Economic Reform Essay
Many diverse countries such as Poland, Ghana and Jamaica have been forced to borrow money from the World Bank and the International Monetary Fund (IMF) under the structural adjustment programs. The main goals of these economic reforms comprise of need to reduce both rural and urban poverty need to increase exports as well as induce a high and sustainable economic growth rate. In Ghana, hyperinflation had occurred due to very lenient fiscal and monetary policies.
When the coup ended, the Provincial National Defense Council (PNDC) realized the need for economic reform although the implementation process delayed due to internal conflicts (Belshaw & Livingston, 2002). This paper discusses why Jamaica has been less successful than Ghana in Economic Reform with the focus on three factors namely; the democracy wave, stabilization components and liberalization. 1. The Democracy Wave With regard to Africa, many critics argue that hard-driven programs in countries headed by dictators are more successful compared to those under democratic conditions.
They state that in a democratic condition, consultation consumes time as well as increasing the transaction costs. Some of the critics therefore argue that one of the probable reasons why the Adjustment programs in Ghana have been more successful than other countries especially Jamaica is because President Rawlings is more of a dictator than a democratic leader (Vinod, Ajay & Mansoor, 1995). In democratic Jamaica, economic reforms were launched by new governments sharply opposed to the outgoing parties.
The Ghanaian government in coordination with the IMF launched an economic recovery program in 1980s which was seen to be the most outstanding of its day in Africa (Belshaw & Livingston, 2002). This economic recovery program was aimed at reopening infrastructure hindrances and reviving the productive sector which included Agriculture, mining, and timber. The exchange rate and prices which had largely been tampered with were realigned to attract more production and exports as well as by the government imposing fiscal and monetary discipline to deal with inflation.
However, it is argued that neither continued political liberation nor authoritarian rule offered a framework for economic reform (Belshaw & Livingston, 2002). For instance, Jamaica is the process of consolidating democracy yet there have been important economic reforms while in Sub-Saharan Africa countries for instance Ghana, partial political reform has so far not generated very satisfying conditions for economic reform as well as democracy. 2. Stabilization Components The stabilization components comprise of the strategies designed to bring economic stability.
The stabilization measures in Ghana were accelerated by the fact that the government was spending more than what it was producing at this moment in time which also implied that it was being financed through the accumulation of debt (Vinod, Ajay & Mansoor, 1995). The aim of stabilization policy was therefore to deal with macro imbalances thus controlling the expenditure while increasing the taxes. This stabilization component in Ghana led to mixed success but potential macro instability was dealt with through these stabilization measures.
Even though Jamaica is regarded as a wealthy country, the society is still not stable due to the deceitful fiscal policies practiced by the government for the percentage of growth recorded in the years 2001, 2002, 2003 was in one digit (World Bank, 1992). In an effort to improve its economic reform, Jamaica has been forced to finance for itself by means of funds borrowed from different agencies in the market. This has enabled the country to improve on its infrastructure, schools, and other social amenities for society. This implies that the progress being made by the Jamaican government is depleting the country of its capital.
Economic satisfaction in Ghana is seen to be lower in rural than in urban areas. Even this be the case, a majority of Ghanaians see the economic conditions being better than in the previous years (Vinod, Ajay & Mansoor, 1995). This is a clear indication that the stabilization components have played a major role in the economic reforms. Majority of the Ghanaians are very optimistic about the future and strongly believe that their personal living and macroeconomic conditions are bound to be better in the coming years. 3. Liberalization This aspect is geared towards creating better incentives for domestic production of services and goods.
These measures many at times lead the reduction of the role of government in commodity production and trade. This is usually done through privatization, marketing controls and deregulation of prices (World Bank, 1992). Ghana has made progress in the area of privatization which has partly contributed to its success in economic reform compared to Jamaica. It was further established that the role of government be to efficiently provide some public and merit goods and services plus improving the regulatory framework of private sectors. In Jamaica, economic reform and poverty are closely related through liberalization of trade.
However, one needs to assess if there is devaluation of the currency which usually leads to increase in the rate of inflation. The high rate of inflation in the country is basically a threat to the poor. Jamaica had always supported the less privileged with health care facilities and basic education during the 1980s (Vinod, Ajay & Mansoor, 1995). These facilities did not last for a long time because the government in Jamaica minimized these facilities with a view of minimizing budget deficits in the country. In case these public utilities are privatized, poverty would be less pronounced in the country thus successful economic reform.
One possible hindrance of the successful economic recovery in Jamaica is that the country is envisaging the idea of globalization. Although globalization usually a possible solution when a country is in debts and is heavily relying on its capital to run every activity (World Bank, 1992). Though this is the case, the government will not be in a position to provide equal opportunities to its citizen. The Jamaican government therefore needs to work out on the damages by introducing economic reform which will be aimed at minimizing debts as well as improving the living standards of the citizens.
Jamaica has concentrated on tapping the natural resources as one economic reform as it is with Ghana. This will also encourage the improvement of infrastructure of the country and consequently sustainable economic reforms. Conclusion The above discussion, it is established that the ability to enjoy the benefits of economic reform largely depends on the country’s access to technology, credit, markets, healthcare as well as education. These factors are seen, from the above discussion to have been more exploited by Ghanaian government than the Jamaican government.
The paper has highlighted these factors in terms of; the democracy wave, stabilization components and liberalization which have been seen as the forces behind the successful economic reform in Ghana.
Belshaw D. and Livingston I. (2002). Renewing Development in Sub-Saharan Africa: Policy, Performance and Prospects. London: Routledge. World Bank (1992). Trade policy reforms under adjustment programs. World Bank publications. Vinod T, Ajay C and Mansoor D. (1995) Restructuring Economies in Distress: Policy Reform and the World Bank. World Bank Publications
University/College: University of California
Type of paper: Thesis/Dissertation Chapter
Date: 30 November 2016
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