Linkages
between Economic Growth and Food Security:
An
Eclectic Perspective
We
live in a world where of the 80,000 edible plants
used for food, only about 150 are being
cultivated, and just eight are traded globally.
In a world where we produce food for 12
billion people when there are only 6.3 billion
living, 800 million suffer from malnutrition.
Vandana
Shiva. World-renowned environmental leader
(Manifesto on the Future of Food & Seed,
2007).
Professor
Desta, Asayehgn
Abstract
The
causal linkage between food security and economic
growth hasn’t been fully resolved.
That is, does food security contribute to
economic growth or does economic growth result in
food security; or is there a two-way causal
relationship between economic growth and food
security? The causality has not yet been
ascertained. Drawing on previous research and
insights, this study attempted to find and
understand the relationship between food
availability and economic growth. A
review of existing secondary studies indicates
that food insecurity, low food intake and the
variable access to food endemic in Ethiopia, is
not due to the lack of economic growth and income
distribution.
Rather, excluding transitory food
insecurity, chronic food insecurity in Ethiopia
seems to derive directly from inflationary
pressures, resulting from excess in the money
supply, population growth, budgetary deficits,
imprudently addressing the “supply side” of
food production during favorable seasons, the lack
of adequate storage systems for stocking food
items that could be used to tackle food insecurity
during shocking periods, a fragile natural
resource base, and weak institutions. Particularly
for policy makers, the study’s findings
contribute to an understanding of some of the
crucial factors that could lead to a reduction of
food insecurity and help to design advance
strategies to alleviate food insecurity in
Ethiopia.
Keywords: food security,
economic growth, income distribution, inflationary
pressure, population growth rate, budgetary
deficits, supply side
Introduction
Despite the fact that enough food
exists for the entire world’s population,
“…almost one in seven people around the world
are chronically hungry, lacking enough food to be
healthy and lead active lives” (World Bank,
2007). More specifically, an authoritative
estimate by the Food Agricultural Organization
(2010) indicates that there are more than 925
million people in the world who are food insecure.
Nevertheless, what is amazing is that Ethiopia
with 100 million people has attained constant
economic growth and recorded an income
distribution index (based on data obtained
from Ethiopian government statistical agencies and
World Bank country departments) stands at 0.29.Interestingly
enough, Ethiopia’s Gini-coefficient index of
0.29 is far below the Gini-coefficient of newly
industrialized nations, indicating that the income
attained from economic growth in Ethiopia has been
fairly distributed (World Bank, 2010 and Desta
2011). More specifically, it is stated by Teshome
of the World Bank (2016) that:
Since
2000, when Ethiopia had one of the highest poverty
rates in the world, households have experienced a
decade of remarkable progress in well-being and
the country has seen a 33 percent reduction in the
share of the population living in poverty.
Agricultural growth drove reductions in poverty,
bolstered by pro-poor spending on basic services
and effective rural safety nets. This progress has
been underpinned by strong and sustained economic
growth averaging 10.9 percent annually.
Nonetheless,
before the recent adverse climate conditions
caused by El
Nino that contributed to drought, Ethiopia’s
dramatic economic growth in tandem with a more or
less equitable income distribution seems to
camouflage the fact that a staggering number of
people are experiencing malnutrition and outright
starvation. That is, the impact of the impressive
economic growth has been negligible on food
security. For instance, the average number of food
insecure people in Ethiopia was about 7 million
from1991 to 2003, 4 million between 2003 and 2014,
8.5 million in 2008, and is more than 10 million
between 2015 and 2016 (See for example, Adugan,
2016).
Puzzled
by this paradoxical (asymmetrical) connection
between economic growth and food security needs, a
number of scholars have questioned and seriously
challenged the Ethiopian Government. As stated by
Adugan (2016), because of the food insecurity that
has developed recently because of El
Nino, some scholars have tried to question the
so called economic growth achieved in Ethiopia
during the last twelve years. According to the
“Aid for Africa” publication of February 5th,
for example, they have questioned how millions of
Ethiopians could be at risk of starvation
“…when in recent years Ethiopia was lauded as
a country on the rise—one of the bright spots in
Sub-Saharan Africa?” Some
critics go one step further and loudly argue that
unless the data were “cooked” to portray an
impressive image of Ethiopia to the outside world,
it is not possible for the Ethiopian economy to
grow at more than 10 percent per year for the last
decade when so many of Ethiopia’s
poor
are facing chronic starvation as a persistent
characteristic of their life.
In
partial agreement with what the critics have been
saying about food insecurity in Ethiopia, Teshome
somehow seems to have changed his mind and argues
that, “…
poverty remains widespread in Ethiopia. The
poorest households have become poorer than they
were in 2005; high food prices that improve
incomes for many poor farmers make buying food
more challenging for the poorest” (2016).
Contesting
the argument that economic growth contributes to
food security, Torero (2014) argues that rather
than economic growth contributing to food
security, it is food security that induces
economic growth.
Actually, Torero persuasively argues that
economic growth is only sustainable if developed
countries try to achieve food security as a base
for their citizens. In his empirical findings,
Torero establishes that “… a 10 percent
increase in economic growth only reduces chronic
malnutrition by 6 percent” (2014). After
establishing that there is no linear correlation
between economic growth and food security, Torero
asserts that this asymmetrical relationship
between economic growth and food security
indicates that economic growth by itself
won’t resolve the problem of chronic
malnutrition but needs to be taken as one of the
key variables in any food security strategy
(Torero, 2014).
This
study, therefore, draws on previous research and
insights to develop an eclectic framework that
could drive or determine the relationship between
food insecurity and economic growth. Exploring the
linkages between economic growth and food
security, the study attempts to find and
understand other eclectic perspectives that could
have an impact on food availability. Particularly
for policy makers, finding and understanding some
of the cardinal factors that contribute to chronic
food insecurity could help them to design
strategies to create the conditions necessary to
alleviate chronic food insecurity.
Literature Review
Economic growth in less developed
countries is highly dependent on food production.
To measure economic growth, the Gross Domestic
Product (GDP) or the market value of goods and
services produced by a country in a given period
of time is used. While producing agricultural
products, since less developed countries are
dependent on natural resources, less developed
countries contribute to resource scarcity,
ecosystem degradation, and climatic challenges. In
order to assess the status of food security, the
estimation of GDP needs to integrate income
distribution, investment in human capital,
non-marketable products, and other positive and
negative externalities.
Historically,
the concept of food security originated as a
result of the international global food crisis
that occurred during the mid-1970s and 1980s.
During these decades, food security mainly focused
on the status of the supply of food availability
and attempted to incorporate the effect of price
stability with food security. A case in point
is, among the food insecurity that emerged
globally, the famine, hunger and food crisis in
1974 contributed to the downfall of the Haile
Selassie regime in Ethiopia.
In addition, the drought of 1984 during the
authoritarian Derg regime contributed to the death
of more than one million and left many Ethiopians
destitute.
As a
result of the famine that became rampant globally,
the concept of food security was elaborated by a
number of scholars. For
example, while operationalizing food insecurity,
the Food and Agricultural Organization (FAO)
focused on securing
access to food, necessary for an active,
healthy life by the most vulnerable
people. Around, 1994, a broader perspective of
food security was adopted by the United Nations
Development Program to include food security as a
necessary element of human rights. Starting
In 2001, the concept of food security was
further expanded to include food and nutrition
status (food availability, food access, food
utilization) and stability
(vulnerability and resilience), and food security
was expected to exist “when all people, at all
times, have physical, social and economic access
to sufficient, safe, and nutritious food that
meets their dietary needs and food preferences for
an active and healthy life” (FAO 1996 and DFID,
2003).
As
shown in Table 1, the operational definition of
food security was designed to include:
1) availability of sufficient quantities of
food of appropriate quality, mainly supplied
through domestic production at prices that the
poor can afford,
2) access by households and individuals to
adequate resources or jobs and income that give
poor people the means to
acquire appropriate
foods for a nutritious diet, and 3)
utilization of food through adequate diet, water
sanitation, and health care (United States
Department of Agriculture, 1996).
Table 1: Four
main Dimensions of Food Security
Physical
availability of food
|
Food
availability addresses the “supply side”
of food security and is determined by the
level of food production, stock levels and
net trade (Export-Import)
|
Economic and
Physical Access to food
|
An
adequate supply of food at the national or
international level does not in itself
guarantee household level food security.
Concerns about insufficient food have
resulted in a greater policy focus on
incomes, expenditure, markets and prices in
achieving food security objectives.
|
Food Utilization
|
Utilization
is commonly understood as the way the body
makes the most of various nutrients in the
food. Sufficient energy and nutrient intake
by individuals is the result of good care
and feeding practices, food preparation, and
diversity of the diet and intra-household
distribution of food. Combined with good
biological utilization of food consumed,
this determines the nutritional status of
individuals.
|
Stability of the
other three dimensions over time
|
Even
if food intake is adequate today, it is
still considered to be food insecure if
there is inadequate access to food on a
periodic basis due to adverse weather
conditions, political instability or
economic factors (unemployment, rising food
prices).
|
SOURCE:
The EC-FAO Food Security Programme (2008).
“Food Security Information for action:
Practical Guides.”
Grounding
their argument on the human rights clause but
stressing more on the “Pro-poor growth”
strategy, Dreze and Sen (1989), forcefully argue
that economic growth in itself is not sufficient
enough to ensure individual food security and
nutrition.” Growth, of course can be very
helpful in achieving development, but this
requires active
public policies to ensure that the fruits of
economic growth are widely shared, and also
requires—and this is very important –making
good use of the public revenues generated by fast
economic growth for social services…” (Dreze
and Sen, 2011).
To
explain the seeming paradoxical dilemma that
exists between food security needs and economic
growth, routes by which this dilemma could be
resolved, along with other factors that contribute
to hunger and food insecurity, need to be explored
in detail. As a result, food consumption in
Ethiopia is seen as a function of income
distribution, inflation, population growth, and
supply of food production. In addition to the
possible linkages that exist between food security
and economic growth, the distinction between
chronic and acute insecurity needs to be
elaborated. While chronic food insecurity is
likely to originate because of a lack of assets,
acute food insecurity on the other hand, emanates
from unusual shocks, such as drought. Furthermore,
a combination of short-term and long term
strategies is needed to form policies to tackle
food insecurity needs.
A) Income
distribution:
Food security is to a great extent affected by
economic growth and income distribution.
For example, Timmer (2004) persuasively
argues that “improved food security stems
directly from a set of government policies that
integrates the food economy into a development
strategy that seeks rapid economic growth with
improved income distribution.” With the income
distribution policies that Timmer portrays,
economic growth and food security mutually
reinforce each other, because poor countries in
East and Southeast Asia have addressed these steps
concurrently for about two decades to increase the
production and distribution of food and have
escaped from hunger (2004).
Given
Timmer’s point of view, we could stress that
though the Ethiopian economy has performed
strongly and the income gap between the lower and
upper households has been narrowing, then, the
deplorable food insecurity that Ethiopia’s poor
have been facing for the centuries before the
havoc of El Nino, could be attributed to a
substantial decline in the purchasing power of the
Ethiopian currency known as the birr.
B)
Inflation: As
documented in the Pigou’s wealth effect theory,
a higher price level contributes to
lower real wealth thereby inducing to lower
consumption spending (see Mankiw, G. and Scarth,
W, 2011). As stated by Durevall and Sjo (2012),
the Ethiopian Real Gross Domestic product has
experienced strong economic growth, for example
from in 5.9% in 2000 to 7.5 % in 2011. Along with
higher economic growth, Ethiopia has been facing
an overheated economy due to inflation volatility.
For example, the inflation rate in Ethiopia
increased from 0.3 percent in 2000 to 36 percent
in 2011. Since the financial global crisis in
2008, Ethiopia has been faced with an average
inflation rate of 17.65 percent from 2006 until
2016. Therefore the “… High and volatile,
inflation is a threat to good economic performance
and has negative effects on many of the poor” (Durevall
and Sjo (2012).
After the 2008 global crisis and the
soaring price of oil and food items, inflation in
Ethiopia has become rampant. At the peak of the
global food crisis, in July 2008, “…annual
food price inflation surpassed 90 percent” (Durevall
and Sjo, 2012).
As
a result of this unprecedented rise in inflation
starting in 2006, in Ethiopia many people, more
particularly, those
with low incomes and retirees have lacked enough
to buy the food needed for survival (See Desta,
2014). As
stated by Durevall, D. Loening, abdJ.
Birru, Y, (2010), with the exception of
Zimbabwe and some small island economies that had
the strongest acceleration in food price inflation
in Sub-Saharan Africa, Ethiopia had the strongest
acceleration in food price inflation.
A caveat needs to be added that though
there is no consensus on the causes of the rise in
inflation, an empirical study by Desta (2014)
indicates that Ethiopia’s inflationary situation
is the result of an expansionary monetary policy,
primarily due to large government expenditures on
infrastructure and budget deficits. Rising food
prices led to devaluations and feedback effects on
consumer prices in general. At the same time, it
is possible to argue that government budget
deficits caused by an increase in large-scale
capital projects and military spending might also
have contributed to the extreme inflationary
conditions in Ethiopia.
C) Population Growth: Another
dimension of food insecurity popularized by Thomas
Malthus that contributes to food insecurity is
population growth. The Malthusian “approach is
focused on the (dis)equilibrium between population
and food. In order to maintain equilibrium,
the rate of growth of food availability
should not be lower than the rate of growth of the
population” (Burchi and DeMuro (2012). Stated
differently,
on the demand side, the reason why a number of
countries with the highest numbers of people face
food insecurity is because they have high
fertility rates and rapid population growth. Given
this, it is possible to assert that an increasing
population growth rate has a substantial negative
impact on economic growth.
Based on the latest estimates,
the current population of Ethiopia is
101,481,
000 and the annual rate of growth rate is close to
2.53percent (Countrymeters, 2016). Given this
possible projection, the Ethiopian population
would double in about 28 years and its effect on
food security would be insurmountable. The density
of population impacts the productive capacity of
Ethiopia and will continue to affect the demand
for food for decades to come. That is,
“population increase reduces landholdings
further and places intolerable stress on an
already fragile natural resource base.”(Devereux,
2000).Therefore, it is vital
that Ethiopia’s demographic projections be
incorporated in the developmental plans of the
country to help policy makers design strategies to
improve agricultural production and attempt to
help Ethiopia achieve greater food security (See
for example, Population Action, 2015).
D)
Sufficiency of Supply: As stated by Torero
(2014), the UN Food and Agriculture Organization
assume that high rates of malnutrition can lead to
a loss in gross domestic product (GDP) of as much
as 4 to 5 percent per year. Therefore, to achieve
food security for its productive citizens, a
nation needs to increase agricultural production
through research and innovative technology.
Furthermore, as a means of optimizing their food
production, developing countries must use drought
–resistant crops and soils and invest in rural
infrastructure by building roads, irrigation, and
storage facilities (Pieters, Guariso, and
Vandeplas, 2013).
Although
attempted, the Ethiopian government needs to take
further steps to amass food stocks and create
early warning systems to handle an unexpected
drought. For instance, in 2015-16, experts
estimated that Ethiopia would need up to $1.4
billion to cope with the El
Nino drought. However, much more was needed
because the Ethiopian Government only committed
about $200 million and another $170 million was
delivered by philanthropic international
communities or NGOs (Africaaid, 2016).
Given
that the majority of Ethiopian households are
engaged in agriculture and live in rural areas,
additional drivers of poverty reduction, more
particularly, those that encourage some type of
structural transformation of the Ethiopian
agricultural system is worthwhile (2016). Without
stable and long lasting food security that
contributes to physical and mental wellbeing, the
economic growth of Ethiopia cannot be sustained.
Though food production in Ethiopia is
unpredictable, it is persuasively argued by Torero
(2014) that “strategically designed, food
security is central to both short and long-term
economic growth.”
In
agreement with the argument that agriculture is
the driving force for the economy and a means of
ensuring household food security, the Ethiopian
Government initiated Agriculture Development Led
Industrialization (ADLI) in 1994. The
components of ADLI included: a) input provision to
peasants, b) promotion of small-scale irrigation,
c) improved livestock herds, d)environmental
protection and natural resource management, e)
grain marketing efficiency, e)women’s
participation in agriculture, and f) expanding
rural and feeder roads (Devereux, 2000). However,
since the ADLI was very low in details, it was
never fully implemented (Rahmato, 1994).
It
has become debatable whether those who
participated in the programs were: 1) poor and
chronically food insecure, 2)
forced to resettle in other areas, 3)
getting sufficient resources and wages in exchange
for their services, and 4) productive and
sustainable. Since
2003, the Ethiopian Government in close
collaboration with development partners (i.e.,
United Nations organizations such as the office
for the coordination of Humanitarian Affairs,
NGOs, the World Bank, International Monetary Fund
(IMF), US international aid Program, etc.), to
prepare a new Coalition for food Security in
Ethiopia.
The
foreign donated food security assistance package
included providing fertile
farm lands to settlers, seed, oxen, hand tools,
access to clean water, heath facilities, feeder
roads and other capacity building facilities. The
food Security program (FSP) was targeted to give
assistance to more than 6million beneficiaries
located in 319 chronically food insecure districts
(woredas).As
outlined by the World Health Organization (WHO),
the most vital components of the Food Security
Program (FSP) resettlement programs in Ethiopia
include: 1) Productive Safety Net Program (PSNP),
2) Household Asset Building Program (HABP), and 3)
Complimentary Community Investment (CCI).
1)
Productive
Safety Net Program (PSNP): Established in 2005, the
Productive Safety Net Program (PSNP) is “one of
the largest safety net programs in the world” (USAID,
2016). It was established by the Ethiopian
Government to build the resilience capacity of
chronically food insecure communities to protect
them from shocks and climate changes and to give
assistance to food-insecure households for six
months of the year for up to five years, to
prevent depletion of resources in farm activities
such as crops and livestock at the household level
(i.e., the beneficiaries were chronically
food-insecure households). More specifically, in
addition to direct sustenance given to the
elderly, the disabled (handicapped), sick,
pregnant women etc. the chronically food- insecure
able-bodied participants were required to engage
in labor intensive public works projects (such as
water harvesting, irrigation, feeder roads)
in-exchange for food-for-work programs or
cash-for-work, possibly financed by monetizing
food aid (Devereux,
2000).
2)
Household
Asset Building Program (HABP): Officially it was started in June
2013 by the Ethiopian Government, and the USAID
Ethiopia mission in collaboration with nine other
donor partners (USAID, 2016).
Its objectives were to improve natural
resources and food security by providing inputs to
increase livestock and crop production, and by
establishing training and market information for
food insecure households.
3)
Complimentary
Community Investment program (CCI):
This
program was mainly tailored to create community
assets and complement household investment through
ecosystem rehabilitation strategies. Among other
things, such programs included soil and water
management, plant nutrient generation and
recycling, planting drought and pest resistant
crops etc.
The
donors who gave food to Ethiopia may have had
gracious intentions. However, it has become
debatable whether the participants were actually
chronically food insecure, or were getting
sufficient resources and wages in exchange for
their services. Therefore, Ethiopia, as an aid
recipient country, needs to be aware that external
sources of food donations at times can lead to
disruption of the local food market and might even
become a disincentive by discouraging local
farmers from attempting to produce their crops and
to store the excess for bad seasons. As stated by
Devereux (2000), “…while safety nets risk
perpetuating dependency on two levels:
beneficiaries will remain trapped in unviable
livelihoods and be dependent on relief
indefinitely, and governments and donors will have
little incentive to invest in agriculture and
other sectors.” Moreover, unlike the current
top-down methods that are used to design safety
net programs for chronically food insecure
peasants, it would be better to use a bottom-up
strategy because the starving poor people
“…know best for themselves what they need, and
will be motivated most thoroughly to productive
effort if they participate actively in decisions
regarding their development” (Pausewang, S. et
al, 1990).
Summary and Conclusions
The causal linkage between food
security and economic growth is not yet fully
resolved. That
is, whether food security contributes to economic
growth or economic growth induces food security or
whether there is a two-way causal relationship
between the two variables is not yet causally
ascertained. However, a review of existing studies
seems to ascertain that food insecurity in
Ethiopia is not due to the lack of economic growth
and income distribution. Rather it seems to be
originating because Ethiopia has failed to
properly ground itself with the necessary
financial infrastructure to tackle the increase in
inflation, resulting from an excess in the money
supply. The sustained budget deficits, increase in
population, and not stocking food production
(supply side), necessaryduring favorable seasons
as a means of mitigating of unanticipated natural
disasters during unfavorable
seasons, are not addressed sufficiently.
Though
not fully borne out by rigorous empirical studies,
proponents of a neoliberal trade theory propagate
the idea that an increase in trade and decrease in
government regulations, would decrease food
insecurity and alleviate rural poverty. Without
designing adequate methods for solving the food
crisis, it is sad that this type of unwarranted
assumption has been hijacking the global food
supply. Taking
these assumptions for granted, it is an irony to
notice that poor countries are faced with the
dilemma of whether they should deny their citizens
their fundamental right to eat or rather
concentrate on exporting their products to
accumulate foreign exchanges, essential for
importing unnecessary gadgets.
To
sustain food security in tandem with economic
growth, Ethiopian policy makers need to focus on
well-orchestrated defensive stabilization policies
such as making food accessible or establishing
food stocks as a means of mitigating the increase
in food prices or establishing food entitlementto
tackle food hunger. As suggested by Dreze and Sen
(2011), governments could save the poor from
vulnerability to food insecurity arising from
negative shocks or resulting from the disjuncture
between soaring prices and the availability of
food items. Based on Newbery and Stiglitz’s
(1979) theory that focuses on the high cost of
national price stabilization schemes, Anderson and
Roumasset, (1996) empirically demonstrate that to
tackle food insecurity,
government efforts need to be tailored to:
a) enhancing private markets, b) increasing the
availability of food products for the poor through
social services (i.e., food, health, education
etc), c) giving entitlements through transfers ,
d) using intensive technology-based methods
that could propel improvements in productivity, e)
improving transportation, enforcing standards and
measures in intensive grain transactions, and f) implementing
small-scale storage facilities.
It
must be stressed that property rights and land
tenure might influence the food security status at
the household level. Given that the Ethiopian
government has full ownership of the country’s
land, it has achieved socially equitable outcomes
because land in rural Ethiopia is distributed
fairly. However, the radical egalitarian measures
of distributing land in rural Ethiopia has
“…generated insecurity practiced by fears of
further redistribution and a consequent
unwillingness to invest effort in measures to
improve soil conservation and enhance fertility’
(Quan, 2000).
It
needs to be underlined here that in patriarchal
Ethiopia, since women by and large are excluded
from owning land, reforming the use and ownership
of land by women is vital in Ethiopia (Pieters,
Guariso, and Vandeplas2013). Therefore, given the
important role of women in Africa’s agricultural
sector and “… in all the different dimensions
of food and nutrition security, policies that
support and stimulate productive activities of
women in general, especially in agriculture, have
great potential in terms of improving food
security.” In
addition, as stated by Hull (2009), growth in the
agricultural sector of the economy cannot be
translated into benefits for the poor because
benefiting the poor needs an identification of the
location of the poor. If
culturally acceptable, people who are volunteering
to move to settlements in ethnically sensitive
regions, the needs of food security in Ethiopia
could be accomplished by designing the mobilityof
the poor across sectors of the economy. However,
not to repeat the mistakes of the Derg, the basic
infrastructures need to be in place before the
chronically food insecure are encouraged to move.
Furthermore, in order to participate in
productive and sustainable food production
activities, participation in the programs needs to
be for chronically food insecure poor and who are
given sufficient resources and wages (instead of
food for work) in
exchange for their services.
Finally,
various donors with gracious intentions need to be
appreciated for their humanity-based food
donations. However, as an aid recipient country,
Ethiopian policy-makers, need to be aware that
external sources of food donations at times can
lead to disruption of local food markets and might
even become a disincentive. They might even
discourage local farmers from attempting to
produce their crops and to store the excess from
good periods for seasons of emergency.
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