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Poverty and income distribution during adjustment: Issues and evidence from the OECD project

Authors
Journal
World Development
0305-750X
Publisher
Elsevier
Publication Date
Volume
19
Issue
11
Identifiers
DOI: 10.1016/0305-750x(91)90002-y
Disciplines
  • Design
  • Economics
  • Political Science

Abstract

Abstract This paper draws lessons from country studies of the effects of adjustment policies on the distribution of income in Chile, Côte d'Ivoire, Ecuador, Malaysia, Morocco, and Indonesia. Following an analytical discussion of the issues that must be confronted in the design of adjustment programs with a poverty focus, the paper synthesizes the main conclusions from the interpretative description in the country studies. Simulation exercises exploring the effects of the design of the adjustment packages in these countries on poverty and the sustainability of the measures undertaken show considerable diversity in the evolution of income distribution during adjustment. These exercises also expose the fatal flaws of narrowly designed adjustment programs. Adjustment programs, whether efficiency-focused of welfare-focused, will fail when they do not recognize the interdependence of the three criteria of efficiency, welfare, and political feasibility. Thus adjustment programs must be carefully packaged to fit country circumstances, taking into account both the political and economic environments.

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