Macroeconomic reform and growth in Africa : adjustment in Africa revisited
The 1994 World Bank study,"Adjustment in Africa: reforms, results, and the road ahead,"assessed the extent of, and economic payoffs from, policy reform in 29 countries in sub-Saharan Africa in the mid-1980s and 1990s. Here, the authors update the results of that report with 1992 macroeconomic data and explore some issues in more detail. The conclusions of the earlier report still hold: improved policies are still associated with improved performance, but countries fall short of having sound policies. In fact, the 1991-92 policy stance was not as strong as the 1990-91 stance, reflecting the slow, fragile, and often reversal-prone nature of macroeconomic reform in Africa. Getting the real exchange rate right and reducing the fiscal deficit should be the top priority for restoring growth. Countries that significantly reduced their budget deficits and reduced the black market premium (by devaluing) enjoyed the greatest payoffs from reform. Devaluation of the CFA franc in January 1994 represents a real opportunity for the CFA franc zone countries to restore growth. Many countries have made considerable progress in moving toward competitive real exchange rates. There still remains the challenge of reducing budget deficits in ways consistent with poverty-reducing growth. Hence, the need to reorient public spending to the essential tasks of government, especially providing social services. Reform in two areas will be important to sustaining fiscal reform: implicit subsidies to public enterprises must be cut, and the cost of restructuring the banking sector must not be absorbed by the budget. Policy reforms undertaken so far have paid off in higher growth rates, but the level of growth is still too low to sustain rapid rates of poverty reduction. Increased growth seems to have come more from efficient use of existing capacity than from new investments. Only steady and increased policy reform will convince investors of the credibility of reform and thus of a more favorable investment climate.
|Date of creation:||31 Dec 1994|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (202) 477-1234
Web page: http://www.worldbank.org/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Barro, Robert J, 1991.
"Economic Growth in a Cross Section of Countries,"
The Quarterly Journal of Economics,
MIT Press, vol. 106(2), pages 407-43, May.
- Barro, R.J., 1989. "Economic Growth In A Cross Section Of Countries," RCER Working Papers 201, University of Rochester - Center for Economic Research (RCER).
- Robert J. Barro, 1989. "Economic Growth in a Cross Section of Countries," NBER Working Papers 3120, National Bureau of Economic Research, Inc.
- Easterly, William & Schmidt-Hebbel, Klaus, 1991. "The macroeconomics of public sector deficits : a synthesis," Policy Research Working Paper Series 775, The World Bank.
- Rudiger Dornbusch & Stanley Fischer, 1991.
NBER Working Papers
3896, National Bureau of Economic Research, Inc.
- Easterly, William & DEC, 1993.
"How much do distortions affect growth?,"
Policy Research Working Paper Series
1215, The World Bank.
- William Easterly & Michael Kremer & Lant Pritchett & Lawrence H. Summers, 1993.
"Good Policy or Good Luck? Country Growth Performance and Temporary Shocks,"
NBER Working Papers
4474, National Bureau of Economic Research, Inc.
- Easterly, William & Kremer, Michael & Pritchett, Lant & Summers, Lawrence H., 1993. "Good policy or good luck?: Country growth performance and temporary shocks," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 459-483, December.
When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:1394. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi)
If references are entirely missing, you can add them using this form.