economic reform

Ghana - long term growth, atrophy and stunted recovery

Upphovspersoner: Leith, J. Clark | Söderling, Ludvig
Utgivare: Nordiska Afrikainstitutet | Uppsala : Nordiska Afrikainstitutet
År: 2003
Ämnesord: Ghana, Post-independence, political development, Economic policy, economic reform, Economic recession, Business and economics, Ekonomi
Ghana's independence in March 1957 was celebrated with great flourish. "Free at last!" Kwame Nkrumah, the country's leader, proclaimed. Yes, Ghana was free to follow an independent political course, and free to experiment with an independent economic direction. But the exercise of that freedom proved to be destructive. Gradually removing internal agents of restraint, and unconcerned about external constraints, Nkrumah pursued his grand vision of Ghana. But, that vision became a nightmare. More than a quarter century of increasingly chaotic political and economic turbulence followed.Eventually a major reform program was launched, but after fifteen years its success has been modest. While the downward spiral has been halted, and real growth resumed, real GDP per capita and total factor productivity have barely exceeded the levels achieved at independence. The long-run economic and political records are both lackluster, each limiting the potential of the other. The question is, why has Ghana not achieved sustained and rapid long-term growth? This study seeks to provide an answer.As we review the experience of the forty plus years of independence, five explanatory themes recur. The first theme is excess demand. Repeatedly, fiscal and monetary policies have been excessively expansionary, generating bouts of inflation, followed by painful adjustment. Ghanaian entrepreneurs have seldom been able to count on a stable macroeconomic environment for more than a few months into the future. Such a short-term horizon has been damaging. Currency overvaluation is the second theme. Initially the problem was a fixed nominal exchange rate, maintained in the face of domestic inflation. Exchange controls followed, while inflation accelerated. The real price of foreign exchange was depressed to a small fraction of its level at independence, and forced the economy to become virtually autarkic. Recovery of the real exchange rate under the reform program has occurred, but its instability remains a serious source of uncertainty for all - exporters, import competing producers, and foreign investors alike. Third, closely related to the foregoing, Ghana has frequently failed to realize the potential gains from pursuing and supporting its comparative advantage. Among the traditional exports, cocoa suffered from a variety of devices that suppressed the real producer price and depressed production to well belowits optimum. Minerals, until recently, endured state ownership, and neglect of infrastructure. The fourth theme is suppression of the financial sector. With the state heavily involved in running financial institutions, and repeated confiscation of assets both directly and via inflation, individuals are reluctant to hold financial assets. The financial sector, consequently, does not yet play its potential roles in bringing savers and investors together. The fifth theme concerns the role of the state. The state was stretched far beyond its abilities. The overextended reach of government and the administrative complexity of many programs pushed the state well beyond the limits of activities that it could handle efficiently and without corruption. This seriously compromised the effectiveness of nearly everything the state was involved in, ranging from education to health care to state-owned enterprises to administration of economic controls. The outcome was a near collapse of the state. Not only was the state ineffective in its economic activities, but it failed to consistently control predation by its agents. Real assets were confiscated, both by direct seizure and indirectly by economic policies. At various times agents of the state extorted huge rents from society and beat hapless victims. The lingering sense that such experiences might recur, leaves the economy achieving far less than its potential, in spite of significant economic and political reforms achieved over the past fifteen years. To appreciate why Ghana's modern history unfolded in this way, it is necessary to understand both the political and economic dimensions. We begin in Chapter 1 with an overview of the economic and political record of the various regimes that governed Ghana from independence through to the launch of the economic reform program in 1983. Those reforms and the consequences are the subject of Chapter 2. The major conclusions are presented in Chapter 3.

Political and economic liberalisation in Zambia 1991-2001

Upphovsperson: Rakner, Lise
Utgivare: Nordiska Afrikainstitutet | Uppsala : Nordiska Afrikainstitutet
År: 2003
Ämnesord: economic development, economic reform, Donors, political development, Zambia, SOCIAL SCIENCES, SAMHÄLLSVETENSKAP
As one of the first countries in sub-Saharan Africa, in 1991 Zambia experienced  a peaceful transition to multi-party rule. The new government, Movement for Multiparty Democracy (MMD), also committed itself to implementing an economic reform programme. The international donor community in turn generously rewarded the new government’s commitment to both political and economic change. Despite the optimistic forecasts in 1991, both the political and economic liberalisation processes in Zambia are today characterised by their partial implementation. Zambia has joined the vast majority of African reforming governments and entered into a 'transitional grey zone' in terms of democratic reforms, and remains stuck in a 'partial reform syndrome' characterised by a permanent economic crisis. What can explain the Zambian development trajectory? Why were some elements of the economic reforms implemented soon after the 1991 elections while other vital reform processes were postponed? To what extent did the processes of political and economic reform reinforce or hinder one another? This book analyses the implementation of political and economic liberalisation in Zambia during the first two election periods (1991-2001). Focussing on the negotiations between government and the key domestic interest groups, as well as the dialogues between the MMD government and the international donor community, the book argues that despite a disastrous socio-economic record, the processes of political and economic liberalisation proceeded concomitantly without seriously affecting or undermining each other. Contrary to expectations linked both to the political and economic reform processes, executive dominance increased in Zambia in the 1990s. Stressing continuity rather than change, the analysis of Zambia's reform processes suggests that the practices of patronage politics associated with authoritarian regimes are compatible with processes of political and economic liberalisation.

Globalization and the Southern African economies

Upphovsperson: Lundahl, Mats
Utgivare: Nordiska Afrikainstitutet | Uppsala : Nordiska Afrikainstitutet
År: 2004
Ämnesord: Southern Africa, Globalization, international economy, trade, economics, economic development, economic reform, labour market, Business and economics, Ekonomi
The present volume has its origin in a conference on globalization and Africa held in Cape Town at the end of 2001. It focuses on the place of Southern Africa in the globalized economy. The different chapters identify the overall economic trends in the African continent and the responses - required and actual - to the impact of an increasingly interdependent world economy. An introductory chapter deals with the phenomenon of globalization in broad terms. Chapter 2 focuses on the marginal role of Africa in the global economy and some of the main reasons for this sad state of affairs. Chapter 3 attempts to answer the question whether globalization is good for Africa and analyzes the relationship between globalization and economic reform, using Zimbabwe as an example. Chapter 4 reports on a survey of popular attitudes towards globalization in a number of African countries. Chapter 5 provides an evaluation of economic integration efforts in Southern Africa. Finally, Chapter 6 uses the case of South Africa to discuss how globalization affects the workplace. The Southern African nations are struggling to find their own ways of participating in global development. The present volume provides an insight into how this process has unfolded in the past and into the problems and challenges of the future.