In July 1999 the World Bank awarded the Latin American and Caribbean Economic Association (LACEA) with two separate grants totaling US$ 500,000.00 from its Fiscal Year 1999 Development Grant Facility. This is part of the Bank's FY99 program on Regional Research Consortia capacity building financed by the Development Grant Facility (DGF). The purpose of the grant was to support LACEA’s capacity-building elements (annual meeting, sponsored research networks, training activities and the journal Economía, among others) during the fiscal year July 1, 1999 through June 30, 2000.

An Advisory Board for the DGF grant was established consisting of the LACEA Executive Committee plus Francois Bourguignon (Delta-ENS, Paris) and Lyn Squire (The World Bank). The Advisory Board provided advice on the allocation of the DGF funds and assessed the quality of the research and other activities funded by the DGF grant.

Since late 1998, LACEA has been collaborating with the Global Development Network (GDN) to support and link research and policy institutes involved in the field of development. GDN’s initiative, has proceeded on two fronts: knowledge generation and knowledge sharing. In July 1999, LACEA, one of the seven regional networks, began using World Bank funding to create or strengthen competitive peer-review grant mechanisms for generating research in Latin America and the Caribbean in three main areas:

1. Encourage research and teaching related to the economies of Latin American and Caribbean countries and to foster dialogue among researchers and practitioners whose work focuses on the economies of the region. As a matter of policy, LACEA welcomes economists of all nationalities, theoretical orientations and policy perspectives.
   

2. Encourage interaction among scholars, teachers and policy-makers residing and working in Latin America and the Caribbean and professionals residing outside the region.
   

3. Sponsor programs, meetings, conferences and other opportunities for scholarly exchange among individuals and organizations concerned with the economies of Latin American and Caribbean nations. In this capacity, LACEA can act both independently and as a member of other professional or nonprofit associations.

In accordance with these objectives and following the consultation with the DGF Advisory Board, LACEA arranged for the grant funds to be awarded as sub-grants on the basis of competitive process. While the main criterion for awarding grants was the quality of the proposals, the allocation of the grant funds was to encourage participation by researchers in countries of the region where capacity building needs are the greatest.

Starting with an initial consultative meeting in June 1998, the regional networks and the World Bank have initiated several knowledge-sharing programs, including training for researchers, a series of regional workshops focusing on building the capacity of research and policy institutes, and launched the Global Research Project.