This paper discusses Zimbabwe’s request for targeted lifting of the suspension of fund technical assistance. Zimbabwe’s cooperation on payments has remained poor: during the period April 2008–March 2009, the IMF received SDR 0.3 million. The government’s forward-looking policy intentions are sound, but their success mainly depends on the authorities’ ability to sustain political commitment and to strengthen technical capacity. The Zimbabwe authorities have expressed their commitment to improve cooperation on payments to the IMF.
This paper explores the sources of inflation in Sub-Saharan Africa by examining the relationship between inflation, the output gap, and the real money gap. Using heterogeneous panel cointegration estimation techniques, we estimate cointegrating vectors for the production function and the real money demand function to recover the structural output and money gaps for seventeen African countries. The central finding is that both gaps contain significant information regarding the evolution of inflation, albeit with a larger role played by the money gap. There is no significant evidence of asymmetry in the relationship.
Agriculture is an important sector of the Zimbabwean economy. At independence, land ownership was highly skewed, as the sector was dominated by a few commercial farms. The initial phases of land reform, along with liberalization of the agricultural sector throughout the 1990s, helped to increase Zimbabwe’s agricultural productivity, but these gains have been reversed over the past few years. After the bumper crop season of 1999/2000, yields have plummeted, owing to droughts and the disruption of commercial farming under the Fast-Track Land Reform Program. The future of the sector is largely dependent on the success of resettled farmers, which requires better weather conditions, the availability of inputs and capital, and a stable economic environment. Preliminary data for the 2002/03 crop season indicate that, for many of Zimbabwe’s main crops, production continues to be low.
The papers in this volume address three important issues: the role ofexchange-rate policy in enhancing the competitiveness of African manufactured exports; the steps that can be taken to improve production efficiency; and the role of institutional and structural reforms in promoting competitiveness in manufacturing and in improving Africa's attractiveness to foreign direct investment. An epilogue evaluates progress and developments since the conference that gave rise to this volume was held.
This paper describes the need to broaden the agenda for poverty reduction. The broadening of the agenda follows from a growing understanding that poverty is more than low income, a lack of education, and poor health. The poor are frequently powerless to influence the social and economic factors that determine their well being. The paper highlights that a broader definition of poverty requires a broader set of actions to fight it and increases the challenge of measuring poverty and comparing achievement across countries and over time.
This Selected Issues paper highlights that cautious monetary and fiscal polices of South Africa during 1997 resulted in a return of financial investor confidence and capital inflows during 1997 and through April 1998. These policies helped the South African economy emerge successfully from the exchange market pressures of 1996 and weather the contagion from the East Asian crisis in the second half of 1997. Throughout 1997 and up until May 1998, inflation and market interest rates fell considerably, net international reserves increased, and the net open forward position of the Reserve Bank was reduced sharply.
Can Africa ever hope to have comparative advantage in manufactured exports? This question, posed in the following chapter, becomes a theme that reverberates throughout this volume. The ongoing debate among economists about how to answer it and thus give guidance to policymakers pits two fundamental and opposing theoretical views against one another. This book not only discusses the debate, in which the authors duly take their positions, but also tries to break new ground in empirical tests that would support an answer of “Yes!” to the question. As will become evident, however, such an answer depends heavily on supportive policies, resolutely pursued. The final chapter, one of the two that pull together the various contributions in the book, reminds us that “… there is no free lunch”.
The key issue of how sub-Saharan Africa might build a strong comparative advantage in exports, especially of labour-intensive manufactures, preoccupies current debates on African development2. The concern stems from two turns of events. First, one of the most visible manifestations of the subcontinent’ s multifaceted development failures during the past 30 years has been its marginalisation in world trade, especially in the global market for manufactures. Second, recent development successes elsewhere have taught that export-oriented policies either have facilitated them, as in Korea and Chinese Taipei, or actually have generated export-led growth, as in Chile, Mauritius, Tunisia and the countries of Southeast Asia3.
Trade liberalisation has formed a major component of the several structural adjustment programmes that Kenya has implemented since the mid-1970s. It has involved a reduction in tariffs and their variance as well as the tariffication of quantitative restrictions. Efforts to implement compatible macroeconomic and institutional reforms have accompanied it, along with direct export-promotion policies that, as explained below, have not had much success. This chapter analyses how, within this context, the real exchange rate (RER) has influenced the performance of Kenyan manufactured exports during the 1980s and 1990s.