Urban Wage Behaviour and Food Price Inflation in Ethiopia

Theoretically, increases in food prices could benefit the poor by increasing the demand for unskilled labour, and hence their wages. This paper tests this hypothesis in urban Ethiopia. We exploit a unique panel of monthly price and wage data from 111 urban markets to first construct welfare-relevant measures of real wages, before employing various panel estimators to formally test wage-food price integration. We find moderate rates of long-run adjustment to increases in food prices, but that adjustment is very slow. This implies highly adverse short-run welfare impacts of higher food prices on the urban poor.     

Building and supporting prsps in africa: what has worked well so far? what needs changing?

The Poverty Reduction Strategy Paper (prsp) initiative came out of the 1999 Cologne annual meeting of the G-7 governments, when the leaders of the industrialised countries announced the Enhanced Heavily Indebted Poor Countries Initiative (hipc II). 1 1 Report of the G-7 Finance Ministers on the Cologne Debt Initiative to the Cologne Economic Summit, Cologne, 18–20 June 1999, at http://www.g8cologne.de/06/00114/index.html. View all notes The joint Boards of the imf and the World Bank officially approved the prsp in December 1999 as a new approach to the challenge of reducing poverty in low-income countries and as a framework for development assistance. The prsp approach is supposed to represent a major departure from previous development strategies whereby the World Bank and the imf dictated the directions of economic policies in poor countries. Implementation of the prsp approach is now in its sixth year and the purpose of this article is to critically examine the challenges that African governments are confronted with in preparing and implementing credible, nationally owned poverty reduction strategy plans. The article further examines the degree to which the prsp approach has transformed donor–recipient country relations, thus allowing African governments the policy space to develop home-grown policies.     

Economic partnership agreements: African–EU negotiations continue

When they were first proposed by the European Commission to the African, Caribbean and Pacific countries — all signatories to the Lome and Cotonou agreements which provided them with preferential access to the European market — economic partnership agreements were presented as supporting regional integration and development. However, most African states regarded economic partnership agreements with suspicion, fearing that the agreements would limit their market access and their policy space. Progress on negotiations has been slow, and more than two years after they were supposed to have been concluded there are still a number of outstanding issues that the individual African regions and the European Commission have to resolve. This paper explores some of the difficulties and the progress made thus far, and proposes some measure that would address the concerns around development and regional integration in the context of the challenges posed by the global financial crisis.     

Debt,adjustment and the politics of effective response to HIV/AIDS in Africa

Today in much of Africa economic growth has slowed and living standards for the majority have suffered in the face of rising unemployment and mass poverty, resulting in incomes that are presently below the 1970 level. One problem that has been the focus of much attention and contention over the past 20 years is the huge foreign debt owed by African countries to bilateral donors and multilateral institutions. Debt servicing is consuming a disproportionate amount of scarce resources at the expense of the provision of basic services to the poor. In order to receive help in servicing their debts, countries must agree to implement structural economic reforms. This often entails drastic cuts in social expenditures, the privatisation of basic services, and the liberalisation of domestic trade consistent with WTO rules. These policy decisions have had a direct impact on the capacity of African countries to promote, fulfill and protect the right to health of their citizens. This is further compounded by ill-conceived privatisation of basic services such as water and health services, without any regard for the ability of the poor to access these essential services at a cost they can afford. Finally, adherence to WTO trade rules, which often comes as an extension of liberalisation policy, hampers the capacity of African governments to produce or purchase less expensive generic drugs for their citizen without fear of retaliation from the developed countries.     

The prospects for expanded trade and investment between Kenya and South Africa

This paper surveys principally the trade relationship between South Africa and Kenya over the last few years, highlighting the tremendous imbalance in South Africa's favour. It also charts the rise and fall in the Kenyan economy with particular reference to the IMF/World Bank reform packages and the on/off implementation, an experience common to many Third World (and African governments in particular) countries.     

Overcoming apartheid's legacy: The ascendancy of neoliberalism in South Africa's anti-poverty strategy

Poverty in South Africa is intertwined with a host of social and economic issues. The burden of poverty is exacerbated by limited access to basic services, poor housing, limited employment opportunities and inadequate infrastructure, which are an outcome of the terrible legacies of apartheid. During its first year in office, the ANC-dominated government officially endorsed a policy of 'growth from redistribution', whereby a strong state and a strong market were expected to serve as vehicles for generating growth and reducing poverty and inequality. By 1996, however, the government had embraced a standard neoliberal strategy as a central piece of its anti-poverty strategy. This article examines the potential contradictions between what appears to be on the surface progressive social policy on the one hand, and on the other, the implementation of aggressive neoliberal strategies of privatisation, liberalisation and deficit reduction to stimulate the economy and create jobs. This heavy reliance on market-led solutions is a high risk strategy, since there exists no example internationally where neoliberal adjustment of the sort championed by President Thabo Mbeki and Finance Minister Trevor Manual has produced a socially progressive outcome, especially in a country like South Africa, which is marked by extreme disparity and poverty.