Chapter5_Neoclassical Reform in Practice(bis)

Chapter5_Neoclassical Reform in Practice(bis) - Chapter 5...

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Chapter 5: Understanding Development- John Rapley Neoclassical Reform in Practice Structural reform adjustments programs have done the most good in Latin America and the least in Africa. The moral concerns are that: SAPS have worsened the plight of the poor and deepened injustices in third world societies The dividends of structural adjustments - Mexico: economic crisis in mid 1980s led to currency devaluation, tight fiscal and monetary policies, and trade liberalization. The conditions worsened, GDP feel, but not everyone was losing out. Economy began to rise in 1988, by 1991 inflation fell down, investment and foreign capital inflows went up, healthy growth. 1994 free-trade agreement with Canada and U.S, but in 1995 the market collapsed investors backing out because no faith in government. U.S. offered billions in credit to save the situation. - Chile: most successful in structural adjustment depended less on foreign backing. Started in 1973, for the first few years, signs of misery and no growth, but by early 1980s, situation got better. Chile’s growth rate, one of the highest at the time. New jobs, exports went up, new products exported, agriculture more advanced, social indicators were high. - India: was a late adjuster. With Rajiv Gandhi as prime minister, reform process tended to stop & go for a few years. In 1991, Congress Party returned to power balance-of-payments crisis, shock therapy in process protective barriers went down, liberalization targeted industrial sector, and agriculture sector was untouched. - Ghana : one of Africa’s early adjusters, remained faithful to IMF therefore, generous aid and credit. 1970s, economy was stagnant coup d’état by Jerry Rawlings, radical group of military officers. They changed how economy worked (p.89), growth resumed and continued, investment and savings rose, exports went up. - Turkey : fairly early adjuster. Middle East started reforms after gulf war (1991). Due to balance-of-payments crisis, adjustment in 1980s Liberalization of trade, payment regulations, abolition of price controls, led to  inflation dropping, exports rising… however after a few yrs, economy failed and decreased.
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Some say that Ghana succeeded only because it was a test so had to succeed, people kept investing their money. Africanists say: structural adjustment did more harm than good in Africa. When it started in 1980s, growth slowed, and agricultural output too, failing to support population… (p.90) rebound that was supposed to come never did. If structural adj. didn’t cause the current econ. Problems, it didn’t cure them. Those for structural adj. say that situation would be worse today. Nigeria’s case shows that though the implementation had some positive points, others were unexpected and undesired firms closed down, no industrial facility to process when the farming output increased. Successful development rises when economies increase their exports but also 
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Chapter5_Neoclassical Reform in Practice(bis) - Chapter 5...

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