4.2 The Implications of Some Global Phenomena for Nutrition
The globalization of financial markets in the absence of appropriate oversight and governance has led to financial crisis, which in East Asia has turned into a human resource crisis. We highlight these relationships and their implications for public policy with a case study of Indonesia - the country that has been hardest hit by the Asian crisis in terms of investments in children. Increasing trade liberalization is generally thought to spur overall economic growth. But the increasing openness of developing-country markets to food combined with the failure of developed countries to reciprocate may well produce a situation that denies developing countries access to high-income markets for their exports. In addition, different standards of food safety between importers and exporters may lead to concerns about the safety of imported food. As food safety concerns heighten, the use of food safety as a trade barrier against exports from developing countries may become a more pressing concern. We also consider the implications of the decreasing costs of information flows, including how the new information and communication technologies can be best used to help accelerate reductions in malnutrition. The freer flow of capital and people across national boundaries has been mirrored by an increasing migration from rural to urban areas, and the implications of this increased rate of migration are discussed in this section of the chapter as well.
Globalization of Financial Resources and the East Asian Crisis: Implications for Nutrition
The East Asian financial crisis, which began in July 1997, is a reminder of how unreliable the past can be as a guide to future events. In one year (1997 - 98), per capita growth rates in East Asia fell sharply. The worst hit was Indonesia, where per capita growth declined from 3.3% to -14.8% (Figure 4.1).
THE UNFOLDING OF THE CRISIS
The crisis occurred as a result of many complex factors. First, and largely in retrospect, the economic outlook of the region had been worsening since the mid-1990s. The increasing strength of the dollar, to which the currencies in the region were linked, made East Asian exports less competitive. Japan, a major consumer of exports from the region, experienced slow growth, and China was becoming an increasingly powerful export competitor. Second, the opening up of East Asian financial systems led to a massive flow of private capital into the region. Given the low interest rates in the industrialized countries and the recent good economic performance in East Asia, foreigners began investing heavily in the region. The inflow of private capital accelerated because of assurances - implicit and explicit - from the region’s governments that they would underwrite or guarantee repayments. On the other side of the coin, East Asian companies could now borrow from sources overseas. Because currencies were linked with the dollar, repayments from East Asian companies would be more predictable and involve lower risk. This easier access to less risky credit led to investment in riskier and lower-performing projects. Third, the region’s financial systems did not respond to the need for greater supervision and oversight in a more deregulated environment.
The trigger event was Thailand’s large and rapidly growing current account deficit (exports minus imports minus interest payments on foreign debt) in 1996-97. This deficit led foreign investors to sell their assets in the region, redeeming them for dollars at the dollar-linked exchange rate. Investors did this because they feared that regional governments would run out of foreign currency to maintain a linked exchange rate and be forced to depreciate the currency. When depreciation occurs, the holdings of foreign investors lose value and, fearing further depreciation, investors sell more assets, leading to a self-fulfilling cycle of currency depreciation. This asset sell-off and the accompanying depreciation can and did spread to other countries via fear, trade, and financial markets. The depreciation and the massive outflow of private capital led to company bankruptcies and sharp price increases for imported goods. The stock markets of the region also declined because of a loss of investor confidence, with an accompanying loss in wealth, and hence in local demand. Increases in unemployment followed as did declines in the real wages of the employed due to inflation.18-21
The effects of the crisis on indicators such as nutrition and educational attainment will play out well beyond the upturn in GDP per capita. How has the crisis affected poverty, education, and nutrition? Moreover, what does the crisis mean for improving public policy to minimize the impacts of future shocks and crises? A case study of Indonesia sheds light on these two questions.
THE IMPACT OF THE CRISIS IN INDONESIA
We choose Indonesia as a case study for two reasons. First, its economy was worst hit in the region - a situation exacerbated by the 1997 drought and massive forest fires in Sumatra and Kalimantan. For example, at the micro level, data from the Indonesian Family Life Surveys (IFLS)22 show that the proportion of individuals living below the poverty line has nearly doubled, from 11% to 19%. This is an enormous increase - equivalent to an additional 20 million people falling below the poverty line between 1997 and 1998. Second, the best data on the crisis and analysis of its impacts are to be found for Indonesia. Appendix 11 summarizes some of the studies available for Indonesia, and Box 4.1 summarizes some of their key findings.
A general point that emerges from the Indonesian case study - and one that has been observed in other countries in the region - is that the crisis had widespread, but not universal, effects. For example, some regions within the country were hit much harder than others. Moreover, the middle-income groups were more affected than the poorest in absolute terms, but because the poor have to make more difficult choices, they may suffer more permanent effects than the middle class. But the data show that me most severely affected were a heterogeneous group - poor and non-poor, consumers and producers, rural and urban, and from many different areas. While a significant per cent of the chronically poor were hit hardest by the crisis, a large number of non-poor households were also significantly affected.
Several nutritional implications for public policy in the region emerge from the Indonesian case study:
• Indicators of diet diversity and micronutrient status should be considered leading or early indicators for monitoring the impact of crises on nutrition status.
Improved safety net mechanisms are needed to mitigate the effects of future crises. For the Indonesia case study, the IFLS study reports that in the months before the 1998 survey, 9.6% of households received assistance from the government or nongovernmental organizations (NGOs) in the form of cash, food, or non-food, and 22.9% of households were able to purchase food in subsidized markets. These coverage rates are reasonably high, although they can only be evaluated in response to the location of need. But the average value of the transfer was only 1% of average monthly household expenditures.
Globalization of Trade: Food Quality and Safety
The globalization of food trade refers to the process of improving access to food markets throughout the world by reducing and ultimately removing barriers to trade. During the Uruguay Round of multilateral trade negotiations, which started in 1986 and lasted eight years, the international community attempted for the first time to introduce rules regarding the liberalization of trade in agricultural products. The Marrakesh Agreement, which marked the close of the Uruguay Round negotiations, established the World Trade Organization (WTO) with the mandate to establish the global rules of trade between nations. Countries that join the WTO commit themselves to respect the series of agreements that were achieved during the Uruguay Round. To date 134 countries have joined the WTO and a further 31 countries have applied for membership.
The World Trade Organization organized a summit in Seattle in December 1999 to launch a new round of trade negotiations following up on the Uruguay Round. Efforts to launch a new round at this meeting were unsuccessful and have been suspended with a view to restarting the talks in Geneva in 2000.25
FOOD QUALITY, SAFETY, AND THE CONSUMER
The value of international food trade in 1997 stood at US$458 billion and continues to show steady growth. The high level of international trade in food is prompted by a number of factors. Consumers are demanding a greater variety of foods fitting a range of preferences and lifestyles. Likewise, the food industry is supplying more options. Foods are now produced, handled, processed, and packaged using a variety of novel techniques, and “new” foods are entering the international food market. These innovations have created new challenges to food safety. Reports of new pathogens and new associations of food to pathogens have been linked to the innovations in handling, processing, and presenting foods.
CONSEQUENCES OF POOR QUALITY CONTROL
The international food market is of great importance to industrialized and developing countries alike. Growth of food exports not only provides much-needed foreign exchange but also generates employment within the agricultural and agro-industrial sectors. Food exporters who fail to ensure that the quality and safety requirements of importing countries are respected can face serious economic repercussions. Detention, rejection, and destruction of food consignments have obvious negative cost implications for food exporters. It is in the economic and national interest of food-exporting countries to reliably supply safe products of acceptable quality.
Poor food safety control in international trade also has important public health implications. Food-borne illness has been linked to internationally traded food.26 Diarrhoeal diseases are the second leading infectious cause of death worldwide for children under age five27 and are projected to remain so until 2020 if current trends in resource allocation persist.28 The large volume of food traded internationally presents a major challenge to public health authorities. Countries must develop and implement adequate food control measures to ensure that food entering and leaving the country is safe.
OVERVIEW OF SPS AND TBT AGREEMENTS
Having decided to embark upon the path towards a globalized food market, governments must deal with several issues related to the regulation of the international food trade in order to protect their citizens. Consumers must be protected from food-borne hazards and fraudulent practices in the food trade. Just as important, governments must ensure the quality and safety of food supplies without introducing unnecessary barriers to trade. These issues were discussed during the Uruguay Round and are dealt with in the WTO Agreements on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) and Technical Barriers to Trade (TBT Agreement).
The SPS Agreement is intended to set rules that prevent food safety measures from being used as non-tariff barriers to trade. The agreement emphasizes the use of risk assessment in determining the appropriate level of protection with respect to human, animal, or plant life and health in a territory and the use of scientific principles and evidence in establishing and evaluating SPS measures. It also calls for WTO members to regulate food safety based on the standards, guidelines, and recommendations set forth by the Codex Alimentarius Commission regarding food additives, veterinary drug and pesticide residues, contaminants, methods of analysis and sampling, and hygienic practice (see Box 4.2).
The TBT Agreement is designed to ensure that technical regulations and standards do not create unnecessary obstacles to trade. This agreement covers a large number of measures that seek to protect consumers from economic fraud and deception. Codex Alimentarius provisions concerning quality and compositional requirements, labeling, and methods of analysis are relevant to the TBT Agreement.
Two critical concepts reflected throughout the agreements are “harmonization” and “transparency.” The importance of harmonization is clear. When potential trading partners apply different standards of food quality and safety, trade becomes complicated if not impossible. Transparency is essential for assuring the integrity of the agreements and building a solid foundation for a globalized food market.
Exporters’ capacity to ensure that their products meet internationally accepted standards of quality and safety consistent with provisions of the SPS and TBT Agreements is a prerequisite to participation in the globalized market. Compliance with regulatory requirements, however, is not the only consideration. Globalization of trade means free and open competition, and food exporters must obtain the trust and confidence of importers if they are to maintain or expand market share. They can only do this through consistent assurance of their product quality and safety and careful attention to the specific demands of markets of interest to them.
To ensure food quality and safety, countries must establish appropriate food legislation and implement food control programmes to enforce compliance with legislation. The standards, guidelines, and recommendations adopted by the Codex Alimentarius provide the basis for national food regulations and controls and are recognized by the WTO Agreements as a basis for international harmonization of food quality and safety measures.
There will be trade-offs however. Exporting countries may not have the monitoring and enforcement capacity to improve food safety to importer standards. In countries such as Ghana where the poor purchase a high proportion of their food from street vendors, excessive regulation may lead to the closure of such vendors, and this could have a detrimental impact on the nutritional status of the poor.29 As proposed by WHO, such regulations should address only the essential safety requirements.30 On the positive side, a food regulatory system is a necessary prerequisite for the establishment of national food fortification programs, which have large nutritional benefits.
Another dimension of food trade liberalization is the decline in overall grain stocks and decrease in the availability of food aid globally. This decline may lead to greater food price volatility, particularly in thinly traded grains such as rice. Rather than arguing for more food aid per se, this potential volatility calls for more attention to appropriate safety net measures in countries dependent on food imports.
The Globalization of Information and Communications
Knowledge about how to treat such a simple ailment as diarrhea has existed for centuries - but millions of children continue to die from it because their parents do not know how to save them.
- World Development & Report 1998/99, p. 1.
The last decade has seen an unprecedented decline in the cost of transferring information. Transmitting information electronically today costs 1/100th what it did in the mid-1980s,31 thanks to a revolution in information and communications technology - personal computers, microchips, optical fibres, satellite communications, and the like - that has connected hundreds of millions of people to each other and to enormous amounts of information via the Internet.32 Three hundred thousand users join the Internet each week, and while access to this information is far from global, some developing countries are catching up: uptake in several developing countries is now exceeding those of some industrialized countries.
The new information technology provides several opportunities for accelerating the reduction of malnutrition. First, a vast amount of food and nutrition information and data is already available to anyone with access to the Internet. Appendix 12 provides examples from the UN system and elsewhere. Such information can be fairly easily accessed to (1) find out about new nutrition initiatives, (2) determine the latest thinking on existing nutrition problems, (3) obtain best practices, and (4) map food production and undernutrition by country and region within country.33 Second, the Internet provides a forum for debate on issues that require discussion (recent examples include the NGONUT forum - see section 5.5 and Appendix 12). Third, the wide availability of information makes organization based on the centralized control of information much harder to sustain. For example, many believe that improved access to information will foster democracy and the decentralization of decision-making.34, 35 The nutrition community has long recognized the benefits of decentralized decision-making at the community level, as well as the importance of democracy for avoiding undernutrition.36 Fourth, easier access to information makes it easier to hold institutions and other duty bearers accountable for their actions. When human deprivation becomes more visible, as does the performance of the institutions that are charged with eliminating it, the pressures to improve performance increase. This is an important component of respect for human rights, a subject discussed in section 4.3.
Improved access to information can, however, have negative effects on efforts to eliminate malnutrition. First, because the generators of much of the new information reside primarily in industrialized countries, there is a real danger that proprietary concerns will restrict public access to that information. Second, information is frequently incorrect - either through error or by design. Misleading information - from advertising or poor training - about breastfeeding or HIV prevention, for example, could prove fatal37 Third, information generation reflects the perspective of the person generating it. If information is generated solely by people who do not experience poverty and malnutrition themselves, it will lack balance. The new information technology affords an opportunity for the poor and malnourished to have a voice in policy-making and programme design.
How can the nutrition community accentuate the potentially positive aspects of the information and communications revolution and minimize the potentially negative ones? A number of mechanisms exist. For example, public institutions can share as much nutrition data and information as possible via the Internet and other mechanisms. They can undertake quality control of that information via peer review and open and transparent debate. They can subject themselves to accountability mechanisms such as external reviews of processes and impact, and they can make the rationales for their decisions more transparent. Finally, they can serve as active partners with private organizations to ensure that private data and information resources generate positive benefits for the poor and malnourished.
The Increasing Urbanization of Poverty and Malnutrition
Urbanization is progressing at a rapid pace. Over the period 2000-25, the rural population of the developing world is projected to increase from 2.95 billion to 3.03 billion. Over the same period the urban population of the developing world is projected to double, from 2.02 billion to 4.03 billion.38 In Asia and Latin America most of the growth in population in the next 20 years will be in urban areas (see Figure 4.2). The most recent data indicate that urban areas are responsible for an increasing share of national undernutrition (see Table 4.1). This shift is important because it is unlikely that the constraints to better nutrition will be the same in urban and rural areas.
TABLE 4.1: Changes in the numbers of underweight children in urban areas, available countries and time periods
A number of phenomena that are unique to or exacerbated by urban living, and the circumstances that bring individuals to urban areas in the first place, produce these urban-rural differences. These phenomena include
1. a greater dependence on cash income for food and non-food purchases (and hence a greater reliance on foods grown by someone else),
These trends and phenomena pose several questions that need answering if urban malnutrition is to be effectively addressed in the next decade. First and most basic, we need better measures of trends in urban under - and overnutrition. Are the trends in Table 4.1 seen in other countries and in other time periods? Second, how different are the constraints to good nutrition in urban and rural areas, and how generalizable are those differences? Third, what are the opportunities for and challenges to developing successful programmes and policies in urban areas? For example, how does the community-based approach have to be modified in urban areas if it is very difficult to identify a cohesive community? And are governments and NGOs even willing to commit to marginal urban areas that are highly transient but highly vulnerable? Fourth, for the delivery of services to poor communities, urban malnutrition poses new problems owing to highly mobile populations. Greater distances to travel between home and work, and rising rates of violence and other crime, make outreach increasingly difficult.
HIV/AIDS and Nutrition
Today, one in every 100 adults in the most sexually active age group (15 - 49) is living with HIV. The vast majority (89%) live in Sub-Saharan Africa and the developing countries of Asia. Africa alone contains 87% of all the world’s children living with HIV. However, the largest increases in HIV prevalence are found in Asia.42 By 2000, worldwide, the disability-adjusted life years (DALYs) attributable to diarrhoea and to HIV/AIDS will be almost identical. Nevertheless, by 2020, projections indicate that HIV/AIDS will be only the tenth leading contributor to DALYs in the developing world, behind ischaemic heart disease (first), tuberculosis (fourth), and lower respiratory infections (sixth).28
What makes this infection particularly relevant for the nutrition community? First, 90% of HIV infection in children is due to transmission of the virus from mother to child during pregnancy, delivery, or perhaps breastfeeding. Thus the nutrition community - led by WHO, UNICEF, and UNAIDS - has had to develop best practices to help educate and counsel women on how best to feed infants in the context of HIV.43 Further research and thinking need to be undertaken with regard to these best practices as they evolve. In particular, how can adequate breastmilk substitutes be provided to HIV-positive mothers who choose to use them? How can provision of substitutes avoid “spillover,” that is, unnecessary use by HIV-negative mothers and those of unknown status?44
Second, there is some evidence to suggest that improved nutrition may play a role in preventing the transmission and progression of the disease, although this link remains inconclusive and much more basic research is needed.43 Third, there is evidence that the orphaning of children that accompanies the adult mortality due to HIV/AIDS leads to stunting of children - regardless of the wealth of the adopting household - and decreases in school enrollment and attendance as children are pulled out of education as part of the household coping strategy.45 Finally, there is clear evidence that the nutrition situation in a significant proportion of Sub-Saharan Africa - the region hardest hit by HIV/AIDS - is deteriorating (see Chapter 1). The challenge to the nutrition community is to work with local organizations to identify mechanisms that enable households to cope with HIV/AIDS while maintaining investments in nutrition and education.
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