# **1. Introduction**

The recent food price crisis has contributed to a shift in many developing countries, including Bolivia, toward food security as a key policy objective. Even prior to the international food price crisis of 2008, Bolivia had brought food security and sovereignty to the center stage of its development agenda, defined in the National Development Plan 2006-2010. The food price crisis and recurrent climate change phenomena are adversely affecting the country and have created a sense of urgency in better understanding and addressing food security. Food security and sovereignty feature prominently in the Government Plan 2010-2015 and are key elements of several government programs currently under implementation.

Food security is a complex phenomenon involving multiple factors. In Bolivia, declining food security could be the result of a number of trends:<sup>2</sup> (i) reduced cultivated land area and increased land fragmentation; (ii) strengthening export-oriented agriculture by large-scale producers; (iii) increased food imports and dependence on international markets; (iv) growing urbanization and movement of labor away from rural areas; (v) dietary changes from traditional foodstuffs like potato to manufactured agricultural products; and (vi) environmental shocks such as droughts and floods. These trends are accentuated by structural factors, such as the rigid geography of the country and limited road coverage, which inhibit domestic market integration.

Considering the multiple factors affecting an individual‘s ability to easily access food that adequately satisfies their needs—the widely accepted definition of food security<sup>3</sup> —a single, ―silver bullet‖ policy for addressing food insecurity is likely to have a limited impact. As a result, food security interventions in Bolivia, as in other countries, span several sectors. A rigorous attempt to assess the impact of the many different interventions would be a major undertaking requiring a great deal of data and analytical sophistication to encompass all programs and address counterfactual and endogeneity issues. This paper takes a supply-side approach by looking at the association of agricultural spending (broadly defined) and food security. Agricultural spending in Bolivia—totaling about 13 percent of GDP in 2008—captures a large portion of the public money being destined to food security, and as such is a good indicator of public interventions that aim at reducing vulnerability. However, it provides only a partial perspective on addressing food security, as spending in other sectors (health, education) is also important for reducing vulnerabilities. In any case, to the best of our knowledge, this is the first attempt to make inferences about the relationship between sectoral spending in agriculture and food security in Bolivia.<sup>4</sup> By showing linkages between public expenditure and a measure of

> 2 See Ormaechea, 2009, Cuesta et al. 2009, and World Bank, 2010a for more on the causes of food insecurity in Bolivia.

> 3 The definition of food security and sovereignty adopted in Bolivia is based on FAO 2006, which incorporates not just food availability but also stable access and the use of food as part of an adequate diet and the stability of access. Consistent with those guidelines, Bolivia‘s definition (UPB 2008, 26) covers risk exposure, capacity to address food insecurity and current situation as part of a historical trend.

> 4 Previous studies, such as Faguet (2004) or Inchauste (2009), have focused on the link between public spending and welfare in the contexts of decentralization and the Heavily Indebted Poor Country debt-relief initiatives, respectively. Faguet (2004) singles out the association between agricultural investments and municipal needs (proxied by municipal malnutrition rates) concluding that the 1994 decentralization reform implied a relatively modest increase in agricultural investments but an improvement in the needs-based allocation of those investments (as it was the case in several social sectors).

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