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| Title: | Positive Terms-of-Trade Shocks and Structural Adjustment in Sub-Saharan Africa |
| Authors: | Brownbridge, Martin Harrigan, Jane |
| Year: | 1996 |
| Periodical: | Development Policy Review |
| Volume: | 14 |
| Issue: | 4 |
| Period: | December |
| Pages: | 409-427 |
| Language: | English |
| Geographic terms: | Subsaharan Africa Africa |
| Subjects: | economic policy terms of trade Economics and Trade Politics and Government Development and Technology |
| External link: | https://doi.org/10.1111/j.1467-7679.1996.tb00116.x |
| Abstract: | Recent research has developed and tested a theoretical framework for analysing the macro and micro economic effects of temporary positive external trade shocks in small open developing economies. The findings, termed 'construction boom theory', suggest that the extent to which a boom's transient windfall income is converted into a permanent income gain depends upon the savings responses of the public and private sectors and their ability to allocate savings among different fixed and financial assets. The nature of the economic policy regime plays a crucial role. Structural adjustment programmes (SAPs) have been under way in much of sub-Saharan Africa for well over a decade. Most sub-Saharan African economies are 'controlled open economies'. This article assesses the SAPs from the standpoint of whether the reforms have left adjusting countries in a better position to manage temporary positive external trade shocks or commodity price booms in three respects: diversifying the economy; efficiently saving and investing boom income; and appropriately managing the macroeconomy in the face of a positive trade shock. Bibliogr., notes, ref. |
