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Poverty and income distribution during adjustment: Issues and evidence from the OECD project

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  • Bourguignon, Francois
  • de Melo, Jaime
  • Morrisson, Christian

Abstract

Drawing lessons from country studies, the authors examine the effects of adjustment policies on the distribution of income in Chile, Cote d'Ivoire, Ecuador, Indonesia, Malaysia, and Morocco. After analyzing the issues that must be confronted in designing adjustment programs with a focus on poverty, they synthesize the main conclusions of the different country studies. With simulation exercises they explore the effects of the design of the adjustment packages on poverty and on the sustainability of the measures undertaken in these countries. These exercises show considerable diversity in the evolution of income distribution during adjustment. They also expose the fatal flaws of narrowly designed adjustment programs. Adjustment programs - whether focused on efficiency or on welfare - will fail when they do not recognize the interdependence of the three criteria of efficiency, welfare, and political feasibility. Adjustment programs must be carefully packaged to fit country circumstances, taking into account both the political and economic environments.
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Suggested Citation

  • Bourguignon, Francois & de Melo, Jaime & Morrisson, Christian, 1991. "Poverty and income distribution during adjustment: Issues and evidence from the OECD project," World Development, Elsevier, vol. 19(11), pages 1485-1508, November.
  • Handle: RePEc:eee:wdevel:v:19:y:1991:i:11:p:1485-1508
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    References listed on IDEAS

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    1. Bourguignon, Francois, 1991. "Optimal Poverty Reduction, Adjustment, and Growth," World Bank Economic Review, World Bank Group, vol. 5(2), pages 315-338, May.
    2. Corden, W Max, 1989. "Macroeconomic Adjustment in Developing Countries," World Bank Research Observer, World Bank Group, vol. 4(1), pages 51-64, January.
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    Cited by:

    1. Tarr, David G., 2013. "Putting Services and Foreign Direct Investment with Endogenous Productivity Effects in Computable General Equilibrium Models," Handbook of Computable General Equilibrium Modeling, Elsevier.
    2. Patrick GUILLAUMONT & Christopher GRIGORIOU, 2008. "Child Mortality Reacts to Relative Prices," Working Papers 200814, CERDI.
    3. Christophe Muller, 2005. "Poverty and inequality under income and price dispersions," Canadian Journal of Economics, Canadian Economics Association, vol. 38(3), pages 979-998, August.
    4. Ehrhart, Christophe, 2006. "Croissance, redistribution et lutte contre la pauvreté : l’évolution non linéaire de l’approche de la Banque mondiale," L'Actualité Economique, Société Canadienne de Science Economique, vol. 82(4), pages 597-641, décembre.
    5. Pastor, Manuel Jr. & Conroy, Michael E., 1995. "Distributional implications of macroeconomic policy: Theory and applications to El Salvador," World Development, Elsevier, vol. 23(12), pages 2117-2131, December.
    6. Christophe Muller, 2006. "Poverty Simulation And Price Changes," Working Papers. Serie AD 2006-13, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    7. Celso Nunes, 2008. "Poverty Measurement: The Development of Different Approaches and Its Techniques," Working Papers 93, ECINEQ, Society for the Study of Economic Inequality.
    8. Dercon, Stefan, 2006. "Economic reform, growth and the poor: Evidence from rural Ethiopia," Journal of Development Economics, Elsevier, vol. 81(1), pages 1-24, October.
    9. Leaky, R. & Caron. P. & Craufurd, P. & Martin, A. & McDonald, A. & Abedini, W. & Afiff, S. & Bakurin, N. & Bass, S. & Hilbeck, A. & Jansen, T. & Lhaloui, S. & Lock, K. & Newman, J. & Primavesi, O. & S, 2009. "Impacts of AKST on development and sustainability goals," IWMI Books, Reports H042791, International Water Management Institute.
    10. Winograd, Carlos D. & Urani, André, 1994. "Distributional effects of stabilization policies in a dual economy: the case of Brazil - 1981-88," Revista Brasileira de Economia - RBE, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil), vol. 48(1), January.
    11. O'Faircheallaigh, Ciaran, 1998. "Resource development and inequality in indigenous societies," World Development, Elsevier, vol. 26(3), pages 381-394, March.
    12. Copenhagen Economics, 2008. "Reduced VAT for environmentally friendly products," Taxation Studies 0025, Directorate General Taxation and Customs Union, European Commission.
    13. Thomas F. Rutherford & David G. Tarr, 2014. "Poverty effects of Russia's WTO accession: Modeling “real” households with endogenous productivity effects," World Scientific Book Chapters,in: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects, chapter 12, pages 287-306 World Scientific Publishing Co. Pte. Ltd..
    14. Ferreira, Francisco & Prennushi, Giovanna & Ravallion, Martin, 1999. "Protecting the poor from macroeconomic shocks," Policy Research Working Paper Series 2160, The World Bank.
    15. Mohamed Abdelbasset Chemingui & Chokri Thabet, 2008. "Agricultural Trade Liberalization and Poverty in Tunisia: Micro-Simulation in a General Equilibrium Framework," Working Papers 402, Economic Research Forum, revised 03 Jan 2008.
    16. Arnim Langer and Frances Stewart (QEH), "undated". "Macro Adjustment Policies and Horizontal Inequalities," QEH Working Papers qehwps158, Queen Elizabeth House, University of Oxford.
    17. Rutherford, Thomas & Tarr, David & Shepotylo, Oleksandr, 2005. "Poverty effects of Russia's WTO accession : modeling"real"households and endogenous productivity effects," Policy Research Working Paper Series 3473, The World Bank.
    18. Thomas W. Hertel & Jeffrey J. Reimer, 2006. "Predicting the Poverty Impacts of Trade Reform," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 2, May.
    19. Devarajan, Shantayanan & Robinson, Sherman, 2002. "The influence of computable general equilibrium models on policy," TMD discussion papers 98, International Food Policy Research Institute (IFPRI).

    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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