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Reforming the International Financial System for Development$
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Jomo Kwame Sundaram

Print publication date: 2011

Print ISBN-13: 9780231157643

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231157643.001.0001

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The Unnatural Coupling

The Unnatural Coupling

Food and global finance

Chapter:
(p.84) 4 The Unnatural Coupling
Source:
Reforming the International Financial System for Development
Author(s):

Jayati Ghosh

Publisher:
Columbia University Press
DOI:10.7312/columbia/9780231157643.003.0004

This chapter examines the link between the global food crisis and the financial crisis. More specifically, it considers the dramatic increase in world food prices in 2007–2008, attributing it mainly to greater speculative activity in global commodity markets in response to earlier financial deregulation and the flight of capital from Wall Street following the bursting of the housing bubble with the sub-prime mortgage crisis in the United States. Despite the subsequent drop in agricultural prices, food prices remained higher than before 2007, and continued to be volatile in many developing countries. The chapter discusses two policy factors affecting global food supply: bio-fuels and the policy neglect of agriculture over the past two decades. It explains how the financial crisis has worsened food insecurity by constraining public investment in agriculture, limiting food imports in developing countries constrained by balance of payments.

Keywords:   food crisis, financial crisis, food prices, commodity markets, financial deregulation, developing countries, food supply, bio-fuels, agriculture, food insecurity

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