forthcoming.
FIGURE 1.3 Countries’ vulnerability to global food price shocks tracked by share o f cereal imports in domestic consumption and food share in household expenditure Middle East 100 and North Africa
Brunei Malta Mauritius
Congo, Rep . Israel Netherlands Yemen, Rep. Japan Mongolia Korea, Rep. Liberia Lebanon Saudi Arabia Botswana Cape Verde Malaysia Gabon
N et importers Portugal Tunisia Mauritania Georgia Armenia Senegal Angola Colombia Namibia Net cereal imports as a share of consumption (%) Swaziland
50 Belgium Slovenia Venezuela, R.B. de Albania Peru Morocco L esotho Switzerland jikistan New Zealand Cameroon Ghana Spain Côte d’Ivoire Africa Mexico Bosnia and Herzegovina Gambia Sri Lanka Guinea-Bissau Chile Ecuador Central Sierra LeoneMozambique Norway Azerbaijan Ta
Egypt, Arab Rep. KenyaAfrican Republic Congo, Dem. Rep. Iran Guinea Rwanda
Bolivia Philippines Burundi Estonia Zimbabwe Belarus Kyrgyzst South Africa Syria Niger Luxemb Indonesia Ca 0
Italy BeninTogo an Nigeria Zambia
Bangladesh MaliUgandaTanzania ourg mbodiaLao PDR
Poland Romania Brazil Burkina FasoMalawi Ethiopia Turkey
United Kingdom Slovak Croatia Madagascar Nepal India Chad
Moldova a Denmark Republic Finland an Vietnam Germany Lithuania Serbia Russia, Federation
China Austri Pakist
Sweden Czech Republic Bulgaria Ukraine United Sta tes Asia Europe and Thailand –50 Hungary Canada Kazakhstan N et exporters Central Asia
Uruguay Paraguay –100 Latin America and the Caribbean –150
Australia Argentina Developed countr ies Developing countries –200 0 20 40 70 Food share of household expenditure (%) Source: World Bank 2011d. 50 30 60 10
POVERTY AND FOOD PRICE DEVELOPMENTS GLOBAL MONITORING REPORT 2012
World price impacts across regions
The spike in food prices in mid-2011 strained ? ssome countries are net food importers, and the share cal budgets, reduced incomes, and increased the of food in household expenditures remains about 40 vulnerability of the poor in many food-importing percent in South Asia. Despite a mix of trade meacountries. sures and buffer stock policies designed to slow the transmission of international to local prices (Dawe Sub-Saharan Africa. The region is particularly vul2008), the 2008 food price spike signi ?cantly reduced nerable to increases in international food prices, household incomes in South Asia. At the same time, because in most countries some 50–70 percent of higher food prices increased fiscal deficits because household spending is devoted to food, and the region of increased expenditures on food subsidy programs imports about 45 percent of its consumption of rice and safety nets (Ahmed and Jansen 2010). A dual and 85 percent of its consumption of wheat. High approach of raising agricultural productivity and levels of malnutrition result in 38 percent of children earned income, coupled with targeted safety nets, being stunted. The situation is most perilous in the is needed to deal with hunger in South Asia. East drought- and con ict-stricken countries of the Horn Asia presents a different mix of challenges. Thailand of Africa. Nevertheless, increases in cereal producand Vietnam provide over 50 percent of global rice tion driven by higher yields since the middle of the exports and thus benefit significantly from rising last decade improved the continent’s ability to cope prices; Indonesia and the Philippines are signi ?cant with the food price spike of 2011, compared with the rice importers; and China is largely self-suf ?cient in experience in 2008. Governments should increase rice. East Asia needs to maintain production while expenditures to raise the productivity of smallholder shifting to more environmentally sustainable proagriculture, strengthen trade between food de ?cit and cesses in the face of increasing land and water scarcity surplus areas to reduce the volatility of local prices, (Christiaensen 2007). and support the coping strategies of poor households in the face of continued food price volatility. Latin America and the Caribbean. Large resource endowments and the lower share of household expenSouth Asia and East Asia and Paci ?c. South and East
ditures devoted to food, at least compared with Asia Asia are both self-sufficient in rice. Nevertheless, and Africa, make the region as a whole less vulner-
TABLE 1.2 Pass-through of international rice prices to local prices 2011; Zurayk 2011). The long-term passin selected Asian countries through coef ?cients average 20–40 percent As a share of Thailand price (rice, 5% broken) of the world food price increase, with the Cambodia Bangladesh Philippines hina full transmission process taking about one Q2/07–Q2/08 98 55 63 25 23 year (World Bank 2011c). The pass-through Q2/07–Q3/08 79 60 46 37 25 effects are notably higher for West Bank Source: World Bank sta estimates based on FAO’s Global Information and Early Warnin g and Gaza, Djibouti, the Arab Republic of System. Note: The international price of rice (Thailand, 5% broken) peaked in April 2008 . Egypt, Iraq, and the United Arab Emirates. By contrast, in Algeria and Tunisia, the passthrough is small because of high food subsiHigh and volatile international food prices dies and controlled food prices. continue to be a big concern in the Middle Limited participation in international trade East and North Africa, which is the largest has led to higher local food price volatility, wheat-importing region in the world. Some particularly in Sub-Saharan Africa. The price have even cited the food price developments volatility of internationally tradable prodsince 2007 as a contributing factor in the ucts is lower than that of nontradable comArab Spring (Breisinger, Ecker, and Al-Riffai modities and commodities that are tradable India C
GLOBAL MONITORING REPORT 2012 D FOOD PRICE DEVELOPMENTS
POVERTY AN 39
World price impacts across regions (continued)
able to volatile international food prices. However, itical pressure to impose export bans or agricultural production has been affected by natural disasters; for example, the January 2011 cold wave in Mexico damaged 1.5 million hectares (or 4 milnd North Africa. Countries in this lion metric tons) of white corn (for tortillas) and over n food imports, particularly wheat, for 80 percent of green vegetable crops for export. And ercent of domestic consumption. Thus, vulnerability differs signi ?cantly among countries. ional prices can put considerable presEl Salvador, Grenada, Haiti, Suriname, and St. Vinnment and household budgets, dependcent and the Grenadines are particularly vulnerable vel of domestic consumption subsidies because of high ?scal de ?cits, large cereal imports, ugh from international prices. and low-quality social protection programs, while epublic of Egypt, Djibouti, and the Argentina, Brazil, and Uruguay are agricultural powmirates, more than 40 percent of a erhouses that bene ?t from higher international food tional food prices is re ected quickly in prices. As a relatively urbanized region, a large majorprices, while in Jordan and the Repubity of its population, including in net-exporting councountries with weak ?scal positions and tries, are consumers who lose from the direct effects dence on food imports, the pass-through of price spikes (World Bank 2012a). t (World Bank 2011c). Higher domesuction insulates Algeria and Tunisia Europe and Central Asia. The region is quite diverse. ional price shocks. Oil exporters are Large grain imports and high shares of food in houseo cope with higher food prices, because hold budgets make Albania, the Kyrgyz Republic, enues have risen along with their food Moldova, and Tajikistan vulnerable to rising food Since energy is an important input to prices. By contrast, Kazakhstan, the Russian Fedproduction, increased oil prices have coneration, and Ukraine are food exporters that benigher food prices. e ?t from increased commodity prices. Similar to netexporting countries in Latin America, net-exporting es by World Bank staff; World Bank 2011c. countries in this region with populations that spend
continued pol to ?x prices.
Middle East a region rely o at least 50 p higher internat sure on gover ing on the le and the pass-thro In the Arab R United Arab E rise in interna domestic food lic of Yemen, a large depen is 20–40 percen tic food prod from internat well placed t their oil rev import bill. agricultural tributed to h Source: Updat Note: See the
appendix for the current classification of signi ?cant shares of household budgets on food face
only on regional markets. Wheat, rice, and ty across products in the countries of cooking oil, products that are imported on the African continent, exhibit lower price Number of Number of observations price series volatility than the prices of domestically produced staples (table 1.3). The prices of maize, l markets 224 3 beans, and cowpeas, which are mainly traded 2,202 30 locally and regionally, are more volatile, on 592 8 average 20–30 percent above the price volaonly on tility of internationally traded commodities. Therefore, many African countries would 878 12 bene ?t from reducing their protection levels 3,450 47 and infrastructure costs to import from, or 2,224 30 export to, international markets when needed 1,914 26
TABLE 1.3 Price volatili Sub-Saharan Africa Volatility Product (%) Tradable on internationa Wheat 9.4 Rice 10.8 Cooking oil 10.1 Nontradable or tradable regional markets Beans 13.3 Maize 14.4 Millet 10.5 Sorghum 12.4 Cowpeas 23.0
369 5 to lower their high domestic volatility. Higher food prices provide an opportuSource: Minot 2011, base d on price data from the U.S. Agency for International Development’s Famine Early Warning Systems Network. nity for the private sector to produce and Note: The local prices w ere analyzed from January 2005 to March 2011. Price volatility is invest more and to improve productivity at de ?ned as a standard devia tion of logarithms of ?rst price di erences.
40 POVERTY AND FOOD PRICE DEVELOPMENTS TORING REPORT 2012
the same time. Higher food prices hurt poor toolkit of various policy net buyers, but increase agricultural incomes, ond to food price spikes, and this in turn should provide incentives on to use depends critito expand production of the most pro ?table conditions the country crops. Smallholder farmers in developing ding its social and political countries produce more when output prices r challenge has been to improve (World Bank 2007). Higher staple tween bene ?ting producers, crop prices in developing countries (25–35 centives for increased percent higher in 2009 compared with 2006), tecting consumers within and favorable weather contributed to higher mework that does not production (5.2 percent), higher stocks (3.8 external sustainability. percent), and more trade (19.9 percent) in 2010 –11 (FAO 2011a). High food prices offer opportunities for many poor countries ce changes to develop their agricultural sectors, which od prices re ect changes can help link local farmers to regional and demand and the correglobal supply chains, increase local consumer ness of the food system. access to competitively priced food products, vels are driven over the and create new export sectors. s in demand from popuAgricultural productivity varies sigrowth, agricultural pronificantly across regions, indicating that and secular changes in improved use of existing technologies can s, complements, and sublead to signi ?cant yield gains. For example, shocks such as droughts, a comparison of current productivity with de restrictions, volatile what is potentially achievable (demonstrated ed inputs and outputs through on-farm research trials), assuming hanol), and market expecthat inputs and management are optimized in y low stock levels tend to relation to soil and water conditions, shows
governments have a instruments to resp and which combinati cally on the initial ?nds itself in, inclu environment. A majo strike a balance be and thus improving in production, and pro a macroeconomic fra jeopardize ?scal and
Drivers of food pri Changes in world fo in food supply and sponding responsive World food price le long term by change lation and income g ductivity outcomes, the prices of input stitutes. Short-term oods, changes in tra demand for associat (such as oil and et tations sharpened b drive food price vo
latility. The corresponding that the yield gap in maize production is ces are conditioned by the greatest in Sub-Saharan Africa and lowest in he food system, that is, the East Asia. Yields in Sub-Saharan Africa are ply and demand (table 1.4). only 24 percent of what could be produced, s on cereals particularly while the gap is only 11 percent in East Asia e most important staples (FAO 2011a). Better use of existing crop and The more responsive the nutrient management practices alone could he corresponding impact increase rice yields in East Asian countries es. by at least 25 percent (Christiaensen 2011). About 15 percent of the value of the total in demand rice crop in South East Asia could be saved
impacts on food pri responsiveness of t elasticities of sup The analysis focuse because they are th for food security. system, the lower t on food price chang
Longer-term trends and supply through better post-harvest technology (especially drying and milling). A shift from areapply has outpaced growth based to volume-based charges for irrigation food crops (table 1.5). water in the Tarim Basin in China resulted demand for food are in a 17 percent decrease in water use, while n and income growth and addressing poor land layout through adese of food crops for indusquate leveling and higher bunds to retain h as biofuels. Global food wet season water has been shown to increase over the past 50 years yields in Cambodia by 27 percent. t a year, or 1.4 times the Local conditions will determine the population of 1.6 permost effective mix of government policies increased from an averin the face of food price spikes. In general, ween 1960 and 2003 to Recent growth of su in demand for main Increases in global driven by populatio by an accelerated u trial purposes, suc consumption growth averaged 2.5 percen average increase in cent. Supply growth age 2.3 percent bet
GLOBAL MONITORING REPORT 2012 POVERTY AND FOOD PRICE DEVELOPMENTS
TABLE 1.4 Major drivers of world cereal prices Average price levels Price volatility Dependent on: Dependent on: Long-term demand responsiveness/ Shor Short-term demand responsiveness/ elasticity to prices elasticity to prices • O • Share of food in consumption • Stock release policies • Biofuels mandates • Oil/maize price ratio • Oil/maize price ratio • • • Excha Preca Food
Long-term change in t-term change in demand demand il prices volatility • Population nge rate volatility • Income utionary hoarding • Biofuels reserves Long-term change in t-term change in supply supply ghts and oods • Area planted production in more volatile • Yield changes uction regions
Long-term supply responsiveness/ Shor Short-term supply responsiveness/ elasticity to prices elasticity to prices • Drou • Output and input market • Trade openness integration • Price risk management • Share of prod • Trade an
policy responses (export bans d sharp reductions in import ta ri s) Source: World Bank 2012b, forthcoming.
TABLE 1.5 Higher consumption growth of corn has offset slowing growth in rice an d wheat, while increases in area planted to food offset slowing yield growth Growth rate (%) Demand Supply Crop 03–11 1960–2011 1960–2003 Total (rice, corn, wheat) 2.5 2.4 2.3 Area 0.5 0.4 1960–2011 2003–11 2.5 2.8 1.1 2.5 1960–2003 20
Yield 1.9 Rice 1.3 Area 0.6 Yield 1.7 Corn 3.7 2.9 2.7 Feed, residual 1.4 Food, seed, industrial, including biofuels 7.7 Area 0.9 0.8 Yield 1.9 1.9 Wheat 1.9 2.1 2.0 Area 0.2 0.1 Yield 1.9 1.9 3.8 2.7 3.4 1.8 2.0 2.1 2.2 0.8 1.4 2.2 2.9 2.8 1.7 1.1 3.0 2.8 0.5 0.9 2.2 2.3 2.0 1.9 1.7 2.1 2.3
Population growth 1.6 1.7 1.2 Per capita income growth 1.4 1.4 1.5 Source: U.S. Department of Agriculture; World Development Indicators database.
an average of 2.8 percent for 2003–11. More in demand will depend on changes rapid growth in food demand than in populathree areas—food, feed, and industion re ects higher demand for grain as ani(biofuels). Population growth is now mal feed (rising incomes increases the demand but demand for biofuels is rising. for meat) and the use of agricultural comare signi ?cant differences in popumodities in the production of biofuels. Future rowth across the globe. Sub-Saharan
increases in these trial uses slowing, There lation g
42 POVERTY AND FOOD PRICE DEVELOPMENTS ONITORING REPORT 2012
Africa has the highest population growth onstraints, rising inputs (2.5 percent growth during the last decade), in development of improved and Europe and Central Asia has the lowest ke yields gains harder to (a mere 0.2 percent growth during the same ield growth rates have period). Even though population growth t from 1.9 percent for the might ease in Sub-Saharan Africa, current o 1.7 percent in 2003–11. levels of population growth point to the need s limit the future expansion for this region, with its fragmented trade, iculture. Approximately 1.2 weak infrastructure, low yields, and underive in river basins with absodeveloped social safety nets, to address the ity, with the Middle East and bottlenecks of food security in an integrated Asia facing the greatest but prioritized manner. and some greater scope for Increases in world food supplies depend irrigation in Africa.3 Given on land area planted for food crops and subraphic pressures, particusequent yields. Average growth in grains suparan Africa, it is important to ply over the past 50 years has been similar to oductivity, manage land susgrowth in grain consumption (2.4 versus 2.5 prove the ef ?ciency of water percent a year, see table 1.5). Over this period lations mean that increasing 21 percent of the growth in grain production achieve reductions in poverty was from area expansion, while 79 percent tually con ict with ensurwas from yield improvements. However, durbility of development (MDG ing 2003–11, area expansion contributed 39 he need for “green growth ? percent of supply growth while yield growth d, forthcoming). accounted for 61 percent; this shift is largely a reflection of a deceleration of yields and s in demand shifts of land away from the production of
land and water c costs, and lags varieties may ma achieve. World y declined somewha period 1960–2003 t Water constraint of irrigated agr billion people l lute water scarc North Africa and water shortages the expansion of continuing demog larly in Sub-Sah increase land pr tainably, and im use. Rising popu food security to (MDG 1) may even ing the sustaina 7) (box 1.6) and t (World Bank 2012
Short-term shock and supply other crops to grains. Yield growth rates for rice and wheat have declined consistently Food price uncer
tainty is rising. The uncerwith slowed development of higher yielding rices is driven by changes in varieties and with an increase in production luding closer links to oil on more marginal land. rate changes, and lower Land has become an increasingly limited ios, and supply, including resource, and the remaining arable land is on of export crop producalmost by definition either less productive ere yields are less stable, (inherently or requiring significant investduction to biofuels, and ment to raise yields) or, particularly in Africa, ons affecting global supply. more dif ?cult to exploit because it is located e volatility is contributfar from infrastructure. In the ?ve years since price volatility. The links 2005–06, land area for 13 major world crops and agricultural markets increased by 27 million hectares, a rate that d considerably since 2005, cannot be sustained inde ? nitely at the estiugh elasticity from crude mated supply of available land. Moreover, ricultural prices increasing most of the expansion in land cultivation pre-2005 period to 0.28 since 2005–06 (24 million of the 27 million es 2010). Crude oil prices increase) is located in only six countries or y from early 2002 to midregions: China, Sub-Saharan Africa, former doubling from early 2007. Soviet Union (Kazakhstan, the Russia Fedhave historically been more eration, and Ukraine), Argentina, India, and ricultural commodity prices, Brazil. link between oil and agriculFuture yield improvements may be harder ll likely contribute to shortto achieve than in the past. More binding volatility.
tainty of food p both demand, inc prices, exchange stock-to-use rat weather, expansi tion to areas wh switching of pro trade interventi Higher oil pric ing to higher food between crude oil have strengthene with the pass-thro oil prices to ag from 0.22 in the through 2009 (Baff increased sharpl 2008, more than Crude oil prices volatile than ag and the greater tural markets wi term food price
GLOBAL MONITORING REPORT 2012 D PRICE DEVELOPMENTS
POVERTY AND FOO 43
BOX 1.6 Sustainable increase in food production is required to simultaneously f ight global hunger and reduce the pressure on biodiversity
The core of sustainable development is the challenge tural areas. Land conversion will be of ful ? lling human needs and aspirations within the possible, settling for accelerated carrying capacity of our planet. This twin challenge s in current agricultural areas while is also re ected within the MDGs, with MDG 1— a of the world in its natural state. eradicating hunger—being part of a social oor, and environmental assessment MDG 7—ensuring environmental sustainability— s the required yield increase to addressing an environmental ceiling. challenge of eradicating global hunFailing to sufficiently increase production will g global biodiversity loss, by adopting have a backlash on the affordability of food and r sparing strategy. The two strateincrease the risk of price volatility, thus reducing the ent spatial patterns of biodiversity stability of food supply. Agricultural area expansion r the sparing strategy, strict protecto facilitate increased food production, together with areas is needed alongside a major other environmental pressures such as climate change se yields by approximately 1.3 percent and nitrogen deposition, results in further declining For the sharing strategy, intensive global biodiversity (PBL 2012). Having a long-term osystem services and landscapes supply of food at reasonable and stable prices while at ngside investment in knowledge and the same time halting global biodiversity loss requires tainable farming, to increase yields that anthropogenic pressures on the environment be way by approximately 1.1 percent a reduced. Measures include more ef ?cient and better se yield increases are comparable ecologically integrated farming, mitigation of clid in the 1970s and late 1990s but mate change, improved land management, altered ained for a longer time period and consumption habits—speci ?cally a transition to lowt have signi ?cant yield increases meat diets in western countries—and reduced losses in the production chain, while increasing agricultural increase in food production to ?ght productivity (PBL 2010, 2012).
existing agricul avoided as much as biodiversity los keeping a larger are The Netherlands agency (PBL) project address the twin ger while haltin a pure sharing o gies show differ loss in 2050. Fo tion of natural effort to increa a year globally. management of ec is required, alo practices on sus in a sustainable year globally. The to those achieve have to be maint in areas that did no in the past. Sustainable global hunger re
quires many simultaneous intervenTwo stylized strategies for increasing agricultural ng the need for policy coherence. Creproductivity within ecological limits could be folg conditions, knowledge transfer, and lowed: sharing or sparing. The ? rst strategy focuses ance with physical potential are on mixing natural elements in existing and new agriland management can be improved cultural areas and making optimal use of ecosyss, regulatory institutions, and intetem services in agricultural production. Biodiversity Furthermore, acknowledging the impacts of expanded agricultural areas will be mitibutions of ecosystems and their sergated and reduced in existing agricultural areas, for y to the livelihoods of poor people, is example through edge effects and reduced fragmentation. The second strategy focuses on intensifying agricultural production in highly productive, already .
tions, emphasizi ation of enablin planning in accord key. Areas where are tenure right grated planning. value and contri vices, especiall important. Source: PBL 2012
Declines in global stock-to-use ratios may and 2010–11, be contributing to higher volatility. Historical nt increase in stocks in evidence suggests that the likelihood of grain cording to the Food price spikes is higher when global stock-totion (FAO 2011a), use ratios, a measure of physical liquidity of n exporters in 2011– grain markets,4 decline to low levels (Wright ine further, reducing 2009; Stigler and Prakash 2011). Weatherratio by 2.2 perrelated production disruptions reduced cereal . Added to this stocks in developed countries by an estimated the exact size and
28 percent between 2009–10 in contrast to a 4 perce developing countries. Ac and Agriculture Organiza the stocks of major grai 12 are projected to decl the global stocks-to-use cent compared with 2010–11 is global uncertainty on
POVERTY AND FOOD PRICE DEVELOPMENTS GLOBAL MONITORING REPORT 2012
ainty on the triggers erdup, and measurealso ave signi ?cant marns are particularly a, ies that are highly Sea mports, as in the t ica region. 5 ayed a signi ?cant
quality of stocks, uncert export in the Southern Cone of Latin Am for their release or buil ica. More recently, world markets have ment revisions that can h become more dependent on supplies from ket impacts. These concer the Black Sea region (Kazakhstan, Russi relevant for those countr and Ukraine). 5 The share of the Black dependent on food grain i region and Latin America in global whea Middle East and North Afr exports doubled from 14 percent in 1990–9 Adverse weather has pl to 28 percent in 2006–10. For maize, the role in the recent price share more than tripled, from 9 percent an important factor in re 29 percent, over the same period. Yield and stocks in 2010. The n these newer export regions are less sta droughts, floods, and ext overall supply and exports more variabl tures seems to be increas part because of the willingness to use a record number of 19 nat restrictions to ensure domestic supply, ture records. Recent extr the traditional breadbasket areas of th include the Russian heat oped world. Thus global supply of these in Brazil, and ooding in A is likely to become more variable over ti and West Africa. Floods a contributing to potentially higher vola aging, as they often requ world food export volumes and prices.
spikes. Weather was to ducing production s in umber of reported ble and reme temperae, in ing; in 2010 alone, trade ions set temperathan in eme weather events e develwave, dry weather crops ustralia, Pakistan, me, re especially damtility in ire large reconstruc-
ms and other infrathat uency has increased ing droughts. Overall, pen ibly resulting from posia signi food ces. ces. d exports is being osgrowing condi, n of world grain rthey years is in large 2011 es in production for to ?cant impact
tions of irrigation syste Insulating policies reduce the role structure, and their freq trade between nations can play in bring along with the number of stability to the world’s food markets.6 O weather variability, poss trade policies are essential to provide climate change, is having tive incentives to national producers of on international food pri and to attract investment from all sour A larger share of worl Although exporters and importers have p produced in more variable sibly been more restrained than in 2008 tions. The major expansio insulating trade interventions was neve exports in the last twent less still widespread and even rose in part due to rapid increas (versus 2010), continuing to contribute price instability.
The inelastic nature of world food demand FIGURE 1.4 Demand responsiveness to food price declines as per and supply lead to large price increase s from capita income increases shocks to the system (that it, the syst em has limited n the 0.2 short term). Over time, world food dema nd 0.1 will become more price inelastic as inc omes Own-price elasticity of demand exibility to respond, at least i
rise, and, if not offset by a more elas tic sup0.0 ply response, price increases per deman d and –0.1 supply shock will be higher in the future than –0.2 in the past. World price elasticities of food de mand –0.3 are low and tend to decline with increa ses in –0.4 per capita income ( d –0.5 demand for biofuels can influence this –0.6 long-term trend in two ways. First, bio fuels 3.9 4.4 4.9 2.4 2.9 3.4 mandates act to ? x demand for corn-based GDP per capita PPP, constant ethanol (at any price), thereby further ?gure 1.4). The increase
2005 international $ (log scale) reduc-
ing overall demand responsiveness to pr ice Source: U.S. Department of Agriculture and World Bank. changes. Second, if long-term oil price s
GLOBAL MONITORING REPORT 2012 FOOD PRICE DEVELOPMENTS
POVERTY AND 45
rise dramatically, making corn-based ethanol profitable beyond the mandates, then the overall demand responsiveness to price eloping-counchanges could increase (oil prices relative en conducive to corn have been higher). The net effect on AO review of price responsiveness depends on which of loping countries these two effects dominates. owed that a Long-term supply responsiveness to used distortionprice changes is influenced by output and ermine agriculinput market integration and price volatility long term (table impacts on production decisions. The world countries used food-supply response is estimated to be low uch as reductions (with estimated price elasticities of 0.1 pert taxes or bans, cent). Price elasticities tend to be higher in Many combined developed than in developing countries, in th domestic part because of more developed and intes in food taxes, grated input and output markets. In addiized prices, and tion, higher price volatility in food markets wer food prices for increases risk and likely lowers the produce of producers. tion response to higher prices (as it does used safety nets for other crops in developing countries; see ising food prices on Subervie 2008). While the longer-term supply e, while allowresponse may rise as countries develop (with to induce a food greater output and input market integration), l prices were this may be offset by lower supply response provided support induced by higher price volatility (and more n for the lower constrained land). n support rarely
Recent policy responses Some responses taken by dev try governments have not be to longer-term growth. An F policy responses by 81 deve to the 2006–08 price spike sh large majority of countries ary measures that could und tural productivity over the 1.6). Nearly 70 percent of trade policy instruments, s in import tariffs and expor to reduce domestic prices. trade policy instruments wi measures, such as reduction release of stocks at subsid price administration, to lo all consumers at the expens Half of the country sample to mitigate the impact of r the most poor and vulnerabl ing domestic prices to rise supply response. Where loca reduced, governments often to producers in compensatio output price, but productio
TABLE 1.6 Policy measures adopted in 81 selected countries in response to 2006–08 price spike Regions (numb er of countries surveyed) Latin America Policy measures 6) (22)
Africa (33) Overall (81) 18 8 14 13 10 12 6 4 4 6 5 4
Trade policy Reductions of tari s and customs fees on imports 12 43 Restricted or banned export 4 25 Domestic market measures Suspension/reduction of value added or other taxes 4 23 Released stocks at subsidized prices 7 35 Administered prices 5 21 Production support Production support 12 35 Production safety nets 5 15 Fertilizers and seeds programs 3 9 Market interventions 2 15 Consumer safety nets Cash transfers 8 23 Food assistance 5 19 Increase of disposal income 4 16 Source: Demeke, Pangrazio, and Maetz 2009.
13 13 5 15 6 11 4 2 9 8 9 8
POVERTY AND FOOD PRICE DEVELOPMENTS GLOBAL MONITORING REPORT 2012
TABLE 1.7 Fiscal implications of policy responses to 2006–08 price spike, selected countries Russian Fiscal costs India Indonesia Federation South Year Africa Argentina Brazil Ukraine Vietnam Chile China 436 7,813 0.1 1.7 1 11 1 24, 5,
Total ?scal costs 2007 273 644 –32 786 (US$, millions) 2008 000 2,095 2,309 1,849 Share of ?scal 2007 3.8 0.8 0.0 0.9 revenue (%) 2008 9.1 2.1 0.6 2.4 Fiscal cost per person 2007 12 6 0 27 (international $, PPP) 2008 55 16 22 67 Source: Jones and Kwiecinski 2010. Note: PPP = purchasing power parity.
49 743 0 79 48 –122 2,394 56 246 242 0.1 0.2 0.0 0.2 0.3 –0.1 0.6 0.1 0.6 1.0 3 5 0 4 2 –5 16 5 10 7
has been large enough to fully make up the on a county’s initial macroeconomic conloss from lower output prices. dition and thus its ability to expand public The ?scal costs of policy responses have expenditure programs or provide tax incenvaried, depending on the mix of instruments tives without jeopardizing ?scal sustainabilused. Brazil and Chile, for example, focused ity. Hence, the content of the policy intervenon safety nets to protect vulnerable consumtions chosen will be roughly the same from ers. The additional ?scal cost involved was country to country, but the sequencing and 0.1 percent of total fiscal revenue in Chile priority given to each intervention and its and 0.6 percent in Brazil in 2008 (table 1.7). magnitude will differ. In South Africa, which followed similar poliA policy mix should contain a combinacies, the ?scal bill of 2.4 percent of revenues tion of short-term measures to alleviate the was larger because of smaller total ?scal revimmediate hardship on the poor and vulnerenues and the larger number of bene ?ciaries. able and long-term measures that address India, which provided short-term stimulus to the main bottlenecks to the functioning of food and fuel price spikes, incurred the largthe domestic food markets and pro ?tability
est ?scal response cost. In most other emergof farmers. In the short term, much depends ing economies, the ?scal cost of response was on the ability to alleviate immediate poverty about 0.5 percent of total budget revenues. implications of higher food prices through social safety nets and efforts to increase agricultural production quickly. Over the long Sustainable policy responses term, policies should focus on limiting the The most appropriate policy mix to address average rise in food prices and food price the implications of higher and more volatile volatility. food prices is determined by the characteristics of each individual country. The chosen Measures to reduce the negative policy mix at the country level depends critiimpacts on food security in the cally on how much of a country’s food needs short term to be imported, how much of their income the poor spend on food, and the socioecoGovernments will need to consider the difnomic characteristics of the poor affected. It ferent implications for the various socioecodepends equally on a country’s integration nomic groups when designing an effective with regional and world markets, its level of policy response. While various policy actions productivity compared with what is achievcan be instigated to prevent future food price able, and its government’s capacity to target spikes, measures to mitigate the immediate the poor and vulnerable through mitigating adverse impacts can and should be taken to interventions. In addition, much is contingent protect the poor and vulnerable. However,
GLOBAL MONITORING REPORT 2012 E DEVELOPMENTS 47
POVERTY AND FOOD PRIC
various socioeconomic groups are affected -term employdifferently, and any policy actions taken e mechanisms should be informed to the extent possible by aused by a food information about the groups most affected. e functioning Even though lower taxes can lower food ve than food in costs to consumers, they are often not well eave poor peotargeted, and consequently large amounts of en food marscare public resources ow to higher-income where prices consumers. In addition, the choice of actions ransfers may be in the short term should not undermine sting the poor longer-term farm incentives to invest and h or foodproduce more; both export bans and ad infrastruchoc provision of inputs can have deleterious ons for future effects on farm incentives. to develop The urban poor are usually net consumlected (such as ers of food and have little opportunity to ad prepared increase subsistence food production. Hence, ms and instiassisting the urban poor depends almost better posientirely on social safety net programs. Howhan those that ever, national programs are often oriented to -income counrural areas, where the share of the poor in programs are the population is commonly higher (Baker better placed 2008). At the same time, the urban poor ood price shock often live in informal settlements and are hough such more transient than the rural population, g adopted by and therefore expected economies of scale with urban social safety net programs are not afety net proalways realized. risis depends
cash transfers, offering short ment, and discouraging negativ for coping with the setbacks c price crisis. Where markets ar well, cash may be more effecti providing assistance but may l ple exposed to price risks. Wh kets are functioning poorly, or are increasing rapidly, food t a more effective means of assi and vulnerable (WFP 2008). Cas for-work programs that develop ture should consider implicati maintenance, and opportunities skills in the types of work se road paving). Countries that h permanent social safety progra tutions during good times were tioned to scale up as needed t had not (box 1.7). Thus middle tries, where social safety net relatively common, were often to support the poor during a f than low-income countries (alt programs are increasingly bein more low-income countries). Using an effective social s gram to address a food price c
Female-headed households are more vulxist and the nerable. Women are in general more vulnerishing a single able to economic shocks, and various genderbe a priority based vulnerabilities, including extensive time le in a middleburdens, limited legal benefits and protecy be ensurtion, and limited access to ?nancial resources dinate well (World Bank 2011e), make female-headed identi ?ed and households even more vulnerable. Policies to ularly femalehelp female-headed households and women n poor (box in general weather a food price crisis must various be tailored to the speci ?c socioeconomic and ver the past cultural context in which gender relations ng weakunfold. For example, food-for-work prosocial safety grams could scale up lighter tasks suitable for s’ income level. women, and conditional cash transfers could ouble with provide higher bene ?ts to girls, who are more as needed, likely to be kept out of schools. en lacked povSocial safety nets have a vital role to play m the choice in coping with food price shocks. Social net program and safety nets can be used to protect the poor bene ?ts. Proby providing conditional or unconditional overty are not
on the programs that already e capacity on the ground. Establ social safety net program may in a low-capacity setting, whi income country the priority ma ing that different programs coor with each other and target the intended beneficiaries, partic headed households and the urba 1.8 and World Bank 2011b). The food, fuel, and ? nancial crises o
decade have underlined remaini nesses in the effectiveness of nets, which differ by countrie Middle-income countries had tr increasing coverage or benefits while low-income countries oft erty data and systems to infor of a particular social safety of ways to target and deliver grams that deal with chronic p
48 POVERTY AND FOOD PRICE DEVELOPMENTS GLOBAL MONITORING REPORT 2012
Ethiopia’s food security programs
Home to 79.1 million people, Ethiopia has achieved onors adopted both ? nancial mansteady, two-digit economic growth in the past few rement frameworks, on top of the years, lifting many out of poverty. However, with a system, to ensure that the programs growing population, inadequate infrastructure, low . To date, with the help of the donor agricultural productivity and recurring droughts, e PSNP covers 8.3 million people floods, and land degradation, 15 million people cts. remain poor and vulnerable to food insecurity. In the past two decades, emergency food aid dominated essons. Since the beginning, the responses to food insecurity in Ethiopia. Yet such o be instrumental in supporting aid was often unreliable, arrived late at a daunting ion, protecting household assets, cost, and focused on immediate relief assistance at unity resources. From 2005 to the cost of improving overall livelihoods. In response entions enabled 75 percent of tarto the growing consensus on the need for reform, to consume more or better quality the government decided to launch the Food Security to avoid selling assets; 23 percent Program in 2003, composed in part of a Productive sets; 46 percent to use more health Safety Net Program (PSNP) and a Household Asset ent to send more children to school. Building Program (HABP). experience proves that a safety net income setting can be implemented The Productive Safety Net Program (PSNP) izations and have multiple funding The PSNP aims to improve food security by providalso demonstrated that predicting short-term transfers that help prevent asset deplers are key determinants of a cash tion at the household level and by creating assets at impact; that the sustainability of the community level to ensure against unpredictable rams depends on local manageshocks. The program consists of two components: all, that there is political will and direct transfer support and labor-based public works. away from one-time humanitarian The direct support program provides predictable and
Soon after, the d agement and procu single monitoring are kept on track organizations, th across 318 distri Achievement and l PSNP has proved t bene ?ciary consumpt
and building comm 2009, PSNP interv geted households food; 62 percent to acquire new as care; and 39 perc Overall, the PSNP program in a lowby multiple organ streams. The PSNP able cash transfe transfer program’s public works prog ment; and, above capacity to move response programs
, to more sustainable developmenttimely cash and food transfers to chronically foodtions. insecure households and extends the option of participating in community work (in child-care centers et Building Program (HABP) and nutrition education). The public works program help households graduate from is focused on creating sustainable community assets, ssist recent graduates. Within the mainly aimed at rehabilitating environmentally is considered to have graduated degraded areas and developing watersheds, with the ood suf ?cient; that is, when, in the core objective of increasing productivity and providing transfers, the household is able ing sustainable livelihoods. needs for 12 months and withstand The PSNP was launched by integrating existing erall, the HABP program seeks government agencies and entrusting them with prome sources and increase productive gram implementation. Importance was placed on secure households that are, or have capacity-building initiatives within the agencies, in ries. It focuses on facilitating addition to creating horizontal links to avoid formeholds’ access to on- and off-farm ing parallel structures. At the same time, 10 donor y, and ? nancial services in order to organizations agreed on a harmonized governmentprogram. engagement model, by forming a joint coordination committee to oversee the programs’ implementation. country teams.
oriented interven The Household Ass The HABP aims to the PNSP and to a HABP, a household when it becomes f absence of receiv to meet its food modest shocks. Ov to diversify inco assets of food-in been, PSNP bene ?cia the bene ?ciary hous
inputs, technolog graduate from the Source: World Bank
GLOBAL MONITORING REPORT 2012 D PRICE DEVELOPMENTS
POVERTY AND FOO 49
Building foundations for social safety net systems
While many of the initial experiences with safety nets ination and pooling of resources are involved ad hoc responses to crisis, it has become especially in low-income settings. clear that building effective safety nets within a oordination depends on countries broader social protection system is essential. Critical g the lead in creating joint processes building blocks for an effective system include: trategies and programs, as well as rs to harmonize their policies. • Identi ?cation: Mechanisms to identify eligible benmanagement systems, periodic eficiaries and promote empowerment should be formance indicators, independent established. ts, targeting and process evalua• Targeting and eligibility: Simplified approaches anisms, community monitoring, drawing on available information, bearing in mind urveys are all tools that can be used costs, should be used. tual con ?dence between government • Enrollment: Either a census-style survey or an ondemand system may be used effectively. Each can transparent systems help ensure be appropriate at different stages of program develeness and sustainability. The rapid opment, or they can be used simultaneously. ety nets has spurred the need to • Timely payments: New technologies can help, but effective use of public funds. It simple, traditional systems can also work. de ? ne clear roles for each institution • Monitoring and evaluation: Basic monitoring sysprivate, and donors) in coordinatems should be established, as a foundation for on of social protection reform, taking immediate impact evaluation and to establish the on capacity levels and political weight. database required for future evaluation. ents for promoting transparency and re: Financial sustainability is a key issue, because programs usually have external ?nancing for only a short ccountability measures are period of time without a guaranteed government budtop down and bottom up.
successful coord not very common, Successful c themselves takin for developing s encouraging dono Sound public reviews with per procurement audi tions, appeal mech and perception s to strengthen mu and donors. Credible and program effectiv expansion of saf ensure ef ?cient and is important to (including public, tion and executi into considerati Critical ingredi accountability a • Strong controls: A required from ?nancial
get for the longer term. The high level of fragmentaactors should understand how they tion of sources of ?nancing and programs make planand their responsibilities. Local ning and budgeting more complicated, and hinders vate organizations, and social funds domestic ownership of social protection programs. d to enhance strong governance. Donors have attempted to address these challenges d rules: Clear operational guidethrough new aid modalities that move away from e disseminated to all actors. fragmented project aid toward general budget support and sectorwide approaches. However, examples of nk 2011a.
• Clear roles: All ?t into the system community, pri can all be use • Well-communicate lines should b Source: World Ba
necessarily well suited to address the tranisis without costly sient impact of shocks on the poor (Alderks. man and Haque 2006). Existing social safety he agricultural supnets provide a basis to scale up implementaming season can tion and coverage in the event of excess need. l impacts of price Relatively small-scale programs may provide Targeted input supthe administrative infrastructure, including lity of smallholders the rules of operation and eligibility, that can inputs works best
be adapted to a major cr implementation bottlenec Actions to increase t ply response in the upco help reduce interseasona spikes on food security. port can enhance the abi to respond. Provision of
POVERTY AND FOOD PRICE DEVELOPMENTS GLOBAL MONITORING REPORT 2012
when it mobilizes the private sector (through by almost one-sixth in Malawi and Ghana vouchers, for example) and is complemented (World Bank 2011e). by reductions in logistical overheads, especially in ports and on roads. Anticipating Measures to address the drivers of and enlisting policy support for dealing with higher and more volatile world food potential bottlenecks that restrict delivery of prices in the long term inputs to national borders are essential. In addition, demand estimates for fertilizer and Demand- and supply-side responses can seeds need to be periodically reviewed in an help to reduce future food price escalaenvironment of rapidly changing inputs prices tion. Responses are needed today at global, to prevent waste from overestimates and conregional, and local levels to have the anticistrained impacts from underestimates. Meetpated impact in the long term. While the ing these requirements is key to generating global supply of cereals has outgrown aggrevalue for money from public expenditures on gate demand during the past eight years (see inputs. table 1.5), and while a few of the large and Agriculture can contribute to gender technology-intensive exporters, such as the equality by improving access to economic United States, retain signi ?cant capacity to opportunities for women, which also would expand production in the near- to mid-term, increase agriculture productivity. Women ensuring sustainable supplies of food at the now represent 40 percent of the global labor local level requires improvements in agriculforce and 43 percent of the world’s agricultural productivity and facilitation of trade in tural labor force. Productivity will be raised and among developing and developed counif their skills and talents are used more fully tries (table 1.8). Measures include promoting and through projects that are gender sensiincreased yields through research, extension, tive in both design and implementation. The and improved water management; improving FAO estimates that equalizing access to prothe ef ?ciency of land markets and strengthductive resources between female and male
ening property rights; addressing biofuel farmers could increase agricultural output in mandates and improving cost-efficiency of developing countries by as much as 2.5 to 4 biofuels technologies; increasing farmers’ percent. For example, if women farmers were access to ef ?cient tools to manage risk; and to have the same access as men to fertilizers increasing the integration of domestic with and other inputs, maize yields would increase world markets. Policies that would limit TABLE 1.8 Main measures to limit the growth and volatility of world cereal price s Measures to reduce price volatility Measures to reduce average price escalation Short-term changes in supply -term change in supply Short-term change in supply Long-term supply responsiveness responsiveness to prices to prices • Development of more • Trade openness rop yields • Better use of price risk weather-tolerant varieties oved water management management tools oved (rural) investment imate including through: proving access to ?nance • Strengthened market cl integration, including – Im infrastructure and private-sector – Fa cilitating land markets Short-term changes in demand -term change in demand development Long Short-term demand responsiveness Long-term demand responsiveness to prices to prices • Increased transparency of • E cient food reserve market-based biofuels • Shifts to market-based biofuels agricultural markets management licies and promotion of more policies and promotion of more ent technologies e cient technologies Source: World Bank 2012b, forthcoming. Long
• Raised c • Impr • Impr
• Shifts to po e ci
GLOBAL MONITORING REPORT 2012 CE DEVELOPMENTS 51
POVERTY AND FOOD PRI
food price volatility include the development f high and volaof weather-tolerant price varieties, increastargeted to the most ing the size and improving the management , using stocks of stocks, opening markets to trade, and rice stabilizaimproving market transparency. of their high t interest, Several actions can directly address volatility l storage losses, Public investment to develop more weatherrotation) and tolerant varieties can be increased. Weathertives to (gentolerant crop varieties can reduce food proctor storage duction and price shocks. Many studies have found that use of drought-resistant maize ets can divervarieties can increase yield by as much as cks, thus dissi40 percent under drought conditions in Subfects. Price insuSaharan Africa. Similarly, breeding millet world markets to and sorghum for drought resistance has prorriers imposed duced yield improvements of as much as 50 food price percent. Substantial room also remains for rade is even research on transgenic methods to improve s are low, the drought resistance of crops in semi-arid enter markets regions. Transgenic drought-resistant maize protection varieties are found to yield up to 20 percent countries (parmore than nontransgenic drought-resistant like Argentina, varieties (Kostandini, Mills, and Mykerezi e) would 2011). Transgenics is indeed an underutilized strictions when technology for poverty reduction. Because alysis of the of the potential risks involved, however, it trade policy should be implemented only in situations nment poli-
alleviating the consequences o tile prices, if they are well vulnerable people. In contrast as an instrument of domestic p tion has proven dif ?cult because costs—both ?nancial costs (implici
hidden quality losses, physica and transaction costs of stock ef ?ciency costs through disincen ?cient) private-se
erally more ef
and trade (Dorosh 2009). Open trade across all mark sify short-term production sho pating the associated price ef lation reduces the ability of dissipate shocks, and trade ba in 2007–08 acted to amplify the spike rather than reduce it. T more important when food stock because more countries need to as net buyers. Improved social policies in net-food-exporting ticularly for large exporters Kazakhstan, Russia, and Ukrain reduce pressures for export re food prices rise. Continued an likely gainers and losers from changes would help guide gover
where international biosafety standards are in place. y would Public food grain stocks can be used effecthe associated tively to reduce domestic and world food ing revisions to price volatility. Sufficient stock levels can , stocks, and reduce the likelihood of price spikes, and ate monitorgood management, particularly of purchases ice spikes. The and releases, can reduce rather than amplify national providvolatility. But stocks always cost money, , public as well which can be as high as 15–20 percent annuvelopments ally of the stocks. Costs are high, while benurate informae ?ts in terms of price stability and economic urity should growth are realized only when stocks are well in this direcmanaged (World Bank, 2012c, forthcoming). he Agricultural Further technical and consistent guidance to S).8 AMIS national governments on costs and bene ?ts, multilateral levels, and use of food stocks is needed. leverage their Small emergency public food grain e comparative reserves, at the national and regional levels, ferent organirelated to the consumption needs of the most t-term agriculvulnerable, have an important role to play in lyses of global
cies and trade negotiations. Greater market transparenc reduce market uncertainty and large price corrections follow market information (production trade). Clearer and more accur ing can help to reduce food pr capacity of international and ers of food market information as private, to monitor market de and disseminate timely and acc tion on food prices and food sec be strengthened.7 A good step tion is the establishment of t Market Information System (AMI is a major partnership effort of international organizations to scarce resources and to use th advantage and expertise of dif zations to improve global shor tural forecasts and policy ana
52 POVERTY AND FOOD PRICE DEVELOPMENTS ITORING REPORT 2012
production, trade, stocks, and price develAn important part of this opments; and to promote early information aptation of high-yielding exchange and discussion on crisis prevention istance to biotic (pest and and responses among policy makers through ic (climate change) stresses; a Rapid Response Forum. More efforts are ility through crop rotations needed to ensure that better market informaof organic and inorganic tion is shared and used for agricultural policy tter integrated management decisions. Initial commodities to be tracked , and weeds in conjunction are wheat, rice, maize, and soybeans. ater management (FAO ary investments will be Measures to reduce average world food price lign extension services with escalation lemented with better use A broad range of actions is needed across communication technoloboth developed and developing countries to e of matching grants for reduce pressures on food prices. Developedn, and strengthened seeds country policy reforms would likely reduce kets. average world food price increases (with improved and sustained higher world food prices from tariff and an enhance the returns subsidy reforms (World Bank 2007) being other soil and crop manageoffset by lower prices from biofuel policy eater attention is needed to reforms). Middle- and low-income counwater management practries can play a signi ?cant role in the supply use associations; incorresponse, enhanced by improved policies and r river basin management investment in productivity growth. Middleved use of shared waterincome countries including Argentina, Brazil, support for cooperation Uruguay, Kazakhstan, Russia, and Ukraine riparian states on the use have significant potential for productivity s. Expanded irrigated areas
has been lagging. agenda includes ad varieties with res disease) and abiot improved soil fert and judicious use fertilizer; and be of pests, diseases with more ef ?cient w
2011c). Complement needed to better a farmers’ needs, supp of information and gies, increased us technology adoptio and fertilizer mar Investments in water management c to investments in ment practices. Gr ensure sustainable tices through water poration of broade aspects; and impro courses, including between different of scarce resource
gains and have accounted for a larger share ?ciency of existing of recent global food exports. With macroeeded, as is better water economic stability, lower con ict, and lower prevention at both ?eld agricultural taxation, agricultural growth vels. In Africa, a lower share itself and its potential growth in Africa is is irrigated, leaving its food also improving. But more is needed, particuable to climate risks. With larly through more and better public and pricted to increase, it is imporvate investments. tage of higher food prices Closing the gap between average farm pro ?tability of irrigated and experimental food crop yields can tain better water managegreatly contribute to a solution to regional ction through investment and global food security. More and better thus the higher productivity public and private investments are needed to ility that irrigated producincrease adoption of improved technology, e. to generate new and improved technologies, to induce a private-sectorto improve agricultural water management e may need improvement and the ef ?ciency of irrigated areas, and to imate. To orchestrate a increase economies of scale in farm producach country will need to tion and processing though private-public ivate sector can take advanpartnerships. This agenda is particularly prices. Issues that often relevant for countries and regions, such as nvestment climate include Sub-Saharan Africa where yield gaps are and) property rights, varilarge and adaptation of new technologies registration requirements, use ef
and improved water schemes are both n control and erosion and river basin le of cultivated land system more vulner climate risks expe tant to take advan and thus improved agriculture, to at ment in food produ in irrigation, and and reduced variab tion systems enabl Public actions led supply respons in the investment cl supply response, e ensure that the pr tage of the higher affect a (rural) i access to ?nance, (l
ous licensing and
GLOBAL MONITORING REPORT 2012 CE DEVELOPMENTS 53
POVERTY AND FOOD PRI
sector specific regulations, and taxes and increased access tax administration. Addressing these potenancial assistial bottlenecks will reduce the cost of doing an potentially business and increase competition. mote equality. Access to finance can greatly improve ultural regions farmers’ ability to take advantage of higher ural disasters, prices and improvements in the country’s Indonesia. economic policy environment and economic be generated infrastructure. However, because most rural forms; increased households lack access to reliable and affordy or informal able finance for agriculture, the improved administration; economic environment does not automatiocially managecally translate into higher private investment. n and reduction Many small farmers live in remote areas te resolution where retail banking is limited and production risks are high. The recent ? nancial and promotcrisis has made the provision of credit even es can reduce tighter and the need to explore innovative industrial purapproaches to rural and agricultural ?nance s account for even more urgent. fuels producFacilitating land markets can expand the 7 percent of areas sown to food crops and improve yields. States, the largest Land sales, more ef ?cient rental markets, and t into making strengthened property rights can improve the .9 Policies to proproductive ef ?ciency of existing land areas p production and make better use of remaining areas availbiofuels storage, able for crop production. Secure property tes, import rights are also a prerequisite for land consolihese policies have
rural poverty. In such cases, through targeted programs of tance to enter land markets c increase productivity and pro Land programs also help agric to rebuild after con icts and nat such as in Sri Lanka and Aceh, Signi ?cant gains can therefore from land policy and legal re security of existing customar land tenure; modernized land land redistribution through s able processes; and preventio of land con icts through dispu mechanisms among other means. Reducing biofuels mandates ing more efficient technologi escalation in food demand for poses. The six largest producer about 95 percent of world bio tion. In 2010–11 an estimated 3 all maize used in the United user of maize for biofuels, wen ethanol (Trostle et al. 2011) mote biofuels have included cro subsidies, infrastructure for blending and production manda duties, and tax incentives. T ?n
dation where it is needed. Attention is needed ethanol worth to ensure responsible agro-investment from tates and $0.60 a foreign investors and to secure the land rights biodiesel, $0.20 of poor farmers. Increased foreign investliter in Switzerments may spur agricultural productivity e biofuels offer a growth, ?scal revenue, employment, and local possible large incomes, but may also result in local people producers, curlosing land on which their livelihoods depend mixed record (Deininger et al. 2011). Capacity strengthent subsidies.11 ing is needed to ensure that the terms and rresponding conditions of land deals enable local (farmvernment reguing) communities to seize opportunities and of the solution mitigate risk. tion. Removing Strengthening property rights, particuse demand for larly for poor farmers can improve the use of s production can existing cropped areas. Making land rights among fuel, more transferable increases investment incenional markets tives and allows access to land through sales, production of rental markets, or public transfers. In some conomically, envicountries, particularly in Latin America and tainable to do southern Africa, inequality in land ownerime, countries ship often leads to underuse and deep-rooted w technologies
provided overall support for $0.28 a liter in the United S liter in Switzerland, and for a liter in Canada and $1.00 a land (Steenblik 2007).10 Whil source of renewable energy and new markets for agricultural rent biofuels programs have a of financial viability withou Because ethanol demand and co prices have been raised by go lation, deregulation is part to reducing food price escala both nonmarket actions to rai biofuels and subsidies for it reduce competition for grains food, and feed. Open internat should be encouraged so that biofuels occurs where it is e ronmentally, and socially sus so (G-20 2011). At the same t should focus on generating ne
54 POVERTY AND FOOD PRICE DEVELOPMENTS ITORING REPORT 2012
that need fewer agricultural commodities to nologies, and improve produce biofuels. ost-harvest storage to Ensuring a food supply response to higher ses. In addition, investprices, and greater participation of smalls logistics and distribution holder farmers in this supply, requires better ough private-public partuse of price risk management tools to reduce itate trade, lower costs, and uncertainty. Earlier analysis showed that t waste. Strengthening the developing-country crop supply response f smallholder farmers— declined signi ?cantly when price instability gh their producer doubled, but that use of risk management help further reduce transtools (such as precautionary savings and ove economies of scale, and access to ?nancial services) reduced the negaem to markets. tive impact of price volatility on production will help both small and decisions. Improved farmer access to price er, the sector dominated risk management tools can help ensure supll require more public ply response to higher prices (help prevent a ernment than the sector decline in the price elasticity of supply) (box r farms. This is because 1.9). Improving access of smallholder farmer gricultural services to small and microenterprises to ?nancial services for nificant coordination agriculture and food retail through direct s high transaction costs service provision, market facilitation, and an ctor. While large farms need improved enabling environment will likely nvironment to facilitate have a broader impact than would improving important production and access to more formal price-hedging instruservices (capital, inputs, ments (such as commodity exchanges or et knowledge, marketing warehouse receipts). Traders have typically own, various public interused formal hedging instruments more than required to ensure that these
communication tech technologies for p reduce product los ing in agribusines infrastructure thr nerships can facil reduce post-harves bargaining power o especially women—throu organizations can action costs, impr hence better link th These measures large farms. Howev by smallholders wi goods from the gov dominated by large the provision of a farmers presents sig challenges and thu for the private se a basic enabling e access to the most marketing support technical and mark contacts) on their ventions are still
farmers, although basis risks (price correladed to smallholders, includtion between domestic markets and the clos-private partnerships. This est futures market) are often too high to jusenging but has high pay-offs. tify their use. These risks can be lowered, but doing so often requires complementary longterm investment in transport infrastructure. ns of higher Better market integration ensures that
services are provi ing through public task is more chall
Poverty implicatio agricultural produ ctivity in world price signals reach more producers and thus induce a supply response, thereby s and price volatility are increasing the responsiveness of the food igh. Official forecasts system to price increases. By linking farmmental factors will keep ers more closely to consumers, marketing er than pre-2007 levels systems can transmit signals to farmers on rm (G-20 2011; World new marketing opportunities and guide their erated use of food crops production to meet consumers’ preferences. ses (biofuels) continues to Strengthening the links between local supof slowing population growth pliers and food retailers can help to provide d production gains may locally produced goods at more competive in the future, with more tive prices. Consequently, public and private area expansion, declining investments are needed to expand the reach increased weather variabiland quality of rural roads, improve the collatility will likely continue lection and dissemination of market inforks remain low and the low mation, including through information and the food system ampli ?es developing world Agricultural price likely to remain h suggest that funda global prices high over the medium te Bank 2011b). Accel for industrial purpo offset the effect on food demand. An be harder to achie limited space for yield growth, and ity. High price vo because world stoc responsiveness of
GLOBAL MONITORING REPORT 2012 PRICE DEVELOPMENTS
POVERTY AND FOOD 55
BOX 1.9 Managing supply and price risks for maize in Malawi
High international and regional prices have created seven months—for example, until an export opportunity for Malawi. But these higher government would then have had prices can also translate into higher risks if the counrchase the maize at an agreed price try experiences grain shortages. One strategy to cope am and to use this maize to resolve with these risks is to strengthen domestic market ply shortages. Such as step would demand and stockholding with a repurchase option any rise in retail grain prices dur(REPO) deal. REPOs involve agreements between on. It also would have contributed to government and banks or grain traders for the bank e volatility seen that season (MK 14 or trader to purchase maize during the harvest season y, but MK 35 in January and Febru(June/July), hold stocks in the country, and later sell ly, the government could have simply these stocks to the government at a pre-agreed price to be exported. on a stipulated date in the future (such as January/ and similar supply/price manageFebruary) if the grain is needed. If the grain is not nto a toolbox of complementary needed, the bank or trader would expect to export it trategies designed to reduce price to neighboring countries. trengthen domestic markets. Other The REPO contract offers Malawi several advanfollowing. tages that contribute to price and supply stabilization. can provide funding for imports • The contract has a stipulated grain purchase price evere production shortfalls associthat can be used as a reference point for any purht. Index-based weather insurance chases by Malawi’s agricultural marketing agency. sure individual farmers, guaranThe additional demand for grain created by this income in the event of a drought. deal would help support a floor price at harvest pts initiative can improve the time. d quality of warehouse facilities • Malawi could more readily take advantage of reduce grain storage losses, and regional grain demand by encouraging exports—
Malawi for up to January 2008. The the right to repu of MK 25 a kilogr any localized sup have helped limit ing the lean seas reducing the pric a kilogram in Jul ary). Alternative allowed the grain The REPO deal ment contracts risk management s variability and s tools include the • Weather insurance in the event of s ated with droug can be used to in teeing them an • A warehouse recei availability an for grain trade, improve the avail ?t i
ability of ?nance for the market. with the knowledge that the country would mainrket information system can tain adequate stocks for its own requirements. ransparency and alert traders to This, again, would contribute to the strengthening or moving grain from surplus to of producer prices. • The REPO would create a second layer of grain stocks in the country held in complement to the ork has yielded valuable lessons holdings of the Malawi’s National Food Reserve o hedging food prices. Lessons Agency. Depending on how the deal was managed, wing. this could encourage a broader range of traders to hold grain stocks in rural areas. The stipulations of are not focused on ex ante the contract would ensure these stocks were mainood price shocks and are not tained in good condition. isk as a contingent liability with ?s• Finally, the grain would be readily available in the country if the next cropping season started poorly. If ot have funds to cover hedging stocks appear adequate in the country, and the next n range from 7 to 12 percent of the season starts well, this grain can then be exported. tected. ften reluctant to make hedging As an example, in May 2007 a repurchase option use they are vulnerable to ex post (REPO) deal would have provided financing for a associated political risk). purchase of up to 150,000 metric tons of maize in f technical capacity to manage July at a price of MK 18–19 a kilogram. The governin many countries. ment would have had to pay a premium of MK 3.4 a kilogram for a bank or trader to hold these stocks in rbach, and Syroka 2007.
• A strengthened ma improve price t opportunities f de ?cit regions.
Ongoing Bank w about constraints t include the follo • Many governments management of f assessing the r cal implications. • Governments may n costs, which ca price level pro • Governments are o decisions, beca criticism (and • There is a lack o hedging programs Source: Dana, Roh
POVERTY AND FOOD PRICE DEVELOPMENTS GLOBAL MONITORING REPORT 2012
BOX 1.10 Linking changes in productivity and climate to poverty: the use of Env isage and GIDD for long-term scenario building
The long-term scenarios described in this chapter are g land and natural resources (in the based on the World Bank’s Envisage model with a ors), and a split between unskilled and dynamic core that is essentially a neoclassical growth s. model. Aggregate growth is driven by assumptions he Envisage model has been developed regarding the growth of the labor force, savings and ated assessment model with a fully investment decisions (and therefore capital accumulatween economics and climate change. tion), and productivity. ity generates greenhouse gas emisThe Envisage model has a considerably develisage model accounts for the so-called oped structure (see van der Mensbrugghe 2010 for a on (C or CO2), methane (CH4), detailed description of the model). First, it is multisec(N 2 O), and the fluoridated gases toral, which allows for complex productivity dynamenhouse gas emissions are added to ics including differentiating productivity growth tock of atmospheric gases, which also between agriculture, manufacturing, and services terrestrial and oceanic stocks, leading to and picking up the changing structure of demand ospheric concentration. The changes (and therefore output) as growth in incomes leads to a concentration convert into changes relative shift into manufactures and services. Second, orcing that in turn drive changes in it is linked multiregionally, allowing for the in uence erature. The Envisage model closes of openness—through trade and ?nance—on domesclimate and the economy by tic variables such as output and wages. The model is climate signal as summarized by the also global, with global clearing markets for goods mperature into an economic impact. and services and balanced ?nancial ows. Third, the odel has a 2004 base year and Envisage model has a diverse set of productive facGlobal Trade Analysis Project (GTAP)
tors, includin fossil fuel sect skilled worker Finally, t into an integr closed loop be Economic activ sions. The Env Kyoto gases—carb nitrous oxide (F-gases). Gre the existing s interact with changes in atm in atmospheric in radiative f atmospheric temp the loop between the converting the global mean te The Envisage m relies on the
price spikes. If the declining responsiveness ment and facilitates access to ? nance of demand with per capita income growth riculture. To illustrate the potential is not offset by higher supply responsiveness, of these improved policies, we develop than the amplitude of a price spike during a enarios: a baseline scenario consistent shock will likely be higher. Policy responses f ?cial forecasts; and an alternative scematter; they can either amplify or dampen that involves a doubling of agricultural price spikes and either prevent or increase the tivity growth in developing countries likelihood of price spikes. ve to the base line, to about 2 percent Increases in yields and improved climate ly (as estimated by Martin and Mitra resilience, particularly in low-income counBoth scenarios take into account the tries, would reduce the average increase in uences of growth and productivity food prices, the likelihood of price spikes, ements on climate change and vice and the poverty impact of shocks that do The rise in productivity in the alterhappen. Improved agricultural productivity scenario reduces international cereal is critically dependent on government supby an average of 4 percentage points port for infrastructure, research that leads base-case levels. As compared to the to improved climate resilience, and extenine, global agricultural output would sion, as well as on the establishment of an se by another 7 percentage points and incentive framework that encourages private cereal production by also an additional
invest for ag impact two sc with o nario produc relati annual 1999). conseq enhanc versa. native prices below base l increa global
GLOBAL MONITORING REPORT 2012 FOOD PRICE DEVELOPMENTS
POVERTY AND 57
BOX 1.10 Linking changes in productivity and climate to poverty: the use of Env isage and GIDD for long-term scenario building (continued)
database to calibrate initial parameters. Productivity on model, takes into account the macrois derived by a combination of factors. First, agriculre of growth and of economic policies tural productivity is aligned with the International croeconomic—that is, a household and Food Policy Research Institute’s model assumpion. The GIDD includes distributions of agricultural productivity, that are based or 121 countries and covers 90 percent of on country- and crop-speci ?c crop modeling using ation. It is used to assess growth and the IMPACT model. At the world level, the average effects of global policies such as multilatgrowth in productivity over the next 15 years is proberalization, changes in agricultural projected to be around 1 percent a year, about half the d policies dealing with climate change, long-run recent historical average (see Martin and The GIDD also allows an analysis of Mitra 1999). The regional variation is somewhat narglobal income distribution of different rower than in the past, with the highest productivity scenarios and distinguishes changes growth in the Middle East and North Africa followed m shifts in average income between counby Sub-Saharan Africa. Productivity growth in manuanges attributable to widening disparifacturing and services is labor-augmenting only (both ountries. unskilled and skilled). The two are linked with pro-micro modeling framework described ductivity in manufacturing, which is assumed to be , the combination of Envisage and GIDD, higher than in services. The Envisage model assumes count the consequences of the policy that energy ef ?ciency improves autonomously by 1 h Envisage on the global income dispercent a year in all regions and that international h GIDD, so as to estimate their impact trade costs decline by 1 percent a year. erty. The Global Income Distribution Dynamics (GIDD), a global computable general equilibrium er Mensbrugghe 2010.
microsimulati economic natu and adds a mi individual—dimens tional data f the world popul distribution eral trade li ductivity, an among others. the impact on global growth resulting fro tries from ch ties within c The macro here, that is takes into ac simulations wit tribution wit on global pov Source: van d
2 percentage points, relative to their respecl production to consumption in 2010 tive 2025 outcomes in the base line (box 1.10 provides a description of the model used). Faster productivity growth in develope ing countries helps many net food importers.12 For example, in the alternative scea nario, Sub-Saharan Africa would become nd ca self-suf ?cient in cereals production by 2025,
FIGURE 1.5 Ratio of cerea and 2025 Latin America and th Caribbean Sub-Saharan Afric Middle East a North Afri Europe and Central Asi
a as would Latin America and the Caribbean and Europe and Central Asia (figure 1.5). ia The Middle East and North Africa region ific would decrease its dependence on imports of cereals. Only East Asia and the Paci ?c and high-income countries would experience a 0 0.2 0.4 0.6 0.8 1.0 1.2 drop in self-suf ?ciency in cereals production. Ratio of cereal production to consumption Higher productivity in agriculture in con2025: Alternative scenario 2025: Baseline scenario junction with climate change reduces over2010: Starting value all poverty further but not in all regions (table 1.9). Given the larger percentage of ge model.
South As East Asia and Pac High-income countries 1.4
Source: World Bank Envisa
POVERTY AND FOOD PRICE DEVELOPMENTS GLOBAL MONITORING REPORT 2012
TABLE 1.9 Poverty forecast, 2015–25 Notes Percent of population living on less than $1.25 a day, 2005 PPP 1. The World Bank Agriculture Price Index 2025 2025 Doubling of includes the food price index, plus cocoa, Baseline, coffee, tea, cotton, jute, rubber, tobacco, and including 2015 wood. East Asia and Paci 3.1 2. Focus groups and interviews were carried out ?c 7.7 3.0 climate change
productivity n developing Region countries
in 17 countries with respondents representing Eastern Europe and Central Asia 0.3 0.2 0.1 groups exposed to economic shocks, such as Latin America and the Caribbean 5.5 5.3 5.4 workers in export-oriented sectors, informal Middle East and North Africa 2.7 2.3 2.1 South Asia 23.9 14.8 11.8 sector workers, and farmers. The research Sub-Saharan Africa 41.2 34.8 33.2 explored to what extent and by what means Total 16.3 12.1 10.8 people were able to remain resilient against Source: Up to 2015: World Bank staff calculations from PovcalNet database; for 2 025: Envisage and the recent economic shocks. The data is GIDD. based on 13 countries for which the qualitative data permitted the authors to determine the importance of these coping responses. population active in agriculture in Africa and The countries were Bangladesh, CamboSouth Asia, the poverty headcount is reduced dia, Central African Republic, Ghana, in these regions by 1.6 and 3.0 percentage
Kazakhstan, Kenya, Mongolia, Philippines, points, respectively, taking possible adverse Serbia, Thailand, Ukraine, Vietnam, and effects of increased agricultural productivZambia. See Heltberg, Hossain, and Reva ity on climate change into account. Poverty forthcoming. increases marginally in East Asia and Paci ?c 3. Water use projections to 2050 suggest that the and in Latin America and the Caribbean water supply to some 47 percent of the world’s because fewer people are dependent on agripopulation, mostly in developing countries, culture, so increases in productivity do little will be under severe stress, largely because of to reduce poverty, and the adverse implicadevelopments outside of agriculture (OECDtions of climate change affect these regions FAO 2011). more than elsewhere. Latin America and 4. Both the FAO and the U.S. Department of the Caribbean is expected to be affected by Agriculture publish stock-to-use estimates. a reduction in tourism revenues, while East They re ect the difference between estimated Asia and the Pacific could face additional production and carry-over stocks on the one water stress (van der Mensbrugghe 2010). hand, and estimated consumption and trade These scenarios are intended to illustrate on the other. The stock-to-use measure thus the central role of increasing productivity in includes (conceptually) all commercial, publimiting food price increases. The projected lic, and household stocks, whether or not the productivity growth may not be achieved for stocks in question are actually available for numerous reasons, such as more-stringentinternational sale. than-expected limits on the availability of 5. Although Kazakhstan is located in Central productive land, the uncertainty concerning Asia, for grain exports it is often said to the impact of climate change, and the potenbelong to the Black Sea region because it uses tial lack of public investment and incentive the seaport facilities in Russia and Ukraine framework that encourages private investfor overseas exports. ments. Nevertheless, the scenarios do serve to 6. While export bans imposed by larger exportunderline the importance of government poliing countries with a readily available surplus cies that support increased productivity, both have a greater impact on global prices than in establishing an appropriate framework to export bans imposed by small producers, all encourage private investment and in providexport bans can affect markets by leading to ing direct support to the agricultural sector.
a perception of larger-than-actual shortages
GLOBAL MONITORING REPORT 2012 OD PRICE DEVELOPMENTS 59
POVERTY AND FO
and could result in beggar-thy-neighbor Brief 18, International actions. Institute, Washington, 7. Synergies should be explored with the monitoring of the social and poverty impacts of pecial Focus: Agriculcrisis in real time that serves social assistance East Asia and Pacific provision and other support. shington, DC 8. T he A M I S a nd t he asso ciated R apid Response Forum were launched by the French hallenge: A Presidency of the G-20 in Rome on September Asia. ? World Bank, Pov15–16, 2011. The Secretariat is housed at the omic Management, FAO in Rome. The participants of AMIS are ashington, DC. the G-20 countries, Spain, and seven develnd J. Syroka. 2007. oping countries, which together account for for Malawi Food more than 90 percent of world food producicy note, World Bank, tion and consumption. 9. Biofuel production through crops, like sugar Increases in Intercane, that do not directly compete with food s Been Transmitted to consumption, is likely to have hardly any (or he Experience in Seven no) impact on food prices. . ? UN FAO-ESA Work10. The United States abolished tax credits and . import duties for ethanol in December 2011. ev, D. 2011. “Poverty 11. The promotion of the use of biofuels by d Prices: A Global Persome governments has been driven in part velopment Economics by the intention to reduce dependence on fuel imports and generate environmental bene ?ts J. Lindsay, A. Norby replacing oil-based fuel with biofuels. Stickler. 2011. “Rising 12. The impact on agricultural productivity rmland: Can It Yield Susof climate change has been widely stude Bene ?ts? ? World Bank, ied and debated, and the results presented Development, Washingare surrounded by a significant amount of
? IFPRI Policy
Food Policy Research DC. Christiaensen, L. 2007. “S ture for Development, Update. ? World Bank, Wa (November). ———. 2011. “Rising to the Rice C Perspective from East erty Reduction and Econ East Asia and Paci ?c, W Dana, J., D. Rohrbach, a “Risk Management Tools Security. ? Internal pol
Washington, DC. Dawe, D. 2008. “How Recent national Cereal Price Domestic Economies? T Large Asian Countries ing Paper 08-03, Rome de Hoyos, R., and Medved Effects of Higher Foo spective. ? Review of De
15, no. 3: 387–402. Deininger, K., D. Byerlee, ton, H. Selod, and M. Global Interest in Fa tainable and Equitabl Agriculture and Rural ton, DC.
uncertainty. , and M. Maetz. 2009. he Food Security
Demeke, M., G. Pangrazio “Country Responses to t Crisis: Nature and Pr
eliminary Implications of References FAO Initiative on SoarAhmed, S., and H. G. P. Jansen, eds. 2010. Man. aging Food Price Inflation in South Asia. abilization, InternaDhaka: University Press Limited. onal Cereal Stocks: Alderman, H., and T. Haque. 2006. “CounterPolicy Response in cyclical Safety Nets for the Poor and Vulnerity 1: 137–49. able, ? Food Policy 31, no. 4: 372–83. ganization). Baffes, J. 2010. “More on the Energy/Nonenergy d Crop Situation. ? Price Link. ? Applied Economics Letters 17: 1555–58. ProgramBaker, J. 2008. Impacts of Financial, Food, and try Level to Address Fuel Crises on the Urban Poor. Washington, Initiative on Soaring DC: World Bank. Breisinger, C., O. Ecker, and P. Al-Riffai. 2011. licymakers’ “Economics of the Arab Awakening: From e Intensi ?cation of the Revolution to Transformation and Food uction. ? Rome.
the Policies Pursued. ing Food Prices, Rome Dorosh, P. 2009. “Price St tional Trade and Nati World Price Shocks and
South Asia. ? Food Secur FAO (Food and Agriculture Or 2011a. “Food Prospects an Rome (October). ———. 2011b. “Guide for Policy and matic Actions at Coun High Food Prices. ? FAO’s
Food Prices, Rome. ———. 2011c. “Save and Grow: A Po Guide to the Sustainabl Smallholder Crop Prod
60 POVERTY AND FOOD PRICE DEVELOPMENTS L MONITORING REPORT 2012
G-20 (Group of 20). 2011. “Price Volatility in Food Environmental Assessment and Agricultural Markets: Policy Responses. ? . “Rethinking Global BiodiverPolicy Report for G-20 coordinated by the gies: Exploring Structural Changes FAO and the Organisation for Economic Coon and Consumption to Reduce operation and Development, May 3. y Loss. ? Bilthoven, the Netherlands. Heltberg, R., N. Hossain, and A. Reva, eds. 2012, ng. “Making Ends Meet: forthcoming. Living through Crises: How the Reconcile Global Food, Energy, Food, Fuel, and Financial Shocks Affect the Biodiversity Goals. Bilthoven. ? Poor. Washington, DC: World Bank. ands. Hossain, N., and D. Green. 2011. “Living on a “Price Transmission from InterSpike: How Is the 2011 Food Crisis Affecting ricultural Commodity Markets to Poor People? ? Oxford: Oxfam. Prices: Case Studies in Asia Ivanic, M., and W. Martin. 2008. “Implications rica. ? International Food Policy of Higher Global Food Prices for Poverty in stitute, Washington, DC. Low-Income Countries. ? Agricultural Eco07. “Biofuels: At What Cost? nomics 39: 405–16. pport for Ethanol and Biodiesel ———. 2012a, forthcoming. “Estimating the untries. ? The Global Short-Run Poverty Impacts of the 2010 Surge nitiative of the International Instiin Food Prices. ? World Development. stainable Development, Geneva. ———. 2012b, forthcoming. “Short- and Long-
PBL (Netherlands Agency). 2010 sity Strate in Producti Biodiversit ———. 2012, forthcomi Pathways to Climate and the Netherl Robles, M. 2011. national Ag Domestic Food and Latin Ame Research In Steenblik, R. 20 Government Su in Selected OECD Co Subsidies I tute for Su Stigler, M., a
nd A. Prakash. 2011. “The Role Run Impacts of Food Price Changes on Povof Low Stoc ks in Generating Volatility and erty. ? Policy Research Working Paper, World Panic. feguarding Food Security in VolaBank, Washington, DC. tile Global Markets, ed. A. Prakash, pp. 319– Jones, D., and A. Kwiecinski. 2010. “Policy 33. Rome: F AO. ? In Sa
Responses in Emerging Economies to InternaSubervie, J. 2 008. “The Variable Response of tional Agricultural Commodity Price Surges. l Supply to World Price Instability Food, Agriculture and Fisheries Working Paper in Developi ng Countries. ? Journal of Agricul34, Organisation for Economic Co-operation tural Econo mics 59, no. 1: 72–92, 102. and Development, Paris. Trostle, R., D . Marti, S. Rosen, and P. Westcott. Kostandini G., B. Mills, and E. Mykerezi. 2011. 2011. “Why Ha ve Food Commodity Prices “Ex Ante Evaluation of Drought-Tolerant Varieties in Eastern and Central Africa. ? Journal SDA Economic Research Serof Agricultural Economics 62, no. 1: 172–206. , Washington, DC. Martin, W., and D. Mitra. 1999. “Productivity ghe, D. 2010. “The EnvironGrowth and Convergence in Agriculture and ct and Sustainability Applied GenManufacturing. ? Policy Research Working ium (ENVISAGE) Model, Version Paper 2171, World Bank, Washington, DC. al Reference Document, World Minot, N. 2010. “Transmission of World Food ton, DC (December). Price Changes to African Markets and its d Programme). 2008. “Vouchers Effects on Household Welfare. ? Paper presfers as Food Assistance Instrupared for the COMESA Policy Seminar “Food unities and Challenges. ? Rome. Price Variability: Causes, Consequences and 07. World Development Report Policy Options, ? Maputo, January 25–26. re for Development. Washing———. 2011. “Food Price Volatility and the . Management of Public Grain Stocks in Eastern ng Agriculture for and Southern Africa. ? Report prepared for the BG Agriculture Action Plan World Bank, Washington, DC (November). shington, DC. OECD-FAO. 2011. Agricultural Outlook 2011– esilient Safety Nets: Pro2020. Paris and Rome. the Social Protection South-South Risen Again? vice WRS-1103 van der Mensbrug mental Impa eral Equilibr 7.1. ? Technic ? U ? Agricultura
Bank, Washing WFP (World Foo and Cash Tran ments: Opport World Bank. 20 2008: Agricultu tom, DC: World Bank ———. 2009. “Implementi Development. 2010–2012. Wa ———. 2011a. Building R ceedings of ? W
GLOBAL MONITORING REPORT 2012 DEVELOPMENTS 61
POVERTY AND FOOD PRICE
Learning Forum. Washington, DC: World ure and Rural Bank. gton, DC. ———. 2011b. Global Economic Prospects: Maintaining Progress and Turmoil. vol. 3. tor Work, Washington, DC: World Bank. ent Depart———. 2011c. “MNA Facing Challenges and Opportunities: Regional Economic Update. ? World Bank, Washington, DC. lopment. ? ———. 2011d. “Responding to Global Food Price Volatility and Its Impact on Food Security. ary Fund. Development Committee Paper, World Bank, ping CounWashington, DC (April). risis? ? Develop———. 2011e. World Development Report 2012: hGender Equality and Development. Washington, DC: World Bank. ain Reserves ———. 2012a, forthcoming. “High Food Prices: ility Latin America and the Caribbean Responses ch Working to a New Normal. ? World Bank, Washington, on, DC. DC. and Freedom: ———. 2012b, forthcoming. “Responding to e, VA: Higher and More Volatile World Food Prices.
Economic Sector Work, Agricult Development Department, Washin
———. 2012c, forthcoming. “Using Public Stocks for Food Security. ? Economic Sec Agriculture and Rural Developm ment, Washington, DC. ———. 2012d, forthcoming. “Greening Growth: A Path toward Sustainable Deve ? Washington, DC. World Bank and International Monet 2010. “How Resilient Have Develo tries Been during the Global C ment Committee Paper DC 2010–0015, Was ington, DC. Wright, B. 2009. “International Gr and Other Instruments to Address Volat in Grain Markets. ? Policy Resear
Paper 5028, World Bank, Washingt Zurayk, R. 2011. Food, Farming, Sowing the Arab Spring. Charlottesvill ? Just World Books.
2 Nutrition, the MDGs, and Food Price Developments
Summary and main messages d distribution erability mean Even temporarily high food prices affect the ren in these long-term development of children. Condiof malnutrition. tions of early life (from conception to two school dropyears) provide the foundations for adult ls than boys. human capital. Vicious interactions between ividual resilmalnutrition,1 poor health, and impaired effects, intercognitive development set children on lower tiple pathdevelopment paths and lead to irreversible rices low. changes. ons should Seemingly small shocks can exert great d purchasdamage if they are not dealt with early. The ronutrient most dramatic effect of the food price crisis is s, food and an increase in infant mortality, especially in are-withlow-income countries. Other hard-to-reverse s on children impacts include growth faltering (stunting ld ensure or low height for age) and lower learning in the hands of abilities. Malnourished young children are nger term, interalso at more risk for chronic diseases such ngthening the as diabetes, obesity, hypertension, and carculture and diovascular disease in adulthood. Moreover, l deprivation, declines in human capital in a crisis tend to d girls’ be more pronounced than the corresponding increases during economic booms. o target vulThe most vulnerable bear the brunt of the vioral changes adverse impacts of high food prices, through ding during ill-
The dynamics of intrahousehol combined with biological vuln that pregnant women and child households face higher risks Impacts such as mortality and out are often sharper for gir To build household and ind ience and mitigate long-term ventions can work through mul ways, beyond trying to keep p In the short term, interventi focus on maintaining househol ing power and caloric and mic intakes through cash transfer nutrient transfers, and workf nutrition. To maximize impact and women, interventions shou that those transfers are put women, if possible. In the lo ventions should focus on stre link between smallholder agri nutrition, addressing seasona and promoting women’s income an education. Speci ?c interventions need t nerable children through beha related to breastfeeding, fee
malnutrition. Poor households tend to spend onutrients, a larger share of their income on food and sorption are especially vulnerable to price increases. ntive and 63
ness, hygiene, access to micr deworming (which increases ab of micronutrients), and preve
64 NUTRITION, THE MDGS, AND FOOD PRICE DEVELOPMENTS LOBAL MONITORING REPORT 2012
therapeutic feeding. Consequently, activities if they are pregnant, increase for countries to mitigate the potentially negaes of maternal mortality and tive impacts of food prices include improving l growth and future outcomes), and data quality about nutrition status (height and affect their productive capacfor age, weight for age, and micronutrient dition, undernutrition decreases de ? ciencies), practices (breastfeeding), and treatments for HIV/AIDS and interventions; targeting the period from condiseases. Box 2.1 summarizes ception to two years of life (pregnant women d impact of the food price crisis and young children); expanding Scaling Up ition on the MDGs. ConservaNutrition interventions; tailoring interventes from Grantham-McGregor tions to country capacity—in the govern007) suggest that over 200 milment, civil society, and private sector—and under ?ve years of age living in to country nutrition security issues; and countries fail to reach their cogincorporating nutrition-sensitive approaches lopment potential because of risks in multisectoral programs (social protection, overty, poor health and undernuhealth, agriculture, and income-generation lack of stimulation at home. Save interventions). n (2011) estimates that the recent hike put 400,000 children’s lives
women (and their chanc affect feta adult men ( ity). In ad the ef ?cacy of other major the combine and malnutr tive estima and others (2 lion children developing nitive deve linked to p trition and the Childre food price at risk.
How high food prices affect the MDGs Higher food prices may make it more difHow food pr ices affect nutrition ?cult to achieve most Millennium Developand nutrition security are difment Goals (MDGs). Food price increases interlinked concepts. Food secuaffect food consumption, quality of one’s rtant input for improved nutridiet, access to social services, and sometimes es, is concerned with physical the quality of care for infants and young chilc access to food of sufficient dren. All these factors may increase underquantity in a socially and culFood security ferent but rity, an impo tion outcom and economi quality and
nutrition among children (and decrease their eptable manner. 2 Nutrition seculearning capacity and survival rates), adult outcome of good health, a healthy
turally acc rity is an
Impact of higher food prices and undernutrition on the MDGs
• As food prices increase, the purchasing power of eightened maternal mortalthe poor decreases, the composition of their diet eased anemia, during a food price worsens, and their food consumption may decrease. These changes directly affect all targets of MDG 1 of a food crisis on the availabilon poverty, full and productive employment, and vices and on health status bear on hunger. viduals’ abilities to combat the • Malnutrition affects early childhood development MDG 6). and makes children more likely to drop out of ens the immune system and school (MDG 2). ect of diarrhea and waterborne • An increase in food prices affects women and girls’ consumption disproportionately (MDG 3). have weakened intergovernmen• Undernutrition is linked directly to more than onefood markets (MDG 8). third of children’s deaths each year (MDG 4).
• Pregnant women face h ity, through incr crisis (MDG 5). • The adverse effects ity of health ser countries’ and indi HIV/AIDS epidemic ( • Undernutrition weak compounds the eff diseases (MDG 7). • Higher food prices tal coordination in
GLOBAL MONITORING REPORT 2012 ICE DEVELOPMENTS 65
NUTRITION, THE MDGS, AND FOOD PR
environment, and good caring practices as uch as meats, well as household food security (World Bank to staple foods, 2006). For example, a mother may have reliand their protein able access to the components of a healthy suffer. Young diet, but because of poor health or improper heir early care, lack of knowledge, gender, or personal eeds for preferences, she may be unable, or choose mong others, may not, to use the food in a nutritionally sound will bear longmanner, thereby becoming nutritionally unger. ? In the insecure. Nutrition security is achieved for a s decrease their household when secure access to food is coueholds in pled with a sanitary environment, adequate d Hou 2011) health services, and knowledgeable care to (World Bank ensure a healthy life for all household memmber of bers. A household (or country) may be food age increases. In secure, yet have (many) individuals who are ) show that nutritionally insecure. relative price of Food security is therefore a necessary but s than 2 percent, not suf ?cient condition for nutrition security. asticity would be And although households make key decisions ignore substituthat in uence the nutritional status of their as households individual members, government funding onsumption by and policy decisions determine the environheir food intake. ment in which households operate (IFAD, ods are central to WFP, and FAO 2011). ong the urban Nutrition security is multidimensional. America, street Solutions to improve nutrition in a given 40 percent of country environment will require integration
consumers shift from foods s fish, vegetables, and fruits such as cereals and tubers, and micronutrient intake may children—in utero and during t years—who have high nutrient n iron, vitamin A, and zinc, a be particularly at risk and term impacts of this “hidden h second adjustment, household caloric consumption—urban hous Pakistan (Friedman, Hong, an and poor households in Haiti 2010b), for example—and the nu children with low weight for Vietnam Gibson and Kim (2011 a 10 percent increase in the rice reduces calories by les but they estimate that this el more than 4 percent if they tion into lower-quality rice, in Vietnam protect calorie c downgrading the quality of t In urban areas, street fo food consumption patterns am poor. In Accra and in Latin food may account for nearly the total food budget of the
urban poor (Ruel among the sectors most relevant to individufood prices is als’ nutritional status, such as trade and infrastreet foods, structure, agriculture, and the labor market, arch. This results as well as the social sectors such as health, ity (caloric coneducation, and social protection (Ecker, value, contributBreisinger, and Pauw 2011). A shock such as y rates among the food price crisis affects both household (CONEVAL and government behavior. ters for Disease , and in many
2000). The risk from higher an increase in consumption of which are rich in oil and st in diets of high energy dens tent) and little nutritional ing to already rising obesit the urban poor, as in Mexico 2009) the United States (Cen Control and Prevention 2011) middle-income countries unde
rgoing the Effects at the household and gh levels of underindividual levels Dietary quality and food quantity to increase their may be affected As prices rise, households will first try to participareplace pricier foods with cheaper sources lts on household of calories, moving from some food categobut it is likely ries or shifting to lower-quality foods. When ents. The effect prices increase further and substitution is not e participation enough, households decrease their caloric children’s ages, ? rst adjustment, poor consumption. In the the education
nutrition transition from hi nutrition to overnutrition. Women and children may have workforce participation Increased women’s labor force tion may yield positive resu income and purchasing power, to change childcare arrangem of mother’s increased workforc on child welfare depends on other household resources, and
66 NUTRITION, THE MDGS, AND FOOD PRICE DEVELOPMENTS L MONITORING REPORT 2012
and knowledge of the person responsible for kes the child more susceptible childcare and feeding. In noncrisis settings, infections. Feeding practices, in urban poor communities of Guatemala asing liquid intake of children City and Accra, mothers seemed to be able iarrhea, may also have severe to manage their childcare responsibilities and their income-generating role ef ?ciently (Levin r the brunt of decreases in et al. 1999, Ruel et al. 1999, 2002). But in imary care and communitycrisis settings, if women engage in distress on interventions (Alderman work (work in response to an adverse shock America’s economic crisis of to the main earner’s income) such as they cut public health spending, do in rural India (Bhalotra 2010), time conisproportionate effect on the straints decrease time spent seeking health s (Musgrove 1987). Ferreira care, and infant girl mortality may increase. 009) contrast the experience (Rural households where mothers are unedand Peru to show the imporucated or had a ? rst birth as a teenager are ining critical services to avoid driving these results.) Interventions that child undernutrition during criaddress women’s childcare and pregnancy e crisis caused a collapse in needs (such as crèches around temporary xpenditures of over 60 perconstruction sites in India) can help to proines in health service utilizatect children’s well-being. more home births and fewer The effect of high food prices on chilkups). Infant mortality shot up dren’s labor force participation is ambigu00 live births in 1988 to 75 ous. Children may join in productive agriontrast, in Indonesia increased cultural activities if the household feels it e up for some of the shortfall cannot afford schooling any more. Children spending. Infant mortality who drop out of school find it difficult to from 30 per 1,000 live births in return to school when the crisis is over, and 1998, but nutrition indicators their schooling attainment suffers. Children’s
system and ma to subsequent such as decre affected by d consequences. The poor bea funding of pr based nutriti 2011b). Latin the early 1980s which had a d poorest group and Schady (2 of Indonesia tance of mainta increases in ses. In Peru th public health e cent and decl tion (including prenatal chec from 50 per 1,0 in 1990. In c donor aid mad in government still spiked 1996 to 48 in such as wasting
, stunting, and anemia did income may also become a key contribution to maintaining the household’s caloric intake. If, though, the price crisis is also a jobs crisis, d reallocation and care practices as in Europe and Central Asia in 2008 or in or aggravate the effects of food Peru in 1988–92 (Schady 2002), children may on specific household members not increase their workforce participation. ecome “shock absorbers of d insecurity, ? as they reduce If households seek less health care or the sumption to allow for more supply of health services decreases, individual r household members (Quisumbmembers’ health may deteriorate and affect ck, and Bassett 2008). Rural their nutritional status the United States and Canada When households feel they cannot afford al. 2003) tend to both lower and health care expenses, the health status of dietary intake in favor of their adults and children may suffer. Poor health ticularly in terms of energy, affects nutrition through changes in metabolate, zinc, calcium, and iron) lism, malabsorption of nutrients and appetite erience food insecurity. In loss, and changes in feeding practices. Highly ies in Bangladesh, Indonesia, prevalent diseases such as acute respiratory a, and Zambia (Holmes, Jones, infections and diarrhea reduce the absorption 009), when choices have to be of nutrients such as vitamin A from the small ? rst; in other commun come intestine, establishing a vicious cycle because re favored. In none of the comvitamin A de ?ciency depresses the immune er, were women, including
not worsen. Intrahousehol may mitigate price increases Women often b household foo their own con food for othe ing, Meinzen-Di poor women in (McIntyre et change their children (par vitamin A, fo when they exp some communit Jamaica, Keny and Marsden 2 made, childre nities, men a munities, howev
GLOBAL MONITORING REPORT 2012 E DEVELOPMENTS 67
NUTRITION, THE MDGS, AND FOOD PRIC
pregnant women, offered the most nutrilostrum, tious foods. In Indonesia mothers buffered the boost to children’s caloric intake during the 1997–98 lostrum crisis, resulting in increased maternal wasting and anemia (Block et al. 2004). nts under Women’s lack of education and low status hough breast in the household contribute to child malnuof nutrients and trition, as do poor care practices. Poor child ions. feeding practices are responsible for high levomplemenels of undernutrition and affect girls more hey feed chilthan boys in most countries in South Asia. In e food or foods many countries, mothers do not exclusively breastfeed their children during the ? rst six ahousehold months of life (see below), and the foods used y mean that to complement breast milk are often low in rgy needs energy and essential micronutrients. The iets are poor in knowledge of a grandmother or an older sibling who cares for the child may even be more feed chillimited than the mother’s. Women’s educaea or tion and status within the household contributed to more than 50 percent of the reduction nates in child undernutrition between 1970 and tes. 1995 (Quisumbing et al. 2000). Good care practices can mitigate the effects of poverty these effects— and low maternal schooling in child nutrition d consump(Armar Klemesu et al. 2000). ticipation, ess to services, Increasing income is not enough orthern Among households, undernutrition rates od price can be high even among the food secure. For example, if the lowest two quintiles by
• Mothers of newborns discard co the ? rst milk, and thus lose
the infant’s immune system that co provides. • Mothers rarely breastfeed infa six months exclusively, even t milk offers the best source protects against many infect • Caregivers start introducing c tary solid foods too late. T dren under age two too littl that are not energy dense. • Although food is available, intr food allocation practices ma women and young children’s ene are not met and that their d micronutrients or protein. • Caregivers do not know how to dren during and following diarrh fever. • Caregivers’ poor hygiene contami food with bacteria or parasi Box 2.2 illustrates some of on quantity and quality of foo tion, individual workforce par intrahousehold allocation, acc and other coping mechanisms—in n Bangladesh during the 2007–08 fo crisis.
wealth in Pakistan had the same characterEffects at the national level istics as the third quintile, poverty would be eliminated, but 38 percent of children od purchases would still be malnourished. In Ethiopia 40 rces from health percent of children in the wealthiest quintile tors), yet these are stunted. This pattern is consistent across l status, because many countries (Haddad et al. 2003) and to preventable points to the need for interventions beyond d lack of nutrigeneral poverty reduction to address speci ?c ormation nutritional issues. As noted by the World s for infants Bank (2006), several reasons explain this rices rose, pattern: set up) food economic hard• Pregnant women eat too few calories and rth Africa, too little protein, and have untreated infecprograms tions, such as sexually transmitted diseases estic prodthat lead to low birth weight. ntail trade• Mothers have too little time to take care of stments.3 In their young children or themselves. rally target foods Increased state spending on fo and subsidies can divert resou and education (among other sec are key sectors for nutritiona undernutrition is often linked diseases (such as diarrhea) an tion knowledge (for example, inf about optimal feeding practice and young children). As food p many governments expanded (or subsidy programs to alleviate ships. In the Middle East and No for example, spending on these reached 5–7 percent of gross dom uct (GDP). But such programs e offs and may threaten other inve addition, price subsidies gene
68 NUTRITION, THE MDGS, AND FOOD PRICE DEVELOPMENTS GLOBAL MONITORING REPORT 2012
BOX 2.2 The impact of the 2007–08 food price spike on a rural community in northern Bangladesh
Bangladesh has high levels of child undernutrition (36 as in the richest households. A percent stunting, 16 percent wasting, and 46 percent t improvement in stunting rates underweight). Prices of key staples increased by as to improvements in women’s status much as 50 percent from 2007 to 2008. On top of nfrastructure) was lost during the this, the country suffered oods in mid-2007 and a ll have permanent consequences cyclone in November 2007, which reduced the aman mental and physical development. (or second) rice harvest. Export restrictions by India, he community responded to the price one of the country’s main rice providers, also raised ldren to work, taking children out rice prices. g productive assets, and reducing their An assessment of livelihood and nutrition security families took loans to replace lost in Kurigram village (194 households) in 2005 and a ment became a priority over livelifollow-up assessment in November 2008 (250 housevestments. Three families moved to holds) shows some of the effects of the price hike. The l. richest households bene ?ted from the price hike (as richest households benefited, rice producers). One-third to one-half of households r wages did not rise enough to comhad lower disposable income after the crisis, mainly useholds for the price rise (partly because of the rice price hike and, to some minor man crop failure). Only one houseextent, crop failure in one of the rice harvests. (Disthe government’s 100-day rural posable income was taken as cash income left, after m. No household received subsihouseholds had met their food energy requirements ugh children in school received foodper adult equivalent, using a cost-of-diet approach.) nsfers. Some households bene ?ted The poorest quartile was no longer able to afford a rogram, some fertilizer stipends, and diet that provided them with their energy and microthe elderly, widows, and freedom nutrient needs. Children ate fewer meals, had less diverse diets, and received few nutrient-rich foods. Stunting among children in the poorest households
was twice as high 7 percentage poin (probably linked and better road i crisis—a loss that wi for the children’s Families in t hike by sending chi of school, sellin food intake. Poor income, and repay hoods and diet in Dhaka, the capita Even though the agricultural labo pensate poorer ho a result of the a hold bene ?ted from
employment progra dized rice, altho for-education tra from the cereal p some stipends for ?ghters. Source: Save the
that are low in micronutrients, distort relative elation between income growth and prices, and may create negative incentives for n gains is much weaker (Ecker, Breispeople to diversify their diets once the crisis nd Pauw 2011; Headey 2011). Underis over. For example, in Morocco, the subsidy n countrywide (de ?ned as low weight on soft wheat our is supporting most of the ay decline at very roughly half the milling sector (World Bank 2005). Expendit per capita gross national product tures on physical infrastructure and especially s (Alderman 2011a)—28 percent in roads are not generally considered as impor7 percent in China, and 76 percent tant for nutritional status, even though they adesh in the 1990s. Yet, Deaton are key both to establish a food supply chain eports that in India per capita calorie that moves food from consumers to producers ion fell in 1997–2007, despite high through markets and to enable households’ er capita income and consumption access to health, education, and, to a lesser While some of the calorie reduction extent, social assistance services. inked to less physical activity (as The connection between economic growth pend less time in agriculture) or to and poverty reduction is well established, but rbidity, the puzzle remains.
the corr nutritio inger, a nutritio for age) m rate tha increase India, 6 in Bangl (2010) r consumpt rates of p growth. may be l people s lower mo
GLOBAL MONITORING REPORT 2012 E DEVELOPMENTS 69
NUTRITION, THE MDGS, AND FOOD PRIC
The interaction of crises and biology ible setbacks evelopment Short-term shocks, long-term effects umulation of The most pernicious effect of the crisis is an f life—through increase in infant mortality, especially girl in and out of infants in low-income countries. A recent es for an study by Baird, Friedman, and Schady (2011) shows a large, negative association between declines in per capita GDP and mortality of l during infants between birth and one year of age. ments during The study, which analyzes data from 59 Demographic and Health Surveys and 1.7 010 million births, also reveals that the mortality t indicaof children born to rural and less educated worsen more mothers is more sensitive to economic shocks, mic booms. which suggests again that the poor bear the ecreases by 6.5 brunt of crises. In addition, the mortality of may increase infant girls is signi ?cantly more sensitive to acceleraincome shocks than that of boys. In a comin infant morpanion study, Friedman and Schady (2009) three times the estimate that the 2008 crisis probably led to (24 versus 8 an excess 35,000–50,000 infant deaths in decrease in Sub-Saharan Africa in 2009 and that nearly ates during all these excess deaths were among girls. increase during Interventions that tackle child mortals 4 percent). ity bene ?t country’s growth overall. Apart than a from the moral arguments for tackling child reases learning mortality, analysis by Baldacci et al. (2004) t (see below). and Save the Children (2008) showed that irls more
that period can cause irrevers in growth and sociocognitive d (Victora et al. 2008). The acc toxic stress in the ?rst years o
decreased care and transitions poverty—has long-term consequenc adult’s wages and productivity. Deteriorations of human capita economic downturns and improve booms are asymmetric The Global Monitoring Report 2 reported that human developmen tors during downturns tend to than they improve during econo For example, life expectancy d years during decelerations but by only 2.0 years during growth tions. Similarly, the increase tality during deceleration is decrease during accelerations per 1,000 live births), and the primary schooling completion r deceleration is six times the acceleration (25 percent versu Undernutrition contributes to more third of infant deaths and dec abilities and school attainmen Economic downturn affects g
a 5 percent improvement in child survival reases by seven rates raises economic growth by 0.85 to 1.0 for boys during percentage point a year over the following years for both decade. ucation comLess dramatic but also severe are the nt for girls and potentially negative effects of economic crises times and rise on nutritional and environmental pathways ercent for boys that in uence early childhood development e enrolland subsequent life opportunities. These arise ng downturns, from interactions between undernutrition, and secondary health, and learning, which set children on ation. lower development paths and lead to changes in states that are difficult to reverse—it is ause increases easier, for example, to maintain a child in and stunting school than to reenroll once she or he has 9–2002, dropped out. The timing of the crisis in the ight to GDP life cycle also matters, with the period from (Cruces, conception to two years of life being one of . Stunthigh risk because of physical and cognitive xtreme shocks, development. Nutritional deprivation during e in 1994–95
than boys. Life expectancy dec years for girls and six years bad times (it increases by two during good times). Primary ed pletion rates fall by 29 perce 22 percent for boys during bad by 5 percent for girls and 3 p during good times. Female-to-mal ment ratios fall severely duri with higher drops in tertiary education than in primary educ Large scale and extreme shocks c in low birth weight, wasting, During Argentina’s crisis in 199 the elasticity of low birth we was –0.25 cases per 1,000 births Gluzmann and Lopez Calva 2010) ing increases as a result of e such as the drought in Zimbabw
70 NUTRITION, THE MDGS, AND FOOD PRICE DEVELOPMENTS NITORING REPORT 2012
(Hoddinott and Kinsey 2001), crop damage ional competence, affect in Ethiopia in 1995–96 (Yamano, Alderman, and subsequent school and Christiansen 2003), and the very large is also a period of intense economic contractions experienced in Peru in ent: children are expected 1988–92. ers in utero, 24 centimeyear of life, and 12 in their Impacts from more moderate crises are r which time the pace of heterogeneous l the rapid growth spurt of Such impacts include increased underweight re 2.1 shows how the shortand anemia and decreased access to health dren in different regions services. In Cameroon the share of underd after 24 months, when weight children under age three increased ealthy reference group. from 16 percent in 1991 to 23 percent in hat affect children in low1998 as a result of combined economic crises include intrauterine growth and subsequent government adjustment proercent of births), stunting grams (Pongou, Salomon, and Ezzati 2006). of children under five Declines in economic status and health care ciency (one-fourth to oneaccessibility were both correlated with an under four years), iodine increase in undernutrition in urban areas. In d of the population worldrural areas, reductions in health access were epression (one-sixth of postcorrelated with an increase in undernutriand inadequate cognitive tion, especially among children born to littledman and Sturdy 2011). Iron educated mothers or poor households. It is ated with fetal and child unclear, however, whether the lower access ower cognitive development stemmed from weakened ability to pay or r physical activity and profrom reduced provision of health services. In ts, and increased maternal Central Java in 1997–98, drought and ?nande ?ciency causes blind-
well as socioemot school preparedness performance. This physical developm to grow 50 centimet ters in their ?rst
second year, afte growth slows unti adolescence. Figu fall between chil remained unchange compared with a h Risk factors t income countries restriction (11 p (around one-third years), iron defi third of children de ?ciency (one-thir wide), maternal d partum mothers), stimulation (Frie de ?ciency is associ growth failure, l in children, lowe ductivity in adul mortality. Vitamin A
cial crisis were associated with a decrease in k factor for increased severmean iron hemoglobin concentration of 6.1 , which leads to increased percent and increasing anemia, with larger e ?ciency is associated with effects on children born or conceived durer incidences of diarrhea ing the crisis (Waters, Saadah, and Pradhan dine deficiency affects 2003). The latter suggests that maternal ment and reduces intelundernutrition was an additional risk pather quantity and quality of way, which is consistent with decreases in e, lower household income, consumption of green leafy vegetables, eggs, rces, and lower quality care and cooking oil among households. ases in the prevalence of childhood wasting, and The importance of when: window of risk and ich in turn have signi ?cant opportunity from conception to 24 months4 on children’s development. Early life conditions have a disproportionate influence on forming adult human capital, of malnutrition and chronic understood in terms of height, skills (cogniished children may become tive and noncognitive) and capabilities (such as health and social functioning) (Victora etal growth in uence longet al. 2008; Friedman and Sturdy 2011). A children who experienced particularly critical period for brain develtero and in their early years opment is from the first few weeks in the of chronic diseases such as womb to the second year of life. Early cogabdominal obesity, hypernitive and sensory-motor development, as iovascular disease. For
ness and is a ris ity of infections mortality. Zinc d stunting and high and pneumonia. Io cognitive develop ligence (IQ). Low nutritional intak lower state resou would cause incre low birth weight, then stunting, wh negative impacts The double burden disease5: Malnour overweight adults Many aspects of f term health, and malnutrition in u are more at risk type 2 diabetes, tension, and card
GLOBAL MONITORING REPORT 2012 PRICE DEVELOPMENTS
NUTRITION, THE MDGS, AND FOOD 71
example, children in utero during the famor age (Z-scores) by age, relative to WHO ine in the Netherlands of 1944– 45 show increased risk of chronic disease and mental illness in middle age and greater loss of atten-
FIGURE 2.1 Mean height f standards, by region 0.5
24 months tion and cognitive ability than the general population as they age further (Alderman 2011a). Similarly in India, children who were
0.3 0.0 –0.3 –0.5
Z-score (WHO) thinner in infancy and experienced rapid growth show a higher prevalence of diabetes (box 2.3), giving that country the highest numbers in the world, both of malnourished children and of people with diabetes. Many countries in Latin America face increases in overweight and obesity among adults who –0.8 –1.0 –1.3 –1.5 –1.8 –2.0 –2.3 –2.5
were previously undernourished, as well as 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 high numbers of chronically undernourished Age (months) children ( ?gure 2.2). During the nutritional Europe and Central Asia Latin America Africa transition from under- to overnutrition, chilMiddle East and North Africa Asia dren who were undernourished face higher risks of overweight and obesity as adults, Source: Victora et al. 2 010. Note: Europe and Central Asia countries included are Armenia, Kazakhstan, Kyrgyzstan, while at the same time, lack of nutritional Moldova, Mongolia, Monte negro, and Turkey. Latin America countries included are Bolivia, Brazil, knowledge and poverty with micronutrient Colombia, Dominican Repu blic, Guatemala, Haiti, Honduras, Nicaragua, and Peru. Middle East and North Africa countri es included are Arab Republic of Egypt, Jordan, Morocco, and Republic of poor diets still undermine the development of Yemen. Thirty Sub-Sahara n African countries are included. Asia countries included are Bangladesh, children. Cambodia, India, and Nep al.
Malnutrition and chronic disease in India
Some 42 percent of the 160 million children in India dex (BMI) under 15—had an accelerated increase under the age of ?ve are underweight. Prime Minister MI until adulthood. Although none was classi ?ed Manmohan Singh described the situation as a matobese by age 12, those with the greatest increase ter of “national shame ? and undernutrition as “unacy this age had impaired glucose tolerance ceptably high ? when he announced those numbers in iabetes by the age of 32 (Bhargava et al. 2005, January 2012. There are signs of progress—one in d in Alderman 2011a). Similar results have been every ?ve children has reached an acceptable healthy rted using a panel in Pune (Yajnik 2009, cited in weight over the past seven years in 100 focus districts, derman 2011a). which were particularly badly off. But the current The transition from a resource-poor environment ?gures point to the inadequacies and inef ?ciencies of that is less constrained may aggravate these government initiatives (such as the Integrated Child sks. India has not only the largest number of underDevelopment Scheme), the scale of the needs of India’s ished children in the world, it also has the most child population (the largest in the world), and the ople with diabetes (Ramachandran and Snehalatha lack of awareness about nutrition. And those num10). These two statistics may very well have a combers may be only the starting point of a much larger n origin. While the Indian population does not long-term problem. ve a high rate of obesity relative to the rest of the A longitudinal study of a cohort of births in South rld, there is a tendency to accumulate adipose tisDelhi followed to age 32 found that those children e around the waist. This pattern is associated with who were thinner in infancy—with a body mass ated risk of chronic disease.
in of B as in BMI b or d cite repo Al
to one ri nour pe 20 mo ha wo su elev
NUTRITION, THE MDGS, AND FOOD PRICE DEVELOPMENTS GLOBAL MONITORING REPORT 2012
FIGURE 2.2 Percentage of stunted children and becomes particularly efficient at conservoverweight women in selected Latin American ing resources. However, if that individual is countries subsequently confronted with a resource-rich environment, this maladapted response conGuatemala tributes to overnutrition and increased risk of chronic disease. It may also threaten the Bolivia welfare of the next generation because hyperHonduras glycemia or diabetes in mothers increases the Haiti risk of diabetes for their offspring (Delisle 2008). Peru Crises may be transitory events, but their Nicaragua impacts on young children are not—they continue in the medium term unless stemmed by Colombia interventions. Poor children who were under Mexico age three during Ecuador’s 1998–2000 crisis Dominican showed increased stunting and lower vocabuRepublic lary test scores (a measure of cognitive develBrazil opment) in 2005 when they were ?ve to seven Chile years old (Hidrobo 2011). This ? nding sug0 10 20 30 40 50 60 gests that they may have experienced reduced Percent parental time on care, and their households Overweight women may not have managed to protect them from Stunting among children age five and younger the general health environment deterioration caused by El Niño and cuts in public services.
Source: World Health Organization global databases on child growth Rural farming households and households and malnutrition and on body mass index. with access to health centers were better able Note: Overweight: body mass index greater than 25; stunting: height for lth age less than two standard deviations using National Center for Hea to protect the height of their children but not Statistics reference. their vocabulary score. Where interventions were in place, nutritional status improved. In Senegal, the national In times of high food prices, the double nutrition program adopted community-based burden increases and obesity and undernutriapproaches, targeted the “ ? rst 1,000 days, ? tion may coexist within the same household implemented systematic nutrition screening, and the same person. As mentioned, poor and delivered interventions using a network families switch away from nutritious food of well-supervised nongovernmental organiand buy “empty calories, ? as is happening zations (NGOs) (Alderman et al. 2008). Over in Honduras and Guatemala (Robles and the years, the program added bednet distriTorero 2010). Combined with the changes in bution, community management of acute metabolism described in the previous paraundernutrition and food forti ?cation, and, graph, these empty calories will increase most recently, a cash transfer initiative. Prethe rates both of stunting and anemia and natal care increased from one-third to twoof overweight and obesity in many middlethirds, exclusive breastfeeding for the ?rst six income countries. In the Arab Republic of months doubled to 58 percent, and correct Egypt, Peru, and Mexico, about half the use of bednets more than doubled to 59 perwomen with anemia are overweight or obese. cent. The rate of stunting in 2005 represented One possible explanation for the impact of just 59 percent of that in 1990. Similarly, the fetal growth on disease later in life is linked underweight rate in 2005 was 65 percent of to adapting to stress in the womb. The sigthat in 1990. nal derived from limited nutrients in utero Childhood exposure to adversity (both may lead to an adaptation in which the child extreme events such as drought, civil war,
GLOBAL MONITORING REPORT 2012 RICE DEVELOPMENTS
NUTRITION, THE MDGS, AND FOOD P 73
BOX 2.4 uatemala
Consequences of early childhood growth failure over lifetimes in G
Growth failure in early life in rural Guatemala, rbal cognitive ability some 35 years as measured by low height for age (stunting) at 36 married people with lower schooling months, affects a wide range of adult outcomes: eduhad 1.86 more pregnancies and cation, choice of marriage partners, fertility, health, to experience stillbirths and miscarwages and income, and poverty and consumption. as found with greater risks of carThe data are based on interviews between 2002 and her chronic disease. 2004 of participants in a nutrition supplementation ho were not stunted earned higher trial between 1969 and 1977. re likely to hold higher-paying Participants who had received nutritional supplehite-collar jobs. They were 34 permentation (a high-protein energy drink with multiple ss likely to live in a poor household. micronutrients) and free preventive and curative medviation increase in height for age ical care (including the services of community health wage by 20 percent, increased workers and trained midwives, as well as immuniof operating their own business zation and deworming) were less likely to become points, and raised the per capita stunted. useholds where the participants Otherwise, participants who were stunted at 36 0 percent. months of age left school earlier and had significantly worse results on tests of reading and vocabuet al. 2011.
lary and on nonve later. They also attainment. Women were more likely riages. No link w diovascular or ot Individuals w wages and were mo skilled jobs or w centage points le A one standard de lifted men’s hourly women’s likelihood by 10 percentage consumption of ho lived by nearly 2 Source: Hoddinott
and famine, and more moderate events such rer performance in as low rainfall) has long-lasting adult life scores equivalent to consequences. Exposure to the Chinese Long st). With the obserWalk famine of 1959–62 is associated with chooling is equivhigher illiteracy, lack of work, and disability ase of 9 percent in
Stunted children have poo school (reduction in test two years of schooling lo vation that every year of s alent to an average incre
later in life. Findings are similar for the Greek tham-McGregor famine of late 1941 and early 1942, with loss in adult income those who were in their ?rst year of life when t for stunted the famine struck the most affected. Expoitudinal study in sure to the famine as a child lowered literacy, l. 2011) provides upper secondary and technical schooling, ng-term impacts of and occupational prestige. Even moderate on body size and adversity, such as low rainfall during the year types of employof birth, has been associated with reduced long-term effects child growth and increase child morbidity in ere, interventions India, and decreased adult height and schoolementation and ing in Indonesia (Maccini and Yang 2009). early years have The clearest pathway through which these ve outcomes over impacts occur is nutrition, especially during ives. the critical period of early childhood, from six months of age and beyond when a child transitions to complementary foods in addirventions tion to breast milk.
adult annual income, Gran et al. (2007) estimate a of between 22 and 30 percen children. A long-run long Guatemala (Hoddinott et a additional evidence on lo undernutrition, including adult ?tness, and wages and
ment (box 2.4). While the of growth failure are sev such as nutritional suppl basic medical care in the strong potential to impro the course of bene ?ciaries’ l
Building resilience: inte to mitigate the effects o f the Height for age at two years is the best predictor of human capital, and undernutriccurrences in develtion is associated with lower human capital. rventions to decrease food crisis Food crises are regular o oping countries, but inte
74 NUTRITION, THE MDGS, AND FOOD PRICE DEVELOPMENTS ITORING REPORT 2012
malnutrition can mitigate their impacts. The on about nutrition and the many pathways along which food crises choices. The pilot led to affect household and individual welfare also a variety of cognitive and offer multiple entry points for interventions. s (social and personal meaWe discuss these entry points and the associry). The program shifted ated costs under three headings: consumption ure toward more diversiand social protection, biology and health, ient-rich foods for young and production and income generation. rials offering greater stimIntervention packages will of course vary by ooks and paper. In addicountry development and capacity, as well as efited from an expanded by the types of problems faced, but there is interventions in health a broad consensus on the bene ?cial impact micronutrient supplemenof proven interventions (World Bank 2012 itoring and promotion, forthcoming). ilarly in Malawi, Miller, t (2011) report that the
received informati importance of food signi ?cant gains for
noncognitive skill sures and vocabula household expendit ?ed diets, more nutr children, and mate ulation, such as b tion, children ben menu of nutrition services, including tation, growth mon and deworming. Sim Tsoka, and Reicher unconditional M’chin
ji social cash transfer Consumption and social safety nets enabled bene ouseholds to avoid food When food prices increase, and before foodease dietary diversity, and output systems can adapt, some safety net more likely to gain height interventions seek to maintain consumption health (Miller et al. 2010). in the short run, especially among more vuls, Tiwari, and Zaman nerable groups. These interventions may also ash transfers helped prohave longer-term impacts and can contribute sity. to bridging the twin-track approach to food security, promoted by the Food and Agritransfers culture Organization of the United Nations maintain consumption is (FAO): short-term transfers and relief to proirectly to vulnerable house?ciary h shortages and incr that children were and report better In Indonesia, Skou (2011) show that c tect dietary diver Food and nutrient Another option to to transfer food d ?a
tect consumption and long-term investments s high and erodes the value to increase food output. ntial bene ?ciaries may preSuch food aid can help mainCash transfers kes of protein and energy One response to rising food prices is to supot micronutrient rich. That port consumption of the poor through tarer, with the inclusion of geted cash transfers. Conditional cash transin the rations provided by fers have shown some results on nutritional gram as well as suppleoutcomes (Fiszbein and Schady (2009) proent foods (Gentilini and vide a review). Fernald, Gertler, and Neufeld options include local (2008) report positive impacts of Progresa/ d aid, which may help Oportunidades on children’s height in Mexmaintain food markets; ico, 6 Attanasio et al. (2005) show similar -density of the food with effects of Familias in Acción in Colombia, entary or therapeutic and Ferrreira et al. (2011) for cash transles, powders that provide fers in Brazil. Macours, Schady, and Vakis and are mixed with staple (2008) provide evidence on the nutritional me. and early childhood development impacts of a conditional cash transfer pilot designed to address crises such as droughts, cyclones, nd the ongoing one have and extreme poverty in Nicaragua. Payments nd for school feeding were conditional on school attendance for come countries, despite school-aged children and on preventive care cost-effectiveness (Aldervisits for preschool children. Parents also ). School feeding should
holds. If in ation i of cash, some pote fer food to cash. tain adequate inta but is generally n is changing, howev more diverse foods the World Food Pro mentary multinutri Omamo 2011). Three procurement of foo small producers and increased nutrient ready-to-use supplem foods;7 and sprink multiple nutrients food within the ho School feeding The 2008–09 crisis a seen enhanced dema programs in low-in questions on their man and Bundy 2011
GLOBAL MONITORING REPORT 2012 CE DEVELOPMENTS 75
NUTRITION, THE MDGS, AND FOOD PRI
be considered as a conditional in-kind transrelatively effecfer to assist low-income households (reduckers from very ing current poverty) with a complementary n face a high benefit of promoting the accumulation of pproach in Djihuman capital by jointly in uencing health utrition proand education. It takes two main forms: tional cashmeals at school and take-home rations. In the effect of most middle-income countries, school feedfamily’s nutriing costs per child represent 10–20 percent of lva 2010), the per child costs of basic education, but in some munity work low-income African countries, these feeding in projects chocosts are as high as the cost of basic education y and services for average students (Bundy et al. 2009). ng collecting, Programs may yield nutritional bene ?ts for stic bags into younger siblings of bene ?ciary children. In component Burkina Faso, for example, the weight for age members of of children aged 12–60 months, whose sister cludes monthly received take-home rations, increased by 0.38 on-relevant standard deviation. In Uganda younger sibby a community lings of bene ?ciaries of school meals showed d supplements improvements in height for age of 0.36 standard deviation, but children in families that took home rations saw no improvement. School feeding programs can be a vehicle for improved micronutrient status if d, effecthe foods are fortified, but local procureion. Inadequate ment issues make fortified foods difficult loss (acute to obtain. Implementation issues may also ring (chronic affect the overall effectiveness of the promunity, and
Self-targeting in workfare is tive, because it attracts wor poor households where childre risk of undernutrition. The a bouti (and Niger) is to add a n motion component to the tradi for-work program to leverage the additional income on the tional status.8 In Djibouti (Si workfare component offers com (for all able-bodied adults) sen and built by the communit work (for women only) includi recycling, and transforming pla pavement blocks. The nutrition targets vulnerable nonworking participating households. It in community meetings on nutriti topics, biweekly home visits worker, and distribution of foo during the lean season. Biology and health There are known evidence-base tive solutions to undernutrit dietary intake causes weight undernutrition), growth falte undernutrition), decreased im
gram, especially in remote areas where transity of diseases. port and storage costs may be prohibitive ) framework for communities. However, school feeding dentifies a is easy to scale up during a crisis. More evins in three main dence is needed on the costs of delivery and cy and readiness sustainability. Workfare-with-nutrition include. Food or cash-for-work programs may prosupport; vide immediate consumption relief in a crisis. promot ion The transfer selection (food or cash) depends ition educaon local capacity, market conditions, and culon of food), and tural acceptability. Some evidence is available promotion from Ethiopia on improved food security and jority of these child weight for height from a food-for-work ugh communityprogram, but targeting needs to improve. In programs. Indonesia, however, transfer of rice, cookntervening oil, and legumes had no effect on child plementation; growth or on maternal anemia rates (Wodon s for manageand Zaman 2008). micronutriA promising new design complements n-folic acid workfare with nutrition interventions. men; iron
increased morbidity and sever The Scaling Up Nutrition (SUN (World Bank 2010a; box 2.5) i package of 13 key interventio areas, selected for their ef for scaling up: • Behavior change interventions Breastfeeding promotion and complement a r y fe ed i ng through counseling and nutr tion (but excluding provisi hand-washing with soap and of hygiene behavior. The ma services are delivered thro based health and nutrition • Micronutrient and deworming i tions include vitamin A sup therapeutic zinc supplement ment of diarrhea; multiple ent powders; deworming; iro supplements for pregnant wo ?ca
76 NUTRITION, THE MDGS, AND FOOD PRICE DEVELOPMENTS OBAL MONITORING REPORT 2012
The global SUN movement
One platform for increased support to nutrition is her to support national plans to the global Scale Up Nutrition (SUN) movement. In It helps ensure that ? nancial and 2010 more than 100 organizations including govare accessible, coordinated, preernments, civil society, the private sector, research to go to scale. Twenty-six couninstitutions, and the United Nations system commithe movement as of early 2010, ted to work together to ? ght hunger and undernus agreed to be the donor trition, developing a Framework to Scale Up Nutrienor in 7 of the 26 countries, tion (launched at the World Bank/International e national nutrition focal point Monetary Fund Spring Meetings in April 2010) and onor partners in each of the a road map that lays out the operational approach hich it has taken on the coordifor increased action. SUN is a movement that brings
organizations toget scale up nutrition. technical resources dictable, and ready tries have joined t and the World Bank ha convenor or co-conv liaising between th and the community d SUN countries for w nating role.
fortification of staple foods; salt iodizaid-arm circumference or for visution; and iodine supplements for pregnant ng growth in height are important women if iodized salt is not available. rental awareness of the dangers These services are delivered through childe thinness, overweight, and short health days, community nutrition programs, the primary health care system and interventions can also help improve market systems (forti ?cation). comes through speci ?c services • Therapeutic feeding interventions include dren and pregnant and lactatprevention and treatment of moderincluding preventing and treating ate undernutrition among children 6–23 anemia, promoting good feeding months of age, and treatment of severe onal care practices, preventing and acute undernutrition with ready-to-use lnesses (especially diarrhea, acute therapeutic foods. These services are delivinfections, measles, malaria,
instance, m ally tracki to raise pa of excessiv stature. Health nutrition out to young chil ing women, all causes of and nutriti treating il respiratory
ered through community nutrition proS), and improving reproducgrams and the primary health care system. and family planning (World Bank oming).9 Provision of these serCommunity growth monitoring and res that basic health funding be promotion programs offer a common platuring crises, which can be a chalform for delivery of multiple services and ountries. have been successful in various countries (box 2.6). The community basis allows proand agriculture grams to tackle a wide variety of causes of undernutrition, often with a focus on women nsiderable momentum, including and children under age two. The programs zed by the global SUN framework, have contributed to changing norms about ink the food security (mainly agrinutritional status and children’s growth. nutrition security agendas so Peru has built a local information campaign ies can bene ?t from potential syn(RECURSO) to show parents that short e SUN interventions have a strong stature is a sign of undernutrition and to onent because women face barincrease their “demand for good nutrition ? inputs and productive assets (Walker 2008). New tools for measuring, for ntries, and increasing women’s
and HIV/AID tive health 2012 forthc vices requi protected d lenge for c
Production There is co that cataly to better l culture) and that countr ergies. Som gender comp riers to access in many cou
GLOBAL MONITORING REPORT 2012 ICE DEVELOPMENTS
NUTRITION, THE MDGS, AND FOOD PR 77
Community-based growth promotion programs
Honduras, Jamaica, Madagascar, Nigeria, Senegal, breastfeeding and a ppropriate and timely complemenTanzania, and some states in India use a strategy of tary feeding, encou rage health and care practices, and community-based growth promotion, which incorpomake referrals to h ealth centers. Some programs have rates some of the key Scaling Up Nutrition intervenprovided micronutri ent supplements for pregnant tions and strengthens knowledge and capacity at the mothers and childre n, as well as immunization and community level. related services. Such strategies have proven effective in improvProgram experien ces highlight the importance of ing mothers’ child-nutrition knowledge, attitudes, three elements: femal e community workers as serand practices; in boosting family demand for health vice delivery agent s; regular child growth monitoring care; and in reducing undernutrition. Successful, (weight), paired wi th counseling and communication large-scale child growth promotion programs in these with the mother by a well-trained agent who bene ?ts countries have achieved sharp declines in child malfrom regular superv ision in weighing, recording, and nutrition in the ? rst ?ve years, with a more gradual counseling; and well-de signed, culturally approprirate of decline in moderate and mild undernutrition ate, and consistent nutrition education to promote after that. The community basis allows practitioners speci ?c nutrition pra ctices. The challenges relate to to address multiple causes of malnutrition, with a agent training, sup port, and motivation; barriers focus on women and on children under age two. faced by bene ?ciary m others in implementing recomLeading interventions include nutrition education mended behavioral c hanges; and high costs of foodor counseling. These interventions often accompany supplementation pro grams for mothers and children. child growth monitoring, offer advice on maternal care services during pregnancy, promote exclusive Source: World Bank 2012 forthcoming.
access to human capital is critical to reducing o humans, and poverty and undernutrition. Changes in agriculture affect health and nutrition through rise, houseseveral levers (Hoddinott 2011; World Bank
that can be transmitted t work-related accidents. • When returns to agriculture holds may increase the la
bor they devote and IFPRI 2008): ring, decreasing ild labor. • Increased agricultural production may ult in increase household income, which can be hold resource used to purchase goods that affect health incomes for and nutrition or can be saved in the form ffect how llocated, and the of assets, such as improved shelter and
to agriculture through hi leisure, or increasing ch • Changes in production may res changes in the intrahouse allocation. Higher earned women, for example, may a money is spent, food is a types of assets held, whi
ch may improve access to sanitation, that improve health. health and nutrition. • Changes in agricultural production may result in improvements in household diets, s is scarce because especially through diet diversification cts or studand potentially through biofortification eir outcomes, and of crops (such as vitamin A–rich rice and tions may look sweet potatoes). rgeted interven• Changes in crops or in production proe knowledge gap cesses may make agricultural work more or point to positive less physically demanding and may change hanges in diet exposure to pesticides, animal diseases of biofortified Evidence on these lever very few agricultural proje ies include nutrition in th because agricultural interven less cost-effective than ta tions for nutrition alone. Th is large, but some studies impacts of higher income, c composition, and provision
78 NUTRITION, THE MDGS, AND FOOD PRICE DEVELOPMENTS MONITORING REPORT 2012
foods on nutritional status (Masset et al. a direct effect on the vitamin 2011). ung children and women in w et al. 2007) and contribStrengthening the link between agriculture consumption, women’s nutriand nutrition ge and empowerment, and Some agricultural strategies have strong me. Work by Harvest Plus potential to strengthen the links between gthen biofortification in iron agriculture and nutrition. The most promemia), zinc (effects on growth), ising ones aim to increase the focus on vul(night blindness, immune nerable groups (like smallholder farmers— rtality) to address microparticularly women); diversify production cies. Some of the crops that (including homestead food production) to ollout include iron- and zinc-rich increase the availability of legumes, vegetan India, iron-rich rice in Banglables, and animal-source foods; reduce the , iron-rich wheat in India and impact of waterborne diseases and diseases -rich beans in Rwanda, vitamin transmitted from animals; and combine n Nigeria and the Demonutrition education with agricultural activic of Congo, and vitamin A–rich ties (Pinstrup-Andersen 2010; World Bank a. The 2008 Copenhagen 2007; World Bank and IFPRI 2008; World luded that biofortification Bank 2012 forthcoming). Dietary diversi ?cacost-effective intervention tion is one of the key results for improving ger and undernutrition outside diets through own production. onal intervention. Women as producers are critical to household food and nutrition security in many ther variability and seasonal smallholder economies, especially in Africa. Agriculture interventions need to address the sonal food shortages through potential negative consequences on household icultural practices, food presnutrition from increased labor by women. safety nets can have long-term
vitamin A) has A status of yo Mozambique (Lo utes to energy tional knowled household inco seeks to stren (effects on an and vitamin A response, and mo nutrient de ?cien are close to r pearl millet i desh and India Pakistan, iron A–rich cassava i cratic Republi maize in Zambi Consensus conc was the ?fth most
to address hun direct nutriti Addressing wea food shortages Addressing sea changes in agr ervation, and
Technology to counteract these effects is ted, the period between conoften available, but it is rarely accessible to o years of age is critical to women. In Sub-Saharan Africa, women have ent. Because that period less access to fertilizer, labor, and other inputs agricultural seasons, where than men do. But when women secured the shortages are typical, children same level of inputs as men, they increased suffer from some deprivation their yields for maize, beans, and cowpeas by With climate change, these 22 percent (Quisumbing 1996). ages are likely to increase in Increasing production of nutrient-dense and severity. Low-input food foods will improve access to diverse diets. echnologies (such as solar dryThose households producing horticultural ase access to diverse diets for crops and raising small animals (poultry, d during the year. Adoption guinea pigs, aquaculture, and the like) will te-season crops, or crops that show the greatest improvement in nutritional ater, may also help improve status. This type of production positively d water management systems affects the quality of the diet and micronutrificient use may improve proent intake. In addition, better preservation of also decrease the incidence of nutrient content or post-harvest forti ?cation ses and reduce women’s can also improve food nutrient content. ecting water (Pinstrup-AnderA promising range of interventions and Jones 2012 forthcoming). involves biofortification. The promotion tions may be complemented of the orange-fleshed sweet potato (rich in on of social safety nets in the
effects. As no ception and tw human developm covers several seasonal food are likely to at some point. seasonal short both frequency preservation t ing) may incre a longer perio of early or la consume less w diets. Improve to increase ef ductivity and waterborne disea burden of coll sen, Herforth, These interven by the provisi
GLOBAL MONITORING REPORT 2012 E DEVELOPMENTS 79
NUTRITION, THE MDGS, AND FOOD PRIC
short run. Studies of such interventions in n northwest Bangladesh (Khandker, Khaleque, ontributed and Samad 2011) show that they are helpful 6 percent) to in mitigating seasonal deprivation during the ion between pre-harvest hunger season, especially those d 2000). administered by NGOs. ion rates in he lower staDecreasing post-harvest losses women’s Decreasing post-harvest losses of nutrienter jobs as a dense foods provides gains to agricultural care in urban income and nutrition. Post-harvest loss is (Ruel et al. especially a challenge for perishable fruits native incomeand vegetables (Pinstrup-Andersen, Herit in Banforth, and Jones 2012 forthcoming), which orld Bank have high micronutrient content. Access to cash transfers markets through investment in roads and etter nutripost-harvest facilities (storage and basic prodren through cessing) are key for reducing these losses. verse diets, Farmers’ marketing organizations, offering access to price information for example, are tal is one also important. reduce poverty nutrition. Targeted subsidies ia, IndoneGovernments often use agricultural input at assets that subsidies to promote food output, but these signi ?cant subsidies generate much controversy because s its deciof their ?scal costs, generally poor targeting, ssociated possible undermining of local markets, and ld spending
Women’s income and girls’ educatio Women’s education (43 percent) c more than food availability (2 decreases in child undernutrit 1970 and 1995 (Smith and Hadda Some of the higher undernutrit South Asia may be related to t tus of women there. Increased income, through access to bett bene ?t of the provision of child
poor communities in Guatemala 2002), through access to alter generation strategies and cred gladesh, India, and Senegal (W 2011a), and through targeting and workfare to women, yield b tional outcomes for their chil increased consumption, more di and better quality of care. Increasing women’s human capi of the most effective ways to and to decrease children’s under Research in Bangladesh, Ethiop sia, and South Africa shows th women bring to marriage play a role in how the household make sions. Higher women’s assets are a with a higher share of househo
lackluster results for rural poverty reduction. rls’—and a Simulations based on the Malawi Agriculls (Quisumbing tural Input Support Program, which provides and de la fertilizer and maize seeds, show that results cation is depend crucially on how the subsidies are nd nutrition of ?nanced, on the return on public investments cation will that compete for scarce government funds, apabilities— and on the size of the productivity gains that ren. smallholders reap from increased application of seeds and fertilizer (Buf ?e and Atolia 2009). The results are much less favorable when input subsidies crowd out infrastructure investment, which in the long term may enable rural households to diversify their vity losses to livelihood strategy from staple food procountries. In duction and help them reach food security. ndividuals are Simulations based on comparisons between ent of lifesubsidy programs and social cash transfers undernutriin Ghana and Malawi (Taylor and Filipski (World Bank 2012 forthcoming) show that the cash transition costs an fers obtained better outcomes for children’s Workforce undernutrition. tion costs the
going to education—especially gi lower rate of illnesses in gir and Maluccio 2000; Quisumbing Brière 2000). Because mothers’ edu a critical input in the care a infants, investments in girls’ edu bene ?t their adult incomes and c
and the welfare of their child
How much would it cost? The cost of inaction Undernutrition causes producti individuals and GDP losses to India productivity losses to i estimated at more than 10 perc time earnings, and GDP loss to tion runs as high as 3–4 percent 2009). In Tajikistan undernutr estimated $41 million annually. lost to deaths from undernutri
80 NUTRITION, THE MDGS, AND FOOD PRICE DEVELOPMENTS L MONITORING REPORT 2012
country $12.3 million a year, while proual per capita cost of various ductivity lost to stunting, iodine de ?ciency, ions is very low childhood anemia, and low birth weight Annual per capita cost costs $28.6 million. motion $0.30–4.00 ents $0.20 Nutrition interventions supplements $0.47 (10 days) age) $0.32–0.49 Horton et al. (2010) put the costs of scaling
TABLE 2.1 The ann nutrition intervent Interventions Breastfeeding pro Vitamin A supplem Therapeutic zinc Deworming (school Iron supplement
$10–50 up the minimum package of the 13 interven$0.01 tions in the SUN package at $11.8 billion a f staples $0.10–0.12 year, of which $1.5 billion is expected to be $0.05 available from wealthier household resources lderman, and Rivera 2008. to cover costs for complementary and forti?ed foods. The total ? nancing gap is therefore $10.3 billion. Such increases in the turn for behavioral intervenresources devoted to nutrition interventions omotion of breastfeeding, would achieve full coverage of the target 67:1, vitamin A supplemenpopulation in the 36 countries responsible for o 43:1; salt iodization, 30:1, 90 percent of the world’s stunting. Adding 32 3:1 to 60:1. The newer smaller high-burden countries would increase term bene ?ts of improved costs by 6 percent. The funds would be raised o and in the ?rst two years of in two steps.10 t the returns are larger still. ch as multi-micronutrient • Step 1. $5.5 billion a year would be raised, , therapeutic foods, and including $1.5 billion for micronutrients rough electronic media also and deworming, $2.9 billion for behavioral implement some of these change, and $1.0 billion to build capacities to start scaling up more complex and targeted food-based programs.
Iron forti ?cation o Salt iodization Source: Horton, A
2.3). Rates of re tions, such as pr range from 5:1 to tation from 4:1 t and deworming from evidence on longnutrition in uter life may mean tha New approaches su powders (sprinkles) cash transfers th make it easier to interventions.
FIGURE 2.3 Benefi t-cost ratios of various • Step 2. $6.3 billion a year would be raised to scale up complementary and therapeutic feeding in resource-poor environments—$3.6 billion on complementary food to treat and prevent moderate undernutrition and $2.6 billion on treatment of ion severe acute undernutrition. tion of stap les The set of interventions and steps will not ate fortificat ion of course be identical in each country and Iro n will re ect the national nutrition issues (seasonal variations, rural/urban distribution, protein-energy shortages, and micronutrient e) deficiencies), the trade position (importer/ nt powder s exporter), and their administrative capacVitamin A ity—those countries with stronger capacity are likely to move faster to the second step. g No one has conducted a global costbenefit analysis of nutrition interventions 0 30 60 90 120 (World Bank 2010a), but individual intervenBenefit/cost ratio tions have consistently shown benefit-cost ratios greater than 2:1 (table 2.1 and ?gure erman, and Rivera 2008. promotion supplements Breastfeedin Micronutrie supplement Deworming (school ag Fol Iron fortifica interventions Iodine supplements Salt iodizat
Source: Horton, Ald
GLOBAL MONITORING REPORT 2012 ICE DEVELOPMENTS 81
NUTRITION, THE MDGS, AND FOOD PR
The global costs of scaling up nutrition oad-based) coaliinterventions are lower than the aid commitften include one or ments for rural development and agriculture hat rally behind and agro-industries ($14 billion in 2010, see ble to in uence chapter 5) and social safety nets, but they are -making proa big leap from commitments of of ?cial develf opportuopment assistance in basic nutrition intervene champions and tions of $0.3 billion a year during the period e (box 2.7). 1995–2007. Not all agricultural, health, and s may give rise social protection interventions are geared to factor; for examreducing malnutrition, but some interveno create polititions in these sectors could bring important or the formanutritional gains, at marginally increased rise to champions cost. At the country level, spending on safety es, where one nets accounted for 1.9 percent of GDP on was absent, the average before the recent global economic iled. Conversely, crisis (Grosh et al. 2008; Marzo and Mori e a force for 2012). During the crisis, a total of $600 bilthe developlion was spent on support for safety nets ative for nutri(Zhang, Thelen, and Rao 2010). As noted, tion of and focus some of these interventions can provide platties and the use forms to support better nutrition outcomes sing data and (World Bank 2012 forthcoming). ional development, Comprehensive, consolidated scaling up of multisectoral nutrition programs implies the need for institutional and policy reforms
champions); formation of (br tions and alliances (which o more development partners) t a common narrative and are a decision makers and decision cesses; and political “windows o nity ? that can be seized by th
coalitions to push for chang Sometimes one of the factor to the emergence of another ple, champions may be able t cal windows of opportunity, tion of a coalition may give who come forward. In countri or more of the three factors push for change generally fa when the three factors becam change, it was common to see ment of a shared policy narr tion, leading to the identi on selected strategic priori of strategic communication u results to push for institut more resources, or both. ?ca
Policy responses and their Challenges to ramping up investment in expected impacts on the nutrition include their multisectoral basis, nutrition related MDGs
which requires strengthening coordination ices on the between ministries in social sectors, agriand socioculture, rural development, and trade; lack apter 1). Is the of up-to-date national data on malnutrition, net importer particularly anthropometric data (especially world prices for height),11 micronutrient adequacy data ce (in trade, (blood tests), and behavioral practices such of the food as breastfeeding and hand washing; lack of change? Simivoice of potential direct bene ?ciaries (young sponses to world children and vulnerable pregnant women); ary depending and lack of political commitment. ics, including A series of case studies of nutrition policies ? nancing that and programs in countries at differing levels in government of policy development and program coveract of expendiage and results have shed light on the process ring crises on of breaking out of the “low priority cycle. ?12 odel, Several factors associated with change were rium model identi ?ed, the three most common ones being r the analysis the coming together of key people who engenver undernutrition. der con ?dence about the issue and develop the at food prices risk-taking attitude to push for change (the (and remain
The impact of higher food pr MDGs varies across countries economic groups (see also ch country a net exporter or a of the food items for which change? What is the importan production and consumption) items for which world prices larly, the impact of policy re price changes is likely to v on country and policy specif the source of any additional is needed to cover increases spending. To explore the imp ture and ?nancing decisions du
the MDGs, we extended the MAMS m a computable general equilib developed at the World Bank fo of country strategies, to co In this exercise, we assume th double between now and 2015
NUTRITION, THE MDGS, AND FOOD PRICE DEVELOPMENTS GLOBAL MONITORING REPORT 2012
BOX 2.7 Breaking the low-priority cycle: how nutrition can become a public sect or priority for Sub-Saharan African governments
In many countries in Africa, the ?ght against underrity cycle, and where the change nutrition has remained a low government priority for in the text were prominent. Senegal decades, and only recently have some countries begun ctoral Forum for the Fight against taking steps to eliminate it. r the Prime Minister’s Office; a Political economy factors are important in undernal policy and a National Executive standing why, in many countries, nutrition is not the day-to-day management, coorrecognized as an important priority for human and itoring of the policy; periodically economic development. Nutrition in many countries trategic plans for nutrition; multiple is trapped in a “low-priority cycle ?—a vicious circle stakeholders from all sectors; that starts with low demand for nutrition services, rently equivalent to $0.20 per capita followed by a weak response by governments that d to $0.03 per capita per year in commit little or no resources and end up with ineffected to grow to $0.65 per capita tive implementation and poor results, which in turn donor contributions that average feed into low demand for nutrition, thus perpetuatper capita per year; national ing its low priority.a The accumulation of new scienand, importantly, a reduction in ti ?c evidence on the magnitude of undernutrition and ion that is 16 times above the its impact on human and economic development is in Africa as a whole. gradually in uencing international donor con ?gurations toward a uni ?ed call for scaling up nutritionb o.worldbank.org/NGZM0XHLM1 for puband the necessary repositioning of nutrition as central udies on Benin, Ghana, Madagascar, and to development.c
out of the low-prio factors mentioned now has a Multise Malnutrition unde national nutritio Of ?ce that ensures dination, and mon updated, costed s programs with multiple a budget line cur per year (compare 2002–06) and projec per year by 2016; between $0.65–0.70 program coverage; chronic undernutrit average reduction a. See http://g lished country st Senegal.
b. Scaling Up Nutrition (SUN) is an international moveIn Sub-Saharan Africa, Senegal is an example of a ment launched in September 2010; see www.scalingup country that has made signi ?cant strides in the ?ght nutrition.org and box 2.5. against undernutrition, where nutrition has broken c. World Bank
constant thereafter) and analyze the implicaundermined by currency appreciations for two archetype low-income counth potential negative impacts on food tries. The two archetypes represent a median ition security. Nevertheless, the need low-income country along several dimender interventions is more evident for sions; their differences are primarily related food importer. to different trade structures, representing the type of intervention and the medians for net food exporters and net food ave important implications for the importers in low-income countries (box 2.8). of nutrition interventions in improvAt the micro level, there may be strong indicators. To illustrate some of the reasons for policy interventions in both nvolved, we constructed six scenarios, country types. While the aggregate impact which involves a policy response by of rising food prices is positive for the net food importer to the rise in the price exporter, speci ?c household groups may be e then compared their impact on hurt, especially in the short run. For examcators with the scenario of a rise ple, households that are net food purchasers prices with no policy adjustment. may experience a decline in real incomes, the scenarios (sub+tax, sub+aid, particularly if their incomes are not very and sub+spnd) involve the introresponsive to the rise in growth (for examof untargeted food subsidies suffiple, households that rely on remittances from keep domestic processed food prices abroad, for which the domestic purchasing through 2025 (as in the baseline).
power is tion) wi and nutr for broa the net Both ?nancing h success ing MDG issues i each of the net of food. W MDG indi in food Four of sub+bor, duction cient to constant
GLOBAL MONITORING REPORT 2012 DGS, AND FOOD PRICE DEVELOPMENTS
NUTRITION, THE M 83
BOX 2.8 The implications of various spending and financing decisions on the MDG s of a low-income country using MAMS a. Higher export prices for net exporter: Relative changes in MDG b. Higher import prices for net importer: Relative changes in MDG indicators compared to baseline of no price increase in 2015 and 2025 indicators compared to baseline of no price increase in 2015 and 2025 MDG 5 MDG 5 (Maternal (Maternal health) health) MDG 4 MDG 4 (Child (Child mortality) mortality) MDG 1.c MDG 1.c (Undernourishment) (Undernourishment) MDG 1.a MDG 1.a (Extreme (Extreme poverty) poverty) –35 0 2 4 6 –30 8 –25 10 –20 –15 –10 12 14 16 percent percent 2025 2015 2025 2015 –5 0
The left panel of the box ?gure shows the impact on Not surprisingly, as shown in the right panel, the selected MDG indicators for a low-income country evolution of the same indicators for a less fortunate that is in the fortunate position of being a net exporter archetype country—a net importer facing increased of food items during a period of rising food prices. We prices for its food imports—is the direct opposite. compare two scenarios, one where world food prices The wide variance in the relative sizes of the gains and are constant through 2025, and a scenario in which
the losses for the two archetypes re ects the impact of world prices gradually are doubled during the period economic exibility: both archetypes adjust produc2012–15 , after which they stay at this high level until ion and consumption, for the net exporter with the 2025, the last simulation year. The box ?gures show im of raising exports and for the net importer with the changes in selected MDG indicators in 2015 and the aim of reducing imports. 2025 compared with the baseline. The rise in food prices drives increased private demand and government services in response to higher growth, resulting Source: For more on MAMS, visit www.worldbank.org/ in substantial improvements in the MDG indicators mams. For more on the analysis summarized here, see compared with the baseline. Lofgren (2012 forthcoming).
The source of required additional ? nancing income. Ttn+tax assumes that (around 5 percent of GDP) is domestic taxes r scheme can be handled by the for sub+tax, foreign grant aid for sub+aid, dministration that already is domestic borrowing for sub+bor, and domesile trn+tax2 initially imposes tic spending cuts for sub+spnd (exempting iring and other costs amounting only transfers to households and spending on nt of the total program cost, agriculture). The last two scenarios (trn+tax er time. and trn+tax2) impose the same, higher tax ts of these policy responses rates as sub+tax but, instead of subsidizing guing patterns. The transfer food, the fiscal space is used for targeted ut additional administrative transfers to the bottom halves of the popuax) achieves the largest reduclation in rural and urban areas as measured eme poverty (MDG 1.a) of the
by per-capita this transfe government a in place, wh additional h to 15–25 perce declining ov The impac reveal intri scheme witho costs (trn+t tion in extr
84 NUTRITION, THE MDGS, AND FOOD PRICE DEVELOPMENTS ONITORING REPORT 2012
six scenarios, followed by transfers with impact on MDG 4 (undersuch costs added (trn+tax2) and aid- ?nanced DG 5 (maternal morfood subsidies (sub+aid); in this and other on the impact on growth in respects, the aid-financed food subsidies and investment, including leave the economy relatively untouched ion and government health by the import price increase (figure 2.4a). ch translates into governUntargeted food subsidies that are ? nanced es; ?gures 2.4c and 2.4d). domestically are relatively less effective in ies (sub+aid) achieve the reducing poverty. Financing via spending n in under- ?ve and maternal cuts (sub+spnd) leads to outcomes that are because there is no need to similar to those of tax ? nancing (sub+tax); stments and the purchasin the real world, the details would depend private sector is boosted by on the extent to which the spending cuts ation. At the other extreme, affect wasteful spending and whether the re ? nanced through governtax increases distort allocative ef ?ciency or (sub+spnd) and, to a penalize investments. Untargeted food subhrough domestic borrowsidies financed through domestic borrowtually raise under- ?ve and ing (sub+bor) do relatively well initially but ty rates compared with end up as the only intervention that raises nario of no policy response. the poverty rate compared with the baseline ct the negative impact of scenario of no policy action. The primary nt spending on both govreason is that increased domestic borrowervices and the importance ing reduces domestic private investment and ivate consumption. The scegrowth in capital stocks and GDP. Initially, increases (sub+tax, trn+tax this negative impact is relatively minor but ve less effect because govover time it becomes important, not unlike are protected, the decline in undernutrition impacts on a child. ion is smaller, or both.
Finally, the ?ve mortality) and M tality) depends real consumption private consumpt consumption (whi ment health servic Aid?nanced subsid
largest reductio mortality rates, make domestic adju ing power of the currency appreci subsidies that a ment spending cuts lesser extent, t ing (sub+bor) ac maternal mortali the baseline sce These results re e cuts in governme ernment health s of protecting pr narios with tax and trn+tax2) ha ernment services private consumpt
The subsidy schemes are mostly more sucanalysis suggests that, if cessful in keeping the rate of undernourishosts can be contained, counment in check ( ?gure 2.4b), because processed k on the dif ?cult task of food prices do not increase. Aid financing eted measures, including (sub+aid) is preferable, followed by spendt, untargeted food subsidies ing (sub+spnd) and tax (sub+tax) ? nancing, n reducing undernourishrespectively. By 2025 the changes in underif they are aid financed, nourishment are minor for the remaining the advantage of making it scenarios. However, for the two transfer d dif ?cult domestic resource schemes, this limited reduction in undernourowever, this does not address ishment comes in the context of an increase ronutrient de ?ciencies. In in real incomes and decisions to reduce food subsidies are financed by consumption and raise consumption of other latively indiscriminately items in response to relative price changes. For rces available for domestic the case of borrowing- ?nanced subsidies, the igh payoffs (including main reason that undernourishment does not ion, private investment, and improve is lower real household incomes.13 d for human development One important dimension to keep in mind difficult trade-offs emerge is that subsidies in general cover staple foods may be better off maintainthat are high in calories and low in microuo. Another important lesnutrients. Even if underweight improves, ysis is that, to understand stunting and micronutrient de ?ciencies may g-run impact of higher increase, which has happened in Honduras. od prices, it is necessary
In sum, this administrative c tries should embar introducing targ transfers. If no may be effective i ment, especially because aid has possible to avoi reallocations. H stunting and mic addition, if the measures that re reduce the resou ? nal demands with h private consumpt government deman services), then and the country ing the status q son of this anal the medium- to lon international fo
GLOBAL MONITORING REPORT 2012 E MDGS, AND FOOD PRICE DEVELOPMENTS
NUTRITION, TH 85
FIGURE 2.4 Impact of policy responses to food import price shock for food net im porter a. Relative changes in MDG 1.a: Extreme poverty b. Relative changes in MDG 1.c: Undernourishment trn+tax2 trn+tax2 trn+tax trn+tax sub+aid sub+aid sub+spend sub+spend sub+bor sub+bor sub+tax sub+tax –5 –33 –30 –27 –24 –21 –18 –15 –12 –9 –6 –3 –4 –3 –2 –1 0 1 2025 2025 2015 2015 0 3
c. Relative changes in MDG 4: Child mortality d. Relative changes in MDG 5: Maternal health trn+tax2 trn+tax2 trn+tax trn+tax sub+aid sub+aid sub+spend sub+spend sub+bor sub+bor sub+tax sub+tax –2 –6 –4 –1 –2 0 1 0 2 2 3 4 4 5 6 6 8 7
2025 2025 Source: Lofgren 2012 forthcoming.
to consider domestic adjustments and the cators and on the effects of both the role of international trade in food for each e rise and some of the interventions to economy; it would be misleading to assume gate them. Appropriate responses can that food prices change for consumers while ut in place only if countries have a good everything else remains the same. rstanding of who is affected and how. ver, few national surveys collect full Policy Recommendations consumption data at the household and vidual levels with the needed periodicity. Improve the information about urement of length or height and weight nutrition status, practices, and if ?cult, and lack of reliable birth data in interventions countries makes collecting anthropoic data and computing indexes a chalA basic problem in designing interventions e. Measurements of micronutrient status to mitigate the effects of food price hikes is n require blood collection, a logistical the lack of quality data on basic nutrition lenge in many cases, although innovative
indi pric miti be p unde Howe food indi Meas is d some metr leng ofte chal
86 NUTRITION, THE MDGS, AND FOOD PRICE DEVELOPMENTS NITORING REPORT 2012
techniques based on biomarkers may make utero and in the ? rst two this information more readily available. Diserline this point. Most interaggregated data on costs and impacts, espehe early window of opporcially in multisectoral interventions, also high rates of return, and the remain scarce. The MDG indicator (indin equity and ef ?ciency are cator 1.b) is child underweight. However, tage. recent ? ndings con ? rm that stunting is the h to optimal young most appropriate measure for undernutrition. development should include A multipurpose, nationally representative , young child stimulation household survey with information on food nd positive discipline. Highconsumption, nutritional status (including mportant in nutritional status some micronutrient information), and mare development. Some of the ket exposure would increase countries’ abilwill require adaptation to ity to monitor nutritional status and to design ntexts and a shift of focus of appropriate targeted interventions. from curative to preventive Investing in nutrition offers high returns ention package to The global costs of scaling up nutrition may ation capacity seem high initially, but the costs of inaction are also high, the unit costs (set out in table nutrition triggers funding 2.1) are low, and estimated returns are very entions, countries also need high—and probably lower-bound estimates.
undernutrition in years of life und ventions during t tunity have very trade-offs betwee minimal at this s A holistic approac child growth and nutrition, health including play, a quality care is i and sociocognitiv behavioral changes local cultural co the health system interventions. Tailor the interv country implement and issues While acute under and relief interv to tackle chronic
undernutrition. Very few Yet funding remains low. One issue is capaccountries experie nce acute protein-energy ity—these interventions typically require undernutrition ex cept in famines (the Horn of collaboration among ministries and in the Africa), seasonal ly (the hungry season in Ban-
?eld. Basic nutrition capacity is also scarce. gladesh and in Sa hel countries), and in speHowever, renewed interest is appearing from ci ountry (hunger and thirst multilateral donors such as the World Bank; bilateral donors such as Canada, Denmark, northern Kenya, and northFrance, Japan, Norway, and the United Kingmunity-based interventions dom; and NGOs such as Save the Children. address acute severe underIncreased action may also come through the en food shortages are acute SUN framework to scale up nutrition (see t function well, food transbox 2.5). tant response in the short not address the prevention of longer-term ch ronic undernutrition. Target the period from conception to “Hidden hunger ?— or micronutrient two years of life de ?ciencies—require a different set of interMany interventions have indirect effects on ventions. The mai n micronutrient de ?ciennutrition, but speci ?c interventions for young cies that affect hi gh shares of populations children and their caregivers and for pregnant include iron, vit amin A, zinc, and iodine. and lactating women are crucial, given the The package of me asures, recommended in importance of that window as a foundation SUN, include supp lementation to vulnerof human capital (see ?gure 2.1). The earlier able groups in high prevalence areas (vitaevidence about the intensity of physical and min A and iron fo r pregnant women and sociocognitive development and the negative children, zinc ta blets for children with diarshort-, medium-, and long-term impacts of rhea), and forti ?ca tion including iodized salt ?c areas of the c
zone in Djibouti, east Brazil). Com (see box 2.6) can nutrition, and wh and markets do no fers are an impor term but they do
GLOBAL MONITORING REPORT 2012 DEVELOPMENTS 87
NUTRITION, THE MDGS, AND FOOD PRICE
and forti ?ed our and sugar. Forti ?cation ion of staple foods requires collaboration with and pregnant the private sector. In the future, bioforti ?ed escribes crops may contribute to population-level tion security efforts to prevent micronutrient de ?ciencies. ? rst proDeworming is also important in settings templates where women and children have high worm burdens and develop anemia. The ministry of health is commonly the agency responsible for the delivery of deworming, infant and
long-term consequences of undernutrit and the need to shield children women from its effects. Box 2.9 d Haiti’s strategy to restore nutri after the 2010 earthquake and the grammatic steps the country con for each priority. Incorporate nutrition-sensitive approaches in multisectoral
young child feeding programs, and micronuinterventions trient supplementation efforts. Communitybased programs are frequently the platform oach to for behavior change interventions and nutriuntries need tion surveillance. of shortImporters and exporters of food would estments to use slightly different packages to address for smallholder increases in food prices. However, all counrs, especially tries should build a safety net that can be riculture, and expanded in a crisis. While general food subapproaches can sidies are important political tools to maingriculture, and tain food prices at acceptable levels, their aid—more ?scal costs and paltry nutritional gains make 012 forththem less appealing than targeted subsidies urenutrition or cash transfers to the poor and vulnerable. Global meaComputable general equilibrium analysis nvironment in suggests that, if administrative costs can be ve imporcontained, countries should embark on the policy options difficult task of introducing targeted mealso matter In developing a twin-track appr nutrition and food security, co to weigh the benefits and costs term relief and longer-term inv raise productivity, especially farms, and to work across secto to link nutrition to health, ag social protection. A variety of make interventions in health, a social protection—including food nutrition sensitive (World Bank 2 coming; see also http://www.sec platform.org/Pages/Home.aspx). sures on food trade shape the e which decisions are made and ha tant consequences for national (chapter 4). National markets a
sures, including transfers. If not, untargeted better price aid-financed food subsidies may be effecns) and more tive in reducing undernourishment. Howor. ever, if untargeted subsidies are ? nanced by tion will measures that reduce the resources for other nts with the human development services, then the counnities, try may be better off refraining from engagin food prices ing in untargeted subsidies. ending on Targeting poor households with young l. In many children is one way to improve nutrition s may have outcomes among the groups at highest risks ess-raising for irreversible negative impacts of undery nutrition nutrition. A point of entry on nutrition is a n several lowcomprehensive growth monitoring and proAnd somemotion program for children, whether at eness and the community level or through the health s a key role in sector. This program would include inforsupplemenmation campaigns (such as the one used by the availabilRECURSO in Peru) to help mobilize the bility of highly population and raise awareness about the
and need improved functioning ( information and fewer distortio involvement of the private sect Locally, successful implementa require an alliance of governme private sector, NGOs, and commu especially because an increase will have disparate impacts dep markets and production potentia cases, behavior and social norm to change, with targeted awaren campaigns. Large-scale communit programs have been successful i income countries (see box 2.6). times NGOs can help expand awar coverage. The private sector ha fortification and sometimes in tation as well as in improving ity, accessibility, and afforda nutritious foods.
NUTRITION, THE MDGS, AND FOOD PRICE DEVELOPMENTS GLOBAL MONITORING REPORT 2012
BOX 2.9 Nutrition security in Haiti after the earthquake of 2010: P riorities and first steps Nutrition security encompasses access to a nutritious diet, a safe envir onment, adequate health care, and proper child care practices. Priorities First steps Reduce chronic undernutrition through improved exclusive behavior change through community education- and breastfeeding and complementary feeding practices ld-level outreach Reduce anemia among pregnant and lactating women and routine micronutrient supplements (iron, iodine, and children by providing iron supplements iron and deworming A) to pregnant and lactating women and children treatments wo years Reduce vitamin A de ?ciency through supplementation Reduce iodine de ?ciency through supplementation and salt sh salt iodization iodization Reduce chronic food insecurity through improved agriculture, in agriculture and agribusiness to increase access to investment in agribusinesses, and multisectoral collaboration t-rich foods and promote the production of forti ?ed Promote househo Provide vitamin under t Reestabli Invest nutrien
complem entary food for children 6–24 months Improve the coverage of basic health and nutrition services by Invest in basic health services to expand access and quality and ensuring proper attention to pregnant and lactating women include a basic nutrition package for the most vulnerable and children under two years Support government capacity and leadership to set, promote and implement nutrition security programs and policies Source: World Bank 2010b.
Notes needs and food preferences for an active and healthy life. 3. ? 1. The term malnutrition refers to undernutriMorocco’s Targeting and Social Protection tion (the outcome of insuf ?cient food intake
Strategy (World Bank 2011b) delineates some and repeated infectious diseases, including
of the trade-offs and calls for targeting and being underweight for one’s age, too short for a different set of interventions to tackle the one’s age (stunted), dangerously thin for one’s risks facing the most vulnerable population height (wasted), and de ?cient in vitamins and groups. minerals resulting in micronutrient malnutri4. This section draws heavily on World Bank tion) and overnutrition (overweight and obe(2006). sity). Prevalence of undernourishment refers to the proportion of a population whose 5. This section draws on Alderman (2011a). dietary energy consumption is less than a pre6. Gertler (2004) also show results on child determined threshold. This threshold is counhealth through increased access to preventive try speci ?c and is measured by the number of health services. kilocalories required to conduct sedentary or 7. Supplementary food contains all the recomlight activities. mended daily allowance of micronutrients 2. According to the Food and Agriculture along with energy; typically it is a fortified Organization, food security is a situation cereal and legume blended our and is used to where “all people, at all times, have physiaddress moderate acute malnutrition. Theracal, social and economic access to suf ?cient, peutic food contains all nutrients for children safe and nutritious food to meet their dietary to reverse growth failure and achieve catch-up
GLOBAL MONITORING REPORT 2012 PRICE DEVELOPMENTS 89
NUTRITION, THE MDGS, AND FOOD
(it addresses severe acute and chronic malernational University, nutrition). The lipid-rich food is ready-to-eat from its container, requires no water for prepNo Small Matter. The aration, is good for 24 months after manufaccks, and Human Capiture and 24 hours after opening. ly Childhood Develop8. Evaluations are under way in both countries. World Bank. 9. Birth spacing, adolescent pregnancies when y. 2011. “School Feedthe mother is still growing herself, and sexuopment: Are We Framally transmitted infections all affect fetal ctly? ? World Bank growth and infant nutritional status. The longer the interval between birth and the next S. Linnemayr, A. Ka, conception, the more time the mother has to M. Mulder-Sibanda. recover nutritionally from her previous birth. a Community-Based 10. In both steps, $0.1 billion is included for rige Nutrition in Young orous monitoring and evaluation. Difference in Difference 11. These data are improving with the impleNutrition: 12, no. 5: mentation of the Living Standards Measure8980008002619. ment Study (LSMS) household surveys, as l, D. Maxwell, well Demographic and Health Surveys and s. 2000. “Poor MaterMultiple Indicator Cluster Surveys in some ain Constraint to Good Accra. ? Journal of countries, but sustained funding for regu-
South Asia. Venice Int San Servolo, July 20–21. Alderman, H., ed. 2011b. Impact of Poverty, Sho tal Investments in Ear ment. Washington, DC: Alderman, H., and D. Bund ing Programs and Devel ing the Question Corre Research Observer. Alderman, H., B. Ndiaye, C. Rokx, K. Dieng, and 2008. “Effectiveness of Intervention to Improv Children in Senegal: A Analysis. ? Public Health
667–73; doi:10.1017/S136 Armar-Klemesu, M., M. Rue C. Levin, and S. Morri nal Schooling Is the M Childcare Practices in Nutrition 130, no. 6:
1597–607. lar national-level household surveys is still a Attanasio, O., E. Battist in, E. Fitzsimons, and challenge. In addition, apart from the LSMS, M. Vera-Hernandez. 200 5. “How Effective while the surveys include anthropometric Are Conditional Cash T ransfers? Evidence data, they contain very little information from Colombia. ? IFS Brie fing Notes BN54,
on consumption. All these surveys also lack Institute for Fiscal S tudies, London. details on household status with respect to Baird, S., J. Friedman, a nd N. Schady. 2011. food markets (net buyer or seller of the prod“Aggregate Income Shocks and Infant Mortalucts affected by price hikes). ity in the Developing World. ? Review of Eco12. This is based on a comparative study of nutrinomics and Statistics 93, no. 3: 847–56. tion policies and programs in Benin, Burkina Baldacci, E., B. Clements , Q. Cui, and S. Gupta. Faso, Ethiopia, The Gambia, Ghana, Mada2004. “Social Spending, Human Capital and gascar, Senegal, and Tanzania (led by Marcela Growth in Developing C ountries: Implications Natalicchio and Menno Mulder-Sibanda). for Achieving the MDGs . ? Working paper 13. In reality, the impact on undernourishment 04/217, International Monetary Fund, Washwould be more positive than indicated for the ington, DC. two transfer schemes because the inequality Bhalotra, S. 2010. “Fatal F luctuations? Cyclicalof calorie consumption declines; however, in ity in Infant Mortalit y in India. ? Journal of the absence of any data on the distribution of Development Economics 93, no. 1: 7–19. calories per capita other than national Gini Block, S.A., L . Kiess, P . Webb, S. Kosen, coef ?cients, the analysis could not account for R. Moench-Pfanner, M. Bl oem, and C. P. this and assumed instead that this national Timmer. 2004. “Macro Sho cks and Micro Gini coef ?cient did not change. Outcomes: Child Nutritio n during Indonesia’s Crisis. ? Economics and H uman Biology 2, no. 4: 21–44. References Buf ?e, E. F., and M. Atolia . 2009. “Agricultural Alderman, H. 2011a. “The Response of Child Input Subsidies in Malaw i. Good, Bad or Hard Nutrition to Changes in Incomes: Linking to Tell? ? FAO Commodity and Trade Policy Biology with Economics. ? Paper prepared Research Working Paper 2 8, Food and Agrifor the CESifo workshop on Malnutrition in culture Organization, Rome.
90 NUTRITION, THE MDGS, AND FOOD PRICE DEVELOPMENTS MONITORING REPORT 2012
Bundy, D., C. Burbano, M. Grosh, A. Gelli, nd N. Schady. 2009. Conditional M. Jukes, and L. Drake. 2009. Rethinking rs: Reducing Present and Future School Feeding. Social Safety Nets, Child hington, DC: World Bank. Development and the Education Sector. . Y. Hong, and X. Hou. 2011. Washington, DC: World Bank. the Food Price Crisis on ConCenters for Disease Control and Prevention. 2011. Caloric Availability in Pakistan: Children’s Food Environment State IndicaRepeated Cross-Sectional and tor Report. U.S. Department of Health and NP Discussion Paper, World Human Services, Washington, DC. gton, DC. CONEVAL. 2009. Informe de evolución histórica Schady. 2009. “How Many de la situación nutritional de la población y Likely to Die in Africa as a los programas de alimentación, nutrición, y obal Financial Crisis? ? Policy abasto en México. ng Paper 5023, World Bank, Cruces, G., P. Gluzmann, and L. F. Lopez Calva. DC. 2010. “Permanent Effects of Economic Crisis J. Sturdy. 2011. “The In uence on Household Welfare: Evidence and ProjecCrisis on Early Childhood Develtions from Argentina’s Downturn. ? Paper of Pathways and Measured prepared for UNDP-RB-LAC project “The mall Matter: The Impact of Effects of the Economic Crisis on the Wellcks and Human Capital InvestBeing of Households in Latin America and the ly Childhood Development, ed. Caribbean. ? ashington, DC, World Bank. Deaton, A. 2010. “Understanding the Mechad S. W. Omamo. 2011. “Social nisms of Economic Development. ? Working : Exploring Issues, Evidence and Paper 15891. National Bureau of Economic Globalizing World. ? Food Policy Research, Cambridge, MA. 29–40. Delisle, H. F. 2008. “Poverty: The Double Burden “Do Conditional Cash Transof Malnutrition in Mothers and the IntergenChild Health? Evidence from
Fiszbein, A., a Cash Transfe Poverty. Was Friedman, J., S “The Impact of sumption and Evidence from Panel Data. Bank, Washin Friedman, J. and N. More Infants Are Result of the Gl Research Worki Washington, Friedman, J., and of Economic opment: A Review Impact. ? In No S ? H
Poverty, Sho ments in Ear H. Alderman. W Gentilini, U., an Protection 2.0 Debate in a 36 (2011): 3 Gertler, P. 2004. fers Improve
erational Impact. ? Annals of the New York olled Randomized ExperiAcademy of Science 1136: 172–84. Economic Review 94, no. 2: Ecker, O., C. Beisinger, and K. Pauw. 2011. “Growth Is Good, but Is Not Enough to . Kim. 2011. “Quality, Quantity, Improve Nutrition. ? Paper prepared for the l Impacts of Rice Price Changes IFPRI 2020 Conference on Leveraging Agriaper presented at the World culture for Improving Nutrition and Health, and Applied Micro Seminar, Delhi, February. Fernald, L. C. H., P. J. Gertler, and L. M. or S., Y. B. Cheung, S. Cueto, Neufeld. 2008. “Role of Cash in Conditional Richter and B. Strupp. 2007. Cash Transfer Programmes for Child Health, otential in the First Five Years Growth, and Development: An Analysis of in Developing Countries. ? Lancet Mexico’s Oportunidades. ? Lancet 374, no. 0–70. 9706: 1997–2005. Ninno, E . Tesliuc, and Ferreira, F. H. G., A. Fruttero, P. Leite, and 2008. For Protection and ProL. Lucchetti. 2011. “Rising Food Prices and sign and Implementation of Household Welfare. Evidence from Brazil in fety Nets. Washington, DC: World 2008. ? Policy Research Working Paper 5652, World Bank, Washington, DC. Alderman, S. Appleton, L. Song, Ferreira, F. H .G., and N. Schady. 2009. “Aggres. 2003. “Reducing Child gate Economic Shocks, Child Schooling and : How Far Does Income Growth Child Health. ? World Bank Research Observer Bank Economic Review 17, 24, no. 2: 147–81.
PROGRESA’s Contr ment. ? American
331–36. Gibson, J., and B and Nutritiona in Vietnam. Bank Poverty September 7. Grantham-McGreg P. Glewwe, L. “Development P for Children 369, no. 9555: 6 Grosh, M., C. del A. Ouerghi. motion: The De Effective Sa Bank. Haddad, L., H. and Y. Yohanne Malnutrition Takes Us? ? World ? P
no. 1: 107–31.
GLOBAL MONITORING REPORT 2012 RICE DEVELOPMENTS 91
NUTRITION, THE MDGS, AND FOOD P
Headey, D. 2011. “Turning Economic Growth ion? Evidence into Nutrition-Sensitive Growth. ? Paper preolicy Research pared for the IFPRI 2020 Conference on Bank, WashingLeveraging Agriculture for Improving Nutrition and Health, Delhi, February. is, D. Maxwell, Hidrobo, M. 2011. “The Effects of Ecuador’s deke. 1999. 1998–2000 Economic Crisis on Child Health tting: Tradand Cognitive Development. ? Department of rity in Accra. ? Agricultural and Resource Economics, Uni11: 1977–91. versity of California at Berkeley. http://ecnr. ming. “World Food berkeley.edu /vfs/ PPs/ H idrobo-Mel /web/ ent: Policy SimuHidrobo_JMP_1.16.11.pdf. -Income Countries. ? Hoddinott, J. 2011. “Agriculture, Health and Monitoring Nutrition: Towards Conceptualizing the LinkWashington, DC. ages. ? Paper prepared for the IFPRI 2020 Conman, B. Cunference on Leveraging Agriculture for Improvchirley. 2007. “A ing Nutrition and Health, Delhi (February). ducing OrangeHoddinott, J. and B. Kinsey. 2001. “Child eased Vitamin A Growth in the Time of Drought. ? Oxford Bulncentrations in letin of Economics and Statistics 63, no. 4: ozambique. ? Jour409–36 (Also in Alderman 2011b). : 1320–27. Hoddinott, J., J. Maluccio, J. R. Behrman, 009. “Under the R. Martorell, P. Melgar, A. R. Quisumbing, g, and Economic M. Ramirez-Zea, A. D. Stein, and K.M. Yount. e Rainfall. ? Ameri2011. “The Consequences of Early Childhood 3: 1006–26. Growth Failure over the Life Course. ? Discus. Vakis. 2008. sion Paper 01073, International Food Policy Changes, and Research Institute, Washington, DC. Early Childhood:
Alleviate Seasonal Deprivat from Northwest Bangladesh. Working Paper 5865, World ton, DC. Levin, C., M. Ruel, S. Morr M. Armar-Klemesu, and C. Ahia “Working Women in an Urban Se ers, Vendors, and Food Secu World Development 27, no. Lofgren, Hans. 2012 forthco Prices and Human Developm lations for Archetype Low Background paper for Global Report 2012, World Bank, Low, J. W., M. Arimond, N. Os guara, F. Zano, and D. Ts Food-Based Approach Intro Fleshed Sweet Potatoes Incr Intake and Serum Retinol Co Young Children in Rural M nal of Nutrition 137, no. 5 Maccini, S., and D. Yang. 2 Weather: Health, Schoolin Consequences of Early-Lif can Economic Review 99, no. Macours, K., N. Schady, and R “Cash Transfers, Behavorial Cognitive Development in ? P
Holmes, R., N. Jones, and H. Marsden. 2009. d Experiment. ? “Gender Vulnerabilities, Food Price Shocks er 4759, World and Social Protection Responses. ? Background Note, Overseas Development Institute, Lon2. “Crisis Response don (October). t background paper Horton, S., H. Alderman, and J. Rivera. 2008. and Labor Strategy, “Hunger and Malnutrition. ? Copenhagen Consensus 2008 Challenge Paper. Copenhagen ornelius, and J. Isaza Consensus Center. Review of AgriHorton, S., M. Shekar, C. McDonald, A. Mahal, at Aim to Improve and J.K. Brooks. 2010. “Scaling Up Nutrition hildren. ? University What Will It Cost? ? World Bank, Washingesearch Unit. ton, DC. K. Raine, J. Dayle, IFAD (International Fund for Agricultural Develglia. 2003. “Do opment), WFP (World Food Programme), and mise Their FAO (Food and Agriculture Organization). hildren. ? Cana2011. “The State of Food Insecurity in the urnal 168, no. 6: World: How Does International Food Price Volatility Affect Domestic Economies and d K. Reichert. 2011. Food Security? ? Rome. h Transfer Khandker, S. R., M. A. Khaleque, and H. n Malawi. ? Food A. Samad. 2011. “Can Social Safety Nets
Evidence from a Randomize Policy Research Working Pap Bank, Washington, DC. Marzo, F., and H. Mori. 201 in Social Protection. ? Draf for the Social Protection World Bank, Washington, DC. Masset, E., L. Haddad, A. C Castro. 2011. “A Systematic cultural Interventions Th the Nutritional Status of C of London, Social Science R McIntrye, L., N. Glanville, B. Anderson, and N. Batta Low-Income Mothers Compro Nutrition to Feed Their C dian Medical Association Jo 686–91. Miller, C. M., M. Tsoka, an “The Impact of the Social Cas Scheme on Food Security i Policy 36, no. 2: 230–38.
92 NUTRITION, THE MDGS, AND FOOD PRICE DEVELOPMENTS BAL MONITORING REPORT 2012
Miller, C. M., M. Tsoka, K. Reichert, and , A. and C. Snehalatha. 2010. A. Hussaini. 2010. “Interrupting the Intergenu rden of Ob e sit y i n A sia. ? erational Cycle of Poverty with the Malawi of Obesity. Article ID 868573; Social Cash Transfer. ? Vulnerable Children 5/2010/868573. and Youth Studies 5, no. 2: 108–21. d M. Torero. 2010. “UnderstandMusgrove, P. 1987. “The Economic Crisis and Its pact of High Food Prices in Latin Impact on Health and Health Care in Latin Economia 10, no. 2: 117–64. America and the Caribbean. ? International 00. “Urbanization in Latin AmerJournal of Health Care Services 17, no. 3: straints and Opportunities for Child 411–41. d Care. ? Food and Nutrition BulPinstrup-Andersen, P., ed. 2010. The African (1): 12–24. Food System and Its Interaction with Human B. de la Brière, K. Hallman, Health and Nutrition. Ithaca, NY: Cornell mbing, and N. Coj. 2002. “Does SubUniversity Press. Childcare Help Poor Working Women Pinstrup-Andersen, P., A. Herforth and A. Jones. Areas? Evaluation of a Government2012 forthcoming. “Prioritizing Nutrition Program in Guatemala City. ? in Agriculture and Rural Development Projnk, Washington, DC. ects: Guiding Principles for Operational C. E. Levin, M. Armar-Klemesu, xwell and S. S. Morris. 1999. “Good Investments. ?
Ramachandran “R i si ng B Journal doi:10.115 Robles, M., an ing the Im America. ?
Ruel, M. T. 20 ica: Con Feeding an letin 21 Ruel, M. T., A. Quisu sidized in Urban Sponsored World Ba Ruel, M. T., D. G. Ma Care Pra
ctices Mitigate the Negative Effects of Pongou, R., J. A. Salomon, and M. Ezzati. 2006. Poverty and Low Maternal Schooling on Chil“Health Impacts of Macroeconomic Crises and dren’s Nut ritional Status: Evidence from Accra. ? Policies: Determinants of Variation in ChildWorld De velopment 27 (11): 1993–2009. hood Malnutrition Trends in Cameroon. ? Save the Chi ldren. 2008. Saving Children’s Lives. International Journal of Epidemiology 35,
Why Equi ty Matters. London. no. 3: 648–56. ———. 2009. “How the Global Food Crisis is Quisumbing, A. 1996. “Male-Female Differences Hurting Children. The Impact of the Food in Agricultural Productivity. ? World DevelopPrice Hi ke on a Rural Community in Northern ment 24: 1579–95. Banglade sh. ? London. Quisumbing, A., L. R. Brown, H. S. Feldstein, ———. 2011. “Costing Lives. The Devastating L. Haddad, and C. Peña. 2000. “Women: The Impact o f Rising and Volatile Food Prices. ? Key to Food Security. ? International Food Policy Research Institute, Washington, DC. 002. “The (Positive) Effect of MacroQuisumbing, A., and B. de la Brière. 2000. rises on the Schooling and Employ“Women’s Assets and Intrahousehold Allocans of Children in a Middletion in Bangladesh: Testing Measures of Barountry. ? Policy Research Working gaining Power. ? FCND Discussion Paper 86, , World Bank, Washington, DC. International Food Policy Research Institute, 10. “Djibouti Crisis Response EmployWashington, DC. Human Capital Social Safety Net. ? Quisumbing, A., and J. Maluccio. 2000. “Intrao the Japan Social Development household Allocation and Gender Relations: ddle East and North Africa Human New Empirical Evidence from Four Developent Department, World Bank, Washing Countries. ? FCND Discussion Paper 84, . International Food Policy Research Institute, , S. Tiwari, and H. Zaman. 2011. Washington, DC. ly on Cash Transfers to Protect Quisumbing, A., R. Meinzen-Dick, and L. BasDiversity during Food Crises? Estisett. 2008. “Helping Women Respond to the Indonesia. ? Policy Research WorkGlobal Food Price Crisis. ? Policy Brief 7, Inter5548, World Bank, Washington, DC. national Food Policy Research Institute, Washd L. Haddad. 2000. “Explaining ington, DC. lnutrition in Developing Countries: Brie ?ng. Schady, N. 2 economic C ment Decisio Income C Paper 2762 Silva, J. 20 ment and Proposal t Fund. Mi Developm ington, DC Skoufias, E. “Can We Re Dietary mates from ing Paper Smith, L. an Child Ma
GLOBAL MONITORING REPORT 2012 PRICE DEVELOPMENTS 93
NUTRITION, THE MDGS, AND FOOD
A Cross-Country Analysis. ? Research Report tions 111, International Food Policy Research Instila Lutte Contre la tute, Washington, DC. itique. Région Taylor, J. E., and M. Filipski. 2012 forthcomdu Nord, Groupe ing. “A Simulation Impact Evaluation of Rural D), World Bank, Income Transfers in Malawi and Ghana. ? Journal of Development Effectiveness. m Victora, C. G., L. Adair, C. Fall, P. C. Hallal, ions? Lessons from R. Martorell, L. Richter, and H. S. Sachdev. s to Reduce Child 2008. “Maternal and Child Undernutrition: Countries. ? World Consequences for Adult Health and Human tion Group, WashCapital. ? Lancet 371 (9609): 340–57. DOI: 10.106/S0140-6736(07)61692-4. ecurity Victora, C. G., M. De Onis, P. C. Hallal, of Pre- and PostM. Blossner, and R. Shrimpton. 2010. “WorldRecommendations wide Timing of Growth Faltering: Revisting d Bank, WashingImplications for Interventions. ? Pediatrics 125: e473–e480. rt 2012: Walker, I. 2008. “RECURSO-Perú. La rendición t. Washingde cuentas a nivél local para mejorar los resultados en servicios básicos. ? Presentation to International Seminar about Decentralization r le Ciblage et la and Social Inclusion in the Process of Regional Moyen-Orient et Integration. Lima, February 7. des Secteurs Sociaux Waters. H., F. Saadah, and M. Pradhan. 2003. hington, DC. “The Impact of the 1997–98 East Asian Ecorition nomic Crisis on Health and Health Care in pproaches: Guidance Indonesia. ? Health Policy and Planning 18 (2): Team Leaders. ? 172–81. . Wodon, Q., and H. Zaman. 2008. “Rising Food ational Food Policy
———. 2009. “République de Djibouti. O d’Assistance Sociale pour Malnutrition. ? Note de pol Moyen-Orient et Afrique des Secteurs Sociaux (MNSH Washington, DC. ———. 2010a. “What Can We Learn fro Nutrition Impact Evaluat a Review of Intervention Malnutrition in Developing Bank, Independent Evalua ington, DC. ———. 2010b. “Promoting Nutrition S in Haiti. An Assessment Earthquake Conditions and for the Way Forward. ? Worl ton, DC. ———. 2011a. World Development Repo Gender Equality and Developmen ton, DC: World bank. ———. 2011b. “Royaume du Maroc. Note d’Orientation Stratégique su Protection Sociale. ? Région
Afrique du Nord, Groupe (MNSHD), World Bank, Was ———. 2012 forthcoming. “Addressing Nut through Multi-Sectoral A Notes for World Bank Task World Bank, Washington, DC World Bank and IFPRI (Intern
Prices in Sub-Saharan Africa: Poverty Impact 2008. From Agriculand Policy Responses. ? Policy Research Works, Synergies and ing Paper 4738, World Bank, Washington, DC. . World Bank. 2005. “Maroc. Réforme du Système Christiansen. de Compensation à la Farine Nationale de Blé d Food Aid Tendre. ? Report 34454-MA, Washington, esearch Working DC. Washington, DC. ———. 2006. Repositioning Nutrition as Central . 2010. “Social to Development. A Strategy for Large-Scale mulus Packages: Some Action. Washington, DC: World Bank. ing Paper ———. 2007. World Development Report 2008. Agriculture for Development. Washington DC, World Bank.
and Research Institute). ture to Nutrition: Pathway Outcomes. Washington, DC Yamano, T., H. Alderman, and L. 2003. “Child Growth, Shocks an in Rural Ethiopia. ? Policy R
Paper 3128, World Bank, Zhang, Y., N. Thelen, and A. Rao Protection in Fiscal Sti Evidence. ? A UNDP/ODS Work (March).
3 Growth and Macroeconomic Adjustment in Developing Countries Summary and Main Messages ry policy wth as long The global recovery shows signs of stallnd inflaing amid deteriorating ?nancial conditions. This should Global growth slowed to 3.9 percent in 2011 ess toward and is projected to decline further to 3.5 perial systems cent in 2012. The strongest slowdown is ely rapid bank being felt in advanced economies, but the worsening external environment and some environweakening in internal demand is expected to emerging lead to lower growth in emerging and develey progress oping countries as well. This outlook is subent Goals ject to downside risks, such as a much larger ounand more protracted bank deleveraging in y, a concern the Euro Area or a hard landing among key uffers have emerging market countries. Against these ore the cribroad developments, food, fuel, and other h as a sharp commodity prices have eased somewhat ge in food from their peaks in mid-2011; where high ese countries commodity prices had become a concern for ation with broader price stability, this price decline has n addition to provided policy makers with greater exibilers, stillity to ease monetary policy. licy making Strengthening the recovery will require ving the sustained policy adjustment at a measured progress pace that depends heavily on a country’s -income individual circumstances. There are risks e and effecconsolidation proceeds, moneta should continue to support gro as unemployment remains high a tion expectations are anchored. be accompanied by steady progr repairing and reforming financ and by steps to avoid excessiv deleveraging. The weaker global economic ment has implications for the and developing countries as th toward the Millennium Developm (MDGs). Among the low-income c tries, despite a solid recover is that macroeconomic policy b not been rebuilt to levels bef sis. Should downside risks suc global slowdown or another sur or fuel prices materialize, th will have to confront the situ weaker buffers than in 2009. I eroded macroeconomic policy buff high food prices complicate po and make progress toward achie MDGs more dif ?cult. Accelerated
toward achieving the MDGs in low countries will require adequat
in some places of inadequate medium-term cooperation fiscal adjustment, and in some of overagg of policy gressive short-term fiscal adjustment. In ries. Fragile the advanced economies, while ? scal policy . 95
tive international development and the continued strengthenin frameworks in individual count states require special attention
GROWTH AND MACROECONOMIC ADJUSTMENT GLOBAL MONITORING REPORT 2012
A weaker global economic global performance, per capita incomes rose environment may impede in most countries ( ?gure 3.1). progress toward the MDGs The World Economic Outlook of the International Monetary Fund (IMF) foreGrowth slowed in 2011 sees a further moderation of global growth in 2012, to 3.5 percent. The Euro Area Global economic growth slowed consideris expected to be in a recession because ably in 2011 to 3.9 percent, from 5.3 percent of high sovereign borrowing costs, fiscal in 2010, as the economic recovery continued along two tracks (table 3.1 and map 3.1). In FIGURE 3.1 GDP per capita growth the advanced economies, growth slipped to 1.6 percent, half the rate in 2010 and well below the rate foreseen in the 2011 Global 4 Monitoring Report (GMR), owing to lower 3 than expected growth in the United States
% change, median country 2 and Japan.1 Modest growth rates were 1 accompanied by relatively high unemploy0 ment and low in ation. –1 In the emerging and developing econo–2 mies, growth slowed to 6.2 percent, about the level foreseen in the 2011 GMR. Growth –3 in the developing world was led by Asian –4 developing countries, while growth in the –5
2008 2009 Middle East and North Africa was dampted) ened by ongoing political turmoil. Growth
Low-income countries in Sub-Saharan Africa continued at around Emerging markets 5 percent, notwithstanding slower export Advanced market economies growth to the Euro Area and drought in the Horn of Africa. Despite an overall weaker Source: World Economic Outlook.
TABLE 3.1 Global output Annual percentage change Projections Region 2009 3–15 World -0.6 .3 Advanced economies -3.6 .4 2.8 .2 Central and Eastern Europe -3.6 .4 -6.4 .2 7.1 7.9 2.7 .9 Sub-Saharan Africa 2.8 .5 Western Hemisphere -1.6 .1 Low-Income Countriesa 5.2 6.0 Emerging Market Countriesb 2.7 6.3 7.7 6.4 6.4 5.5 6.2 4.5 4.2 3.7 5.9 5.7 6.2 5.8 4 5.3 5.1 5.6 5.4 5 4.5 Commonwealth of Independent States 4.8 Developing Asia 9.7 Middle East and North Africa 4.9 7.8 3.5 5.3 4.9 3.2 1.9 5.4 4.2 7.8 7.3 4.7 4.2 3 3 4 3.2 Emerging and Developing Countries 7.5 1.6 6.2 5.3 3.9 2010 2011 2008 2012 2.8 3.5 0.0 1.4 6.0 5.7 201
4 2 6
Fragile Statesc 3.9 6.3 4.3 2.9
Source: World Economic Outlook. a. Low-income countries are those eligible for ?nancial assistance und er IMF’s Poverty Reduction and Growth Trust, including Zimbabwe. b. Emerging market countries are emerging and developing countries t hat are not low-income countries. c. A subset of emerging and developing countries included in the Wor ld Bank’s list of fragile and con ict-a ected states.
GLOBAL MONITORING REPORT 2012 GROWTH AND MACROECONOMIC ADJUSTMENT
consolidation, and the impact of bank delepolitical transitions draw out. Countries in veraging on the real economy. Growth in ntral and eastern Europe may be severely other advanced economies would slow, in fected by trade and ?nancial spillovers from part, because of trade and ?nancial spillover Euro Area, and recovery there would lag. effects from the Euro Area, but is expected contrast, Sub-Saharan African countries to remain positive. In the United States and a ould see continued strong growth, except few other countries, modest growth momensouthern Africa, which is more exposed to tum would be maintained and underlying ak demand conditions in Europe. Overall, domestic demand would broadly offset the erging and developing countries are proimpact of these spillovers. Overall, advanced cted to grow by 5.7 percent. economies are projected to grow by just over Global current account imbalances remain 1 percent. low those experienced in the run-up to the In the emerging and developing econoobal ?nancial and economic crisis, and narmies, a weaker and more uncertain external wed somewhat in 2011 (figure 3.2). Net environment, compounded by softer interncial ows to emerging and developing nal demand, is expected to further dampen untries, while fairly robust, are also below activity in 2012. Nonetheless, strong growth e-crisis levels (table 3.2). Average net ?nanis expected to continue in developing Asia, al ows were broadly unchanged in 2011 in particular China and India. Growth is om 2010 and 2009, and the expectation is expected to accelerate in the Middle East and r similar levels in 2012. Relative to gross North Africa, led by oil exporters such as mestic product (GDP), low-income counLibya, where recovery from the political turies continue to receive higher net finanmoil of 2011 is expected; nonetheless, many al flows than do emerging market councountries in the region face muted prospects ies—mainly re ecting signi ?cantly higher FIGURE 3.2 Global current account imbalances 3.5
as ce af the In sh in we em je
be gl ro ? na co pr ci fr fo do tr ci tr
2.5 1.5 % of world GDP
0.5 –0.5 –1.5 –2.5 –3.5 07 2008 2009 2002 2010 2003 2011 2004 2012 2005 2006 20
(projected) Low-income countries with surplus Other advanced economies with deficit Emerging market countries with surplus Emerging market countries with deficit Other advanced economies with surplus Low-income countries with deficit United States Source: World Economic Outlook. Note: The global statistical discrepancy is not shown.
GROWTH AND MACROECONOMIC ADJUSTMENT GLOBAL MONITORING REPORT 2012
2008 2012 projection 9.1 6.7 5.4 2.6 nt 3.0 –1.2 0.4 3.5 3.4 0.1 0.8 ion) –1.0 –1.7 5.1
TABLE 3.2 Net financial flows Percent of GDP, equally weighted Economy 2009 2010 2011 Emerging Market Countries 7.4 Private capital ows, net 2.3
7.2 1.4 3.8 –0.8 3.5 2.3
Of which: private direct investme 3.2 3.3 private portfolio ows 0.6 0.3 Private current transfers 3.4 3.3
O cial capital ows and transfers (net) 1.7 0.9 Memorandum item: Change in reserve assets (–, accumulat –2.1 –1.5 Low-Income Countries 13.2 Private capital ows, net 4.3
15.4 13.8 4.9 3.2 nt 6.3 –1.2 –0.9 5.1 4.5 5.4 6.2 ion) –1.2 –2.1 5.7 6.6
13.5 3.2 5.3 –1.2 4.7
Of which: private direct investme 5.9 6.6 private portfolio ows –1.3 –0.9 Private current transfers 4.4 4.5
O cial capital ows and transfers (net) 4.5 6.2 Memorandum item: Change in reserve assets (–, accumulat –1.7 –2.0 Fragile Statesa
18.8 5.4 5.1 nt 6.3 –1.0 –1.6 6.0 5.8 3.7 7.9 ion) –1.9 –1.6 –2.0 Memorandum item: Change in reserve assets (–, accumulat –2.0 –1.7 2.6 O cial capital ows and transfers (net) 0.5 8.3 6.2 Private current transfers 5.9 6.0 –1.0 private portfolio ows –1.4 –1.6 4.7 3.5 Of which: private direct investme 4.8 6.7 2.6 Private capital ows, net 3.9 4.7
Source: World Economic Outlook. a. A subset of emerging and developi ng countries included in the World Bank’s list of fragile and con ict-a ected states.
FIGURE 3.3 Low-income countries: Imports, exports, and current of ?cial loans and grants in ows. Fragile stat es account balance, including FDI received substantially higher foreign dir ect investment (FDI), of ?cial capital ows, and 65 0 ion is that these high levels will be maintai ned in –1 55 2012. While private current transfers rem ain % of GDP, median country of ?cial transfers in 2011, and the expectat
below the pre-crisis levels, internationa l –2 45 remittances (in nominal dollars terms) fu lly % of GDP
recovered from the decrease in 2009. Emerging and developing countries wer
e –4 25 –5 nt 15 –6 2008 2012 de ?cits (net of inward FDI), in low-income (projected) ted Exports (left axis) by SDR allocations), of ?cial reserves have not Current account balanc e, xis) st Source: World Economic Outlook. tain reserves in excess of three months o f including FDI (right a kept pace with growing trade; however, mo emerging and developing countries maincountries widened somewhat in 2011 ( ?gure Imports (left axis) 3.3). Since 2009 (when reserves were boos 2009 2010 2011 recovered fully from the drop in 2009 and grew by 22 percent in 2011. Current accou part of the continued brisk expansion in global trade in 2011. Their exports have
GLOBAL MONITORING REPORT 2012 GROWTH AND MACROECONOMIC ADJUSTMENT 99
Official reserves supportive monetary policy. There was much less room for maneuver regarding ?scal pol10 icy in 2011, however, given large debt levels 9 and concerns in ? nancial markets over gov-
ernments’ debt sustainability. In emerging Reserves, in months of imports
8 7 and developing countries, increasing prices for food and other commodities through 6 mid-2011 prompted higher headline infla5 tion rates ( ?gure 3.5). Some easing in non4 fuel commodity prices since mid-2011 has 3 reduced these pressures, but in many coun2 tries commodity price volatility continues to 1 complicate macroeconomic policy making. 0 After the unprecedented countercyclical 2008 2009 2010 2011 fiscal response to the 2009 crisis, emergEmerging market count ries et countries Median, emerging mark ing and developing countries had begun to Low-income countries reduce ?scal de ?cits in 2010 and 2011 (albeit Median, low-income co rather timidly) (figure 3.6). Although real
GDP growth among developing countries in Source: World Economic Outlook.
Note: Bars represent the range between the 25th and 75 percentiles. 2011 was similar to that in 2008, ?scal de ?-
cits on average (unweighted) remained 2 perimports—one of several measures of reserve centage points of GDP higher than before the adequacy ( ?gure 3.4). crisis. Among emerging and developing countries that loosened monetary policy in 2011, Macroeconomic policies looser monetary conditions mostly took the In advanced economies, ample economic form of a nominal depreciation of the curslack and well-anchored inflation expecrency, rather than a lowering of nominal tations continued to provide room for short-term interest rates ( ?gure 3.7). Against FIGURE 3.5 Commodity price indexes 700 600 Index (2002Q1 = 100)
500 400 300 200 100 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q 1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (projected) Fuel Food All commodities Cereals Copper Nonfuel
Source: World Economic Outlook. Note: Indexes are in U.S. dollars. Data for 2012 Q2, Q3, and Q4 are projections.
100 RING REPORT 2012
GROWTH AND MACROECONOMIC ADJUSTMENT GLOBAL MONITO
FIGURE 3.6 Fiscal deficits in emerging and low-income economies tightening (figure 3.9). In contras t, among the 55 percent of low-income countr ies that Low-income countries sened ?s0 cal policy. The variety of policy r esponses contrasts with 2009, when 90 percen t of –1 emerging market economies and 80 perc ent % of GDP, median country Emerging market countries tightened monetary policy, half loo
of low-income countries loosened l pol–2 icy in response to a major global eco nomic shock. Most policy adjustments seem to be –3
driven by country-speci ?c consideration s— including available policy space. –4 Quality of macroeconomic policies i n –5 low-income countries 2008 2010 2011 Monetary policy, access to foreign exchange, Source: World Economic Outlook. and the consistency of macroeconomi c poli2009
Note: General government balances as defined in IMF Government Finance Statistic s Manual 2001. cies were judged by IMF country des ks to be relatively strong areas of policy i mplementation in low-income countries in 201 1 ( ntor, ?gure this background, monetary aggregates co 3.10). Governance in the public sec ?scal tinued to expand broadly in line with t transparency, and the composition o increase in nominal GDP in emerging mar spending were assessed as areas of countries ( ?gure 3.8). weakness. Lower ratings for y in y to pre. sed too economic ore eive ry slipped countries that tightened ? scal policy, m growth rates. Country desks also perc than half complemented that with moneta that the quality of monetary policy The direction of macroeconomic polic 2011 suggest a sense that a return adjustments varied considerably in 2011 crisis fiscal positions has progres Among the 62 percent of emerging market slowly, given the continued strong ?scal polic
he f public ket relative
FIGURE 3.7 Monetary policy loosening in emerging market and low-income countries a. b. 80 81% in 2009 80 70 70 60 60 % of countries % of countries
Emerging market countries Low-income countries
50 40 40 30 30 20 20 10 10 0 0 Discount Discount dex x rate rate rate 2008 2009 2010 2011 Exchange Exchange rate Monetary Monetary Conditions In Conditions Inde
Source: World Economic Outlook. Note: Monetary policy loosening is base d on Monetary Conditions Index (MCI) calculations. The MCI is a linear combinati on of nominal short-term interest rates and the nominal effective exchang e rate (with a one-third weight for the latter).
GLOBAL MONITORING REPORT 2012 GROWTH AND MACROECONOMIC ADJUSTMENT 01
FIGURE 3.8 Average year-on-year growth in money and the money gap in emerging ma rket countries 25 20 15 Percent
10 5 0 –5 Q1 Q2 Q3 Q4 2008 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2005 2006 2009 2010 Money gap Source: International Financial Statistics. Note: The money gap is the difference between year-on-year growth rates of M2 an d nominal GDP. The sample includes emerging market economies that have data on both for the whole sample period shown. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2007 2011 Money supply (M2)
Macroeconomic policy mix a. Emerging market countries b. Low-income countries 50 50 74% in 2009 40 40
% of countries
% of countries
30 30 20 20 10 10 0 0 Monetary Monetary Monetary Fiscal Monetary Monetary Monetary Fiscal and fiscal and fiscal loosening loosening and fiscal and fiscal loosening loosening loosening tightening and fiscal and monetary loosening tightening and fiscal and monetary tightening tightening tightening tightening 2008 2008 2009 2009 2010 2010 2011 2011
Source: International Financial Statistics. Note: Fiscal conditions are defined based on annual change in government balance as a percent of GDP in 2008, 2009, 2010, and 2011. Monetary conditions are based on the change in the Monetary Conditions Index; changes are calculated Q4 over Q4, subject to availability (see also figure 3.7’s note).
in some countries in 2011; although assessFood price developments and ments remained fairly positive overall, more their macroeconomic impact on than 10 percent of country desks considered developing countries the monetary policy stance unsatisfactory— similar to that of ?scal policy, but noticeably As discussed in chapter 1, food prices have higher than in recent years. been volatile over the past several years.
GROWTH AND MACROECONOMIC ADJUSTMENT GLOB
AL MONITORING REPORT 2012
FIGURE 3.10 Quality of macroeconomic policies in low-income countrie s, 2005 and 2009–11 a. Fisc al policy b. Composition of public spending 90 90 % of countries in each category
% of countries in each category 80 80 70 70 60 60 50 50 40 40 30 30 20 20 10 10 0 0 Unsatisfactory ate isfactory Good Adequate Good c. Fiscal t ransparency d. Monetary policy 90 90 % of countries in each category Adequ Unsat
% of countries in each category 80 80
70 70 60 60 50 50 40 40 30 30 20 20 10 10 0 0 Unsatisfactory ate isfactory Good Adequate Good e. Consistency of ma f. Gov 90 90 % of countries in each category Adequ Unsat
croeconomic policy ernance in monetary and financial institutions
% of countries in each category
80 80 70 70 60 60 50 50 40 40 30 30 20 20 10 10 0 0 Unsatisfactory ate isfactory Good Adequate Good Adequ Unsat
g. Governance in the public sector h. Access to foreign exchange 90 90 % of countries in each category
% of countries in each category
80 80 70 70 60 60 50 50 40 40 30 30 20 20 10 10 0 0 Unsatisfactory ate isfactory 2005 011 Source: IMF staff estimates. Good Adequate 2009 Good 2010 2 Adequ Unsat
GLOBAL MONITORING REPORT 2012 GROWTH AND MACROECONOMIC ADJUSTMENT 103
Global food prices rose by more than prices will lead to a widening of the 50 percent during 2007 and the first half rnal trade deficit. Initially, the larger of 2008, before plummeting by 30 percent may be ?nanced by increased donors’ in late 2008. By early 2011, however, food stance (for example, in the form of food prices exceeded the peak level of mid-2008. or a drawdown of the central bank’s forAlthough prices have since moderated, avercurrency reserves. A exible exchange age levels in 2011 exceeded those in 2008. may also work to cushion the balance of While some weakening of prices is projected ents impact of a higher food import bill for 2012 and beyond, the prospects are for hough at higher social costs for vulnerable relatively high food prices to remain. ps), which over time may be lowered by An increase in food prices represents a eases in domestic food production. shift of real income away from net-foodhile the social implications may be difimporting countries toward net-food-exportnt, and typically less urgent, changes in ing countries. The shift in income takes place r commodity prices affect macroecothrough changes in the terms of trade, which c aggregates similarly to changes in affect the purchasing power of domestic ?rms rices. As food, fuel, and other comand households. Countries that are broadly ty prices often move in tandem, it self-suf ?cient in food will not experience any dif ?cult to isolate the effect of food terms-of-trade losses, but may nonetheless be es alone. The 2007–08 food price surge affected as higher prices trigger a shift of real cided with even larger increases in fuel income from net-food-consuming households es ( ?gure 3.11). For some oil-exporting to net-food-producing households. loping countries, higher prices for food The balance of payments is also directly rts were more than offset by higher affected by higher prices for food and other es for oil, while many poorer countries commodities, because changes in terms of to confront the challenge of concurtrade may trigger payments imbalances. For ly ? nancing more expensive imports of a typical net-food-importing country, higher food and fuel.
food exte de assi aid) eign rate paym (alt grou incr W fere othe nomi food p modi can be pric coin pric deve impo pric had rent both ?cit
FIGURE 3.11 Commodity prices and macroeconomic developments, 2007–12 a. Changes in commodity prices b. Changes in GDP per capita, terms of trade, and inflation in emerging market and developing countries 40 15 10 20 5 Percent
0 0 –5 –20 –10 –40 –15 2007–08 2007–08 2009 2009 2010–11 2010–11 2012 2012 (projected) (projected) Agricultural raw materials Median, terms of tra Inflation Median, inflation
Food Fuel Metal Real GDP per capita de Median, real GDP per capita Terms of trade
Source: World Economic Outlook Source: World Economic Outlook Note: Indexes are in U.S. dollars. Note: Bars represent range between 25th and 75th percentiles.
GROWTH AND MACROECONOMIC ADJUSTMENT GLOBAL MONITORING REPORT 2012
MAP 3.1 As global growth slows, growth outcomes across countries converge
Greenland (Den.) Faroe Iceland Islands (Den.) Norway Finland Russian Federation Sweden The Netherland s Russian Estonia Canada Isle of Man (UK) Denmark Fed. Latvia United land Kingdom Germany Poland Belarus Channel Islands (UK) Belgium Ukraine Luxembourg Lithuania Ire
Moldova Kazakhstan Liechtenstein Romania Mongolia Switzerland France Italy Uzbekistan Kyrgyz Rep. Bulgaria Georgia Andorra Azer-
Armenia baijan D.P.R. United States Portuga l Spain Monaco Turkmenistan Tajikistan of Korea ) Rep. of Japan Tunisia Malta lamic Rep. Lebanon of Iran Korea Afghanistan Bermuda (UK) Israel cco Kuwait West Bank and Gaza Bhutan Jordan Iraq Moro Rep. China Is Turkey
Gibraltar (UK Greece Cyprus Syrian Arab
Bahrain Algeria Qatar as Former Libya Nepal The Baham
Arab Rep. of Egypt Bangladesh Cayman Is. (UK) Cuba Arabia Emirates Mexico ia Oman Cape Verde India N. Mariana Islands (US) Mali of Guatemala Honduras Chad Guam (US) Nicaragua The Gambia Burkina Faso Cambodia Marshall El Salvador Djibou ti Philippines Benin Nigeria Costa Rica Guyana Côte Ghana Central Sri South Brune i Suriname d’Ivoire African Rep. Sudan Lanka French Guiana (Fr.) Cameroon omalia Palau Colombia Liberia S Malaysia Ethiopia Sierra Leone Venezuela Federated States of Micronesia Islands Panama R.B. de Guinea-Bissau Guinea Senegal Eritrea Yemen Thailand Vietnam Niger Sudan P.D.R. Belize Jamaica Rep. Myanmar Lao Haiti Mauritan Spanish Saudi Sahara
United Arab Turks and Caicos Islands (UK)
Togo Maldives E quatorial Guinea Príncipe Gabon Congo Rwanda Kenya Singapore Nauru Dem. Rep. of Burundi eychelles Indonesia S Uganda Ecuador São Tomé and
Solomon Tanzania Comoros Islands
New Guinea Peru Brazil Timor-Leste Angola Malawi Zambia Vanuatu Bolivia (Fr.) Namibia Zimbabwe Madagascar Mayotte
Mauritius New Botswana Mozambique Caledonia Paraguay (Fr.) Réunion
(Fr.) Swaziland South Africa Chile Lesotho
Uruguay Argentina New
Zealand British Virgin Isl. (UK) Anguilla (UK) Poland
GDP growth 2010 Germany
Dominican Puerto Ukraine
Republic Rico (US)
St.-Martin (Fr.) St. Maarten (Neth.)
Czech Rep ublic U.S. Virgin Isl. (US) St.-Barthélemy (Fr.) Slovak Republic al GDP per capita growth (%) Saba (Neth.) ia Hungary >6 St. Eustatius (Neth.) ia St. Kitts Montserrat Dominica Aruba ia Bosnia & 3 – 5.9 San Serbia (Neth.) 0 – 2.9 Bulgaria St. Lucia Romania and Nevis (UK) Martinique (Fr.) Croat Guadeloupe (Fr.) Sloven Re Antigua and Barbuda Austr
Curaçao St. Vincent & Herz. Barbados Marin o ontenegro 6 St. Eustatius (Neth.) ia Romania
Re Antigua and Barbuda Austr
Guadeloupe (Fr.) Sloven
Aruba St. Kitts Montserrat Dominica and Nevis (UK) Martinique (Fr.) Croat ia Bosnia & 3 – 5.9 San Serbia (Neth.) 0 – 2.9 Bulgaria
St. Lucia Herz. Curaçao St. Vincent & Marino Kosovo (Neth.) the Grenadines Barbados Grenada M ontenegro FYR T Vatican Ita ly Macedonia (Neth.) Trinidad and City Albania no data he boundaries, colors, denominations and any other information Greece s hown on this map do not imply, on the part of The World Bank Tobago T 3 months exporters Small countries economies Commodity Floating exporters exchange e
xchange rate rate Baseli ne Higher commodity prices Global growth downturn
Source: IMF 2011b. Note: The illustrative fiscal space measure (top panel) is calculate d as the difference between the baseline primary balance and the constant primar y balance that is needed to achieve a target public debt-to-GDP ratio of 40 percent in 2030. The bottom panel shows a simulation of the reserve covera ge ratio after an increase in global food, metals (except gold and uran ium), and fuel prices (by 31, 36, and 48 percent respectively) and a slowdown in global growth (by 1.6 percentage points) relative to the World Economic Out look baseline.
of food in the consumption baskets of lownegative median impact from food and fuel income countries. While the growth impact prices would be more than offset by the of this scenario would likely be modest, in again from higher prices of other commodition could more than double, assuming that ties. About one-fifth of low-income counthe pass-through from global to domestic tries would stand to gain from higher prices. prices follows historical patterns and that any Among those hurt by the shock, about half monetary policy response is mild. would have adequate international reserves The external impact of a commodity to absorb the shock and the others would price spike would differ signi ?cantly across face additional ?nancing needs. low-income countries depending on their In many low-income countries, increased trade structure. A large majority would be global commodity prices would put pressure adversely affected, however, with the median on ?scal positions, assuming that countries trade balance deteriorating by almost 3 permaintain existing policies (such as fuel subsicent of GDP. For commodity exporters, a dies) and that they reintroduce transfers and
GLOBAL MONITORING REPORT 2012 ADJUSTMENT 111
GROWTH AND MACROECONOMIC
subsidies similar to those used in 2007–08. A up, rebuildsharp increase in commodity prices that was a high priority. sustained for long periods would also worsen ed of help from debt dynamics in a number of low-income countries with existing debt vulnerabilities. create space low-income
under the baseline. For this gro ing external buffers should be These countries are most in ne the international community. To reduce their exposure or to prepare for future shocks, countries can also take steps
ex ante. Besides Policy responses in the event of adverse building policy buffers during good times, external developments they can, for example, make th eir budgets A key policy challenge for many low-income 2011d); put in countries is to build resilience while supportcial safety ing economic development. This requires encourage balancing pressing spending needs, includeir ? nancial ing public investment and social protection, to encourage against the rebuilding of macroeconomic nomy’s probuffers to prepare for future shocks. xample in Many low-income countries could still domestic fuel bene ?t from a further strengthening of their tly strengthen ?scal buffers. Scenario analysis indicates that g the private a large number of low-income countries can more rational only partially absorb large tail-risk shocks. would be to This group could consider a mix of gradual hat acknowl?scal adjustment combined with realignment ications—to of priorities, for example by shifting spending rnational prices in favor of investment and social programs, and building a stronger revenue base. Those countries that already have no fiscal space event of a sharp under the baseline would have limited room for maneuver in the event of a tail-risk shock. more structurally robust (IMF place more exible and robust so
net systems; pursue reforms to domestic savings and deepen th sectors; and explore policies greater diversi ?cation in an eco duction and exports. A speci this regard would be to lower subsidies. This step would direc the ?scal buffer, while also givin ?c e
sector incentives to pursue a use of energy. Another example lower import tariffs—at a pace t edges the potential revenue impl better align domestic and inte of traded commodities. Macroeconomic policies in the global downturn The appropriate macroeconomic
policy For this group, rebuilding ?scal buffers and response to a sharp global downt urn would strong concessional support from developdepend in part on available po licy buffers. ment partners will be particularly important. During the global downturn in 2009, lowSome low-income countries already have adeincome countries with more com fortable quate ?scal buffers, and may even be able to buffers were able to mount a str ong counexpand their ?scal de ?cits in the baseline, for tercyclical fiscal response that c ushioned instance to step up critical spending, without the impact on spending and gro wth. In the compromising their ability to absorb large event of another sharp downtur n, the scope shocks. for ?scal stimulus would be more limited for While many low-income countries have most low-income countries, giv en weaker built up sufficient reserves to absorb the ?scal buffers and constrained ai d envelopes, impact of either shock fully without the need but those with suf ?cient ?scal roo m should for adjustment (and import compression), aim to protect spending. For c ountries lackothers would benefit from building addiing fiscal room, key challenge s will be to tional reserve buffers. These buffers could limit the decline in domestic revenue to the be achieved through a mix of monetary and extent possible through streng thening tax fiscal tightening, combined with greater and customs administration, an d to prioritize exchange rate exibility where appropriate. spending. If ?scal space allows, l ow-income A quarter of these countries already have countries should seek to softe n the economic import coverage of less than three months and social impact of a global downturn by
112 GROWTH AND MACROECONOMIC ADJUSTMENT ITORING REPORT 2012
preserving—and where feasible increasing— ly, and others less real ?scal spending in priority areas. In the event of another global downturn e monetary policy response and related softening in commodity prices, ock depends on the in ation more active monetary easing may be approof food prices in household priate in low-income countries with moders, the pass-through from ate in ation. Greater exchange rate exibility rices, and the country’s could also help to weather another downdebt, and reserves situaturn, and would be particularly important on is at low to moderate for those countries with low reserve cushions. rd monetary policy advice the direct impact of the Macroeconomic policies in the event of global while guarding against any commodity price spikes ts. (For food importers, Global commodity price spikes present lowten require some degree of income countries with difficult tradeoffs eciation, amplifying the between price stability, external goals, and ) This allows the monsocial objectives. A pragmatic response could to avoid an undue policy include targeted measures to protect the poor uld exacerbate the impact and a monetary policy response that may on output, while preventlargely accommodate the ? rst-round impact ect on in ation and in aon in ation, although those countries with ox 3.3). However, foodlimited reserves may need to tighten policies er commodity-importing) in support of external and price stability. The es with high in ation or scope to use tax and expenditure measures ers such as high current to mitigate the social impact of higher comreserves, or vulnerable modity prices depends considerably on the y require policy tightencountry-speci ?c ?scal space. per balance can be parThe illustrative tail-risk scenario indi-
been used—some effective so (box 3.2). The appropriat to a food price sh outlook, the share consumption basket food prices to other p external balance, tion. When inflati levels, the standa is to accommodate food price shock, second-round effec adjustment will of exchange rate depr in ationary impact.
etary authorities tightening that wo of the price shock ing a persistent eff tion expectations (b importing (and oth low-income countri weak external buff account de ?cits, low
debt positions) ma ing.3 Striking the pro ticularly complex
for low-income countries, cates that many low-income countries appear t exhibit considerable to have adequate ? scal space to absorb the ch as food and fuel, may effect of a large, but temporary, global the consumption basket ( ?gcommodity price shock. By contrast, those other hand, because wage lacking ?scal space even under the baseline contract mechanisms would need to adjust over the medium term inertia are less prevalent to preserve fiscal sustainability after such countries, a temporary a shock. A “first-best ? policy response to ces will have milder global price shocks would consist of fully ts on in ation. passing on price increases while relying on an effective, well-targeted social safety net—in states combination, these measures would ensure ?scal affordability and avoid economic disharacterized by weak pubtortions, while protecting the most vulnerlack of timely and reliable able. However, institutional capacity and basis of which policies can political constraints often make the ?rst-best s shortages, slow rates of infeasible, particularly in the shorter term. eater macroeconomic These constraints may imply a need to resort - and state-building takes to pragmatic policy responses—a challenge ating and implementthen being to make the measures as costium-term macroeconomic effective and targeted as possible. A number Con ict and other major of “second-best ? policy approaches have great hardship but also
where products tha price volatility, su constitute half of ure 3.14). On the indexation and other that foster in ation in many low-income surge in commodity pri second round effec
A note on fragile Fragile states are c lic institutions, statistics on the be formulated, skill GDP growth, and gr instability. Peace priority over formul ing consistent med policy frameworks. shocks not only bring
GLOBAL MONITORING REPORT 2012 ONOMIC ADJUSTMENT
GROWTH AND MACROEC 113
Fiscal policy responses to food price shocks
In designing policies to respond to food price and and restrictions have also been used related shocks, national authorities consider the effecdampen domestic price increases, tiveness of various tax and expenditure policies and nsiderable drawbacks, including the ?scal space available to implement these policies latility of global prices (chapter without endangering macroeconomic objectives. The import tariffs—if only temporary— scope for mitigating the impact of higher food prices wbacks. Measures to address supply depends considerably on earlier policies and how as agricultural input subsidies—may those have affected the country’s ?scal and debt posiented within a broader strategy tions. The appropriate ?scal response also depends on ng agricultural productivity. Howthe nature of shock and its expected duration. nce with input subsidies is mixed Even for countries with ample fiscal space that face a spike in food prices, measures aimed at limiting he 2007–08 and 2010–11 food price the price increase for all consumers, such as a general implemented a broad variety of price subsidy, are typically not optimal. First, by proeract the effects of higher internaviding relief to the general population, large shares of amples of targeted measures include the cost of these schemes are incurred in subsidizing food vouchers to the lowest quintile consumers that may not require assistance. Second, two largest urban areas in Burkina because broad-based subsidies are more expensive, if n of school feeding programs in the shock persists their cost becomes a greater cona conditional cash transfer program cern very quickly. Third, political economy considerand vulnerable children in Kenya. ations can make it dif ?cult to eliminate price subsidies board measures included a suspenonce they are in place. Finally, subsidies create a subuties on rice, wheat, and powdered stantial wedge between world market and domestic nd a suspension of taxes on food prices; incentives for smuggling could lead to the budintroduction of fuel subsidies in get subsidizing consumption in neighboring countries. Guinea, a reduction in retail prices Developing countries’ experiences dealing with
Export taxes in an attempt to but these have co exacerbating the vo 4). Reductions in carry similar dra constraints such have a role if implem focused on increasi ever, the experie (chapter 2). During both t shocks, countries measures to count tional prices. Ex the provision of households in the Faso, an expansio Sierra Leone, and targeting orphans Broader across the sion of customs d milk in Senegal a products and the Burkina Faso. In on fuel turned out
to be very costly and spurred illerecent years’ high and volatile oil prices are illustraighboring countries. Vietnam temtive in this regard (Granado et al). After oil prices ice exports for a few months until it began to rise at the end of 2003, most developing e new harvest was suf ?ciently large. countries limited the full pass-through of internaworld market prices had started to tional prices to domestic consumers (the median passVietnamese exporters experienced through was lowest in the Middle East and highest in heir earnings than did their Thai Africa). When oil prices did not subsequently reverse, the cost of maintaining the subsidies mounted and by cent commodity price shock, most mid-2008 reached about 1 percent of GDP in affected ies adopted countervailing ? scal countries, with most of the associated benefits on ate the impact of higher food and household welfare accruing to the better off segments everal cases, the ?scal costs exceeded of the populations. Pass-through of international to oduced during the 2007–08 episode. domestic food prices varies across regions and counsure was fuel subsidies. These subtries; as discussed in chapter 1, in countries open to er transportation costs, and thus trade the pass-through is faster and relatively larger. rices. The median (annual) fiscal While a well-targeted social safety net aimed at to exceed 1 percent of GDP for those the most vulnerable households is preferable to geng the measures. Most fuel or food eral price subsidies, such safety nets are dif ?cult to ersal, and few were explicitly tardesign and implement. Until they can be put in place, . While these ?scal measures helped in some cases policy makers may subsidize particular onomic and social concerns, they products predominantly consumed by the poor (such w income countries from making as coarse grains) while recognizing that some nontoward restoring their ?scal de ?cits poor households may also bene ?t from the scheme. g before the 2009 crisis.
gal reexports to ne porarily banned r was clear that th In the meantime, fall rapidly and larger drops in t counterparts. During the re low-income countr measures to mitig fuel prices. In s the measures intr An often-used mea sidies helped low indirectly food p cost is estimated countries adoptin subsidies were univ geted to the poor address urgent ec also prevented lo further progress to levels prevailin
114 GROWTH AND MACROECONOMIC ADJUSTMENT GLOBAL MONITORING REPORT 2012
Food price volatility and monetary policy
Recent research done for the International Monetary h a regime. A common objection to Fund’s World Economic Outlook suggests that cening in ation targets is that they do tral banks faced with high and volatile food prices set re ect the day-to-day prices faced by and communicate monetary policy based on developer, even headline in ation is not ments in underlying in ation (IMF 2011e). e of the prices faced by any given This ?nding hinges on the observation that, when ple, consumption patterns of food prices are volatile and the share of food in the many children will be very different consumption basket is high, it can be very dif ?cult of young adults, and neither conto control headline in ation. Food price shocks often ill match the basket used for the stem from weather disruptions and other shocks that measure. Furthermore, underlying are generally temporary and outside the control of the are generally constructed so that central bank. Consequently, when a food price shock run, if not the short run, they show hits, a central bank targeting headline in ation will evel of in ation as headline in abe faced with either a loss of credibility if it accomch argues that the central bank, thus, modates the shock, or collateral economic volatility over the target used, a ?nding that is if it attempts to dampen the in ationary effects of the uccessful experiences of in ationshock. Conversely, if a central bank has established l banks that established their regimes and communicated a clear focus on underlying in ain ation measures through the use tion that is embedded in people’s expectations, it can ltimately successful communicasuccessfully accommodate the ?rst-round effects without undermining credibility or risking higher future d prices present a signi ?cant challenge inflation. A striking consequence is that a central trying to control in ation. This chalbank can achieve lower headline in ation and output countries with high shares of volatility than if it had focused on headline in ation. umption baskets seeking to establish The key channel for this result is the preservation of y regime. The research suggests that the central bank’s credibility and the anchoring of
establishing suc the use of underly not necessarily consumers. Howev an accurate measur consumer. For exam households with from those made up sumption pattern w headline in ation in ation measures over the medium the same average l tion. The resear has some choice supported by the s targeting centra around underlying of sustained and u tions strategies. Volatile foo to central banks lenge is magni ?ed in food in their cons a credible polic these central bank
s would do better to target what in ation expectations when food price shocks hit. is underlying in ation) than valWhile an emphasis on underlying inflation can control headline in ation in the face deliver superior outcomes, there are challenges in ocks that are outside their control.
they can hit (that iantly trying to of food price sh
FIGURE 3.14 Composition of the Consumer Price Index basket in low-incom e and OECD countries a. Median low-income country: b. Median OECD country: Composition of the CPI basket mposition of the CPI basket Fuel Fuel Food 13% Food 45% Other 49% Other 82% 5% 6% Co
Source: World Economic Outlook.
GLOBAL MONITORING REPORT 2012 OMIC ADJUSTMENT 115
GROWTH AND MACROECON
set back years of investment in public institutions and public infrastructure, perpetuating a cycle of underdevelopment. Bruckner. 2011. In the face of a slowdown in global l Instability. ? IMF growth, the structural problem of unemternational Monetary ployment, particularly among the young, would become starker. In the face of food , David Coady, and price shocks, fragile states lack many of the . “The Unequal Benepolicy options available to other developing Review of Evidence for economies. Because available policy space is F Working Paper strictly limited, these countries often turn to onetary Fund, Washthe international community for assistance. To engage most effectively, international . “2011 Report of the organizations and development partners are up. ? October. increasingly recognizing the limited capacG-20 Study Group ity and large ?nancing needs of fragile states, and developing longer-term strategies to benry Fund). 2001. Gove ?t them. s Manual 2001.
References Arezki, Rabah, and Markus “Food Prices and Politica Working Paper 11/62, In Fund, Washington, DC. Granado, Del, Javier Arze Robert Gillingham. 2010 ?ts of Fuel Subsidies: A Developing Countries. 10/202, International M ington, DC. G-20 (Group of 20). 2011a Development Working Gro G-20. 2011b. “Report of the on Commodities. ? July. IMF (International Moneta ernment Finance Statistic Washington, DC. ———. 2011a. “Macroeconomic and Op ? IM
erational Notes Challenges in Countries in Fragile Situations. ? 1. The classi ?cation of countries is the one used in Washington, DC (June 15). the IMF’s World Economic Outlook. Emerg———. 2011b. “Managing Global Growth Risks ing and developing countries are those counand Commodity Price Sho cks—Vulnerabilities tries that are not designated as advanced counand Policy Challenges f or Low-Income Countries. Countries that are eligible for ? nancial tries. ? Washington, DC (Sep tember 22). assistance under the IMF’s Poverty Reduction ———. 2011c. “Managing Volatility in Lowand Growth Trust constitute a subset of emergIncome Countries—The Role and Potential for ing and developing countries; these countries Contingent Financial In struments. ? Washingare denoted low-income countries although ton, DC (October 31). eligibility is based on other considerations in ———. 2011d. “Revenue Mobilization in Develaddition to income levels. Emerging and developing Countries. ? Washing
ton, DC (March). oping countries that are not eligible for ? nan———. 2011e. “Target What You Can Hi t: Comcial assistance under the Poverty Reduction modity Price Swings and Monetary Policy. ? In and Growth Trust are designated as emerging World Economic Outlook, ch. 3. Washington, market countries. DC (September). 2. This section draws from IMF 2011b. Walsh, James P. 2011. “Reco nsidering the Role 3. Food and other commodity exporters should of Food Prices in Infla tion. ? IMF Working generally rely on exchange rate appreciation to Paper 11/71, Washington , DC. mitigate in ation pressures from a food price spike.
4 Using Trade Policy to Overcome Food Insecurity
Summary and main messages emain linked rity therefore Trade is an excellent buffer for domestic ucthrough a tuations in food supply. There is no global teral trade food shortage: the problem is regional or
allow its domestic market to r to the world market. Food secu requires encouraging more trade more open, rules-based multila regime, best achieved by concl
uding the local—one of moving food, often across borDoha Round of WTO negotiations , and ders, from surplus production areas to de ?supported by further work towa rd developcit ones—coupled with affordability. World ing disciplines on export rest rictions. output of a given food commodity is far less Efforts to extend trade int egration to variable than output in individual countries. developing countries should al so focus on Thus increased trade integration holds considerable potential to stabilize food prices, nal integraboost returns to farmers, and reduce the food prodprices faced by consumers. is also important Trade liberalization protects national food e to promote markets against domestic shocks by allowduce a supply ing more food to be imported in times of ries, particushortage and exported in periods of plenty. However, historically—and despite a host of regional trade agreements—most countries have chosen to take the opposite approach by restricting imports of food and discouragas almost ing exports in often-failed attempts to keep outpacing the domestic markets isolated from internaon. Yet over a tional shocks by ensuring self-suf ?ciency in in hungry. food production. promoting more effective regio tion among them, including for ucts. Facilitating food trade through increased Aid for Trad frictionless borders and to in response from developing count larly in Sub-Saharan Africa. Trade in food Global production of cereals h trebled in the past 50 years, twofold rise in world populati billion people in the world rema Cereals form the staple diet o
f poor people Self-suf ?ciency should be weighed against food item. the bene ?ts of cheaper imports. A country ent of the that is a natural exporter should not hinder d countries. its comparative advantage with export bans. tables and A country that tends to import food should incomes, and 117
and are also their main imported In 2010, cereals made up 40 perc food imports of least develope Increasing consumption of vege meat is indicative of growing
USING TRADE POLICY TO OVERCOME FOOD INSECURITY GLOBAL MONITORING REPORT 201
FIGURE 4.1 Most cereal production is consumed domestically and not traded a. Wheat b. Rice EU27 China China India India Indonesia United States Russian Federation Bangladesh Canada Vietnam Pakistan Thailand Australia Myanmar Turkey Egypt, Arab Rep. Philippines Others 0 35 25 30 35 Global share (%) Global share (%) Production Consumption Production Con sumption Source: Kshirsagar and Baffes 2011 (U.S. Department of Agriculture, 2006–10 averag es). Others 5 0 10 5 15 10 20 15 25 30 20
these items typically account for half of the 10 percent of world production traded globfood imports by developed countries. ally: over the past decade, only one- ?fth of a ll Wheat, maize, and rice account for the wheat produced globally was traded, while majority of trade in cereals; maize and other rice trade accounted for 6 percent of global coarse grains are not only consumed by
rice production (Kshirsagar and Baffes 2011) . humans but are also used as animal feed in In value terms, approximately two-thirds the production of meat and for the manufacof world food exports go to developed counture of biofuels. Most cereal production is for tries, and just under one-third to middledomestic consumption ( ?gure 4.1), with just income ones, with the poorest countries being FIGURE 4.2 Food trade matters most for low-income countries a. Share of food exports in goods exports b. Share of food imports in goods imports 35 20 18 30 16 25 14 12 Percent
20 10 15 8 10 6 4 5 2 0 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 1990 1992 1994 1996 1998 2000 2002 2004 2006 200 8 2010 World World dle-income countries Low-income countries High-income countries Middle-income countries Mid
Low-income countries h-income countries
Source: World Bank DDP and COMTRADE data. Note: Food = SITC rev. 4 codes 0+1+22+4: food, livestock, alcohol/tobacco, oilse eds, edible oil.
GLOBAL MONITORING REPORT 2012 TRADE POLICY TO OVERCOME FOOD INSECURITY
insigni ?cant in world food trade: the share of Markets in key cereals are often domithe least developed countries in world food nated by just a few players among developing trade is just 1 percent. However, food trade countries ( ?gure 4.3); India and China are forms a higher share of the total trade basthe largest producers and consumers of these ket of developing countries compared with crops. Exports of wheat are mainly from developed countries ( ?gure 4.2) (FAOSTAT eveloped countries, exports of rice from 2010 Yearbook). Sub-Saharan African coundeveloping ones. More than 62 percent of all tries, especially some in the Horn of Africa, wheat is exported by the United States, the also have high shares of food imports in total European Union (EU), Canada, and Austraimports, compared with other parts of the lia, and these countries have highly protected world. Although not all developing countries agricultural sectors. South and East Asian depend on food imports, how food is moved economies are the leading rice exporters, within and across borders has clear implicabut only 6–7 percent of global production tions for poor farmers and consumers, who is traded. Market concentration in cereals spend a large share of their household income has declined over time, with an increasingly on food. diversi ?ed export base, although the United FIGURE 4.3 Trade in key cereals is dominated by just a few countries a. Wheat b. Rice Others Others 10% 10% Ukraine Cambodia 3% 5%
United States Thailand 23% 31%
Uruguay 3% Kazakhstan China 3% 6%
Argentina United States 7% 11% Russian Federation Pakistan 10% 10% Australia India 10% 11% c. Coarse grains d. Vegetable oils Others Others 9% 12% India 2% Indonesia EU27 2% Australia 4% 28% Canada 3% Canada 4% Ukraine 3% EU27 4% United States 3% Ukraine Brazil 7% 6% Brazil 8% Argentina 18% Argentina 25% 14% Malaysia United States 48% Vietnam Canada 18% 14% EU27 15%
Source: Kshirsagar and Baffes 2011.
Note: U.S. Department of Agriculture, 2006–10 averages; coarse grains are those us ed as feed (maize, millet, sorghum, and barley).
USING TRADE POLICY TO OVERCOME FOOD INSECURITY GLOBAL MONITORING REPORT 2012
States continues to dominate trade in maize balances, growth, and welfare depend criti(Kshirsagar and Baffes 2011). Import marcally on the terms-of-trade effects of higher kets are, and have historically been, less confood prices. The increase in world food centrated than export ones. prices implies terms-of-trade gains for netTrade policy actions by exporting and exporting countries of food products and importing countries can have knock-on losses for food-deficit, net-importing ones effects in food markets, and food commod( ?gure 4.4). For example, net-food-importing ity prices are often highly correlated. For countries in the Horn of Africa such as example, an export restriction by India on Ethiopia, Kenya, and Somalia currently face rice exports, even one that does not directly drought, famine, and humanitarian emerinfluence the world price, can still lead to gency situations affecting more than 13 milmarket behavior that indirectly affects the lion people, with domestic food prices soaring world price, as happened in 2008 when other (between 30 and 240 percent for red sorghum rice exporters also started to impose restricand maize in Somalia), while Tanzania and tions. Wheat, rice, and maize share a positive Uganda have gained because they remain net relationship: price changes due to temporary exporters (mostly for maize). production or export disruptions can affect Increases in global prices have not always the price of substitute products (Ivanic, Martranslated into equivalent increases in food tin, and Zaman 2011). prices prevailing in domestic markets for various reasons, including a weakened dollar (commodity prices are often expressed in Higher world food prices and dollars); local transport costs (often arising their trade impacts from inadequate competition in road transFood prices remain at historically high levels, port markets); market distortions and price contributing to differing terms-of-trade controls set by governments; the persistence effects across developing countries as well as of trade barriers; and good harvests in some distributional impacts within them. The developing countries (notably for maize, sor-
impact of global food in ation on external ghum, millet, and cassava in some African countries that have allowed for substitution FIGURE 4.4 Net-food-importing regions lose from higher food away from imported wheat and rice) despite prices while net-exporting regions gain bad yields in several of the largest grainexporting economies. These factors explain stark differences in domestic price uctuaSub-Saharan tions across countries even when world food Africa prices decline or remain unchanged. SouthAsia Differences in aggregate food trade balMiddle East and ances can also be deceptive and conceal large North Africa variations at the product level (Canuto 2011). Latin America and For example, in the Andean region, Venezuthe Caribbean ela is the only net importer of food whereas Europe and Bolivia, Colombia, Ecuador, and Peru are all Central Asia net food exporters. However, Bolivia is the East Asia only net exporter of cereals and vegetable and Pacific oils, whose price increases have dramatically – 0.65 – 0.45 – 0.25 – 0.05 spiked; coffee and bananas drive the other Percent three countries’ net exporting positions. 2010–11 2008–09 2009–10 2007–08 0.15 0.35
Protectionist responses Source: World Bank, Datastream. Note: Terms-of-trade changes in food commodities, by developing region, year ove r year changes Protectionism should be avoided as global as share of GDP. trade slows and food prices remain high.
GLOBAL MONITORING REPORT 2012 D INSECURITY 121
USING TRADE POLICY TO OVERCOME FOO
Trade in food is currently subject to fewer the trade policies policy interventions than has historically re responsible been the case, but since 2011 trade protection ces of agriculis once again increasing. Given renewed ecoe exported by nomic uncertainty in 2012, however, coupled over the past with higher food prices and the tendency for hift in agriculcountries to insulate their domestic markets countries, with from world price shocks, governments must increases in continue to keep their markets open to avoid goods. Tarpushing domestic food prices higher. for goods from For a number of staple food commodities, ies, averagmany governments intervene in their food aborde, and markets in attempts to reduce the volatility d countries, of domestic prices relative to world prices. In s high but developing countries, the various intervenel during the tions re ect the sensitivity of governments to tection can volatile prices for important staples, either d therefore to protect consumers against high prices or a relatively small to maintain higher domestic prices for proation is actually ducers. Such measures can be shown to be y consumers in second-best complements to storage polirise in world cies for individual small and open developdomestic ones. ing countries concerned about the adverse ering domestic impacts of high prices for staple foods on permanently risk-averse consumers and farmers, when her taxes on key insurance against price volatility is unavails. Instead, howable and more direct measures to target poor ly lower import households (in periods of high prices) and
Traditionally, it has been of developed countries that we for pushing down the world pri tural products, including thos developing countries. However, two decades there has been a s tural protection to developing reductions in export taxes but protection on import-competing iffs on food trade are highest middle- and high-income countr ing 22 percent (Boumellassa, L Mitaritonna 2009). In develope agricultural protection remain has declined from its peak lev 1980s. While lowering global pro be expected to raise demand an increase world food prices by degree, global trade liberaliz likely to lower prices faced b developing countries, with the prices offset by reductions in Cooperative options to low food prices therefore include reducing import tariffs and ot staples and agricultural input ever, countries often tactical barriers on food temporarily d
uring periods fragile producers (in periods of low prices) to reimpose are not feasible (Gouel and Jean 2011). But proved, again such trade restrictions are not a cooperative ility (Martin way to address price volatility and can actue tariff ally exacerbate it. and applied Trade restrictions have both direct and for countries indirect impacts on world food prices. Tradeon food imports, distorting policies displace and reduce the volatility. efficiency of agricultural production globn a core part ally and make it less resilient to exogenous shocks: policies that distort production and as export trade in food commodities also potentially asures (NTMs), impede the achievement of long-run food ch as price security, by promoting production in areas t to which where it would otherwise not occur and by ets accurately obscuring the transmission of price signals to rade Organief ?cient producers elsewhere. Furthermore, a restrictions collective action problem may emerge: many , particularly countries simultaneously insulating their e debt crises domestic markets against global price shocks d States began through restrictive trade measures may well ection meacreate higher volatility for global food prices ) countries— (Martin and Anderson 2011). ctions—now
of domestic food scarcity only them later when yields have im exacerbating world price volat and Anderson, 2011). “Water ? in th (the difference between bound rates) can leave signi ?cant room
to raise their applied tariffs also compounding global price Lowering bound tariffs has bee of the Doha agenda. Other trade measures such restrictions and non-tariff me including domestic policies su support, also in uence the exten price changes in domestic mark re ect world prices. The World T zation (WTO) reports that trade over the past year have spiked since July-August 2011 when th in the Euro Area and the Unite to intensify (WTO 2011b). Prot sures by the Group of 20 (G-20 the main users of trade restri
USING TRADE POLICY TO OVERCOME FOOD INSECURITY GLOBAL MONITORING REPORT 2012
affect a little over 2 percent of world trade. most frequently to meat, livestock, and grains Approximately 1,000 trade-restrictive mea(concern over pandemics drove the restricsures were introduced between September tions applied to livestock). The most frequent 2008 and October 2011, with increasing users of protection measures for food over use of NTMs, especially quantitative import the period were China, India, Indonesia, restrictions (Datt, Hoekman, and Malouche and the Russian Federation, which together 2011). One-third of all NTMs were on accounted for almost one-third of all trade exports, with increased use of export restricrestrictions introduced on food items since tions for agricultural products, in part as a the beginning of the financial crisis. Nonresult of higher world food prices. G -20 countries, most notably Belarus, Since September 20 08, new tradeBolivia, and Ukraine, have also imposed restrictive measures on food products (that trade restrictions on food products. is, all products within SITC Rev. 4—food Notably, since the 2008 financial crisis, and live animals, beverages and tobacco, oilcountries have also pursued trade liberalizaseeds and edible oils), has accounted for onetion as well as protection in efforts to lower quarter of all new trade restrictions, and the domestic prices for households and indusshare is rising. Export restrictions have been tries ( ?gure 4.6). Although some countries used in attempts to stabilize domestic food have increased their import tariffs on food prices (figure 4.5). But these same policies products—for example, Russia increased its have exacerbated global food price volatiltariffs to 50–80 percent on imports of pigs, ity, raising the price of rice by 45 percent and pork, and poultry—tariff reductions on that of wheat by almost 30 percent between food imports were far more frequent over 2006 and 2008 (Martin and Anderson 2011). this period. In some cases the reductions in New trade restrictions adopted between Sepimport tariffs were signi ?cant. For example, tember 2008 and October 2011 were applied Turkey lowered its tariffs on livestock from FIGURE 4.5 The most frequent users of trade-restrictive measures on food product s are G-20 countries
a. Food products facing trade restrictions, Sept. 2008–Oct. 2011 b. Types of trade restrictions on food, Sept. 2008–Oct. 2011 Meat and livestock Import tariffs Trade remedies Dairy Import restrictions Export ban Other Price support mechanism Cerealsa Import quotas Import ban Fruit and vegetables Export incentives Alcohol/tobacco Export restrictions Import licensing Sugar Export tariffs Fish and seafood Export quota Export licensing Vegetable oil Import subsidy 0 25 25 0 30 Number of restrictive measures Number of restrictive measures Non-G-20 countries G-20 countries Non-G-20 countries G-20 countries Source: Authors’ calculations using data from WTO Trade Monitoring Reports, 2009, 2010, 2011. Note: Total restrictions = 177; restrictions depicted exclude pandemic-related m easures; trade remedies = antidumping, countervailing duties, safeguards. a. In G-20 countries, “cereals ? are mainly wheat; in non-G-20 countries, “cereals ainly wheat and rice. 5 5 10 10 15 15 20 20
? are m
GLOBAL MONITORING REPORT 2012 E POLICY TO OVERCOME FOOD INSECURITY 123
FIGURE 4.6 Some countries have also sought 4.7 Producer support to farmers in most developed to lower domestic food prices by temporarily es has fallen but is rising in emerging economies lowering trade restrictions 160 Export incentives removed 5% 140 Import bans removed
Pro ducer support estimates (%) 5% Export quotas/ 120 restrictions eased 6% 100 Import quotas/ 80 Tariff reductions 60 61% 40 Export bans removed 12% 20 0 European United Turkey Japan China Korea, Russian Brazil restrictions eased 11%
Union States Rep. of Federation Source: Authors’ calculations using WTO data from 2009, 2010, 2011. Note: Trade liberalizing measures on food products, September 2008– 2009 2010 October 2011; total number of observations = 148. Source: OECD 2011. 135–225 percent to 0–20 percent. Most food tariff reductions were on grains and sugar, erage %PSE. For OECD countries, OECD av
followed by meat, edible oil, and dairy produgar, milk, and livestock receive the ucts. Additionally, some countries have tried level of support through price protecto stimulate exports with various incentives: licies and payments based on output, Brazil, through duty drawback schemes on h large declines in price support in meat exports; and the European Union and years have been associated with high the United States with refunds and other rices for these products. Milk, sugar, incentives to their dairy industries. e also feature prominently among the Direct subsidies to farmers in developed ties receiving specific support in countries remain a major source of support, g economies. As mentioned in chapdisadvantaging producers in other countries biofuel policies in developed countries, and distorting world trade. Producer support onsist of subsidies, tax credits, and estimates (PSEs) produced by the Organisative mandates, have further distorted tion for Economic Cooperation and Developtural trade. ment (OECD) provide a measure of the extent loping countries also use policies that to which developed country governments are ly affect food trade and are highly assisting their farmers over time through tive; such measures include food marvarious payments and price support policies. boards, oligopolistic market structures PSE expresses the monetary value of policy parts of the food value chain such as transfers from consumers and taxpayers to , price controls, and trade bans. Counproducers and can also be expressed as a perhat are net exporters of food may face centage (%PSE) of gross farm receipts. Supal pressures to restrict food exports in port to producers in developed countries was of high domestic prices. Not only do estimated to be $227 billion in 2010, accountolicies tend to have a limited impact on ing for 18 percent of gross farm receipts—the price levels, however, but they also lowest %PSE on record (OECD 2011). e a signi ?cant negative effect on earnPSEs have increased in China, Japan, and om export production (box 4.1). CounTurkey ( ?gure 4.7). In China support has been t insulate their domestic markets also increasing rapidly and is actually nearing the instability onto international markets,
rice, s highest tion po althoug recent world p and ric commodi emergin ter 1, which c legisla agricul Deve adverse restric keting in key milling tries t politic periods these p domestic can hav ings fr tries tha export
124 USING TRADE POLICY TO OVERCOME FOOD INSECURITY GLOBAL MONITORING REPORT 2012
Russia’s export ban on grains
In August 2010, in response to escalating grain prices, reducing exports in 2010–11 to the 3 the Russian Federation imposed a temporary export eady shipped at that time, resulting in ban on wheat, barley, rye, maize, and wheat and rye 12 million tons of exports initially flour until the end of December 2010. In October e year. 2010, the export ban on grain was extended until the strictions had unintended and undeend of June 2011; the ban on our was allowed to es such as undermining Russia’s expire. of becoming an even more imporThe export bans were originally a response to a he global grain market, encouraging drought that caused a shortfall in the grain harvest ctation of the bans’ removal, distortand associated rapid grain price increases in both affecting the investment and producdomestic and international markets. According to f its farmers. of ?cial estimates, farmers harvested almost 37 percent less grain than they did in 2009. The export ban was intended to insulate Russia from highly volatile nk 2011d.
grain prices by million tons alr a drop of nearly projected for th The export re sirable consequenc long-term policy tant player in t hoarding in expe ing prices, and tion decisions o
Source: World Ba
especially if they are major producers or consts between Maghreb countries in sumers of food. For example, the introducrica—Algeria, Libya, Mauritania, tion of export restrictions on food exports by and Tunisia—are two to three Argentina, Kazakhstan, Russia, and Ukraine gher than those faced between counfor wheat and China and India for rice, in st north of the Mediterranean rim attempts to decouple domestic markets from France, Italy, and Spain). This difglobal markets to keep domestic food prices l is partly attributable to more NTMs low, have in the past compounded the food traints to intraregional trade versus price problem. ional trade, such as more border conSmaller developing countries (such as d limited cross-border cooperation to
Trade co North Af Morocco, times hi tries ju (such as ferentia and cons interreg trols an
Malawi, Tanzania, and Zambia) also route trade across land borders (box 4.3). tinely impose strict controls on food trade, gional barriers to trade drive up the especially if their agricultural sectors remain trading agricultural products, with highly regulated by various interventions at ant implications not only for food local and national levels. For example, some , but for political stability and ecocountries often ban imports during good velopment more generally. harvest years to ensure domestic production ersistence of NTMs on trade in is consumed first and limit exports during uces trade in these products. New periods of low yields to contain domestic at the World Bank suggests that the price increases. While these policies are often em equivalent of NTMs on African implemented ostensibly to promote food rder trade in food is very high (Goursecurity in the form of self-suf ?ciency, they dot 2011). For example, sanirarely work and can exacerbate food insecuphytosanitary (SPS) regulations on rity rather than reduce it (box 4.2). of rice raise prices by as much as 42 Some restrictive barriers to trade are in Kenya and 30 percent in Uganda not always as visible as outright bans but ). come in more nebulous, less apparent and other restrictions on food trade forms that nevertheless increase trade costs. as government interventions that
facilita These re costs of signific security nomic de The p food red research ad valor cross-bo don and Ca tary and imports percent (box 4.4 Bans as well
GLOBAL MONITORING REPORT 2012 E FOOD INSECURITY
USING TRADE POLICY TO OVERCOM 125
BOX 4.2 s
Government imports of maize during the Southern Africa food crisi
In 2001– 02, the Zambian government publicly l (ADMARC) announced a fixed announced that it would import 200,000 tons of sold at its distribution centers and maize from selected South African suppliers to cover tention to import maize from South the national food deficit and sell it below market ain this price. The selling price was set price to a small number of large formal-sector millwer than the landed cost of imported ers. The subsidy was intended to limit consumer price private traders with no incentive to increases, paid directly to the South African suppliers port. As with Zambia, the governand also to the importers. Because of liquidity probso arrived late and were insuf ?cient lems, the subsidy payment was made late, causing the so prices soared to a peak of $450 maize imports to be delayed. When the government 2002. To make matters worse, the lateinstead imported only 130,000 tons very late in the C imports arrived during the good season, maize and maize our shortages occurred and were then released to the market, local market prices exceeded import parity. Zambian months of continuously falling maize traders and millers who had not been selected to bendetriment of farmers. At other times, e ?t from the scheme, including informal traders from rain from South Africa and subseMozambique, refrained from commercially importing nto the domestic market through govmaize for fear of not being able to sell it once the subts with South African suppliers has sidized maize reached the market. Because grain was informal maize trade with Mozamchanneled only to the largest millers, consumers had Mozambique is the source of informal to pay a higher price for already-re ?ned our instead outhern Malawi, these government of being able to source grain and mill it themselves or d greater risks and price instability for though the informal network of small hammer mills. lholder farmers. In the same year, Malawi also faced a modest maize production de ?cit—8 percent below the counal. 2002; Jayne, Chapoto, and Govereh try’s 10-year average. In September 2001, its grain5; Nijhoff et al. 2003.
trading parastata price for maize declared its in Africa to maint considerably lo maize, leaving commercially im ment imports al to meet demand, a ton in early to-arrive ADMAR 2002 harvest and resulting in 16 prices, to the the sourcing of g quent release o ernment contrac also depressed bique. Because trade in maize to s imports also ad Mozambique’s smal Sources: Nijhoff et (2007); Rubey 200
foment distortions might allow a country to lf-sufficiency in shield consumers from the initial implications ensitive issue in both of a price hike. However, they do not provide g countries in which the incentive for a domestic supply response, sometimes played out and these implications should be considered rade policies. Price when implementing policies that restrict rting countries international trade. Encouraging more trade account de ?cits, put in food, not less, is essential for achieving exchange rates, cause food security. Increased reliance on trade for eserves, and increase production and consumption of food, as well ditures. For example, as for inputs, increases farm gate prices withthe government of out necessarily in ating consumer prices—a subsidy cuts it win-win for farmers and consumers alike. uced tax exempIndeed, those developing countries that have In the Arab Repubadopted more-open trade policies for food subsidy is estimated have seen benefits through higher producent of the population, exports, and trade in these products, . The risk with such together with lower domestic price volatility hat they can become (box 4.5). igh fiscal costs.
However, national se food remains a highly s developed and developin political struggles are in food marketing and t shocks on net-food-impo can also widen current additional pressure on a shortage of foreign r social safety net expen during the Arab Spring, Jordan overturned the food made in 2008 and introd tions on 13 foodstuffs. lic of Egypt, the bread to reach around 85 perc tion (World Bank 2011a) measures, however, is t entrenched, incurring h
126 USING TRADE POLICY TO OVERCOME FOOD INSECURITY GLOBAL MONITORING REPORT 2012
BOX 4.3 food
The Middle East and North Africa region faces high trade costs in
The Mediterranean basin, including its northern ded or heavily controlled at several European and southern North African rims, has because of security concerns but also been an active trading area for more than three mill lack of trust regarding standards lennia. Yet trade and logistics patterns between the ially in the context of the Pan Arab two rims vary considerably, with the cost of trading ment, which will remove tariffs on among Middle East and North African countries b origin.) A 2009 World Bank misbeing inordinately high. Trade costs between counmany as 10 separate control stops tries on the developing, southern rim are higher than dan border, equally distributed on those experienced between the wealthier, European tainer dwell time in Morocco and counterparts (such as France, Italy, and Spain), by one week, longer than the OECD as much as three times for agricultural goods. Moreays and that in emerging Asia— over, trade costs within, for example, the Maghreb ia, 2.5 days in Shanghai. Small region or between the Levant countries in the Eastade costs can result in considerable ern Mediterranean exceed those the region incurs reducing trade costs by just 5 perexternally with Europe. Three explanatory factors ase trade between the Maghreb and stand out, in order of restrictiveness: NTMs that y 22 percent, and intra-Maghreb constrain trade processes; the low quality and fragent. Lower trade costs would also mentation, by country, of logistics services such as ction sharing within a larger market trucking; and less developed intraregional infrastruce competitive exports to Europe. ture, such as ports that easily connect the Maghreb to the Mashreq, and few active transport corridors d 2011; Arvis 2012; Hoekman and between countries. (Trucking and railway movement
are still suspen borders in part because of mutua or origin, espec Free Trade Agree all goods of Ara sion counted as at the Syria-Jor either side. Con Tunisia is about benchmark of 3 d 4 days in Malays reductions in tr trade expansion: cent could incre Western Europe b trade by 20 perc facilitate produ resulting in mor Sources: Shepher Zarrouk 2009.
BOX 4.4 Quantifying the effects of non-tariff measures on trade in Africa n food staples
Quantifying the price-raising effect of non-tariff g the application of NTMs of varimeasures (NTMs) was, until recently, constrained by a panel of 1,260 country-product the availability of comparable data across countries. ssions control for systematic differThanks to a collaborative effort between the World -living across countries, as well as in Bank and other agencies, including United Nations diversity across products, with a full Conference on Trade and Development (UNCTAD) and product ?xed effects. Interaction and the African Development Bank, a new wave of Ms and either region or country data collection was undertaken in 2009–10. So far, ntative estimates of their price30 countries have been covered, with NTMs coded n Africa or in speci ?c countries. for each of the Harmonized System’s 5,000 product h this type of exercise, results should lines. Combining this data with price data collected ith caution, because many confoundas part of the World Bank’s International Comparifect estimates. Although many son project (for a smaller set of products) has made it d in the regressions to limit these conpossible to estimate directly, using econometric meth, they put heavy demands on the ods, the price-raising effect of NTMs on African food in many coef ?cients being estimated staples. dence intervals. Be that as it may, The approach consisted of running regressions of raphically in the ?gure below, are tellcountry-level product prices on “dummy ? (binary) ca’s SPS measures, which often
variables markin ous types, using pairs. The regre ences in cost-of market-structure array of country terms between NT dummies provide te raising effect i As is usual wit be interpreted w ing in uences can af controls are use founding in uences data and result with large confi results, shown g ing. On average Afri
GLOBAL MONITORING REPORT 2012 TRADE POLICY TO OVERCOME FOOD INSECURITY
BOX 4.4 Quantifying the effects of non-tariff measures on trade in African food staples (continued) Price-raising effect of NTMs, Africa average (all affected suffer from lack of harmonization, poor design, and products) haphazard enforcement, raise the price of food staples 25 by 13–15 percent. Quantitative restrictions, where 20 they are applied, add another 20 percent. Such price 15 increases have the potential to affect signi ?cantly the Percentage points
10 real income of poor households. 5 Product-specific estimates suggest substantial 0 effects of SPS regulations in Kenya on rice prices (+42 –5 percent), meat (+34–37 percent), ? sh (+33 percent), –10 and edible oils and fats (+29 percent). Rice prices –15 seem to be similarly affected in Uganda (+30 percent), –20 as are meat and ?sh prices (+41 percent). SPS TBT PSI and Price Quanti tative formalities rictions ects Region fixed effects Country fixed eff Source: Gourdon and Cadot 2011. Note: SPS = sanitary and phytosanitary; TBT = technical barriers to trade; PSI = pre-shipment instructions. controls rest
Open border policies for trade in food
Unlike many other countries in the region, Uganda of which periodically face food shortages. The voland Mozambique have consistently retained liberal umes purchased reached 109,000 tons in 2010. The border policies for food staples. Uganda’s open trade
maize policy of the Ugandan government has been policy for food staples enables traders to offer prodto allow and encourage cross-border trade, and the ucts and services competitively, reliably, and on a susWFP procurement program has encouraged a suptainable basis. Uganda is able to serve as a food basply response of more maize and beans from farmers ket for East Africa. There is no export restriction on who are able to meet WFP’s quality and quantity agricultural products, nor has the government instirequirements. tuted any recent ban on trade in food. Consequently, Mozambique, since the end of its civil war in 1992, the ow of maize from Uganda to Kenya is one of the has also freely allowed both imports and exports of larger and more consistent cross-border ows in the maize. Because northern Mozambique is typically a region (approximately 120,000 tons a year). There is maize surplus area, and because Malawi offers better also cross-border trade with Rwanda (50,000 tons), prices than southern Mozambique (because of lonand southern Sudan is also becoming a growth marger distances and higher transport costs to Maputo), ket for Ugandan products. Nevertheless, the most distraders in northern Mozambique routinely sell their tinct feature of the Ugandan market is the signi ?cant grain to Malawi and eastern Zambia. The open borpresence of the World Food Programme (WFP) and der policy enables the resulting de ?cits in Mozamits procurement program. Ugandan maize accounts bique’s southern cities to be met by large millers who for the largest proportion of maize the WFP procures import grain from South Africa and mill it for domesin Africa (21 percent in 2010), excluding South Africa tic sale. Trade (coupled with the 30 percent subsidy on (which accounted for 24 percent in 2010). The WFP our for wheat and bread production) has therefore buys Ugandan maize as well as beans for distribution helped to stabilize prices in Maputo compared with to internally displaced people in the country but also other capital cities in the region. sends shipments to Burundi, the Democratic Republic of Congo, Kenya, Rwanda, Sudan, and Tanzania, all Sources: Haggblade et al. 2008; World Bank 2009a.
128 USING TRADE POLICY TO OVERCOME FOOD INSECURITY ITORING REPORT 2012
Moreover, consumer subsidies that are met subsidies—especially in by price controls and trade restrictions can h prices have reduced the be counterproductive and create disincentives r use. The ban would be for domestic food producers. world prices fell in the decline would not trigger
of removing extant a period where hig prevalence of thei more signi ? cant if
future because the an increase in exp ort subsidies. Policy recommendations for ciplines on the ability of opening food trade in the import and export barpursuit of food security domestic markets, and hence less thin, would also be Concluding the Doha Round would a major source of welfare gain for developbring more predictable market access ing countries (Mar tin and Anderson 2011). for food products WTO disciplines fo r food export restrictions A conclusion to the Doha Round of WTO idered to be insuf ?cient and negotiations would contribute to food 2011). Export taxes price stability by reducing distortions and the WTO and must comstrengthening disciplines on food trade favoured-nation clause. restrictions, thereby limiting the scope for he General Agreement on countries to impose policies that destabilize (GATT) also provides for world food markets. It would also provide tariffs on both imports a boost to the world economy, generathile export taxes do not ing a potential stimulus of $160 billion in nal anchor equivalent to real income (Laborde, Martin, and van der ings, which are addressed Mensbrugghe 2011). The primary delivere GATT (Article II), there able would be enforceable policy commitment to negotiating their ments by member governments to provide are currently cons weak (FAO and OECD are covered under ply with the mostArticle XVIII of t Tariffs and Trade the negotiation of and exports. And w have an institutio import tariff bind specifically in th is no legal impedi reduction or elimi Developing dis governments to use riers to insulate make world markets
nation (Mavroidis 2007). greater security of market access by not very few export tariffs raising support for domestic agricultural been negotiated by WTO sectors above a given level (high commods that most export tarity prices could dissipate resistance by farmound. ers in developed countries to an agreement estrictions, including for on this); to place greater restrictions on the e generally prohibited by level of permitted tariffs for food imports; GATT but an exception and to refrain from using certain policies restrict food exports at all (such as export subsidies). The topics sures are “temporarily on the table are therefore important, and in or relieve critical shortages principle there is enough substance for all . ? (GATT Article XI, 2 (a)). countries to gain from an agreement. Hows relating to food must also ever, too much emphasis has been placed greement on Agriculture on the gains from market access alone. requires WTO members to The Doha Round is about much more than ncy in using such meamarket access. Concluding the negotiations ng the effects on importing arguably requires greater recognition of the ty, give notice in writvalue that new trade policy disciplines could ith other WTO members bring as part of an agreement (Hoekman of implementation as is pos2011). For example, while a complete ban ons of this article exempt on export subsidies for crops such as cotes, unless they are net ton would be a major step forward, it should the speci ?c food staple connot be quanti ?ed by estimating the impact ce June 2010, only four
However, there are that have already members. This mean iffs are not yet b Quantitative r exports (bans), ar Article XI of the allows members to as long as the mea applied to prevent of foodstuffs. . . Export restriction conform with the A (Article 12) that maintain transpare sures by consideri members’ food securi ing, and consult w as far in advance sible. The provisi developing countri food exporters of cerned. However, sin
GLOBAL MONITORING REPORT 2012 D INSECURITY 129
USING TRADE POLICY TO OVERCOME FOO
noti ?cations by three WTO members have security, been submitted (Saez 2011). g the region to One policy option, therefore, would be Republic of to ban export restrictions altogether in the n Zambia; WTO if this could be agreed and enforced. and casCommitments by the larger exporters of reby enhancfood not to impose export restrictions would ly food-de ?cit especially help maintain world price stability re cassava in periods of food stress. Reinforced multirovide local lateral trade rules for noti ?cation and transorts both parency of export restrictions would also o Malawi; be useful. Developing a code of conduct to nation of exempt food aid from export restrictions is ize enable regan important priority for the international into Kenya and community. Food and Agriculture Organizafrica where tion (FAO) member countries have already and mechaagreed to remove these on food consigninputs and ments purchased for humanitarian purposes, for the export ? rst at the Group of Eight (G-8) Summit in , southern L’Aquila, Italy, in July 2009 and then at the 2008). World Summit on Food Security in Rome in cross-border November 2009. If met, these commitments ut various would allow food to be shipped to where it is sewhere, Thaimost needed in times of severe shortage. er of cassava, c increases in
production ensures domestic food even in drought years, enablin export maize to the Democratic Congo, Malawi, and elsewhere i eastern Uganda, where bananas sava ensure food security, the ing maize exports to chronical Kenya; northern Mozambique whe and Irish potato cultivation p food, enabling regular maize exp north into Kenya and south int most of Tanzania where a combi rice, cassava, bananas, and ma ular cereal exports both north south into Malawi; and South A large-scale commercialization nization combined with modern irrigation enable high yields of cereals northward to Zimbabwe Mozambique and Malawi (Haggblade Indeed the scope for increased trade in Africa is enormous, b obstacles remain (box 4.6). El land, the world’s largest produc has recently witnessed dramati its exports of this crop on th
e back of sales to Greater opening of regional markets to China for biofuel production. trade would promote food security and
To better exploit these op portunities, more price stabilization effective regional trade polic y and regulations The potential for faster agricultural growth lholder farmin many developing countries could be ross borders. unlocked by deeper regional trade integrahave been tion to complement multilateral liberalization de agreements efforts. In the absence of a Doha package, n of free trade increased regional trade can also be a powh for the most erful instrument for stabilizing food supply reducing tariffs and food prices. The distribution of food m. As with crop cultivation between neighboring coundual removal of tries, coupled with possibilities, where they come more exist, for staggered harvesting within the ans, countrysame commodity, offers substantial opporof origin, tunities for regional trade. Because producments tion variability is not often highly correlated o reduce regional among countries in most regions, integration food prices. through regional trade can reduce the effects have retained of small country size on production volatility. eir various Examples of regional trade in food, both regional recorded and unrecorded, are numerous and and pubinclude northern Zambia, where cassava nments retain a must be developed to link smal ers to urban demand centers ac Groups of developing countries actively pursuing regional tra (RTAs), including the formatio areas and customs unions, whic part have largely succeeded in on most goods traded among the global trade, however, the gra tariffs has meant NTMs have be visible. For example, export b speci ?c standards, complex rules
and cumbersome customs require across countries often serve t trade and destabilize regional Additionally, governments the use of safeguards under th RTAs to exclude food from open trade on the grounds of health lic safety. As a result, gover
130 USING TRADE POLICY TO OVERCOME FOOD INSECURITY GLOBAL MONITORING REPORT 2012
BOX 4.6 ion?
Defragmenting Africa: What will stimulate regional trade integrat
Africa’s potential for regional trade remains unexve been many initiatives to integrate ploited because of the high transaction costs that in Africa, effective implementation face those who trade across borders in Africa. A as been sorely lacking. Hence, there wide range of policy-related barriers drives up costs p countries understand the political and limit trade. To escape the current straitjacket of esistance to integrative reforms. trade fragmentation, Africa needs to pursue changes eaders publicly and, by and large, genuin three key areas: port for integration, but actual barersist? For example, most of the non• Facilitating cross-border trade, especially by small enti ?ed in the East African Commupoor traders, many of whom are women, by simte removal in 2008 are still in place. plifying border procedures, limiting the number staples to regional trade will create of agencies at the border and increasing the prors. Therefore, political consensus on fessionalism of of ?cials, supporting traders’ assois required to create new insticiations, improving the flow of information on ments that moderate the impact of market opportunities, and assisting in the spread d instability in agricultural markets. of new technologies, such as cross-border mobile ors can help governments build conbanking, that improve access to ? nance. form and provide a predictable and • Removing a range of nontariff barriers to trade, ronment: such as restrictive rules of origin, import and export bans, and onerous and costly import and dialogue on food trade reform export licensing procedures. imely and accurate data on global, • Reforming regulations and immigration procedures ational markets. Food trade policy that limit the substantial potential for cross-border ject to open discussion, and the intertrade and investment in services. s of relevant stakeholders in food policies are seldom represented. And
While there ha regional markets of commitments h is a need to hel economy behind r How is it that l inely pledge sup riers to trade p tariff barriers id nity for immedia Opening up food winners and lose agricultural reform tutional arrange future shocks an Two related fact stituencies for re stable policy envi 1. An inclusive informed by t regional, and n is rarely sub ests and view staples trade
The main message is that to deliver integrated open discussion about trade reform, regional markets that will attract investment in rs rely most on the input of those agroprocessing, manufacturing, and new services l in uence. activities, policy makers need to move beyond signing tegy that provides a clear transitional agreements that reduce tariffs to drive a more holistic rated regional markets rather than a process to deeper regional integration. An approach litically unfeasible jump to competiis needed that reforms policies that create nontariff A reform strategy will have to take barriers; puts in place appropriate regulations that emental steps that encourage investallow cross-border movement of services suppliers; ing uncertainties about policies for delivers competitive regionally integrated services ector and deliver real and visible benmarkets; and builds the institutions that are necessary me time, it will allow policy makto allow small producers and traders to access open t a pace consistent with their political regional markets. The appropriate metric for successions and their capacity to address the ful integration is not the extent of tariff preferences hose who will lose from the reform but rather reductions in the level of transaction costs that limit the capacity of Africans to move, invest in, and trade goods and services across their borders. nk 2012.
when there is decision make with politica 2. A reform stra path to integ single but po tive markets. place in incr ment by reduc the private s e ?ts. At the sa
ers to move a risk calculat concerns of t process. Source: World Ba
great deal of discretion over food-related or agricultural products has essentrade policy, particularly in cases of food ecome a patchwork of rules implesecurity and when there is a perceived risk to nevenly across different countries human health. Consequently, regional trade rced inconsistently, generating an
policy f tially b mented u and enfo
GLOBAL MONITORING REPORT 2012 OD INSECURITY 131
USING TRADE POLICY TO OVERCOME FO
opaque policy environment that severely limfocus on the its trade in food. s of transcilitation projects
as Nepal. However a stronger “software ? (regulatory) dimension
port, logistics, and trade fa is also needed (Arvis, Raball and, and MarImproved transport logistics and trade teau 2010). facilitation would improve links to Improving trade facilitati on and logistics markets and promote cost-effective reforms, as well as streamlin ing regulatory access to food and food inputs frameworks in the context of simpli ?ed borTrade policy restrictions are not the only n have signi ?impediment to the free movement of food le generating across borders. Efficient transport and When moving logistics are critically important to agriculcross borders, tural marketing and are a key component of es often face a prices. Yet in developing countries, particuissions, redunlarly landlocked least developed countries, , and uneven transport and logistics costs are generally far ts. As a result, higher than OECD benchmarks of around 9 eloping counpercent. For example, on average transport ven for perishable and logistics costs account for 18 percent of d be cleared the value of firms’ sales in Latin America, hese requirereaching 32 percent for Mercosur (Southern delay or expense Cone Common Market) and Chile (World hey represent a sigBank 2005). In the case of African countries, where single improvements in logistics services (as mearoduced, the sured by the Logistics Performance Index) documents would provide greater bene ?ts than changes ms, origin cerder management procedures, ca cant bene ?ts for consumers, whi
a favorable supply response. formal consignments of food a traders in developing countri host of repetitive fees, perm dant documentation procedures certi ?cate of origin requiremen customs clearance in many dev tries involves long delays, e goods such as food that shoul quickly. Individually most of t ments may constitute a small to traders but collectively t ni ?cant barrier to trade. Even entry documents have been int information and accompanying (such as import declaration for
in other components of trade costs (Hoekits and stanman and Nicita 2008). om traders can Transport and logistics costs are also s-border tradan important determinant of food costs all of the inforfor importing countries as well as of food . For example, price variations within them. For example, permits can maize prices in Guatemala have increased Dar es Salaam. signi ?cantly more than in the rest of Latin ort grain are America because of higher transport costs. ameino, Kagira, Similarly, sharp increases in the prices of wanting to wheat-related products in Azerbaijan, the hern MozamKyrgyz Republic, and Tajikistan over the required to get past year partly re ect increased transport on the cencosts from Kazakhstan (World Bank 2011b). hirley, Abdula, While individual countries cannot do much , food trade to reduce ocean freight costs, which may be ; subjected to a signi ?cant part of the ? nal price for bulk, n the context relatively low-value commodities such as scussed, pushed grains and edible oils, they can pursue proactive policy initiatives to lower costs associ, and predictated with regional and domestic distribution. that are based Investments in transport infrastructure have -satisfy a proven track record of reducing consumer t the capaciprices, especially in remote locations such the provision of
ti ?cates, invoices, import perm dards compliance) required fr be burdensome, and small cros ers may be unable to provide mation for the entry document in Tanzania all certi ?cates and
be obtained only in person in In Kenya permits to legally imp available only in Nairobi (Ny and Njukia 2003). And traders export food staples from nort bique to southern Malawi are an export permit from Quelimane tral coast of Mozambique (Tsc and Weber 2005). Consequently can be effectively prohibited tariffs (even if undertaken withi of an RTA); or, as already di into informal channels. Simple, structured, stable able trade regimes are needed around harmonized and easy-to border procedures that reflec ties of farmers and traders;
132 USING TRADE POLICY TO OVERCOME FOOD INSECURITY ONITORING REPORT 2012
information on rules and regulations that are ribution of agriculture to easily available and well known; and clear through attracting investnotification procedures for new rules and tural research and more regulations that allow traders, other govultural techniques, thereby ernments, and agencies to contest proposed ains for small-scale farmers changes and give producers time to adjust. es such as Brazil, Malaysia, Increasing the productivity of food proe made significant progduction also requires an assessment of the ural commercialization in problems that affect the whole value chain, have undertaken investparticularly those relating to infrastructure h and extension services and links to markets. The prices that farmtries such as India and ers receive and consumers pay for food are ed their market informain uenced by the quality and availability of a d Bank 2009b). However, range of services including extension services, opportunities requires an transport and logistics services, storage and able trade policy environdistribution, and water. Increasing competid food inputs. For example, tion in these services can play a positive role hat seek to control domestic in boosting agricultural productivity and ough price controls, direct improving cost ef ?cient access to food. ment in marketing activirestrictions are all likely to
enhance the cont economic growth ments in agricul productive agric harnessing the g as well. Countri and Thailand hav ress in agricult recent years and ments in researc while other coun Mali have improv tion systems (Worl exploiting these open and predict ment for food an those policies t food markets thr government involve ties, and trade lower the food s
upply response over the Positive policy measures to promote medium term. In contrast, the development food security should be developed of market-based mechanisms to manage food though increased Aid for Trade price risks (suc h as futures and options marPolicy makers are often reluctant to open up on of private storage or wareto food trade because they are keenly aware kets, facilitati house receipts s
ystems, market information that food price shocks can lead to food insether-indexed insurance) are curity and consequently to social unrest. This bilize signi ?cant new investis certainly the case if at the country level no rivate sector. Aid for Trade social safety nets or other instruments are support the policy reform available to mitigate the adverse effects on the upgrade processes that are poor and vulnerable. At the same time, it is oping countries to better tap not always immediately clear whether a food s created by more open mulprice shock is permanent or transitory. Policy gional markets for food. makers often treat shocks as transitory and for Trade commitments use trade policies to protect their consumated $40 billion—a 60 ers. Those policies do not necessarily provide from the 2002–05 period. incentives to producers to increase productivfor Trade going to least ity and production. As various improvements ies has also increased from in the food value chain will require time to ing the period 2002– 05 materialize, for example, in trade-related in 2009. Furthermore, supinfrastructure, it is important to work simuluntry programs (both global taneously on enhancing social safety nets. ached $7 billion in 2009, While rising world food prices are curtimes the amount during rently perceived as a “crisis ? and are clearly k is the largest proa burden to poor net consumers of food, Trade. Based on the OECD/ over the long term, they could bring signi ?d for Trade, the Bank cant opportunities to stimulate food producage of $15 billion a year in tion in developing countries, thus improving tween 2001 and 2011 and food security for the poor. They could also ercent of all Aid for Trade
systems, and wea all likely to mo ments from the p could be used to and supply-side needed for devel the opportunitie tilateral and re In 2009 Aid reached approxim percent increase The share of Aid developed countr 26.5 percent dur to 30.4 percent port for multico and regional) re more than three 2002–05. The World Ban vider of Aid for WTO de ? nition of Ai provided an aver Aid for Trade be accounts of 20 p
GLOBAL MONITORING REPORT 2012 FOOD INSECURITY 133
USING TRADE POLICY TO OVERCOME
expenditures globally. Lending for transport economics and Alterinfrastructure is a critical component of the ence, New York, World Bank’s efforts to help developing countries achieve their trade integration and pol. Malouche. 2011. icy reform objectives. Almost two-thirds of tectionism since World Bank support for transport infrastructe 72, World ture is for roads and highways, with South Asia being the largest recipient of funds for rganization). 2009. transport projects. Excluding infrastructure, ity in the World. ? the World Bank provided a total of $2.6 billion in trade-related lending in 2010–11, an 2010. almost ?vefold increase over 2002–03; the Economic share of trade-related lending in total Bank ment). 2011. “Price lending also showed a rising trend, from an gricultural Markets: average of 2 percent during 2001–03 to an epared for the average of 6 percent during 2008–11. Africa is the largest recipient of World Bank Aid for 1. “Optimal Food Trade and now accounts for more than oneSmall Open Developing third of disbursements. for Research on the With uncertainty in the global economy Paris. and ?scal pressures in key donor countries, a 11. “The Pricekey challenge will be to sustain current levels ariff Measures in of ? nancing. Monitoring by the OECD and ton, DC. WTO as part of the self-assessment exercise g African Food for the Third Global Review of Aid for Trade d Regional Marketindicates that the outlook for Aid for Trade ples. ? Michigan State appears stable, although the previously high growth rates have declined. Aid for Trade H. Nielson, D. Tschirgrew by 2 percent between 2008 and 2009, . “Regional Trade in compared with annual increases of 10 perfor Stimulating Agri-
Geopolitical Risk, Macro native Investment Confer October 11–12. Datt, M., B. Hoekman, and M “Taking Stock of Trade Pro 2008. ? Economic Premise No Bank, Washington DC. FAO (Food and Agriculture O “The State of Food Insecur Rome. ———. 2010. FAO Statistical Yearbook FAO and OECD (Organisation for Co-operation and Develop Volatility in Food and A Policy Responses. ? Report pr G-20. Rome and Paris. Gouel, C., and S. Jean. 201 Price Stabilization in a Country. ? CEPII (Institute
International Economy), Gourdon, J., and O. Cadot. 20 Raising Effects of Non-T Africa. ? World Bank, Washing Haggblade, S. 2008. “Enhancin Security through Improve ing Systems for Food Sta University. Haggblade, S., J. Govereh, ley, and P. Dorosh. 2008 Food Staples: Prospects
cent between 2006 and 2008 (WTO 2011a). rating Short-Term Existing Aid for Trade pledges should thereEastern and Southfore be honored and new pledges encouraged. d for World Bank, d the Doha References gs. ? Economic Arvis, J. F. 2012. “Trade and Transport Facilitaion and Economic tion in the MNA Region. ? World Bank, WashBank, Washingington, DC. Arvis, J. F., G. Raballand, and J.F. Marteau. 2008. “Trade Policy, 2010. The Cost of Being Landlocked. Washng Country Trade. ? ington, DC. Paper 4797, World Boumellassa, H., D. Laborde, and C. Mitaritonna. 2009. “A Picture of Tariff Protection across the 2009. “Changes World, MAcMap-HS6, Version 2. ? IFPRI Diss in the Pan-Arab cussion Paper 903, International Food Policy . ? Policy Research Research Institute, Washington, DC. d Bank, WashingCanuto, O. 2011. “Fiscal Consequences of Food and Agricultural Commodities Inflation. ? Zaman. 2011. Remarks for the World Bank GAIM/GMA, Poverty Impacts
cultural Growth and Mode Food Security Crises in ern Africa. ? Paper prepare
Washington, DC. Hoekman, B. 2011. “The WTO an Round: Walking on Two Le Premise 68, Poverty Reduct Management Network, World ton, DC. Hoekman, B., and A. Nicita. Trade Costs and Developi Policy Research Working Bank, Washington, DC. Hoekman, B., and J. Zarrouk. in Cross-Border Trade Cost Free Trade Area, 2001–2008 Working Paper 5031, Worl ton, DC. Ivanic, M., W. Martin, and H. “Estimating the Short-Run
134 USING TRADE POLICY TO OVERCOME FOOD INSECURITY MONITORING REPORT 2012
of the 2010–11 Surge in Food Prices. ? Policy awi’s Food Crisis: Causes Research Working Paper 5633, World Bank, ns. ? Report for USAID, Lilongwe. Washington, DC. “Trade Policy Options and InternaJayne, T., A. Chapoto, and J. Govereh. 2007. Prices. ? World Bank, Washington, “Grain Marketing Policy at the Crossroads: Challenges for Eastern and Southern Africa. ? 1. “Trade Costs in the Maghreb Paper prepared for the FAO Workshop on eloping Trade Consultants “Staple Food Trade and Market Policy Options for Promoting Development in Eastern and D. Abdula, and M. Weber. 2005. Southern Africa, ? March 1–2, Rome. Marketing and Trade PoliKshirsagar, V., and J. Baffes. 2011. “The Nature te Household Food Security in and Structure of Global Food Markets. ? World outhern Mozambique. ? MichiBank, Washington, DC. niversity. Laborde, D., W. Martin, and D. van der 05. “Infraestructura logística en Mensbrugghe. 2011. “Implications of the rt 35061-CO, Departamento Doha Market Access Proposals for Developing , Sector Privado e Infraestructura, Countries. ? Policy Research Working Paper Latina y el Caribe, Wash5697, World Bank, Washington, DC. Martin, W., and K. Anderson. 2011. “Export ica: A Study of Restrictions and Price Insulation during Coml Maize Market and Marketing modity Price Booms. ? Policy Research Paper ture and Rural Development 5645, World Bank, Washington, DC. a Region, World Bank, WashingMavroidis, P. 2007. Trade in Goods. New York: Oxford University Press. od Prices: Policy Nijhoff, J., T. Jayne, B. Mwiinga, and J. Shaffer. World Bank Response. ? World 2002. “Markets Need Predictable Government ton, DC. Actions to Function Effectively: The Case of e Watch February Importing Maize in Times of De ?cit. ? Policy duction and Equity Group, Synthesis 6, Food Security Research Project, Washington, DC.
Rubey, L. 2005. “Mal and Solutio Saez, S. 2011. tional Food DC. Shepherd, B. 201 2000–2009. Ltd. Tschirley, D., “Toward Improved cies to Promo Central and S gan State U World Bank. 20 Colombia. ? Repo de Finanzas Región de América ington, DC. ———. 2009a. “Eastern Afr the Regiona Costs. ? Agricul Unit, Afric ton, DC. ———. 2009b. “Rising Fo Options and Bank, Washing ———. 2011a. “Food Pric 2011. World Bank, ? Poverty Re ? Dev
Lusaka. e Watch April 2011. ? Nijhoff, J., D. Tschirley, T. Jayne, G. Tembo, uction and Equity Group, World P. Arlindo, B. Mwiinga, J. Shaffer, M. Weber, ngton, DC. C. Donovan, and D. Boughton. 2003. “CoorCentral Asia: Windination for Long-Term Food Security by Govhes in Trade Integration. ? ECSPE ernment, Private Sector and Donors: Issues and asian Development Bank Center Challenges. ? Policy Synthesis 65, Michigan on, Washington, DC. State University. ting Africa: DeepenNyameino, D., B. Kagira, and S. Njukia. 2003. l Trade Integration in Goods and “Maize Market Assessment and Baseline d Bank, Washington, DC. Study for Kenya. ? Regional Agricultural Trade Organization). 2011a. “Aid Expansion Support Program, Nairobi. ork Programme 2012–2013— OECD (Organisation for Economic Co-operation oherence. ? JOB/DEV/12, Comand Development). 2011. “Agricultural Polde and Development, Geneva. icy Monitoring and Evaluation 2011: OECD n G-20 Trade Measures. Countries and Emerging Economies. ? Paris.
———. 2011b. “Food Pric Poverty Red Bank, Washi ———. 2011d. “Russia and Win Approac and the Eur for Integrati ———. 2012. “De-Fragmen ing Regiona Services. ? Worl WTO (World Trade for Trade W Deepening C mittee of Tra ———. 2011b. Report o Geneva.
5 Aid and International Financial Institutions
Summary and Main Messages the full impact on aid flows Official development assistance (ODA) rscored by has strengthened remarkably over the past preliminary decade, despite the disruptions of the global disburse?nancial crisis centered in high-income coun2011 (at tries. Net ODA reported to the Developation in sevment Assistance Committee (DAC) of the o their aid Organisation for Economic Co-operation and Development (OECD) rose from 0.22 n food prices, percent of donors gross national income , food, and (GNI) in 2000 to 0.32 percent in 2010 and re of aid comreached a record high of $127.3 billion in ulture, food, 2010 (at 2009 prices), very close to the target about 10 perset at the Group of Eight Gleneagles Sumd upon in mit in 2005. And among the 15 European for nutrition Union (EU) member countries that commitsistance for ted to raising ODA to 0.51 percent of GNI rcent of total by 2010, 8 countries reached the goal and nd nutrition, another 4 countries made signi ?cant progin early ress toward it. There is some evidence that ical to ecointernational coordination, notably the commitments made at Gleneagles, contributed to many donor the rise in aid disbursements (Kharas 2010). for improvNevertheless, aid remains well short of the the MDGs in goal of 0.7 percent of GNI set by the United d effectiveness Nations some 40 years ago and substantially e 13 global tarbelow various estimates (Atisophon and oth-
may take several years before of the global financial crisis becomes apparent. This is unde the just-released (April 2012) OECD data indicating that ODA ments declined by 2.7 percent in 2010 prices), as ? scal consolid
eral DAC countries has cut int budgets. Despite the recent spikes i ODA commitments to agriculture nutrition are limited. The sha mitments directed toward agric and nutrition has remained at cent since the MDGs were agree 2000. Further increases in aid are particularly important: as nutrition represents only 3 pe aid ows to agriculture, food, a yet improved nutrition and gains childhood development are crit nomic progress. Tight budget constraints in countries underscore the need ing aid effectiveness to meet 2015. Progress in improving ai has fallen short. Only 1 of th gets set out in the Paris Decl
aration on Aid ers 2011) of annual disbursements required ieved by 2010 to meet the Millennium Development Goals progress has (MDGs). Further, a key concern is that it Directing a 137
Effectiveness (2005) to be ach has been met, and only limited been achieved on the other 12.
138 AID AND INTERNATIONAL FINANCIAL INSTITUTIONS NITORING REPORT 2012
larger share of disbursements to country proonal activities that supgrammable aid (CPA, a core subset of ODA, and poverty alleviation which accounts for about 60 percent of total Nevertheless, ODA remains DAC gross bilateral ODA and excludes rtant for low-income coununpredictable components such as food aid nted more than 60 percent and aid ows that do not have direct develinance during 2005–10, opment impacts such as donor administraere 4 percent for middletive costs) would also help to mitigate the (Adugna et al. 2011). ODA impact of weakened aid ows. gile and conflict-affected The very welcome expansion of new egration with global mardonors has raised new challenges for aid erely hampered. Recogrecipients and has led to shifts in the interonflict-affected countries national aid agenda. While data remain ingle MDG by 2015, the limited, the Bank estimates that aid disgement in Fragile States bursements by non-DAC bilateral donors rs endorsed at the Fourth (including new donor middle-income counin Busan) sets out 5 pritries) and private actors such as philanoward: legitimate politics, thropic organizations reached $63.5 billion , economic foundations, and in 2009. The lion’s share, $52.5 billion, es. came from private nongovernmental orgadation in many large donor nizations (NGOs) (Hudson Institute 2011) ly to slow the growth of aid and the remaining $11 billion came from Donor reports indicate non-DAC donors (accounting for $7.3 bilf disbursements of counlion) and new middle-income donors Brazil, aid could fall from an China, India, the Russian Federation, and ent a year recorded during South Africa (together accounting for $3.7 ge of 2 percent during billion) (Zimmermann and Smith 2011). The es an annual per capita
of many internati port development (Zoellick 2011). particularly impo tries. It represe of their external f compared with a m income countries is critical for fra states, where int kets has been sev nizing that few c would achieve a s New Deal for Enga (which stakeholde High Level Forum orities to work t justice, security revenues and servic Fiscal consoli countries is like in coming years. that the growth o try programmable average of 5 perc 2001–10 to an avera 2011–13. This impli
rapid rise in the number of donors and projrcent of CPA disbursements ects has increased the administrative burden ntries. Disbursements to facing recipients, particularly for fragile and lict or fragile situations con ict-affected states (OECD 2011c). The nnual 2.1 percent on a sharp rise in stakeholders has contributed to although they would remain important shifts in the aid agenda, including r capita level expected for calls for strengthening country leadership nts. If realized, lower per and ownership of the aid management prosements could have sigcess; promoting a more inclusive process of cal implications for the development cooperation; improving delivd—and potentially for the ery, measurement, and monitoring of results; e MDGs. This potential and improving harmonization and transparscores calls at the Fourth ency of aid management and delivery pracon Aid Effectiveness in tices—common goals that the development esults, to scale up aid for community endorsed in the Global Partnerd underaided countries, and ship for Effective Development at the Fourth ordination. High Level Forum on Aid Effectiveness in Busan in 2011. Additionally, participation by new actors, particularly the private secthe tor, has led to calls for greater emphasis on
decline of 0.2 pe for recipient cou countries in conf may decline by an a per capita basis, four times the pe other aid recipie capita CPA disbur ni ?cantly negative countries affecte achievement of th aid decline under High Level Forum Busan to focus on r fragile states an to improve aid co ?s
Recent trends in disbursement and composition innovation (Gates 2011). With increased international trade, forassistance strengthened eign investment, and remittances flows, 2010, despite ongoing chalODA is now viewed as only one component e global ? nancial crisis and of aid Of ?cial development substantially in lenges tied to th
GLOBAL MONITORING REPORT 2012 INSTITUTIONS 139
AID AND INTERNATIONAL FINANCIAL
limited fiscal space in many high-income bilateral disbursements countries. DAC member countries’ bilateral ODA net disbursements increased by 140,000 5 6.3 percent in constant dollars to $127.3 billion, the highest level on record, exceed120,000 ing the previous peak of $122.3 billion in
FIGURE 5.1 DAC members’ net ODA
2009 constant US$, millions 100,000 5 2005. This increase followed weak volume growth of 1 percent in 2009, as the global 80,000 0.2
Percent economy grappled with recession. Bilateral 60,000 5 ODA net disbursements rose to 0.32 percent of DAC donors’ GNI in 2010, up from 0.22 40,000 percent in 2000 and the highest share since 20,000 5 the record 0.33 percent posted in 2005 ( ?gT to LICs (left axis) ure 5.1). Of the $127 billion in ODA net dis0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 bursements from DAC countries, 29 percent was directed to low-income countries, 18 ODA as percent of donors’ GNI (right axis) Total ODA (left axis) percent to middle-income countries, and 30 Total ODA to low-income countries (left axis) percent to multilateral institutions.1 In contrast to DAC bilateral ODA, multiSource: OECD DAC. lateral net disbursements for development
contracted by 1.6 percent in 2010 to $13.2 billion in constant 2009 prices. Since multiTABLE 5.1 Decadal changes in b ilateral official development lateral disbursements accounted for only 9 assistance percent of total disbursements (DAC bilateral Constant 2009 prices, decade e nding in year noted ODA and multilateral aid) in 2010, the rise in Bilateral ODA 1970 1980 1990 2000 2010 DAC bilateral ODA more than offset the mulPercent growth 0.8 46.5 38.2 –9.2 60.0 tilateral decline; aggregate DAC bilateral and Level change (US$ millions) 339 19,418 22,870 (7,902) 47,799 multilateral net aid disbursements reported Source: OECD DAC. to the OECD reached a record high of $147.5 billion in 2010 at constant 2009 prices. The increase in ODA in 2010 continued the general trend of rising ows throughout substantial increases in interna tional aid much of the decade. DAC bilateral ODA regand debt relief. These include agreements istered a cumulative net gain over the decade reached in 2002 in Monterrey a nd in 2005 of nearly $48 billion in constant prices. This in Gleneagles and Paris and th e Multilateral 60 percent real increase was by far the largDebt Relief Initiative (MDRI), as well as the est decadal gain since data collection began Heavily Indebted Poor Countrie s (HIPC) in 1960 (table 5.1). In the 40 years through Initiative dating back to 1996 . The surge 2000, DAC ODA grew by an annual average in ODA in 2005 in particular r e ects debt of 2.1 percent in real terms, while during the relief tied to HIPC, MDRI, and traditional decade through 2010 the pace accelerated debt relief mechanisms under t he Paris Club, to an average 5.5 percent. The general trend which in aggregate accounted f or 17 percentof rising annual ows during the 2000s was age points of the 31.6 percent r eal increase in only brie y constrained by the onset of the ODA for the year. Debt relief re presented 10 global ? nancial crisis in 2008, with a sharp percent of ODA over the decade ( 2001–10), deceleration in growth to 1 percent in 2009. peaking at 22.2 percent in 200 5. This level To a large extent the buoyancy in aid compares with a somewhat small er average disbursements over the decade is tied to the share of 7.8 percent during th e 1990s and a 31.6 percent surge (in real terms) in DAC much smaller 2.3 percent share in the three bilateral ODA in 2005 that is associated earlier decades (1960s through 1980s). The with international agreements that targeted upswing in multilateral ODA he lped reverse
AID AND INTERNATIONAL FINANCIAL INSTITUTIONS GLOBAL MONITORING REPORT 2012
the contractions in DAC bilateral ODA of 0s). As a consequence, the 5.2 percent in 2006 and 8.1 percent in 2007 the DAC country effort (in real terms). , by a wide and growing 2010 was the deadline to achieve very -weighted average (which ambitious targets that donors and partountry’s effort by its GDP, ner countries set for themselves in 2005 to rger economies a larger increase development aid ows in an effort to AC countries’ total help realize achievement of the Millennium rsements as a share of Development Goals in 2015. More specifiercent in 2010, the average cally, at the G-8 Gleneagles Summit in 2005, share rose to a record donors agreed to raise annual ODA disbursent in 2010 (up from 0.36 ments by about $50 billion by 2010 and the ure 5.2). 15 EU countries that are members of OECD e rise in aid ows over the DAC committed to raise ODA ows to 0.51 accompanied by a sigpercent as a share of GNI by 2010. While tion of flows toward lowneither target was met, signi ?cant progress ere aid also represents was made despite the severe disruptions tied ce of external financing to the global ?nancial crisis since 2008—and w-income countries the commitments made at Gleneagles and ak 61.9 percent of aid ows other international initiatives (such as the with 46.9 percent and High Level Forums) appear to have contrib00 and 1990, respectively.3 uted to the rise in aid disbursements (Kharas lows to middle-income 2010). Aid disbursements reached a record m 56.7 percent of the total high of $127.3 billion in 2010 and helped rcent in 2010. The rise in bring donors very close to achieving the G-8 ntry share of ODA ows Gleneagles target for 2010 of $130 billion (at t acceleration of a long-term 2009 prices). Additionally, 8 of the 15 EU ries received only 35 per-
percent in the 199 simple average of has come to exceed margin, the income weighs the given c and thus giving la weight). While the D weighted ODA disbu GNI rose to 0.32 p unweighted country high of 0.47 perce percent in 2000) ( The considerabl past decade has been nificant reorienta income countries, wh a much larger sour needs (figure 5.3). Lo accounted for a pe in 2010, compared 44.3 percent in 20 In contrast, ODA f countries fell fro in 1990 to 38.1 pe the low-income-cou represents a recen trend: these count ?g
member countries that committed to the 0.51 developing countries in percent target reached it, and 4 countries istorical low of 27 percent made signi ?cant progress toward the goal.2 ble data starting in 1960). More countries made larger ODA disdisbursements to them in bursements relative to their GNI over the tied to the war on terrorpast decade than during the 1990s—or f total ODA disbursements indeed since the 1960s. The individual country efforts of smaller countries have exceeded those of the larger DAC bilateral donor counas a share of donor GNI rent prices tries. EU member countries have led this trend. For example, ODA disbursements rose by a minimum of one-tenth of a percentage 0.6 point as a share of GNI in Belgium (from
cent of ODA ows to the 1960s (and a h in 1961, with availa The recent rise in part re ects efforts ism. Nevertheless, i
FIGURE 5.2 DAC ODA Percent share, cur
% share, curren t prices
0.5 0.53 percent to 0.64 percent), Denmark (0.81 0.4 percent to 0.91 percent), Ireland (0.42 percent to 0.52 percent), Luxembourg (0.79 per0.3 cent to 1.05 percent), Spain (0.27 percent to 0.2 0.43 percent), and the United Kingdom (0.47 0.1 percent to 0.57 percent) between 2005 and 2010, reflecting a concerted effort to meet 0 05 60 65 70 75 80 85
90 95 00
their Gleneagles 2010 commitment. By con20 19 19 19 19 19 19 19 19 20
trast, U.S. ODA disbursements averaged 0.17 DAC countries total Average Median percent of GNI during the decade through 2010, (notably rising from an average of 0.13 itor Reporting System and World Bank.
Sources: OECD Cred
GLOBAL MONITORING REPORT 2012 AID AND INTERNATIONAL FINANCIAL INSTITUTIONS 141
from all donors to Afghanistan are excluded, in the 1990s to $27.9 billion in the 2000s, the trend is still evident and becomes more whereas Bangladesh and India experienced a pronounced later in the 2000s. And notably, decrease in real ODA disbursements of about the surge in ows to middle-income countries 20 percent. Afghanistan accounts for 41 perduring the mid-2000s is accounted for by cent of real ODA to South Asia, followed by disbursements to Iraq (largely in the form of Pakistan (17 percent), India (16 percent), and debt forgiveness). Aid ows are a signi ?cant Bangladesh (12 percent). source of external ? nancing for low-income In the Middle East and North Africa, the countries, with ODA representing more than Arab Republic of Egypt received more than 60 percent of total external financing for 50 percent of regional ODA disbursements them from 2005 to 2010, in contrast to a from 1990 to 1999, followed by Morocco mere 4 percent for middle-income countries, (11 percent) and Jordan (8 percent). That where foreign direct investment (FDI) and changed during the 2000s, when disburseother sources of private ?nancing accounted ments to Iraq surged as it became a strategic for more than three- ?fths of external ?nancfocus for the United States. Iraq has received ing needs (Adugna et al. 2011). more than $60 billion since 2000, or 59 perRegional shifts in ODA re ect the reoricent of regional ODA ows during the 2000s entation in aid toward low-income countries (in real terms). and an increased concentration of ows by Among the other developing regions, large donor countries toward strategically Sub-Saharan Africa also saw a signi ? cant important recipient countries. A key example upswing in real ODA disbursements durof the latter is the United States, which has ing 2001–10 compared with 1991–2000, concentrated its bilateral aid ows in Afghanre flecting efforts by donors to support istan over the past decade (along with Iraq, a acceleration in progress toward meeting lower-middle income country; see ?gure 5.3). the MDGs. Nigeria, Democratic RepubIn South Asia, real ODA disbursements lic of Congo, and Tanzania experienced to Afghanistan increased from $1.6 billion the largest increases in aid disbursements
FIGURE 5.3 Net ODA disbursements to low- and middle-income countries and by regi on a. Net ODA disbursements t b. Net ODA disburse low- and middle-income count ries 50,000 250,000 45,000 40,000 200,000 US$ millions (2009 prices)
o ments to developing regions
US$ millions (2009 prices)
35,000 30,000 150,000 25,000 20,000 100,000 15,000 10,000 50,000 5,000 0 0 East Asia tin Middle South Sub-Saharan 90 92 94 96 98 00 02 04 06 08 10 Europe La
rica East and
Africa 19 19 19 19 19 20 20 20 20 20 20
Pacific the North
Central and Cari
Middle-income countries Asia bbean Africa fghanistan 000 2001–10 g Iraq Source: OECD DAC.
Low-income countries Low-income countries, excluding A 1991–2 Middle-income countries, excludin
AID AND INTERNATIONAL FINANCIAL INSTITUTIONS GLOBAL MONITORING REPORT 2012
to the region, accounting for 25 percent y (both including and excludof regional ODA disbursements. Europe ia).5 and Central Asia also saw a substantial to the trend of higher increase in ODA, albeit from a low base. countries, the level of Real aid disbursements shifted from Bosniaon a per capita basis has Herzegovina (30 percent of regional disgly toward countries that bursements) and Turkey (17 percent) toward achieving the MDGs. For Serbia. Real ODA to Serbia increased from p of countries that have $1.6 billion in the 1990s to $10.3 billion in tly on track to achieve no the 2000s. s received an annual Regional ODA flows have remained r capita in 2008–10, up roughly stable in Latin America and the real terms compared with Caribbean in real terms. Colombia saw the trikingly up 85 perlargest percentage rise in disbursements, h 2000–2002 ( ?gure 5.4). from $2.1 billion in the 1990s to $7.8 billion o countries that are furin the last decade (a real increase of 262 pering the MDGs represents an cent). In contrast to the rest of the developff between need and pering regions, ODA disbursements in East Asia aid effectiveness (improveand Paci ?c declined markedly in real terms r dollar spent) in these in the last decade, as the region made strong ly to be weaker compared gains toward poverty alleviation. In particuies closer to the 2015 tarlar, the aid decline re ects a fall-off in ows sfully tackling circumof more than 30 percent to the large regional formance has been severely economies of China, Indonesia, and the ct or natural disasters, Philippines. These declines more than offset provides scope for the the 159 percent increase in disbursements gains. to Vietnam, which became the top regional recipient with 22 percent of the region’s total
states held stead ing China and Ind Corresponding ODA to low-income net ODA received shifted increasin are furthest from example, the grou met or are curren more than two MDG average of $48 pe by 20 percent in 1990–92, and more s cent compared wit This rise in ows t
thest from attain important trade-o formance, because ment in outcomes pe countries is like with other countr gets. However, succes stances where per hampered (by con i for example) also greatest possible
ODA in 2010. A received per capita by Another important development over es ranked by MDG targets met or t by 2015 recent years, attendant with increased focus of aid ows to low-income countries, is that aid is increasingly being directed to fragile 60 states and situations (FSS).4 The severity of 50 48 the situations in FSSs has widespread effects that are manifest locally, regionally, and 40
FIGURE 5.4 Net OD groups of countri on track to be me
US$ (constant 2009)
40 globally. The 32 countries categorized as FSSs (according to the International Devel30 opment Association, or IDA) accounted for 26 about 18 percent of total net bilateral ODA 20 disbursements and multilateral development 14 13 13 12 assistance and 25 percent of net bilateral 9 7 disbursements from DAC countries in 2010. These countries represent 425 million people. 0 Some other de ?nitions of countries in fragile 1990–92 2000–02 2008–10 situations include countries with as many as 0–2 targets (45 countries) 1.5 billion people (World Bank 2011b). ODA 3–5 targets (54 countries) 6–10 targets (40 countries) disbursements to fragile states increased in 2001–10 (both including and excluding Iraq opment Indicators database, OECD DAC, and World and Afghanistan), while aid to nonfragile ations.
Source: World Devel Bank staff calcul
GLOBAL MONITORING REPORT 2012 RNATIONAL FINANCIAL INSTITUTIONS 143
AID AND INTE
Recent trends in the composition Share of committed ODA to food, nutrition, and e by donor of aid for agriculture, food, and nutrition 16 Despite the spike in food prices, ODA commitments from all donors to agriculture, 14 14% food, and nutrition did not increase as a
FIGURE 5.5 agricultur
% of t otal commitments 12 12% share of total ODA between 2000 and 2010. 10% While aid commitments from DAC bilateral 11% 10% 10 10% ODA and multilateral developmental assis9% 9% tance to agriculture, food, and nutrition 8 rose from $8.7 billion in constant terms in 2000 to near $16 billion in 2010, the share 6 remained roughly unchanged at close to 10 4 percent. In the mid-2000s, increased focus 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 was paid to debt forgiveness (particularly for All donors DAC countries Multilateral highly indebted poor countries and Iraq). As All donors (net of debt support) a result, and despite a 75 percent increase in committed support to agriculture, food, and Source: Wo rld Bank staff calculations based on OECD DAC. nutrition from all donors, the actual share in
total ODA commitments declined from 10 percent in 2000 to about 7 percent in 2006. are recorded during the ? rst few Excluding debt forgiveness, ODA for agriculhe decade ( ?gure 5.5). ture, food, and nutrition from all donors has nce for nutrition represents only 3 remained more stable since the mid-2000s total agriculture, food, and nutriat about 10 percent of total remaining comtments, despite widespread evimitments, 1 percentage point below the 11 improved nutrition and gains in
percent sh years of t Assista percent of tion commi dence that
FIGURE 5.6 Composition of committed ODA and commitments by donors in year 2010 Constant 2009 millions, unless otherwise noted Basic nutrit 46
ion 3% 113
16% 349 Total commitments (excluding food, nutrition, 19% 412 and agriculture) 147,373 curity 24 s 9% Food, nutrition, and agriculture 15,857 273 830
Emergency food aid 2,242
Rural development 1,714 Food aid/food se 1,344 program
Agricultur e and s 52% 1,965 5,337 agro-industrie 936
DAC countries World Bank Multilaterals (except for the World Bank) Source: World Bank staff calculations based on OECD DAC.
AID AND INTERNATIONAL FINANCIAL INSTITUTIONS GLOBAL MONITORING REPORT 2012
early childhood development are key in makport to programs aimed at bolstering proing long-term progress in development ( ?gure vity and long-term growth in agricul5.6). Since 2000 support from IDA to nutrie. In this new architecture, DAC countries tion has decreased, whereas commitments e concentrated their efforts on emergency from DAC countries and other multilaterals ponse and food aid programs, whereas have doubled. However, actual aid- ? nanced national financial institutions (IFIs), expenditures on nutrition may be higher than ticularly the World Bank, have focused reported, because other sources of aid may rural development, agriculture, and agrobe devoted to purchasing food. For example, ustries. (See the annex for further discusresearch shows that spending on social safety n of the IFIs’ response to the recent spikes nets has often been used by bene ?ciaries to od prices.) purchase more and better food (as discussed ODA commitments by income group for in chapter 2). Similarly, there is evidence that iculture, food, and nutrition have increasprograms that provide a basic package of ly shifted toward low-income countries. free health care services to poor households average during the decade through 2010, is also spent by bene ?ciaries on food. Addigroup received about two-thirds of total tionally, aid delivered as fungible budget supcommitments for this category. ODA port can be used to support particular needs mitments for basic nutrition for low(which may be nutrition) or sectors of the ome countries accounted for 0.2 percent economy (which may be agriculture). total ODA commitments for all categoMore than 40 percent of food-related s during the decade, twice the amount development assistance commitments were eived by lower-middle-income countries directed to agriculture and agro-business in 1 percent), and twice again that received the year 2000. Remaining aid commitments upper-middle-income countries (0.05 perwere intended for programs related to food t) (see ?gure 5.7 and the appendix for the aid and food security (30 percent), rural ssi ?cation of economies). development (16 percent), emergency food aid (7 percent), and basic nutrition (2 per-
sup ducti tur hav res inter par on ind sio in fo
agr ing On this ODA com inc of rie rec (0. by cen cla
cent). Recent data (2010) show that agriculExp ansion of the donor ture and agro-industries, rural development, com munity and emergency food aid have gained signi ?t years have witnessed an expancantly in aid importance, whereas commitn and diversification of the donor base ted resources to food aid and food security concessional aid, notably from NGOs programs have considerably decreased (table , to a lesser extent, the emergence of a 5.2). This pattern illustrates a shift in the ber of middle-income countries as new donor community to focus on alleviating the ors (even while in some cases they are short-term impact of food crises on the most ll receiving ODA). This expansion of the vulnerable, while at the same time providing or community appears to be reinforcing Recen sio for and num don sti don
TABLE 5.2 Composition of committed ODA to nutrition, food, and agri culture 2000 nt $ Share of Category commitments (%) Constant 2009 $ 2010 Creditor Reporting Share of System code commitments (%) 12240 72040 43040 52010 3110-95 216 603 1,358 2,640 3,863 8,680 2009 Consta
Basic nutrition 2 398 3 Emergency food aid 7 2,598 16 Rural development 16 2,960 19 Food aid/food security programmes 30 1,644 10 Agriculture and agro-industries 45 8,257 52 Total 100 15,857 100 Source: OECD DAC, Creditor Reporting System.
GLOBAL MONITORING REPORT 2012 AID AND INTERNATIONAL FINANCIAL INSTITUTIONS 145
FIGURE 5.7 ODA commitments by income group a. ODA commitments to food, nutrition, and a b. ODA commitments to basic nutri 100 total commitments (all s ectors) 0.5 90 80 57 74 69 % of committed ODA 0.4 51 58 64 70 72 69 66 73
griculture tion as a share of
% of committed ODA 60 0.3 50 40 0.2 30 20 23 3 27 10 5 5 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 ntries iddle-income countries ountries Source: OECD DAC, Creditor Reporting System. Note: See the appendix for the classification of economies. Low-income countries Lower middle-income cou Low-income countries Lower m Upper-middle-income countries Upper-middle-income c 4 0.0 3 4 2 3 4 4 4 38 45 0.1 39 32 29 25 27 30 23
the increased concentration of aid ows to 44 percent in 2009, up from zero reported low-income countries (noted earlier). While aid in 1992. the broadening of the donor base has been More and more countries are providapparent for decades, it intensified in the ing ODA, and more and more countries are 1990s and particularly in the second half of reporting data on their ODA disbursements. the 2000s, and in part simply re ects better For example, the OECD reports on non-DAC reporting of aid ows. The proliferation and ODA—aid flows from countries that are increased diversity of donors bring a number not members of the Development Assistance of bene ?ts aside from increased aid disburseCommittee—but not in the same detail as ments—including complementarities, addithe DAC member countries provide. Twenty tional resources, and technical expertise— non-DAC countries reported to the OECD but the proliferation of donors also poses in 2009, up from 10 in 2000. The disburseimportant new challenges, including rising ment of non-DAC aid reported to the OECD transaction and administrative costs for both increased to $7.3 billion in 2009 from $1.3 donors and recipients. billion in 2000 (at constant 2009 prices). As Data regarding concessional flows for a share of DAC bilateral ODA, non-DAC development from NGOs, middle-income ODA rose to 6.1 percent in 2009 from 1.7 countries, and other newer donors remain percent in 2000 in constant prices. The extremely sparse, although they have non-DAC countries include both high- and improved. For example, the Gates Foundamiddle-income countries. The Arabian countion has begun reporting aid disbursements tries of Saudi Arabia, Kuwait, and the United to OECD DAC. Latest available estimates Arab Emirates, and to a lesser extent, new from the Hudson Institute indicate that priEuropean Union member countries Estonia, vate NGOs (foundations, philanthropist Latvia, Lithuania, Romania, and Slovenia, organizations, and corporations) provided account for much of the increase in non-DAC $52.5 billion of international developmental ows reported to the OECD. Among the nonows in 2009 (latest available). Measured as DAC middle-income countries, the Republic a share of total bilateral ODA reported by of Korea and Turkey markedly increased aid OECD DAC, NGO contributions surged to
assistance during the decade, from near zero;
AID AND INTERNATIONAL FINANCIAL INSTITUTIONS GLOBAL MONITORING REPORT 2012
FIGURE 5.8 ODA from Brazil, Russia, India, China, Among those reporting of ?cial bilateral data and South Africa are Brazil, China, India, Russia, and South Africa (BRICS). These data are dif ?cult to 4,500 compile, given different reporting methods. 4,000 However, various estimates are available. 3,500 Zimmermann and Smith (2011) estimated the South-South ows of the BRICS—which 3,000 account for much of the increase in SouthUS$ millions
2,500 South aid ows in recent years—grew to $3.7 2,000 billion in 2009 from $0.6 billion in 2003 ( ?g1,500 ure 5.8). China accounted for 53 percent of 1,000 the total ODA from BRICS in 2009 (reaching 500 $1.9 billion up from an estimated $0.6 billion 0 in 2003), and Russia and India accounted 2003 2004 2005 2006 2007 200 for 21 percent and 13 percent, respectively. South Africa Russian While the aid ows from BRICS remain relaBrazil Federat tively small compared with DAC ows, they
8 2009 India ion China
represented just over half (50.5 percent) of Sources: OECD DAC; Zimmermann and Smith 2011. total non-DAC ows reported to the OECD in 2009, up from about one- ?fth in 2003. To the extent data on aid from BRICS is availboth were among aid recipients until a few able, given irregular reporting and differyears ago. Notably, Korea, an aid success ent methodologies, some general trends are
story, became a DAC donor in 2009. emerging. BRICS’ aid is generally delivered Data reporting has also improved in some to bilateral partners with a combination of middle-income countries that are new donors, conditional and nonconditional financing, although they do not report to the OECD. usually without policy conditions, and is TABLE 5.3 Key characteristics of BRIC financing Characteristic Brazil ration India Key agency nce Brazilian Cooperation Indian International Agency Development Cooperation Agencya Key ministry e and ry n A airs Form debt Loans and grants Grants, credit lines, interest-free loans, and other concessional and nonconcessional loans Ministry of External Ministry of External A airs Relations Ministry of Financ Department of Aid in Minist Ministry of Foreig of Commerce Mostly grants and Grants, credit lines, relief interest-free-loans, and other concessional and nonconcessional loans Country focus h tes stan ublic) Sector get and Mostly agriculture, Grants for rural development, education, and health education, health, technical cooperation; loans for nd infrastructure and disaster relief ojects (such as stadiums) Source: Mwase and Yang 2012. Note: There is no systematic reporting of aid data for South Africa (Adugna et a l. 2011). hospitals and prestige pr Mostly general bud Mostly energy, transport, support communications, but also construction of schools a Latin America and Neighboring countries Africa (especially (Afghanistan, Bhutan, Myanmar, Lusophone) and Nepal) and Africa Mostly Commonwealt Widespread through large of Independent Sta amounts concentrated in a (especially Kazakh small number of countries and the Kyrgyz Rep Russian Fede China Department of No development agency International Fina (discussions are ongoing)
a. Proposed in 2007 but not yet established.
GLOBAL MONITORING REPORT 2012 D INTERNATIONAL FINANCIAL INSTITUTIONS
AID AN 147
often directed toward infrastructure and proreased markedly over the past decades. ductive sector investment projects (table 5.3). instance, the OECD alone reports that in Geographically, the BRICS tend to extend 9 the average OECD donor was present aid to neighboring countries, with the excep71 of 152 ODA-eligible countries (73 for tion of China, which delivers signi ?cant aid ountries and 69 for multilateral agenows to other regions. For example, India’s and that the average number of donors aid is largely directed toward Afghanistan, sent in each recipient country was 21 Bhutan, Myanmar, and Nepal (Mwase and CD 2011d). Aid fragmentation is greater Yang 2012). new agents (NGOs and middle-income NGO concessional aid flows were the ntries) are included. As a consequence, leading dynamic behind the doubling of real tner country institutions are facing rising aid flows from 1992 to 2009. An aggregansaction costs, as they are required to dedition of the Hudson Institute’s NGO aid estimore and more resources toward engagemates with the OECD’s bilateral DAC and with donor agents, while the average non-DAC ODA disbursements—along with of projects has declined (in part the result Zimmerman and Smith’s (2011) estimates proved reporting). Because anecdotal of ODA from BRICS—indicates that total nce suggests a growing duplication of global aid reached $183.3 billion dollars in ort, increased coordination among donors, 2009, up from $90 billion in 1992 (in real well as between donors and recipients, terms) (figure 5.9). NGOs represented 29 ld generate signi ?cant gains in ef ?ciency. percent of this global total. OECD non-DAC OECD reports that the global fragcountries and BRICS represented 6 percent— tion ratio (number of nonsignificant which together with NGOs accounted for ors compared with the overall number of more than one-third of reported total global ors) has risen in recent years, with fragile aid in 2009. The Hudson Institute’s estimates on ict-affected states seeing the largest indicate that private NGO aid flows have rease (table 5.4). As of 2009, two of every come to eclipse ODA originating from new AC countries’ aid relations were clasdonor countries, despite their rapid growth
inc For 200 in DAC c cies), pre (OE if cou par tra cate ment size of im evide eff as cou The menta don don and c inc ?ve D si ?ed
as nonsigni ?cant, representing a total over the last decade. about $2.9 billion or a mere 3 percent of With the growing number of countries al global CPA transactions. In response to and organizations contributing ODA and increased fragmentation of aid, several development aid, the number of counterparts ors have undertaken efforts to concenwith which a recipient country engages has te aid disbursements on fewer recipient
of tot the don tra
FIGURE 5.9 Changes in sources of estimated global concessional developmental flo ws a. 1992 b. 2009 Total flows = $90 billion Total flows = $183.3 billion 3% 6% 29% NGOs, including philanthropist organizations DAC ODA Non-DAC ODA (plus BRICs) 97% 65% Sources: Hudson Institute 2010, 2011; OECD DAC; Zimmermann and Smith 2011; Fengl er and Kharas 2010.
148 AID AND INTERNATIONAL FINANCIAL INSTITUTIONS LOBAL MONITORING REPORT 2012
TABLE 5.4 Aid fragmentation by income group and fragile and conflic t-affected states Number Significant Nonsignificant Total Fragmentation 2008 2004 of relations relations re lations ratio (F-ratio) F-ratio F-ratio Income group countries (A) (B) (A+B) B/(A+B) (%) (%) (%) ,542 ,121 594 257 Lower 36 34 Lower-middle 47 46 Upper-middle 34 35 Total 40 38 Memo: fragile and con ict-a ected 41 39 Memo: Other 39 38 Source: OECD 2011d. 61 33 48 46 43 33 152 38 41 36 111 38 622 1,343 436 856 1,058 2 1,965 1,292 3, 390 204 590 531 1 985 557 1
countries. Notably, phasing out nonsigni ?Consensus was adopted by cant relations is largely an uncoordinated 0 heads of state and gained the exercise and points to risks for recipient counthe International Monetary Fund, tries that have a high fragmentation ratio, ank, and the World Trade Orgasuch as fragile and con ict-affected states. Monterrey Consensus highimportance of development coop-
the Monterrey more than 5 support of the World B nization. The lights the eration, re
cognizing that both domestic and Aid effectiveness agenda al resources need to be mobilized The marked changes in aid architecture ment. Donors agreed to ramp up over the past decade have coincided with a ticipants at Monterrey also recreexamination of ODA, with heightened scrut aid needs to be optimally used tiny on the effectiveness of aid and results. sh the MDGs by 2015. A number of fundamental shifts in the aid option of the Monterrey Consenagenda and approaches have become increas-
internation for develop aid ows. Par ognized tha to accompli Since ad sus, the in
ternational framework for action ingly apparent. In part, new donors and nonctiveness has come to be articustate participants have made demands for e High Level Forums.6 In 2003 the increased accountability and the effective use al aid community met in Rome for of money spent on development assistance. igh Level Forum, which focused These demands have translated into calls for ation among donors. Among the greater transparency in aid ows at all levome, donor institutions comels and across agents, and have highlighted mprove coordination of their prothe need for strengthening institutions to o streamline activities. make them more results oriented for better econd High Level Forum in 2005 monitoring of development programs and to takeholders endorsed the Paris Decbroaden participation. In response, the develAid Effectiveness, an effort to opment community has increasingly pursued vely revamp the way donor and various avenues to strengthen accountability ountries work together to improve and transparency among donors and recipiuction outcomes and achieve ents to improve outcomes, along with more ustainable development. The Paris rigorous measures of aid effectiveness. on Aid Effectiveness placed the Improving aid effectiveness has been a key ership of policies and programs focus at various international development er of an international reform forums over the past decade, especially folake aid more effective, with the lowing the signing of the Millennium Develal community recognizing that opment Declaration in 2000. In particular, g and monitorable actions and the aid effectiveness movement, with a focus us on results would be necessary to on results, gained momentum in 2002, when delivery and management of aid
on aid effe lated at th internation the First H on harmoniz outcomes in R mitted to i grams and t At the S in Paris, s laration on comprehensi recipient c poverty red long-term s Declaration country own at the cent agenda to m internation far-reachin greater foc improve the
GLOBAL MONITORING REPORT 2012 CIAL INSTITUTIONS
AID AND INTERNATIONAL FINAN 149
to maximize its contribution to the achievetile. Insufficient ment of the MDGs. Five shared principles as an important of aid effectiveness were set out in the Paris utcomes,8 including Declaration, along with more than 50 comer partner participamitments. A distinct feature was the committh local objectives. ment by donors and developing countries to GO initiatives have hold each other accountable for implemente the tracking of ing the declaration through a set of clear y along with the indicators of progress with 13 measurable ectiveness. Initiatives targets.7 The 5 principles call for strengthWhat You Fund ened partner country ownership (partners ffort by the Censetting the agenda); improved donor alignt and Brookings ment with partners’ agenda; harmonization nt Assistance, across donors (establishing common arrangetly (box 5.1). ments, simplifying procedures, sharing inforLevel Forum mation); managing for development results; creased role for and mutual accountability. tors beyond the Participants recognized that while the principle of ownerrecent proliferation of donor agents contribipation of partner uted to higher aid ows, it also led to fraglders (such as philmentation of aid, making it less predictable, global programs),
transparent and more vola transparency was identi bottleneck to improving o the need to achieve great tion and harmonization wi Separately, a number of N been undertaken to improv aid flows and transparenc ability to assess aid eff include those by Publish (PWYF Index), the joint e ter for Global Developmen (Quality of Of ?cial Developme or QuODA), and Give Direc In 2008 the Third High in Accra recognized an in a range of development ac state that broadened the ship, strengthened partic countries and other stakeho anthropic foundations and ?ed
Examples of independent initiatives to improve aid effectiveness
Publish What You Fund (PWYF) campaigns for aration and Accra Agenda for Action. improved aid transparency, that is, more and better ents are compiled by constructinformation about aid. The organization’s 2010 Aid
in the Paris Decl The QuODA assessm ing four dimensions
or pillars of aid quality, built up Transparency Assessment (the first global assessindicators. The four dimensions are ment for aid transparency) and its 2011 Index show y, promoting transparency and that the aid information currently made available ng institutions, and reducing burden. by donors is very limited and that there is a lack of ked according to these assessments, comparable and primary data available. Their index d to inform users of how much and compares transparency of 30 major donors by seven ity is “purchased ? with the given weighted indicators that fall into three categories— multilateral aid delivery. high-level commitment to transparency, transparis a nonprofit initiative to create ency to recipient government, and transparency to nsparent way to provide aid. The civil society. PWYF reports wide variation in levels of ws individuals to donate money donor aid transparency and signi ?cant weaknesses in to impoverished households in many donors across the seven indicators. irectly has identi ?ed. Give Directly The Center for Global Development and Brookations electronically to the recipient’s ings released the Quality of Official Development the poor choose to what purpose Assistance (QuODA) assessment in 2010. The ct the funds. QuODA assessment is similar to the PWYF’s aid transparency index; however, it also seeks to address ww.Publishwhatyoufund.org/resources/ the broader issues of aid effectiveness and capture www.givedirectly.org; and Birdsall and donor adherence to international standards outlined
from 30 separate maximizing ef ?cienc
learning, fosteri Countries are ran which are intende what type of qual country, agency, or Give Directly an ef ?cient and tra
organization allo through its website Kenya that Give D transfers the don mobile phone, and they want to dire Sources: http://w index/assessment; Kharas 2010.
150 AID AND INTERNATIONAL FINANCIAL INSTITUTIONS NITORING REPORT 2012
and deepened efforts to harmonize donor set of stakeholders than preactivities to improve the effectiveness of aid. forums, including civil sociParticipants reaf ? rmed and deepened their representatives of private commitments made in Rome and Paris and ons, and countries that had agreed on the need to accelerate progress d a less active role in intertoward improved cooperation and stronger on aid effectiveness (includresults orientation. The Accra Agenda for iddle-income countries). Action consolidated the Paris Declaration tnership agreement is principles and called for heightened focus range of initiatives preon country ownership and leadership, more ilding blocks ? that bring inclusive partnerships, and increased accountf like-minded stakeholders ability for, and transparency about, developls and determined to ment results. The Accra Agenda committed orward at the country level. donors to publicly disclose regular, detailed, e intended to operationaland timely information on volume, allocad commitments set out in the tion, and, when available, results of developallowing for a deepening ment expenditure to enable more accurate d, in places, further innobudgeting, accounting, and auditing by develtary basis at the country oping countries. Additionally, recognizing the improved knowledge sharneed to strengthen local capacity to monitor ility, the Open Aid Partprogress toward achieving the MDGs, interlaunched at Busan with national stakeholders at Accra mounted an World Bank, the United effort to improve national statistical systems Spain, the Netherlands, (box 5.2). The International Aid Transparand. More speci ?cally, the ency Initiative aims to help donor signatories nce transparency of pubmeet this commitment in the most coherent ice delivery, and development and consistent ways, and to bring together are critical for improv-
involved a wider vious high-level ety organizations, sector organizati until Busan playe national dialogue ing a number of m The Busan Par complemented by a sented as “Busan bu together groups o around common goa take the agenda f These efforts wer ize principles an outcome document, of commitments an vation on a volun level. To support ing and accountab nership (OAP) was support from the Kingdom, Sweden, Estonia, and Finl OAP seeks to enha lic budgets, serv assistance, which
donors, partner countries, civil society orgacountability and citizen nizations, parliamentarians, and aid informailds on the International tion experts to agree on common information Initiative data standard to standards applicable to aid ows. n more accessible and In 2011 the international development izens, and is complementary community met at the Busan High Level s of the Open Government Forum to assess progress on the MDGs Results and Accountability and to determine where adjustments can be cused on operationalizing a made to improve the outlook for meeting the try-led results framework goals by 2015, including ways to improve aid itional initiatives at the effectiveness and to better address the needs ed at improving the delivof under-aided countries and fragile states. learning, and accountabilStakeholders reaf ? rmed the relevance of the aid effectiveness principles as stated in the hat few conflict-affected Paris Declaration and deepened in the Accra hieve a single Millennium Agenda for Action. In an evolving developby 2015, a number of ment landscape, stakeholders recognized that ernational organizations at further efforts to increase the effectiveness e New Deal for Engageof aid needed to be grounded in the broader tates. The New Deal sets development context, embracing the increasate politics, justice, secuing diversity of development actors and seizundations, and revenues and ing opportunities to leverage a wider range of arity on the priorities in sources of development ? nance. Discussions akeholders agreed that the
ing governance ac engagement. It bu Aid Transparency make aid informatio meaningful to cit to ongoing effort Partnership. The Building Block fo transparent, coun and exploring add country level aim ery, measurement, ity for results. Recognizing t countries will ac Development Goal countries and int Busan endorsed th ment in Fragile S out 5 goals—legitim rity, economic fo services—to give cl fragile states.9 St
GLOBAL MONITORING REPORT 2012 RNATIONAL FINANCIAL INSTITUTIONS
AID AND INTE 151
BOX 5.2 goals
Better statistics for all: Monitoring the millennium development
The need for reliable and timely statistics to monitor mark level of 54 in 1999 to 67 in 2011 (see table). the results of development programs was recognized The availability of data for monitoring the MDGs has long before the Millennium Development Goals were improved commensurately: in 2003 only 4 countries promulgated, but the widespread attention given to had two data points for 16 or more of 22 principle their quantitative targets has increased the demand MDG indicators; by 2009 118 countries met this for regular and uniform reporting of key indicators. measure (OECD 2009b). Of 79 low-income IDA Faced with large gaps in the international database, countries, only 8 do not have a national strategy for the Partnership in Statistics for Development in the the development of statistics and are not planning 21st Century (PARIS21) was established in 1999 to to prepare one. Implementing these strategies is well coordinate efforts to increase the statistical capacity under way in many countries. After the 2010 census of developing countries. In 2004 the Second Roundround concludes in 2014, 98 percent of the world’s table on Managing for Development Results endorsed population will have been counted. Since donors the Marrakech Action Plan for Statistics (MAPS), began reporting support for statistical capacity develestablishing an international agenda for support to opment in 2008, ? nancial commitments to statistics statistics in developing countries. Subsequently the increased by 60 percent to $1.6 billion over the period Accra Agenda for Action made broad commitments 2008–10. More than 55 developing countries have on behalf of donors and developing countries to improved their practices in data collection, managestrengthen national statistical systems. More recently, ment, and dissemination of household surveys. The at the November 2011 Fourth High Level Forum on United Nations Interagency and Expert Group on the Aid Effectiveness, held in Busan, heads of state, minMDGs has conducted a series of regional workshops isters, and other representatives of developing and aimed at improving the monitoring of the MDGs and developed countries endorsed a global action plan has reported annually on progress. for statistics.a This is the ?rst time a statistical action plan has received explicit endorsement globally from the highest political levels. a. Busan Partnership for Effective Development CoMuch progress has been made. The quality of
operation. Para 18.c of http://www.aid effectiveness.org/ statistics as measured by the World Bank’s statistisanhlf4/images/stories/ hlf4/OU TCOME _ cal capacity indicator has improved from its benchDOCUMENT_-_FINAL_EN.pdf. World bank statistical capacity index of IDA-eligible countrie s All ub-Saharan Africa 999 49 35 46 65 2011 Overall 58 Methodology 39 Source data 53 Periodicity 82 51 65 39 59 53 65 49 68 44 57 non-Sub-Saharan Africa 1999 1999 2011 54 2011 67 1 S
65 81 58 81 Source: For more on the World Bank statistical capacity index, see http://data.worldbank.org/data-catalog/bulletinboard-on-statistical-capacity Note: Countries included are those IDA-eligible countries with a population above 1 million.
current ways of working in fragile states need tioning out of fragility is long, serious improvement, and that despite the sigork that requires country leaderni ?cant investment and the commitments of rship. The New Deal recomthe Paris Declaration and the Accra Agenda, se of peace-building and stateresults and gains in value for money have als as an important foundation to been modest. Stakeholders also recognized ress toward the MDGs. The New
that transi political w ship and owne mends the u building go enable prog
152 AID AND INTERNATIONAL FINANCIAL INSTITUTIONS GLOBAL MONITORING REPORT 2012
Deal also calls for an increase in the predictorks and platforms, and ensure that ability of aid, including by publishing threesed aid inflows are absorbed and to- ?ve year indicative forward estimates (as iently to enhance growth. Donors committed in the Accra Agenda for Action). d to ramp up efforts to fully unwind Another main outcome from Busan was d the practice of tied aid (which the creation of a global partnership to supes recipient countries to spend aid dolport global-level monitoring and accountn deliverables from companies in donor ability through a new and more inclusive ies)—including efforts to improve the development agenda. Delegates in Busan, y and transparency of reporting on the including Brazil, China, and India, endorsed s of untying aid. the Busan Partnership for Effective Develle remarkable progress has been made opment Cooperation (Global Partnership) increasing aid disbursements, progon common goals, shared principles, and oward improving aid effectiveness has differentiated commitments.10 The Global ess impressive—aside from achieving Partnership recognizes that , whereas the consensus in identifying speci ?c areas different types of aid donors should work eed to be addressed. In Paris in 2005, toward common goals, donors can achieve ample, the development community of them by “embracing their respective and difnd recipients agreed to pursue, and ferent commitments. ? The new development h other accountable for, reaching 13 agenda is based on 4 principles: ownership of mbitious global targets. By the 2010 development priorities by developing counne only 1 of the targets had been met, tries, focus on results, inclusive development gh there were some apparent gains partnerships, and transparency and accountachieving the other targets (table 5.5). ability. Donors pledged to make their aid many of the reforms that were needed information available to the public and to ch the Paris Declaration targets were help recipient countries establish transparent recognized as being very ambitious, public ? nancial management and aid inforets are nevertheless attainable.
framew increa spent ef pledge and en requir lars o countr qualit proces Whi toward ress t been l broad that n for ex donors a hold eac very a deadli althou toward While to rea widely the targ ?c
mation management systems. To increase e measurable, if limited, improvefocus on development results, the Global have been made in aid effectiveness, Partnership seeks to strengthen partner ularly in recipient countries, and specountry ownership and to strengthen their in the areas of monitoring capacity policies and core institutions through the crelicy framework, as well as in collabation of transparent and country-led results n and harmonization among donors TABLE 5.5 Progress toward Paris Declaration targets Survey outcomes in percentages, unless otherwise noted Indicator 2010 Target Status Operational development strategies 75 not met Reliable public ?nancial management (PFM) systems 50 not met Aid ows aligned with national priorities 85 not met Strengthen capacity by coordinated support 50 met Use of country PFM systems 55 not met Strengthen capacity by avoiding parallel projects (number) 565 not met Aid is more predictable 71 not met Aid is untied > 89 not met Use of common arrangements, procedures 66 not met Joint missions 40 not met Joint country analytic work 66 not met Results-oriented frameworks 36 not met Mutual accountability 100 not met Source: OECD 2011a.
Som ments partic ci ?cally
and po oratio
0 Actual 37 38 41 57 48 ,158 43 86 45 19 43 20 38
GLOBAL MONITORING REPORT 2012 L INSTITUTIONS 153
AID AND INTERNATIONAL FINANCIA
and partner countries. According to a progni ?cant gains ress report on implementing the Paris Decaration targets laration based on 2010 surveys of donors the Consuland recipients, the proportion of developing Agricultural countries with sound national development mproved colstrategies in place more than tripled from to enhance 2005 to 2010 (OECD 2011a). The results4). oriented frameworks to deliver results and anks (MDBs) monitor progress against national developogress in ment priorities are in place in one-fourth of on targets. The reporting developing countries, and statistics irect related to the MDGs are becoming increastures, support ingly available. on national priProgress has been moderate or mixed in r the mainthe areas of capacity development and the s principles. As ? nancial managequality of country public develment (PFM) systems in partner countries. ccording The OECD also reports that support for survey (table capacity development is often supply driven, ied in the surrather than geared toward the developing nclude the use countries’ needs, and remains an area for furprocurement), ther improvement (OECD 2011a). Neverthen arrangements less, donors met the target on technical cooprs. eration. And while more than one-third of gress include partner countries showed improvement in the nts or procequality of PFM systems from 2005 through medium-term 2010, one-fourth experienced setbacks. progress report, Donor countries are using partner country
the World Bank, have made sig across many of the Paris Decl (box 5.3). Another example is tative Group on International Research (CGIAR), which has i laboration and harmonization results on the ground (box 5. Multilateral development b have also made significant pr attaining the Paris Declarati country-led development model—d funding of government expendi for the private sector based orities, or both—has allowed fo streaming of aid effectivenes a whole, MDBs have outperformed opment partner performance, a to the 2010 Paris Declaration 5.6). Key challenges, identif vey, remain, however. These i of country systems (especially aid predictability, and commo with other development partne Areas of limited or no pro untying aid, common arrangeme dures, aid fragmentation, and predictability of aid. In its the OECD reports that the unt
ying of aid PFM systems more extensively than they did aid is becomin 2005, but they have fallen short of the tarOECD 2011a). get. More speci ?cally, donors’ use of country progress PFM systems could be strengthened where s to implethe systems have been made more reliable. rocedures Some donors have made measurable and analytic progress and have introduced innovative ture aid disapproaches and reforms to improve aid effeced, and hence tiveness and to meet the Paris Declaration ains a key chaltargets. Among bilateral donors for examgovernments. ple, the United Kingdom’s Department for artner counInternational Development (DFID) initiated horough, mutual results-based ?nancing in 2010, focusing speerformance. ci ?c outputs at a more micro level by offering incentives to a service provider or bene ?ciary of services (de Hennin and Rozema 2011). The intent is that from 2011 through
shows no improvement and that ing increasingly fragmented ( Survey results also show limited has been achieved among donor ment common arrangements or p and to conduct join missions work. Donor information on fu bursements remains very limit the predictability of aid rem lenge for developing country Additionally, the majority of p tries have yet to implement t (government-donor) reviews of p
Country programmable aid and outlook for ODA flows through 2014, all of DFID’s bilateral ODA allocations will be based on evidence-supported “results fectiveoffers, ? which are competitively bid upon to provide by country and regional of ?ces around the or country world (Birdsall 2010). Some IFIs, including ve the 2013 Among efforts to improve aid ef ness, DAC donors in 2007 agreed annual forward spending plans f programmable aid (CPA)—to impro
AID AND INTERNATIONAL FINANCIAL INSTITUTIONS GLOBAL MONITORING REPORT 2012
BOX 5.3 The World Bank has made significant progress on the aid effectiveness agenda, but there is room for improvement
Because of its mission, mandate, and country-driven development partner average, and the Bank has met business model, the World Bank demonstrates strong or is close to meeting the majority of targets (box performance on the Paris Declaration monitoring table). The World Bank Group also performs well on survey, the main tool for tracking progress globally other independent rankings such as those conducted on the aid effectiveness agenda. In 2011 the Bank’s by Publish What You Fund and the Center for Global results on the survey were better than the overall Development and Brookings. (see box 5.1). Overall results Paris Declaration survey indicators 2010a Meeting Target (development partner performance) (%) target? (%) World Bank results 2010a (%) Target Meeting Progress (%) target? since 2005?
3. Aid ows are aligned with national priorities 85 41 85 74 + (aid on budget) 4. Strengthen capacity by coordinated support 50 57 50 73 + (technical assistance) 5a. Use of country PFM systems 55 48 51 69 + 5b. Use of country procurement systems — 44 50b 54 + 6. Strengthen capacity by avoiding parallel project –67 –32 –67 –80 + implementation units 7. Aid is more predictable 71 43 83 61 – 8. Aid is untied 89 86 100 100 = 9. Use of common arrangements or procedures 66 45 66 59 + (program based approach) 10a. Joint missions to the ?eld 40 19 40 29 + 10b. Joint country analytic work 66 43 66 59 + Source: OECD-DAC and World Bank. denotes the target is achieved; denotes the target is nearly achieved (g ap is about 10%). denotes the target is not achieved. a. Indicators 3, 5a, 5b, 6, and 7 are calculated for the 30 countries that
participated in the 2006 baseline survey and the 2011 survey. b. The 2008 Accra Agenda for Action target of 50% is applied. — = not available. Nevertheless, while it has made signi ?cant gains of country systems (procurement, ? nancial manacross the Paris Declaration survey indicators, the agement, safeguards, statistics, monitoring and Bank fell signi ? cantly short of the target in some evaluation, budget, project management) is critical areas, particularly in making aid more predictto country ownership and leadership; and Capacity able and, to a lesser extent, in donor coordination development is key to strengthening country sys(joint missions to the ? eld and joint country anatems and building effective institutions. lytic work) and in aligning aid ows with national • Development partnerships beyond aid: New priorities. partnerships and approaches need to be recThe Bank has been playing a key role in shapognized—DAC donors and traditional donor/ ing the international aid effectiveness agenda over recipient models of aid are no longer the only the years, and has mainstreamed the aid effectiveapproach; the aid landscape is evolving—middleness agenda at the country and corporate levels. The income countries play an increasingly important World Bank’s aid effectiveness priorities are based on role as providers of development assistance; founa country-based business model and an ongoing work dations, global funds and programs, NGOs and program focused on: the private sector are also major providers of assistance; partners use a multiplicity of approaches— • Country ownership and leadership: Country-led South-South cooperation, knowledge exchange, aid management and coordination is paramount technology transfer, foreign direct investment, (evolution away from donor harmonization); use trade, ? nancing, aid.
GLOBAL MONITORING REPORT 2012 IAL INSTITUTIONS
AID AND INTERNATIONAL FINANC 155
BOX 5.3 The World Bank has made significant progress on the aid effectiveness agenda, but there is room for improvement (continued)
• Transparency for Results: The World Bank is a tuations: These countries are path-breaker on transparency—access to informar the Bank, including supporting tion policy, open data initiative, project database, ement and coordination. international aid transparency initiative. The Bank is also strong on results—IDA and Corporate Food Crisis: Issue Briefs. Available scorecard; core sector indicators country, project, nk. “The World Bank and Aid Effectiveand program level results frameworks; statistical to Date and Agenda Ahead. ? November and monitoring and evaluation capacity development; Development Impact Evaluation Initiative.
• Fragile and Con ict Si a special focus fo better aid manag Source: World Bank. online at World Ba ness: Performance 2011.
BOX 5.4 ry
CGIAR: Improved collaboration and harmonization to strengthen delive
The Consultative Group on International Agriculthat respond effectively to the needs tural Research (CGIAR) is a global partnership that s in developing countries. unites 15 International Research Centers and partner a rapidly changing global developorganizations engaged in research for sustainable the CGIAR had gone through development with the major global funders of this further improve its delivery of work. Its vision is to “reduce poverty and hunger, on-the-ground impact. The improve human health and nutrition, and enhance to give rise to a more resultsecosystem resilience through high-quality internaagenda, clearer accountability tional agricultural research, partnership and leaderstreamlined governance, and ship. ? The funders include developing- and industrialnew CGIAR fund will improve country governments, foundations, and international antity of funding by harmonizing and regional organizations. s, while a consortium structure The vision is supported by three strategic objec-
relevant products of rural household In response to ment environment, a major reform to research results and reform is designed oriented research across the CGIAR, increased ef ?ciency. A
the quality and qu donor contribution will unite the CGI
AR Research Centers under a legal tives: Food for People, to create and accelerate suses the fund a single entry point for tainable increases in the productivity and production s and other partners to conduct of healthy food by and for the poor; Environment ults-based performance agreefor People, to conserve, enhance, and sustainably use o a more programmatic approach natural resources and biodiversity to improve the livers to operate within a strategy and lihoods of the poor in response to climate change and aimed at strengthening collaboraother factors; and Policies for People, to promote polf ?ciency and development impact. icy and institutional change that will stimulate agriAR research programs was develcultural growth and equity to bene ?t the poor, espee centerpiece of the reform. cially rural women and other disadvantaged groups. tions to the CGIAR in 2011 were The collaborative work of the CGIAR over the past million, with $384 million chan40 years has resulted in development impacts on a scale fund. Of that, about 80 percent that is without parallel in the international community. idence of widespread faith in a mulThey are the result of “international public goods, ? funding agricultural research including improved crop varieties, better farming his is only a year after the new methods, incisive policy analysis, and associated new ablished. knowledge. These products are made freely available to national partners, who transform them into locally Council.
entity that provid contracting center research under res ments. The shift t provides for cente results framework, tion for greater e A portfolio of CGI oped that remains th Total contribu approximately $706 neled through the was untied aid, ev tilateral approach to for development. T CGIAR fund was est Source: CGIAR Fund
AID AND INTERNATIONAL FINANCIAL INSTITUTIONS GLOBAL MONITORING REPORT 2012
TABLE 5.6 Multilateral development bank progress on Paris Declarati on survey indicators Percentage Overall results obal et (%) 5 MDB performance Gl Progress targ since 2005?
Paris Declaration survey indicators 2010 2010 (development partner performance) (%) (%)
3. Aid ows are aligned with national priorities 8 41 59 = (aid on budget)a 4. Strengthen capacity by coordinated support 50 57 71 + (technical assistance) 5a. Use of country PFM systems 55 48 70 + 5b. Use of country procurement systems 50b 44 48 + 6. Strengthen capacity by avoiding parallel –6 7 –32 –73 + project implementation units 7. Aid is more predictablea 71 43 51 – 8. Aid is untied 89 86 100 = 9. Use of common arrangements or procedures 66 45 56 + (program based approach) 10a. Joint missions to the ?eld 4 0 19 27 + 10b. Joint country analytic work 66 43 56 = Sources: World Bank and OECD-DAC. Note: MDBs include African Development Bank, Asian Development, Int er-American Development Bank, and the World Bank. Data are for all participating countries, except for indicator 7 on aid predictabili ty. +, –, and = respectively denote improved, deteriorated and unchanged performance. a. Unweighted average. b. AAA target of at least 50 percent is used.
predictability and transparency of flows.11 were programmed in early 2008, early 2009, The forward-spending plans can be used to and early 2010 relative to actual CPA 2010 provide a good indication of actual CPA disdisbursements averaged 95.3 percent (OECD bursements and provide a rough indication of 2011c).
the prospects for total bilateral ODA ows in Latest available OECD DAC forward the coming years. survey data indicate that the annual average Country programmable aid is a core subgrowth rate of CPA may decelerate in real set of ODA (representing about 60 percent of terms from 4.9 percent during 2001–10 to total DAC gross bilateral ODA) and is consid2.1 percent during 2011–201313 (albeit this ered critical support in achieving the MDGs. represents a recovery from the 0.7 percent CPA is aid that has a direct development contraction in 2010) ( ?gure 5.10). Planned impact and upon which recipient countries disbursements by multilateral agencies have, or could have, some input—and for account for much of the 2 percent increase which donors are expected to be accountable expected during the coming years. In comfor delivering.12 Planned disbursements are parison, annual bilateral CPA from the DAC reported for the upcoming three years (with countries is expected to grow by a more modlatest available forward plans ending in 2013, est 1.3 percent. Additionally, actual disbursebased on surveys conducted from December ment rates (versus planned) for CPA declined 2010 through February 2011). Forward CPA in 2010, suggesting that the actual pace of is intended to reduce uncertainty about aid growth may be weaker than the anticipated ows in recipient countries and thus enable 2 percent rate (OECD 2011). better management of government spending In per capita terms, CPA is projected to plans, improve recipient country ownership, decline by an annual 0.2 percent. Countries and help reveal gaps in development aid. in con ict or fragile situations are on track to As a predictor of actual disbursements, see a sharper decline in CPA disbursements planned CPA has proven reliable. For examof 2.1 percent a year on a per capita basis— ple, the predictability ratio of 2010 ows that although they are expected to continue to
GLOBAL MONITORING REPORT 2012 D INTERNATIONAL FINANCIAL INSTITUTIONS
AID AN 157
FIGURE 5.10 Country programmable aid a. CPA disbursements are expected to level off in coming b. CPA flows per capita to fragile years with donor fiscal consolidation and nonfragile situations 100,000 50 47.6 44.8 95,000 90,000 40
US$ ( constant 2009) 85,000 US$ millions
80,000 30 75,000 70,000 20 65,000 12.5 60,000 10 55,000 50,000 0 2000 2002 2004 2006 2008 2010 2012 2010 2011–13 Actual Planned Fragile situations Nonfragile situations Source: OECD CPA. 12.6
receive about four times the per capita CPA for the developing regions indicate the disbursements expected for nonfragile counwing projected trends. tries—underscoring calls at the Busan High h Asia is expected to post the stronLevel Forum to scale up aid for fragile and gains in CPA in ows over the 2011–13
plans follo Sout gest
conflict-affected countries and offset this d, with average annual real growth of expected decline. ercent. Three of the projected top four Lower CPA flows could have signifiry aid recipients across regions durcant fiscal implications for the countries 011–13 are in South Asia: Bangladesh, affected—particularly for those that rely and Pakistan (the fourth is Vietnam). heavily on ODA for external financing cted CPA represents a 4.7 percent needs—and potentially on the achievement increase to South Asia and largely of the MDGs. Aid ows are much more sigs strong growth in flows to Banglani ?cant as a source of external ?nancing for ia, and Pakistan, more than offsetlow-income countries. As noted, on average declines in planned ows to Afghanistan during 2005–10, ODA represented more a lesser extent, Sri Lanka. than 60 percent of total external ? nancing Asia and the Paci ?c and Sub-Saharan for low-income countries in contrast to a a are expected to see an average annual mere 4 percent for middle-income countries, increase in CPA disbursements of 2.2 where private ? nancing accounted for more than 60 percent of external ?nancing needs. .7 CPA by region During 2011–13, the share of each develshare of total oping region in total CPA is expected to Region 2005 remain broadly stable. The biggest shifts are Asia and Paci ?c 18.8 expected for Latin America and the Caribe and Central Asia 6.7 America and the Caribbean 9.6 bean, where the share is on track to decline e East and North Africa 20.7 from 9.6 percent of the total in 2010 to 8.7 Asia 16.8 aharan Africa 27.4 percent on average, and in South Asia, which is expected to see a 1.1 percentage point le situations — increase to 21.3 percent on average (table 5.7, es: OECD, CPA and World Bank sta calculations. ?gure 5.11). More speci ?cally, the latest CPA ilable.
perio 7.7 p count ing 2 India, Proje annual reflect desh, Ind ting and, to East Afric real TABLE 5 Percent 2010 16.8 8.0 9.6 10.7 20.2 34.7 2011–13 East 16.9 Europ 7.8 Latin 8.7 Middl 10.6 South 21.3 Sub-S 34.8 Memo: Fragi 25.3 25.6 Sourc — = Not ava
AID AND INTERNATIONAL FINANCIAL INSTITUTIONS GLOBAL MONITORING REPORT 2012
FIGURE 5.11 CPA flows to developing regions annual decline in planned disbursements for the region. 30,000 The Middle East and North Africa region is projected to see a modest 0.9 per25,000 cent expansion of CPA disbursements; however, strong population growth implies an 20,000 annual average 2.4 percent contraction (in US$ millions
real terms). Planned disbursements to Alge15,000 ria, Iraq, Jordan, and Tunisia are expected to decline, while those to Egypt and the Repub10,000 lic of Yemen are expected to increase. 5,000 Planned CPA disbursements to Europe and Central Asia are on track to decline by 0 0.8 percent overall and by 1.3 percent in per East Asia Europe Latin Middle capita terms (at constant 2009 prices). Turand and America East and
Pacific Central and the North key is expected to continue to post the largest Asia Caribbean Africa CPA, and modest growth in the share, over 2005 2010 2011–13 (annual averag the 2011–13 time horizon, while Uzbekistan
is expected to see the strongest growth. BosSource: OECD CPA. nia and Herzegovina, Georgia, Kosovo, Moldova, and Tajikistan are among the countries percent and 2.1 percent, respectively. For expected to see signi ?cant declines.
Sub-Saharan Africa, this increase represents A significant share of the projected a sharp deceleration from the 13 percent declines in CPA going forward re ect planned annual average increase from 2008 through phasing-out of aid by donor countries tied to 2010. On a per capita basis, East Asia and the efforts to concentrate aid on fewer partner Paci ?c is expected to see more modest growth countries and increased pressures on donor of 1 percent, while Sub-Saharan Africa, given country coffers (OECD 2011c). To reduce the rapid population growth rate, will see a transaction costs for recipient countries, 3 percent annual decline. Kenya, Ethiopia, where the capacity to manage the adminMadagascar, and the Democratic Republic istration costs of projects is limited, donor of Congo are among the expected top 10 countries have been phasing out programs CPA recipients from 2010–13. Vietnam will where disbursements are small. For examreceive the largest CPA disbursements in East ple, preliminary findings suggest that 162 Asia and the Pacific, if plans are realized. aid relations between DAC EU member and Although Indonesia and the Philippines are partner countries are expected to be phased expected to continue to account for a large out between 2011 and 2013, accounting for 8 share of the CPA flows to East Asia and percent of DAC EU total CPA in 2009. From Paci ?c, the share is expected to contract coma partner country perspective, while a given pared with 2010. donor may not provide large aid volumes in Latin America and the Caribbean is on terms of total aid received, it might neverthetrack to post the largest real regional declin less represent a sizable share of aid directed in CPA through 2013 of close to 7.9 percent to a speci ?c sector or region where only a few a year on average—with the vast majority of donors may be present. the countries in the region recording a conReal CPA flows to low-income countraction. Aid disbursements are expected tries are set to decelerate markedly, from to decline in nearly 80 percent of partner an average rate of expansion of 8.6 percountries, with 40 percent of these linked to cent during 2008–10 to 1.4 percent over phase-out decisions. On a per capita basis, 2011–13. Planned CPA disbursements to that translates into a 9.8 percent average middle-income countries would shift from an
GLOBAL MONITORING REPORT 2012 AID AND INTERNATIONAL FINANCIAL INSTITUTIONS 159
FIGURE 5.12 CPA received by number of MDG FIGURE 5.13 CPA by low- and middle-income countries, 2003–13 targets achieved or on track 55 45 41 41 % of total CPA to developing countries 50 41
US$ billions (2009 prices) 36 36 45 35 31 30 40 25 23 20 30 15 25 10 20 5 2003 2007 2009 2011 2013 2005 35 23 28
(projected) (projected) 0 2005 2011–13 ddle-income countries 0–2 targets 0 targets come countries 3–5 targets Low-in 2010 Mi 6–1
Sources: OECD CPA and DAC, and World Bank staff calculations. Sources: OECD CPA and World Bank staff calculations.
average real growth rate of 2.2 percent in the FIGURE 5.14 Eurobarometer surveys earlier period to a 0.2 percent average rate of contraction during 2011–13 ( ?gure 5.12). 100 91 88 CPA ows to both low- and middle-income 90 countries are expected to contract on a per 80 capita basis. The largest share of CPA % of respondents ows 70
are expected to continue to be directed to the 60 countries that are furthest from attaining the 50 MDGs ( ?gure 5.13). 40 The projected decline in the growth of 30 CPA disbursements likely reflects the need 20 10 9 for signi ?cant 7 ? scal consolidation in many
2 3 high-income countries. Among the 23 OECD 0 Important, Not very Don’t know donor countries, 9 have ?scal de ?cits equivfairly ortant alent to or greater than 5 percent of their important or not at all important GDP.14 These countries accounted for 57 Winter 2004 Spring 2009 percent of bilateral OECD disbursements in imp
2010 and contributed 22 percentage points to Source: Eurobarometer 2009. the 63 percent real increase in aid ows from Note: Survey respondents were asked, “In your opinion, is it very impor2000 to 2010 (or $28 billion of the $49 biltant, fairly important, not very important, or not at all imp ortant to help people in developing countries? ? lion level increase). There is also some indication of a slight decline in public support for development assistance. For example, the beyond existing aid commitments to the share of respondents in a post-crisis Eurobadeveloping world, support for development rometer survey that considered development cooperation remained strong: 72 percent of important or fairly important fell from 91 Europeans were in favor of honoring or going percent in 2004 to 88 percent in 2009 ( ?gure beyond existing aid commitments, while only 5.14). Nevertheless, according to the same 7 percent deemed that current contribution survey, when asked about honoring or going levels were “too high. ?
160 AID AND INTERNATIONAL FINANCIAL INSTITUTIONS NITORING REPORT 2012
IFI responses to food price spikes programs to ensure crops, while supp generating activi poorest segments The AfDB’s suppor its Agriculture S to increase agric incomes, and impr tainable basis. I mentation of two The ?rst pillar
International ?nancial institutions (IFIs) have production of major food responded to recent food price hikes through orting alternative incomedifferent lending and nonlending mechaties in rural areas for the nisms (table A5.1). of the population. These responses include emergency ?nant is channeled through cial support to the most vulnerable countries; ector Strategy, which seeks medium-term assistance to strengthen social ultural productivity, enhance safety nets and agribusiness; and long-term ove food security on a susprograms to enhance infrastructure, rural t does this through the impledevelopment, and productivity along the mutually reinforcing pillars. food value chain. focuses on rural infrastrucSeveral high-level meetings in 2008 and r resources manageafter, in addition to the already established agroprocessing, and tradeCommittee on Food Security and the recently s for accessing local and created United Nations High Level Task a means of increasing Force, of which the World Bank is a member, uctivity and food security. helped galvanize the international commuAfDB’s principles of strategic nity by increasing coordination among sister vity, 80 percent of the 2011 institutions and policy dialogue with local or the sector were allocated authorities. ucture. llar aims to improve the
ture—including wate ment and storage, related capacitie regional markets—as agricultural prod In line with the focus and selecti total approvals f to rural infrastr The second pi resilience of the
natural resource base. Its African Development Bank d, namely. forestry, sustainThe African Development Bank (AfDB) ent, and climate change established the Africa Food Crisis Response aptation. Accordingly, the initiative in 2008, providing approximately
focus is threefol able land managem mitigation and ad AfDB recently app
roved a $63 million grant $3 billion to reduce food poverty and malltural research on four nutrition in the short term and to ensure aize, rice, and wheat) that sustainable food security in the medium state defined as strategic to longer term. The aim of this initiative is hrough the Comprehensive to strengthen the capacity to closely moniral Development Program. tor the food security situation in each of the bank’s member countries through the collection, analysis, and dissemination of food Bank security information; to boost sensitization ment Bank (ADB) has among the different stakeholders in memaddress the structural and ber countries on the dangers, but also on s associated with food the potential opportunities, that high food DB’s medium-term investprices entail; and to provide budgetary supurity aim to ease the strucport to low-income food-de ?cient countries ertaining to productivity, experiencing large ?scal and current account esilience of its developing de ?cits to strengthen food safety-nets for the d systems. As part of most vulnerable. In the medium to long term, ADB continued to provide the objective is to help member countries tical agriculture and food design and implement national food security programs by international
to support agricu crops (cassava, m African heads of for the region, t African Agricultu
Asian Development The Asian Develop sought mainly to long-term problem insecurity. The A ments on food sec tural constraints p connectivity, and r member countries’ foo its response, the financing for cri security research
GLOBAL MONITORING REPORT 2012 D INTERNATIONAL FINANCIAL INSTITUTIONS 1
AID AN 16
TABLE 5A.1 Responses from the international donor community to recent food price spikes Institution Emergency suppor t Long-term programs African Development Bank Africa Food Crisis Response Init iative: $730 million Africa Food Crisis Response Initiative: $2.2 billion for increased provision of agric ultural inputs for agricultural infrastructure, including water through emergency budget support , use mobilization for irrigation, rural access roads, and of high-yield New Rice for Afric a (NERICA), facilities for reducing post-harvest losses (2008). allocation of resources to fragi le states (2008). Asian Development Bank $700 million for food safety net measures, Operational Plan for Sustainable Food Security emergency food assistance, and f ood policy in Asia and the Paci ?c: $6.8 billion lending and reforms in Bangladesh, Cambodia, Mongolia, nonlending assistance allocated to transport and Pakistan (2007–08). and communications, agriculture and natural resources, natural resources management, and rural infrastructure (2009–11). European Bank for Reconstruction EBRD Agribusiness Strategy: investments in the and Development private sector along the food value chain to foster productivity growth, enhance global food security, and limit food price in ation. $1.3 billion provided (debt and equity) to private agriculture enterprises (2011). Inter-American $1.8 billion approved for agriculture and rural Development Bank development over the period 2009–11 (including $551 million for food and agriculture in 2011). $26 million technical assistance projects on concessional terms for small and vulnerable countries in 2011. The IDB Food Security Strategic Thematic Fund
($3.5 million) to provide assistance to Bank borrowing member countries to improve agricultural production and productivity as a means to enhance their food security (supply side). World Bank ram: $2 billion provide echnical advice le countries Global Food Crisis Response Prog Scale up of regular lending program in agriculture (extended through June 2012) to and social safety nets. Commitments to agriculture ?nancial assistance, policy, and t in 2011 reached $3.6 billion. Commitments to social to the poorest and most vulnerab safety nets accounted for $2.9 billion. (2008–12). Global Agriculture and Food Security Program: Global Food Initiative (IFC): $6 $20 billion ?nancing mechanism to manage the investment lending and $300 mill G-20’s increased support to agriculture and food advisory services to support agr security. The program is implemented as a Financial chain in IDA and IDA/IBRD (blend Intermediary Fund for which the Bank serves as
00 million in ion in ibusiness value ) countries.
trustee (launched in April 2010). Sources: World Bank and partner institutions.
and national agricultural research centers. At Policy Research Institute, the Interthe same time, it actively carried out strateonal Rice Research Institute, and other gic studies to inform and in uence relevant rs. policy making, and to promote regional colhe ADB’s assistance to meet food seculective actions for sustainable food security. concerns became more strategic and In carrying out these ?nancing and advisory d during the food crisis of 2007–08. services, the ADB worked effectively with the continued uptrend in food prices and Food and Agriculture Organization of the cast of more frequent food price surges United Nations, the International Fund for pted it to develop its Operational Plan Agricultural Development, the International Sustainable Food Security in Asia and
Food nati partne T rity focuse The fore prom for
162 AID AND INTERNATIONAL FINANCIAL INSTITUTIONS ONITORING REPORT 2012
the Paci ?c in 2009. From 2009 to 2011 the and crop receipt programs. ADB has provided food-security-related lendapproach recognizes the ing and nonlending assistance of $6.8 billion. e that the supply side in genAbout $3 billion was allocated to transport tructure and trade logistics in and communications, mainly roads, followed play in smoothing price variaby agriculture and natural resources ($2.0 tional commodity markets. billion) comprising mainly irrigation, drainfood and ? nancial crises, age, and ood control, water-based natural projects in 2009, comresources management, and agriculture and on across central Europe rural sector development. By region, ADB . Of this, 42 percent was food security investments were $2.7 billion sis response projects, with to South Asia, $1.8 billion to East Asia, $1.1 orting low-income and billion to Southeast Asia, $888 million to countries. Central and West Asia, and $146 million to BRD scaled up its investPaci ?c countries. d 63 transactions for From January to December 2011 ADB’s n. In 2011 it surpassed food-security-related lending and nonlending r’s volume, providing priassistance amounted to $2 billion, $1.8 bilenterprises with debt and lion of which went to agriculture and natural ount of 945 million in resources, energy, transport, and communication. The remaining $200 million was EBRD offers a range of invested in education, ? nance, industry and elp manage the ? nancial trade, public-sector management, and multis shocks such as those assosector activities. Of these investments, $739 odity price volatility. These million was allocated to South Asia, $470 ude policy loans with continmillion to Central and West Asia, $310 mils, catastrophe risk ? nancing lion to South East Asia, $307 million to East interest rate hedges using Asia, and $105 million to Paci ?c countries.
warehouse receipt The value chain instrumental rol eral, and infras particular, can tions on interna Even amid the the EBRD signed 59 mitting 639 milli and Central Asia committed to cri emphasis on supp early transition In 2010 the E ments and complete a record 836 millio the previous yea vate agriculture equity in the am transactions. In addition, instruments that h risk of exogenou ciated with comm instruments incl gent credit line instruments, and stand-alone swaps.
In parallel with investment, these prod ucts allow tailored risk management along th e food value chain. European Bank for Reconstruction EBRD has been actively engaged through and Development the Private Sect or for Food Security IniAs the single largest investor in agriculture ing regulatory and instituin its countries of operations, the European n six main areas: promotBank for Reconstruction and Development te sector policy dialogue to (EBRD) takes action through both debt and policy transparency and coorequity investments, and complements this the establishment of regular investment with technical cooperation and orking groups (for example policy dialogue. ain Sector Working Group); In agribusiness, EBRD has adopted a food eralization of soft commodivalue chain approach, mobilizing investment hnical assistance (implemenfrom farming and processing to logistics use receipt legislation in and retail, entirely through the private secKazakhstan, and Serbia); tor. Ongoing projects include direct support ity trading and risk manto the primary agriculture sector and leadng quality standards along ing companies with strong links to the secalue chain through private tor. Particularly relevant in response to recent r engagement; increasing food price surges are the EBRD’s activities cing options; and pilotin improving farmers’ risk management and nd policy advise on waterenabling access to seasonal ? nance through technology. tiative in induc tional changes i ing public-priva achieve greater dination through public-private w the Ukrainian Gr promoting collat ties through tec tation of wareho Russia, Ukraine, improving commod agement; enhanci the whole food v and public-secto local currency ? nan
ing water audits a ef ?cient production
GLOBAL MONITORING REPORT 2012 L INSTITUTIONS 163
AID AND INTERNATIONAL FINANCIA
Inter-American Climate change Development Bank all activities The Inter-American Development Bank work to develop (IDB) established the Food Security Fund in the negative 2008 to address the consequences of major food security. price hikes of food that erupted in 2007. The agricultural fund was originally conceived as a two-tiered joined with the response to the food-price crisis: in the short Développeto medium term, it helped alleviate the impact und for Agriof the crisis on the most vulnerable people llaborate in an of the region; in the long term, it aimed to ccessful poliincrease agricultural and agro-industrial output and address trade-related policy issues. The fund has recently been refocused on the longer-term objective of improving agricultural production, productivity, and trade as the 2008 cria means to enhance food security. The new ction, the Food Security Strategic Thematic Fund will Food Crisis provide technical assistance on concessional y 2008 to terms. Since 2009, 18 technical assistance ical advice projects have been approved for a total of RP has now $11.9 million. Eleven of these operations 47 countries. were approved for small and vulnerable and rural develcountries. y. The World Food security has been made a priority lture and area for the IDB as part of the mandates of t to some $6 its Ninth Capital Replenishment (IDB-9). from $4.1 billion One of the five priority areas of IDB-9 is e request of the “Protecting the environment, responding to he Global
agricultural direct payments. aspects are considered across directed toward agriculture. In parallel, the IDB will new instruments that address impact of price volatility on As part of the G-20’s focus on price volatility, the IDB has World Bank, Agence Française de ment, and the International F culture and Development to co exchange of information on su cies and instruments. World Bank Responding to the severity of sis and the need for prompt a World Bank set up the Global Response Program (GFRP) in Ma provide Bank ?nancing and techn
to affected countries. The GF reached 40 million people in Investment in agriculture opment remains a high priorit Bank Group is boosting agricu agriculture-related investmen billion to $8 billion a year in 2008. In April 2010, at th G-20, the World Bank launched t
climate change, promoting renewable energy, Program—a and enhancing food security. ? The IDB-9 rt of agriResults Framework established a speci ?c tarrgency and get in this regard: by 2015, 5 million farmers f, targeting should have access to improved agricultural ange in the agriservices and investments. Nearly 1 million poor countries farmers were assisted in 2010; 2.5 million existing aid were assisted in 2011. ate, seven counMoving forward, the IDB will continue n have pledged to concentrate on productive activities in ext three years, order to improve the supply response in the longer term. The IDB’s investments toward to the agriculture growth in the region have quinas: tupled in the past ?ve years, from an average of less than $100 million a year between ngaged in pol2004 and 2006 to nearly $500 million a year 0 countries, at for 2009–2011. The IDB’s strategic focus is ss the food twofold: to increase access to improved agriude rapid country cultural services and rural infrastructure, gue, public comand to enhance the quality and ef ?ciency of tical work. A
Agriculture and Food Security multilateral mechanism in suppo culture that takes up where eme recovery assistance leaves of transformative and lasting ch culture and food security of through financial support to effectiveness processes. To d tries and the Gates Foundatio about $1.1 billion over the n with $612 million received. The World Bank has responded food crisis around ?ve main are
Policy advice. The Bank has e icy dialogue with more than 4 their request, to help them addre crisis. Instruments used incl diagnostics, high-level dialo munications, and in-depth analy
164 AID AND INTERNATIONAL FINANCIAL INSTITUTIONS NITORING REPORT 2012
study on sources of food price in ation and surance products and risk appropriate policy responses in Ethiopia is gies. In developing counongoing. In the Middle East and North Africa gro-enterprises, and governregion, the World Bank, in collaboration a range of technical, manwith the Food and Agriculture Organization al approaches to mitigate, and the International Fund for Agriculture e with risks. The World Development, released a paper on “Improvevelopment and impleing Food Security in Arab Countries. ? ltural sector and supply ment strategies in a growExpedited ? nancial support. In May 2008, oping countries through the Bank’s Board of Executive Directors chnical assistance, capacity endorsed the GFRP, initially a $1.2 billion ining. rapid financing facility providing financial assistance as well as policy and technical ss critical knowledge gaps. advice to the poorest and most vulnerable with other agencies and countries. The Bank increased the size of the Bank is undertaking a comfacility to $2 billion in April 2009, and the ical program. In addition, program was recently extended until June s its support to the Con2012 to allow for a swift response to calls n International Agricultural for assistance from countries hard hit by A new CGIAR Multiprice spikes. As of January 2012, the GFRP was established to harmohad ? nanced operations amounting to $1.5 nts and is being hosted billion; some 82 percent of funds had been e World Bank. Six new disbursed, reaching at least 40 million vulresearch programs submitnerable people in 47 countries. In addition to tium of International AgriBank resources, grant funding has been made Centers have been recently available through three externally funded ing by the CGIAR Fund trust funds that amounted to about $358 mil-
Financial market in management strate tries, farmers, a ments can employ agerial, and ?nanci
transfer, and cop Bank supports the d mentation of agricu chain risk manage ing number of devel the provision of te transfer, and tra Research to addre In collaboration institutions, the prehensive analyt the Bank continue sultative Group o Research (CGIAR). Donor Trust Fund nize donor investme and managed by th results-oriented ted by the Consor cultural Research approved for fund Council.
lion. A Multi-Donor Trust Fund has received contributions from Australia ($A50 million), k is also responding to Spain ( 80 million), the Republic of Korea coordination with develop(W9.5 billion), Canada (Can $30 million), and e World Bank is actively the International Finance Corporation (IFC) United Nations High Level ($150,000). The Russia Food Price Crisis Global Food Security CriRapid Response Trust Fund has allocated $15 in April 2008, the task force million for the Kyrgyz Republic and Tajikihe heads of UN specialized stan. Last, the European Union has allocated and programs with the Bret111.8 million to operations in 10 countries. ons. The World Bank is support to the task force Increased IFC investment in agribusiness. gh the World Bank’s DevelThe Action Plan projects an increase in suplity and also participated port from the World Bank Group (IDA, f the UN’s Comprehensive IBRD, Special Financing, and IFC) to agriion. The World Bank is culture and related sectors to between $6.2 to several agricultural and and $8.3 billion annually over FY10–12. For ng groups drafting recFY11, IFC invested $2.1 billion across the the G-20, at the request agribusiness value chain. This leads to a total sidency. Several G-20 initiaof $5.7 billion for overall World Bank Group food price volatility are being lending in FY11. llaboration with partners,
The World Ban the food crisis in ment partners. Th engaged with the Task Force on the sis. Established brings together t agencies, funds, ton Woods instituti providing ?nancial
secretariat throu opment Grant Faci in the updating o Framework for Act also contributing food security worki ommendations for of the French pre tives to address implemented in co
GLOBAL MONITORING REPORT 2012 NCIAL INSTITUTIONS
AID AND INTERNATIONAL FINA 165
Food price hikes and nutrition: The United Kingdom’s response
The 2008 food price hike prompted the international is to reach 20 million children under community and partner governments to take a numrs with nutrition-related interventions. ber of steps to develop a more coordinated and comaling up a range of programs across prehensive response to undernourishment. As the as making signi ?cant investments in risks to improved nutrition from high food prices and act evaluation to address some of the continued volatility became more apparent, so too s. For example: did the concern about the lack of progress in tackling hunger and undernourishment (MDG 1). w six-year program aimed at signi ?Along with other governments, the United Kinging the coverage of nutrition-speci ?c dom, led by its Department for International Devel(treatment of severe acute malnutriopment (DFID), developed a strategic approach to infant and young child feeding, to undernourishment based on an evidence paper ent supplementation) in the north(“Nutrition and Development: The Evidence ?), which culminated in a position paper (“Scaling Up Nutriproviding 10 years of support tion: The UK’s Position Paper on Nutrition ?) pubchild grant program aimed at lished in September 2012. These re ect the internaconomic barriers to good nutrition tional policy consensus that undernourishment is nder ?ve. best addressed through efforts that reach children FID will strengthen the nutriin their ? rst 1,000 days of life before the effects are existing extreme poverty programs irreversible, and that a twin-track approach is needed the delivery of nutrition specific which scales up nutrition-speci ?c interventions, often enhance the impact of the asset delivered by the health sector, in combination with h transfers, training and income gennutrition-sensitive investments in agriculture, social these programs already provide. protection, gender empowerment, and water and riority is to develop a better undersanitation, speci ?cally designed to improve nutrition. relationship between nutrition outThe United Kingdom actively supports the Scalcultural growth, including the nutri-
target for 2015 the age of 5 yea The agency is sc sectors as well research and imp key evidence gap • In Nigeria, a ne cantly increas interventions tion, support and micronutri ern states. • In Zambia, DFID is to the government’s addressing the e for children u • In Bangladesh, D tional impact of by integrating interventions to transfers, cas eration which • A key research p standing of the comes and agri
ing Up Nutrition movement, which brings together of investments in food staples versus international partners including civil society and the ps. private sector, with country governments to accelerate progress in reducing undernourishment. DFID’s
tional impacts other food cro Source: DFID.
including the Agricultural Market Informave also undertaken tion System launched to improve global agripond to the food crisis, cultural market transparency. The World clude, the United KingBank also regularly participates in the Multinational Devellateral Development Banks’ Working Group European Union on Food and Water Security.
Bilateral agencies ha major initiatives to res as well. Such efforts in dom’s Department for Inter opment (box A5.1) and the (box A5.2).
166 AID AND INTERNATIONAL FINANCIAL INSTITUTIONS GLOBAL MONITORING REPORT 2012
EU initiatives on agriculture, food security, and nutrition
The European Commission remains a committed pport agriculture and food security partner both politically and ? nancially to ensuring in 2010–12; in 2010 alone, the global food security and nutrition. In terms of ?nanon had already committed over cial initiatives for food security, EU cooperation with 02 billion) of its pledge. developing countries is mainly delivered through n Commission is taking concerted country programs such as the European Development security. It is a major contributor to Fund, where support to agriculture, rural developurity governance—especially through ment, and food security is over 1 billion for Africa eform of the Committee on World alone (2008–13). This support is often complemented for implementation of the Food by other means such as the 1 billion EU Food Faciln the G8/G20 context. ity (2009–11) and the almost 1.7 billion Food Secus also a priority topic in the EU-US rity Thematic Programme (2007–13). gue, with interesting initiatives The Food Facility is a prime example of the Eurothe ground. The European Commispean Union’s ability to react rapidly, ef ?ciently, and d onto a new Strategic Framework transparently to a global food security crisis. This encouraging greater collaboration temporary instrument was created as a rapid and speinternational food agencies and ci ?c response to help millions of people in the worst d for them to focus on their areas of affected countries in the short and medium term, following the food price crisis of 2007–08. a global initiative to tackle In late 2010, to speed up progress on the MDGs, and boost effor ts to achieve the European Union announced a 1 billion initiarishment culminated in the Scaltive to assist those countries struggling to reach the n (SUN) initiative following months MDG targets; this effort focuses on the MDGs that rk by experts worldwide, including are most off track, in particular MDG 1—eradication rom the Commission and EU memof hunger and malnutrition. chapter 2). As the world’s largest grant donor, the Euro-
in L’Aquila to su with $3.8 billion European Commissi 50 percent ($2. The Europea action on food global food sec its backing for r Food Security and Security agenda i Food security i Development Dialo taking place on sion has also signe of Cooperation, between several stressing the nee expertise. The launch of undernutrition MDG 1.c on malnou ing Up Nutritio of technical wo representatives f ber states (see
pean Union is living up to the pledge made in 2009 n Union.
Notes GNI, while disbursements from Austria and ly declined as a share of GNI from 0.52 per1. The remaining disbursements are for “othand 0.29 percent in 2005 to 0.32 percent ers, ? made up of more advanced develop.15 percent in 2010, respectively. ing countries and territories and amounts GNI for the 35 low-income countries (of unspeci ?ed by country. al of 139 developing countries with CPA 2. Countries that reached the goal are Ireland a) represented a mere 2 percent of total (0.52 percent of GNI), Finland (0.55 pereloping-country GNI in 2010. cent), United Kingdom (0.57 percent), Belde ?nes “fragile situations ? as either IDAgium (0.64 percent), Netherlands (0.81 pergible countries with a harmonized average cent), Denmark (0.91 percent), Sweden (0.97 ntry Policy and Institutional Assessment percent), and Luxembourg (1.05 percent). IA, made by World Bank staff each year) Others raised disbursements but did not ntry rating of 3.2 or less (or no CPIA), or reach the target: France (0.50 percent), Spain presence of a United Nations or regional (0.43 percent), Germany (0.39 percent), Porcekeeping or peace-building mission, or tugal (0.29 percent). Greek (0.17 percent) h, during the past three years. On average, disbursements remained constant as a share ntries in fragile situations reported a CPIA
of Ita cent and 0 3. The a tot dat dev 4. IDA eli Cou (CP cou the pea bot cou
GLOBAL MONITORING REPORT 2012 ANCIAL INSTITUTIONS 167
AID AND INTERNATIONAL FIN
of 2.9 in 2010, compared with 3.6 by nonm local governments, fragile-situation countries. y agencies). Addition5. For example, Kharas et al. (2011) estimate et out loan repayments, that net ODA delivered to fragile states rose to t typically factored into an average of $50.4 per capita during 2005– ns (OECD 2010). 08 from an average of $21.4 during 1995–98, cludes forward aid per capita disbursements to non-fragile states untries and the largest 23 remained stable at $10 per capita. s, including multilateral 6. The driving force behind these forums has N agencies, and global been the Working Party on Aid Effectiveness, hosted at the OECD Development Assisnada, Greece, Ireland, tance Committee. What started as a donords, Portugal, Spain, the only grouping in 2003 has now emerged as the United States. a major international partnership, a forum where donors, developing countries, international organizations, civil society organizations, parliaments, and the private sector 11. “Trends and Oppormeet to discuss how to improve ways to work g Landscape. ? CFP together. d Bank, Concessional 7. The number of Paris Declaration indicators is rtnerships, Washington, 12, but 3 indicators have subindicators, bringing the total to 15. However, 2 indicators do s Bueren, Gregory De not have global targets, so there are 13 indicarroway, and Jeantors with global targets. . “Revisiting MDG Cost 8. Estimates of the associated costs of the unprestic Resource Mobidictability of aid range between 10 percent Working Paper 306, and 20 percent of developing-country pro). grammable aid from the European Union w: Will This Resultsover recent years (Kharas 2008). DfID Country Allo9. “A New Deal for Engagement in Fragile
as food aid, aid fro aid through secondar ally, CPA does not n because these are no aid allocation decisio 13. The 2011 CPA survey in plans for all DAC co multilateral agencie development banks, U funds. 14. The countries are Ca Japan, the Netherlan United Kingdom, and
References Adugna, Abebe, et al. 20 tunities in a Changin Working Paper 8, Worl Finance and Global Pa DC (November). Atisophon, Vararat, Jesu Paepe, Christopher Ga Philippe Stijns. 2011 Estimates from a Dome lization Perspective. OECD, Paris (December Birdsall, Nancy. 2010. “Wo Based Approach Change cations? ? Center for Glob ?
al Development, States. ? 2011. http://www.oecd.org/data r). oecd/35/50/49151944.pdf. i Kharas. 2010. “Qual10. “Busan Global Partnership for Effective t Assistance AssessDevelopment Cooperation. ? 2011. www.aid ion and the Center effectiveness.org/busanhlf4/images/stories/ t, Washington, DC. hlf4/OUTCOME_DOCUMENT_-_FINAL_ rm Rozema. 2011. EN.pdf. Programming and 11. The CPA survey was intended as a means to of Shaping the Multigain a better understanding of donors’ aid ork after 2013. ? allocation policies and to track aid commit). ments made by the G-8 at Gleneagles. lopment Aid in 12. More speci ?cally, CPA is calculated by startil, ? Special Eurobaing with gross ODA ows, and then excludn Commission, http:// ing aid that is inherently unpredictable (such pinion/archives/ebs/ as humanitarian aid and debt relief); entails no flows to the recipient country (such as omi Kharas. 2010. donor administrative costs and donor costs ently—Lessons from the of development awareness and research); and : Brookings Press. is usually not under discussion between the tion with Impact: donor agency and partner governments (such y Development. ?
Washington, DC (Decembe Birdsall, Nancy, and Hom ity of Of ?cial Developmen ment. ? Brookings Institut
for Global Developmen de Hennin, Carlo, and Ha “Study on Results-Based Financing in Support Annual Financial Framew European Union (March Eurobarometer. 2009. “Deve Times of Economic Turmo rometer for the Europea ec.europa.eu/public_o ebs_318_en.pdf. Fengler, Wolfgang, and H Delivering Aid Differ Field. Washington, DC Gates, Bill. 2011. “Innova Financing 21st Centur
168 AID AND INTERNATIONAL FINANCIAL INSTITUTIONS ONITORING REPORT 2012
Speech delivered at the Cannes G-20 Summit veness 2005–2010: (November). plementing the Paris DeclaraHudson Institute. 2010, 2011. “The Index of Global Philanthropy and Remittances. ? agility: InternaKharas, Homi. 2008. “Measuring the Cost of Aid t in Fragile States, Can’t We Volatility. ? WP3, Brookings Institution, Washington, DC. eport on Aid ———. 2010. “The Hidden Aid Story: Ambition on Donors’ Forward Breeds Success. ? Brookings Institution, Wash011–2013. Draft. ? Paris ington, DC. Kharas, Homi, et al 2011. “Overview: An Agenda ort on Division for the Busan High-Level Forum on Aid ressing Cross-Country FragEffectiveness. ? . ? Paris. Mwase, Nkunde, and Yongzheng Yang. 2012. . World Development Report “BR ICs’ Philosophies for Development curity and Development. Financing and Their Implications for LICs. ? WP/12/72, International Monetary Fund, x, and Kimberly Smith. 2011. Washington, DC. re Money, More Ideas for OECD (Organisation for Economic Co-operation Development Co-operation. ? and Development). 2009a. “Aid Orphans: national Development 23: Whose Responsibility? ? Development Brief, Issue 1, Paris. . 2011. “Beyond Aid. ? Speech ———. 2009b. “PARIS21 at Ten: Improvements shington University, in Statistical Capacity since 1999 ? (October). September). http://www.paris21.org/sites/default/files/ P21-at-10.pdf. ———. 2010. “Getting Closer to the Core—Measuring Country Programmable Aid. ? Development Brief, Issue 1, Paris.
———. 2011a. “Aid Effecti Progress in Im
tion. ? Paris. ———. 2011b. “Con ict and F tional Engagemen Do Better? ? Paris. ———. 2011c. “2011 OECD R Predictability: Survey Spending Plans 2 (November). ———. 2011d. “2011 OECD Rep of Labour: Add mentation of Aid World Bank. 2011 2011: Conflict, Se Washington, DC. Zimmermann, Feli “More Actors, Mo International Journal of Inter 722–38. Zoellick, Robert delivered at George Wa Washington, DC (
GLOBAL MONITORING REPORT 2012 APPENDIX 169
Appendix l 2012 East Asia and Pacific South Asia American Samoa Afghanistan Cambodia Bangladesh China Bhutan Fiji India Indonesia Maldives Kiribati Nepal Korea, Dem. Rep. Pakistan Lao PDR Sri Lanka Malaysia
Classification of Economies by Region and Income, Fisca UMC LIC LIC LIC UMC LMC LMC LMC LMC UMC LMC LIC LIC LMC LMC LMC UMC LMC LMC LMC LMC LIC LIC UMC UMC LIC LMC LIC LMC LMC LMC LMC LMC LIC UMC LIC LMC LIC LMC LIC LMC LMC LMC LMC LMC LIC LIC Latin America and the Caribbean High-income OECD economies Antigua and Barbuda UMC Australia Argentina UMC Austria Belize LMC Belgium Bolivia LMC Canada Brazil UMC Czech Republic Chile UMC Denmark Colombia UMC Estonia Costa Rica UMC Finland Cuba UMC France Dominica UMC Germany Dominican Republic UMC Greece Ecuador UMC Hungary El Salvador LMC Iceland Grenada UMC Ireland Guatemala LMC Israel Guyana LMC Italy Haiti LIC Japan Honduras LMC Korea, Rep. Jamaica UMC Luxembourg Mexico UMC Netherlands Nicaragua LMC New Zealand Panama UMC Norway Paraguay LMC Poland Peru UMC Portugal St. Kitts and Nevis UMC Slovak Republic St. Lucia UMC
Marshall Islands Sub-Saharan Africa Micronesia, Fed. Sts. Angola Mongolia Benin Myanmar Botswana Palau Burkina Faso Papua New Guinea Burundi Philippines Cameroon Samoa Cape Verde Solomon Islands Central African Republic Thailand Chad Timor-Leste Comoros Tonga Congo, Dem. Rep. Tuvalu Congo, Rep. Vanuatu Côte d Ivoire Vietnam Eritrea Ethiopia Europe and Central Asia
Gabon Albania Gambia, The Armenia Ghana Azerbaijan Guinea Belarus Guinea-Bissau Bosnia and Herzegovina Kenya Bulgaria Lesotho Georgia Liberia Kazakhstan Madagascar Kosovo Malawi Kyrgyz Republic Mali Latvia Mauritania Lithuania Mauritius Macedonia, FYR Mayotte Moldova Mozambique Montenegro Namibia Romania Niger Russian Federation Nigeria Serbia Rwanda Tajikistan São Tomé and Principe Turkey Senegal Turkmenistan Seychelles Ukraine Sierra Leone Uzbekistan Somalia South Africa Sudan Swaziland Tanzania Togo Uganda
UMC UMC LIC LMC LMC UMC LIC UMC LIC UMC LIC UMC LMC LMC LIC UMC LIC LMC LIC LIC LIC UMC LMC UMC UMC UMC UMC LMC LIC UMC UMC UMC LIC UMC LMC UMC LIC LIC LMC UMC LMC LMC UMC LMC LIC LMC LIC UMC LMC LMC LIC LIC LIC
Slovenia St. Vincent and the Spain Grenadines Sweden Suriname Switzerland Uruguay United Kingdom Venezuela, RB United States
UMC UMC UMC UMC
Middle East and North Africa Other high-income economies Algeria UMC Andorra Djibouti LMC Aruba Egypt, Arab Rep. LMC Bahamas, The Iran, Islamic Rep. UMC Bahrain Iraq LMC Barbados Jordan UMC Bermuda Lebanon UMC Brunei Darussalam Libya UMC Cayman Islands Morocco LMC Channel Islands Syrian Arab Republic LMC Croatia Tunisia UMC Curaçao West Bank and Gaza LMC Cyprus Yemen, Rep. LMC Equatorial Guinea Faeroe Islands French Polynesia Gibraltar Greenland Guam Hong Kong SAR, China Isle of Man Kuwait Liechtenstein
Macao SAR, China Malta Monaco New Caledonia Northern Mariana Islands Oman Puerto Rico Qatar San Marino Saudi Arabia Singapore Sint Maarten (Dutch part) St. Martin (French part) Taiwan, China Trinidad and Tobago Turks and Caicos Islands United Arab Emirates
Virgin Islands (U.S.) Source: World Bank data. Note: This table classi ?es all World Bank member economies, and all other economie s with populations of more than 30,000. Economies are divided among income groups according to 2010 GNI per capita, calculated using the World Bank Atlas method. The groups are: low income, $1,005 or less; lower middle income, $1,006–$3,975; upper middle income, $3,976–$12,275; and high income, $12,276 or more .
ECO-AUDIT Environmental Benefits Statement The World Bank is committed to preserving endangered forests and natural resources. The Office of the Publisher has chosen to print Global Monitoring Report 2012: Food Prices, Nutrition, and the Millennium Development Goals on recycled paper with 30 percent post-consumer waste, in accordance with the recommended standards for paper usage set by the Green Press Initiative, a nonprofit program supporting publishers in using fiber that is not sourced from endangered forests. For more information, visit www.greenpressinitiative.org.
Saved: • 21 trees • 8 million BTU of total energy • 2,111 pounds of CO2 equivalent of greenhouse gases • 9,517 gallons of wastewater • 603 pounds of solid waste
hat has been the impact of yet another food price spike on d that sequencing and prioritizing various policy W developing countries’ ability to make progress toward the Millennium Development Goals (MDGs)? How many poor depend critically on the initial situation a country or
?t all an
initiatives region find s itself in. It also discusses support by the people have been prevented from lifting themselves out of al community. poverty? How many people, and how many children, have seen ld has met two global MDG targets well before the their personal growth and development permanently harmed ne. Estimates based on preliminary surveys indicate because their families could not a ord to buy food? Finally, what e of people living in extreme poverty in 2010 was can countries do to respond to higher and more volatile food t was in 1990. The world has also halved the share of prices? Global Monitoring Report 2012: Food Prices, Nutrition, and no safe drinking water. The goal of gender parity in the Millennium Development Goals examines these questions. It secondary education is on track to be met in 2015, summarizes the e ects of food prices on several MDGs, stressing of ensuring that children everywhere—boys and that recent food price spikes have prevented millions of re able to complete primary school is nearly on households from escaping extreme poverty. The report the MDGs closely linked to food and nutrition, advocates using agricultural policy to orchestrate a supply y those that aim to reduce child and maternal response; deploying social safety nets to improve resilience; are lagging. strengthening nutritional policy to manage the implications of Monitoring Report 2012 was prepared jointly by the early childhood development; and implementing trade policy to and the International Monetary Fund, with improve access to food markets, reduce volatility, and induce ns and collaborations with regional development productivity gains. The report acknowledges that one size does ther multilateral partners. internation The wor 2015 deadli that the shar half what i people with primary and and the goal girls alike—a track. But particularl mortality, Global World Bank consultatio banks and o