Crises and Inequality: Lessons from the Global Food, Fuel, Financial and Economic Crises of 2008–10
| Published date | 01 October 2011 |
| DOI | http://doi.org/10.1111/j.1758-5899.2011.00090.x |
| Date | 01 October 2011 |
Crises and Inequality: Lessons from
the Global Food, Fuel, Financial and
Economic Crises of 2008–10
Ronald U. Mendoza
UNICEF and Asian Institute of Management
Abstract
This article points to three main lessons for social policy from the global crises of 2008–10. First, there is evidence that
the crises and their public finance ramifications could be characterized as ‘anti-poor’. Second, even as the recovery
begins to benefit the banking and financial sectors where the financial crisis began, it may also tend to further
marginalize the poor, who are likely at their weakest and most vulnerable point, having undertaken a variety of
coping strategies that are difficult to reverse quickly (e.g. drawing down on assets and possibly selling productive
ones, taking on more debt, pulling children out of school). Third, if the crisis harms the poor and the ensuing recovery
excludes them, then this could exacerbate inequity in human development. To prevent this, there is a need for pro-
poor countercyclical fiscal policies, boosting social spending and investments, as well as building on and adequately
financing social protection systems, not just for poverty reduction but also to boost resilience against future crises.
Policy Implications
•In order to prevent poor and low-income families from suffering a double disadvantage from crises, and in order to
mitigate possibly rising inequality from a world faced with frequent aggregate shocks, policy makers need to con-
sider specific policy strategies that temper the social and economic impact of aggregate shocks, including through
countercyclical social spending and boosting social protection systems.
•As millions of poor and low-income families have shifted from private to public providers of education, health and
other services, straining existing public sector capacities, now is not the time to scale back on public investments in
education and health. Especially, child-friendly budgets will be critically needed in the medium term.
•Spending on nutrition programs is a particularly important area for action, given that the combined effects of the
food crisis and the global economic slowdown are likely to persist in many parts of the world. Indeed international
food prices have shot up again in 2011.
•For many countries, the global crisis was an opportunity to channel more resources into their social protection sys-
tems. These could be dramatically scaled up (covering more components) and scaled out (covering more families
and beneficiaries).
•In boosting social protection systems, nuanced policy interventions will be required as these need to address the
specific vulnerabilities of different groups in society, for example women.
Aggregate shocks of different types – food price spikes,
financial and economic crises, natural disasters and
others – could create disproportionate harm to poor and
low-income families who are typically the most vulnera-
ble in society. They are also often marginalized during
the recovery process for the very same reasons. When
combined, this ‘double disadvantage’ suggests that cri-
ses could be acutely anti-poor. Furthermore, crises could
lead to rising inequality between those who are well
resourced and more resilient and those who are poorer
and less capable of protecting themselves and taking
advantage of forthcoming recovery. Higher inequality is
therefore one of the principal risks in a world character-
ized by frequent crises. How then did poor and low-
income families fare in the last few years of crisis? And
what key lessons could policy makers take away from
the tumultuous events of 2008–10?
Drawing on extensive social and economic monitoring
work by the United Nations and its partners, this article
reviews some of the early evidence on the social and
economic impact of the food, fuel, financial and
economic crises during the 2008–10 period, as well as
countries’ policy responses to these aggregate shocks.
1
Rather than focus on forecasts of impact, this article will
Global Policy Volume 2 . Issue 3 . October 2011
Global Policy (2011) 2:3 doi: 10.1111/j.1758-5899.2011.00090.x ª2011 London School of Economics and Political Science and John Wiley & Sons Ltd.
Research Article
259
To continue reading
Request your trial