OCR Text |
Show COLLEGE OF SOCIAL & BEHAVIORAL SCIENCE Basil Vetas John Francis Steve Reynolds REMITTANCE PAYMENTS AND FOOD PRICE SHOCKS: THE EFFECT ON FOOD SECURITY AND CONSUMPTION PATTERNS IN DEVELOPING NATIONS Basil Vetas (John Francis, Steve Reynolds) Department of Economics University of Utah According to 2012 FAO estimates, 870 million people around the globe have been chronically undernourished over the past three years, and more than 850 million of those people live in developing countries. In recent years, one particular concern has been the rising global food prices that began in 2002, reversing a longtime trend and leaving many people at high risk of food insecurity. Due to the global spike in food prices in 2008, and subsequently in 2011, much research is being performed to evaluate the effects of price volatility on consumption patterns in developing countries. Prior research has found that remittance payments, the money sent h o m e by migrants from abroad, have a mitigating effect on the consumption instability that often results from these types of economic shocks. Currently however, very little research has been performed addressing the effect of remittances on changes in consumption patterns within specific food groups. Often, when food price shocks hit, poor households will protect staple food consumption but cannot protect dietary diversity, leading to declining nutritional conditions. M y research method is to observe the trends in these changing consumption patterns, with respect to corresponding changes in food prices and remittance payments, a m o n g a cohort of high-remittance receiving countries and low-remittance receiving countries. I will draw conclusions about the role that remittance payments play in fortifying the consumption of foods like fruits and vegetables, as opposed to staple foods such as cereals and grains. M y anticipated results of this study are consistent with the conclusions that have been drawn regarding more general consumption patterns. I hypothesize that remittance payments do, in fact, have a stabilizing effect on dietary diversity and the consumption of nutritious foods in low-income households during periods of food price volatility. If this hypothesis is supported by the data, the significance of these results could reinforce remittance payments as a far more important factor in global economic crises than previously understood. By taking the appropriate measures to support remittance payments, such as reducing international transaction costs, countries m a y utilize those payments as an avenue for sustainable economic development. |