Global food prices remain high and volatile, affecting the poorest countries the most. Global prices might not be at their 2008 record high, but they are still well above their levels a year ago. For millions who are already vulnerable, events like the droughts in the Horn of Africa add to their hardships while continued market turmoil increases uncertainty in the global economy.
Like the massive earthquake in Japan earlier this year, the floods in Thailand are again exposing the vulerabilities of fragmented global supply chains.
Last month, a team of economists from PREM’s International Trade Department encountered some flooding side-effects during a visit to the Indonesian production site for ECCO, a Danish company that manufactures footwear. In order to transfer production to the factory in Indonesia, the workers needed the specific shoe molds used in the Thai factory. But there was a problem: The Thai factory was under three meters of water.
These specialized molds manufactured in the Thai factory would have taken several weeks to manufacture, which would have further delayed production. So ECCO hired scuba divers to enter the Thai factory and recover the molds. They then shipped them via air to other factories around the region, including ECCO Indonesia.
Shoemakers are not the only businesses with drowned components. Automotive producers are also hiring divers to rescue molds from underwater Thai factories, according to the Financial Times. Honda, for one, has said it will cut worldwide production by 50 percent because of a shortage of specialty parts. Reuters reports that computer hard drive prices have
Investing more on roads, bridges and schools is an essential part of President Obama's American Jobs Act. If this is important in the current U.S. context, the role of both infrastructure and education in job creation is even more fundamental in developing countries, where there's much more to be done than in the U.S.
Last week, world leaders gathered in Cannes, France to discuss the future of the global economy. Key on the agenda were issues surrounding the European sovereign debt crisis, new capital requirements for banks, commodity and food price volatility, and climate change.
Turmoil is not solely circumscribed to Wall Street and stock markets around the world. Volatility is also affecting global food prices, and with them, millions of people in developing countries. So, just as the world marks the birth of the 7 billionth baby this week, his or her family might be struggling to put food on the table.