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When trade liberalization occurs by deliberate design, it does so through the implementation of specific trade policy measures. But trade policy is often confused with other, and in some cases more general, macroeconomic policies. It is therefore necessary to clarify what trade policy is and what its major PMI PMI-001 components and instruments are. In the context of Africa, trade policy changes constitute only one set of the many policy reforms being undertaken, usually under the general umbrella of structural adjustment programs. However, this set appears to carry substantial weight in the typical reform package. The rather sharp focus on this component may be part of the reason why trade policy is often not sufficiently differentiated, or separable, from broader macroeconomic policies. Yet, analytical convenience and the need to relate particular policies and its major components are separately identified from other policies.In general, trade policy measures are targeted at the tradeable goods and services sector. More specifically, they influence the overall structure of incentives within this sector and thus affect the relative prices between importables and exportables. In the process, trade policy measures exert their impact through changes in the incentives for producing and consuming, as well as exporting and importing various types of tradeable goods and services (Helleiner 19921995). It should be obvious that while trade policy measures aim primarily at influencing the composition and levels of imports and exports, this does not preclude other factors and policies from affecting the levels of exports and imports. Clearly, exogenous changes in levels of income and/or general economic activity in a country would tend to influence both tradeable and non-tradeable sectors. At the same time, some macroeconomic policies (for example, exchange rate policy) could alter relative prices between non-tradeable and tradeable goods and hence influence the levels of exports and imports. Disentangling the effects of pure trade policy on the composition and levels of imports and exports from the effects of other policies and exogenous factors is one of the many challenges facing empirical research in this area.Discussions of trade policy reform, especially in the context of Africa, are confined almost exclusively to a debate about the pros and cons of trade liberalization. How far and how fast should it proceed? What should be its coverage? etc. This contextual framework reflects the REDHAT RH302 reality that many African countries have embraced and are implementing various forms of trade liberalization measures. Thus, in this context, trade policy reform is coterminous with trade liberalization, which in turn refers to policy changes and associated measures that are used to endow the trade regime with a more neutral incentive structure. In the process, the policies aim to reduce domestic policy distortions and open the economy to the world market. A neutral trade regime is one whose incentive structure does not discriminate between exportables and importables or between production for the domestic market and for export sales. More specifically, trade liberalization would imply transforming the trade regime from an “inward-oriented” stance that discriminates in favor of (and thus protects) import-competing activities into a “neutral” regime whose incentive structure does not distinguish between exportables and importables — or into an “outward-oriented” trade policy regime that discriminates in favor of (and thus actively promotes) exports.It has been argued that trade liberalization that produces either a “neutral” or an “outward-oriented” trade regime confers certain productivity-enhancing and growth-promoting features on the liberalized economy (World Bank 1991). Included among these are improvement in the efficiency with which resources are allocated, increase in competition and product investment, and the creation of a favorable environment for technology transfer. In the context of a more open trade regime, technology can be transferred through at least three distinct REDHAT RH202 sources: as an integral part of foreign investment, through increased trade that allows a country at the frontiers of technological development. This perspective thus suggests, first, that a trade regime that enhances import and export competition would induce increased trade and promote more rapid economic growth; and secondly, that the key to the productivity increases associated with expanded trade lies predominantly in “exporting (which) strengthens the incentive to adopt new technology by increasing the returns from innovation through expanded market opportunities” (World Bank 1991:89).There exists, however, an alternative perspective that associates the growth-promoting effect of expanding trade with the productivity-enhancing characteristics of technology by increased imports of capital and intermediate inputs (Helleiner 1995). This perspective would, in effect, be consistent with a trade regime whose incentive structure discriminates in favor of technology-embodying imports of capital goods and intermediate inputs as a means of capturing the growth-promoting gains derivable from increased capacity utilization and the productivity-enhancing gains emanating from technology transfer. Even in the context of this perspective, however, there is a clear recognition of the important role of exports, not necessarily as the critical vehicles for technology transfer but more significantly as the primary source for financing the indispensable bottleneck-breaking and technology-bearing imports, especially in the absence of adequate capital inflows. Both perspectives suggest that the two (import and export) components of trade policy reform may have important, distinct and different implications. VMWARE VCP-310 Hence, their differences deserve to be explicitly taken into account in the design and implementation of trade liberalization programs.

The debate on the role of international trade in economic development has involved not only theoretical arguments but also empirical analysis. Conventional trade theory based on the principle of comparative advantage postulates that the expansion of trade is beneficial to all trading partners, ORACLE 1Z0-204 that when commercial policies approximate free trade conditions the gains from trade are likely to be maximized and, by implication, overall economic growth is maximized.This postulated link between trade and growth has been consistently challenged. Lewis (1978) deflates this relationship somewhat by suggesting that “the engine of growth should be technological change, with international trade serving as a lubricating oil and not as fuel” Diaz-Alejandro (1980) goes further by arguing that the purported link between trade and growth has not been rigorously and convincingly established. More specifically, he claims that “when all is said and done, we remain unsure as to whether and when trade is the engine, the handmaiden, the brake, or the offspring of growth (300).” Finally, Helleiner (1985:6) offers “good reasons for questioning whether there exist any such links” between trade and development and notes that “the purported link between proper static allocation and growth remains . . . a “black box” about which it is best (and most honest for us to be cautious.”A variant of the trade-development nexus suggests that export expansion is positively related to output growth. Although this idea had been discussed and even empirically tested earlier, the 1987 World Development Report re-energized the debate on it by claiming that abundant evidence based on the experience of the previous thirty years provides strong support of the idea that growth in developing countries is closely related to their export growth. The key point here is that this evidence could provide a basis for the neo-liberal trade policy advocacy in favor of outward-oriented trade regimes and focus on export expansion which are also prominently reflected in the design of many African SAPs.The postulated relationship between export performance and economic growth has been tested for many developing countries as well as for Africa. In her review of some of the earlier evidence, Krueger (1980:289) affirms that “the relationship between export performance and growth is sufficiently strong that it seems to bear up under many different specifications of the relationship.” Similar studies focusing specifically on Africa (e.g., Oyejide 1975 and Fosu 1990) have reached conclusions that are broadly in line with a confirmation of the postulated positive relationship between ORACLE 1Z0-055 exports and growth. But there are also studies that have failed to support this position. For instance, Taylor (1988:8) finds that “there is no obvious relationship between performance and overall openness to trade.” In the same way, Helleiner (1986:146) concluded in his study that there is “no statistically significant link between the change in export share of GDP and growth; indeed, the sign on this relationship is consistently negative.”In spite of the mixed results obtained so far, two interesting elements of the basic idea appear to stand out and could be used with appropriate caution, as broad guides to policy. First, both Michaely (1977) and Helleiner (1986) find that export expansion in the poorer economies is not necessarily accompanied by increased overall economic growth. They infer that the validation of the export-led growth hypothesis appears to hold, if at all, only with respect to those developing countries whose level of development places them above a certain “threshold” level of per capita income. In the words of Michaely (1977): “this seems to indicate that growth is affected by export performance only once the countries achieve some minimum level of development (52).” Second, one of the findings of Balassa (1985) is that the greater the share of manufactured exports (in overall exports) the greater tends to be the contribution of exports to growth.Taken together, both of these elements might easily feed into Helleiner’s (1988) admonitions regarding the developmental implications of various categories of exports. Apparently, the lack of statistically significant relationship between export expansion and economic growth in low-income ORACLE 1Z0-007 developing countries derives largely from the virtual absence of manufactures from their exports. Since the developmental implications of various categories of exports are different, broad selectivity should be exercised in promoting exports to ensure that only those export sectors which are particularly “developmentally nutritious” are given high priority.

The conventional and, in many ways, still dominant construct in international trade theory focuses on the growth-transmitting effects of international trade emanating from both the static and dynamic gains from trade. This focus derives directly from the early theoretical insights regarding the importance ORACLE 1Z0-241 of trade as a means of widening markets, enhancing division of labor and, hence, raising the level of factor productivity.insights have been codified in the principle of comparative advantage which, in turn, leads to the neo-classical prescription that countries should “specialize in the production and . . . export of those commodities in whose production (they) enjoy a comparative advantage” (Viner 1937:348). The principle also serves as the intellectual backbone of the more recent neo-liberal trade policy advocacy which argues that liberalization of markets is the key to policy reform. This rests, in effect, on traditional trade theory’s focus on the allocative efficiency that could be achieved when markets are “free” and promote the actualization of comparative advantage and thus the maximization of the gains from international trade. In addition to the trade gains associated with static allocative efficiency, neoclassical trade theory also suggests that dynamic gains can accrue from increased access to technology and the exploitation of economies of state which are absent in small domestic markets.Based on this conventional theory, the neo-liberal policy stance holds that economies that are shielded from international trade competition can be expected to have firms that operates at inefficiently small scales in the protected domestic market. As such economies are divorced from the international price structure, they could fail or be extremely sluggish in responding to international relative price changes. Insulated economies thus share various characteristics that hurt their international/competitiveness which can be expected, in turn, to adversely affect their growth prospects.The neoclassical theory of international trade and the associated neo-liberal trade policy stance have, of course, been confronted and challenged by alternative perspectives on the trade-development nexus. One such alternative view focuses on the unequal distribution of the gains from trade (Evans 1989). A major plank of this view rests on the idea that the structure of trade of the developing countries and the underlying dynamics of the world economy imply that the gains from active participation in international trade are biased against the developing ORACLE 1Z0-202 countries because their patterns of specialization fail to bring about significant dynamic and growth-inducing effects and they tend to specialize in those goods and sectors in which linkages with the rest of the economy are tenuous and weak. In the extreme case, the developing countries such as those in Africa, that specialize in primary products tend to suffer from endemic long term deterioration of their terms of trade, emanating partly from the low income elasticity of demand of these commodities in the world market.A more theoretically rigorous and less ideological challenge to neo-classical trade theory orthodoxy emerged in the 1980s. Its main point of attack is the perfectly competitive model on which so much of neoclassical trade theory rests. This “new” trade theory suggests that models incorporating imperfect competition, economies of scale, and learning effects constitute a more realistic framework for understanding international trade (Caves 1985; Helpman and Krugman 1985; Helleiner 1987; Rodrik 1987; Srinivasan 1989).This theory views economies of scale as an important explanation of trade and specialization and a major factor of intra-industry trade. More importantly, it demonstrates that the effects of trade policy can be quite different from those postulated in conventional neoclassical models depending on ORACLE 1Z0-271 how trade policy changes affect domestic market structures. Its recognition of the role of policy in “creating” international competitiveness and modifying dynamic comparative advantages goes some way in rehabilitating the significance of policy intervention, particularly of the “strategic” trade policy variety.

In addition to the above criticisms, a fundamental shortcoming of the Bank! Fund program and on which most other development institutions and scholars agree, is its neglect of, and inconsistency with, requirements for sustainable long-term development in Africa. Most other United Nations agencies, notably the UNICEF, UNDP, UNCTAD, and the General Assembly have expressed strong ORACLE 1Z0-043 reservations about several aspects of the SAP. The core criticism is the program’s neglect of “development issues.” Of note is the outcome of the extra-ordinary session of the UN General Assembly, 1986, summoned to discuss Africa’s acute economic crisis. The resultant strategies embodied in the United Nations Program of Action for African Economic Recovery and Development (UNPAAERD) and the follow-up program under UN-NADAF go far beyond the SAP policies to commit the international community to certain responses in order to ensure” sustainable development.” Furthermore, several scholars and non-governmental organizations, notably, OXFAM, have been largely critical of the SAP framework and proffer alternative perspectives that at every level contradict the SAP policies. Even the World Bank has shifted significantly from an earlier position that SAP also promotes long-term development. In its 1994 Report (World Bank 1994:2), it admits that “Adjustment alone will not put countries on a sustained, poverty-reducing growth path. That is the challenge of long-term development, which requires better economic policies and more investment in human capital, infrastructure, and institution-building, along with better governance.” In defence of SAP as the necessary pre-condition for development, the Report argues that” development cannot proceed when inflation is high, the exchange rate overvalued, farmers overtaxed, vital imports in short supply, prices and production heavily regulated, key public services in disrepair, and basic financial services unavailable. In such cases, fundamental restructuring of the economy is needed to make development possible.” The Bank unwittingly suggests that a sequencing process which runs from SAP to development should be pursued. In essence, it implies that development concerns should be postponed until SAP succeeds. This is a fundamental source of a seemingly acrimonious controversy, and resurrects the old debate (especially between the UNECA and the Bank) as to whether Africa’s problem is essentially that of development or that of “structural adjustment.”By far the most critical and articulate challenge to the SAPs in Africa was provided by the UNECA’s African Alternative Framework to Structural Adjustment Program (AAF-SAP) (1989).2 Set as an “alternative” to SAP, AAF-SAP was based on different philosophy of development and mode of analysis, as well as an entirely different perception of Africa’s priorities, ORACLE 1Z0-048 problems and requirements. It sets the premise that Africa’s socio-economic problems are first and foremost rooted in its structural weaknesses, and therefore any meaningful analysis should start with a structural analysis of its political economy and causes of its underdevelopment. According to AAF-SAP, these features include: the predominance of subsistence and commercial activities; a narrow production base with weak inter-sectoral linkages and ill adapted technology; neglect of the informal sector; environmental degradation; fragmentation of the African economy; openness and external dependence; and lack of institutional capability. Based on this premise, it adopts a philosophy of development which reaffirms the primacy of self-reliant and self-sustained growth as the appropriate long-term development strategy for SSA countries. Essentially, AAF-SAP was anchored on the Lagos Plan of Action which, inter alia, called for the alleviation of mass poverty, improvement in living standards, the attainment of self-sustained development and the pursuance of national and regional collective self-reliance.With respect to the choice of policy instruments to realize the program, AAF-SAP insists on active state intervention, and prescribes policies which at every level, contradicts the SAP policies. For example, it insists on directed credit (and opposes financial liberalization); favors selective trade policies involving import controls and import management as well as export promotion; supports multiple exchange rate to be administered by government; increased domestic resource mobilization; supports capital controls; stresses the need for improving the quality of governance as to accountability, competence and regular, competitive choice of leaders; supports basic services/ human investment as a key part of transforming African economies” dynamism; seeks reduction in defense budgets to the benefits of basic ORACLE 1Z0-046 services, and increase popular participation both to increase productive efficiency and to redress the bias in allocations against absolutely poor households and women; etc. Finally, it expects the international community to assist Africa with the requisite funds to finance the AAF-SAP through: debt write-offs, better terms of trade and market access, and increased financial assistance.

The Berg Report and all the SAP policies implemented at the behest of the BWIs in developing countries have as their intellectual precursor the ascendancy of the “new classical economics” and the principle of “monoeconomics” as the dominant paradigm for diagnosing economic problems and prescribing solutions. Between 1973 and 1980, enormous intellectual transition regarding development theory EXIN EX0-101 and policy occurred. The neo-Keynesian consensus was breaking up quite rapidly as a consequence of the inflationary and other macroeconomic distortions in the industrial economies. Increasing interest in the classical view was reenforced by the public’s disenchantment with neo-Keynesian policies of the time and consequently the election of a more conservative group of leaders in major industrial countries: Margaret Thatcher in Britain (1979), Joe Clark in Canada (1980), Ronald Reagan in the United States (1980), and Helmut Kohl in Germany (1981). There was strong political attack on big government as being both incompetent and oppressive, and this was reinforced by the evident failure of centralized planning in the former USSR and other communist countries in the 1980s. There was increasing attention to the twin concepts of “efficiency” and “market forces” and the new classical paradigm provided the anchor.As Mkandawire (1989:5–6) observes, “the neoclassical interpretation is based on the theoretical and empirical corpus of work that essentially derives from a set of theories on the efficacy of the market system in resource allocation.” Its major principle is that of “monoeconomics” by which it insists on the universality of rational economic behavior and the existence of marginal substitution possibilities in production and consumption. The classicals vigorously criticized the range of established theoretical constructs in development economics, such as dual-gap analysis, the Lewis theory of growth and the use of input-output in planning. The critiques sought to show how such theories violated normal economic principles of response to price incentives, while offering empirical proof of rational economic behavior by the poorest peasants in developing countries (Toye 1994:22). Thus, according to the classical view, the so-called “structural bottlenecks” that could make basic economic principles inapplicable in developing countries were not empirically founded. Factor substitution was shown to be high, and commodity markets performed well wherever they were allowed to operate.Furthermore, the classical view also challenged the argument that developing ISC CISSP countries in Africa could not develop because of the adverse terms-of trade shocks, limited access to foreign credit, and declining demand for African exports. Both the faster growth of low-income countries in other regions (especially South-East Asia) that have faced similar external conditions as African economies and better performance in Africa in earlier periods (with similar external shocks) point to the potential dominant impacts of domestic policies. The economic success of the four “Asian tigers” which pursued “market and outward-oriented” policies was presented as the evidence par excellence that domestic policy distortions are to blame for poor performance.Thus, neoclassical economics sought to re-establish a presumption of a “standard economics” for policy analysis in all economies — developing as well as industrial economies. The localization of these arguments in the African case was made in the Berg Report, and more so, the World Bank and the IMF have become the major converts and protagonists of this diagnosis. The consequence is the design and implementation of SAP whose focus is the domestic policies and the central strategy is to “role back the state and get prices right.” While stabilization remains the major policy thrust, some of the original concerns of the structuralists seem to be addressed in some, albeit “distorted” ways. Stabilization had failed in some Latin American countries (1956–62) because it neglected the structural issues, and structuralist policies have failed in most of Latin America and Africa, arguably because, they focused on long-run structural transformation while ignoring the imperatives of short-run macroeconomic stabilization. The “new consensus” policy package still incorporates short-run stabilization through the traditional instruments of money supply control, ORACLE 1Z0-042 fiscal deficit reduction, devaluation, and removal of price controls, but it also recognizes the need to complement these with medium to long-term institutional changes. As Toye (1994:23) argues, “the resurgent monoeconomics of the 1980s is, therefore, not simply the old monetarism, but the old monetarism trying to incorporate the insights of the old structuralists into a new policy consensus.” But the manner in which such insights are incorporated is such that even the structuralists have difficulty recognizing several of such policies as deriving from their development theories.

Intellectually, the last few decades have witnessed major shifts in general economic thinking and development economics in particular. Structuralism as a development paradigm had been born partly in response to the failure of stabilization packages in Chile, Argentina and Uruguay (1956–62) which COMPTIA PK0-002 ignored the effects of the “bottlenecks” and rigidities that pervaded those countries’ agricultural, foreign trade and government sectors. Structuralists argue that the poor initial conditions, and a long list of structural bottlenecks make developing countries different from the industrial ones, and thus require different set of policies for development. Such bottlenecks often cited include: widespread subsistence farming and activities; shortage of trained personnel and scarcity of entrepreneurial capabilities to promote and manage development; weak institutions; small and fragmented economies; inappropriate technology and traditional production techniques marked by low levels of productivity; poor physical infrastructure and transportation networks constraining the integration of various regions of a country; weakness in political structures; excessive dependence on the foreign sector rendering the economies extremely susceptible to external shocks; rudimentary money and capital markets; colonial influence marked by “too much” dependence of African manufacturing sector on imported factor inputs such as capital, skilled manpower, technology as well as spare parts and raw materials; poor weather conditions and prolonged periods of droughts which affect the major production activity-agriculture; low price elasticities rather than instantaneous responses to price incentives, etc (see Elbadawi et al. 1992:70–73).A bottleneck greatly emphasized by the structuralists is the asymmetrical economic power relations in the world and the secular movements in the terms of trade faced by the developing countries. The centre-periphery thesis, as well as the argument of a premature integration of the developing countries into the global capitalist system is seen as necessitating different policies by the developing countries in order to achieve “self-reliance” and “balanced development.Much of the economic woes of the developing countries are attributed to the vagaries of the external environment which is controlled by the industrialized countries.In the light of these structural COMPTIA RF0-001 rigidities, structuralists believe that the basic principles that should underline policies in developing countries are ones that essentially contradict the neoclassical view-class based distribution of income rather than marginal productivity based distribution, oligopolistic rather than the laissez-faire capitalist markets; increasing returns to scale or fixed proportions production functions rather than “well- behaved” production functions with decreasing returns and high rates of substitution; nonequivalent or “unequal exchange” in the world rather than competitive, comparative advantage based world system, active state intervention in economic activities through planning, controls, and direct investment, to nurture the process of development, etc (see Mkandawire 1989:3–4).The rationale and modalities of this paradigm of development are well articulated in the literature (see Prebisch 1959, 1964; Hirschman 1958; and the Lewis (1954) Labor surplus model. Ranis (1991) provides a succinct summary of the theoretical framework of the inward-looking, import-substitution industrialization (ISI) strategy especially in relation to modernization process or path for small open dualistic and labor surplus economies such as most African economies. The process dictates that the economies pass through some evolutionary phases. For example, they begin from an early or primary import substitution (PIS) sub-phase, gradually evolve to the secondary import substitution (SIS), and at a much later stage, mature into an outward looking or externally COMPTIA TK0-201 oriented sub-phase which may be of the export promotion and export substituting variety. A key feature of the early phases is inward looking policy of protection, price controls, central planning, dependence on external financial assistance-all of which imply strong state control.

The single most important development in the discourse of Africa’s crisis is the healthier atmosphere of co-operation rather than the confrontational, acrimonious debates of the past. The vehement rejection of some African analysts of the orthodox SAP as a development strategy often gave the mistaken COMPTIA N10-003 impression that Africans were against “sound economics.” On the other hand, the failures of the past have foisted some long overdue humility on the advocates of SAP to acknowledge that “no one has all the answers.” What emerges is the need to forge a new platform for development policy dialogue based on partnership and consensus-building. In this dialogue, Africans must have the confidence and courage to take the driver’s seat. While others can help, it is ultimately the primary responsibility of Africans to think for Africa and to develop it.The new dispensation calls for fundamental change by Africans on several fronts, in response to changing reality. While one loathes the elements of the “Afro-pessimism” and the attempts to locate Africa’s poor performance on its supposedly “immutable” and “peculiar” characteristics, it is also important to underscore the need for fundamental changes in some of the current attitudes, institutional arrangements, orientation to governance and economic management. For example, the tensions and suspicion between the state and the capitalist class in many African countries that lead to massive capital outflows into “safer havens” is very unhealthy for the development of what are obviously capitalist economies. Furthermore, the subordination of national goals and development agenda to the narrow and often temporary interests of political survival and, or, ethnic loyalty, is hardly the best way to build a competitive and prosperous economy. In the end, there is no wishing away the socio-political issues which the transition to a market economy brings. Each country must, out of its own historical experiences, forge its own vision and design the requisite institutions to effectuate development. Outsiders can assist, but they can never substitute for local initiative.We cannot overemphasize the role which the international conjuncture can play in widening or further narrowing the road ahead. Africa must learn to compete in this global arena. Such a learning process will be facilitated by regional markets but also by adopting a proactive strategy COMPTIA SK0-002 for increasing and diversifying Africa’s exports. Africa’s natural resources may facilitate this process but we should recognize that only a strategy that relies on our human capacities will produce a development process that can respond flexibly to a rapidly changing world. Our natural resource endowment will only contribute to development if we add intellectual value to it and if we use the revenue to transform and modernize agriculture and strengthen the development of industrial structure that is made competitive by strategically orchestrated exposure and competitiveness in international markets.Africa should know that it cannot integrate fully into the global economy by permanently depending on aid and preferential treatment. None of these have served Africa well. Aid has produced a phenomenon of a dependency syndrome that stifles both imagination and initiative, while preferential treatment (especially under the Lome convention) has provided incentives for the perpetuation of activities that have tended to fossilize our production structures in primary commodities. What Africa needs, as it approaches the twenty-first century, is not increased aid but rather a leveling of the playing ground. An important element in this is an unconditional debt write off for all the indebted SSA countries. Tying debt reduction to perceived compliance of debtors to certain performance standard could amount to a circularity of logic. Poorly performing countries could owe their performance COMPTIA SY0-101 to the debt burden, while the high fliers could be because of the debt relief — which currently comes by way of increased official aid.

In addition, efforts must be deployed to enhance the capacity of the state to channel public, private and external savings to finance investments by means of development banks or specialized investment funds. As argued by Fanelli and Frankel (1994), carefully administered development banks could be COMPTIA 225-030 efficiently used to evolve screening devices for the selection of private investment projects. Such an argument is reinforced by the lack of long-term capital markets in most African countries. It is unlikely in Africa that private markets will generate a flow of financial intermediation high enough to support a substantial rate of investment in productive activities. Evidence has shown that the axiomatic scheme that associates financial liberalization to high savings and then high investment simply does not hold. Studies of stock exchange markets suggest that they are unlikely to finance long-term investments at desirable levels.For several countries in Africa, important attention must begin to be focused on strategies to encourage flight capital to return home, and be invested. For countries such as Nigeria, Zaire, etc. with several tens of billions of dollars in foreign private bank accounts, any program that attracts back a significant proportion of such funds could unleash the required momentum for growth in some sectors. Government leadership in providing the necessary incentives, legal guarantees of property rights, and personal encouragement to these owners of funds (however acquired) would be important. For such a process of “amnesty” to be credible, the governments should enjoy popular support and empowered by the electorate to grant such “amnesty.” An “amnesty” declared by those who constitute the “kleptocracy” would be morally reprehensible and ultimately incredible.Aside from efforts directed at increasing domestic savings and campaigns for flight capital to return as investments, another potential source of resources to aid investment could be the external aid. There is an on-going but largely unsettled debate about the positive and negative consequences of aid to Africa. For many analysts, aid has simply generated a dependency syndrome, cynicism, “aid fatigue,” and has been largely counter-productive. Any serious development strategy must re-examine the aid-development nexus. African governments need to define in a much more precise manner what external assistance is required on the basis of clearly defined national goals and an exhaustive mobilization of national capacities and resources. It is imperative that for most countries to move forward, both the donors and recipients of aid seriously re-think the purpose and nature of aid to Africa. No doubt, some aid plays some positive roles, but policy-makers should initiate major debate around the potentials for channeling aid money in a manner that enhances African human resource utilization and building and mobilization of domestic resources and wean away African economies from an aid dependency that simply does nobody any good COMPTIA HT0-101 In addition to aid, perhaps the single most important issue relating to the compact between Africa and the international community is the external debt overhang. Many analysts of the African crisis have stressed for the umpteenth time that the resumption of long-term sustainable growth in Africa would be extremely difficult, if not impossible, without addressing the debt burden. Alternative proposals for solving the problem are on the table. Increasingly, however, analysts would agree with Sachs (1996) that “the assistance should come in the form of debt cancellation. No one can doubt the dreadful policy errors of the past, nor the mutual complicity of African and donor nations. A fresh start requires a thick line drawn under the past.” This solution, simple as it sounds, holds a key component to the solution to Africa’s economic stagnation. All efforts to find out why stabilization or adjustment has not worked, why investment has not resumed, and why the state capacity has been further eroded, will not succeed without the inclusion of this one but dominant argument-debt overhang. The immediate solution of this crisis, or an articulation of a comprehensive reform program that also indicates how countries can sustain growth irrespective of the debt should be devised.Another, and perhaps the hottest issue on the development policy dialogue, pertains to the questions of social-political “fundamentals.” An aspect of these fundamentals is the domain of the state — its institutions, and governance. It is important to underscore the importance of such socio-political fundamentals because the failure to have them in place can completely scuttle any “sound” economic policy. Africa abounds with examples of countries which impressed donors with their sound economic policies when the political system was on the verge of collapse. Furthermore, to tie up all these fundamentals into some coherent whole one needs a theory of development which delineates the role of the state. Essentially, a government that would implement the kinds of policies suggested here would have to be “strong” both in terms of technical capacity and its political legitimacy and social anchoring. The state, to use the old cliché, must be developmental. A major challenge to the transformation of African states into developmental ones must go beyond merely enhancing its techno-bureaucratic capacity and seek to “embed” such a developmental state within democratic social institutions and governance frameworks. This major challenge requires imagination and sense of history. Indeed COMPTIA HT0-102 the constitution of “democratic developmental states” may be the single most important task on the policy agenda in Africa. Such a process is not facilitated by the current practice that removes key elements of economic policy from democratic scrutiny by placing them in the hands of an insulated “technocracy.” What is required is a system of policy-making and democratic governance in which political actors have the space to freely and openly debate, negotiate and design an economic reform package that is integral to the construction of a new social contract on the basis of which Africa might be ushered into the twenty-first century.

In essence, the emerging consensus is that SAP was wrong by its over-arching emphasis on “getting prices right” as well as asking governments to “get out of the way” with respect to industrial policy. Industrial policy of the “selective” kinds should be brought back on the agenda but with full COMPTIA 220-602 lessons of the negative consequences of the kinds of import substitution strategy of the past. The new strategy presupposes an aggressive export-orientation but insists that such a strategy can best be achieved with a dose of “infant industry protection” and an active, selective industrial policy by the state.A nascent industrializing country would need a number of policies to develop the “hard” and “soft” infrastructure required to build up a competitive industrial sector. These would involve massive investment in providing such “hard infrastructure” as roads, ports, efficient telecommunication and postal services, electricity, and water supply. Human capital development through investment in education at all levels, especially in science and technology, and research and development activities would serve to provide the requisite skills to compete in modern world. The soft infrastructure would include the institutional framework for doing business-efficient and transparent regulatory framework, enforcement of contracts and well-defined property rights, insurance and accounting services, development of the money and capital markets, forging of business-government relationship, etc.Furthermore, a gamut of tax, credit, and labor policies would need to be designed to lower the operating costs of firms. Institutions for provision of long-term finance and procurement of information relating to technologies and markets need to be designed. Perhaps, one of the areas where closer government-business relationships would need to be strengthened in Africa relates to the processing of information relating to foreign markets and technologies.Long-term growth prospects in Africa will depend on how well agriculture performs. In most countries, agriculture will be a source of foreign exchange and savings. It will also be an important source of inputs into industry and a major contributor to the market for some of the “infant industries.”The chosen pattern of agrarian transformation will also determine the course of equity in the growth process. Because of its importance, agriculture has continued to receive policy attention, but it has proven to be the Achilles Heel of virtually every strategy of development in Africa. The conviction that getting the macroeconomics right would elicit the required response has proved naive. It has become clear that there was a need for sectoral and micro-level policies that would directly address problems of low productivity and COMPTIA 220-603 low technological levels in African agriculture. More specifically, there is a need for increased investment in infrastructure, in extending markets to reduce transaction costs, in increased extension services, etc. All these require a much more active state than was allowed for under SAP. There is a need to devise schemes that direct credit to rural producers in a manner that encourages technical innovation. This may involve subsidized credit or inputs. We should recall that the “Green revolution” in Asia required massive intervention in the markets for credit and agricultural inputs. It also demanded policies that protected agriculture from cheap imported grains “dumped” from countries that heavily subsidized their own agriculture.Mobilization of domestic financial resources and their use is another area that requires more attention than it has received. African governments should find ways and means of “forcing” up the domestic saving ratio. African countries have in the past achieved higher levels of domestic savings than the current ones. There is no doubt that such levels can be attained, especially if the” debt overhang” can be relaxed, allowing the public sector to also begin saving. The deployment of efforts at increasing both private and public savings will probably have a much higher pay-off than the efforts that have hitherto been devoted to attracting foreign capital — both official and private. African governments must seek ways of mobilizing domestic resources. Forced savings schemes such as fully funded pension schemes (such as those of Singapore) and taxation on luxury consumption goods ( “Kaldor Tax”) should be considered. Some form of “financial repression” will also have to be tolerated to direct savings and to mobilize capital for long-term development.Partly because of the fiscal crisis of the state and the ideological stance of public investment suggesting that they were either inherently inefficient or “crowded out” private investment, public investment has collapsed in Africa.COMPTIA 220-604 In more recent years it has become abundant clearly that one constraint on private investment response has been the collapse of public investment. There is need to revive public investment within a framework of long-term development thinking both as a guide to the private sector on what are the national priorities but for its planning in light of well-articulated state priorities and projects.

Needless to emphasize that many development-inducing policies are of a micro- or meso-level nature. The primacy given to “stabilization” fundamentals led to a confusion between microeconomic policies and macroeconomic policies, with micro-level policies guilty by association with failed macroeconomic policies (Rodrik 1995). Under the current reforms, emphasis on getting COMPTIA 220-301 the monetary/financial accounts and “fundamentals” right has almost become an end in itself because it was assumed that most other things of a microeconomic or sectoral nature would automatically follow from any such reforms. The result was that interventionist microeconomic policies that had worked in several successful Asian economies were rejected wholesale in the African case, leaving the state with virtually nothing to do in the development process. Experiences so far in most parts of the world, including Europe, point to the need to take explicit steps to get “other fundamentals” right. For example, the quest for the European common currency had imposed emphasis on “monetary/fiscal fundamentals” with complete disregard to the “real” side of the economy. Recently, many countries are realizing that the adjustment costs are simply too enormous, and it is not surprising that many newly elected governments in Britain, France, etc. are arguing that “employment and output” should be part of the targets for monetary union.The major point of the foregoing discussions is that the new dimensions of development dialogue for Africa should synthesize the various “fundamentals” into a coherent strategy for development. We argue that “policy fundamentals” must simultaneously address the key elements of: equity, rapid but stable economic growth, and political legitimacy. The weight attached to each of these will depend on each country’s political and economic conditions. A broad spectrum of African analysts insist that development-focused adjustment should simultaneously establish “fundamentals” relating to financial, production and governance systems that constitutes a development policy-package. In more recent times, one additional set of “fundamentals” relates to environmental sustain ability of economic growth.One example of these” other fundamentals” is the “production fundamentals.” These address the real side of structural variables -productivity, demand for output, firm and household behavior, institutional relations, innovation process, tangible and intangible investment, export orientation, employment creation, and economic growth. A development-oriented adjustment program will be investment driven. Consequently, a central piece of policy must include measures that increase investment and improve allocation among sectors and projects.The presumption in all these is the view that economic policies in Africa will be judged by the extent to which they contribute to economic development broadly understood as involving economic growth, structural change and elimination of poverty. Our argument is that policy needs to simultaneously address a broad range of fundamentals-macroeconomic stabilization, proactive, supply-side (production) fundamentals as well as socio-political fundamentals. All these should be COMPTIA 220-302 mutually reinforcing.From the overall framework of “development fundamentals,” a number of micro-macro policies might need to be re-designed in ways that are more compatible with the structures of these economies and that cohere with the objectives of long-term development. Some of these policy areas span: trade and industrial policy; human resource and technological development; resource mobilization and external financial dependence; democratic governance, and measures to address the gamut of institutional and administrative bottlenecks of the system (see Chapter 4 of the Synthesis Volume for detailed adumbration of these issues).An aspect of the policy framework under SAP about which a serious re-thinking is imperative pertains to the requirements of rapid industrialization and the consistency of unilateral, deep trade liberalization in the process. Africa’s position in the new global trade relations will largely be determined by what action is taken in two important directions: first, increasing the regional and international competitiveness of its production activities by changing the structure of exports towards more dynamic, non-traditional products (in terms of their demand prospects and their potential to effect technological change); and second by tackling the structural bottlenecks inherent in the entire system of governance and those specifically addressing export promotion and industrial development. The need to effect change in the export structure will inevitably bring discussions of policy issues relating to export diversification, the transformation of production structures, and industrialization, back on the development agenda. The policy stance under SAP of an “incentive-neutral” trade policy and the associated perfect competition and comparative advantage model that underlie the attendant industrialization strategy has come under severe attack. With respect to trade policy, an emerging COMPTIA 220-601 consensus is that adequate preparations should be made-in terms of relevant supply-side measures and institutional arrangements-to elicit the desired export supply responses before deep liberalization is implemented. Trade reforms must serve, and be consistent with the requirements for balance of payments constraints, government fiscal viability, and industrialization objectives.

In much of recent discussions of the prerequisites of economic development, “getting the fundamentals right” has become the new fad. What is debatable is the nature of “fundamentals” and the edifice which they are supposed to support. In the popular usage under SAP, “stabilization” issues have been elevated as constituting “the” fundamentals. In times of economic turbulence CISCO 650-621 and scarce resources, concern with” stabilization” tends to attain great prominence on the policy agenda and monetary and financial fundamentals have tended to be confined to issues of stability and efficiency in the use of given resources. The crisis of the last two decades has underscored the importance of macroeconomic stability. Economic conditionality now routinely insists that countries enter into agreement with the IMF before having access to other sources of funding. There can be no doubt about the importance of macroeconomic stability for both economic and political well-being of a country. No sustainable growth can take place in a context of hyperinflation and unsustainable balance of payments equilibrium. And so any new policy must address issues of stability and must seek to get the financial “fundamentals” in place, not necessarily sequentially but at least simultaneously with “other” fundamentals. It is important to note how pre-occupation with” development issues” of the 1960s and 1970s and consequent little regard for macroeconomic stabilization was partly responsible for the debt and balance of payment crisis of the 1980s.The appropriate reaction to the previous neglect of stabilization issues is, however, not to elevate it to such pre-eminence as to almost completely ignore the “development issues.” Stabilization has proceeded without seeking to minimize the negative consequences of these policies on investment, employment and the process of technological learning. Indeed what we note is the deterioration in the support given by the financial system to the production system and the tendency to give primacy to the exigencies of financial stabilization even when these undermine economic production and social cohesion. While perhaps addressing issues of static allocative efficiency and while perhaps appropriate for stabilization policies based on these narrow perception of “fundamentals,” financial stabilization does not explicitly incorporate measures that would be addressing developmental fundamentals and do not in themselves guarantee the resumption of growth. The implication is that they have the distinct danger of producing a “poor but stable and efficient” Africa.Between the promise of “accelerated development” of 1981 and that of “sustainable development” in 1989 and the more recent Adjustment in CITRIX 1Y0-264 Africa, “development” disappears from the adjustment discourse to such an extent that the “success indicators” were confined to the movement of policy instruments rather than the real economy. In the 1989 World Bank’s Long Term Perspective, there was an attempt to assert the developmental thrust of adjustment. The report recognized the importance of structural and institutional factors in explaining economic performance in Africa. It correctly pointed out that “it is not sufficient for African governments merely to consolidate the progress made in their adjustment programs. They need to go beyond the issues of public finance, monetary policy, prices and markets to address fundamental questions relating to human capacities, institutions, governance, the environment, population growth and distribution, and technology” (World Bank 1989b). It suggested that the attention to human resources, technology, regional co-operation, self-reliance and respect for African values provide the main focus of the proposed strategy.The proposed strategy stressed the need to put in place an enabling environment for infrastructure services and incentives to foster efficient production and private initiative; enhanced capacities of people and institutions; and growth strategy that must be both sustainable and equitable. This was a significant broadening of perspective on behalf of the Bank and was in some way a movement closer to the positions that the UN-ECA had pushed over many years. Although the notion of “governance” in the 1989 report was excessively technocratic and narrow, it did permit a much less jaundiced view of the role of the state in the economy and placed issues of governance at the core of the policy dialogue. This shift was, however, short-lived and was de-emphasized CITRIX 1Y0-456 in the 1994 report which used indices of policy stance that said nothing about other “fundamentals.” Nothing was said about proactive policies that would be required for a dynamic industrialization program, a transformative agrarian process of the “Green Revolution” dimensions and the accumulation of both physical and human capital in a forced and speeded-up pace.

Africa’s endemic poverty and pervasive underdevelopment have defied much of the development policy experiments of the last three decades. To be sure, no amount of excuses can hide the monumental failures of public policy in the past and the complicity of Africans and the outside world in the process. In several aspects the fault, to borrow the Shakespearean expression, “is not in our stars but CISCO 640-553 in ourselves.” Through several acts of omission and commission, we, and more so our leaders, have short-changed the continent. In addition, our problems have been compounded by the very weak/poor initial conditions, short but peculiar history of post-independence colonial heritage, and hostile external environment. On the other hand, the international community — the multilateral development institutions (especially the Bretton Woods institutions, [BWIs], and bilateral agencies (mostly former colonial masters) — also bear much of the blame. There has been hardly any development program in much of Africa without the tacit or explicit involvement/endorsement of the donors. In several important aspects, many of the policies/programs which have turned out to be “bad” were at their insistence. With Africans adjudged “incapable of thinking for themselves and implementing policies,” a deluge of over 100,000 foreign technical experts costing over $4 billion annually to maintain have literally taken over the process of policy/project design and sometimes implementation. In what has ensued, Africa has turned into a pawn in the chessboard of experimentation for all manner of ill-digested development theories and pet hypotheses. Again, Africa is largely to blame for sheepishly following along.Sequel to the intensification of the economic crisis since the late 1970s, the efforts to “develop” Africa in the last decade and a half have been underpinned by SAP. Throughout the adjustment years, the BWIs seized much of the initiative, and foreclosed the debate by literally insisting that it was either their way or nothing, with African scholars and policymakers largely relegated to reactive protest. Africans recognized that their economic crisis required some fundamental adjustment, but raised serious reservations about the relevance and/or adequacy of the kind of adjustment being foisted upon them by the BWIs. After over a decade of acrimonious debates and tons of evaluation reports, there is an increasing convergence of views that SAP has not worked, and as designed, it is grossly defective as a policy package for addressing the problems of underdevelopment in the region. In its latest evaluation report on Adjustment in Africa, however, the World Bank (1994) obdurately insists, contrary to all evidence (including several of its own contradictory evidence) that” adjustment is working.” Such insistence could not hide the continuing disappointing socio-economic performance of the region. More recently, such self-assurances of CISCO 640-721 the past seem to be giving way to a subdued humility, expressed in such phrases as “development everywhere is a complex phenomenon . . . nobody has all the answers . . . learning from experience . . . rapidly changing realities.” This recent “re-thinking” and admission that it does not have all the answers have provided a conducive climate for productive dialogue in search of the way forward.The current mood and search for solutions is akin to the situation in 1979/80 when African heads of state adopted the Monrovia Declaration, and later the Lagos Plan of Action and the Final Act of Lagos.These were Africa’s own first attempts at articulating a framework for solving its problems. Subsequently, as a response to the perceived inadequacies of the orthodox SAP, and the deepening crisis, the UNEconomic Commission for Africa articulated the African Alternative Framework to Structural Adjustment Programs (AAF-SAP). Most African governments signed the documents, and to date, none has publicly dissociated itself from the ideas espoused in them. The World Bank virulently attacked those documents, and every African government that wished to have successful debt rescheduling or aid negotiations distanced itself from the principles in the documents.African governments either did not have the confidence and courage to implement their own strategies, or they were constrained by resources to implement programs they did not believe in. The years of the crisis merely saw a continuation of the surrender of national policy-making to the ever changing ideas of the “international experts.” Ironically however, most of what appear today as new insights about the imperatives of poverty reduction, investment in infrastructure, education, requirements of rapid industrialization and the structural and institutional bottlenecks of Africa’s underdevelopment, are nothing but a rehash of old but once disparaged ideas of African scholars and policy - makers on the subject. It has taken over a decade for the international community to agree with the UN-ECA’s AAF-SAP that “adjustment alone is not adequate CISCO 646-204 for long-term sustainable development” as the World Bank (1994) finally admits. The acrimonious nature of the earlier debate and dogmatic proclivities of the BWIs prevented a creative search for a “consensus model” or some convergence of views about the synthesis of the disparate proposals on African development.

In practice, because decisions are always seen to be arrived at based at best on a consensus centred on the interests of creditor members, there has been a growing loss of ownership by the developing countries of board policies. This loss of ownership has been costly to the IMF as a whole and to individual members. It has left scope for poor decisions and inefficient decision making, often CISCO 640-460 based primarily on creditor vs. debtor interests - decisions which are not necessarily in the overall interests of the membership. There is adequate evidence to demonstrate how significantly the imbalance in representation arrangements has affected the efficiency of decision making in the long term. These are most vividly illustrated during periods of crisis. For example, during the Asian crisis in 1997-98, a host of commentators, including several Asian member countries themselves, argued that Fund programme design was inappropriate and failed to take account of specific circumstances of member countries. The quality of decision making and in turn programme design and content would have been far improved and the prospects of success strengthened had the recipient members had a stronger influence in the decision making process. Similar arguments and similar criticisms are noted below in respect of the PRSP initiative.Similar arguments have also been advanced in regard to the IMF's policy on conditionality. In the past, IMF conditionality has been the subject of extensive criticism. It has been an issue affecting all developing countries with IMF programmes. Despite clear and mounting evidence over many years that programme conditionality had become excessive, irrelevant and counter-productive to the interests of the programmes themselves, decisions approved by the Executive Board continued, over several years, to favour excessive conditionality in IMF-supported programmes. This was despite repeated and well-argued objections by the debtor countries in the board, both to the IMF's policy on conditionality and to the manner in which it was being implemented. Developing countries argue that the lack of voting power to carry their view resulted in substantive failure of the IMF's conditionality policy, caused unnecessary damage to the institution's reputation, and contributed to programme failure in many cases. Fortunately, a fundamental change in conditionality policy was finally agreed, after an extensive consultative process, though only after many years of growing policy failure.The loss of ownership in policy making is most acutely borne by the IMF's lowest-income developing country member countries. These members, who are eligible for the IMF's Poverty Reduction and Growth Facility (PRGF)Objections to the severity of IMF conditionality have been widespread and persistent. More recently, given clear evidence of the failure of conditionality policy, a new approach to conditionality has been agreed by the IMF Executive Board. The new approach attaches value to parsimony of conditionality and the need for the IMF to focus on conditionalities relevant to its core areas of expertise. The new approach has begun to restore credibility to IMF conditionality policy, though only after over a decade of mounting failure in conditionality policy and immeasurable harm to the institution's reputation. The cost of poor conditionality policy to member countries cannot easily be measured but is considered to CISCO 646-230 have been significant.programmes, are able to muster barely 6 per cent of the voting power in the IMF board. They have little scope to influence policy and must rely significantly on the persuasive power of their representatives in the board and on the consensus-based style of decision making. As we note below in the case of the Sub-Saharan African members of the board, this makes it all the more important for these members to enjoy an adequate presence, in terms of numbers of seats, in the Executive Board. Their minimal voting strength means that they have no prospect of building a simple majority of the voting power, to generate a decision explicitly in their favour.There is a similar set of arguments in regard to the PRSP and HIPC processes. For example, lowest-income developing country members raised significant objections, on grounds of both procedure and practice, when the PRSP initiative was launched in December 1999. These included the lack of institutional capacity in their countries to incorporate the new PRSP process and the consequent need for longer timeframes for implementation, the need for PRSPs to be conducted over a period longer than three years, the need for stronger support in linking PRSP objectives to the budget process in member countries, and the need for countries emerging from conflict to be provided with other means to develop poverty-reducing strategies which would nevertheless enable them to qualify for HIPC debt relief at an earlier stage. Although some objections were incorporated at the inception of the PRSP, the bulk of these were overridden because of the overwhelmingly superior voting power of the creditor group. The consequence was that in almost all instances, the PRSP process encountered precisely the challenges and difficulties which developing countries and particularly the PRGF members had predicted. Some of these were corrected during an important review of the PRSP process in 2002, based again on evidence in the field of mounting and valid objections to aspects of the process. But developing countries note that these objections had been raised three years earlier. The three-year delay unnecessarily damaged the institution's reputation as an CISCO 650-393 agency seriously interested in poverty alleviation and resulted in significant and unnecessary capacity constraints on low-income country members. This group of the membership continues to object to some aspects of the design of PRGF programmes. Given the current distribution of voting power and particularly of board representation, these members consider that there is little prospect of redress by relying on their direct experience of the flaws in PRGF programme design, because of their limited voice at the table.

Although these steps towards improved transparency, evaluation and ownership are welcome, they are only the first towards a coherent system of accountability. By themselves they do not create accountability, but they offer a useful foundation from which to build better structures and processes. This discussion makes clear that there are many aspects of IMF accountability that need to be CISCO 642-845 addressed and the complex relations require clarification and simplification. New systems need to be introduced and old governance structures need to be modified. Some of the apparently most pressing issues, such as voting and board reform, may be the most difficult to address since they will require the willing surrender of power. This report does not try to address all of the issues raised here. Rather, a pragmatic approach is taken to look at several key issues that could be practically implemented within current constraints.One of the most urgent issues is how to achieve better representation of developing countries on the Executive Board. The inability of developing country EDs to adequately represent the views of their constituency members at the board is explored in Chapter 1. Cyrus Rustomjee shows how a lack of voting power prohibits developing country governments from putting forward their opinions to the board. The result is weaker, and sometimes inappropriate, board decisions which can hamper progress in developing countries. At best developing country governments can be reactive to the agendas of the developed countries but they have almost no opportunity to propose their own agenda. The inability of developing country EDs to be proactive is further undermined by the burden of work they shoulder in terms of representing their clients, an issue starkly demonstrated by the case of the two Sub-Saharan African EDs. Rustomjee considers several options for increasing developing countries' capacity to engage more fully and effectively in board discussions.There is very clearly an extremely weak link between most member governments, the Executive Board and the IMF management and staff. Andrew Eggers, Ann Florini and Ngaire Woods explore in Chapter 2 what options and limitations there are for parliamentarians to become more involved in oversight of the Executive Board as the legitimate interlocutor between civil society and government.In Chapter 3, Angela Wood argues that the demand for greater accountability arises from the perceived failure of the IMF to learn CISCO 642-892 from its policy shortcomings and to take account of the risks to full policy implementation. Wood explores the limitations for holding the IMF staff directly to account for the outcomes of its policy advice. She suggests that it would be more productive to focus less on apportioning blame and to pay more attention to adopting mechanisms to improve policy advice and enhance staff learning. Wood argues that accountability can be effectively demonstrated by putting lessons learned into practice. Wood outlines the core components and process of a systematic learning mechanism and argues that for such a process to be useful, it needs to be complemented with appropriate incentive structures and transparency mechanisms.Staff and management are not held directly accountable for the outcomes of their policy advice. Daniel Bradlow makes the case in Chapter 4 for formal operational policies and procedures. With these, affected peoples can hold the IMF staff to account for how they conduct their work and go about making decisions. A mechanism to investigate claims of non-compliance is necessary. Bradlow compares the current relative lack of operational policies and procedures, and mechanisms for enforcing them at the IMF with the situation in the multilateral development banks. He evaluates the feasibility of establishing a comprehensive set of operational policies and procedures, and considers CISCO 642-901 the case for establishing a mechanism for holding the staff and management accountable for compliance with them. Finally, he identifies the key features of a compliance mechanism.

This accountability void may be filled in part by non-governmental organisations, which often seek accountability directly from the IMF leaving aside the parliamentary process, but there are no formal mechanisms for doing so. Although individual staff and EDs have made significant effort to engage more with civil society, this engagement is typically ad hoc and expectations are unclear. The CISCO 642-642- result is that, often, civil society organisations remain unsatisfied with the outcome of interactions. Moreover, for civil society in the developing countries a lack of resources, a lack of information, or an inability to organise can limit their capacity to exercise informal oversight, although capacity is improving. Ultimately this means that there is no requirement for IMF staff or management to be directly accountable to citizens in program countries, nor is there much likelihood that the governor or ED will be held accountable either.While the crux of the accountability problem lies in the inadequate representation of members on the Executive Board, particularly those governments who borrow from the IMF, and the distance of the board from those who are affected by IMF policies, there is also a lack of mechanisms through which oversight and accountability takes place.Internally, review and accountability is confined to the Office of Internal Audit and Inspection (OIA) and the Policy Development and Review department (PDR). The OIA's remit is confined to reviewing the IMF's organisational and operational effectiveness and auditing the Fund's accounts. Reports are made to the board, but are not published. PDR is responsible for ensuring consistency between programs and countries' equitable treatment, although no formal procedures exist. All policy and operational documents, program related documents, mission briefs and reports, and surveillance reports pass through PDR for clearance before they are submitted for approval by the Managing Director, and finally by the board. PDR also conducts sporadic evaluations of policies and program outcomes in relation to objectives, but these are not linked to any mechanism of accountability and are not necessarily made public. There is potentially a moral hazard problem in that PDR staff both establishes policies and programs and reviews them without any external input into the process. There is no systematic monitoring or reporting of program outcomes, unlike at the World Bank where all completed projects are reviewed by its Operations Evaluation Department and an annual report is published. Neither is staff performance monitored nor are staff incentives linked to performance in relation to core IMF objectives.Although there is much missing in terms of a coherent system of accountability, the IMF has made efforts in recent years, some considerable, to address some of its critics' concerns. Since 1999, the IMF has produced a few new operational policies and guidelines for staff. Most notable CISCO 642-812 perhaps are those that were the culmination of the conditionality streamlining process embarked upon in 2001. The process called for greater transparency and clarity as to what constitutes conditionality but also called for a scaling back of the number of conditions and the areas to which conditionality would be applied. However, operational policies and guidelines remain few, covering only a small area of the staffs work. Apart from reports to the board prepared by the staff there is as yet no formal mechanism to regularly monitor compliance or allow external stakeholders to raise complaints where non-compliance is suspected.In 2001 the IMF established the Independent Evaluation Office (IEO), which undertakes ad hoc evaluations and reports directly to the Executive Board. Its reports, which are made public, have proved useful for prompting reflection and operational change in the IMF, although it does not operate explicitly as an accountability mechanism (preferring to focus on learning) and it is not a vehicle through which external stakeholders can participate or pursue complaints.Since 1999 there has been a marked increase in transparency, which makes accountability to external stakeholders more effective, as well as making it clearer what the IMF can be held accountable for. The IMF has revised its policies on making program and surveillance documents, staff reports, and its archives public. There is now a much stronger presumption of publication although it is still not yet mandatory. Nor are internal reviews automatically made public. More importantly, although the introduction of Chairman's Summaries and Public Information Notices summarising board discussions on country programs, surveillance reports, and broad policy issues is welcome, the lack of transparency surrounding board decision making and the positions taken by individual board members continues to impede accountability to member states and citizens.Finally, in 1999 the IMF established a committee to review its quota formula, which determines how much each country must pay into the IMF and CISCO 642-825 therefore each country's allocation of votes. In 2000 the IMF established a joint committee with the World Bank to examine the processes by which the IMF Managing Director and World Bank President are selected. Revealingly, both of these processes were conducted under a very limited remit and to no substantive effect.