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Poverty and Growth in the WAEMU after the 1994 Devaluation

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  • Azam, Jean-Paul

Abstract

This paper brings out that poverty increased massively in the wake of the 1994 devaluation of the CFA franc, despite a significant recovery of economic growth. Although this increase affected all the social groups, it fell mostly on the urban poor. An analytical model is presented, which explains this puzzle by the stratification of the labour market, assuming that the formal sector workers are at the same time the investors in the informal sector. Then, capital intensity in the latter increases as the former anticipate the cut in formal sector wages that the long-awaited devaluation brings about. Ex post, they run down their assets for consumption-smoothing purposes, thus de-capitalising the informal sector firms, with a negative impact on incomes in the (urban) informal sector. Copyright 2004, Oxford University Press.
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  • Azam, Jean-Paul, 2003. "Poverty and Growth in the WAEMU after the 1994 Devaluation," IDEI Working Papers 197, Institut d'Économie Industrielle (IDEI), Toulouse.
    • Handle: RePEc:ide:wpaper:615
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    13. Jean Paul Azam & Bruno Biais & Magueye Dia & Christine Maurel, 2001. "Informal and Formal Credit Markets and Credit Rationing in Côte D'Ivoire," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 17(4), pages 520-534.
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    Cited by:

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    2. Florence Bouvet & Roy Bower & Jason C. Jones, 2022. "Currency Devaluation as a Source of Growth in Africa: A Synthetic Control Approach," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 48(3), pages 367-389, June.
    3. Michael Grimm & Isabel Günther, 2005. "Inter- and Intra-household Linkages Between the Informal and Formal Sector: a Case Study for Urban Burkina Faso," WIDER Working Paper Series RP2005-14, World Institute for Development Economic Research (UNU-WIDER).
    4. Azam, Jean-Paul & Dia, Magueye, 2004. "Pro-Poor Growth in Senegal," IDEI Working Papers 325, Institut d'Économie Industrielle (IDEI), Toulouse.
    5. Mason, Nicole M. & Jayne, T.S. & Chapoto, Antony & Donovan, Cynthia, 2011. "Putting the 2007/2008 global food crisis in longer-term perspective: Trends in staple food affordability in urban Zambia and Kenya," Food Policy, Elsevier, vol. 36(3), pages 350-367, June.
    6. Pau Baizan & Amparo González-Ferrer, 2016. "What drives Senegalese migration to Europe? The role of economic restructuring, labor demand, and the multiplier effect of networks," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 35(13), pages 339-380.
    7. Isabel Günther & Mohamed Ali Marouani & Marc Raffinot, 2006. "La croissance est-elle pro-pauvres au Mali ?," Working Papers DT/2006/15, DIAL (Développement, Institutions et Mondialisation).
    8. Mr. Montfort Mlachila & Mr. Tidiane Kinda, 2011. "The Quest for Higher Growth in the WAEMU Region: The Role of Accelerations and Decelerations," IMF Working Papers 2011/174, International Monetary Fund.

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