During the next few decades, tremendous demands will be placed on the foreign exchange-earning capacities of developing countries. These countries need to pay for rapidly increasing food imports and, in addition, for the capital goods they need to import to sustain economic growth. Intensives pressure will also be placed on the real incomes of low-income people, particularly if the real price of food rises in response to the rapid growth of demand. That pressure, in turn, will increase the pressure for consumer food subsidies, aided by a growing realization that food subsidies are labor subsidies in the same sense that interest rate subsidies are capital subsidies. In contrast, constraints on foreign exchange availability, saving rates, and the availability of government revenues will press for containment of food subsidy coasts. These forces are neither simpler nor well understood. Their importance will increase. Much of IFPRI’s research is forced on the background factors, the conceptual elements, and the empirical record of food subsidies. Import policy is a major component of these. This research report by Grant Scobie is a major step forward for IFPRI’s work in this important area. It concentrates on the interaction of government policy and wheat imports. Data for Egypt sheds light on many of the issues related to their interaction. Because the size of food subsidies and wheat imports is much larger in Egypt than in other developing countries. This research is related to specific analyses of food subsidies and their effects currently under way at IFPRI. That work will allow more conclusions about how international trade and domestic food policies interact. Other work at IFPRI is refining our knowledge of the relationship between food prices and availability, on the one hand, and poverty, nutritional status, and employment on the other. From these works objectives of growth and equality more effectively and more humanely.


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