Globalisation and Policy Effects in Africa

18 Pages Posted: 20 Oct 2003

See all articles by Arne Bigsten

Arne Bigsten

University of Gothenburg

Dick Durevall

Göteborg University - School of Business, Economics and Law

Abstract

Globalisation or market integration in Sub-Saharan Africa is closely linked to the structural adjustment programmes. In this paper we focus on their dependence on the politics and institutional characteristics of the countries concerned. In particular, we argue that one important explanation for the dismal performance of many African countries, in spite of all the measures taken towards market liberalisation, is the combination of, first, a magnification of the effects of policy and, second, a lack of willingness or ability on the part of politicians to respect the restrictions imposed on their behaviour and policy choices by the liberalised markets. We look at how the increased exposure to international prices and returns on assets make the economic equilibrium relations - the law of one price and uncovered interest parity - relevant guidelines for economic policy. The argument is illustrated by the case of Zimbabwe, where lack of respect for the restrictions imposed by international markets has led to an economic crisis with negative growth rates and a departure from globalisation.

Suggested Citation

Bigsten, Arne and Durevall, Dick Johnny, Globalisation and Policy Effects in Africa. World Economy, Vol. 26, pp. 1119-1136, August 2003. Available at SSRN: https://ssrn.com/abstract=443783

Arne Bigsten (Contact Author)

University of Gothenburg ( email )

Box 640
SE 405 30 Gothenburg
Sweden

HOME PAGE: http://www.hgu.gu.se/item.aspx?id=2619

Dick Johnny Durevall

Göteborg University - School of Business, Economics and Law ( email )

Box 605
Goteborg, 40530
Sweden

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