External Resource Flows, Debt Relief and Economic Development in Sub-Saharan Africa

Abstract

There is no longer much controversy as to the limited developmental impact of structural adjustment programmes in sub-Saharan Africa, at least so far. Even the most enthusiastic proponents now describe their results as disappointing. Within the World Bank, the most careful econometric tests carried out to date, using a ‘modified control group’ approach (which controls for external and internal shocks, and political and other initial conditions), show that adjustment programmes in sub-Saharan Africa were not associated with any statistically significant differences in growth in the second half of the 1980s. According to these studies, they were associated with significantly lower investment rates, marginally significantly lower savings rates, and significantly higher exports (Elbadawi, 1992; Elbadawi et al., 1992). The primary debate now concerns the reasons for these weak results and hence the best means of doing better.