The Atlantic Council’s Freedom and Prosperity Center has awarded Ignacio P. Campomanes, resident fellow of the NCID at the University of Navarra, a Freedom and Prosperity Academic Grant to finance a research project titled “Paths to Prosperity: Interactions between Rule of Law, Economic and Political Freedom”. These grants aim to promote research that explores the concepts of freedom and democracy, and the mechanisms through which they affect overall prosperity. 

How should taxes be designed in order to achieve higher tax-collection while affecting consumption as little as possible? Is it possible to use taxes to discourage the consumption of certain goods (for example, those that exert negative environmental externalities) to a certain group of consumers, without harming the consumption of others? Or in other words, what rules allow us to design an optimal tax structure through which to achieve certain objectives while minimizing market distortions? This is the main research question that we want to study in this project proposal.

Countries with a high degree of ethno-linguistic diversity are often associated with underdevelopment and the under-provision of public goods. However, the existing literature, which is at the cross country level, fails to take into account the effective contact between the different ethnic groups. For a given level of ethno-linguistic diversity, we would expect the outcomes to differ depending on whether the different groups are interacting locally or not. Our premise is that the potential for interaction between people of different groups depends on the spatial distribution of diversity.

While urbanization can bring benefits for economic, cultural and societal development, the rapid pace of urbanization that is experienced is creating enormous challenges. Especially cities in developing countries are struggling to keep pace with necessary infrastructure investment. One consequence is a phenomena referred to as “urbanization of poverty”. United Nations Water (2013) estimates that 40% of the world’s urban expansion is taking place in slums.

In developing countries, financial uncertainty has deep repercussions on both households' welfare and investment in productive activities. Bolivia is characterized by the prominence of agriculture in its economy. More than 30% of its labor force works in agriculture, and according to the last available agricultural census, 94% of Bolivian productive units are owned by families whose output surpasses 6 million tons. Thus, being of paramount importance for Bolivian food security.

Technological innovation constitutes a promising alternative to allow many people in developing countries to escape a situation of poverty. This project analyzes four basic questions. First, what are the characteristics of the firms that introduce new products and/or processes in developing countries. Second, how do these firms do innovation. Third, what are the consequences of technological innovation. Finally, what are the main obstacles to innovations that these firms must overcome.