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Notes
Paul Mosley, Department of Economics, University of Sheffield, Sheffield S1 4DT, UK.
Many thanks to Karuna Gomanee and Arjan Verschoor for research assistance, particularly in the development of the ‘pro‐poor expenditure index’ presented in the Appendix. We acknowledge also the financial support of the Department for International Development under ESCOR grant R7614.
For an update on the Brazilian and Bolivian dimension of the crisis, see Financial Times, 24 June 2002.
Arjan de Haan, ‘Globalisation and social policy—thoughts for international development cooperation’, in: Paul Mosley & E. Dowler (eds), Poverty and Social Exclusion in North and South (Routledge, 2002), pp. 35–47.
Stephan Haggard, Jean‐Dominique Lafay & Christian Morrisson, The Political Feasibility of Adjustment in Developing Countries (OECD, 1995).
Francois Bourguignon & Christian Morrisson, Adjustment and Equity in Developing Countries (OECD, 1992).
Haggard et al., The Political Feasibility, p. 14.
Ibid., p. 16.
Ibid.
Ibid., p. 15.
Ibid., p. 121.
Ibid., p. 120.
Ibid., p. 121.
Alberto Alesina & Allan Drazen, ‘Why Are Stabilizations Delayed’, American Economic Review, Vol. 81 (1991), pp. 1170–88.
For example, a freeze on wages, or on private savings accounts (as in Argentina 2002), or emergency restrictions on civil rights.
Dani Rodrik, The New Global Economy and Developing Countries; Making Openness Work, Policy Essay No. 24, Overseas Development Council, Washington DC, 1999, p. 77.
Ibid., p. 92.
Ibid., p. 82.
Ten per cent is a pretty arbitrary number. But there is an accumulating body of empirical evidence (see for example Michael Sarel, ‘The Impact of Inflation on Growth: A Cross‐Section Analysis’, IMF Staff Paper, 1996), which suggests that the response of the real economy to inflation is nonlinear, with measurable impacts of inflation on output and investment being low and insignificant if inflation is less than low double figures, and large and significant if it is greater—possibly even the fact of inflation going into double figures has an effect on the psychology of wage bargainers and businesses. As our threshold we use the figure of 10 per cent suggested by Sarel.
Less military expenditure, in some versions of the index.
From Elena Alexeeva, Paul Mosley & Daniela Olejarova, ‘Microfinance, social capital formation and political development in Russia and Eastern Europe’, unpublished paper, Ford Foundation/University of Sheffield, 2002. We have substantial evidence of abrupt changes in mutual trust over time under the stresses imposed by sharp declines in income under perestroika.
These increase what is known as its risk efficacy—its ratio of assets to perceived risk.
For example, the Ugandan home market‐oriented manufacturing sector.
Bourguignon & Morrisson, Adjustment and Equity.
Hollis Chenery, C. Bell, J. Duloy & R. Jolly, Redistribution with Growth (Oxford University Press, 1975).
Paul Mosley, John Hudson & Arjan Verschoor, ‘Aid, Poverty Reduction and the “New Conditionality”’, Economic Journal, forthcoming.
Oliver Morrissey & Arjan Verschoor, ‘Is ownership a meaningful concept in policy reform? Policy learning and the evolution of pro‐poor policies in Uganda’, unpublished paper, Universities of Nottingham and Sheffield, 2002.
Most recent estimates suggest a slight increase in headcount poverty between 2000 and 2003.
Joseph Stiglitz, Globalisation and its Discontents, public lecture, University of Manchester, 4 April 2002.
S. Dercon, ‘The poverty impact of reforms in Ethiopia: an analysis via panel data with an application to Ethiopia’, mimeo, Centre for the Study of African Economics, August 1999.
Tony Addison & Lisa Laakso, ‘The Political Economy of Zimbabwe’s Descent into Conflict’, Journal of International Development, Vol. 15 (2003), pp. 457–471, argue that ‘inflation, not just unemployment, has been an important factor in mobilising opposition to the government, especially among urban workers and the middle‐class’.
These then exacerbated the fiscal deficit: Addison & Laakso, ‘The Political Economy’, p. 464, estimate the cost of the land invasions to the government at Zimbabwe$430 million.
A moral hazard problem emerged after the 1992 drought with the emergence of many thousands of people dependent on drought relief—since their dependence provided the government with a powerful political lever (food aid has frequently been withheld from MDC members), which successful agricultural policies would have eliminated.
JoAnn McGregor, ‘The Politics of Disruption: War Veterans and the Local State in Zimbabwe’, African Affairs, Vol. 101 (2002), pp. 9–37.
International Fund for Agricultural Development, Rural Poverty Report 2001 (Oxford, 2001), p. 42 (we use a weighting structure of 3:1 between rural and urban poverty). Beyond any doubt the poverty rate now, in 2003, will be much higher after several years of negative growth.
International Monetary Fund, World Economic Outlook (IMF, 2002).
The current Ethiopian government is largely constituted by the TPLF, which seized power from the former regime of Haile Mengistu Mariam.
We deliberately speak here of more and less democratic practices, rather than more and less democratic countries. Of the countries surveyed here, only Congo‐Zaire and Angola can be seen as completely undemocratic through most of the 1990s; but in most of them there existed some restraints on freedom of political expression. We deal with this through a multiple (and inevitably somewhat subjective) dummy variable—see .
Paul Mosley, ‘The Failure of Aid and Adjustment Policies in Sub‐Saharan Africa: Counter‐Examples and Policy Proposals’, Journal of African Economies, Vol. 5 (1996), pp. 406–444; P. Collier & J.W. Gunning, ‘The IMF’s Role in Structural Adjustment’, Economic Journal, Vol. 109 (1999), F634–52; and Jakob Svensson, ‘When is Foreign Aid Policy Credible? Aid Dependence and Conditionality’, Journal of Development Economics, Vol. 61 (1999), pp. 61–84.
Bourguignon & Morrisson, Adjustment and Equity; and Paul Mosley, ‘The IMF after the Asian Crisis’, The World Economy, Vol. 24 (2001), pp. 597–629.
For example, International Monetary Fund, External Evaluation of the ESAF (IMF, 1998).
Barry Eichengreen, Towards a New International Financial Architecture (Institute for International Economics, 1999).
Ethan Kaplan & Dani Rodrik, ‘Did Malaysian capital controls work?’, unpublished paper, Harvard University, 2000; and Jarita Duasa, Malaysia's Capital Controls: Explanatory Hypotheses, draft PhD thesis, University of Sheffield, 2004.
Jeffrey Sachs, Do We Need an International Lender of Last Resort?, Frank D. Graham lecture, Princeton University, 1995; Collier & Gunning, ‘The IMF’s Role in Structural Adjustment'; and Martin Wolf, ‘A new mandate for the IMF’, Financial Times, 15 December 1999, p. 25.
The phrase used by the outgoing Managing Director of the IMF, Michel Camdessus, in his farewell address at the UNCTAD Conference, Bangkok, February 2001.
Mick Moore, ‘Death without taxes: democracy, state capacity and aid dependence in the fourth world’, in: Mark Robinson & Gordon White (eds), The Democratic Developmental State; Politics and Institutional Design (Oxford University Press, 1998), pp. 17–35.
P. Collier & O. Dollar, ‘Aid Allocation and Poverty Reduction’, European Economic Review, Vol. 46 (2002), pp. 1475–1500.
Marco Ferroni & Ravi Kanbur, ‘Poverty‐Conscious Restructuring of Public Expenditure’, Sub‐Saharan African Working Paper, No. 9, World Bank, 1990.
D. Sahn & S. Younger, ‘Expenditure Incidence in Africa: Microeconomic Evidence’, Fiscal Studies, Vol. 21 (1999), pp. 329–47.
Ibid., p. 344.
S. McDonald & L. Chant, A Computable General Equilibrium Model for Uganda: Technical Documentation, Report for Department of International Development Research Programme on ‘Poverty Monitoring and Pro‐Poor Growth’, produced with the Department of Economics, University of Sheffield, 2002.
Sahn & Younger, ‘Expenditure Incidence in Africa’.
Morrissey & Verschoor, ‘Is ownership a meaningful concept in policy reform?’; and June Rock, ‘Ethiopia: aid dependent; fiercely independent’, mimeo, Department of Economics, University of Sheffield, 2002.