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Comments on “Fift Years
 C        t     “Fifty Y
   of Distortions in World
       Food Markets”
          Eugenio Diaz Bo...
Overview
Congratulations

Methodology

Applications

Only economists care about
“distortions”...?
 distortions ?
 …. or so...
Methodology
Partial equilibrium versus general
equilibrium of distortions
  Sherman Robinson et al (1998 and 2002)
  TMD p...
Applications
CGE simulations
     i  l ti
 Can be utilized in welfare simulations…
 …but careful with the ER component of ...
NRA and Growth for Africa

                                                                                        5
     ...
LAC: Growth, NRA and RRA
               1960/70s 1980/2000s
LAC
Agricultural
Growth               3.1      2.9
NRA        ...
NRA and Agricultural Growth
                    in Developing Countries
                                                  ...
RRA and Agricultural Growth
                    in Developing Countries
                                                  ...
0
                                           5000000
                                                          10000000
  ...
Indicators of Production and Trade

12.00%                                                                                ...
19
                                60




                                                   0
                           ...
Indices of world prices, REER and Domestic Relative Prices (2001 Q1=1)

 3



2.5



 2



1.5



 1



0.5



 0
 6


   ...
Legal Issues in ER Policies
GATT se e al references to IMF and exchange rates.
      several efe ences               e cha...
Communication
W economists tend to talk in terms of
We          i t t d t t lk i t      f
distortions and gains in welfare...
Conclusions
G    tj b t       t   ti      f l
Great job at constructing useful
indicators with large coverage (time,
count...
Thanks....
0
                                                  50
                                                            100
   ...
AFRICA: Agricultural Growth and NRA

 0                                                                                   ...
LAC: Agricultural Growth and NRA

10                                                                                      ...
ASIA: Agricultural Growth and NRA

15                                                                                     ...
-1
                                               0
                                                   1
                 ...
-1
                                           0
                                               1
                         ...
60
                                            70
                                                 80
                    ...
Tema 2: Sobreinversión
Exceso de liquidez mundial generó sobre
                                    sobre-
inversión en cas...
Food Prices and World Growth
30


25


20


15


10


 5


 0
      0   1         2            3                 4   5   6...
Metal Prices and World Growth
60


50


40


30


20


10


 0
      0   1    2      3             4                      ...
Oil Prices and World Growth
80




60




40




20




 0
      0   1   2     3             4                      5   6 ...
Change in NRA and Agricultural Growth
                        in Developing Countries

                                   ...
World and US Growth
          8



          7



          6



          5



          4



          3



          2
...
-6
                          -4
                               -2
                                              0
        ...
¿Posibles contrapesos (2) ?
       Pueden China o Japón mantener
       crecimiento mundial? No...
                      P...
Comments on "Fifty Years of Distortions in World Food Markets"
Comments on "Fifty Years of Distortions in World Food Markets"
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Eugenio Diaz Bonilla, Executive Director for Argentina and Haiti, Inter-American Development Bank
14th October 2008, International Food Policy Research Institute, Washington D.C.

Published in: Business, Technology
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Comments on "Fifty Years of Distortions in World Food Markets"

  1. 1. Comments on “Fift Years C t “Fifty Y of Distortions in World Food Markets” Eugenio Diaz Bonilla Executive Director for Argentina and Haiti g Inter-American Development Bank
  2. 2. Overview Congratulations Methodology Applications Only economists care about “distortions”...? distortions ? …. or some random thoughts about communicating with interested audiences…
  3. 3. Methodology Partial equilibrium versus general equilibrium of distortions Sherman Robinson et al (1998 and 2002) TMD publications 25 and 105 Criticized Krueger, Schiff, and Valdés, 1988; Schiff and Valdés 1992; Bautista and Valdés, Valdés, 1993 Issues: exchange rates, inputs, tradability, g , p , y, marketing margins, among others Anderson et al ( d l (WBWP 4612, April 2008) il ) correct approach in ER, tradability; the other issues more difficult to deal in partial equilibrium measures
  4. 4. Applications CGE simulations i l ti Can be utilized in welfare simulations… …but careful with the ER component of the b t f l ith th t f th distortion measures (they are not being negotiated in the WTO, even though there are IMF and WTO links; more on this below) Econometric analysis of growth and trade Cross-section and panel regressions …controlling for macroeconomic and developmental policies, and other factors
  5. 5. NRA and Growth for Africa 5 y = 0 2133 + 4 5326 0,2133x 4,5326 R2 = 0,4568 4,5 4 3,5 3 2,5 2 1,5 1 0,5 0 -16 -14 -12 -10 -8 -6 -4 -2 0 Africa Growth Linear (Africa Growth)
  6. 6. LAC: Growth, NRA and RRA 1960/70s 1980/2000s LAC Agricultural Growth 3.1 2.9 NRA -13.5 -1.8 RRA -33.8 -13.6
  7. 7. NRA and Agricultural Growth in Developing Countries 6 y = 0.0144x + 3.21 5 R2 = 0.0273 4 3 2 1 0 -30 -25 -20 -15 -10 -5 0 5 10 15 Series1 Linear (Series1)
  8. 8. RRA and Agricultural Growth in Developing Countries 6 y = 0,0029x + 3 1457 0 0029x 3,1457 R2 = 0,0028 5 4 3 2 1 0 -70 -60 -50 -40 -30 -20 -10 0 10 Series1 Linear (Series1)
  9. 9. 0 5000000 10000000 15000000 20000000 25000000 30000000 19 7 19 3 7 19 4 7 19 5 7 19 6 7 19 7 7 19 8 7 19 9 8 19 0 8 19 1 8 19 2 8 19 3 8 19 4 8 19 5 8 19 6 8 19 7 8 19 8 8 19 9 9 Net Agricultural Trade 19 0 9 19 1 9 19 2 9 19 3 US: REER and Net Agricultural Trade 9 US REER 19 4 9 19 5 9 19 6 9 19 7 9 19 8 9 20 9 0 20 0 0 20 1 0 20 2 0 20 3 04 50 60 70 80 90 100 110 120 130
  10. 10. Indicators of Production and Trade 12.00% 66.00% 64.00% 10.00% 62.00% 8.00% 60.00% 6.00% 58.00% 56.00% 4.00% 54.00% 2.00% 52.00% 0.00% 50.00% Average 1990s Average 2003-2007 Last campaign 2006/7 Production Argentina/World Exports Argentina/World Exports/Production Argentina
  11. 11. 19 60 0 20000 40000 60000 80000 100000 120000 /1 96 19 1 62 /1 96 19 3 64 /1 96 19 5 66 /1 96 19 7 68 /1 96 19 9 70 /1 97 19 1 72 /1 97 19 3 74 /1 97 19 5 76 /1 97 19 7 78 /1 97 19 9 80 /1 98 19 1 82 /1 98 GRAINS+OILSEEDS 19 3 84 /1 (000 MT) Argentina: 98 19 5 86 /1 98 19 7 88 /1 Production Grains and Oilseeds 98 19 9 90 /1 99 19 1 92 /1 99 3 Expon. (GRAINS+OILSEEDS) 19 94 /1 99 19 5 96 /1 99 19 7 98 /1 99 20 9 00 /2 00 20 1 02 /2 00 20 3 04 /2 00 20 5 06 /2 00 7
  12. 12. Indices of world prices, REER and Domestic Relative Prices (2001 Q1=1) 3 2.5 2 1.5 1 0.5 0 6 7 8 9 0 1 2 3 4 5 6 7 8 96 97 98 99 00 01 02 03 04 05 06 07 I9 I9 I9 I9 I0 I0 I0 I0 I0 I0 I0 I0 I0 III III III III III III III III III III III III REER index (CPI based; against US$) Relative prices agriculture/non agriculture World Agricultural Prices (Real; deflated by CPI-US)
  13. 13. Legal Issues in ER Policies GATT se e al references to IMF and exchange rates. several efe ences e change ates Particularly, Article XV. Exchange Arrangements. “4. Contracting parties shall not, by exchange action, frustrate the intent of the provisions of this Agreement, f t t th i t t f th i i f thi A t nor, by trade action, the intent of the provisions of the Articles of Agreement of the International Monetary Fund.” F d” IMF: Article IV of the IMF's Articles of Agreement IMF s “Obligations Regarding Exchange Arrangements.” The Decision on Bilateral Surveillance, approved by IMF Board June 15, 2007, which complements the IMF s IMF's multilateral surveillance. Replaces the 1977 Decision. (only covered surveillance over exchange rate policies; the new Decision is broader). Calculations of fundamental misalignment
  14. 14. Communication W economists tend to talk in terms of We i t t d t t lk i t f distortions and gains in welfare… Losses are b tt attention getter L better tt ti tt “Tell me where it hurts” paper Need t d b t th N d to debate the same “values” “ l ” Food security (paper with cluster analysis) Poverty (microsimulations; careful with labor market modeling) Multifunctionality (“That was then and this is now” paper) Livelihood or survival strategies (“Thinking Inside the Boxes” paper)
  15. 15. Conclusions G tj b t t ti f l Great job at constructing useful indicators with large coverage (time, country, products) Need to better understand links to agricultural growth and trade… Consider price effects but also income effects; broader framework with other macroeconomic and growth policies… policies For trade negotiations, ER issues are separate (although they may eventually converge…) As economists our research program and communication efforts must also consider ff “values” being debated…
  16. 16. Thanks....
  17. 17. 0 50 100 150 200 250 300 350 M1 1960 M2 1961 M3 1962 M4 1963 M5 1964 M6 1965 M7 1966 M8 1967 M9 1968 M 10 1969 M 11 1970 M 12 1971 M1 1973 M2 1974 M3 1975 M4 1976 M5 1977 M6 1978 M7 1979 M8 1980 M9 1981 Real Agricultural Prices M 10 1982 M 11 1983 M 12 1984 Metals M1 1986 M2 1987 M3 1988 M4 1989 Crude Oil M5 1990 M6 1991 M7 1992 M8 1993 M9 1994 M 10 1995 M 11 1996 M 12 1997 M1 1999 M2 2000 M3 2001 M4 2002 M5 2003 M6 2004 M7 2005 0 20 40 60 80 100 120 140 160 180 200
  18. 18. AFRICA: Agricultural Growth and NRA 0 5 1960-64 1965-69 1970-74 1975-79 1980-84 1985-89 1990-94 1995-99 2000-04 4.5 -2 4 -4 3.5 -6 3 -8 2.5 2 -10 1.5 15 -12 1 -14 0.5 -16 0 Africa NRA Africa Growth
  19. 19. LAC: Agricultural Growth and NRA 10 3.6 3.4 5 3.2 0 1960-64 1965-69 1970-74 1975-79 1980-84 1985-89 1990-94 1995-99 2000-04 3 -5 2.8 -10 2.6 -15 2.4 -20 2.2 -25 2 LAC NRA LAC Growth
  20. 20. ASIA: Agricultural Growth and NRA 15 5.5 10 5 5 4.5 0 1960-64 1965-69 1970-74 1975-79 1980-84 1985-89 1990-94 1995-99 2000-04 4 -5 -10 3.5 35 -15 3 -20 20 2.5 -25 -30 30 2 Asia NRA Asia Growth
  21. 21. -1 0 1 2 3 4 5 6 19 7 19 0 7 19 1 7 19 2 7 19 3 7 19 4 7 19 5 7 19 6 7 19 7 7 19 8 7 19 9 8 19 0 8 19 1 8 19 2 8 19 3 8 19 4 8 19 5 8 19 6 8 19 7 Aggregate Net Resources (% GDP) 8 19 8 8 19 9 9 19 0 9 19 1 9 19 2 9 19 3 9 19 4 9 Aggregate Net Resources and Transfers (% GDP) 19 5 9 19 6 9 19 7 9 Aggregate Net Transfers (% GDP) 19 8 9 20 9 0 20 0 0 20 1 0 20 2 0 20 3 0 20 4 05
  22. 22. -1 0 1 2 3 4 5 6 7 8 19 70 19 71 19 72 19 73 19 74 19 75 19 76 19 East Asia & Pacific 77 19 78 19 79 19 80 19 81 19 82 19 83 19 84 19 85 19 86 19 Latin America & Caribbean 87 19 88 19 89 Net Private Capital Flows 19 90 19 91 19 92 19 93 South Asia 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 Sub-Saharan Africa 02
  23. 23. 60 70 80 90 100 110 120 130 140 J a n -7 3 J a n -7 4 J a n -7 5 J a n -7 6 J a n -7 7 J a n -7 8 J a n -7 9 J a n -8 0 J a n -8 1 J a n -8 2 J a n -8 3 J a n -8 4 J a n -8 5 J a n -8 6 J a n -8 7 J a n -8 8 J a n -8 9 J a n -9 0 J a n -9 1 REER US Dollar (FedRes) J a n -9 2 REER US Dollar (FedRes) J a n -9 3 J a n -9 4 J a n -9 5 J a n -9 6 J a n -9 7 J a n -9 8 J a n -9 9 J a n -0 0 J a n -0 1 J a n -0 2 J a n -0 3 J a n -0 4 J a n -0 5 J a n -0 6
  24. 24. Tema 2: Sobreinversión Exceso de liquidez mundial generó sobre sobre- inversión en casas y propiedad inmueble en EEUU y otros países p Altos precios generaron efecto riqueza entre las familias norteamericanas (y otros países) y han permitido tomar prestado contra inmuebles, manteniendo el consumo Caída actual de propiedades impacta al revés: efecto “pobreza”, no ingreso disponible y efecto multiplicador negativo de la caída de la inversión inmobiliaria i ió i bili i Posible impacto sobre el sistema financiero norteamericano (similaridades con crisis de fines de 1980s)
  25. 25. Food Prices and World Growth 30 25 20 15 10 5 0 0 1 2 3 4 5 6 -5 -10 -15 -20 20 -25 Series1 Linear (Series1)
  26. 26. Metal Prices and World Growth 60 50 40 30 20 10 0 0 1 2 3 4 5 6 7 8 -10 -20 -30 Series1 Linear (Series1)
  27. 27. Oil Prices and World Growth 80 60 40 20 0 0 1 2 3 4 5 6 7 8 -20 -40 -60 Series1 Linear (Series1)
  28. 28. Change in NRA and Agricultural Growth in Developing Countries 6 y = 0.0368x + 2.9904 2 R = 0.0525 5 4 3 2 1 0 -20 -15 -10 -5 0 5 10 15 20 change NRA and growth Linear (change NRA and growth)
  29. 29. World and US Growth 8 7 6 5 4 3 2 1 0 -4 -2 0 2 4 6 8 World and US growth Linear (World and US growth)
  30. 30. -6 -4 -2 0 2 4 6 8 19 70 19 71 19 72 19 73 19 74 19 75 19 76 19 77 19 78 19 79 19 80 19 81 19 82 19 83 19 84 19 85 19 86 19 87 19 88 19 Real Interest Rate 89 19 Real Interest Rate 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05
  31. 31. ¿Posibles contrapesos (2) ? Pueden China o Japón mantener crecimiento mundial? No... Porcentaje del PBI Mundial P j d l M di l 0,35 0,3 03 0,25 0,2 0,15 0,1 0,05 0 China Japan European Union United States PBI en dolares PPP PBI en dolares corrientes

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