Social Development and Public Governance > Agriculture and Rural Development
Dealing with Coordination Issues in Rural Development Projects: Game Theory Insights
By Mark D. Wenner (06/07, RUR-07-06, En)
Development is a challenging business in large part because many agents have to coordinate actions and many times, they fail to do so. Agents are simply unable to coordinate their behavior which leads to an equilibrium outcome that leaves all agents worse off than in an alternative but superior equilibrium. This can occur due to lack of information, inadequate institutional rules, unclear gains to cooperation, risk aversion, or differing expectations. This paper attempts to review the literature on coordination issues, apply game theory to the topic in the context of selected rural development projects in order to develop a set of guidelines to avoid and minimize coordination failures. Three Inter-American Development Bank (IDB) financed projects were selected for review -a grape value chain in the Cauca Valley in Colombia, a terretorial development project in the Rio Chanchan watershed in Ecuador, and a tourism cluster in Patagonia, Argentina. Each project required a high level of coordination among multiple actors in both vertical (regional and municipal governments) and horizontal dimensions (alliances between private businesses, trade associations, civic organizations, and government entities within one region). The setting, the goals, the constraints, the project results are described in each case, then the coordination issues are analyzed. As a result, a checklist and set of preliminary guidelines were developed, aimed at reducing the likelihood of coordination problems in the design of projects.
This working paper is being published with the sole objective of contributing to the debate on a topic of importance to the region, and to elicit comments and suggestions from interested parties. This paper has not gone through the Department's peer review process or undergone consideration by SDS Management. As such, it does not reflect the official position of the Inter-American Development Bank. The opinions expressed in this paper are those of the author and do not necessarily represent the official position of the Inter-American Development Bank. All errors and omissions are the sole responsibility of the author. Permission is granted to reproduce this paper in whole or in part for non-commercial purposes only and with proper attribution to the author, the Sustainable Development Department and the Inter-American Development Bank.
Last updated: 06/29/07
