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SUMMARY OF EXISTING EVIDENCE OF IMPACT ON FOOD CONSUMPTION AND NUTRITION
Very little quantitative research has been done on the short-term effects on the poor and their nutritional status of macroeconomic adjustment policies, and empirical evidence is very scarce. Studies in the UNICEF report edited by Jolly and Cornia [6] provide useful insights into the effects of economic recessions on children in a number of countries. Some of these studies, along with other UNICEF research, also provide empirical evidence of the impact of adjustment programmes.
The research found that absolute poverty increased in several countries during periods of serious economic disruptions. Jolly and Cornia concluded, "The poor and the bottom strata of the social pyramid have been harshly hit in those countries where the recession has been severe" [6]. Infant mortality rates increased in cases where government transfers and/or earning opportunities for the poor decreased, and in a number of cases the rate of decline in infant mortality slowed. Malnutrition has increased during the last few years in a number of study countries, such as Costa Rica, Brazil, Sri Lanka, and Ghana.
Thus, the UNICEF researchers concluded that in most study countries "a serious deterioration has occurred in indicators of nutrition, health status, and school achievements, and it is quite evident that if this process is not reversed it will lead to more dramatic deteriorations which will then be reflected in a higher rate of infant and child mortality." They further concluded that "the evidence strongly suggests the existence of time lags between the deterioration of input indicators and that of process and outcome indicators" [6]. Thus, measurements of immediate effects of current reductions in incomes of the poor, increases in food prices, and reduced government spending on social programmes on the nutritional status, child mortality, and other welfare indicators underestimate the actual impact.
FIG. 3 Change in calorie consumption by income quintile in Chile, 1969-1978 (Source: Raczynski [31])
The Inter-American Development Bank, in an analysis of the effects of macroeconomic adjustments during 1982-1984 in several Latin American countries, concludes that "the social cost in terms of reducing living standard, high inflation, and high unemployment has been tremendous and unequally distributed, and there is little likelihood of significant improvement over the near term" [10, p. 89].
A recent study in Chile [31] found that the discontinuation of a government-sponsored child-feeding programme caused an increase in child malnutrition and mortality in 1983. Soon after the programme was reinstated, the negative effects disappeared. The nutritional status of children also deteriorated in the Philippines during the last two to three years [17].
Data from Chile and Sri Lanka illustrate a serious decrease in calorie consumption among the poor as well as a deterioration in the relative distribution among income groups. Thus, daily calorie consumption per capita in the poorest quintile of the Chilean population decreased from 1,925 in 1969 to 1,626 in 1978, a reduction of 16 per cent. During the same period, calorie consumption increased in the richest quintile (figure 3).
In Sri Lanka, the calorie consumption of the poorest 10 per cent of the population decreased by 27 per cent, or 590 calories per person per day, from 1969/70 to 1981/82, while the average decrease for the population as a whole was 10 per cent, or 325 calories per person per day. The share of total calorie consumption captured by the poorest 10 per cent of the population decreased from 6.5 per cent in 1969/70 to 5.1 per cent in 1981/82, while the share for the richest 10 per cent stayed constant. As shown in figure 4, both the absolute level of calorie consumption by the poor and the relative distribution among income strata deteriorated from 1978/79 to 1981/82.
These deteriorations in both the absolute and the relative level of food consumption by the poor are rather dramatic and deserve serious attention by policy-makers; however, the causes are not fully understood. Are they caused by the adjustment policies that were introduced in these countries or by the crises that made the adjustments necessary? What would the situation have been if the crises had been permitted to continue or if a different set of adjustment policies had been used? Answers must await further research.
Even though very little research that firmly establishes and quantifies a causal link between specific adjustment policies and nutritional status has been completed, available evidence suggests that there is a high risk of deterioration in nutritional status as a consequence of traditional macroeconomic adjustment programmes. Scattered evidence as mentioned above, together with massive evidence of falling real wages, rapidly increasing food prices, reductions in food subsidies and transfer programmes to the poor, and reduced government expenditures on primary health care and education should not be ignored just because solid causal links have not yet been established. Enough is known about the effect of food price increases and real wage decreases on food consumption by the poor to conclude that the nutritional status of those most at risk has deteriorated. While the causal links are being studied and the estimates of nutritional impact refined, explicit attention should be paid to avoid negative and enhance positive nutrition effects at the time of designing macroeconomic adjustment programmes. Some of the issues to consider are discussed in the next section.
POLICY MEASURES TO IMPROVE THE NUTRITION EFFECTS OF MACROECONOMIC ADJUSTMENTS
Suggestions about how governments may avoid negative and enhance positive nutrition effects of macroeconomic adjustment programmes must necessarily be somewhat crude until more knowledge about the causality between adjustment policies and nutrition is acquired. While awaiting additional information, certain things can be done.
Based on the discussion in the earlier sections of this paper, four key factors must be considered from the point of view of nutrition when designing macroeconomic adjustment policies:
In principle, governments can do one or both of two things to incorporate nutritional considerations into the design of macroeconomic adjustment programmes: they can design or modify the adjustment policies to take into account the nutritional concerns, or they can introduce separate policies and programmes to compensate the poor for any adverse effects caused by the adjustment programme. The former may be politically difficult to implement if there appears to be a trade-off between the achievement of nutritional goals and other goals - that is, if modifying the programme to improve the achievement of nutrition goals decreases the expectation of achievement of such goals as accelerated economic growth and improved balance of trade.
The choice of compensatory measures over modifications in the adjustment programme is appropriate if the programme is expected to contribute to improvements in the nutritional status in the long term, for example, through higher incomes of the poor, while short-term negative effects are expected to be transitory. Although the record is mixed, this is an argument frequently -made in support of traditional adjustment programmes. If, on the other hand, it is unlikely that the long-term nutrition effects of the traditional programmes will be positive and of a sufficiently large magnitude, compensatory measures would be less appropriate than changes in the programmes themselves. In many such cases, structural changes in the economy and reorientation of the development strategy probably will be needed.
The following measures are likely to be important from a nutritional point of view:
In addition, many other measures may be considered. The choice of the most appropriate ones must necessarily be based on the particular circumstances of the country in question. Jolly and Cornia suggest that five elements should be present in efforts to make economic adjustments:
The executive director of the World Food Council concluded that the trend toward increasing malnutrition has "been exacerbated in the 1 980s by the current economic and financial crisis and its concomitant structural adjustment requirements, which have adversely affected the poor and undernourished" [33, p. 9].
The Council suggests that the needs of the undernourished may be explicitly taken into account if: governments in the process of adjustment sharpen their focus on poor families' food security in policy reformulation and on the most cost-effective measures to protect it; the international financial institutions, notably the International Monetary Fund (IMF), heighten their sensitivity to food security and poverty issues while recognizing their principal mandate of assisting countries in restoring their financial and economic health; international development agencies increase their assistance to governments in assessing the impact on hunger and malnutrition of adjustment policy alternatives and in implementing effective protective measures. At the same time, they should seek greater collaboration with the IMF and other financial institutions in advising on the social costs of adjustment policy packages.
A PROPOSAL FOR RESEARCH
While consumption may have to be reduced in favour of investment, it is clearly a misconception that, to be effective, long-term solutions to the problems of foreign-exchange deficits and slow economic growth must necessarily hurt the poor in the short run. Current understanding of the relevant economic processes and knowledge of the magnitude of the gains and losses for the poor that may be expected from each of the policy measures available to governments who wish to implement adjustments are insufficient to assist in the design of a set of policies that will deal with both short-term effects on the absolute poor and long-term efficiency and growth objectives within a given economic, social, and political environment.
Very little empirically based research has been done on the matter, and it appears that successful attempts to reduce the existing knowledge gaps are likely to have a high payoff in terms of assisting governments in improving the design of adjustment policies and related measures.
Pioneering work in this area has been done by UNICEF, and several UNICEF-supported activities are currently under way. The UNICEF research provides extremely important information on recent changes in the welfare of the poor in general and children in particular in a number of countries faced with serious economic recessions. It also provides an important foundation for additional research to improve the understanding of the short-term impact of various policy measures on poor people's incomes, food consumption, and nutrition. Such new research must attempt to establish causal links between changes in the welfare of the poor and specific economic changes and policies in order to assist in the design of policies that will effectively deal with short- as well as long-term goals and effects.
The World Institute for Development Economics Research has taken the initiative to sponsor a set of country studies of the effects of macroeconomic adjustment policies. Short-term effects on the poor and their nutritional status do not appear to be a major concern of these studies. Several other studies are currently under way by various institutions and individuals, including an analysis of the income distribution effects undertaken by the Overseas Development Institute [34] and analyses by Helleiner at the University of Toronto.
Continuing research at IFPRI includes an analysis supported by FAO and the United Nations University of the short-run effects of macroeconomic adjustment policies on the poor in Sri Lanka. A proposal for a similar study in Jamaica has been developed jointly with the Jamaican government, and exploratory work is being done regarding studies in other countries, possibly the Philippines, Sudan, and Brazil.
Food price and subsidy policies often play an important role in macroeconomic adjustments, and past research on these policies provides important input into the research discussed here. Findings from a series of IFPRI studies of food price and subsidy policies are reported elsewhere and are not discussed here [19, 20, 24, 28, 30, 35-44].
Past and continuing research on the implications of alternative ways of reducing the fiscal costs of subsidies is particularly relevant for those designing adjustment policies because it assists in identifying policy changes that take into account both fiscal and short-term welfare implications. Studies for Brazil 128], Egypt [39], and Sri Lanka [43] are examples of research that identifies specific policy changes that may reduce government costs with little or no negative impact on the poor.
Policies to expand production of agricultural commodities for export or for import substitution also play an important role in adjustment efforts in many countries. Findings from past research on the nutrition effects of increasing commercialization of semi-subsistence agriculture and export-crop production may be useful in this regard, although their utility for policy design is limited [14, 45]. Continuing IFPRI research on this topic in several countries (Gambia, Guatemala, Kenya, the Philippines, Rwanda) supported by IFAD, AID, and GTZ (Gesellschaft für Technische Zusammenarbeit) is more sharply focused on policy implications.
Results from these studies are expected to be of greater utility to policy-makers and provide important input into the overall effort of improving the understanding of the effects of macroeconomic adjustment policies.
To strengthen past and continuing activities discussed above, it is proposed that additional research be undertaken. The principal objectives of this research should be:
The proposed research does not address the question of whether macroeconomic adjustment is needed, but rather how the poor will be affected in the short term by specific adjustment policies and how short-term effects not desired by governments may be avoided by policy modifications or additional policy measures and programmes specifically aimed at alleviating these effects through compensation for expected losses or insufficient gains.
In cases of severe crises, the question usually is not whether adjustments should be made but how they are made. Adjustment policies that hurt the poor in the short run cannot be justified merely on the grounds that lack of adjustment would hurt them even more. The challenge is to design the adjustment policies in such a way as to achieve the desired mix of short- and long-term equity and efficiency goals, including protection of the poor from serious deteriorations in their welfare in the short run. It is toward this challenge that the proposed research should be aimed.
Since the poor are not a homogeneous group, analyses must be based on their disaggregation into a number of groups such as landless agricultural workers, semi-subsistence farmers, non-agricultural labour, self-employed in the informal sector, etc. (See Sahn [8], Trairatvorakul [19], and Garcia and Pinstrup-Andersen [44] for examples of such disaggregation. See also Alderman [46] for a review of demand variables by income group.) Furthermore, the nutrition impact of changes in employment, wage levels, and incomes may depend on how individual household members are affected. Thus, the impact of macroeconomic policies on these factors should be estimated by gender and age.
Neither adjustments nor associated effects are instantaneous. Thus, appropriate time lags must be incorporated into the analyses. This is one of the key concerns in research to assess short-term versus long-term effects.
ANALYTICAL APPROACHES
The analytical approach to be used in the proposed research must have at least the following capabilities:
1. Estimating the short-term effects of each policy measure or group of like measures, as well as separating the effects of the problem (balance-of payments and other problems) from the effects of the solution (the adjustment policies). The effects of external changes must also be separated.
2. Providing estimates for various short-term periods, e.g., one to five years. The approach must be capable of dealing explicitly with time lags. Ideally, the effects would be estimated for each of a number of years, with data collection beginning prior to the introduction of the policies under study and extending into what is defined as "long-term." Data deficiencies may prohibit such an approach.
3. Integrating macroeconomic and microeconomic approaches into a consistent analytical framework.
4. Estimating the effects on real incomes, food consumption, and nutritional status for each of a number of population groups, including several groups of low-income people.
5. identifying the mechanisms or processes through which the effects are transmitted and the most important factors and relationships that, if changed, would alter the effects.
6. Providing estimates of likely effects of alternative policy options and identifying ways in which short-term effects on the poor may be improved.
Several analytical approaches may be considered. The final choice will be determined by relative effectiveness in reaching the study objectives, data availability, and relative costs.
The most straightforward approach would be a comparative analysis that basically compares a situation before with a situation after the introduction of adjustment policies. Most existing empirical evidence of the nutrition effects is obtained from this approach. The principal deficiencies are that (a) it is unlikely to be able to separate the effects of various policy measures and the effect of other factors, (b) it provides little evidence of how the effects came about, i.e., the mechanism, and (c) because of the above two deficiencies, it is unlikely to be very useful for the design of future policies.
If, instead of a comparison of two points (before and after), comparative analyses could be done annually for a number of years, more insight could be gained but it would still be very difficult to establish causality unless additional analysis were undertaken.
Partial equilibrium econometric analysis provides a tool for estimating causality. Such analyses could be performed at several levels and used to explain the impact of a particular adjustment policy on the indicators of interest (incomes, food consumption, and nutrition) either directly or on a step-by-step basis. Single equations as well as systems and simulation models could be developed. If data needs can be met, partial equilibrium econometric analysis would meet all the above criteria. Certain macroeconomic relationships would be left out, however, because the approach does not assure general equilibrium. This might not be a serious weakness for estimating very short-term effects but could introduce significant biases in efforts to extend the analysis beyond the short term. To overcome this deficiency, general equilibrium models (GEMs) are needed. Most existing GEMs are either too aggregate or too data-demanding for the purpose of this study. The development of GEMs that are sufficiently disaggregated for the research proposed here would be a very costly and time-consuming undertaking that probably cannot be justified. Furthermore, the validity of the results might not be high because there may not be sufficient sound data available to meet the large data requirements of GEMs. Where appropriate GEMs and data are already available, however, they should be used.
Input-output models provide another potential analytical approach. Within this group of models, the social accounting matrices (SAMs) are the most promising because they pay a great deal of attention to income distribution by dividing the population into income groups. Their principal weakness is that the effects of changes in relative prices are not easily incorporated.
The choice of analytical approach must be made on the basis of a series of considerations specific to each study- such as specific study goals, data availability, availability of computer facilities, budget, and competence of the researchers - and no general recommendation should be made for all studies in this area. It appears, however, that a comparative approach based on data from several years together with partial equilibrium econometric analyses offer the most appropriate approach in most cases. The most appropriate specification of the econometric model is likely to vary between studies. Where a sufficiently disaggregated GEM and the necessary data are available, the use of such a model is likely to be appropriate.
PROPOSED ACTIVITIES
It is proposed that the research needs discussed here should be met through a three-phased approach.
Phase 1. In the initial phase it is proposed that three sets of activities should be undertaken simultaneously:
Phase 2. It is proposed that a series of in-depth country studies should be undertaken within a research network in the second phase to provide ex-post assessments of the effects of macroeconomic adjustment programmes and their components on real incomes, food consumption, and the nutritional status of the poor. Study countries should have introduced adjustment policies during the last one to six years. Other criteria for selecting study countries will be data availability, the seriousness of the poverty and nutritional problem, and availability of qualified researchers and institutional support. Ideally, a minimum of 10 to 12 country studies would be undertaken to provide generalizable results. If research resources are insufficient to cover the ideal number of in-depth studies, however, it will be better to reduce the number of studies than their rigour and depth. A smaller number of rigourous in-depth (and therefore relatively costly) studies is likely to have a much higher payoff than a larger number of superficial (and therefore less expensive) ones. This is so because the issues and relationships are very complex and primary data may be required. Superficial studies are unlikely to provide reliable results and may result in faulty policy advice, which, if implemented, may result in social and economic losses that by far exceed the cost difference between a superficial and an in-depth study.
Phase 3. As results from in-depth studies become available, they should be analysed across countries. The purpose of such integrative or comparative analyses would be to attempt to derive generalizable lessons that may be useful for policymakers in the future and to identify issues that cannot be generalized. Activities in this phase may also include one or more international conferences to present and discuss study findings and generalizable lessons with policy-makers, advisers, and analysts, as well as other interaction with national governments and international institutions as appropriate.
REFERENCES
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![FIG. 3 Change in calorie consumption by income quintile in Chile, 1969-1978 (Source: Raczynski [31])](8F091E04.GIF){kind=link}
