Hunger, Environment, Health & International Finance Institutions

by Dave Balaam

What follows is a summary of most of the literature I located pertaining primarily to the topic of hunger but also some materials dealing with environmental and health issues as well as the relationship of the crisis to international finance institutions. I discuss in some detail the hunger situation related to the Asian crisis, which is not altogether clear at this point. I then list a number of articles or web sites where I located this material so that you will be able to consult that literature for yourself. In most cases, I have hard copies of these materials, which I would be glad to share with you. I then list a number of other sources--some in annotated bibiographic form--that discuss the relationship of the environment, health, and international finance institutions to the Asian crisis.

I would like to thank Gianna Piccardo for assisting me in searching for this material this past summer.

Given the extent to which the Asian crisis is supposed to have hurt the Asian economies and helped displace so many people in the region, one would expect that levels of hunger if not serious malnutrition, would have significantly increased during the crisis (1997-99). However, I did not find any hard evidence (as of yet) that the level of hunger and malnutrition increased that much during the crisis. If anything, the evidence is mixed at this point. I suspect that information on hunger is either not reported or that it is still in the process of being processed and analyzed. The World Bank, IMF, and other agencies tend to run two or more years behind in their coverage of hunger and health problems. A few reports (see below) base their findings on hearsay evidence or what appears to be a trend in the making and to not deal with any real numbers covering either total national or regional amounts of hunger related to the crisis itself. I also suspect that some people in urban areas who may have lost their jobs and become part of the hungry went back to the countryside and may not be considered to be hungry if they were taken care of by family members or others in their new location.

A good example of a report that follows this line of argument was done by the International Rice Research Institute (IRRI) (see list of site links below). In "Rice Gets Thailand Through Crisis" the IRRI argues that on the one hand the crisis contributed to an almost doubling in the price of rice in Thailand from 10 to 17 baht per kilogram. On the other hand, instead of not being able to purchase rice, urban dwellers in particular tend to purchase higher priced rice and instead cut down on their consumption of vegetables, meat, and fish. In the case of Thailand the crisis tended to contribute to malnutrition (via an imbalance in the consumption of nutrients) more than it did hunger or starvation per se. The IRRI estimates that some 12-18 percent of urban people left Bangkok and returned to their home villages, putting pressure on local villages to provide them with jobs and other opportunities. (See "Tales from Four Cities" which discusses the impact migration from urban areas has had on the countryside).

Finally, the IRRI reports that ironically, the crisis benefited Thai rice producers who profited from a nearly doubling in rice prices over the last two years. Some farmers even expanded rice-producing areas, even if many of them were hurt by last year's drought. Thailand retains its rank as the world's largest rice exporter (exporting about 5.5 million tons a year) with earnings from rice exports helping relieve Thailand of its financial debt.

In "The Politics of Rice" the IRRI discusses in more detail the importance of rice. In Asia the IRRI estimates that rice provides 30-76 percent of people's daily calories. And high rice prices often generate civil unrest. Urban workers and the rural landless spend 50-70 percent of their total income on rice and cannot easily tolerate drastic price increases. Making sure people have enough rice constitutes one of government's major roles in different Asian economies as rice prices are linked to the competitiveness of many of these economies in the international economy. Most Asian countries "grow most of their own rice, maintain a public-sector monopoly in external trade, and hold rice stocks to dampen price fluctuations." Yet Malaysia imports 40 percent of its rice, while Hong Kong and Singapore also import large quantities.

In "Facts of Rice" the IRRI takes another tact in the study of hunger in the region by suggesting that much of the problem is not due to the crisis as much as it is overpopulation in that region of the world. Up until recently the "Asian miracle" has helped keep people fed via the application of Green Revolution technology to rice production in the region. Since 1965 farmers have grown 2.5 percent more rice each year feeding some 600 million people. Bountiful harvests in the late 1970s and 80s were attributed to high-yielding modern plant varieties, more irrigation, and access to credit, resulting in a drop in rice prices. However, "1.3 billion still live in poverty while 840 million suffer from hunger, and 2 billion are malnourished." The Asian crisis contributes to increased levels of poverty, the IRRI worries about another billion rice eaters by the year 2020 when more than four billion people--more than half the world's population--will depend on rice. Population growth rates continue to be 1.5 to 2.8 percent a year in the region. While the IRRI admits that growth rates have dropped along the lines of UN reports, "it's already too late to stop the massive tidal wave of humanity." An expanded population base then is most likely to be poor generating increased demand for rice by 65 percent in the Philippines, 51 percent in Bangladesh, 46 percent in India, 45 percent in Vietnam, and 38 percent in Indonesia.

The IRRI isn't sanguine about the ability of farmers to keep up with demand. They face competition from more lucrative crops that use field space, the lack of water in almost all nations, and the trend of young people leaving the farm sector. Demand in urban sectors is likely to be met by Australian and U.S. exports. Instead of helping to meet demand the IRRI goes so far as to predict that cheap imports that will result from implementation of the Uruguay Round of the GATT are likely to flood domestic markets and drive down prices, but also encourage "farmers to abandon their fields and seek employment in urban factories, and panicking governments about food security." Only Myanmar and Cambodia are likely to be able to significantly expand rice production. For now, the IRRI would like to find more ways to "grow more rice on limited land, in ways that do not harm the environment, and that benefit both farmers and consumers and the rural and urban poor."

Interestingly, the IRRI believes that the relationship of rice to free trade is a complicated problem. Compared to wheat and maize, the world rice market is small and unstable. Only 6.6 percent of the world's rice crop is sold on the world market (1999). World rice prices are quite volatile with high prices likely in the event of major harvest failures. Dependence on trade is likely to increase the risk that the poor of urban and rural areas will feel the effects of higher prices, weakening food security. An example the IRRI uses is the impact of the Asian crisis on Indonesian rice prices. Government stabilization policies helped counter a plunge in the value of the rupiah from 2,500 to 15,000 to the dollar. Instead, prices only increased by "less than a factor of six and was not abrupt." The IRRI wants to balance free trade policies with domestic measures that sustain political and economic stability. After the crisis the developed countries should buy more of their supplies from rice surplus producing developing countries. Finally, the Asian countries must do more to promote regional solutions to their rice production and other hunger related problems.

In many parts of Asia issues of food production and hunger did come up from time to time in the literature that focused on food riots (see Philip McMichael) that followed from stringent terms for IMF loans--in Indonesia for example--or often in the context of criticisms of the impact WTO or IMF policies were likely to have on small farmers. The issue of whether liberal economic policies can or will in the future benefit Asia are taken up in Walden Bello's "The WTO's Big Losers." Bello argues that as we near new WTO negotiations (in Seattle this Fall) "the countries of East Asia are divided on whether to support further liberalization of agricultural markets." It seems that the Japanese and South Korea governments oppose more liberalization for fear of its impact on their rice farmers. Other Southeast Asian nations (and the U.S. on this issue) who are also members of the (pro-liberal) Cairns Group support broader and faster liberalization of agricultural markets along with an end to export subsidies and a decrease in production subsidies in the North. Bello goes on to criticize liberal trade policies in Southeast Asia because he argues, they assist mainly cash-crop producers and processors such as Malaysian palm-oil plantations, Philippine coconut-oil exporters and Bangkok-based Thai rice middlemen. The crux of his argument is that "the vast majority of unorganized small farmers in these countries are harmed by this position" (of promoting liberal trade policies). What the North gains by these policies is access for their rice and corn exports in Asia. Small farmers can't compete with American agricultural product dumping in Asia or with Asian agro-exporters.

Bello would like us to take a second look at arguments in support of agricultural trade protection made by the Japanese and South Koreans. He argues that protection can be "multifunctional" if it "protects biodiversity, guarantees food security, promotes rurual social development," and is part of a nation's cultural heritage. Without protection we should expect the "transmogrification" of small farmers into "marginalized masses pouring into Asia's big cities."

From the perspective of the U.S. Department of Agriculture the Asian crisis spelled serious trouble for U.S. commodity producers and exporters. In an extensive report entitled The Future Stakes for U.S. Food and Agriculture in East and Southeast Asia, Steven Breth and Associates edited a compilation of small studies done for the Food and Agriculture Committee (FAC) of the National Policy Association of the USDA on the prospects for U.S. producers in Asia with an eye to the impact the crisis had on world and U.S. trade patterns. Their main conclusions were three: 1) that the U.S. food and agricultural industry has big stakes in Asia, 2) that policies that free trade and generate economic growth are keys to unlocking the potential of the Asian market, and finally 3) that changes in U.S. development assistance would help U.S. firms boost sales to the region. In short, the Asian Crisis presents the U.S. with a marketing problem. In dollar terms the report estimates losses of $2 billion in agriculture exports or 3.4 percent of sales in 1998 had their been no crisis. The report expects recovery of the Asian economies after 1999, but also argues for financial assistance to soften the blow of recession on the Asian economies. IMF, World Bank, and other sources of credit are supported in the report to the extent they are likely to make it easier for Asian nations to be able to import U.S. agricultural commodities.

One nation that concerns many USDA experts is China, which has adopted and maintained a policy of 95 percent food self-sufficiency. This hurts U.S. exporters who have anticipated large increases in imports of U.S. agricultural and food products by China. At the same time China is continuing to adopt market reform policies to its domestic agricultural policies which promise to open up its markets albeit without raising import levels. Indonesia also worries U.S. exporters because of its policy to limit imports of U.S. commodities until such time that the crisis passes.

Locally, the crisis also worries Washington state officials. A 1998 state press release states that Asia accounts for 30 percent of all U.S. exports and 40 percent of all agricultural exports. Of the 50 states, Washington ranks second in exports to Asia. In 1996 Washington exported $13.9 billion in merchandise to Asia, accounting for 54.6 percent of the state's total merchandise exports. These exports also accounted for 8.7 percent of the state's gross state product. The largest Washington state industries with a stake in Asia are transportation, lumber and wood products, and the fishing industry. Japan and South Korea are particularly strong importers of Washington state products (e.g., apples). Finally, Washington state officials worry that the Asian crisis could easily spread to other nations and hurt Washington's economy even more.

Outside of specific industries, there is little evidence that the crisis seriously impacted the Washington economy overall, which continued to remain quite strong. State unemployment rates were some of the lowest in the nation during the crisis. It is likely that the crisis helped shift Asian imports away from U.S. products in general, however, most of those products seemed to have found other markets.

Note: Many of the hyperlinks below have expired since this article was first posted on the internet. The broken links have been deactivated..

Hunger References

  1. Walden Bello, "The WTO's Big Losers," 6/24/99
  2. Steven A. Breth, James A. Auerbach, and Martha Lee Benz, eds, The Future Stakes for U.S. Food and Agriculture in East and Southeast Asia, Food and Agricultural Committee, National Policy Association, U.S. Department of Agriculture, NPA Report #291, Washington D.C., 1999.
  5. http://www.hunger/politics.htm
  9. Philip McMichael Development and Social Change: A Global Perspective (Thousand Oaks, Ca: Pine Forge Press, 1996)
  10. Especially pp. 203-204 where he outlines some 146 incidents or food riots between 1976 and 1992.

The Environment: Links and other Sources

  4. Hettige, Hemamala, Mainul Haq, Sheoli Pargal, and David Wheeler. 1996
    Determinants of Pollution Abatement in Developing Countries: Evidence from South and Southeast Asia." World Development 24: 1891-1904.
  5. Jacob Park, "The Other Asian Crisis" The Washington Quarterly 22, Spring 1999, p. 7.

Health Issues References

  1. Kent Buse and Catherine Gwin, "The World Bank and Global Cooperation in Health: the Case of Bangladesh, The Lancet, 351, Feb 28, 1998, p. 665. Buse and Gwin report that the World Bank has assumed an increasingly larger role in financing but also coordinating world health projects. The case of Bangladesh is explored, if only briefly.
  2. Kamran Abbasi, "Healthcare Strategy," British Medical Journal, 318, April 3, 1999, p. 933. This is an overview of the World Bank efforts to work in conjunction with the World Health Organization to shape the delivery of health care. Nothing specifically about Asia however.
  3. Charles Henderson, "IMF and World Bank Policies May Have Contributed to Spread of HIV, AIDs Weekly, May 29, 1995. Interestingly, in this article Henderson argues that the IMF and WB have helped create social and economic forces that may have contributed to the spread of HIV infection in developing countries. He attacks structural adjustment policies (SAPs) for increasing the debt of developing nations. Migration of displaced rurual people to urban areas "has important implications for the AIDs epidemic." Urban centers are the focal points of the drug trade and sex industry. Health spending for all developing countries (except India and China) declined from 5.5 to 2.8 percent of national budgets between 1972 and 1988. Interesting, even if not focused on the Asian crisis per se!
  4. Charles Henderson, "World Bank Urges Greater Efforts to Prevent Infections in Developing Countries, AIDs Weekley, Nov 24, 1997. Because 90 percent of all HIV infections occurs in developing countries, the World Bank recommends more intensive government prevention programs in those regions of the world. India and China's population worries the WB, along with Bangladesh, Indonesia, and the Philippines, among others in other regions of the world.

World Finance Institutions References

  5. Bob Davis and Jonathan Friedland and Matt Moffett, "Good Money Gone Bad, Tacoma New Tribune, 8/30/98, B. 8.
  6. Edward Gargan, "Asian Nations Affirm IMF as Primary Provider of Aid, New York Times, 11/20/97 p. c2.
  7. Cameron Barr, "World Starts to Agree on Braking Money Flows, Christian Science Monitor, 3/3/99 p. 1.
  8. Paul Lewis, World Bank Worried by Pressure for Quick-Fix Fiscal Action, New York Times, 10/5/987, p. A.6.
  9. "A Changed World for the IMF" New York Times, 10/5/98 p. A.22.
  10. Nicholas Kristof, "Japan Sees Itself as a Scapegoat of Washington in the Asia Crisis" New York Times, 9.2.98 A.1.
  11. David E. Sanger, "The Global Search for an Economic Parachute, New York Times, 9/2/98, A.1.
  12. Sheryl WuDunn, "Asia's Tigers Lick Wounds and Worry" New York Times, 9/16, 98, C.1.