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Recent Policy Reform and Industrial Adjustment in Zambia and Ghana

Published online by Cambridge University Press:  11 November 2008

William F. Steel
William F. Steel
Affiliation:
Senior Industrial Economist, World Bank, Washington, D.C.
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Extract

It has been argued recently that implementing a laissez-faire approach to economic development faces serious difficulties in Africa.1 This article provides some empirical evidence on the question by comparing the recent efforts of two countries to move towards less interventionist policies. Both Zambia and Ghana attempted to reverse their deteriorating economic performance by introducing major reform measures during the mid-1980s. Their different experiences illustrate both the positive effects that laissez-faire policies can have when resource allocation has been constrained by extensive controls, and the difficulties of sustaining and financing a reform programme.

Type
Africana
Information
The Journal of Modern African Studies , Volume 26 , Issue 1 , March 1988 , pp. 157 - 164
Copyright
Copyright © Cambridge University Press 1988

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References

Page 157 note 1 Schatz, Sayre P., ‘Laissez-Faireism for Africa?’, in The Journal of Modern African Studies (Cambridge), 25, 1, 03 1987, pp. 129–38.Google Scholar

Page 158 note 1 Data throughout the article are taken from internal World Bank Sources.

Page 158 note 2 In Ghana, economic deterioration contributed to political instability in the form of several changes of government, including two brief attempts to return to civilian rule, although political factors were more proximate causes of coups. Successive governments tightened controls (especially on prices and distribution of imports), and later loosened restrictions when they proved unworkable. Zambia showed greater stability both in its political régime and in its attempts to control the economy from the centre. But the stability of political forces may have worked against efforts to change direction in economic policy.

Page 159 note 1 Purchases from the I.M.F. in 1983 and 1984 corresponded closely to the current-account deficits in both countries, and they accoudted for 27 and 29 per cent of imports in those years in Zambia, and 48 and 31 per cent in Ghana.

Page 160 note 1 Sources: internal World Bank documents and staff estimates.