Import Dependency and Structural Adjustment in Sub-Saharan Africa

One of the effects of structural adjustment programs in Sub-SaharanAfrica has been the reduction of imports in the face of scarceforeign exchange. This article takes the analysis of importdemand beyond the traditional income and price determinantsto account for factors likely to be important to Sub-SaharanAfrican countries in the 1990s. First, the effect of demandon imports is reflected by the level of absorption rather thanthe less direct income variable. Second, because adjustmentprograms may cut government consumption and, through increasesin interest rates, reduce investment, these components of absorptionare also considered independently to assess their differentialeffect on imports. Third, import barriers are often set in dollarterms to limit the use of foreign exchange. Because reliableand complete data for import restrictions are not available,the ratio of exports to debt is included as an indicator offoreign exchange availability to reflect its effect on tradebarriers and thus imports. The findings suggest that this morecomprehensive assessment of import demand will be needed ifthe size and even direction of changes in import demand in responseto policy reform is to be understood and anticipated.