Posts Tagged ‘Development’

Zoellick Smackdowned Turkish style

April 5, 2008

Be careful with your canned development speeches when Dani Rodrik is in the audience.

World Bank President Robert Zoellick gave a speech in Washington a few days ago in which he listed development challenges. The first challenge was dealing with high food prices. As you know, the high prices of rice, wheat, and other staple crops are currently threatening to cause riots in many sensitive locales around the world. Zoellick’s second challenge was saving the Doha round of WTO talks. This is the current “development” round concerned with among other things reducing agricultural subsidies in rich nations to benefit developing countries.

See the logical contradiction? I didn’t, but of course Dani did. The main mechanism through which the Doha rounds are supposed to help developing countries is through allowing the price of crops to rise (think about the logic behind all the anti-dumping hullabaloo in Latin American). But Zoellick’s first challenge was dealing with already-too-high food prices.

Free trade is optimal in the long term, but in the short term it isn’t always the best policy. As Dani says, it depends…