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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 l.jpg

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

Steve Wiggins

Overseas Development Institute


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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?



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Agricultural Growth

1.6% pa

3.5% pa



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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


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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


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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


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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


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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


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Conclusions

Path dependency:

  • Yes, but 1870s

  • sí, pero … lo del 52 …


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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


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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