WORLD BANK :1! ]R1S A hi1f [[' f Volume 3 Number 1 Winter 1981/1982 CONTENTS'S Planning Investments in Electric Power in Indonesia ............................ 27 -_ - - ---Tax arnd Cont-actual Arrangements for World Bank Rcsearclh on the Hunger Exploiting Natural Resouirces ............ 28 Dimension of the Food Pro-blem .......... 3 Public Policies in Argiculture: Republic of Shlomo JKeutliCg' Korea and Thailand ................... . 30 _Economic Cornscoun-ices of the Coffee Boom Completed Research ..................... 10 in East Africa ........................ 31 Rural Detvlopmnent in China ........... 10 National Accmunts. Statistics of Centrally Marketing NManlf'actur ed Exports: Planned Econoinies ....................33 C!othing from Colonibia. ................ 13 iidlian Urbain Development ..............33 Ian\gci4 erv and Organization of Industrial Location Policics for Urban lriga.ttioni Projects ... ................ ..16 Deconicentiation: Republic of Korea ..... 34 ITre;n3tiunal 'rade l'Pli..,; for the Income Formation ancl Expenditures of Development of Banelac;: ......... 18 Poor Urban I-Touselholcls ....... .........35 Labor Nfigr;lion fropi i'il.isian and Particinant-Observer Evaltiation of Urban B;;ngfladc:sli to the MflitdIe East ........... 20 Projects .............................. 36 Inicormes and Wc'lfare in C>olombia, Research and Development: Handp-rLmps for 1964--1978 .. ....................... 24 Rural W ater Stpply. ..... ............ 37 Determinints of FrcrliliLy in Rural Ne-w rLesearch B&rglade........ ................... 37 Adj1l.nicllt in ODil-Tniporting Cowint-rWs 25 Demiiand foi and Willingness to Pay for A fodcl of Encrry Drni;.i:d in D)evey,orin;jf Srr:ircs in Rural Mali ..................38 C,,11>! ris.................. ......... 26 T'she V/Ielfnreim1 ica,ii; of Ahltrn::ti'c New4 and ?rlicoouirt Publications .......339 Energy Pi icing 1'oliricsin iLndn)eci ....... 27 V'NTFR'R )81/82 -( -; i. mpo t cl od.pds 3 WORLD BANK RESEARCH the prevalenlce of hunger. This is not to deny the O7st rpss tTTTT^T5insportant CoWl'libUtli(Ill food p)roduction has made ON THE HUNGER and wJ coiitinuc to make tovvard reducing DIMviENSION OF THE lhunger-wvithout the "Green ReVolution"! the DI E SIO OF T f problem of hunger wvould be muclh wvorse than it is FOOD PROBLEM today. But wvile the WNorld Bankl has an extensive research portfolio on issues related to food supply, Shio2no RIetll'Igcr* research about the impact on hunger of projects Develofmient Lconomnics Departmeiit and policies designed to promote food production has hardly begun. Accelerated food productioni will alleviate hunger only to the extent that the scarce Over the last decade, dramatic chaniges have resources used in the process yield a larger occurreld in perceptions ab)out Lhe nature and reduction in poverty and/or food prices than they magnitude of the food problem in developing wvould if used in other ways. countries. Almost cxclusive preoccupation wvith trends and fluctuations in aggrecrate food demand, unger in developing countries has essentially two production, and imports has been augmented with major dimensions chronically low levels of food a new concern for inadequate food consumption by consumption among major segments of the popula- large numbers of people here and now. This tion and periodic reductions in food consurnption evolution in perceptions about the food problem on a national or re;ional scale caused by failing closely parallels the newv realization that the harvests, abnormally high prices of imported food, preoccoLpation with economiic growvth ought to be or ireduced ability to pay for food imports. complemented with an explicit concern for the poverty persisting among large seg,ments of the C population. HoIw many people are chronically short of food? This neNw perception of the nature of the food By howv much? Who are they? Howv does DifThc.l thiem? Howv mnuch additional income would the problem, while wridely shared, has niot been tlm Hsmc diinlIcm ol h probem,whie wielyshaed, as ot eenhungry need, to afford the food thiey require? How uniformlv interpreted, howvever, in its implications are their food shortages aflected by the aggregate for policy and research. For example, Willi arthifodsragsaee bteageae Brandl, in a recent article in the Economist food supply and the price they pay for food? These Brandt,in arecentarti n the Cmitconference,states are some of the questions that necd to be addressed reviewving the Cancuin summ-it conference, statesifaymnnguadcos-feivplcesret the w idely held view that increased food production if any meaningful and cost-efective policies are to evolve. is the key riequiremenit (for eliminating wvorld hunger) and that food aid (presumably also food t~1 Zat IiS the aggregate dimension2 of chronic food imports), while valuable, should be used only for shortages? temporary and enmergcncy supportL. The first requirement for assessing the numbers of Research in thie World Bank on hunger issues is people short of food in any country is knowvledge predicated on the basic premise that the extcnt of about howv food consumption is distributed. The hunger cannot be inferre(d from data on aeggregate food productioni and that to alleviate hunger, accelerated food production and the stabilization of 'This review is, 1)) necessity, only about rcsearch at the World Bank. My intellectuall dcebt to thc wider reswarcli community and, food suLpplies throughl buffer stocks are neither equally, to the dedicated practitioners in the field is enormious and sufficier.n nor necessary. A seconid premise is that gratefully 'T,owled.alu (ln(lia) '4 and.thc rationi shop program quantified, one cotild compare the cost effectiveness in India. In a studly of the milk-distri-bution pro'gramti in Chile,' T Iirb-rtL ancd Scandizzo ana- ` get Group Oriented Food Pro- - , 12, Mlarcelo .Selowssk;v, Tr,c(;op.rindFodr l%,zed the e.xtent to NN-hich Lhe food given to the gr.ams: C8os Et<;.-s C'omparlisons.- Wtorldl Bank Reprint houusehold is actually used by the intended benefici- Series: N'umber 127. Repriniedi from A'morican Jouirnal of aries (children and pr.noan womesn) and ques- t7ierat Ec'nnzcs, vol. 61, no. 5 (I)eember 1979):pp. 988- tionie(d whdtl r the prnoi, rni's econiomic and (lietary 4 K. Knudsen, "Economis of Supplemental Feeding of b1rncfits ensuredl a lalsting i inpyrovemTent in nutri- 13. Od.in Inule,"}(omcofupecnaFedgf *rns -nsurda n mpro n in n iMalnourished Children: Leakages, Costs, and Bencfits." World tion. TIle' foun(d that, wvhile somie of the benefits go Bank Staif WNorkinig PIaper No. 451, April 1981. to otlher fz'inil members, a substantial anmount still 14. Odin K. Knuldisen, ibicd. reaches the target group. Among the target group, 15. Plasquate L. Seandizzo. and Cirushri Samy, "Benefits and calorie antl protein Constumlptin rose significantly, Costs of Food l.)i;rl,niion Poliries: Tile toidia Case." WVorld Bank, whie wrighteand Agriculture and Ruial I)evelopment Department, September heile ,vcight and height incr-eased. 1981. 16. Lloyid J larhert and Pasqualc 1,. Scandiz,o, "Food Distribu- Sc nd1iz,:o and (r racv1es analyzed both fiscal and tion and Nutrition Interventioon-The Care of Chile." *Yorld econori(lie costs o)f poIlicies for broad-based food Banik, A;crirulture and Rutril Development )epartmnent, Working dsistril) iib m in several Asian coitmntriers. Their Paper No. 27, FebIrary 1980. results show' tiat sh policie>s tt(i to) be morc cos;t 7j Pasquale L. Sealn(dizzo and J. Graves, "Te Alleviation of reslt sowtht uc plicested o e or cstMalnutritiotn: Impart and Cost 1.11'c, ii%renc- of Oflicial Pro- effective in n,'intrits with hi-her foo(l (efit(its per grams." World Bank, Airiculture and Rural DscVelopment capita i wt 1where a l.arger share of the population is D)epartmen't, Wi k'ri ,, 1)aper No. 19, J.anua.iry 1 981. in deficit and inci-iescs its cornsumption signiii- iP,. li,,ar 2 mliner, "Analysi; of the Nttitie-ai Cost- ntAll' inl l inst' to) smalll redt(it infood I l'cu s iof Commodities." World Bank: D)evelopment Eco- nesp ios i fod nnlis Dt)partmient. Septembher 1981. p)ices. Ftri li,r, (couitries in which a larger nortion 1 9. C. .''immer, " liw ird a Nutrition Oriented Food Policy: of the dlistribution (osL is sust.ainetl by the TIhe Case of Indonesia." \orldt Bank (mimieitno). V, ()R I 1) K NV1NTVI'llJQ8i1 82 1_____ ___________________________ RF~ i VAT?CI I N F'W / of supplementary foo(d programs with that of other Periodic Countrywide Food Scarcities health--oiool0oinrr investments. Periodic poos harvests, high prices of imlported World 13ank hrave investigited two foods, and recuced foreign-c;xcblanige carnings (can kinds of relationships l)rtwcen nutrition and sharply reduce the food available to a nation. TIlic productivitv: the effect of early nutritional depriva- effects may bC severe for the poor but hardly tion on children's mental devlcopniem ant ccluca- noticeable for the well-to-lo.d When aggregate tional aichieement, with its consequences for supplies decline and pr'ices rise, the wvell-to-do can lifetimile earnings, ancd the effects of adult malnutri- continue to eat the samei amounts of food simply by tion on Nvork:e rs' performance. Studiies b)y; Selowsky buying cheaper foods or by reducing thcir nonfood and Taylor?" oni the former and b)y 13asta and consumption. Ihle poor do not h ve this option; Churchill2l on the latter showY that nutritional they must sharply reduce their total consunmption deprivation cani significantly impair productivity, of food whien the -frice rises. As a consequence, the but that this inmpairnment is difficult to separate chronically undcrfed have even less food than from the effects of oliher factors in the envirr,ninent. usual, and people wvho normally "get by" becomne Suchl a concept of the ber ncfits from improved underfed periodicmlly, too. Worst hit when harvests nutrition is made even more diflicult to use as a fail are poor farm--ers and the lanidless, who derive criterioni in project selection because any assess- their inconme largely frorrm food production. ment of the social, as distinct from the private, gains requires additional assumpiions abouit the When the World Bar-k first began its research on social value of the current and future marginal instability in food si-pplies, neither the many product of labor and mental abilities both in the causes of observed variations in food supply and presenit and many years into the future. consumption nor the-ir implications for the inci- dence of hunger wvas explicitly rccognized. The An alternative approach to the evaluation of main objective of the first stud)?3 wvas to estimate benefits from additiornal food consunmption is the benefits and costs of a national buffer stock presernted in a papcr by fSeandizzo and Knudsen.22 under conditions that wouldl be most fa.orlahle to Ti icy derive criteria for estimating social demnand its econonmic justification: the case of a country functions, which inCal UICr the valuc society places unable or unillingto vary food imports or cxperts on various amounts of food c(nsuned by each of its in response to vaiions in its domestic food members. The extent to which social dermand production. A simulation model was used to exceeds private (eimand is used to measure the transform the probability distribution of p.roduc- gains fronm en,aibling poor people to consume more tion into a proba.bhility distribution of price ancd food than they otherw.ise would. coiisuM3ption associated with buffer stocks of Given thef state of p,resent knowledlgc and the cost of learning nmore about the functional and economic ---- significancr of undernutri.rion, it is doubtful that 20. 'farcelo Selowsky and Lance Tavlor, "The Economics of pr-ojects or )olicies designed to reducc hunger could Mialnourishe6 Children: An Elxample of D)isinvestmeint in IHuman or should be e va.luatecd using cost/benefit analysis. C'apital." Economic I). D-,n/11,muI anfd (dullur2l Chan,e, vol. 22, In any case>, the corst of bunvn suffering cannot be no. 1 (October 1973): pp. 17-30. assessed in any oth ective mahnnr. Besides, different bm2i. Sainir S. Basta and Anthony Chuit hilt, "Iron D)eficency assesed n ay ol~Jecivemannr. Bsids, dfreriit Anemnia anid ihie Productivity of Adlult Mates in Indionesia." World degrees of conmpassion and political con-siderations Iianik Staff 'rVkini4 Paper >No. 175, April 1974, and "'Tlhc pla) an important role in dllturmining thiC kind and Relationship of Nuiriiioii and Ilealth to Worker Productivi!v in extent of measures adopLed in a pat ticul;ir country. Kenya," Stuciv of the Suhstitution of Lalaor and F.quipment in In this c' reeac'oteu it ('onstructioion, Technical Mtcn,,ralndUni No. 26, WNorld Bank, ln this t- , research on t ch1r~onic huier May 1977. dinmensioii of the food problem cani be most relevanit 22. Pasquale L. Scandizzo and Odin K. Knudsen, "Tlic wh1en it focuses prirnmirily oni ident i if in wlhichl Iluatiai,, of tde l3vtiefis of Basic Needs Policies." Ameriran segments of the 1)pop11.ltion are denied access to Jjuirna/ o/fA4rie ultm,il Ecnnomrics, ol. 62, no. I (February 1980): foodl by any r--sonlb)le .stmiid:ird and on cevlluating pp. 45.Ir costeffctiv mesure to23. SlJo0MO RCUilinp.cr, "A Simulation NIfPIrI for Evilumiin4; which are the m33ost cost-r Stlive rnczsures to NIrrto(k lPogr.irni," in MI /it 'it k GinJai.ketnp, reduce these deprivations. in? Asia," Asian Productivi'y Organization, 'lTokyo, 1971. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _~~ ~ ~ ~ ~ ~ * - _ _ _ _ _ _ _ _ _ _ _ ._ _ _ _ _ _ _ _ . _ _ _. _ _ . . ,~ l 1 A N . V. Wirius sizes. Probabilit- iti 'ii tim 1U of the costs so, a stubilizi uig-tradle policy in grains 'o5001d an(I hcm,["its of the buffer stock opt'raitions were redutce slipply B iils5. ihili t , iL thec (c(st of gric.Ily ca1cl,d,iici ol 011 e balsis of a large sample of 30-x'car (dcstabilizing the foreign ch g and fiscal Sate the effectiveness of buffer stocks in stabilization could be assurecd through trade and reducingc, the li!kclilhomol of extreme shortfalls in less stocks, particularly if stocks are r'-pleniishcd supply. It was ihlustr:lcd that this purpose would wvhen world prices are fa'orable.27 - ' > i;avery lar-e and cwltly buffer stock if the stock 'err ep) rimlcd by rutles wilich provide for the redluction of gcieneral price instability. A mucIh less costly stock of modlerate size, lhovever, vas shown 24. , "A Simulation Model for E.:ftwaing World-Wide to be adequate to the task if rules were adopte Bnulfrr Stocks of Wheat." Wurtd Biank Reprint Series: Ntimber 34. provi(lhin fo)r the releaise of stocks only in the event Reprinted from Amercran Journal of,lgrw1 inrJ Econo7mcs ,vol. of extreie shortfalls in supply. 58, T1o. 1, (February 1976):pp. 1-2. 25. Shlomo Reutliniger, 1). Eatoni, and 1). Bigman, "Slitoul( Further studies of countrywidr instability in the De,cloping Nations Carry Grain Reserves?" in E'aton and Steele, C,0 np1lption of foo(igrains invest igried the effects ects., Argl1slzs of Grain R'srves. United Slttes Department of Agriculture: 1: !S-634, pp. 12-38. Aum;uSt 1976M. D). Bligosin and of instability both in d(lttestic produtiction and in ShI,,o Reutlinger, "Foodt Price St.hiiz.,tiz.1i1 N:11 i,,,.t BullTer world miarket prices tindter :!i i n:ttive buffer-stock Storks and Trade Polioies." A,ne'rtoan Journal of ;tgru -//ora and food-trade policy scenarios. It was shown that EcInrnziftiC., vol. 61, no. 4 (November 1979): pp. ;657-667, "National andi tnternationat Policies Tlowards Food Secuirity and uLider a f'ree-tracle regimet,With imports filling the ihiprs tePrice t,it aio"Amerct'an E,wioinir RIi,z'o', vol. 69, no. 2 gap et C!wCe foo(d ccLump! .t.... and prod uction at (I' b pp. 159-163. Shlonto Rcurilt,'0 adl K->. Knapp, "Fto)o oxisting wor'lcl market pirices, muiclh of the supply Securitv in Food l)elitit Countries' A Brict H jistoritatl Review anid Instability caused( by fluctuations in dotest ic Proshilistii SiItII.Iticn of the Etlect of Trand Smock Policies I r,intl ucti (l ci ni ( cli sa ppea r. Thlie t ern a in i nfng insta- in \'a rts anapiers (cds.)p,'ra/zort I?e,r, in Apt' u//ore hilil) ':otlMld be the result of instability inC- import andt IaeI a/r Rrswiri, r'meioh,-% (Amrsterdamn: North H lolland impc)rt ; Ltlll,i5 d.o111tiop.m, 19811). pr'ic'es and the response of consumers to price i. .Shlous R,'Uttit,rr and F). miunman, "Poli(v options in fluctluations. TIhiis sozirce of instability couldI be ;\tt.iii t Food Srtnit let'.an,l t md Costs,' in e lill;ill, d Ii r Mier a1 s ablii i i tg trade policy, \ ild,ted)it r ). '1ii;'i' 'IuoLtOi uLiUiuez "--erv'lv all or, isortle tm0tistitilis Woulld be inFtilatcd We,tsNjew Press, 1981). 2". h>111 litmt Reutlinger, "'I'lle Level ol St.aibility of Itidia's frioml itmi toiLC11 ls i1n in i n ter'aiionl prices. It was Foodgr.min Ctonstuniption" I Ibm l4 Bank Sta]J lI Irkitn,g I'olper XA. shimts','n, hlowe'.'r, that a free-tra(le policy and, mnore 27f.0. NoNeriber 1979. 01 .1>!t) I) I 1 N _ WINTFER 1981/82 - - i.Sl:k( 11 NI \;5 9 In rcccnt vears, research in the World B3a.nk on the incluodes what is SC) far the most coml)letc analysis stabilization of rood grainl supply has focused of the So11iCceS Of instlaili,v in a country's food inlcrcasingly' oni the inmcrnm tonal environnceni and consumLlptiotv: as wvell as variations in domestic initiatives. In thec wake of the foo(d crisis in the pr)dm1o imll and import )pricesS, these inclode varia- early 1970s and its visible c(nseqlueinces irn tions in cxport earni ngs.') devcloping countries, the nmcelia and i-nerna tional fora. istI;0.7c p!as for newV a1i'. lareq rr rtnert : in Summarv national and intcrn;ltiontial buffer stocks. R1Cescairch in the 3ank has (lenlolstraled efrct ively that sucl The focus on the hunger dimension of the food supply-ori-nrted soluttions are cxtrcincly costly and problenm has led resrarchers in the W6forld Bank to could ill he af)rded.1 Moreover, on the level look inr(aicsilngly at the liink between hunger and contemplated, the) W%'c)tld be too slllall to solve the poverty. In this regard, there is a clear sytnimetrv hunger problem of poor peoplec and poor countries. between the problem of chronically underfed people within countrics and perindic threats to In a paper puldishcd in 1978, Reutliiger demon- aggregate food consumption in poor counitries. In strated that if countries are short of foreign both cases, the aggreg-nic amount of food--the exchange or are unwilling to allocate enough country's foodl supply; c the worldwide food foreign exchange to foozd imports, their food supply, respectively- plays a role. However, by supplies will continuc to be unstable, irresl)ectie far the more dcisive dlterini11Lt of whether of the level of suppIly stabilization in the interna- people and countries obtain cnough food is their tional tarhlet. Perhaps as often as four out of five ability to pay for it. 1'or the chrolly honor, times, a food shortage in a country will be caused what m1aLters is their incomel7 and the prices they by poor harvests uncopnl)s;ited by ithiports. These must pay for food. Producijng more food, if it occurrenlces wrould not be rcclie1 by interna- doesn't cgcrate a suflicicentl) large vage bill and if tional supply stalili;-ation through intcrnational it doesn't reduce the price of food faced by those in buffer stocks. (Otherwise, what is the e ;Illa1n ItiO hunger, wvill (1o little to prevent hunger. The food of the repemicd supply shortfalls in many countrics produced might end upin ecessive stocks or in during a long perliod p)rccditg 1973 when t' c exports, or depress prices to farmers and thereby world price of food grains w,as ery stable?) "kcill the goose that laid the golden eqg." Silnilarty, Domestically held lbuffer stocks in each country the supply of foo(d in poor countries is more likely would be a solution, but a very costly one. The to be stabilized by providing them wvith the obvious alternative is to seek a solultion Lo the financial assistance they neecl for imports than by financial const raints that ptrevent countries from stabilizing global su0)plies of food. offsetting losses in thieir owvn production of food by Future research on hunger issues in the World imports. Research slhowved that an international Bank and elsewhere migt wNell concentrate more financing facilitv could insure countries against idn f ing ths e hunger c onsewhich are excessive foo(l iniport bills at low cost, even if the primarily caIuI sed by poverty as distinct from those credit wvere extended on very favworable terms.25 primarily caused b)y supply constraints. In either The most significant p)olicy initiative traccable to case, it miglht be easier to become knowle1deahle research C onI fbod securuity is the recent modification about the causes tIan ahouI approl)riate and cost- of the lntcrna;12.