Stabilization policies and stagflation: The cases of Brazil and Chile

This paper is a comparative study of the economic stabilization policies in Brazil 1964–1968 and Chile 1973–1978. The periods chosen correspond to the first phase of authoritarian regimes whose avowed aim was to re-establish economic equilibrium and ‘put order’ in society in general, after severe disruptions caused by populist or socialist experiences.The economic policies of these regimes have been characterized as a radical attempt to apply orthodox tools in the context of semi-industrialized economies. Conventional wisdom has it that Brazil was the precursor in the orthodox experiments and one imitated by southern-cone countries in Latin America in the 1970s. Our study reveals deep differences between the cases of Brazil and Chile.The study discusses initial conditions, macroeconomic results, the use of monetarist tools, deviations from orthodoxy, the connection between stabilization policies and the long-term development model, and the effects of the policies on income distribution.     

Child-headed households in South Africa: What we know and what we don't

Household structures in many countries in Africa have been drastically changed by the HIV/AIDS epidemic. Traditionally, orphans were absorbed by members of the extended family but today this safety net no longer works so well and many children are left to fend for themselves. The South African Government recognises the problem, but views differ on the effectiveness of the programmes for assisting these children. This article looks at what is known and what needs further research. It is known that child-headed households do exist in South Africa and that children living in these households are vulnerable. What is not known is the prevalence of these households and how to deal with the children's psycho-social problems. The article argues that the definition of child-headed households needs to be refined if we are to understand the extent of the problem. This will facilitate assessment of the programmes established for these children.     

Some theoretical and empirical issues relating to economic stabilization in developing countries

This paper surveys some issues relating to economic stabilization in developing countries. Section 2 examines the contributions of terms-of-trade deterioration and real exchange rate appreciation to payments imbalances in non-oil developing countries during the 1970s. Section 3 distinguishes between demand-side and supply-side policies, and discusses their respective roles in stabilization programmes. The effects of exchange-rate changes are considered within this framework. In Section 4, the effects of alternative stabilization policies on output, prices and the balance of payments are illustrated using simulations of a model that incorporates the major relationships relevant to a typical programme. Section 5 summarizes the conclusions.     

Effects of the current world recession on the welfare of children: The case of Korea

The remarkable growth of Korea's GNP during 1963–1978 was achieved through export-led industrialization. The accelerating rate of growth in labour-intensive export industries provided job opportunities to the growing labour force. However, during the last years of the 1970s the Korean economy experienced bottlenecks and strong inflationary pressures which eroded its export competitiveness. As a response to these problems, the government implemented stabilization and restructuring programmes which did not affect the expansion of social welfare programmes for the poor and the vulnerable.     

The causes and consequences of world recession

Diverging trends in productivity since the late 1960s, if not before, between the United States and its competitor countries, lie at the heart of the global slump. Over the 1970s, these trends began to be reflected in large deficits in commodity trade - but the tendency was to resolve them by means other than increased investment: at first devaluation, later restrictive monetary policies and rising unemployment. None of these policies helped significantly to achieve the needed structural adjustments but they did serve to aggravate the position and prospects of the poorer developing countries. By the 1980s, this became a crisis situation of serious proportions. Often drought and war or civil strife have reinforced economic difficulties, compounded further in many countries by rising debt service obligations and declining real commodity prices.This combination of external and internal difficulties certainly contributed in the poorer countries to the slowdown, since the 1960s, in reducing infant mortality and in tackling basic child survival and development issues. The impressive progress in reducing IMR by an average of 2% or more a year by a number of developing countries, however, shows what can be done. Although rising expenditure is by no means a sufficient condition for child progress, declining expenditures and severe balance-of-payments problems greatly constrain programmes for expanding child services.     

Strengthening institutional safety nets in South Africa: Sharing operation hunger's insights and experiences

Poverty and malnutrition are major problems in South Africa, especially among black people in rural areas. The poorest are heavily dependent on social pensions, remittances, low wages, piece jobs and, to a very small extent, household agriculture. Industrial safety nets are weak and do not necessarily help the vulnerable to overcome their poverty. This article draws on the experience of Operation Hunger, a South African NGO founded in 1980, to examine the impact of poverty‐alleviation programmes on the recipients. The article reviews the strategies employed by the government and NGOs to strengthen vulnerable households ‐food aid, public works and agricultural programmes ‐ drawing on Operation Hunger's experience in these areas. The article concludes that targeting, monitoring and evaluating, and piloting development programmes are crucial, and stresses the importance of NGOs in this regard.     

Regional job-turnover and industrial policy. a note on a potential time pattern of regional industrial policies and their job effects - the case of the german city-state of bremen

Many regions have experienced long-run economic fluctuations generated by the life cycles of their dominant industrial clusters. During the downswings in the 1970s and 1980s, proactive structural policies were typically launched in German regions to combat job losses in their core clusters and to create new jobs in new industries. With respect to the German State of Bremen, this paper provides empirical evidence of: (1) a long-run regional downswing; (2) the potential job effects of proactive regional industrial policy programmes in terms of increasing regional employment, by safeguarding jobs in the regional core industries and creating new jobs in new growth industries; and (3) a time pattern in the job effects, which are related to the different generations of programmes.     

Stabilization: The political economy of overkill

This paper considers whether national and international aspects of the IMF's stabilization programmes during the 1970s and early 1980s have resulted in a process of ‘overkill’ — or, in other words, a process of economic retrenchment which went much further than was strictly necessary in terms of what could have been regarded as reasonable objectives. In the international context, the author describes how the attack on inflation has become an end in itself, at the expense of other stated objectives of the IMF, thus creating a distortion of its priorities. The paper discusses errors of diagnosis which have led to this disorientation and explains why deflationary policies should not be regarded as a panacea. The paper then considers the nead for equity and efficiency in the distribution of the political and economic costs of adjustment.The next section of this paper discusses the assumptions underlying the IMF's treatment of Fund members and to what extent ‘even-handedness’ in the application of stabilization measures may result in inequality of burden-sharing among borrowers. Problems related to monetarist theories and the consequent policies are examined, followed by a consideration of the dangers involved in devising ‘straightforward’ performance criteria in the form of precise monetary targets that can readily be monitored by the IMF. This means of evaluating the national adjustment policies' success is seen to be unsatisfactory, viz. the frequency of stand-by arrangement breakdowns and mistakes in forecasting.The paper concludes that the concept of unilateral adjustment is not an acceptable basis for IMF supervision of the international monetary system. In addition, care should be taken to avoid overkill in determining the degree and character of adjustment needed in stabilization programmes. One possible solution to the extra burden imposed on the LDCs might be a liberalization of the compensatory financing facility with the objective of applying the same kind of regime to imports as to exports.     

Poverty Alleviation in the People's Republic of China: The Implications for Sino–African Cooperation in Poverty Reduction

Abstract: In the last thirty years, remarkable achievements have been made in China's poverty reduction course. The dramatic fall in China's poor can be attributed mainly to a high rate of economic growth, government poverty reduction policies and targeted programmes and pro‐poor macroeconomic and industrial policies. This paper focuses on China's poverty reduction policies and programmes and their impact on the poor regions and poor households. Lessons are drawn for poverty reduction and economic development in African countries. The paper also explores the potential for collaboration in poverty reduction between China and African countries and recommendations are made for the governments and donor agencies.     

Brazilian children and the economic crisis: Evidence from the State of São Paulo

This paper briefly reviews the socio-economic conditions and the situation of children in Brazil during 1960–1980, drawing on data for the country as a whole and concentrating on the policies of the 1964–1973 years. It also examines more recent developments that led to the current crisis as well as its overall social impact on employment, food consumption and prices, and government social expenditures. The possible effects of the crisis on the welfare of children in the State of São Paulo are examined in detail. Finally, the paper reviews the government policy for protecting the poor and vulnerable in general and children in particular.     

日本经济结构转型与产业升级路径研究

通过对战后日本经济景气循环的全景考察,发现中国经济现状和日本20世纪70年代具有很大的相似性。1970前后,日本进入大众消费的阶段,经济增长的所有要素贡献率都呈下降趋势,日本政府通过调整产业政策,促进制造业升级换代,实现了经济结构的转型。对比日本的发展历程,中国应加快政府职能转换和产业转型的步伐,扩大国内消费,避免经济的过度虚拟化。     

Tying governments' hands in commodity taxation

In the 1970s, taxation of 'windfall' profits from primary productsand intervention in trade and production tempted governmentsinto expansionary fiscal policies, whilst stifling the privatesector and depressing growth. However, the experience of themid-1990s coffee boom has so far been more favourable: thoseAfrican countries which liberalised and left a large share ofthe 'windfall' with the private sector, and which committedthemselves to fiscal austerity via adjustment programmes, haveshown better results in terms of fiscal stability, private sectorresponses and economic growth than countries which did not reform.These findings suggest that constraints on discretionary governmentpolicies are desirable, and that domestic institutions and internationalcommitments could serve this purpose.     

Perceptions of common helminth infections in a rural community

Common parasite infections cause energy depletion and growth stunting in children in endemic areas, and there is a suggestion that mental processes and school achievement are affected. The efficacy of control and treatment programmes, as with other development programmes, will depend to a great extent on the acceptance and support of people in affected areas. This study focused on the views of women who have young children in their care with the object of understanding their perceptions, and the implications these would have for intervention programmes.     

The South African social safety net: past,present and future

Discriminatory social provision in South Africa originated soon after Union. This differentiation continued in the period before Nationalist rule, but there were also attempts at liberalisation, particularly during the Second World War. Nationalist rule brought with it a reversal of what little gains may have been made. From the early 1970s there was a gradual shift away from apartheid dogma. Future policies will need to eliminate gaps in the social safety net and ensure that adequate entitlements are delivered prudently and cost‐effectively.     

African Education Challenges and Policy Responses: Evaluation of the Effectiveness of the African Development Bank's Assistance*

Abstract: From marginal access to school before 1960, African modern education systems expanded steadily during the 1960s and 1970s, prompted by high priority given to education. The 1980s experienced stagnation and decline due to a drastic decrease in education financing further to the balance of payment and budget deficits, and the ensuing structural adjustment programmes. Since 1990, there have been intensified efforts to reverse the trend through national and international efforts. The African education sector continues to face serious challenges of low and inequitable access to education, irrelevant curriculum and poor learning outcomes, inadequate political commitment and financing, weak education system capacity, and weak link with the world of work. Drawing on relevant documents and data, the paper discusses briefly those challenges and the education policy measures taken to address them. It also assesses to what extent the Bank response was relevant and effective in addressing the African education challenges. While progress has been made in bringing more children to schools, the results in terms of quantity and quality have been far from the targets, particularly in sub‐Saharan Africa. The paper concludes with a call for a greater effort to keep the promise for education for all and for quality education. This may require an invitation for a new forum on education to take stock and try again more realistic policies and better defined means to effectively implement them. The forum's resolutions should not be limited to the primary education but consider the education sector as a whole in the context of a globalized economy and labor market.     

The political economy of income distribution in South Korea: The impact of the state's industrialization policies

A number of previous studies of economic growth and income distribution in South Korea, based largely on 1960s data, concluded that South Korea was an exception to Kuznets' ‘inverse U-pattern’ of income inequality. Also, it was regarded as an exception to the usual negative consequences predicted by dependency theory for an economy so dependent on foreign capital and world markets. This author presents more recent data — for the 1970s and early 1980s — in order to support his claim that the trend toward income equality that appeared in the 1960s was reversed in the 1970s. The author develops a thesis that stresses the role of the state in shaping the Korean political economy. He argues that it has been the strong South Korean developmentalist state in firm control of both domestic and foreign capital and its export-oriented industrialization policies that have been the principal determinant of the pattern of income distribution. He contests the usual explanation related to the level of economic development or external dependency per se.     

Institutional destruction resulting from donor and project proliferation in Sub-Saharan African countries

This note suggests that the most important feature distinguishing foreign aid in the 1970s from earlier programmes was the proliferation of donors and projects. This donor and project build-up, which continues into the 1980s, is having a negative impact on the major government institutions of developing nations. Instead of working to establish comprehensive and consistent national development objectives and policies, government officials are forced to focus on pleasing donors by approving projects that mirror the current development ‘enthusiasm’ of each donor. Further, efforts to implement the large number of discrete, donor-financed projects, each with its own specific objectives and reporting requirements, use up far more time and effort than is appropriate. Project consolidation is needed, but this is unlikely to occur on a significant scale because of the competitive nature of donor interactions. Second-best solutions include a greater emphasis on institution-building and new projects expressly intended to facilitate implementation of existing project portfolios.     

Black banks: A survey and analysis of the literature

The analysis of the role of black banks in black economic development began in the early 1970s. At that time the focus was on the profitability of these institutions. Since then both the number of black banks and the research on their performance have increased significantly. This article reviews the recent literature on black banks in order to provide a conceptual framework for policies that will promote their growth and prosperity. The authors conclude that there is a clear need for future research in every area relating to black banks.     

Localisation barriers to trade: The case of South Africa’s renewable energy independent power program

South Africa’s Renewable Energy Independent Power Projects Procurement Program (REIPPPP) has been hailed as one of the most successful programmes of its kind, contracting 92 renewable energy projects totalling 6 328 MW and US$20.5 billion since its inception in 2011. Despite this success, the programme’s use of non-price factors such as local jobs, local black ownership, local content, and local community ownership in bid evaluation has generated criticism and controversy. Lessons learned in other countries about how and when to use policies like import substitution to promote sustainable economic development seem not to have been fully incorporated by the REIPPPP. We therefore offer a cautionary note that dramatic and impressive localisation results are not inevitable – especially considering the size of the South African market and accompanying investment uncertainties – and that there is bound to be a trade-off between price and non-price factors in these kinds of competitive procurement programmes.     

Poverty,income distribution and child welfare in Latin America: A comparison of pre- and post-recession data

The traditional and external dependency of most Latin American economies and their recent pattern of growth has made them particularly vulnerable to the unexpected and severe changes of the world economy that began in 1979–1980. Even those countries with less open economies have been forced to seek adjustments to the new world situation that are, both in nature and consequences, essentially different from those of the interdependent industrial economies.This paper attempts to evaluate the impact of these recent economic changes on the living conditions of the populations of Chile, Colombia, Costa Rica, Panama and Venezuela. It is based on household data and is limited to those aspects of household living conditions that can be observed through the variables included in labour surveys. It analyses changes in overall income distribution, the movement of different socio-economic groups within the income pyramid and changes in these groups' livelihood strategies.