[Joseph Stiglitz] Nobel economist launches poverty research institute

From The Guardian

Europe and the United States have reneged on an understanding to help developing countries by cutting agricultural subsidies, Nobel laureate Joseph Stiglitz said today.

Speaking at the launch of the University of Manchester's Brooks World Poverty Institute of which he will be the chairman, Professor Stiglitz said he was "deeply pessimistic" that forthcoming World Trade Organisation talks in Hong Kong would reach agreement.

"People say that talks reach agreement at the 11th hour but Cancun and Seattle came out with nothing," he said. "The US and the EU had made a tacit bargain that world trade talks would deal with issues like financial services and intellectual property rights in return for sorting out textile quotas and agricultural subsidies for the benefit of developing countries."

A former economic adviser to President Clinton and vice-president of the World Bank, Professor Stiglitz, who is now a professor of finance and economics at Columbia University, said that policies of the western democracies were being driven by special interests. Subsidising American cotton farmers was harming 10 million sub-Saharan farmers, he said.

A strong believer that aid and trade must go hand in hand, Professor Stiglitz is the first of the "iconic appointments" which the recently merged University of Manchester has pledged to make in a bid to make itself a world-class institution.

The new institute is funded by a £1.3m donation from Rory and Elizabeth Brooks. It will carry out research on all aspects of poverty and in February is due to hold an international conference on the results of the Hong Kong trade talks.

Professor Stiglitz said research could lead to changes in government policies by exposing what was happening. "It's one thing to be subsidising well-off farmers but once you start seeing the consequences of that in Africa you start rethinking policies and hopefully changing them. That is an area where research can have a political impact."

Winner of the 2001 Nobel prize for economics, Professor Stiglitz said that as an economist he was attracted to Manchester, the city that gave birth to the idea of free trade and the university's efforts to be a catalyst for development in the north of England.

"The notion of trying to create an intellectual centre in the north to help stimulate development - as an economist I find it an extremely interesting idea. The issue of poverty is one of the big global issues so that made it more enticing for me," he said.

Manchester already has more than 70 people working on development issues in poor countries and recently launched the chronic poverty research centre, explained David Hulme, who was also present to launch the Brooks Institute.

He said the university was working with partners in south and west Africa, and Bangladesh and India, trying to understand the causes of poverty and work out policies to combat it.

Professor Hulme said the idea of giving poor people cash rather than food and seeds was an example of recent thinking. Instead of disrupting local markets with an influx of free food, giving families cash could tackle hunger and help develop the productive capacity of the local economy as well, he said.

He also expressed anger that the "duplicity" of Europe and the US in protecting their own farmers with high subsidies while urging free trade on the rest of the world.