Are Low Prices Really Bad for the Poor?

Martina Gernet has posted on Eldis a summary of several recent studies of the role of supermarkets in developing countries. All of them appear to be about the bad effects of supermarkets on workers and suppliers. I continue to be astonished by how the debate over the impact of supermarkets always ignores the huge gains in welfare of consumers, especially poor consumers. As Sebastian Mallaby pointed out in a recent column in the The Washington Post titled "Progressive Wal-Mart. Really."the gains to poor people from lower prices dwarf any losses to workers or suppliers. Sebastian is mostly writing about the U.S. but the same arguments apply in developing countries. Indeed, whether or not workers and suppliers actually incur losses is controversial, since both operate in highly competitive markets. That is, they have alternatives if they don’t like working for or supplying supermarkets.The second astonishing thing about the debate over the supermarket revolution is how little first-rate research is being done to understand its speed and consequences. I count my academic colleagues who are deeply engaged in this research, at least in developing countries, only in the dozens despite the dramatic transformations being wrought by modern supply chains in traditional food markets.It is easy to criticize the impact of supermarkets without the facts or a full understanding of what is happening on the ground (or in the overall economy). It is much harder to develop new public policies and investments to help small farmers, mom-and-pop shops, and supermarket employees without this knowledge.