Promoting and sustaining trade and exchange reform in Africa : an analytical framework

First, the paper identifies significant economic and political obstacles to sustaining trade liberalization; second, it identifies ways that successful liberalizers in SSA and other developing regions have been able to overcome these obstacles. The focus is trade reform as an ongoing process, including the packaging of reform measures, their timing and sequencing, and the political economy issues central to the viability of reforms. In failed SSA reforms, there is a characteristic pattern in which exchange rate and trade policy reforms are set into motion only to be undercut by delays in their implementation or appreciation of the real exchange rate, or are abandoned outright in the face of domestic political opposition. Countries following this pattern thereby forego the benefits of reform and also damage the credibility of any subsequent reforms. How can this cycle of reform followed by policy reversal be overcome? In addition to a range of national policy choices, the potential role of regional trade initiatives and aid conditionality in promoting the move to openness among African countries is examined. (Author abstract)