A new vision for agriculture
momagri, movement for a world agricultural organization, is a think tank chaired by Christian Pèes.
It brings together, managers from the agricultural world and important people from external perspectives,
such as health, development, strategy and defense. Its objective is to promote regulation
of agricultural markets by creating new evaluation tools, such as economic models and indicators,
and by drawing up proposals for an agricultural and international food policy.
Banque mondiale Joseph Stiglitz

The world must prepare for other crises

by Paul-Florent Montfort,

Analyst, momagri

While the media and politicians keep an eye out for the end of the crisis, Joseph Stiglitz––laureate of the Nobel Prize in Economics and former Chief Economist of the World Bank––dampened their expectations by predicting that the economic recovery will not occur before 2012 and 2013. Still worse, he even warned against possible new crises. In a January 11, 2010 address during a public conference held in Tunis and sponsored by the African Development Bank (AfDB) on the topic “Post financial crisis: Options for Africa”, the economist provided a sharp and objective analysis of the current crisis. We at momagri fully subscribe to his position on the role of governments in economic development, the part of agriculture in the framework of Africa’s recovery and the absurdity of the Doha Round as it stands today… All key topics covered by the world-renowned economist to deliver his own recommendations and insights, which we are summarizing below.

Governments must play a key role in economic development

As outlined by Professor Stiglitz, the financial crisis exposed the conceptual weaknesses of the strategies that were “in vogue” for the past few years: deregulation, lack of constraints, self-regulatory capabilities, rational behavior of economic players… Indeed, contrary to what had been said, the well-offs became richer and the neediest turned out to be the venture’s greatest losers, as their income dropped and their meager assets––real estate in particular––disappeared since they became unable to meet their real estate loans. Such scheme can also be applied at the country level since, according to Professor Stiglitz, Africa now counts less industrial activities than forty years ago.

Thus, unfettered markets are neither “self-corrective, nor necessarily stable, nor efficient”. In addition, trade liberalization and lack of regulation had the side effect of rapidly spreading the crisis throughout the world.

The Economics Nobelist forcefully stated that the crisis clearly showed that “governments must play a key role in economic development”, even if such role must be tailored to geographic areas and circumstances. While summits have followed one another since the beginning of the economic downturn with the goal to design new global governance, Dr. Stiglitz believes that the reforms currently planned are still too limited and too gradual, and are leaving a wide open door for the occurrence of new crises.

Ending the economic crisis by banking on agriculture in Africa

Ending the crisis? Yes, but how? The economist indicates that stimulating investment through national programs and marshalling funds from wealthy nations will not be enough. Speaking at the AfDB podium in Tunis, he made an impassioned plea for African countries to get out of their reliance on foreign funds and muster their own capital. “I am convinced that there is a way of marshaling national public financing all over Africa. It is inaccurate to consider that only the rich can save. One can mention, for instance, the case of China, which was successful in doing so. Once available, funds can be earmarked for industrialization in Africa”, states Stiglitz.

Infrastructure, development of the banking sector in the African continent following the Indian game plan1, diversification of the various economies… According to Joseph Stiglitz, African countries must take advantage of the current environment to free themselves from an over dependence on mining resources exports, ascertain new financing sources and, most importantly, better rely on agriculture. Because, first and foremost, laying emphasis on agricultural activities––the key to food security and primary boost to development––will be the only approach to achieve sound and balanced growth in Africa. In fact, over sixty percent of the continent population now directly depends on agriculture2. It is therefore utopian to consider the formation of local financing––the basis for African development––without first securing food security for all and appropriate revenues for farmers.

Indeed, one should not forget that agricultural development has historically been the cornerstone of economic development for all countries throughout the world 3.

Doing away with the Doha Round as it currently stands

Professor Stiglitz notes that, in order to seize such opportunities, governments must play a key role through the creation of auspicious conditions for agricultural development. Such environment includes strengthening national, regional as well as international governance. The economist uses his Tunis address to condemn the development of the trade talks of the Doha Round under the aegis of the World Trade Organization (WTO). “These talks were initially supposed to improve development and rectify discrepancies in international trade. Today, one has to admit that they have totally gone astray. Africa cannot expect anything from them,” argues the Economics Nobel Prize laureate.

For him, the meager position given to agriculture in the current negotiations supports pessimistic attitudes and convinces developing countries that their interests will not be taken into account in the end. “One cannot pretend to balance international trade and omit the importance of African agriculture. It is both an issue of economic development and a question of fairness. The Doha Round goes on as if we had learned nothing from the last global food crisis”.

It is now more than necessary to learn from the crisis that occurred worldwide these past few years. While they generated many debates, one must admit that reforms implemented in the present governance are insignificant. In agriculture for instance, one notes a growing consensus to acknowledge that regulation is necessary, but nothing translates into facts in spite of numerous international conferences on the matter. It is urgent to build some international governance, which alone will be most likely to breed conditions conducive to economic development worldwide and better prepare for up-coming crises. How many crises must we experience before the international economic system is altered?

1 India decided to develop its banking system by asking all large banks wishing to invest in the country to open branches in inland cities. Additionally, these banks were also requested to finance small and medium-sized businesses (SMEs), and thus contribute to the local economy and improve earnings of the population.
2 In some countries, one can observe that sometimes ninety percent of the population earns its main livelihood from agriculture.
3 With the exception of oil producing countries that profit from revenues generated by their oilfield reserves.
Page Header
Paris, 16 June 2019