Chapter 5 - reading group

Chapter 5 - reading group - Chapter 5 : Neoclassical Reform...

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Chapter 5 : Neoclassical Reform in Pratice (p. 87-109) **examples from the book are in blue, for those who would like to use them (he said we do not need to know them, but they are good to use as examples on the mid term!) Sructural adjustment = rolling back the State o Good effects in Latin America o Bad in Africa The Dividents of Structural Adjustment Mexico, mid-1980s : currency devaluation, tight fiscal and monetary policies and trade liberalization o Good in 1988, 1991 inflation ↓, investments ↑, growth. o 1995 : “Booming stock market collapsed” because ↓ foreign invest. (doubt ability gov. to maintain stability) Chile : world’s best advertisement for SAP (structural adjustment policies) o Local investors (vs. Mexico with foreign invest.) o 1980s → world’s highest growth rate o New jobs, ↑ exports, agriculture more advanced (techno) o Improved social indicators India : late adjuster o Congress Party return in 1991 : finance minister → “shock therapy” o Max. Import duty : cut from 250% to 50% o Growth : 5% o Agricultural econo. Untouched Ghana : gov. Of Jerry Rawlings (1981) o ↑ producer prices, phased out subsidies agricultural imputs o ↑ tariffs of public services, devalued currency, cut in gov. spending, no price controls, no import licensing. o Privatization → growth 5%, invest. and savings rose Export volume ↑ (cacao ↑ 15% 1983-1988) Turkey : balance-of-payments crisis → SAP 1980s o Was state-led dev. before o Devalutation, liberalization trade, no price control, no subsidies to state economic enterprises, tax reform, etc → Successes, but. .. Turkey : few years later, growth ↓, import ↑, export ↓ Ghana : success because it “has to” (1 st African country SAP) o Foreign backers : aid + credit Africa : SAP = more harm than good o 1980 : SAP = growth slowed, ↑ food import, invest. ↓, unemployment ↑, etc. o Some positive point, but the anticipated gains didn’t happen
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o Unexpected and undesired consequences Ghana : ↑ primary sector, but not value, ≠ ↑ manufacturing growth The problem of declining terms of trade Successful dev. only occurred if ↑ export + alter export composition Demand for 3nd world primary commodities is inelastic
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This note was uploaded on 10/09/2010 for the course INTD 200 taught by Professor .. during the Fall '09 term at McGill.

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Chapter 5 - reading group - Chapter 5 : Neoclassical Reform...

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