December 1, 2012

Spend or Send

Developing countries can spend commodity windfalls on physical investment, but it may be better in the short run to distribute part of them to their citizens

THE decade-long boom in commodity prices has boosted government coffers in many traditional producing countries. Following a wave of discoveries, new oil and gas producers—such as Ghana, Mozambique, Tanzania, and Uganda—are also emerging (see table). They may not all be major players at the global level, but the revenues they raise will be substantial for them and will brighten the prospects for growth and poverty reduction.

Still, the future is not without its dark side. New oil income will almost certainly relax constraints on government budgets, but it will also create challenges—as conditions in other resource-rich countries show. Many citizens of these countries remain poor, despite large revenues from resources. In some cases competition over resource wealth has fueled or sustained civil conflict. Economic diversification is a further long-run challenge: nonresource sectors tend to lose competitiveness as a result of exchange rate appreciation.

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March 1, 2012

Global Land Rush

Foreign investors are buying up farmland in developing countries

THE sharp increase in international food prices during 2007–08 triggered a spate of cross-border land acquisitions by sovereign wealth funds, private equity funds, agricultural producers, and other key players in the food and agribusiness industry—fueled by mistrust in international food markets, concern about political stability, and speculation on future demand for food.

Throughout the world, it is estimated that 445 million hectares of land are uncultivated and available for farming, compared with about 1.5 billion hectares already under cultivation (Deininger and others , 2011). About 201 million hectares are in sub-Saharan Africa, 123 million in Latin America, and 52 million in eastern Europe.

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