Press release The best ways to improve public spending in Latin America prioritized by top-economists San José, Costa Rica (October 25, 2007) Early childhood development identified as most effective program out of 29 ways to improve public spending and policies in Latin America at large gathering of more than 30 economists at INCAE Business School. Nine top-Professors in economics, including a Nobel Laureate, the Chilean Finance Minister, and a former UN Under-Secretary General for Economic and Social Affairs sat down to jointly assess the biggest challenges facing Latin America today and ranked the most effective solutions to meet these. The experts were asked to respond to the question: If Latin America were willing to spend, say, $10 billion over the next five years on improving welfare, which projects would have the greatest benefits? Out of the 29 specific projects identified to tackle Latin America’s biggest challenges, the three most effective and promising projects were: Early childhood development to meet the challenge of poverty and inequality; Improving fiscal Rules to mitigate the negative consequences of Fiscal Problems, and Increase investment in infrastructure, including maintenance, to improve especially poor roads. The process, which brought together more than 30 regional and international economists, was based on a framework pioneered by Danish university think-tank Copenhagen Consensus Center, while the entire undertaking was funded and co-organized by the Inter-American Development Bank. “Our list is the first step. Next step is for policymakers to consider it, discuss it, and, hopefully, turn it into action” explained Nobel Laureate in economics Finn E. Kydland. According to Ricardo Hausmann, professor of the Practice of Economic Development at John F. Kennedy School of Government at Harvard University and also a participant of the expert panel “this project brings to afore the magnitude of our ignorance. The region’s policy debates would be much more constructive and effective if we knew more than we know about what works and what does not. This initiative is a first step in what should be a long and fascinating social learning process.” The group of nine top-level economists who compiled the prioritized list based its deliberations on twenty economic assessments and presentations of the costs and benefits of dealing with Latin America’s ten biggest challenges: Democracy, Education, Employment, Environment, Fiscal Problems, Health, Infrastructure, Poverty/Inequality, Public Administration, and Violence & Crime. Commenting on the difficult task of setting priorities among interventions on such crucial areas Andrés Velasco, Minister of Finance to Chile and member of the expert panel said, “It is counterproductive to think of setting priorities as a negative approach to public policy. As a minister of finance I know that it is a necessary and ever present part of politics.” “The region’s countries face very diverse problems, and no one formula can be applied universally,” the President of the IDB Luis Alberto Moreno said. “That is why we think this sort of debate should be repeated at the national level throughout the region.” In a region with very low output to spending, the prioritized list of solutions provides Latin American policymakers with a ready-to-implement list of specific policy proposals for ways to increase the efficiency of public spending on crucial welfare issues alongside the costs and benefits of implementing them. “What we really lack in Latin America is for politicians to be open to policy revisions – we need a more technical approach to policy making” said economist and author of the analysis on the challenge of Latin American labour markets Alejandra Cox Edwards professor of economics at California State University Long Beach. 1
Press release Nora Lustig, one of the nine top-economists and long-time advocate of empowerment and combating inequalities, said that “for everyone focusing on implementing policies which can help improve the welfare of the 20% of Latin American’s living below the poverty line, here’s a framework that clearly shows where we can achieve the biggest impact”. This initiative underlines the importance of focusing on how public spending and policy can best achieve sustainable development by highlighting which policies are the most cost-efficient and which are not. President of Costa Rica, Oscar Arias earlier stated that “we must make choices between various good ideas, however difficult this may be. “This list shows us the best investments in the region, solidly founded in research. It is definitely our hope that Latin American policy-makers will see the list, capture the amazing opportunities at its top, and realize much better outcomes for the continent”, Director of the Copenhagen Consensus Center, Bjorn Lomborg, said. Parallel to the sessions of the expert panel a “Youth Forum” of 35 students from 20 Latin American countries was convened to go through the same exercise. At top of the ranking of the Youth Forum came Nutrition Programmes/Interventions to improve Education and fight Poverty and Inequality, followed by Conditional Cash Transfer Programmes also to improve Education. In this way, the Youth Forum prioritized human capital development along the same lines as the top priority of the Expert Panel. Sanola A. Daley from Jamaica participated in the Youth Forum and said that “it was a difficult process which got more difficult the more challenges we heard about.” Furthermore, “it made me realize how hard it is for politicians – I actually felt like I was in Parliament, which was very thought-provoking.” Head of INCAE Business School Arturo Condo was pleased with the many intense and passionate discussions which had taken place at the Youth Forum saying that “if these young people represent tomorrow’s decisionmakers, the future looks promising”. Former UN Under-Secretary General for Social and Economic Affairs José Antonio Ocampo summed up the importance of the project by stating that “the approach seems perfectly suited for governments and aid organizations dedicated to do as much good as possible.” For interviews or further comments please contact: Tommy Petersen, email: tp.ccc@cbs.dk phone (+45) 5129 0131. For further information visit the websites www.copenhagenconsensus.com and http://www.iadb.org/res/ConsultaSanJose/.
2