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International Monetary Fund. External Relations Dept.

The IMF is helping low-income countries hit by high food prices take appropriate policy action while providing financial assistance to some of the worst-affected nations, Managing Director Dominique Strauss-Kahn said.

International Monetary Fund. External Relations Dept.

Global food aid serves as a critical safety net for poor countries. But does food aid reach those who most need it when they most need it? And, more broadly, has it generally been effective in “smoothing” consumption patterns—that is, averting sharp changes in the overall availability offood? In a new IMF Working Paper, “Foreign Aid and Consumption Smoothing: Evidence from Global Food Aid,” Sanjeev Gupta, Benedict Clements, and Erwin R. Tiongson examine the cyclical properties offood aid and evaluate how successful it has been in helping the economies it targets.

Mr. Erwin H Tiongson, Mr. Benedict J. Clements, and Mr. Sanjeev Gupta
Global food aid is considered a critical consumption smoothing mechanism in many countries. However, its record of stabilizing consumption has been mixed. This paper examines the cyclical properties of food aid with respect to food availability in recipient countries, with a view to assessing its impact on consumption in some 150 developing countries and transition economies, covering 1970 to 2000. The results show that global food aid has been allocated to countries most in need. Food aid has also been countercyclical within countries with the greatest need. However, for most countries, food aid is not countercyclical. The amount of food aid provided is also insufficient to mitigate contemporaneous shortfalls in consumption. The results are robust to various specifications and filtering techniques and have important implications for macroeconomic and fiscal management.
Leif E. Christoffersen

The vast majority of the world’s poorest live in rural areas. There is no simple solution to alleviating the conditions in which they live, and any efforts made depend both on national and international commitment to the policies chosen. This article, the third in a series, reviews the approach evolved by the Bank since 1973, which essentially concentrates on developing the productive potential of the rural poor.