Economist analyze CAFTA´s impact in Central America

It will be necessary to improve the economic models and give attention to the complementary agenda, specialists warn.

A group of economists and rural development researchers from regional research centers, called together by RUTA, met March 8 in Costa Rica to reflect on CAFTA’s effects on agriculture and rural development in Central American countries.

Among the regional organizations represented at the meeting were IFPRI, ASIES, CAC, CATIE, CINPE, Zamorano, FUNDE, FUSADES, IDIES, IICA and SIDES, as well as the World Bank, IADB, IMF and ECLAC. RUTA thus initiated a series of CAFTA-related events that will allow support for complementary agendas of the region’s governments to better take advantage of the Treaty’s opportunities and achieve greater distribution of the impact in the rural sector.

Review of economic models

The region’s economists acknowledged that, in the face of CAFTA, it will be necessary to improve the economic analytical models applied in Central America, supporting them with microeconomic data from research being carried out in the region. Of particular importance, acknowledged the participants, will be the most disaggregated studies of value chains, transaction costs, labor market, production costs per product and per region, analysis of substitution and elasticity of agricultural products, as well as identification of active groups that rely on rural households for their development.

After a day of selective presentations of recent research, it was acknowledged that economic models are very useful for organizing free trade concepts and for indicating tendencies of socio-economic impacts on the countries of the region, although the limitations of these models were also recognized.

This workshop, rich with technical debates on economic rural development policy, evidenced the importance of adequate public policies to address the complementary agendas and achieve the benefits of CAFTA. Economists and researchers who participated in the workshop acknowledged that there are, and have been, sufficient external and tax resources available to governments to adjust public spending in favor of broad rural development, in which State resources may be aligned with the development interests of the large majority of the rural poor, who historically have had little voice or influence in the allocation of public resources.

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DON’T FORGET THE CAFTA AND RURAL DEVELOPMENT EVENTS CALENDAR

May 22, 2006 Panama
CAC Presentation of the results of the workshop “Methodological focus to estimate potential CAFTA impact on the Rural Sector”
Studies being carried out on CAFTA’s impact on the rural sector will be presented to the ministers and policy directors of the Ministries of Agriculture and Economy.

June 7, 2006, Videoconference
CAFTA and rural poverty: transition period
To focus on the contribution that lifestyle surveys can make to the analysis of complementary measures for CAFTA in the rural areas

June 1, 2006, Videoconference
CAFTA and rural development: the role of communication
Seeks to instruct governments in the use of communication to generate understanding about the treaty and the necessary reforms to be implemented in each country.

June 2006, Guatemala City,
Consolidation of the Capacity Building Committee
Meeting with the ministers and CAC policy directors. The objective is to present the results of the study “Support for national entities in Central America to improve commercial agricultural capacities in anticipation of CAFTA.”

July 2006
Lessons for Central America from the Latin American free trade agreements:  Mexico y Chile
Specifically directed toward ministers and CAC policy directors to share the experiences of those countries under the free trade agreements.

July 2006, Videoconference
Opportunities and challenges of CAFTA to general rural employment in Central America
Dialogues to identify elements in public policy and in academic courses to foment/generate agricultural and non-agricultural employment.

August 2006, San Jose, Costa Rica
CAFTA’s impact on Agriculture and the Rural Sector in Central American countries: presentation of initial research results
Presentation to ministers and CAC policy directors regarding research progress.

September 2006, Guatemala City
Workshop on International Commerce and Development of Rural Economies: one year later
Review and update the topics discussed in the “International Commerce and Rural Development” event, held in February 2005, in Guatemala.