Thursday, June 12, 2008

Global Inflation – Failure of neoliberal policies and globalisation ?

Global inflation, particularly the increase in food prices, is said to be an outcome of the neoliberal policies underlying globalisation. The surge in global inflation is an outcome of various factors:

1. Rising oil prices . This is affecting the commodity pricing too.

2. Shifting away from food crops and using cereals and vegetable oils to produce bio-fuels in several countries like the US, EU and Brazil, leading to declining food production.

3.Policy neglect by national governments leading to decline in public investment in agriculture, especially in areas like irrigation, productivity enhancing technology and extension services.

4.Withdrawal of the State from procurement and distribution of agricultural commodities, dwindling food stocks held by public agencies and increasing dominance and control exercised by private players in food production and trade

5.Enhanced speculation in the commodity markets through instruments like futures and derivatives with the involvement of financial entities .

A number of Government which includes Indian Government continues to repose faith in the neoliberal policies and globalisation, which seems to be the root cause behind the global food crisis. It is true, that there has to be, a lot of creative thinking into this policies . We can’t go back from globalisation to protectionism era, where again there are more ammount of export and import barriers, promting national interest, which has recently started by certain goverments. Further,we are moving on the maturity stages of Globalisation phenomenon, and the world is more and more becoming flat . So , we have to think on creating a right balance between the protecting the primary markets like agriculture and food production and yet enabling the global trade.

No comments: