The State’s Distributive Policies Under Indebted Development

Abstract

The previous two chapters set the stage for the current discussion of the distribution of resources among domestic interests in Kenya, Zimbabwe, and Brazil. Chapters Three and Four specified the two aspects of indebted development within which the state operates. In considering the selection and implementation of adjustment strategies in the Third World, it is critical to analyze the role of the state as the main intermediary between societal interests and external creditors. The state is at the locus of interaction with the former in assessing and distributing the costs of adjustment and with the latter in identifying a debt management strategy as a means to protect state interests. With this place and role of the state in mind, an adjustment strategy becomes a series of policies and choices made by the state as it responds to the cross-cutting pressures and demands from both levels. The adjustment process is a political process in that the state simultaneously pursues policies that will benefit some groups and hurt others. Both domestic and external groups use their relative power capabilities to incorporate their interests into the adjustment strategy and to affect the implementation of relevant portions of the strategy. Ultimately, economic adjustment implies the allocation of scarce resources to certain beneficiaries and of distributing the economic costs of adjustment to other actors.