ARTICLE: “Zoellick Charts Inclusive Course At World Bank,” by Bob Davis, Wall Street Journal, 9 October 2007, p. A1.ARTICLE: “World Bank Neglects Africa Agriculture, Study Says,” by Celia W. Dugger, New York Times, 15 October 2007, p. A3.
SUNDAY MONEY: “For Emerging Markets, A Move Toward Maturity,” by Conrad De Aenelle, New York Times, 14 October 2007, p. BU7.
OP-ED: “World Bank Weary: Private lenders channel 300 times more capital to developing nations,” by Adam Lerrick, Wall Street Journal, 19 October 2007, p. A18.
Zoellick gets hammered for wanting to continue the World Bank’s connections to “middle economies,” or increasingly successful and stable emerging markets that I call New Core.
Zoellick, according to WSJ:
… says continuing to do business with countries like China and India will give the bank influence over their policies so their growing economic might won’t seem as threatening to the U.S. and Europe. “Frankly, we need more ways in the world for countries to work together on common problems, not fewer,” he says.
Like I’ve long said, one smart fellow.
It’s clear the WB doesn’t focus that much on ag in Africa, and count me among those who’d like to see more money in that effort, but you have to ask yourself what will change things more.
If the WB helps India and China rise without backlash from the West, that’s a huge good.
If the WB pushes the Old Core to cut ag subsidies, that alone will do much more than whatever meager money the WB can push into ag in Africa.
As Lerrick points out:
Nations moving up the economic ladder are weakening the bank’s hold. China, Brazil, India and Russia are funding infrastructure for even the poorest countries, to lock in access to raw materials and export markets. China alone will send $25 billion to Africa over the next three years, 50% more than the funds coming from the bank. Bank staffers label these latest lenders “rogue creditors.”
Back to the point I love to harp on: The Old Core will not be the economic agents of Gap shrinkage. Nor will their financed aid institutions. The New Core will.
Influencing that new connectivity is a good task for the WB. Zoellick is right to maintain the bank’s ties to the New Core.
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Comments (3)
Diversion of crops to biofuels in the US and Europe is accomplishing the reduction in dumping in Africa and making agriculture in Africa that much more economically sound. As more agricultural land in the United States is planted in corn that is make into ethanol, there is less corn, less wheat, less cotton and every other sort of crop that African farmers have to compete with in their own countries and on the world market.
No need to worry about US agricultural subsidies hurting Africa. That is becoming last century's problem.
African farmers have plenty of room to grow, both satisfying their own domestic food demands and in producing ethanol and biodiesel for domestic use and export.
Posted by Mark in Texas | November 4, 2007 5:59 PM
Mark -
Agricultural subsidies are only about politics, not good policy.
1. Corn is not an efficient source for the production of ethanol, in that more energy is required to convert corn to ethanol than the amount of energy derived from the ethanol. Sugar cane is a far more efficient source of ethanol, but relatively little sugar cane is grown in the US, so there is no lobby seeking subsidies. But there is a lot of corn grown here and those farmers can hire lobbyists, and hence, they get subsidies. And, look ahead to next century's problem - American corn growers receiving subsidies will gain an artificial advantage in the production of ethanol as compared to ethanol produced from sugar cane grown without subsidies in poorer countries of the world. The poorer countries get screwed and the world, including US consumers, winds up with less efficiency in the production of ethanol.
2. If you are saying that cotton production will end in the US because all of the farm land will be diverted to corn, then obviously, there will be no US cotton farmers left to receive any subsidies. However, I don't think that's going to happen. Lobbyists for US cotton growers will continue to press Congress for subsidies, so the laws of comparative advantage will continue to get screwed up, all to the disadvantage of cotton growers in Africa.
Fortunately, we now have a WTO that can overrule Congress on these sorts of things - a good example of how globalization requires institutions that enforce the rules that make the existence of "free markets" possible.
Agricultual subsidies make for bad economics in any century.
Posted by stuart abrams | November 5, 2007 11:08 AM
Mark,
Sounds like a nice concept, but I can find you loads of experts who would discount your comment as highly misrepresentative of reality.
Posted by Tom | November 17, 2007 2:34 PM