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The economics of developing countries

Professor David Fielding, Otago Business SchoolNew Zealand may be far from the rest of the world, but to avoid being isolated and insular, it is vital that we understand and participate in world issues.

One researcher who has done just that for many years is Professor David Fielding, his studies contributing to understanding the economics of low-income developing countries, especially countries in Sub-Saharan Africa.

He explained that the world is connected and we are part of an international community, therefore it’s appropriate we have a global sense of responsibility.

“We may be small, but New Zealand has the resources and skills to assist and take a leadership role in the economics of developing countries, as similar-sized countries like Finland do already. Such participation is enlightened self-interest; we can’t afford to remove ourselves from the problems facing the rest of the world.”

Professor Fielding is working alongside researchers in the UK, participating in a range of studies that seek to understand what drives economic growth in low-income countries.

For example, while large physical distances restrict trade, ethnic and religious differences can also play a role in commerce. A lack of understanding of such complexities can therefore derail potential efforts to improve economies in small, low-income countries with poor infrastructure.

There are multiple constraints to improving development, including political ones, but Professor Fielding emphasized that investing in education is a key in improving communication, integrating communities and improving economies.

“More people speaking the same language means less distance and more connected markets; trade therefore becomes easier.”

Numerous studies across different countries show that integrated markets increase volumes of trade, lessens the price variations following events like drought, and reduce the power of monopolists.

His current research interests include the economics of violent conflict in the Middle East.

He has also looked at the volatility of aid to developing countries, and analysed aid effectiveness. Conventional monitoring looks at a country’s GDP to gauge progress, but his research shows that measuring literacy, life expectancy, fertility and material assets gives a robust and more complete picture of the health of a nation, and the on-going value of aid into developing countries.

Professor Fielding teaches macroeconomics and development economics at the University of Otago.

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