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Book Details
Abstract
‘Africa and Economic Policy: Developing a Framework for Policymakers’ aims to fill an important gap in the current literature on economic policy in developing countries. Despite its richness and sophistication, the current economic literature has not yet succeeded in developing a framework for economic policy that is clear and intelligible to policymakers in developing countries, and which is capable of effectively delivering a sustained increase in citizens’ well-being. This ground-breaking study seeks to rectify this problem by suggesting a unique conceptual framework for designing and conducting economic policy in developing countries, particularly those in Africa.
‘Africa and Economic Policy: Developing a Framework for Policymakers’ aims to fill an important gap in the current literature on economic policy in developing countries. Despite its richness and sophistication, the current economic literature has not yet succeeded in developing a framework for economic policy that is clear and intelligible to economic policymakers, and which is capable of effectively delivering a sustained increase in citizens’ well-being – something that developing countries’ policymakers, particularly those in Africa, are striving for.
This ground-breaking study seeks to rectify this problem by suggesting a unique conceptual framework for designing and conducting policy in developing countries, and primarily presents its proposals in an African context. In doing so, the volume addresses one of the major shortcomings of developing country economic policy literature as it now stands.
Ferdinand Bakoup is currently Lead Economist at the African Development Bank.
Table of Contents
| Section Title | Page | Action | Price |
|---|---|---|---|
| Africa and Economic Policy | i | ||
| Title | iii | ||
| Copyright | iv | ||
| CONTENTS | vii | ||
| ACKNOWLEDGEMENTS | ix | ||
| Introduction AFRICA’S ECONOMIC GROWTH DEPENDS FIRST OF ALL ON GOOD ECONOMIC POLICY, NOT ON FOREIGN AID | 1 | ||
| The Aim of This Book | 1 | ||
| What Is Economic Policy? | 2 | ||
| Justifications of Economic Policy | 3 | ||
| Why This Book? | 4 | ||
| What This Book Is and What It Is Not | 9 | ||
| The Main Audience of the Book | 10 | ||
| The Structure of the Book | 11 | ||
| Part One THE CONCEPTUAL FUNDAMENTALS \rOF A SYSTEMIC ECONOMIC POLICY \rFOR AFRICA’S REVIVAL | 13 | ||
| Chapter One THE SECTORAL APPROACH TO ECONOMIC POLICY AND ITS LIMITS | 15 | ||
| Introduction | 15 | ||
| What Is Meant by a “Sectoral Approach” to Economic Policy? | 15 | ||
| Limitations of the Sectoral Approach to Economic Policy | 19 | ||
| Summary | 20 | ||
| Chapter Two CONCEPTUAL FRAMEWORK OF A SYSTEMIC ECONOMIC POLICY FOR THE REVIVAL OF AFRICA | 21 | ||
| Introduction | 21 | ||
| Good Economic Policy Consists Primarily In Making \nthe Right Choice of Credible Goals | 21 | ||
| The Final Goals of Economic Policy | 24 | ||
| The Intermediate Goals of Economic Policy | 25 | ||
| Operating Goals of Economic Policy | 26 | ||
| The Instruments of Economic Policy | 26 | ||
| Designing and Implementing Economic Policy Measures: \nA Science and Art Marked by a Certain Level of Voluntarism | 27 | ||
| The Constraints of Economic Policy | 27 | ||
| Summary | 28 | ||
| Conclusion to Part One | 30 | ||
| Part Two GOALS AND INSTRUMENTS FOR A SYSTEMIC ECONOMIC POLICY FOR AFRICA’S REVIVAL | 31 | ||
| Chapter Three FINAL GOALS FOR A SYSTEMIC ECONOMIC POLICY | 33 | ||
| Introduction: The Web of Goals in African Countries Still Prevent Concentration on Fundamental Final Goals | 33 | ||
| Poverty Reduction: Still Operationally Ambiguous for Economic Policy | 36 | ||
| What elements do we take into account? A monetary approach \n(income) or a multidimensional approach (living conditions)? | 38 | ||
| Which poverty line should we retain? | 38 | ||
| Should we take into account the intensity of poverty? | 40 | ||
| Difficulties of measuring poverty in Africa | 40 | ||
| Economic Growth and Job Creation: Final Goals for \na Systemic Economic Policy | 42 | ||
| Work and well-being: Some perspectives drawn from social sciences | 42 | ||
| Work: The principal determinant of well-being | 45 | ||
| Employment and economic growth are inseparable from \nthe improvement of well-being | 47 | ||
| The employment–economic growth correlation | 48 | ||
| Overview of Practices on Fixing Final Goals of Economic Policy | 49 | ||
| As Final Goals of Economic Policy Are Economic Growth and Employment Exempt from Criticism? | 52 | ||
| Chapter Four INTERMEDIATE GOALS FOR A SYSTEMIC ECONOMIC POLICY | 55 | ||
| Stimulating, through Noninflationary Means, Demand \rfor Goods and Services Addressed to the Economy | 56 | ||
| Why is it important to stimulate demand addressed to the economy? | 56 | ||
| Would world demand addressed to African economies be infinitely elastic? | 58 | ||
| Do only exports matter? | 58 | ||
| Is a policy of demand stimulation necessarily inflationary? | 60 | ||
| Strengthening Production Capacity and Increasing \nProductivity in African Companies | 61 | ||
| Failing to Stimulate Demand Addressed to the Economy and to Build Productive Capacity | 63 | ||
| Summary | 65 | ||
| Chapter Five OPERATING GOALS FOR A SYSTEMIC ECONOMIC POLICY | 67 | ||
| Introduction | 67 | ||
| Operating Goals that Contribute Both to the Stimulation \nof Demand Addressed the Economy and to the \nStrengthening of Productive Capacity | 68 | ||
| Gain credibility among economic agents | 68 | ||
| Maintain the confidence and morale of economic agents | 69 | ||
| Promote good governance | 69 | ||
| Improve the quality of infrastructure and other public goods | 70 | ||
| Promote social cohesion | 71 | ||
| Promote and maintain a stable macroeconomic framework | 72 | ||
| The freedom to choose one’s own economic policy | 74 | ||
| Prices that reward production | 75 | ||
| Ensure adequate financing of the economy | 77 | ||
| Build capacity, especially the level of economic expertise \nof those involved in economic policy | 78 | ||
| The sustainability of economic policy choices | 81 | ||
| Regional and multilateral economic integration | 81 | ||
| Operating Goals Specifically Contributing \rto Productive-Capacity Building | 82 | ||
| Improve the business environment and corporate governance | 82 | ||
| Build human capital | 83 | ||
| Increase the attractiveness of the national territory | 83 | ||
| Operating Goals that Contribute Specifically to the Stimulation of World Demand Addressed to the Economy | 84 | ||
| A macroeconomic framework that stimulates, in a noninflationary manner, demand addressed to the economy | 86 | ||
| The quality of goods and services | 87 | ||
| Tastes and preferences of economic agents | 87 | ||
| Summary | 90 | ||
| Chapter Six INSTRUMENTS FOR A SYSTEMIC ECONOMIC POLICY | 91 | ||
| Introduction | 91 | ||
| Monetary Policy | 92 | ||
| Has monetary policy a role to play in growth and employment, \nbeyond price stability? | 93 | ||
| In favor of a liquidity policy? | 94 | ||
| Budgetary Policy | 95 | ||
| Budgetary policy and credibility | 95 | ||
| Has budgetary policy a role to play in directly stimulating demand? | 96 | ||
| Budgetary instruments and other operating and \nintermediate goals of economic policy | 99 | ||
| Should we seek automatic stabilizers of public finances \nin African economies? | 100 | ||
| Tax Policy and Administration | 100 | ||
| Public Debt Policy | 102 | ||
| Communication Policy | 102 | ||
| Exhortation of Economic Agents | 103 | ||
| Can exhortation be an effective instrument of economic policy in Africa? | 104 | ||
| Competition Policy | 104 | ||
| Who benefits from competition? Demand or supply | 104 | ||
| Partnerships in the Economy | 106 | ||
| Industrial Policy | 107 | ||
| Trade Policy | 108 | ||
| Public Procurement Policy | 110 | ||
| Regulation | 111 | ||
| Exchange Rate Policy | 111 | ||
| Creating trademarks to stimulate demand addressed to the economy | 116 | ||
| Social Security Policy | 116 | ||
| Other Sectoral Policies | 116 | ||
| Summary | 117 | ||
| Chapter Seven MEANS OF IMPLEMENTING \rA SYSTEMIC ECONOMIC POLICY | 119 | ||
| Introduction | 119 | ||
| The Legal and Regulatory Framework as a Means \nof Implementing Economic Policy | 119 | ||
| The Constitution | 120 | ||
| Framework Laws of Economic Policy | 121 | ||
| Other Economic Policy Laws and Regulations | 123 | ||
| International Agreements and Treaties | 124 | ||
| Summary | 124 | ||
| Chapter Eight ECONOMIC POLICY IN \rPARTICULAR CONTEXTS: ECONOMIC CRISES AND NATURAL RESOURCES–BASED ECONOMIES | 125 | ||
| Manifestations of Economic Crisis | 125 | ||
| The Origins of Economic Crises | 126 | ||
| What Should Be Done in Times of Crisis? | 128 | ||
| Economies Based on the Exploitation of Natural Resources | 129 | ||
| Conclusion to Part Two | 130 | ||
| Part Three GLOBALIZATION: CHALLENGES AND OPPORTUNITIES FOR AFRICAN ECONOMIC POLICY | 133 | ||
| Chapter Nine GLOBALIZATION: A VARIABLE GEOMETRY PROCESS | 135 | ||
| Introduction | 135 | ||
| Brief Overview of Some Important Facts about Globalization | 135 | ||
| Trade in manufactured goods and agricultural products: \nSupport to globalization | 135 | ||
| The economic dynamism of Asia | 136 | ||
| A marginalized Africa | 136 | ||
| Decoupling or globalization? | 137 | ||
| Actors of Globalization | 137 | ||
| Consumers | 138 | ||
| International Institutions | 139 | ||
| The International Monetary Fund | 139 | ||
| The World Bank | 143 | ||
| The World Trade Organization | 143 | ||
| Civil society organizations | 148 | ||
| Multinational companies | 149 | ||
| National governments | 152 | ||
| Factors of Globalization | 152 | ||
| Technological process | 152 | ||
| Psychological factors | 153 | ||
| Public policies | 155 | ||
| What Is the Impact of Globalization on Poor Countries? | 155 | ||
| Chapter Ten GLOBALIZATION: A FACTOR \rOF WORSENING ECONOMIC POLICY CONSTRAINTS, BUT ALSO A SOURCE \rOF OPPORTUNITIES? | 161 | ||
| Introduction | 161 | ||
| A Resource Constraint? | 161 | ||
| Do Those Governing and the Governed Pursue the Same Goals? | 162 | ||
| Are Economic Policy Goals Compatible? | 163 | ||
| The dilemma of economic policy linked to the magic square | 163 | ||
| Growth and inequality | 164 | ||
| Constraints that Affect the Use of Instruments | 164 | ||
| The impossible trinity | 164 | ||
| Do the rules of the WTO constitute constraints? | 165 | ||
| Constraints Linked to the Behaviors of Economic Agents | 167 | ||
| Means to increase the credibility of authorities responsible \nfor economic policy must be sought absolutely | 167 | ||
| Can an agreement with international financial institutions \nfoster the search for credibility? | 170 | ||
| Rational expectations of economic agents | 172 | ||
| Limiting crowding out and encouraging crowding in | 174 | ||
| Effects of hysteresis | 175 | ||
| Constraints linked to our insufficient knowledge of the transmission mechanisms of economic policy | 176 | ||
| Constraints linked to political cycles | 176 | ||
| What opportunities does globalization offer African economic policy? | 177 | ||
| Part Four FOREIGN AID AND AFRICAN \rECONOMIC POLICY | 181 | ||
| Chapter Eleven RECENT TRENDS OF FOREIGN \rAID TO AFRICA | 183 | ||
| Introduction | 183 | ||
| New Initiatives Seem to Indicate a New Level of Solidarity \nof Rich Countries | 183 | ||
| Initiatives of the United Nations System | 183 | ||
| Initiatives of the Group of Eight (G8) | 186 | ||
| Discussions on aid to Africa in the World Economic Forum of Davos | 188 | ||
| The American initiative: The Millennium Challenge Account | 189 | ||
| The French initiative: An international tax to finance development | 190 | ||
| Monterrey International Conference on Financing for Development | 191 | ||
| Launching a cycle of multilateral trade negotiations \n(a “development cycle”) in Doha | 191 | ||
| The Increasing Gap between Pronouncement and Execution | 192 | ||
| Africa Remains the Continent that Receives the Least Foreign Aid | 193 | ||
| Summary | 194 | ||
| Chapter Twelve WHAT GOALS FOR FOREIGN AID? | 195 | ||
| Introduction | 195 | ||
| The Goal of Reducing Poverty under Debate | 195 | ||
| Concentrating the Attention of Actors on Economic Growth and Job Creation in Recipient Countries as Final Goals of Foreign Aid | 197 | ||
| The period up to the mid-2000s: The marginalization \nof economic growth and employment | 197 | ||
| The mid-2000s to 2011: Signs of positive evolution | 200 | ||
| The Arab Spring effect, 2011 to the mid-2010s: Some attempts \nat better integrating the key final goals of employment \nand economic growth in donors’ aid programs | 202 | ||
| The post–Arab Spring period: From the mid-2010s onward | 203 | ||
| Scenario 1: Continuation of the trend | 203 | ||
| (a) Adapting international indicators of employment to the context of developing countries | 203 | ||
| (b) Instituting an employment test | 203 | ||
| Scenario 2: A reversal of the Arab Spring effect | 204 | ||
| What Contribution Can Aid Make to the Productive-Capacity \nBuilding of African Economies? | 204 | ||
| Support to companies and infrastructure at the center of aid priorities | 204 | ||
| Measures to strengthen the good governance \nof companies operating in Africa | 205 | ||
| Can Aid Contribute to Stimulating the Demand for Goods \nand Services Addressed to African Economies? | 205 | ||
| Developed countries must significantly reduce their level \nof protection of trade | 205 | ||
| Aid can also contribute to directly stimulate the demand \nof goods and services addressed to African economies | 212 | ||
| Summary | 215 | ||
| Chapter Thirteen HOW TO CHANNEL AID FOR \rIT TO BE EFFECTIVE | 217 | ||
| Introduction | 217 | ||
| High Level Forums on Aid Effectiveness: The Paris Declaration and the Accra Action Plan, and the Busan High-Level Forum | 218 | ||
| Predictability of Aid | 219 | ||
| As a New Privileged Instrument of Aid, Is Direct Budgetary \nSupport Preferable to Targeted Project Aid? | 220 | ||
| Untying Aid | 223 | ||
| Debt Relief | 223 | ||
| What Do We Do with Conditionality? | 226 | ||
| Opening Up the Rest of the World to African Exports | 232 | ||
| The growth in strength of new donors | 232 | ||
| Part Five SOME SUCCESSFUL EXPERIENCES OF ECONOMIC POLICY IN AFRICA AND BEYOND | 237 | ||
| Chapter Fourteen A SUCCESSFUL ECONOMIC POLICY EXPERIENCE IN AFRICA: ECONOMIC POLICY IN TUNISIA | 239 | ||
| Introduction | 239 | ||
| Brief Overview of Tunisia | 240 | ||
| Some Characteristic Elements of Tunisian Economic Success | 240 | ||
| Five-Year Development Plans as Instrument of Formulation \nand Implementation of Economic Policy | 243 | ||
| Employment and Economic Growth at the Center of Final Goals \nof the Economic Policy Defined in the Five-Year Plans | 244 | ||
| Revealed Intermediate Goals of Economic Policy: A High Concentration on the Development of Productive \nSectors and Demand Addressed to the Economy | 245 | ||
| A high concentration on productive sectors | 245 | ||
| Stimulation of demand addressed to the economy | 245 | ||
| Revealed Operating Goals of Tunisian Economic Policy | 247 | ||
| Instruments of Economic Policy in Tunisia | 248 | ||
| Monetary policy | 248 | ||
| Budgetary policy | 249 | ||
| Exchange rate policy | 250 | ||
| Trade policy | 251 | ||
| Competition and regulation policy | 254 | ||
| Exhortation | 255 | ||
| Policy to improve the attractiveness of the territory | 255 | ||
| Public–private partnerships | 256 | ||
| The Role of Foreign Aid in Tunisian Economic Policy | 256 | ||
| Why Was Tunisia Able to Elaborate and Implement Such a Successful Economic Policy? | 257 | ||
| Future Challenges | 258 | ||
| Summary | 258 | ||
| Chapter Fifteen POST-APARTHEID SOUTH AFRICA’S ECONOMIC POLICY: LESSONS FROM A SUCCESSFUL EXPERIENCE | 259 | ||
| Brief Outline of Post-apartheid South Africa’s \nEconomic Performance | 261 | ||
| Post-apartheid South Africa’s Economic Policy | 264 | ||
| The role of the state in the economy | 264 | ||
| Formulation and implementation of economic policy | 264 | ||
| Goals targeted by economic policy in South Africa | 265 | ||
| South Africa’s Major Economic Policy Operating Orientations | 265 | ||
| The search for credibility and sustainability | 265 | ||
| The search for social cohesion and stability | 268 | ||
| Other major sectoral goals | 270 | ||
| Orienting demand toward locally produced goods and services | 270 | ||
| Procurement | 273 | ||
| National productive capacity | 274 | ||
| The Challenges Ahead | 276 | ||
| Summary | 276 | ||
| Chapter Sixteen SOME ECONOMIC POLICY EXPERIENCES IN DEVELOPED AND EMERGING COUNTRIES | 277 | ||
| Introduction | 277 | ||
| Asian Emerging Countries | 277 | ||
| Developed Countries | 278 | ||
| Summary | 281 | ||
| CONCLUSION | 283 | ||
| Africa in a Process of Revival | 283 | ||
| New Partnership for Africa’s Development | 284 | ||
| An Exhortation to Hope | 286 | ||
| Stimulating National Supply and Demand Addressed to the Economy to Promote Growth and Create Jobs: First Goals of Economic Policy | 287 | ||
| The Search for Credibility and Confidence of Economic Agents: Indispensable for the Success of Any Economic Policy | 288 | ||
| Notes | 291 | ||
| Introduction | 291 | ||
| Chapter One: The Sectoral Approach to Economic Policy and Its Limits | 292 | ||
| Chapter Two: Conceptual Framework of a Systemic Economic Policy for Africa’s Revival | 293 | ||
| Chapter Three: Final Goals for a Systemic Economic Policy | 294 | ||
| Chapter Four: Intermediate Goals for a Systemic Economic Policy | 296 | ||
| Chapter Five: Operating Goals for a Systemic Economic Policy | 297 | ||
| Chapter Six: Instruments for a Systemic Economic Policy | 299 | ||
| Chapter Seven: Means of Implementing a Systemic Economic Policy | 304 | ||
| Chapter Eight: Economic Policy in Particular Contexts: Economic Crises and Natural Resources–Based Economies | 305 | ||
| Chapter Nine: Globalization: A Variable Geometry Process | 306 | ||
| Chapter Ten: Globalization: A Factor of Worsening Economic Policy Constraints, but also a Source of Opportunities? | 308 | ||
| Chapter Eleven: Recent Trends of Foreign Aid to Africa | 311 | ||
| Chapter Twelve: What Goals for Foreign Aid? | 311 | ||
| Chapter Thirteen: How to Channel Aid for It to Be Effective? | 313 | ||
| Part Five: Some Successful Experiences of Economic Policy in Africa and Beyond | 316 | ||
| Chapter Fourteen: A Successful Economic Policy Experience in Africa: Economic Policy in Tunisia | 316 | ||
| Chapter Fifteen: Post-apartheid South Africa’s Economic Policy: Lessons from a Successful Experience | 319 | ||
| Chapter Sixteen: Some Economic Policy Experiences in Developed \rand Emerging Countries | 321 | ||
| Conclusion | 322 | ||
| BIBLIOGRAPHY | 325 | ||
| INDEX | 339 |