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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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PRINTED FROM COLUMBIA SCHOLARSHIP ONLINE (www.columbia.universitypressscholarship.com). (c) Copyright University of Minnesota Press, 2022. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in CUPSO for personal use.date: 28 June 2022

The Unnatural Coupling

The Unnatural Coupling

Food and global finance

(p.84) 4 The Unnatural Coupling
Reforming the International Financial System for Development

Jayati Ghosh

Columbia University Press

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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