Economic Policy Group Networks For Free Markets

Panama-based think tank puts open trade on national agendas. LATIN AMERICAN ECONOMIES

BEFORE Carlos Salinas de Gortari became President of Mexico in December 1988, a mere 20 families controlled Mexico's trucking industry through government licensing. The monopoly made these few families wealthy.

After his election, Mr. Salinas - who holds a PhD in economics from Harvard - soon moved to deregulate the trucking industry, pushing the cost of transportation down and helping stimulate freer movement of goods.

The policy steps he followed in doing this were developed in detail ahead of time at the Autonomous Technological Institute of Mexico (ITAM) in Mexico City, in conjunction with several private Mexican economic institutes.

Policy development was done locally, though the study was funded by the International Center for Economic Growth (ICEG).

Mexico's successful deregulation of the trucking industry illustrates the impact of the quiet work of the ICEG, which has international headquarters in Panama City, administrative offices here in San Francisco, and a field office in Washington, D. C.

Nicolas Ardito Barletta, chairman of ICEG's board of overseers and manager of its international headquarters in Panama, is a former vice president of the World Bank for Latin America and also former president of Panama.

The board of overseers includes Paul Volcker, former chairman of the United States Federal Reserve Board, Raymond Barr, former prime minister of France, Roberto Campos, former minister of planning and finance for Brazil, and Saburo Okita, former Japanese minister of foreign affairs and director of planning.

Through ICEG, Dr. Barletta - who holds a PhD in economics from the University of Chicago - is striving to help build healthy economies in Latin America and other regions. ICEG has direct connections with a network of more than 240 indigenous economic policy institutes in 94 countries.

All are working to bring free-market reforms to their own economies. The network of experts tries to get market-oriented economic and human-development policies clearly stated and implemented.

ICEG's operating concepts are these:

* Facilitate the ability of countries to learn from each other.

* Utilize proven development concepts.

* Focus on practical, reformist policies, not on large grants or loans.

* Stress local ownership and investing in people at all social levels, giving them access to economic opportunity.

* Support policy experts who have done reform studies in ICEG-related institutes and have later been appointed to government jobs.

Such appointments have happened in both Mexico and Argentina, Barletta says.

ICEG's methods often involve a cross-fertilization between private sector planning and government implementation.

Barletta says one of the leading network institutes - Hernando de Soto's Instituto Libertad y Democracia in Peru - determined that one country in the region was requiring even small businesses to fill out 200 forms to get approval to operate legally.

The result of such policies in many countries, Barletta says, is that small businesses often just operate illegally. Another result is that many people simply can't participate in the legitimate economy, because it is so restrictive.

A. Lawrence Chickering, who worked extensively with ICEG when it was getting started around 1985 and is its associate director in San Francisco, says that "the way policies get formed is absolutely basic to progressive economies.

"As the world's economy becomes more and more interrelated, private citizens are increasingly in contact with each other, and this is where the real power of change comes in."

It is well understood, Mr. Chickering adds, that the key to economic progress is having "good policies, ones that are proven." But they need to be adapted to each culture, he says.

Chickering says that ICEG has sponsored studies comparing Latin America, which is just approaching a growth threshold, to the "more egalitarian region" of East Asia, where growth has become almost a norm. He and Barletta say that Mexico and Argentina will post dramatic records for growth.

President Carlos Saul Menem of Argentina has used work done by one of ICEG's correspondent institutes, the Institute of the Social Market Economy, to help him launch his successful privatization program.

Barletta said he feels that the Catholic Church, both in Rome and in Latin America, is increasingly emphasizing the advantages of the market economy as long as it supports human development.

Last year, ICEG was involved in a conference that brought economists and church bishops together in the Dominican Republic to "see if the social doctrine of the church and free market ideas can come together and satisfy the high objectives of morality." He feels that the two can do just that.

In May, ICEG will hold a conference in India on the economies of South Asia - Nepal, India, Pakistan, Sri Lanka, and Bangladesh.

This has been a slow-growth area where market-oriented ideas are just beginning to penetrate. A study of the region by Indian economist K. B. Lall along with five South Asian institutes will be released at the conference, Chickering says.

Prime Minister P. V. Narasimha Rao of India will open the conference.

While some of ICEG's funding comes from the Agency for International Development, the US government's foreign aid arm, it also receives funding from businesses and foundations.

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