 It's always wonderful to be associated with success. And WIDA has been so extremely successful. If you don't believe me, take a look at the output. Take a look at the amount of new evidence that has been produced by this organization and the impact it has had on policy. So I'm really pleased to be here. I'm going to talk about the project that Phil Albert mentioned, the political economy project that I was fortunate to do as part of the WIDA activities. But before I do that, Finn asked me, why don't you take a look at what WIDA has really produced in this area of political economy? So I said, yeah, a piece of cake. That probably produced nothing, so except for my project, so I will quickly do that. Turned out not to be true. Political economy enters into a very large number of the projects that WIDA has undertaken. I'm just mentioning four right here. That's just the tip of the iceberg. The number in parentheses is the number of outputs can be written or given in an all-form workshops or conference and whatnot. Political economy associated with protection, 189 outputs. Political economy of clean energy transitions, 44, foreign aid and democracy in Africa, 42. The political economy of food price policy, the one I'm going to talk about, 64 outputs. And that's, as I said, just the tip of the iceberg. There's a lot more political economy embodied in these thousands of outputs that have come out of WIDA. Now, just in case Amelia starts waving her zero card here before I finish, let me give you my main message and then you can go back and do your things on your computer, on your phone. Based on the evidence that I'm familiar with, I believe this message is correct. We do need a political economy and a little approach if we are to understand and predict the behavior of relevant decision-making groups. And we need to understand that in order to make sure that the recommendations we make are likely to be accepted. And now some of you are sitting there thinking, yes, of course, we're doing this all the time. No, we're not. Most of the policy research related to food and agriculture that I'm familiar with, including most of my own work, stops before we get to the political economy aspects of it. We say, here is the first best solution to your problem, Mr. or Mrs. decision-maker, now go and do it. And guess what? In most cases, they don't. So we say, well, they're not very smart. Are they? They're probably bordering stupidity because they should just do this. The problem, of course, is that we don't understand the decision-making process within which our recommendation has to be considered. We have to understand that. And therefore, we have to take this next step beyond what I'm sure are wonderful and correct economic analyses and recommendations based on. We need to take the next step and say, how can this be integrated into the overall decision-making process of the behavior of whom we're trying to influence? So we need a much sharper focus on the behavior of decision-makers in the food and agricultural systems. We need to improve the understanding of the decision-making process and the decision space. What is it really that is available to that decision-maker? What is it the decision-maker can actually do? It may be the brightest economist in the world who fully understands that what you're telling him or her is the first best solution, but it is outside the decision space. We need to understand the relative power, the incentives, the regulations, the knowledge that's embodied in this decision-making process. And ideally, we should seek win-wins. Yes, I want you to do something that improves the well-being of some group, let's say, preschool children. Can this somehow be combined with another goal that the decision-maker has that may have little or nothing to do with preschool children? Are there win-wins out there? Yes, I believe there are. But there are certainly also trade-offs. And then once we have come this far, chances are that our recommendations, as modified, will be accepted. Now, I'm giving you this list not because I want to go through every one of the stakeholder groups, but to make the point that we need to understand decision-making processes not only among national or local policymakers, politicians, if you like, but also all the other decision-making stakeholder groups that are involved in food and agriculture. And that, of course, includes the news media and the other ones I'm mentioning. And it includes us, those of us who do policy analysis. Why are we doing? Why do we prioritize certain analyses over others? Why do we pick certain themes over other themes? Are we biased? Do we really ever look at why we do what we do? And what about agricultural research organizations? Why do they keep prioritizing production or more calories when we're all getting fat? At the same time, as 2 billion people don't get enough micronutrients. Why aren't they maximizing production of micronutrients per unit of input instead of maximizing calories per unit of input? Just an example, foreign direct investors. What makes them tick? Can we get foreign direct investors to invest in primary agriculture without taking ownership to the land? Or will they have to own the land in order for them to make the investment available? Again, just another illustration. Venture capitalists are currently driving a process of expanding indoor production of vegetables. No policy analyst with respect for him or herself is getting into that because clearly it's not economical. You don't want to produce tomatoes in high rises. Well, we're getting pretty close now where the economics may make that possible. But only the venture capitalists are doing that. We need to understand the behavior of that group as well. But of course, everybody is maximizing utility. We know that. No. Psychologists are telling us that's really not true. So there's a lot of work to be done there to understand what do we really mean by maximizing utility and how do we measure that utility. The other point raised by Professor Basu a couple of days ago is why is it that we're only worrying about maximizing utility for consumers, producers, but not for all the other agents in the food system? What makes them behave the way they do? As I'll come back to it in a few minutes, the project we did with wider the one I'm going to talk about in a few minutes showed that legitimacy is really goal number one in all of the 14 governments that we worked with as part of this project. Maintaining legitimacy is the key goal for all of those governments. Is that a big surprise? No, not really. But sometimes we just fail to recognize it. What about the private sector? They're doing a tremendous amount of good for poor people, or they're doing all this good stuff to reduce poverty and to reduce child malnutrition. They do social responsibility. Is that just window dressing? Or are they actually substance in that social accountability or social responsibility? We need to understand that. What really is the goal? Is it profit maximization? And the rest is just kind of to make some of us happy. What about humanitarian goals? We all want to reduce poverty. We all want to reduce malnutrition. We all want to make people better off. How serious are these goals? Is that just something we say? Is that really driving? None governmental organizations, for example, or do they have some other goals that we don't talk about a lot? So those are some of the behavioral motivations I think we need to look at. Now let me go to the project that I mentioned. This was a network research project with researchers from 14 developing countries, as well as one person from the EU and one from the US. And it was carried out within the wider network. What we were trying to understand was why did governments in those countries respond the way they did to the rapid increases in grain prices in the international market? And if we are to understand that, we first have to understand the extent to which these international prices were transmitted to national markets. So I'm giving you just a few examples of what we found. And of course, I can only give you just a few illustrations. This shows the wheat prices in the world market in South Africa and Bangladesh during the period of time. I'm showing 05 to 012. And here you see an almost perfect transmission. Whatever happened in the international market was transmitted almost completely to the national market for wheat. Why was that? Because the interest groups in those countries were able to convince government to leave the markets open. In the case of South Africa, we were looking mostly at the farm groups. They wanted to keep the markets open. In the case of Bangladesh, it's less clear why they kept the market open. But there's a lot more detail on that in the material that's available. Let me now show you an example where there was virtually no price transmission. So therefore, there was not much point in looking at how governments responded to price changes. We could look at how governments responded in order to keep the national prices more or less constant. And this refers to rice prices in China, India, and compared to the world market. And you see the rice price went up dramatically, whereas in China and India, they stayed virtually constant. And then we have a third illustration. This is about maize prices in Malawi and Zambia, where they just fluctuated almost independently in national markets and in the international market. So what were the behavioral responses to these recent food price volatilities? First of all, there was a great deal of confusion about predictions and projections. The news media was predicting, and many of the researchers were projecting. And the difference, of course, is that when the news media said, this is what's going to happen. And in fact, the news media kept predicting continued food price increases long after the prices came back down, because they were operating on a time lag, I guess, or something, not entirely clear. But if you are a policymaker and you get bombarded with these kinds of predictions and projections, and it's not clear which is which, you have to respond accordingly. And as I mentioned, the news media was extremely active when the prices went up, predicting that that would continue into the foreseeable future. As soon as the prices came down, you couldn't find a single article in the news media about prices dropping. You did find some saying prices were going to continue to go up. So there was a lot of misinformation. I think we now call that fake news, by the way. There were a number of books produced that predicted and some projected that this was going to go on, and we never against the low food prices that we seen before. If they were lucky, they got the books so quickly, because of course prices came down within less than two years. A lot of conflict of interest in the information that was shared, I don't have time to go into a lot of illustrations so that the international and national sources, again, in many countries including, I remember Nigeria and the Nigerian government did not see any price change at the national market for their grains, but they were reading New York Times that said that grain prices are going up dramatically, you need to do something. So what do you do if you're sitting in a national government and apparently nothing is really happening, you need to respond to, but somehow the international news sources are telling you that you better do something. And so what they did of course was short-term interventions. Some, in some cases they were protecting those groups that they wanted to protect, in other cases they were compensating them, letting the prices increase at the national market. Export restrictions were very, very common, and this links back to this beggar, thy neighbor kind of approach. I don't really care what I do to other countries I have, I'm only obligated to deal with my own constituency, so if necessary I'm going to stop exporting even though that causes tremendous trouble for the traditional importers. India and rice is the case in point. The Philippines were importing rice at twice the price that they were paying a few months earlier from Thailand because India was cutting back on rice exports, that a lot of other examples like that. Many countries were cutting import tariffs in order to avoid the rapid increases in domestic markets. And again, as I said, governments were focusing on national supplies, not worrying too much about the international market. Now we have WTA of course, we still have WTA and hopefully we'll continue to have WTA as we discussed earlier in the session. But WTA doesn't really help much when the exporting countries misbehave. They're much better at dealing with behavior of when the importing countries misbehave. Irrational expectations, we saw cases where governments were saying we're going to stabilize prices, we're not going to let prices go up. But of course, because prices are going up, which they didn't, farmers are going to respond by producing more. Now if you didn't get that, not to worry. If you don't let the price signals work, you don't get a response, that's quite clear. And many other countries were protecting consumers by stabilizing prices, by avoiding increases in the national prices. Well, if you avoid that, you are helping your consumers, they don't have to pay more for the food, but don't expect a response from farmers because they're not getting any more than they got before. Economics 101, price stabilization, as I mentioned, was a favorite thing. Now, I have some lessons, Amelia, and you just, when you stand up, I sit down. How is that? We haven't got much more to worry. I haven't seen the zero card yet. You have a zero card? Okay, all right, that's the zero card. So, protecting government legitimacy, priority number one, goal number one for all other countries, we looked at. Pursuing domestic policies, irrespective of international consequences, I mentioned that. Unitary government decision making is very unusual. In some countries, you have the Ministry of Finance doing one thing and the Ministry of Health doing the exact opposite. No big surprise, I suppose, for those of you who work in government, but nevertheless, we keep thinking that somehow a government has one decision making position, not so. Path dependence, path dependence, repeating policies that have been in place before was quite normal. The relative power of a stakeholder groups varied a great deal. Increasing urban bias, that was very, very clear. Yes, there was some talk about smallholders and helping smallholders, and of course, the way you help smallholders is to make sure they get paid better for what they produce, but by stabilizing prices, you do the exact opposite. In some countries, like Brazil and South Africa, there were quite powerful farm groups, and they were able to maintain the higher prices at the national markets. So the governments, if anything, were helping the larger farmers, even though they were saying that they were helping smallholders. Mutual mistrust between government and the private sector, that's a very interesting, and I kept the most interesting thing for last, I mean, yes, so you wouldn't stand up. The government would not tell the private sector what they were about to do until they did it, and the private sector, the same way, they wouldn't talk to government, and then they did whatever they did. They might decide to put in storage, or they might hold back hoarding, or whatever they decided to do, but there was virtually no good communication between the two. Foreign agencies, as opposed to the structural adjustment period, some, what, 15, 20 years ago, where the foreign agencies, the banks, the World Bank, the regional banks, and others had a tremendous impact on what the national governments had to do. There was virtually none of that here. Whatever the national government wanted to do, that's what the international agencies said was okay. Now, of course, the explanation is that in this case, the international agencies didn't have a lot of money involved in the game, whereas they did in structural adjustment. Now I have to stop, so let me, and there are a few more recommendations, and maybe we can go back to that later on. But I wanted to show you the sources, since I can't cover very much of that. These are the two sources where you can get more information. The bottom one is free, the top one you have to pay for. Thank you very much.