The Economist recently published a chart depicting the rising incidence of hunger in the aftermath of last year's financial crisis.
According to The Economist, (all bold emphasis mine)
``THE economic crisis is having a big impact on those already struggling to survive. The number of chronically hungry people in the world will rise from 913m in 2008 to 1.02 billion this year, a sixth of the global population, says the UN's Food and Agriculture Organisation in its annual report on food insecurity. Food prices that are 17% higher than they were two years ago, and big falls in remittances and investment are contributing to growing hunger. The economic slump has meant a growing share of the world's population is going hungry, after a steady decline since 1970. And the FAO notes that global food output will have to increase by 70% to feed a population projected at 9.1 billion in 2050."
I think The Economist has painted only a minor part of the big picture.
It is true remittances are expected to decline to about $290 billion in 2009 from only $305 billion in 2008, according to Indiainfo.com., and possibly contribute to the hunger woes. The Chart of global remittance trend above from UNCTAD Trade and Development Report.
But remittances are puny compared to what matters more.
The Economist have significantly missed the most important aspect- the impact from the $32 trillion global trade. From this perspective remittances constitute only 9% of global trade.
Yet, the material improvement of world hunger has coincided with a surge in global trade similar to the impact on depressed gold prices in the 90s as explained in Gold: An Unreliable Inflation Hedge?
While investment matters too, this has likewise mostly been underpinned by globalization trends.
In short, global trade creates job opportunities, expands the global labor market and improves on per capita GDP as to reduce poverty and incidences of hunger.
On the other hand, food prices are largely determined by trade, investments incentivized or hindered by national administrative policies and importantly, current synchronized monetary policies to curb so called demand shock from last year's meltdown.
Policies aimed at resolving such demand shock, with an overdose of paper money with dead politicians printed on them, may spawn a "supply shock" or a food crisis.
According to The Economist, (all bold emphasis mine)
``THE economic crisis is having a big impact on those already struggling to survive. The number of chronically hungry people in the world will rise from 913m in 2008 to 1.02 billion this year, a sixth of the global population, says the UN's Food and Agriculture Organisation in its annual report on food insecurity. Food prices that are 17% higher than they were two years ago, and big falls in remittances and investment are contributing to growing hunger. The economic slump has meant a growing share of the world's population is going hungry, after a steady decline since 1970. And the FAO notes that global food output will have to increase by 70% to feed a population projected at 9.1 billion in 2050."
I think The Economist has painted only a minor part of the big picture.
It is true remittances are expected to decline to about $290 billion in 2009 from only $305 billion in 2008, according to Indiainfo.com., and possibly contribute to the hunger woes. The Chart of global remittance trend above from UNCTAD Trade and Development Report.
But remittances are puny compared to what matters more.The Economist have significantly missed the most important aspect- the impact from the $32 trillion global trade. From this perspective remittances constitute only 9% of global trade.
Yet, the material improvement of world hunger has coincided with a surge in global trade similar to the impact on depressed gold prices in the 90s as explained in Gold: An Unreliable Inflation Hedge?
While investment matters too, this has likewise mostly been underpinned by globalization trends.
In short, global trade creates job opportunities, expands the global labor market and improves on per capita GDP as to reduce poverty and incidences of hunger.
On the other hand, food prices are largely determined by trade, investments incentivized or hindered by national administrative policies and importantly, current synchronized monetary policies to curb so called demand shock from last year's meltdown.
Policies aimed at resolving such demand shock, with an overdose of paper money with dead politicians printed on them, may spawn a "supply shock" or a food crisis.
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