Private decisions and public policy : the price dilemma in food systems of developing countries

This paper analyzes this dilemma from the micro level (e.g., farm production and household access to food) through an intermediate level (e.g., technological and marketing issues) to the macro level (e.g., fiscal and monetary policy and international trade). First, the evolution of the food policy perspective - in which consumption and production issues are seen in a macroeconomic context - is traced from a methodological point of view. Included therein is a review of economic theories on the roles of market processes and government interventions. The paper then examines the two-way relationship between government policy and the macro economy. The results reported, especially concerning the effects of macro price policy on the share of agriculture in total economic activity, draw heavily on empirical work carried out since 1980. The paper concludes on a speculative note, suggesting that a country"s food policy is a barometer of its political and economic health and, as such, provides early insight into the climate for investment by domestic and multinational firms. As more governments and investors understand this, a powerful consortium of interests could be assembled to promote both the fulfillment of short-term food consumption needs and long-term productivity gains.