Trans-continental research demands improved institutional infrastructure

African and Latin American research collaboration is identifying the differential role of institution and market forces in explaining the contrasting economic results of countries with similar commodity abundance.

Olusanya Ajakaiye, director of research at the African Economic Research Consortium in Kenya chaired the parallel session which featured projects on Oil Institutions in Nigeria and Colombia; the role of Copper on Chilean and Zambian economies and Impacts of higher food prices in Argentina and Malawi.

Co-chair, Mauricio Cárdenas, director of the Latin America Initiative at the Brookings Institution said “This is one of the first projects to create synergy between the two regions.”

Guillermo Perry of Fedesarrollo in Colombia presented research based on variants of Nigerian and Colombian oil wealth. Nigeria for example has a more abundant oil resource yet operates as a low-income country while Colombia produces comparatively smaller outputs of oil per day but is a middle-income country.

Oil wealth can influence growth through higher investment levels, human capital and public good. However policy and institutions have to be conducive to exploration. Perry said “Oil is a curse when the boom is very large and diversification of the country is very large, but the oil institutions are very poor.”

Patrico Meller (CIEPLAN, Chile) who is the lead author on Copper research in Zambian and Chilean economies believes that resource abundance is not a negative if managed correctly.

Chile is the leading exporter of Copper in the world and Zambia has experienced growing participation in global exports. Meller said “The more copper we have, the higher the price, and the better we are. It is a blessing!” Central bank autonomy and long run monetary policy are just some of the factors that can control ‘Dutch Disease’ and chart the way to future sustainable economic development.

Lucio Castro presented a paper on volatile food prices in rural households in Argentina and Malawi. He described the importance of the agricultural sector through a simulation of poverty impacts from high international food prices.

Agriculture is much more productive in Argentina than Malawi but represents only 7% of the GDP while it is 40% in Malawi. Poverty is widespread in both countries; despite Argentina being a middle-income country 30% of the population live in poverty. The study shows that urban households would mostly benefit from a surge in global food prices through increased factor demand.

As with many arguments that have emerged from the GDN 2010 conference, infrastructure improvements are necessary to help alleviate poverty. Castro said “They are rich countries in terms of capital of people but very poor in agricultural institutions.”

Mauricio Cárdenas concluded the session praising the worthiness of the projects undertaken. He said “Wealth is the institutions.” He added “We want to conclude [these projects] with a set of policies for these countries.” The lesson is that institutional progress will harness the effectiveness of a commodity boom.

See more stories from the GDN 2010 Conference, watch participants’ videos interviews, download conference presentations and papers

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About Pier Andrea Pirani
Information, knowledge sharing and communications in international development - Social media and collaboration tools.

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