Growth and Chronic Poverty: Evidence from Rural Communities in Ethiopia

This article employs a computable general equilibrium model for Sandinista Nicaragua to argue that a foreign exchange constrained economy does not necessarily fall prey to the inflation‐devaluation‐inflation vicious cycle characteristic of more mature Keynesian economies. It is seen that when the economy is shocked by a devaluation, prices do not rise proportionately. Output increases and the distribution of income can actually improve. These results support Sandinista policy of raising wages along with devaluation, a policy widely criticised as counterproductive. When the model is structured to account for the combined effects of Sandinista policies, however, including rising government expenditure and multiple effective exchange rates, a host of macroeconomic problems experienced by the regime arise. Stagflation sets in, income distribution deteriorates and the incentives for export production seriously diminish.     

Reinventing urban government in the Netherlands: an American perspective

National agricultural policies intended to stabilize farm price and income may have different impacts on different agricultural sector of a state or a region. A policy which influences a region's agriculture also may affect the general economy of that region, depending on the degree to which agriculture is linked to the general economy. This study evaluates the economywide impact of the Flexible Planting Program (FPP) -- a recent policy designed to encourage farmers to respond more to market than to the government incentives. The study employs an integrated modeling framework which links the national and state farm sectors to the region's non-farm sectors. Because of reductions in real U.S. market prices and, in turn, Tennessee market prices of some farm commodities under FPP, production of most agricultural outputs are expected to decline in Tennessee by 1995. Study results indicate that as a result of price reductions, the agricultural sector will lose about 15 percent of output, income, and employment. These losses cause significant negative impacts on the business-related service sector. The service sector suffers a loss of 31 million dollars in total output and 523 jobs. The total income lost by the service sector (18 million dollars) will be much higher than agriculture sector (11.99 million dollars). Thus, though the FPP may deliver its intended good at the national level, the policy has the potential to cause undesirable impacts on certain regions.     

Price policy,poverty, and power within rural West African households

This paper explores the impact of agricultural price policy on poverty in West Africa, a region in which prices are an important tool for raising rural household incomes. A game-theoretic, collective model of household income generation and resource allocation is developed that incorporates three features typical of West African rural households: preference heterogeneity among women and men, individual resource control, and power-mediated bargaining over resource control in the face of changes in households' economic environments. To explore price effects, the model is used to simulate the income impacts of large increases in cotton prices accompanying fast-paced agricultural liberalisation in Burkina Faso in the 1980s. The paper shows that where resources are controlled individually by household members, rather than pooled, Pareto efficiency in income generation does not hold. The impact of agricultural price policy on poverty is mediated by bargaining over resource control within households. Both the relative bargaining power of women and men and the degree of preference heterogeneity between them play fundamental roles in the outcome of such bargaining. The results point to a lower ability of households to take advantage of price incentives and thereby raise their incomes than a unitary household model, in which preferences do not differ and resources are pooled, predicts. They suggest that the effectiveness of price policy in reducing poverty in the region would be enhanced by taking into account the incentive structure within households as well as individual household members' ability to bargain over the benefit and cost streams flowing from price changes.     

POLICY IMPLEMENTATION IN AN AFRICAN STATE: AN EXTENSION OF KINGDON'S MULTIPLE‐STREAMS APPROACH

Kingdon's multiple‐streams framework, which emerged in the mid‐1980s, today forms one of the indispensable analytical frameworks for understanding public policy agenda‐setting. However, it is only in the context of wealthy countries that this approach has been validated for setting the agenda of national and international policies. This article reports the results of empirical research in an African state studying the transferability of a threefold theoretical innovation. The question under consideration is whether the multiple‐streams framework is useful for examining public policy implementation at the local level and in the context of a low income country. The research findings confirm the premise that the multiple‐streams framework can be extended and can lead to the formulation of several theoretical propositions.     

Measuring trade strategy in the presence of non‐tradeables: Theory and some evidence for the Caribbean

This article models trade policies in the presence of non‐tradeables, and investigates trade strategy interventions and outcomes where the price of non‐tradeables endogenously adjusts to trade interventions. Trade regime bias and neutrality issues are examined within a three‐sector, open economy model. The theoretical framework is operationalised using empirical evidence for Trinidad and Barbados. The robustness of partial equilibrium measures of protection for classifying trade strategies is challenged and evidence on alternative general equilibrium or ‘true’ measures of protection is reported. ‘True’ or revealed trade strategies are shown to differ from those apparently intended by policy‐makers.     

Oil price shocks and policy responses in the post‐reform Chinese economy

This study analyses the impact of the 1986 oil price shock on China and the policy options for accommodating the shock. A computable general equilibrium model is used to capture the complex interactions in the Chinese economy in response to the shock. Interpreted in the theoretical framework of the ‘Booming Sector’ model, the results of the model provide insights on both the real and monetary effects of the shock, and suggest that a combination of policy instruments such as a cut in real absorption, depreciation of the official exchange rate and tight monetary control are required to facilitate adjustment.     

Economic growth and the population explosion: Simulation experiments using a growth model with population endogenous

The purpose of this analysis is to shed some light on the issue of how much economic growth, unaided by population control policies, can bring down fertility and defuse the population explosion in the less developed countries. The paper explores the demographic evolution of an ideal less developed country over a 100 years time span under alternative assumptions concerning capital accumulation, rate of technological progress, and returns to scale. The model used incorporates (a) a population projection matrix with coefficients which are a function of time and of endogenously generated levels of income per capita, and (b) a gross reproduction rate‐GNP per capita function with parameters estimated from a time series of cross sections spanning the period 1860 to 1959. This function was designed to reflect dominant traits of the historical experience concerning the effects of economic growth on fertility in a context characterised by the absence of population control policies.     

Violent Narco-Cartels or US Hegemony? The political economy of the ‘war on drugs’ in Mexico

Mainstream analysis and commentary on drug trafficking and related violence in Mexico focuses overwhelmingly on the narco-cartels as sources of the problem and presents the US as a well intentioned player helping to conduct a ‘war on drugs’ out of concern for addiction, crime and violence. This article offers an alternative interpretation, grounded in critical political economy, showing that in addition to fuelling the narcotics industry in Mexico thanks to its large drug consumption and loose firearms regulations, the US shares much responsibility for its expansion thanks to its record of support for some of the main players in the drugs trade, such as the Mexican government and military, and by implementing neoliberal reforms that have increased the size of the narcotics industry. The war on drugs has served as a pretext to intervene in Mexican affairs and to protect US hegemonic projects such as nafta, rather than as a genuine attack on drug problems. In particular, the drugs war has been used repeatedly to repress dissent and popular opposition to neoliberal policies in Mexico. Finally, US banks have increased their profits by laundering drug money from Mexico and elsewhere; the failure to implement tighter regulations testifies to the power of the financial community in the US.     

Views from the periphery: Futures of neoliberalism in Latin America

The political economy of Latin American countries seems increasingly characterised by neoliberal approaches. Economic factors at the global and continental scale seem to reinforce this trend. This article explores the social bases of neoliberalism not only in terms of the technocratic but also of the wider social and political base. The connections between neoliberal reform, people and places are explored through examining the nature of exportorientated growth, the transformations of labour markets, the social impacts of reform, poverty and the changing social provision of the state. The contradictions within the neoliberal model are examined before the future of neoliberalism and the prospects for alternative development strategies and sociopolitical scenarios are considered. In particular, the arguments from neostructuralist contributions are assessed and some of the contrasts between neoliberal and neostructural theories identified.     

Terms of trade and class conflict in a computable general equilibrium model for Mexico

A computable general equilibrium model for Mexico is constructed in which class conflict over the distribution of the surplus is the principal determinant of the terms of trade. The model consists of seven social classes and eight productive sectors. Classes are distinguished as ‘fundamental’ or ‘subsumed’ according to whether their incomes are primarily determined by conscious class struggle or by the resulting system of relative prices. Flexible prices are assumed to clear markets for which non‐produced means of production, such as agricultural land, limit supply while output in the remaining sectors is determined by the level of effective demand. For the latter sectors, two theories of price formation are compared and are seen to differ radically in their implicit conception of the nature of class conflict. A ‘Keynes‐Kalecki’ closure is considered in which prices are determined by a fixed mark‐up on costs. This enables capitalists to protect themselves from incursions on the rate of profit due to labour militancy or state‐imposed terms‐of‐trade policy designed to favour peasants andlor the agrarian bourgeoisie. A second, ‘Marx‐Sraffian’ price closure constrains the economy to a wage‐profit‐terms‐of‐trade surface; where the economy conjuncturally resides on this surface depends upon the level of effective demand, wages and terms‐of‐trade policy. Various policy scenarios are investigated under both closures.     

Presidential succession,economic crisis,and populist resurgence in Brazil

Latin American populism has been characterized as a time-bound phenomenon, part of the political revolution against the old agricultural oligarchy and accompanying import-substitution industrialization. It has been asserted that populism died with the “exhaustion” of the “easy phase” of import-substitution, and that bureaucratic authoritarian regimes were predicated on that demise. Brazil, Argentina, Mexico, and Peru are regularly cited as evidence. This article examines these definitional premises in light of the apparent resurgence of populist politics in the democratic transition in Brazil. It is argued that populism is not a pre-1964 anachronism, but is predictably appealing in the 1980s. Distinctions among populistappeals, contention for power, andsuccessful populist order suggest that populism and its leaders offer a very limited alternative to the future of Brazilian politics. Gamaliel Perruci, Jr., a native Brazilian, is a doctoral student in political science at the University of Florida. He is currently conducting research on Brazilian industrial and trade policy. Steven E. Sanderson is professor of political science at the University of Florida. His most recent book isThe Transformation of Mexican Agriculture: International Structure and the Politics of Rural Change (Princeton University Press, 1986). He is currently completing a book entitledThe Politics of Trade in Latin American Development.     

Liberia: security challenges,development fundamentals

This research article argues that security challenges in post-conflict Liberia cannot be addressed effectively without synchronising current stabilisation policies with the implementation of development fundamentals. The article explores key strategic sectors of the Liberian economy and their impact on the security and development dimensions of peace building. The political economy of post-conflict Liberia has not structurally modified an economic model which relies on the concessionary system and the extraction of raw materials at the expense of developing productive sectors which could be used to secure sustainable livelihoods. It is suggested that a shift in the political economy pursued by national and international actors is needed to link current peacebuilding efforts to sustainable development processes; one policy measure recommended to achieve such a goal is enhanced support for land reform and small farmers' rights.     

NAFTA: The institutionalisation of economic openness and the configuration of Mexican geo-economic spaces

Since the second part of the 1980s, and with the negotiation and implementation of the North American Free Trade Agreement (NAFTA), Mexico's growth-and industry-orientated policies have shifted from the realm of public policy to a market-driven domain. This paper suggests that economic openness and the empowerment of market actors is provoking a new regionalisation of Mexico's core economic activities that will play a crucial role in the coming century. For Mexico, the core of NAFTA, so to speak, encompasses a cross-border territoriality covering two key southern American states: Texas and California, and key Mexican states located from the border to the Central plateau of the country. I also argue in this paper that Mexico's changing economic territoriality, triggered by the dominance of the outward-looking economic model, is exacerbating regional inequalities that prevailed in the country even before the outset of economic reforms. This is mainly the case of Mexico's southern region, still very agriculture-orientated, and with a deficit of those export-orientated industries currently fuelling economic growth. This region is the least endowed with mobile assets-such as technology, capital, knowledge-in order to exploit the opportunities of market-orientated policies. Consequently, social cohesion is at stake, not necessarily provoked by the market, but exacerbated by it, and the market mechanism cannot by itself address this problem.     

The structure of employment and structural adjustment in the Philippines

Growth in the 1970s seemed, at that time, to have brought the Philippines to a rather high equilibrium growth path. But the foreign debt and political crisis in the early and mid‐1980s had brought the economy down to a lower equilibrium path. The recovery years (1987 to 1990) did not prove to be sustainable, given the extreme debt overhang, so that the economy retreated once again to the lower equilibrium path in the early 1990s. Significant debt reduction schemes and the new inflows (remittances of overseas workers and rising foreign investments) allowed a new growth trend. Whether sufficient growth can be maintained in the medium and long term will depend to a large part on uncontrollable external conditions. Significant improvements in trade and industrial policies are needed so that external deficits and imports will finance those sectors that allow for creation of high quality employment. Policy will have to shift resources away from the trade, real estate and other service sectors to strong tradeable manufactures. If the Philippines cannot get out of the boom—bust cycle, labour productivity in the medium and long term will stagnate and the share of those employed in the total labour force will remain stable, leading to stagnating employment opportunities and worsening income distribution.     

A comparative study of the production structure of the cotton textile industry in India and the USA

This paper attempts a comparison of production structures of the cotton textile industries in India and the USA, using the input‐output framework. There are studies of comparative production structures in an economy but a disaggregated study has not been attempted for a particular industry. Almost all studies of the international comparisons of production structure have revealed that there are structural similarities between developed and less developed countries in spite of wide differences in per capita income and in levels of development. These similarities may not persist at an industry level and it could be that the chosen product‐mix and techniques conceal the basic differences in production structure of a developing and a developed economy in the economy‐wide study.     

The Structure of Government Intervention in African Agriculture

This article examines the determinants of various rates of agricultural subsidies (output, input, exchange rate distortions, and aggregate) using commodity-level data from eight African countries in the 1980s. Econometric results indicate that structural adjustment policies were more effective in reforming exchange rate distortions than in liberalising commodity markets. Output policies are determined within the national context while input subsidies are more responsive to commodity-specific conditions. Further-more, agricultural subsidies were strongly influenced by the degree of urbanisation and by the number of people per unit of arable land in a manner consistent with cheap food policy strategies.     

Private foreign asset accumulation,not just capital flight: Evidence from the Philippines

External debt problems have been accompanied in many developing countries with large private capital outflows. The latter phenomenon is usually identified in the literature as ‘capital flight’. This article argues that private foreign asset accumulation is a more appropriate term and compares a great variety of definitions and measurement methods and applies these to Philippine data for 1971–88. Outcomes show striking differences in assessment of the magnitude of the phenomenon. In the preferred definition of this study applied to the Philippines, unrecorded workers remittances from abroad, a factor omitted in other studies, represent a major source of foreign exchange earnings which indirectly support private foreign asset accumulation. Other definitions appear to severely underestimate private capital outflows. Econometric evidence on the causes of private foreign asset acquisition shows a strong sensitivity to the applied definition. Regression analysis for six alternative definitions shows that the expected real exchange rate depreciation and the real foreign‐domestic interest rate differential are ‐ in line with portfolio theory ‐ important determinants in the case of nearly all alternative measures, except for those that attempt to define a narrow ‘capital flight’ concept. Other determinants found significant are the availability of external finance and the previous year stock of private foreign assets. Debt‐fuelled private capital outflows are associated with the political economy of public external borrowing and the segmented nature of the foreign exchange market in the Philippines. Stock‐adjustment behaviour in the acquisition of private foreign assets in turn is interpreted as being a result of a simultaneous decision‐making process determining consumption demand and portfolio choice of high‐income Philippine households to satisfy demands related to their international lifestyles. These results have important welfare implications and policy consequences.     

Generalists and specialists in executive politics: Why ambitious meta‐policies so often fail

This article contributes to the politics of policy‐making in executive government. It introduces the analytical distinction between generalists and specialists as antagonistic players in executive politics and develops the claim that policy specialists are in a structurally advantaged position to succeed in executive politics and to fend off attempts by generalists to influence policy choices through cross‐cutting reform measures. Contrary to traditional textbook public administration, we explain the views of generalists and specialists not through their training but their positions within an organization. We combine established approaches from public policy and organization theory to substantiate this claim and to define the dilemma that generalists face when developing government‐wide reform policies (‘meta‐policies’) as well as strategies to address this problem. The article suggests that the conceptual distinction between generalists and specialists allows for a more precise analysis of the challenges for policy‐making across government organizations than established approaches.     

Institutions and Poverty

This study utilises eight alternative measures of institutions and the instrumental variable method to examine the impacts of institutions on poverty. The estimates show that an economy with a robust system to control corruption, an effective government, and a stable political system will create the conditions to promote economic growth, minimise income distribution conflicts, and reduce poverty. Corruption, ineffective governments, and political instability will not only hurt income levels through market inefficiencies, but also escalate poverty incidence via increased income inequality. The results also imply that the quality of the regulatory system, rule of law, voice and accountability, and expropriation risk are inversely related to poverty but their effect on poverty is via average income rather than income distribution.