Vol. 38, No. 18

2-1-2006
By: Joni Bentz Seal

Rural Finance Program influences agricultural policy around the world

A little-known Ohio State program has been shaping rural finance policy in developing countries around the globe for more than four decades.

The Rural Finance Program, in the Department of Agricultural, Environmental, and Development Economics, began as a cooperative agreement between the university and the United States Agency for International Development back in the 1960s.
"The thinking and practice about lending in countries - ranging from Korea to El Salvador to South Africa - over the last 40 years have changed significantly because of our Rural Finance Program and the intellectual and policy-driven contribution by Ohio State," said Claudio Gonzalez-Vega, director of the program.

Through its collaborations, the program has helped draft new central bank laws for the Dominican Republic and Costa Rica, swayed financial reform in the Philippines and other Asian countries, and influenced international donors such as the World Bank and USAID, Gonzalez-Vega said.

Such reform begins with Ohio State faculty, graduate students and alumni of the College of Food, Agricultural, and Environmental Sciences master's and doctoral programs working with a country's local USAID mission or government program.
"We have built an international network and attempt to transfer lessons learned in other nations during a two-to-four year period," said David Hansen, associate dean and director of International Programs in Agriculture. "Our students gather data and write theses and dissertations, usually addressing specific issues or problems in the country."

Over the years, Ohio State's influence has helped define "rural finance" as more than just agricultural credit by including manufacturing, trading and services, and put an end to the old assumption that small farmers save little money and don't know how to manage funding and resources.

"It was amazing how many projects and programs designed by the World Bank and international agencies focused only on credit for agricultural business to the exclusion of all other rural industry," Gonzalez-Vega said, "and how typical lending practices failed to acknowledge and administer the financial services that such populations needed to prosper and maintain their assets."

Students in master's and doctoral programs in agriculture can specialize in the rural and microfinance track, which boasts nearly 120 graduates. Many of those alumni - who had once assessed rural situations in various countries as students - now hold high positions in the World Bank, the Inter-American Development Bank and the central banks and ministries of finance of the Dominican Republic, Mexico and Costa Rica.

Because it is the only one in the country with such broad scope - interacting with the central banks all the way down to the agriculturalists themselves - Ohio State's program is an attractive option for student and faculty exchange. Last summer, the program won a competition to partner with the Centro de Investigaci—n y Docencia Econ—micas in Mexico to help CIDE emerge as the country's premier center for analysis and support of rural and microfinance through scholarships, student and faculty exchanges, lectures and workshops.

The first students arrived in Columbus in January to begin two quarters of study at Ohio State before returning to CIDE to obtain their degrees. Four more students will come in September to complete the two-year master's program in Columbus, earning their degrees from Ohio State.

A faculty exchange also will begin this month, with the first of three professors on sabbatical arriving for a full year of teaching, advising and research. And several Buckeye faculty will provide workshops, training and short courses at CIDE throughout the three-year agreement.

The partnership also will link rural financial markets and internationally recognized researchers and scholars from both institutions with a global network of research and practice to share Mexican experiences, said Martha Navarro-Albo, director of the Office of Academic International Affairs at CIDE.

"CIDE is recognized as a leader in economic thought in Mexico and our scholarly output has significant impact on government policy and programs," Navarro-Albo said. "Our partnership with Ohio State will help us become a leader in this area of study and analysis, and it will help us sustain this capacity into the future."
For more information about Ohio State's Rural Finance Program, visit http://aede.osu.edu/programs/RuralFinance.

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