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Understanding the Impact of High Food Prices in Latin America

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  • Luis Miguel Robles

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  • Maximo Torero

    ()

Abstract

Since the late 1980s, almost all Latin American countries have adopted a series of far-reaching economic reforms, especially trade, financial, and capital account liberalization. Increased economic openness has gone hand in hand with large financial inflows—particularly in the first half of the 1990s—and has brought new sources of economic growth. As a result, economies grew, inflation declined, and there was a big surge in foreign cap- ital inflows. Although overall growth slowed after 1995, the region has expe- rienced strong growth in the past five years, the best sustained performance since the 1970s. With the exception of a handful of countries, this economic growth has been accompanied by relatively modest inflation. Despite these positive results, virtually all Latin American countries share similar problems: uneven economic growth, unacceptably high poverty and malnutrition rates, and lagging agricultural growth. More than 60 percent of the region’s poor live in rural areas, where slow economic growth, unequal distribution of assets, inadequate public investment and public services, and vulnerability to natural and economic shocks are major policy issues. The 2007–08 food price crisis exacerbated these problems. Prior to the cri- sis, the region was considered relatively stable and capable of absorbing exter- nal shocks, thanks to its higher foreign exchange liquidity; decreased public sector and external borrowing needs; exchange rate flexibility; lower exposure to currency, interest rate, and rollover risks in public sector debt portfolios; and improved access to local-currency loans. Nevertheless, the food price cri- sis severely affected most of the Latin American countries in terms of inflation, especially food inflation.

Suggested Citation

  • Luis Miguel Robles & Maximo Torero, 2010. "Understanding the Impact of High Food Prices in Latin America," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 117-164, January.
  • Handle: RePEc:col:000425:014300
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    Cited by:

    1. David Dawe, 2014. "Transmission of global food prices, supply response and impacts on the poor," Chapters, in: Raghbendra Jha & Raghav Gaiha & Anil B. Deolalikar (ed.),Handbook on Food, chapter 5, pages 100-121, Edward Elgar Publishing.
    2. Santiago Garriga & María Ana Lugo & Jorge Puig, 2018. "Effects of Food Prices on Poverty: The Case of Paraguay, a Food Exporter and a Non-Fully Urbanized Country," CEDLAS, Working Papers 0231, CEDLAS, Universidad Nacional de La Plata.
    3. Rita Motzigkeit Gonzalez, 2016. "Welfare effects of changed prices The “Tortilla Crisis" revisited," Working Papers 167, Bavarian Graduate Program in Economics (BGPE).
    4. Norman Bentley Piccioni, 2015. "Agriculture in Nicaragua," World Bank Other Operational Studies 25978, The World Bank.
    5. Renato Vargas & Pamela Escobar & Maynor Cabrera & Javier Cabrera & Violeta Hernández & Vivian Guzmán & Martin Cicowiez, 2017. "Climate risk and food security in Guatemala," Working Papers MPIA 2017-01, PEP-MPIA.
    6. Weber, Regine, 2015. "Welfare Impacts of Rising Food Prices: Evidence from India," 2015 Conference, August 9-14, 2015, Milan, Italy 211901, International Association of Agricultural Economists.
    7. Jonathan Brooks & Alan Matthews, 2015. "Trade Dimensions of Food Security," OECD Food, Agriculture and Fisheries Papers 77, OECD Publishing.
    8. Ceballos, Francisco & Hernandez, Manuel A. & Minot, Nicholas & Robles, Miguel, 2017. "Grain Price and Volatility Transmission from International to Domestic Markets in Developing Countries," World Development, Elsevier, vol. 94(C), pages 305-320.
    9. Tetsuji Tanaka & Jin Guo, 2020. "How does the self-sufficiency rate affect international price volatility transmissions in the wheat sector? Evidence from wheat-exporting countries," Palgrave Communications, Palgrave Macmillan, vol. 7(1), pages 1-13, December.
    10. Kalkuhl, Matthias & von Braun, Joachim & Torero, Maximo, 2016. "Food Price Volatility and Its Implications for Food Security and Policy," MPRA Paper 72164, University Library of Munich, Germany.
    11. Nadia Shabnam & Fabio Gaetano Santeramo & Zahid Asghar & Antonio Seccia, 2016. "The Impact of Food Price Crises on the Demand for Nutrients in Pakistan," Journal of South Asian Development, , vol. 11(3), pages 305-327, December.
    12. Digvijay S. Negi & Bharat Ramaswami, 2020. "International risk sharing for food staples," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2020-002, Indira Gandhi Institute of Development Research, Mumbai, India.
    13. Cornelis Gardebroek & Manuel A. Hernandez & Miguel Robles, 2016. "Market interdependence and volatility transmission among major crops," Agricultural Economics, International Association of Agricultural Economists, vol. 47(2), pages 141-155, March.
    14. Hernandez, Manuel A. & Rashid, Shahidur & Lemma, Solomon & Kuma, Tadesse, 2015. "Institutions and market integration: The case of coffee in the Ethiopian commodity exchange:," IFPRI discussion papers 1464, International Food Policy Research Institute (IFPRI).
    15. Kuhlgatz, Christian H. & Huang, Jiaqi & Antonides, Gerrit & Nie, Fengying, 2018. "The Effect of Food Prices and Own-produced Food on Food Security of Chinese Rural Households," 2018 Annual Meeting, August 5-7, Washington, D.C. 273988, Agricultural and Applied Economics Association.
    16. Dorosh, Paul A. & Kennedy, Adam & Torero, Máximo, 2016. "El Niño and cereal production shortfalls: Policies for resilience and food security in 2016 and beyond:," Policy briefs 978-089629-988-7, International Food Policy Research Institute (IFPRI).
    17. Alessandro De Matteis, 2014. "Varied nutritional impact of the global food price crisis," Economics and Business Letters, Oviedo University Press, vol. 3(3), pages 166-176.
    18. Sthanu R. Nair, 2019. "India’s Agrarian Performance: A Comparative Analysis of UPA and NDA Regimes," Working papers 340, Indian Institute of Management Kozhikode.
    19. D'Souza, Anna, 2011. "Wheat Flour Price Shocks and Household Food Security in Afghanistan," Economic Research Report 262238, United States Department of Agriculture, Economic Research Service.
    20. Sakai, Yoko & Estudillo, Jonna P. & Fuwa, Nobuhiko & Higuchi, Yuki & Sawada, Yasuyuki, 2012. "Do Natural Disasters Affect the Poor Disproportionately? The Case of Typhoon Milenyo in the Rural Philippines," PRIMCED Discussion Paper Series 31, Institute of Economic Research, Hitotsubashi University.
    21. Sakai, Yoko & Estudillo, Jonna P. & Fuwa, Nobuhiko & Higuchi, Yuki & Sawada, Yasuyuki, 2017. "Do Natural Disasters Affect the Poor Disproportionately? Price Change and Welfare Impact in the Aftermath of Typhoon Milenyo in the Rural Philippines," World Development, Elsevier, vol. 94(C), pages 16-26.

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    Keywords

    Latin America; Food; Prices; Impact; inflation;

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