- Kalpana Kochhar, Erik Offerdal, Louis Dicks-Mireaux, Mauro Mecagni, Jianping Zhou, Balázs Horváth, David Goldsbrough, and Sharmini Coorey
- Published Date:
- August 1996
© 1996 International Monetary Fund
Reinvigorating growth in developing countries: lessons from adjustment policies in eight economies / David Goldsbrough … [et al.]. —Washington, D.C.: International Monetary Fund, 1996.
p. cm. — (Occasional Paper, ISSN 0251-6365; no. 139)
1. Developing countries—Economic policy. 2. Saving and investment—Developing countries. 3. Labor market—Developing countries. 4. Loans, Foreign—Developing countries. I. Goldsbrough, David John. II. Series: Occasional paper (International Monetary Fund); no. 139. HC597.R35 1996
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- I Introduction and Summary: Issues in Adjustment and Growth
- II Overview of Adjustment
- III Cross-Country Evidence on Factors Influencing Growth
- IV Role of Macroeconomic Policies
- Costs of Delayed Adjustment
- Sustainability and Consistency of Policies
- V Private Investment
- VI Saving
- VII Role of External Financing
- VIII Structural Reforms
- IX Role of Labor Markets
- X Conclusions and Lessons for Program Design
- 1. An Overview of Adjustment in the Eight Countries
- 2. Investment: Program Targets and Outcomes
- 3. What Does the Literature Say About Lags in Investment?
- 4. Saving: Program Targets and Outcomes
- 5. How Could Structural Reforms Have Been More Growth Enhancing?
- 6. Ghana: Constraints to a Stronger Supply Response
- 7. Lessons from the East Asian “Miracle”
- 8. Principal Studies Referred to in Appendix I
- Tables Section
- Charts Section
- 1. IMF Arrangements in the Eight Countries
- 2. Real Per Capita GDP Growth, 1970-94
- 3. Real Per Capita GDP Growth and Investment Ratios
- 4. GDP Growth, Investment, and National Saving, 1970-93
- 5. Indicators of Domestic and External Economic Performance During Preadjustment Period and During 1990-93
- 6. Size of External Shocks
- 7. Share of Private and Public Investment in GDP
- 8. Structural Reforms and Trends in Total Factor Productivity
- 10. Fiscal Indicators
- 11. Nominal and Real Effective Exchange Rates and Inflation in Various Indexation Regimes
- 12. Changes in Domestic Absorption, Exports, and Imports During Periods of Demand Contraction
- 13. Difference Between Actual and “Sustainable” Fiscal Primary Balances
- 14. Real Interest Rates
- 15. Stock of Private Sector Credit
The following symbols have been used throughout this paper:
- … to indicate that data are not available;
- — to indicate that the figure is zero or less than half the final digit shown, or that the item does not exist;
- – between years or months (e.g., 1991-92 or January-June) to indicate the years or months covered, including the beginning and ending years or months;
- / between years (e.g., 1991/92) to indicate a crop or fiscal (financial) year.
“Billion” means a thousand million.
Minor discrepancies between constituent figures and totals are due to rounding.
The term “country,” as used in this paper, does not in all cases refer to a territorial entity that is a state as understood by international law and practice; the term also covers some territorial entities that are not states, but for which statistical data are maintained and provided internationally on a separate and independent basis.
This study examines the links between adjustment policies and growth in a small group of developing countries—Bangladesh, Chile, Ghana, India, Mexico, Morocco, Senegal, and Thailand—during 1970-93, reflecting information available through mid-1995. The study provides an overview of the adjustment and growth experience, examines in depth several policy issues of particular interest, and distills the principal policy lessons for the design of adjustment policies. The analysis builds on separate studies prepared for many of the countries in the context of the IMF’s regular consultations with member countries, as well as on many other publications, articles, and work inside and outside the IMF and World Bank. A companion study, Composition of Fiscal Adjustment and Growth (forthcoming) examines issues related to the quality of fiscal adjustment.
The authors are indebted to numerous colleagues throughout the IMF for their assistance in the country analyses, in particular Rifaat Basanti, Elie Canetti, Ajai Chopra, Charles Collyns, Erik De Vrijer, Klaus Enders, Fernando Fernandez, Manal Fouad, Vicente Galbis, John Hicklin, Jianhai Lin, Michael Nowak, Karen Parker, Roohi Prem, Hugo Juan-Ramon, Marjorie Rose, Miguel Savastano, Amor Tahari, Van Can Thai, John Thornton, and Ewart Williams. They also thank Nadeem Haque, Peter Montiel, and Susan Schadler and many other colleagues in the Fund and World Bank for their valuable comments. They wish to thank Mehnaz Husain and Kadima Kalonji for research assistance and to Olivia Carolin and Fernanda Gusmao for secretarial support, and Esha Ray of the External Relations Department who edited the paper for publication and coordinated production. The opinions expressed in the paper are those of the authors and do not necessarily reflect the views of the IMF or of its Executive Directors.