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How Wall Street Gets Development Agencies to Push Emerging Economies into Derivatives

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Yves here. This post helps fill readers in on an important, but under the radar topic: how various international organizations push hard to make emerging markets fertile ground for America’s financiers. I became aware of this practice by happenstance. A McKinsey colleague left to join the World Bank in the 1980s. Her job was to set up capital markets in emerging economies. Later on, she set up private equity funds in emerging economies. She left the World Bank recently to help found an emerging markets PE fund of her own. Mind you, it’s not as if she needed the money. She will get a $160,000 (no typo) annual pension for her time at the World Bank, and if she’d stayed a few more yeas, it would have been $220,000.

However, as this post details, the sort of revolving door practices that have been used to suborn regulators in the US appear to have the same sort of persuasive effect on key development agency officials.

By Sasha Breger Bush, a lecturer at the Josef Korbel School of International Studies at the University of Denver and author of the book Derivatives and Development. Cross posted from Triple Crisis

Why are development institutions so supportive of the derivatives industry? Given what we now know about derivative instruments and markets—they are complex, volatile, poorly regulated, crisis-prone, and dominated by very large financial firms—the alliance between prominent global development agencies like the World Bank and UNCTAD and the derivatives industry gives real reason for concern. In fact, this appears to be yet another instance in which the interests of the development establishment seem grossly misaligned relative to the goals of the constituencies they purport serve.

As I detail in my recent book on the topic, the governments of commodity dependent economies, agricultural firms involved in commodity trading and processing, and even small farmers have been targeted by these two institutions as actors who stand to benefit from more derivatives trading and the expansion of derivative markets across the developing world. The basic argument is that the welfare of these actors depends critically on prices in global commodities markets. By using derivatives to manage the risk of price fluctuation, tax and export revenues, business revenues and personal incomes could be stabilized and even raised in some cases.

To this end, UNCTAD has been recommending the establishment of local commodity exchanges in a variety of developing countries, exchanges that can both facilitate spot exchanges as well as provide opportunities for forward contracting, and futures and options trading. Similarly, though with a slightly different orientation, the World Bank has been recommending that various developing country parties (public and private) trade on global derivatives exchanges (located mostly in the West) in order to mitigate price risk.

Despite the fact that UNCTAD pictures itself as an “honest broker”, merely “informing those active in the commodity sector of the new possibilities open to them, assisting in the evaluation of the benefits of new tools and the implications of their use”, the evidence suggests that UNCTAD and the World Bank have positioned themselves both as friends of and marketing tools for the derivatives industry itself. In at least three contexts—employment crossovers, programmatic cooperation, and joint research and promotion—the uncomfortable closeness of the development establishment and the derivatives industry is apparent, leading me to question the impartiality of the derivatives policy recommendations issued.

First, there are several cases of employment crossover between prominent global development institutions and the derivatives industry. This means that the people recommending derivatives for development have subsequently reaped personal financial and professional benefits from the implementation of such projects on the ground, creating a clear conflict of interest. In one case, UNCTAD’s Chief of Finance and Risk Management in the Commodities Division was hired on as a top manager of India’s MultiCommodity Exchange (MCX). In another case, a senior economist at the World Bank and former commodities expert with UNCTAD was subsequently hired on as the CEO of the Ethiopian Commodity Exchange.

Second, there are a growing number of instances of cooperation between the development establishment and specific financial firms, for the purposes of marketing derivatives to developing country actors. For example, in 2011 the World Bank announced a new program to be undertaken in conjunction with JP Morgan. The program intends to “improve access to hedging instruments to shield consumers and producers of agricultural commodities from price volatility” by extending lines of credit along with derivatives expertise to potential hedgers in the developing world (consumers and producers alike). JP Morgan is matching the credit extended to these prospective traders by the World Bank’s IFC: “In the debut facility with J.P. Morgan, IFC will commit up to $200 million in credit exposure to clients that use specific price hedging products, while J.P. Morgan will take on at least an equal amount of exposure to them. Since the exposure associated with risk management operations is typically smaller than the principal amount of hedges made available to clients, these combined credit exposures should enable up to $4 billion in price protection to be arranged by J.P. Morgan for emerging markets agricultural producers and buyers.”

Not only do the derivatives and development industries share personnel and programmatic work, but they also sometimes jointly prepare the research and documentation that provides ideological and empirical support for increased derivatives usage in developing country agriculture. For example, UNCTAD collaborated with the Swiss Futures and Options Association (an industry advocacy and lobbying group) to produce a 2006 report that unequivocally recommends increased derivatives usage in the development context. I quote the report at length as it exposes the uncomfortably close, “friendly” relationship between UNCTAD and the derivatives industry, despite UNCTAD’s assertions of its “impartiality” on the matter of expanding commodity exchanges in the South:

As an international organization with considerable accumulated knowledge of commodity sector development, UNCTAD is ideally placed to overcome the trust gap that often still exists between the public and private sectors in developing countries and which hinders investments in trade-related institutions. An organization like UNCTAD brings a measure of impartiality to the discussion on the use of modern risk management and financing tools, and thus helps potential users of these tools to feel more comfortable about such use…There are many further opportunities out there which are yet to be realized and much poverty that could be alleviated if only decision-makers know how to utilize modern financial tools for managing commodity production and trade, particularly the commodity exchange. With the continued support of our stakeholders in government and friends in the industry, we will stand for a brighter future in this domain.

As I detail in my book, derivatives have at best an erratic record of success in mitigating price risk in the agricultural commodity context; in many cases, derivatives trading can augment risk. The tools are difficult and costly to use, and the markets are dominated by large financial institutions (exchanges, clearinghouses, brokers and speculators) whose interests are not necessarily aligned with those of developing country agricultural actors. Why, then, do development institutions continue to recommend them so brazenly and carelessly? Alliances and friendships between development institutions and the industry itself appear to partly explain this continued advocacy.

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38 comments

  1. Chris-Engel

    We really need to reform ethics standards and laws against corruption to incorporate the realities of the “modern capitalist system.”

    It’s insane how blatant a lot of the corruption is, and the ridiculous US standards of “no direct influence for two years after leaving office” is insufficient.

    I wonder if Elizabeth Warren or any of the handful of politicians who actually know what they’re doing will spearhead this issue, but it’s starting to become a serious embarrassment.

    Case in point: Lanny Breuer. I noticed Yves had a great quote in HuffingtonPost on the blatant unethical nonsense that came out of Breuer’s DoJ exit and return to Covington to a nice fat promotion.

    These sorts of events lead people “in the game” to think one of two ways:

    1) Play the game and take advantage of the system since it’s impossible to reform anyway.

    2) Screw the game and just get out of it because it’s been shown to be so hopeless to reform.

    And in the end, “the industry” only attracts psychopaths with little to no context of what they’re working on.

    1. Chris-Engel

      forgot the link + quote:

      http://www.huffingtonpost.com/2013/03/28/lanny-breuer-joins-law-firm_n_2974058.html

      “Breuer’s golden handshake return to Covington & Burling confirms the worst suspicions about his cowardly failure to pursue bank and mortgage misdeeds, despite mountains of evidence and no shortage of legal theories: it was all about not riling his once and future paymasters,”

      I’ve actually been anticipating a more detailed take-down by Yves of Breuer and the whole revolving door corruption endemic in our system. But i’ll drop this now since it’s on topic with what we’re seeing in international development firms around the developing world.

      What I don’t get is why academics don’t get to play a bigger role in public policy positions and in these international organizations? That used to be where we’d go if we were worried about private sector corrupt actors but still wanted to have the expertise necessary.

      Maybe I’m missing the big picture, but it seems that academics are really ignored these days whereas they used to play a more active public policy/information role.

        1. Chris-Engel

          Yea I remember you reporting on the Frontline fallout, but I’m referring to from the news of Breuer’s shameless move back to Covington. Deserving of a revisiting :)

          1. LucyLulu

            Schneidermann was on Rachel Maddow last night (she occasionally does some good pieces) talking about the revolving door, mentioned Breuer and Schapiro as prime culprits. He didn’t directly make the statement, he was cut off, but implied that some folks had the intellectual integrity to make the switches and be honest with them and that Mary Jo White was one of those people. He said that he hoped that White would put a 5 year ban on moves from government to the private sector (assume it could only be SEC) in place during her tenure at the SEC. I’m not sure why he brought that up, if he had some inside info that might be in the cards or not.

            Yves, you (and I) may have been right about White after all. Quelle surprise! Schneidermann surely ran in the same circles as White did, when she’s been on both sides of the fence, so you’d think he’d know (and has no compunction about calling a spade a spade).

          2. Hiram Bilgewater

            I find Lanny’s ‘Kleptocracy Initiative’ really hilarious, which was announced back in 2010. C&B attorneys gave counsel to Prince Bandar Bush. Chertoff, former C&B partner, meanwhile goes on to a cushy position at BAE. We need some new adjectives to describe this level of abject depravity/sleaze/skeez, we need some more sound symbolism.
            — Hiram

      1. Moneta

        If businesses were run the “proper” way, they would quickly get squeezed out by the short-term “cheaters”.

        Anecdotally, most of my friends who have made the most money over the last decade don’t read much.

        1. Chris-Engel

          I see your anecdote and raise you a survey:

          An independent survey of hedge fund professionals commissioned by law firm Labaton Sucharow LLP, HedgeWorld and the Hedge Fund Association, revealed that nearly half (46%) believe that their competitors engage in illegal activity, more than one third (35%) have personally felt pressure to break the rules, and about one third (30%) have witnessed misconduct in the workplace.

          http://www.labaton.com/en/about/press/Hedge-Fund-Industry-Survey-Commissioned-by-Labaton-Sucharow.cfm

      2. from Mexico

        @ Chris-Engel

        I think if you’re looking to the acdeme for salvation, you’re going to come up empty-handed.

        Somewhere between Descartes and Kant we ditched the old two-world theory of body and soul for the new three-world theory of mind, body and soul.

        But if you carefully examine the history of the last few centuries, I think you will find that mind hasn’t exhibited a whole lot more soul than body did.

    2. Abe, NYC

      Bretton-Woods institution are as prone to revolving door as the rest of the US government. Just look at Larry or Timmy. Hadn’t heard of a similar problem at UNCTAD, but no surprise there: once you start getting close to the Big Finance, few it seems can maintain their integrity. It probably isn’t as bad as in the US, many cases of international officials leaving for the private sector would be benign, although many wouldn’t.

      However, while it’s extremely difficult to fight the revolving door in the US, this is practically impossible at the international level. There is no legislative framework to restrict the employment of former officials once they leave international organizations – it’s up to the member states. There needs to be a whole culture change, and it’s not happening until the US cleans up its own house, which is unlikely for many years to come.

      1. LucyLulu

        Schneidermann also mentioned Timmy, as one who hasn’t done the revolving door, he’s never been in the private sector (per Schneidermann, he must consider the NYFed public sector, and it kinda is), yet is still corrupt (okay…… he didn’t use the word “corrupt”…… I’m paraphrasing).

        1. Abe, NYC

          That Geithner hasn’t gone through the revolving door is still technically true (there is another kind of revolving door, between the US government and WB/IMF, but that’s a different story – just ask Koreans or Indonesians). But who wants to bet about his next job?

          There are many other examples, both evil and benign. Jim Wolfensohn went from Wall Street to WB presidency and, by most accounts, did a pretty good job there, without a conflict of interest (I may be wrong but I haven’t heard of any).

    3. nonclassical

      …chris,

      while I totally agree, the problem as spoken by U.S.-Wall $treet “investment banks” involves advantage of other world banks…especially perhaps, “City of London” parallel to Wall $treet banks…

      it’s a worldwide problem, that looks as though it can only lead to a worldwide crash, IMO…

  2. Anonymous

    “Breuer’s golden handshake return to Covington & Burling confirms the worst suspicions about his cowardly failure to pursue bank and mortgage misdeeds, despite mountains of evidence and no shortage of legal theories: it was all about not riling his once and future paymasters.”

    Thank you for your accurate vision and speaking the truth. It is interesting to note that Covington & Burling provided an opinion letter for MERS opining that it could work as an e-note registry, when it never registered notes. That opinion letter was boldly posted on the MERS website for an extended period of time to provide it with a color of legitimacy. MERS is the smoke screen behind which millions of homes were confiscated by Covington & Burling clients. Since MERS is also a Covington & Burling client, is it any wonder that MERS was never investigated by the US DOJ? MERS is fraud per se. It claims to operate as a private registry for mortgages as a “nominee” of the originator and claims to have the authority of defunct originators (New Century, Aegis, Countrywide . . . ) to allow servicers for unnamed entities (often Fannie and Freddie) to assign mortgages to themselves. To my mind, the real legacy of Holder (also of Covington & Burling) and Breuer is MERS and the collapse of our public land records which allowed the illegal foreclosure of millions of homes using forged mortgage assignments and endorsements for proof of the servicers’ claims of standing to foreclose.

    1. Susan the other

      According to Covington and Burling’s favorite legal theory, you can make a ham sandwich your agent, if you want to.

  3. from Mexico

    Sasha Breger Bush said:

    The tools are difficult and costly to use…

    All the better for the FIRE sector. That’s the perfect combination to dupe the rubes with.

  4. Felipe

    Financial tools, like other instruments or inputs, may do either harm or good. To hedge on the commodities market is by itself a sound notion. The corruption corroding the finantialization industry belongs to a different agenda: The independence of the polity from Big Capital. Sans regulation or oversight, we have seen how the top ten U.S. control nations, markets, and political processes.

    In sum, derivatives are neither good nor bad. The financialization sector, as it exists today, is intrically perverse. Don’t throw away the baby with the bath water; murky as it might be, the wash water hides promising babies.

    1. from Mexico

      But don’t derivatives hold out a false promise, and that is that they can make risk, as if by magic, disappear? So even at first glance they amount to nothing but false advertising.

      What they do — at great cost, as Breger Bush points out — is to move risk around. They’ve done such a good job of this that we don’t even know where risk resides anymore. And this, in itself alone, greatly enhances risk, unknowing, and uncertainty; which in turn greatly diminishes confidence in the financial system.

      Empirical information, such as that formerly gathered and used to evaluate loan quality, has been replaced by pure speculation and obfuscation. Derivatives, therefore, represent a complete withdrawl from the real world into a world of uselessness, meaninglessness, and unreality.

      Historically, derivatives find precedent in the “greater lunacy” of the medieval scholastics, whose abstruse abstractions completley departed from this world.

      1. William C

        I think some distinction can usefully be made between on-exchange and OTC derivatives. With the former you should get some price transparency, sometimes even information about positions in an aggregate format and independent risk mitigation activities through margin calls and the clearing house, which should work against quite a few abuses. OTC – well as we have seen that is another world.

  5. Susan the other

    Maybe Derivativism will replace Capitalism. The world of risk and profit will be so diluted with derivatives of derivatives that only fees will be made off of all the confusion. Those clever banksters.

    1. scot

      A prudent hedging plan that reduces bankruptcy risk might be a good thing for developing nation farmers. Many of these farmers are one bad crop away from no income. Not sure how IFC or other agencies providing credit to farmers is a bad thing. Small farmers are not going be able to sign ISDAs or whatever other counter-party agreement is required to hedge with a bank.

  6. Abe, NYC

    Weren’t agrictultural options and futures the original, “good” kind of derivatives? I certainly thought so. They’ve been around forever, American farmers have apparently used them quite successfully. Also, I understand the agricultural sector was most vocal in resisting the rise of predatory “financial innovation.”

  7. May

    This is nothing new. Covington, for instance, both drafted FDA law and now works for companies in cases pertaining to it.

    http://www.cov.com/practice/food_and_drug/

    http://www.zoominfo.com/p/H.-Austern/78256364
    H. Thomas Austern These writing awards honor the memory of H. Thomas Austern, who practiced food and drug law for more than 50 years at the firm of Covington & Burling. As a result of his work on the drafting and negotiation surrounding the Federal Food, Drug, and Cosmetic Act, and his many scholarly contributions, Austern became known as the “Dean of the Food and Drug Bar. Austern served on the Editorial Advisory Board of the Food Drug Cosmetic Law Journal from its inception until his death in 1984, and was a strong supporter of FDLI since its founding in 1949. FDLI’s H. Thomas Austern Memorial Writing Competitions

    http://www.cov.com/files/upload/Hutt%20-%20Legal%20Times%20Leading%20Food%20&%20Drug%20Attorney.pdf
    Identifying Leading
    Food and Drug Lawyers

    http://www.politico.com/story/2013/03/jon-kyl-joins-covington-burling-law-firm-88494.html
    Jon Kyl joins Covington & Burling law firm

    1. JamesW

      Covington & Burling, Sullivan & Cromwell, Gibson, Dunn & Crutcher, Richardson & Patel, what the hell ……

  8. wunsacon

    Recently, this blog briefly covered the topic of people who “contribute” some time to charities in order to expand their networks and advance their careers. This article highlights a macro version of that!

  9. McWatt

    What we need to do is end speculation in all the commodity markets and
    get back to the original system of just producers and processors being involved.

  10. Sure, wreck my day again

    Thanks a lot for the worst news in a long time, goddammit. It used to be war, with Bretton Woods fighting for the banks and Dumbarton Oaks (through the UN agencies) fighting for the common interests of LDC states. As financial markets set themselves on fire and Bretton Woods began to lose traction, banks stepped up a longstanding effort to subvert the UN agencies with “public/private” collaboration. Sounds like the subornation’s paying off. Let us hope the corruption is confined to specific initiatives. UNCTAD as a whole is still a gadfly to the crooked western bankers.

  11. LucyLulu

    $160,000 annual pension. Damn!

    Because my ex changed jobs so often, there was only one employer I stayed with long enough to vest in their pension, 7 years, Charter Behavioral Health. A class action suit brought me a lump sum settlement payment of a little over $400.

    And they said nursing would bring security, if not riches. Yeah, you can always find a job, even when you’re 80???? (Though that isn’t true anymore, just ask unemployed nurses over 50 how easy it is to find work. Age discrimination is rampant. They know nurses are broken down by then)

  12. Jess

    Yves — Your friend’s pension from the World Bank is peanuts. I live in a city of 65,000 here in Cali. One of our former fire chiefs gets $176K annually from his pension, and our most recently retired chief gets $214K.

    How is an enabler of the plutocracy like your friend suppose to subsist on a mere $160K pension. That will hardly pay for the household staff.

    1. Carla

      Yeah, exactly how did that happen in California? Was nobody paying attention for two-three decades, or what?

  13. washunate

    “using derivatives to manage the risk of price fluctuation”

    Derivatives are always good for a nice laugh. Who in (positions of power) in finance knows anything about managing risk? I crack up thinking about David Viniar’s 25 standard deviation events remark every time I think about it.

    This post highlights beautifully how one of the best ways the US could help the world would be to do less meddling (but I do understand that sentiment runs afoul of the more interventionist streams of liberalism).

  14. Ep3

    “get a $160,000 (no typo) annual pension for her time at the World Bank, and if she’d stayed a few more yeas, it would have been $220,000.”

    Now some slight sarcasm. Yves, what about 401ks and all the successful investments that Walmart workers are using to float their retirements? Surely your hardworking friend yves must be actually a lazy union worker, if she draws a pension. Isn’t that pension financially hard on the employer? Employers can’t be expected to keep promises they have made to employees.
    Sorry yves. I am sure your friend worked hard for their income. Why can’t everyone have a retirement full of dignity?

  15. Claudius

    Gawd! This is a big apple from which to take a bite.

    The author seems to be hyperventilating:
    The author writes: ‘The launch of the programme coincides with appointment of Robert Kopech, who spent 19 years working at JP Morgan, as the Bank’s new Group Chief Risk Officer’. What is omitted is that before joining the World Bank, he spent the previous 16 years with Oliver Wyman (consultancy); so, not quite the hot line to Jamie Diamond, perhaps. He joined as VP of Group Risk.

    The UNCTAD commodities programme had been in the works for over a decade before his joining the World Bank and before the board of review for approvals with the IFC for 18 months and the WB for some six month prior to his appointment. Lastly, he had no sign-off for the UNCTAD programme.

    Both, Lamon Rutten and Dr Eleni Gabre-Madhin both worked for UNCTAD before joining the Indian and Ethiopian commodity exchanges respectively. Both had worked for over ten years as part of the UN’s national commodities exchange development programme. Lamon Rutten and was hired by the Indian ComEx in 2006 – 5 years prior to UNCTAD even seeking funding from the World Bank (and thus being a viable programme) . In Dr Gabre-Madhin case she was involved in the programme since the inception of Ethiopia’s Commodities Exchange, joining it in 2004 (a remarkable feat for an Ethiopian woman); she resigned her position as head of the Ethiopian ComEx, (November 2012).

    What surprised me most was that neither of them went off to join first world Goldman Sachs, JP Morgan or HSBC, but chose instead to accept third world opportunities contingent with their research and development. Neither of the two commodity exchanges has previously or subsequently hired UNCTAD staff; but sorely need the expertise that these two individual bring with them.

    UNCTAD’s is a UN entity, not a private consortium, a commercial bank or even part of the World Bank. Among UNCTAD’s stated missions are:
    1. Examine the factors influencing commodity markets
    2. Help developing country efforts to achieve sustainable commodity exports
    3. Help commodity-dependent countries diversify their economies

    Still, why (derivative) commodity exchanges for developing countries?
    Because higher food prices, global imbalances, G20 protectionist policies affect the worlds the poorest countries’ commodities most; and, disproportionally, resulting in to a much larger fraction of meager budgets being allocate to food staples than might otherwise be the case. With estimates that since June 2010, rising and volatile food prices have led to an estimated 44 million more people living in poverty – under $1.25 a day. There are close to one billion hungry people worldwide – or one in seven people on the globe.

    Hedging cash flow volatility can facilitate investments by agricultural producers and food processing companies help with short-term price volatility, moderating fluctuations in cash flows and income (though, not make prices permanently cheaper nor prevent them from rising) and thus reduce volatility, increase cash flow and quick return of income; outcomes, often, the difference between a developing country’s population receiving at least the minimum calorific daily intake and starvation.

    The problem (until UNCTAD’s involvement) was that a developing countries’ market agriculture producers and intermediaries didn’t have access to hedging instruments, the expertise or experience to address the problems cause by first world commodity speculators. However:
    1. UNCTAD’s has the expertise and experience but not the funds to broker or underwrite the hedge.
    2. The World Bank has the funds but not the appropriate, technical financial transmission or monitoring mechanism for underwriting commodity hedges.
    3. The World Bank’s IFC has the commercial (contract/monitoring/legal) expertise but not the commercial commodities market’s transmission mechanisms.
    4. Banks do have transmission mechanisms: JP Morgan and Société Générale.

    Why does the World Bank/IFC have to be involved?
    Because, for developing countries local hedging by local consumers, producers and processers on its own doesn’t protect consumers from short-term price volatility as, typically, profits and losses on a hedge go to ‘smoothing’ the investment and are not passed along in product prices. Price stability, profits are passed through to the local consumers and producers and are consumers protected ONLY if:
    1. The consumers themselves hedge (impossible in developing markets), OR
    2. If governments (or a World Bank) hedge on their behalf and guarantee the pass through (and absorbs the losses).

    So, what’s in it for JP Morgan and Société Générale?
    In short, brokerage fees (and continued access to lucrative IFC programmes). These banks can provide the contract and transmission mechanisms required to meet international and local regulatory requirements – something that only a few banks have the breadth and depth for, internationally. In essence, money for nothing, and no risk – they themselves are not providing the $200m. The banks are simply facilitating a match (the cash ‘float’ on deposit; so, technically, it’s a bank liability) but it’s backed by the rest of the world (The World Bank). The banks themselves stand no chance of losing it.

    APRM will help provide access to World Bank credit for producers, reduce the impact of price volatility, and create greater access to affordable food through cost stability for intermediaries such as cooperatives. APRM “will also improve access of mid-size producers who might not be able to have access to price hedging products by themselves.” But, again, this credit is provided by World Bank Funding not by commercial bank funding – underwrite the hedging risk that no commercial bank would be prepared to do.

    Still, a commodities exchange for the third world?
    Is it an ideal solution to the problems faced by developing countries being screwed by the big commodities traders? No. There is probably the usual suspect with nefarious misdeed somewhere involved – but, I don’t see the New World Order event.

    And, hedging is no quick fix to the fundamental tragedy of poverty and the difficulty millions of people face in paying the high cost of food. Hedging can only smooth out the peaks and troughs of volatile food prices, delivering a more stable price, but not a lower one. And no amount of financial engineering can change the long-term direction of prices. At best, by smoothing cash flow, hedging gives local businesses breathing room to respond to changing prices. The real task is economic development, and hedging is just a minor tactic in that project.

    But, it should be recognized, nevertheless, that rising and volatile food prices have, since June last year, pushed around 44 million more people into poverty with income of less than $1.25 a day. There are now close to one billion, or one in seven, hungry people in the world, says a World Bank report. And according to the report published by the UN food prices may be on average up to 30% higher over the next decade and that the number of chronically hungry people is likely to rise above 1 billion this year due to the rising cost of living. World food output will have to rise 70% by 2050 to feed a forecast population of more than nine billion people.

  16. Edith

    This is a very interesting debate there, and I totally agree on the fact that academics should play a bigger part in the decision-making process. They often have a bigger picture in head, that definitely helps.

    Speaking of academics, for those of you who are interested in the emerging markets, a free webinar will be held by David Florence, Professor of Government at Harvard University, about why some emerging economies fail and also what we can learn from it. There is the link to register : http://www.cfo-insight.com/events/webinars/webinar-why-nations-fail-and-what-cfos-can-learn-from-it/

    Really looking forward to a constructive and enriching debate.

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