Structural Adjustment programmes

1
Structural Adjustment programmes

• Washington consensus
• Low budget deficits
• Free trade
• Reducing the role of the state
• Getting prices right
• IMF/WB
• Conditional loans

2
Millennium Goals

• UN
• South and North together
• Goals aimed at improving the conditions of the
  poor
• No programmes

3
The growth record

• ASIA
• Sustained economic growth
• Green Revolution
• The Asian Miracle

4
The growth record

• Latin America
• Economic upheaval
• Political upheaval
• Poor performance
• Stagnant
• Africa
• SAP
• HIV/AIDS
• Chaos
• Marginalised

5
Asia - What do we mean by miracle?

• High and sustained economic growth
• Structural change
• equity

6
High and sustained economic growth
7
Structural change

• Industrialising, urbanising, modernising
  economic development
• Modern Economic growth (MEG)
• Technological catch up
• Labour intensive and resource based industry
• to
• Technology and knowledge based industry
• De-industrialisation
• Institutional modernisation

8
Equity

• Increased standard of living
• Increased consumption
• Reduced poverty
• Reduced marginalisation
• Growth with equity

9
The Asian miracle

• Japan
• The tigers (Taiwan, South Korea, Hong Kong,
  Singapore)
• The New Tigers (Malaysia, Thailand, Indonesian)
• China (coastal) 1978
• India 1980 (1991)

10
Phases of Industrialisation

• Phase 1. The break through
• Productivity increase in agriculture
• -gt surplus labour and capital,
• -gt market growth
• Low tech consumer goods
• Export a supplement

11
Phases of Industrialisation

• Land reform
• Technological upgrade in agriculture
• Labour productivity increase
• Example Household Responsibility System

12

• Increased per capita income
• Increased purchasing power
• Rural industries industry
• Township and village enterprises
• Equal distribution

13
(No Transcript)
14
(No Transcript)
15
Phases of Industrialisation

• Phase 2 Technological upgrade
• Export of advanced consumption goods
• East Asia with the development state
• ASEAN and China with FDI

16
State intervention

• Mercantilism
• Industrial policy
• Protectionists
• Prices wrong

17
State intervention

• State regulations
• Export premiums
• Credit regulations
• State owned enterprises
• Tariffs and quotas
• Infant industries
• Technological upgrade by the state

18

• 1950 all countries practised import
  substitution
• 1960s gradual Export Oriented
• Combination of these two
• Overlapping

19
Phases of Industrialisation Development state

• IS1 _______________
  EO1_____________
  IS2________________
  EO2_____________
• IS 1 consumption goods for domestic market
• EO 1 consumption goods for export
• IS 2 capital goods and more advanced
  consumption goods for domestic market
• EO 2 advanced goods export

20

• Production for the world market by
• Free market (comparative advantage)
• Protected industries (created advantage)
• Goal to increase trade surplus

21

• Dual economy
• Government sector
• Political contacts
• Resources
• Large scale
• Concentration
• Private sector
• Scarce resources
• Personal contacts
• Informal credit markets
• Small scale

22
Foreign Direct investment

• The state is not so strong
• New division of labour in Asia Plaza Accord
• Capital flows from Japan
• 2002 worlds largest receiver of FDI (52.7
  billion)
• FDI in china from America 200 million 1989 to
  7.8 billion in 2000
• The result of MNCs moving their production to
  China

23
Singapore
Taiwan
Other
USA
Japan
Hong Kong
24
Phases of Industrialisation The challenge

• Phase three knowledge based growth
• Japan, Taiwan and Korea have completed this
• ASEAN China still not there

25
Other models

• India
• Before 1991 (1980) ISI
• Dual economy
• industrial towns
• In flow of cheap labour
• rural poverty
• After 1991
• From plans to visions
• Knowledge-based growth model
• Human capital it, medicine

26
Indian growth 1951-2000
27
The IT- sector
28
 

• A. Is there a miracle?
• B. is the model relevant?

29
The role of women

• Are women part of this development process?
• New technology women pushed out of agriculture
• Create new labour opportunities replacing men
  in agriculture
• Create new arenas for women
• Sweat shops Informal sector

30
New Technology

• Sweat shops
• May empower
• The poor
• Women
• Information technology as a new source of
  information
• Education

31
Urbanisation

• Mega cities in Asia
• Poor housing
• Poor sanitation
• Poor health care
• Remittances (China)

32
Environment

• Global warming
• Not so much discussed in the miracle economies
• China the new giant
• India small impact so far
• Local environment
• Water quality
• Soil quality
• Air quality

33
B. Is the model relevant?

• Asia is unique
• Asia specific circumstances
• Historical specifics
• Growth with investment not productivity (Krugman)