Poverty Effects of Higher Food Prices: A Global Perspective

16 Pages Posted: 24 Jul 2011

See all articles by Rafael E. De Hoyos

Rafael E. De Hoyos

United Nations - United Nations University (UNU)

Denis Medvedev

World Bank; American University

Multiple version iconThere are 2 versions of this paper

Date Written: August 2011

Abstract

The spike in international food prices between 2005 and the first half of 2008 drew much attention to the vulnerability of the poor to such shocks. This paper provides a formal assessment of the direct and indirect impacts of higher prices of agricultural goods on global poverty using a representative sample of 63-93% of the developing world's population. To assess the direct effects, the paper uses domestic food price data between January 2005 and December 2007 - when the relative price of food staples rose by an average of 5.6% - to find that the number of individuals living under the extreme poverty line increased by 155 million, with almost three-quarters of this increase taking place in East Asia. To take the second-order effects into account, the paper links household survey data with a global general equilibrium model, finding that the same increase in consumer prices of agricultural goods (modeled by increasing demand for first-generation biofuels) would raise the number of individuals living under extreme poverty by 32 million, with nearly the entire increase occurring in South Asia and Sub-Saharan Africa.

Suggested Citation

De Hoyos, Rafael E. and Medvedev, Denis, Poverty Effects of Higher Food Prices: A Global Perspective (August 2011). Review of Development Economics, Vol. 15, Issue 3, pp. 387-402, 2011. Available at SSRN: https://ssrn.com/abstract=1892597 or http://dx.doi.org/10.1111/j.1467-9361.2011.00615.x

Rafael E. De Hoyos (Contact Author)

United Nations - United Nations University (UNU) ( email )

Tokyo, 150-8925
Japan

Denis Medvedev

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

American University

4400 Massachusetts Avenue N.W.
Washington, DC 20016-8029
United States

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