Tag Archive | government expenditures

Development in Africa and Latin America

No doubt the development experience is different everywhere. There are commonalities, usually associated with productive or non-productive responses to the same issue. Latin America, however, is a big mystery to me, simply because I have little experience with it.

I was talking with a student today about the World Bank’s structural adjustment reforms of the 1980’s and 90’s. Basically, the World Bank developed a series of policies as a requirement to obtain loans for development projects. These policies largely centered on cuts to government expenditures and privatization of state assets. They were disastrous to Africa’s nascent, post-colonial states (though some argue that the benefits to SA programs are now realizing themselves).

Early in the development process (or even after an economic downturn), government expenditures are necessary to provide a foundation for economic activities. Cutting expenditures prematurely could hamper the process.

And it did.

The experience of Latin America and Africa (I’ve learned), though, was vastly different. African states, when looking for items to cut from their budgets, often offered to cut social services, but chose to continue funding for military expenditures. This resulted in the hollowing out of public sector social programs such as health care and schools, but provided governments with stability.

Latin American countries, however, chose to do the opposite. So what happened was that where turnover of governments in African states was rare, Latin American states faced constant upheavals and regime changes.

Now, I’m not quite sure I believe this (and the data would be fairly easy to find), but it’s worth exploring. It would be interesting to see if different approaches to the SAPs resulted in different and predictable outcomes.

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