Introduction

For a large number of developing countries, particularly in Africa and Latin America, the 1980s are remembered not terribly fondly as the decade of debt and ‘structural adjustment’. In many of these countries, the term is closely associated with the International Monetary Fund (IMF) and the World Bank. More recently, though, during the ‘emerging markets’ boom of the mid-1990s, structural adjustment – a set of policy reforms aimed at restoring internal and external equilibria to a crisis-hit economy, whilst simultaneously seeking to increase the efficiency with which its productive resources are allocated – seemed consigned to textbooks of the economic history of the 1980s, along with the debt crisis that preceded it.

With the onset of the East Asian, Russian and Brazilian balance of payments crises during 1997–9, however, the topic generated renewed interest. Other chapters in this volume will address the Asian crisis specifically. This chapter looks back at the World Bank's experience with structural adjustment programmes during the 1980s – since the first Structural Adjustment Loan (SAL) was launched in February 1980. We discuss the causes and the nature of the process of adjustment, and consider its main policy components in turn. We also review the evidence on the performance of the programmes during the 1980s. Where appropriate, we draw some lessons for the different – yet related – systemic crises and reforms of the late 1990s.

Section 2 briefly reviews the causes and nature of the processes of stabilisation and structural adjustment in the 1980s.