Stanford News

1/29/97

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Stanford launches development research center with policy reform focus

A new research center focused on economic development and policy reforms in developing and transition economies has been announced by Stanford's provost and dean of research.

Provost Condoleezza Rice and Charles Kruger, dean of research and graduate policy, also announced the appointment of Professor Anne O. Krueger as the director of the new center, which is named the Stanford Center for Research on Economic Development and Policy Reform. Krueger is an expert on international economics and economic development who came to Stanford in 1993.

The center's mission is to "support research and other activities that increase and deepen understanding of the process of economic policy reform and its effects on economic development and growth." In some developing countries and in economies in transition from centrally planned systems to market economies, policies must be reformed before satisfactory rates of growth can be attained, Krueger said. The center's mission in this area will focus on "deepening understanding of the necessity of reform and of the ways in which reforms can be rendered most conducive to achieving more satisfactory economic performance and better living standards for poor people."

In other developing countries and in economies further along the transition process, she said, research will be conducted to "understand the reasons for success and failure of reforms and the behavioral responses to altered incentives."

The development center's research program will be devoted to issues associated with policy reform and will not have a regional or an area focus, she said. However, individual researchers may have area specialties on which their research on aspects of policy reform concentrates. Methods of research will include theoretical analyses of alternative policies and their effects and empirical analyses of the policy reform process.

Within the next few months, Krueger said she expects to announce the appointment of several senior fellows and center fellows, including joint appointments of current Stanford faculty.

"I would hope that when we are fully operative and at cruising speed, at any given time we would have eight to 12 professional economists working with or associated with the center," Krueger said. Visitors probably will be invited to teach one course while at the center, she said, as well as to engage in seminars with Stanford faculty and graduate students.

The Center for Research on Economic Development and Policy Reform will have offices in the Landau Building and will be part of the Center for Economic Policy Research, which sponsors and disseminates economic research relevant to government policy choices in fields ranging from U.S. health care and Social Security reform to regional trade accords and international currency markets.

In contrast to other activities of the Center for Economic Policy Research, Krueger said, the new development center will not focus on the United States or other G-7 countries but on countries that are either not highly industrialized or that, like Russia, are industrialized but have to make severe adjustments to move from a centrally planned to a competitive market economy.

"The development center will address important areas of research concerning the most difficult economic problems facing the world in the next century," said Professor John Taylor, director of the Center for Economic Policy Research.

"The new center will be interdisciplinary; however, economic development in some of its aspects is importantly and deeply an economic issue," Krueger said. "There have to be close linkages with economists," she said, which was one reason to locate the center physically in the Landau Building.

Some economic policy issues, such as deregulation of airlines or telecommunications, apply to both highly industrialized and less industrialized countries, she said, but there is a need for research that is specific to transition economies and developing economies. "The distinctive characteristic of developing countries is that agriculture is very important, and in transition economies, there are issues of developing an appropriate legal framework," she said.

The center will be funded in part from endowments for development research from the Carnegie and Rockefeller foundations that were previously used by the Food Research Institute, a unit that university administrators and trustees decided last year to close. In recent years, that institute focused its research on agriculture in developing countries, and Krueger said the new development center will have a strong agricultural component as well.

"In the '50s, people thought you could study agricultural problems in isolation. That has proved to be less true in recent years because government policies that are not specifically related to agriculture have been shown to help or hinder the development of a strong agricultural sector," she said. For example, in a comparative study of agricultural pricing policies in 18 countries that Krueger began when she was at the World Bank, she found that countries' exchange rates and macroeconomic policies, along with their policies toward protection of other industries, more strongly influenced farm incomes than did their agricultural policies.

Asked how the center compared to others around the country, Krueger said its mission lies somewhat between those of Yale's Economic Growth Center and of Harvard's Institute for International Development. The Yale center is highly regarded for its academic research on economic development and does some teaching. The Harvard center doesn't teach or do academic research per se but is highly regarded for its ability to provide practical policy advice to governments of developing countries. The title of Stanford's center, she said, is meant to stress that its intentions are both to do research and to provide policy guidance to countries and international institutions involved in development.

"We have an enormous opportunity now, with basic core funding, to undertake what ought to be a premier center, one that brings together both policymakers and academics," Krueger said. Part of her job will involve fundraising, she said, as well as planning seminars and conferences with senior fellows.

The center, which began operation this month, has its first two visiting scholars. T.N. Srinivasan, a professor of economics at Yale, is working at the center on issues of Indian economic policy reform, and Chong Hyun Nam, a professor at Korea University in Seoul, is working on Korean policy reform.

Krueger, who holds the Herald L. and Caroline L. Ritch Professorship in the School of Humanities and Sciences and is a senior fellow, by courtesy, at the Hoover Institution, previously served as vice president for economics and research at the World Bank and held faculty positions at Duke University and the University of Minnesota. Her national honors include membership in the National Academy of Sciences and the American Academy of Arts and Sciences. She is the immediate past president of the American Economics Association.

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By Kathleen O'Toole