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We are proposing that FAO and Consortium partners agree to the development of a limited number of agricultural policy indicators (API) that would be useful in monitoring the current state and the development over time of polices directed toward the agricultural sector in selected developing countries. The API would be grouped into separable modules of different complexity and not all modules would be completed for all Tier I countries. Thus, beyond a core content common for all countries, the API project would allow for a different coverage and depth in the analysis of different countries according to the availability of data and of experienced analysts to contribute to the more complex modules.

The most fundamental of the modules would be the set of indicators that measure the incentive effect on farmers through the direct policies that impact on output and input markets. This would be complemented by the structural and (where possible) the macroeconomic modules that reflect structural and factor market policies and the measure the impact of macroeconomic distortions and non-agricultural trade policies. Given that the structural and macroeconomic distortion modules are more complex to deal with, in the first phase of the project they might only be undertaken in a few countries on a pilot basis - with those countries selected because of the availability of previous analysis and good data on these topics. Modules that assemble systematically the regulatory and research and technology policies would provide more qualitative evidence of the policy environment for countries for which such data is available.

The modus operandi for collecting and collating the data for these indicators would be to select country teams for a limited set of Tier I countries. The choice of countries would be a matter of discussion within the Consortium, but would ultimately depend on the interest of FAO in the policy issues of that country.22 It would seem desirable to have countries that had different types of agricultural policy environment, including those for whom food security is a pressing issue as well as those whose problems include finding overseas markets for commodities. In addition, it would be good to include smaller as well as larger economies, as their problems might differ in important respects. Some regional dispersion would be advisable to avoid the identification of the program with just a subset of policy issues. On the other hand, including countries in the same region would strengthen any comparative conclusions. The relevant government would be informed of the choice of country, though, unlike the Tier II countries, it would not be necessary for the government to become involved in the data and analysis components of the study.

Each team would collect and would conduct a preliminary analysis of the data for the policy indicators using the common methodology suggested above. The task of completing the analysis of the data would be undertaken in FAO on the basis of data submitted, and preliminary results would be sent back to the field for checking. Team leaders would meet together to critique each other's country results, and a compilation of those results would then be made by FAO. Though government would not need to agree with all the calculations up to this stage, the initial compilation would be circulated to them for comment before publication or distribution.

One way to make best use of scarce country-based professional capacity could be to establish regional networks of researchers working on different countries within the region. The researchers could be located in a single institution, a regional university with strong ties to academics in neighboring countries for instance, or could agree to communicate on a regular basis. This relates to the issue of country coverage, as it suggests that covering perhaps three countries in a region may give the element of comparability discussed above.

The development of the API would be of significant interest to developing country governments and to international organizations and donor agencies and of help in trade negotiations. But an important benefit would also accrue to the agency collecting and analyzing the data, as it would act as a framework for accumulating knowledge about a set of countries and ensure that follow-up work on policy analysis could be done more efficiently. An important organizational issue is how the results obtained from these studies will be stored and disseminated, an area in which FAO has ample experience. An important side-effect of the API programme would be the opportunity for capacity building in developing countries, and hence it would be desirable to make a link between the monitoring programmes and training and policy analysis activities in the public sector and in developing country institutions.

22 The question arises as to whether the ROA study could be a starting point for choosing the countries and providing some analysis for the broader API project. We think that this could be a constructive first step in the project as country analysts and consultants are already in part identified.

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