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Hunger Report 1998 Executive Summary

Hunger in a Global Economy

8th annual report on the state of world hunger

For better and for worse, our world is linked by the expanding web called the global economy. It affects virtually everyone, from the very richest to the very poorest.

Economic globalization has benefited many people through higher living standards, better job opportunities and an increased variety of products at lower cost. But 841 million people in developing countries are chronically undernourished. Tens of millions more people in wealthy countries, including 34 million in the United States, are food insecure. More than one billion people—nearly a quarter of humanity—live in grinding poverty, surviving on less than a dollar a day.

A Two-Sided Coin

Globalization's double edges are evident in the United States. In 1995, $60 billion worth of investments poured in from abroad, nearly matching foreign investment to the developing world outside China. Such ventures as Georgetown, Kentucky's Toyota plant have created jobs and stimulated economic activity.

But imports of manufactured goods from lower-wage countries have contributed to declining real wages and economic insecurity for low-skilled U.S. workers who must struggle to make ends meet. The United States has the highest inequality in the industrial world because of the income gap between well-educated professionals and workers with limited education. As part of its 1997 Offering of Letters campaign, Hunger Has A Cure, Bread for the World has sought to increase public understanding of what can be done to improve job prospects for low-income people.

Globalization has also had mixed effects on hunger in the developing world. In the Cavite Export Processing Zone in the Philippines, workers toil long hours making blue jeans for export to the United States. But their $480 monthly salaries are four times what struggling fisherfolk could expect even in good times. Today, the zone's pollution and overfishing drive boats ever farther for a meager catch. Arnulfo Plocios, a fisherman in nearby Rosario, can only feed his family one daily meal of rice and dried fish.¹

Making the Global Economy Work Better for Hungry People

Bread for the World Institute proposes 10 ways to make the global economy work better for hungry people. These proposals are fully developed in the Institute's 1998 report on the state of world hunger, Hunger in a Global Economy.

Governments, businesses and individuals all can make economic life less harsh for hungry and poor people.

Governments should encourage broad-based economic growth to expand employment opportunities and ensure adequate safety nets for those left behind. Governments should also invest in basic health and education to lay the groundwork for future economic prosperity.

Employers should respect the rights and needs of their employees, and provide living wages.

Individuals, acting as consumers, investors, charitable givers and responsible citizens, also have an essential role to play.

Markets are very efficient in allocating most goods, services and investments. Nearly every government on earth today has committed itself to some version of a market economy.

But markets cannot meet all the needs of a society. They must be tempered with governmental and civic action to provide decent jobs and living wages.

In the global economy, employers look for "flexible labor markets." All too often this means that if workers are to have jobs, they must accept unconscionably low wages and dismal working conditions. Governments must maintain an adequate minimum wage and uphold workers' rights. Civic and community groups are also essential to protecting basic values such as food security, equity and safety.

People go hungry because they are poor and powerless. Lack of democratic participation contributes to hunger, poverty and rebellion. Democratic countries seldom experience famine. Popular participation in decision-making is a key to making economies work to improve conditions for hungry and poor people.

The route out of hunger and poverty for most poor people is through jobs or self-employment. The global economy is booming in 1997, and sustained growth is improving the job market. But over the past two decades, global competition has contributed to rising unemployment and falling wages in the industrial countries. In the United States and United Kingdom, real wages for low-skilled workers have declined, while most other industrial countries face chronic unemployment. In the developing world, many poor and hungry people survive through petty trade, day labor and other informal economic activity.

Under the pressure of global competition, the United States and other governments have cut safety net programs and enacted other policies which tend to restrain job growth and wage increases. They try to keep inflation down to make exports competitive, and interest rates up to attract investment.

The world's major economic powers should work together to emphasize growth and employment. This would mean, for example, that the U.S. Federal Reserve Board would be less inclined to raise interest rates at any hint of possible inflation.

Expanded trade has helped China, South Korea and other East Asian nations reduce malnutrition and absolute poverty within their borders. Without safeguards, however, the global economy can make disenfranchised people more vulnerable and increase inequality.

Responsible trade seeks the efficiencies of freer trade, while protecting worker rights, the environment and vulnerable groups such as low-income children, elderly and disabled people.

Agricultural trade can help overcome hunger by providing access to less expensive food, offsetting local food shortages and raising farm incomes.

At the same time, small farmers can be driven out of business by larger producers at home or abroad. They are also not well-equipped to withstand volatile price fluctuations on the international market.

Agriculture is essential to food security both as a direct source of food and because 60 percent of the work force in developing countries (67 percent in sub-Saharan Africa) depends on agriculture for a living.

Several concerns must be addressed for agriculture and rural development to succeed and produce an acceptable standard of living for people in developing countries. These include changing policies toward women farmers, resolving conflicts among and within nations, ensuring the ability of farmers to maximize yet maintain available natural resources, and encouraging industrial countries to play a suitable role in the process.

Women produce much of the locally grown food in the developing world—80 percent in sub-Saharan Africa. Women farmers often suffer from biased laws, policies and customs. In many places, women are limited in their ability to own land, gain access to irrigation water, receive loans and education, and benefit from agricultural extension. Foreign assistance, with the involvement of nongovernmental organizations, can help change these patterns. But development efforts too often focus on male-controlled export crops.

Food security also depends on a peaceful and safe environment. In Burundi and Rwanda, ethnic violence has eased but food production remains below pre-conflict levels, and a third of the people still need food assistance.

For the long run, agricultural development must be sustainable; that is, it must maintain both natural resources and human life. Producers must pay attention to soil and water conservation. Ousmane and Mariam Kabreogo, for example, who grow sorghum and millet on a small farm on Burkina Faso's Central Plateau, rely on manure from the cattle of nomadic herders as a source of fertilizer. They try to leave some of their farm fallow each year to keep the soil productive.² Techniques such as these should be encouraged and replicated.

Industrial countries can help developing countries by funding aid programs that encourage sustainable agriculture and food security. They can also reduce protectionism against imports and end export subsidies. Sustainable development is likely to lead to increased demand for developed countries' agricultural exports over the long haul.

Agricultural policies and development programs should emphasize boosting yields, adopting sustainable farming practices and diversifying production for both export and domestic consumption. It is also important to expanding food processing and higher value activities in developing countries.

Tens of thousands of companies, especially a couple of hundred giant corporations, cross national boundaries in search of greater profits. They offer management skills, new technologies and new products. They have created millions of new jobs and improved incomes, especially in East and Southeast Asia.

But global investing has its negative aspects: child labor, appalling working conditions, wages at a few cents an hour, environmental devastation, dismal shanty towns within a stone's throw of the southern U.S. border, and sweatshops in the United States.

Private foreign investment in developing countries has increased dramatically and now exceeds development aid and lending from governments and international organizations. But private investment has largely bypassed the poorest countries, especially in Africa.

Governments in both rich and poor countries should adopt policies which harness international investment capital to the development of human resources around the globe. Investment should emphasize meeting the needs of women, extending credit to small-scale entrepreneurs and creating good jobs. Particularly in the poorest nations, renewed efforts are needed to create a climate which will both attract investments and ensure widespread sharing of the benefits.

The World Bank is the largest source of development capital for the world's poorest nations, and is a major funder of health, education and nutrition projects. Together with regional development banks and the International Monetary Fund, the World Bank provides substantial resources to developing countries in a time of declining aid.

Many of the loans support large-scale projects or economic reform packages. These often do not benefit hungry and poor people, and sometimes hurt them. The international financial institutions should target their programs more directly toward poverty alleviation.

In addition, these institutions should consult with communities that are affected by their loans and policies. All too often, they design programs and projects which have enormous impact on hungry and poor people without consulting them. For example, entire communities have been dislocated by large hydroelectric projects. Policies intended to reform national economies have resulted in user fees for health programs and primary schools, making them inaccessible to poor people. These results can be devastating.

In many poor countries, crushing national debt burdens extinguish opportunities for millions of poor families. Developing countries owe more than $2 trillion to foreign creditors. Especially for the poorest countries, this debt is simply unpayable.

To service their debts, governments shift scarce resources from schools, clinics, roads, the environment and other sustainable development investments. If African nations invested annual debt payments in health and education, it would save the lives of an estimated 21 million children by the year 2000.

Ordinary people have considerable power to influence the course of the global economy for the benefit of hungry people. Simple choices can have a major impact. For example:

• Buying products from companies which adhere to standards of fair and ethical treatment of workers, customers, communities and the environment;
• Investing in socially-responsible companies and mutual funds;
• Supporting unions in their struggle to improve wages, benefits and working conditions;
• Supporting charitable responses to hunger and poverty; and
• Urging elected officials to make ending hunger and reducing poverty high priorities.

By joining civic groups, individuals can multiply their power. Advocacy organizations such as Bread for the World help shift government policies to focus more on the needs of hungry and poor people.

The active engagement of citizens at all levels Ð local, national, regional, and international Ð can help make the global economy work better for everyone.

Sources

¹ Keith B. Richburg, "Tide of Foreign Capital Helps Lift World Poor," Washington Post, December 29, 1996.

² According to the International Food Policy Research Institute's (IFPRI) initiative, A 2020 Vision for Food, Agriculture and the Environment; see IFPRI, Feeding the World, Preventing Poverty and Protecting the Earth (Washington: IFPRI, 1996), p. 22.