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Alternative Adjustment Programmes

Based on Ch 8.5 of Robert Lensink, 1996, Structural Adjustment in SSA, New York: Longman

The alternative adjustment programmes presented in the 1980s and early 1990s can be considered derivatives of the structuralist position. They have much in common with it and each other, although in general they reject the former emphasis that structuralism placed on industrialisation at the expense of the agricultural sector.

Neoliberal adjustment programme Alternative adjustment programme
Agricultural Policy
Market-based pricing and free trade Agricultural policy aimed at peasants and women
Emphasis on creating unfettered markets by removing government interference. Achieved by: eliminating marketing boards, subsidies, tariffs, and by currency devaluation to make agriculture for export more competitive. Government actively promotes the agricultural sector but the purpose of agricultural development is to improve the position of women and peasants. Therefore priority policies include: land reform, improvement of access to agricultural inputs and credit for peasants and women, stabilisation of prices.
Industrial Policy
Removal of government from industrial policy Improvement of linkages between agriculture and industry
The government has no place making structural decisions about which industries should be promoted and developed – it will inevitably make worse decisions than the market, reducing the productive capacity of the economy. Frequently the development of one sector is hampered by a lack of linked sectors – there are externalities which require multiple industries to develop simultaneously. Policies: improvement of social and physical infrastructure in rural areas, improvement of education, promotion of small-scale and labour intensive industry which can make use of locally-produced raw materials, especially by providing credit facilities where none exist.
Social Safety Nets
Shock therapy Sustainable human development
Mitigation of the costs of adjustment to vulnerable groups will generally only serve to slow adjustment, reduce its gains and prolong the pain ultimately caused. A reduction of safety nets will improve incentives, speed adjustment and minimise long-run pain. The most vulnerable groups in society must be targeted for particular support through adjustment: considering the suffering of these groups as the 'necessary pain' of adjustment is unacceptable. Policy must be directed at improving productivity and prosperity of the poor. Policy: increased spending on healthcare and education, including the creation of additional institutions for rural distribution of medicines. Changing the way that incomes are realised is more important than post-facto redistribution: therefore land reform is crucial, but progressive tax of consumer goods may also be useful.
International Trade
Unification and abolition of trade barriers External policy of selective protectionism and regional import substitution
Quotas should be replaced with tariffs, which should be simplified, reduced, and ultimately abolished. The infant industry argument is, in practice, flawed and merely favours a domestic industry and labour aristocracy at the expense of the domestic consumers. The infant industry argument is accepted, but protection should involve tariffs not quotas, should protect industries not firms and where possible should protect a region (such as SSA) rather than a country (although this can prove politically difficult). Devaluations are supported (provided they are accompanied by policy aimed at improving production capacity and income distribution) in support of an increase in the volume and variety of export goods.
alternative_adjustment_programmes.txt · Last modified: 2008/03/17 12:00 (external edit)