Kostas Stamoulis

The role of agriculture in economic development: visible and invisible surplus transfers

The financial surplus of agriculture has been central to theories of the role of agriculture in economic development. Morrisson and Thorbecke (MT) have used a constant-price social accounting matrix (SAM) framework to measure rigorously the financial surplus of agriculture and decompose the mechanisms of surplus extraction. History and theory have, however, stressed the role of prices as an invisible transfer mechanism in addition to the visible transfers identified in the SAM framework. We extend the MT approach by defining and measuring the real surplus of agriculture and decomposing the mechanisms of surplus extraction between visible and invisible financial transfers. Using an archetype computable general equilibrium model for poor African nations, we trace the generation, transfer, and use of an agricultural surplus created by a productivity gain in agriculture. This shows that prices indeed play an overwhelmingly important role in transferring a surplus from agriculture to the benefit of the rest of the economy.

Applying Behavioural Economics to International Development Policy

Many development policies and programmes are premised on a traditional economic model of rationality to predict how individuals will respond to changes in incentives. Despite the emphasis of these programmes on poverty reduction, economists and the development community in general are still unable to understand fully how the poor make decisions, especially under uncertainty and over time. We do not understand why, for example, individuals do not regularly adopt subsidized technologies, such as ventilated cooking stoves to reduce health risks. Even when cultural norms and other constraints are considered, our models do not explain why a massive HIV/AIDS information campaign does not encourage individuals to regularly use condoms. Individuals avail themselves less than predicted in health programmes, participate less than expected in market opportunities, under- or over-insure themselves and make short-run decisions that are inconsistent with their long-run welfare. The rise and fall of different descriptive models and paradigms of poor-household behaviour can partly be attributed to this limited understanding. We believe that some more helpful answers may lie within behavioural economics, that these insights are particularly important for poor populations, and that they can improve the future design, implementation and subsequent effectiveness of development programmes.

Hunger, food insecurity and malnutrition: new challenges for international organizations

This contribution examines the roles and challenges of international organizations in the context of global governance systems for hunger, food insecurity and malnutrition. Firstly, we define how the concepts of hunger, food insecurity and malnutrition have evolved over the years, in line with emerging challenges. We draw particularly on FAO’s experience and analytical work in recent years. Secondly, we review the wide range of international stakeholders addressing hunger, food insecurity and malnutrition, with their different but sometimes overlapping roles and mandates. Thirdly, we examine how international organizations are responding to emerging food and nutrition security challenges and whether the current global institutional and governance architecture is adequate to address these challenges. Fourthly, we bring into sharp focus the challenges involved in bringing coherence to the governance of a global system for food and nutrition security (FSN).