Why Globalisation Isn't ALL Good After All.

I was reading the BB article on the rising food prices. First of all, it’s not only in Brunei (so please don’t blame the government). It’s a global effect. Everyone is feeling the heat especially those in poor developing countries. So we all in Brunei should be grateful.

Why the increase in prices? My answer is that it is very much related to the effect of globalization. Because of globalization, a number of giant economies emerge, in particular, China and India. Their economies grow, and so do their standards of living. As a result world demand for oil, gold and food soar. Any O level economics student would know that an increase in demand will surely lead to an increase in price. Besides the increase in global demand, there are also other factors that lead to the increase in the world’s food price such as floods and draughts (caused by the dramatic climate change) which reduce the world’s food supply.

What should we do? Well, if we can, we should increase food production. Seriously people, put some EXTRA effort in our agriculture production. Anything can happen in the future. There is (sometimes) an extent to what money can buy (from abroad). I believe, at the end of the day any country’s first priority would be the survival of its own people.

On the other hand, in the event that the hike in prices affects our local consumers and producers (which eventually will be inevitable) and as I think, as we speak, some have actually felt the effects (forgive me as I am not in Brunei, I don’t know whether food prices there have actually gone up), then there are 3 things the government can do (in our case 2 things actually):

1. This is when price control sets in. The government would typically set a price ceiling. This is already happening in Russia and Argentina.
2. Eliminate any import tariff on those products. I don’t think this applies to Brunei as I believe the food tariff is already at 0%.
3. Increase or introduce food subsidy, where the government would typically pays for the excess price. This is happening in Egypt as we speak.

Anyway, as I said we all should be grateful. The government has ensured that enough staple food supply is available. For how long, that I don’t know. My only advise for now is DON’T WASTE FOOD!

Salaam.