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altArgentinian Sebastián Cutrona (pictured, left) and Colombian Pablo Moreno are the latest Latin American members to complete four-week research fellowships (January 11 - February 5) at the Virtual Institute.

"We welcome the possibility, thanks to the funding provided by the Government of Spain, to receive for a second consecutive year fellows from Latin America," said Vi Chief, Vlasta Macku. "Research is an essential function of UNCTAD, and it is beneficial for both the Vi member universities and the organization to work together on research projects."

Cutrona, of Universidad Nacional de Córdoba (UNC),  and Moreno, of Universidad de la Sabana, bring up to nine the number of fellows sponsored by the Government of Spain since last year, when the Vi hosted lecturers André Biancareli (Brazil), Marcelo Saguier and Juliana Peixoto (Argentina), Jorge Ochoa and Sascha Furst (Colombia), Felipe Muñoz (Chile) and Marcel Vaillant (Uruguay).

Cutrona's research project focuses on the potential of oil and gas to act as a driving force for regional integration in Latin America. During his fellowship he was able to broaden the scope of his research beyond the Latin American region and enrich his work with information, analysis and data from other regions. He benefited extensively from recent statistical data available through UNCTAD channels.

"Even though Latin American oil and gas reserves and production are not considered high at global level, the figures by themselves do not reflect the complexity and importance of this sector for the producer countries," Cutrona writes in his fellowship report. "Oil and gas provide significant revenues to countries that have not yet identified alternative strategies to diversify their economies.

Nowadays, after a period of energy control by the private sector, Latin America is reintroducing State intervention in the field of natural resources. Under the leadership of Venezuela, Bolivia and Ecuador, the rest of the continent would be initiating a reassessment of strategic resources such as oil and gas. In this context, the pipeline infrastructure becomes a potentially major element of the integration process in the region."

Cutrona plans to publish a paper on the subject and to integrate his findings into the teaching program at his university. His fellowship work counted with the support of Rachid Amui, of UNCTAD's Special Unit on Commodities, Piergiuseppe Fortunato, of the Virtual Institute,  and Giacomo Luciani, Director of  the Gulf Research Center.

Moreno came to UNCTAD to start work on a paper that would analyze financial indicators, identify the acquisition and use of financial products in Latin America, and formulate recommendations for improvement in this area. 

Working with UNCTAD's  Alfredo Calcagno and Jörg Mayer, of the Division on Globalization and Development Strategies, and with Leonela Santana, of the Division on International Trade in Goods and Services, and Commodities, Moreno decided to narrow his research down to the Colombian financial market in the light of recent financial developments, with a particular focus on commodity exchanges.

"The world was hit by a major financial crisis in 2008, which was caused by several factors, among them, the massive presence of speculators who transformed financial instruments into gambling products that satisfied their economic greed," writes Moreno. " As the derivatives market is still incipient in Colombia, this has mitigated the impact of the financial crisis in the country.

Nonetheless, is the world financial crisis a valid argument to stop the idea of introducing a derivative market in Colombia? Or, on the contrary, would the lessons learned be used to establish a clear (and probably highly regulated) system that would allow hedgers to become potential users and benefit from the derivatives market? "

To address these questions, Moreno used his time in Geneva to talk with experts and to consult and review various data sources, becoming aware of the benefits that can stem from the derivatives market and how these markets can contribute to the financial development of a country.

Once in Colombia, as suggested by UNCTAD, he will contact the Colombian Commodity Exchange (CCE) and analyze the lessons learned from the world financial crisis to support (or reject) the so far shyly suggested CCE strategy of hedging commodity prices through the use of derivatives. UNCTAD's Special Unit on Commodities will continue to provide support to Moreno on his project, which he hopes will result in a published work.

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