Maros Ivanic

Food Price Spikes, Price Insulation, and Poverty

This paper has two purposes. It first considers the impact on world food prices of the changes in restrictions on trade in staple foods during the 2008 world food price crisis. Those changes -- reductions in import protection or increases in export restraints -- were meant to partially insulate domestic markets from the spike in international prices. The authors find that this insulation added substantially to the spike in international prices for rice, wheat, maize, and oilseeds. As a result, although domestic prices rose less than they would have without insulation in some developing countries, in many other countries they rose more than they would have in the absence of such insulation. The papers second purpose it to estimate the combined impact of such insulating behavior on poverty in various developing countries and globally. The analysis finds that the actual poverty-reducing impact of insulation is much less than its apparent impact, and that its net effect was to increase global poverty in 2008 by 8 million people, although this increase was not significantly different from zero. Since there are domestic policy instruments, such as conditional cash transfers, that could now provide social protection for the poor far more efficiently and equitably than variations in border restrictions, the authors suggest it is time to seek a multilateral agreement to desist from changing restrictions on trade when international food prices spike.

Why Isn't the Doha Development Agenda more Poverty Friendly?

Critics of the Doha Development Agenda rightly point to the lack of aggressive reform in wealthy countries for its role in dampening developing country gains. The authors find that the absence of tariff cuts on staple food products in developing countries also critically limits poverty reduction in those countries. Based on their analysis of the impacts of multilateral trade policy reforms in a sample of 15 developing countries, they find there is some evidence of poverty increases amongst the poor who work in agriculture when they lose protection for their earnings. However, these effects are minimized when agricultural tariffs are cut in all developing countries, and when the impact of lower food prices on low income consumers is taken into account in their 15 country sample.

Short- and Long-Run Impacts of Food Price Changes on Poverty

This study uses household models based on detailed expenditure and agricultural production data from 31 developing countries to assess the impacts of changes in global food prices on poverty in individual countries and for the world as a whole. The analysis finds that food price increases unrelated to productivity changes in developing countries raise poverty in the short run in all but a few countries with broadly-distributed agricultural resources. This result is primarily because the poor spend large shares of their incomes on food and many poor farmers are net buyers of food. In the longer run, two other important factors come into play: poor workers are likely to benefit from increases in wage rates for unskilled workers from higher food prices, and poor farmers are likely to benefit from higher agricultural profits as they raise their output. As a result, higher food prices appear to lower global poverty in the long run.

GTAP-POV: A Framework for Assessing the National Poverty Impacts of Global Economic and Environmental Policies

The goal of this technical paper is to provide sufficient detail to permit readers to bring into the GTAP poverty framework additional countries for which suitable household data are available. With the inputs from processed household data - as per the guidelines provided here - the poverty framework can be readily used to assess the likely poverty impacts of global economic policies across a wide range of developing countries, in a fashion which enables systematic cross-country comparisons.

Implications of the Growth of China and India for the Middle East

The Middle East and North Africa (MENA) region is expected to benefit more than most other regions from continued rapid growth in China and India. This paper analyzes the trade-related implications of this growth for the MENA countries using a global general equilibrium model, modified to take into account the focus of China and, increasingly, India on exports of manufactures from global production chains. To obtain a better idea of the implications for key countries in the region, we developed a database with expanded coverage of Middle-Eastern countries. We find that most of the gains to the MENA region come from improvements in the terms of trade, particularly linked to increasing demand for energy. Exports from the Middle East as a whole are expected to decline although exports from the non-oil economies will likely expand. Fuelled by higher incomes and by increases in the competitiveness of China and India, imports into MENA are expected to increase. In the oil-exporting countries of the Middle East, Dutch-disease effects increase the importance of policies to promote adjustment to the changing world environment.

Poverty Impacts of the Volume‐Based Special Safeguard Mechanism

The volume-based Special Safeguard Mechanism was proposed as essential for small, poor farmers and became the proximate cause of the collapse of the Doha Agenda negotiations in 2008. But is it helpful for these farmers, given that it is likely to be applied when farm output is depressed and many poor farmers in developing countries need to buy food? Stochastic simulations for 31 countries suggest that use of this safeguard in line with the proposed World Trade Organization rules would raise the world poverty headcount by an average of 24 million. The adverse poverty impact of the duty is larger when the quantity safeguard is triggered than it would be in other years, because lower farm output levels reduce or reverse the benefits to poor farm households from higher prices.

Implications of the Growth of China and India for the Other Asian Giant: Russia

Continuing rapid growth of China and India can be expected to raise incomes in Russia, but also to put adjustment pressure on Russian firms. The impacts of the rapid growth of China and India on the Russian economy are explored by examining a baseline projection using a global general equilibrium model, and then assessing the implications of higher-than-expected growth in China and India. The authors find that a major source of benefits to Russia is likely to be terms-of-trade improvements associated with higher energy prices - a quite different channel of effect from that for many developing countries that benefit primarily through expanded opportunities to trade directly with these emerging giants. Taking into account the likely improvements in the quality and variety of exports from China and India, the gains to Russia increase substantially. The expansion of the energy sector and the contraction of manufacturing and services are a sign of a Dutch disease effect that will increase the importance of policies to encourage adaptation to the changing world environment.

Economic Effects of the Syrian War and the Spread of the Islamic State on the Levant

This paper uses a global computable general-equilibrium framework with new detail on six Levant countries -- the Arab Republic of Egypt, Iraq, Jordan, Lebanon, the Syrian Arab Republic, and Turkey -- to quantify the direct and indirect economic effects of the Syrian war and the advance of the Islamic State on the Levant. Syria and Iraq bear the brunt of the direct economic costs, while the other Levant countries lose in per capita but not in aggregate terms. The fact that the Islamic States spread has undermined regional trade adds to varying degrees to the direct costs in all Levant economies and in the case of Syria and Iraq doubles the welfare losses. All these countries are foregoing opportunities to expand intra-Levant trade and the associated gains in economic efficiency and diversification. The average welfare effects are not indicative of within-country incidence, which varies among workers, landowners, and capitalists.

Food Price Changes, Price Insulation, and Their Impacts on Global and Domestic Poverty

Food price volatility—and in particular price spikes—can create serious problems for vulnerable individuals and groups. One quick, simple approach for governments to deal with this problem is to insulate their domestic market from changes in world prices. It turns out that many governments do this to a large degree, resulting in their domestic prices becoming much less volatile than world market prices. But if changes in international prices are sustained for a few years, policymakers appear to pass through most of these changes. Such sustained increases in food prices appear to be helpful in reducing poverty and to have had favorable impacts on global poverty since 2006. To individual policymakers, this approach of using short-term insulation and long-term pass-through seems to be very practical and useful, even though they know that insulation measures, like export restrictions and import tariff reductions, are beggar-thy-neighbor policies. Collectively, however, this policy approach appeared to be ineffective in reducing poverty during the 2006–2008 price spikes because price insulation contributed substantially to increasing food price volatility.

Managing High and Volatile Food Prices in Developing Countries Since 2000

Abstract Purpose This chapter examines the long-run behavior of real food prices and the impact of food prices on poor and vulnerable households. It also examines the price policy responses of governments to high and volatile food prices, and the impact of food prices and policies on the poorest in the society. Methodology/approach We focus on the impacts of food price changes on individual households, particularly on those living near the poverty line using the standard World Bank measure of poverty at US