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Institutions for Pro-Poor Growth Institutions, agriculture & economic growth in Bolivia & New Zealand. Steve Wiggins Overseas Development Institute. Inspirations and questions. How do otherwise similar countries end up in such different circumstances? Chance to address the Maputo question!

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institutions for pro poor growth institutions agriculture economic growth in bolivia new zealand

Institutions for Pro-Poor GrowthInstitutions, agriculture & economic growth in Bolivia & New Zealand

Steve Wiggins

Overseas Development Institute

inspirations and questions
Inspirations and questions
  • How do otherwise similar countries end up in such different circumstances?
    • Chance to address the Maputo question!
  • How much can this be attributed to economic institutions?
  • And in particular, how did such institutions develop in agriculture?
agricultural growth
Agricultural Growth

1.6% pa

3.5% pa

institutions compared
Institutions Compared
  • New Zealand:
    • Land: the family farm
    • Commercial intermediation ex late C19, govt initiatives
    • Collective action in agriculture: co-ops & consensus
  • Bolivia
    • Land: still in debate — small farms in highlands ex reforms of 1953, settlement & LSCF in Oriente
    • Chronic lack of trust in economic bargains
    • Solidarios pero solitarios
bolivia rent seeking intriguing hypothesis
Bolivia: rent seekingIntriguing hypothesis
  • Resource-based economy; scale … mining, hacienda
  • Key institution: Property Rights conferred by state
    • …but … property rights confer Rents!
  • Profit = NR + state favour  rent-seeking
  • Feeble state: few public goods, favouritism
    •  no legitimacy  political instability
    •  high costs in rent-seeking

Changing models, continuing patterns

but not always this way back to the 1870s in nz
But not always this way!Back to the 1870s in NZ
  • Land held highly unequally
    • > 50% land held by 1.5% farmers in holdings >4k ha, cover 3.25M ha (1882 Ag Census)
  • But then Chance:
      • Decline of sheep running
      • North Island bush
      • Refrigerated shipping (1882)  dairying
slide9
But also Design: Government acts to ‘burst up’ estates
      • 1877 Land Act,
      • 1891 Land tax,
      • 1891 Lands for Settlement Act, etc.
    • barrage of measures to encourage conversion of estates to family farms
    • 1910: estates cover 1.45M ha;
    • Farms up from 10k to 80k by 1914
1870s bolivia exvinculaci n
1870s BoliviaExvinculación!
  • 1874 Ley de Exvinculación
    • ‘Spare’ land of indigenous communities becomes public, sold off to haciendas
    • 1950: 98% area in holdings of > 100 ha
  • Yet land concentration when farming was barely profitable!
    • 1900: <15% pop of 1.8M urban, c 270k
where s the difference imagination some pointers
Where’s the difference?Imagination!Some pointers …
  • Voting
    • New Zealand: 1879 all men (incl Maori) vote, 1893 all women vote
    • Bolivia: 1950 property, income, literacy reqs — 4% vote
      • 1952 universal franchise
  • Education
    • NZ: 1877 universal compulsory primary schooling
    • Bolivia: universal primary schooling awaits 1952 Revolution
conclusions
Conclusions

Path dependency:

  • Yes, but 1870s
  • sí, pero … lo del 52 …
conclusions 2 virtues of slow and inclusive development patterns
Conclusions (2)Virtues of slow and inclusive development patterns

New Zealand: GDP per capita constant, 1861 to 2002

1932-2002

1.6% pa

1861-1932

0.98% pa

conclusions 3 a tale of institutions
Conclusions (3)A tale of institutions?
  • Economic institutions are secondary: totems?
  • Investment climate in widest sense matters
    • Holy Grail of modern growth theory
  • But where does climate come from?
  • Kiwi clues: political imagination
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