Faculty / School
Faculty of Business Administration (FBA)
Was this content written or created while at IBA?
No
Document Type
Article
Source Publication
Finance & Development
Keywords
World bank, Case study, Africa
Disciplines
Economic Policy | Public Affairs, Public Policy and Public Administration | Public Policy
Abstract
SUB-SAHARAN Africa's economic decline, although modestly reversed in some countries, is deeply worrying. A World Bank case study of seven countries pinpoints the need for consistent and unfettered implementation of reform policies, along with investments in infrastructure and human resources, to lift these countries out of poverty. After a prolonged period of economic stagnation, many African countries committed themselves in the mid-1980s to a series of structural reforms and adjustment policies aimed at restoring economic growth. Now, almost a decade into adjustment, Africa's economic climate still remains unclear and uncertain, with the overall results modest relative to original expectations. Although some countries have enjoyed a resurgence of growth, the economic performance of the region as a whole has been disappointing, raising troubling questions about the extent and efficacy of policy reform efforts. Previous studies of structural adjustment have focused on cross-sectional and aggregate performance of a group of countries that have taken adjustment loans from the World Bank and the IMF. Few empirical studies have actually measured the extent to which policies have, in fact, been implemented by the countries themselves and then related changes in policies to subsequent economic performance. To fill this gap, a recent World Bank study examined in depth seven countries--Burundi, Cote d'Ivoire, Ghana, Kenya, Nigeria, Senegal, and Tanzania--that undertook adjustment programs during the mid-1980s. The period covered by these case studies ends, for most countries, in 1991. The countries were chosen to capture a variety of characteristics and initial conditions. In all seven countries, adjustment programs addressed such distortions as an overvalued exchange rate, high current account and fiscal deficits, low factor mobility, restrictions on domestic and foreign trade, distorted pricing for tradables, and inefficient public services. How far have these countries come in reforming their policies? To assess the extent of reform, the study looked at the five questions that are raised most frequently in connection with adjustment programs: Has growth been adequate? Has the supply response been strong? Do investment-to-GDP ratios show improvement? What role has been played by external financial flows? And, have adjustment policies hurt the poor? The results of this study confirm the findings of the main World Bank Report Adjustment in Africa: Reforms, Results, and the Road Ahead. Those countries that have pursued adjustment programs in a consistent and sustained manner, such as Ghana and Tanzania, have shown positive results in terms of a resurgence in growth. But it is equally clear that many structural reforms have yet to take place; consequently, economic recovery is still fragile and economic growth rates are still insufficient to make any dent in poverty alleviation.
Citation/Publisher Attribution
Husain, I. (1994). Results of adjustment in Africa: selected cases. crisis, 1981, 86.
Husain, I. (1994). Results of adjustment in Africa: selected cases. crisis, 1981, 86.
Recommended Citation
Husain, I. (1994). Results of adjustment in Africa: selected cases. Finance & Development, 6-9. Retrieved from https://ir.iba.edu.pk/faculty-research-articles/241
Publication Status
Published
