Sustaining trade and exchange rate reform in Africa : lessons for macroeconomic management

Few countries have sustained the reforms. Many potentially beneficial policy changes have unraveled. Reasons for this have included inconsistencies in the policy agenda, the delaying tactics of African governments in meeting adjustment goals, and the inability of some groups to rise above their own narrow concerns to help promote growth and development throughout the society at large. Policy reforms have been reversed and deflected directly (e.g., when trade tax reforms unravel) and indirectly (through policy changes related to non-trade aspects of the macro economy). This paper discusses how trade and exchange rate reforms are indirectly undermined. This occurs in several ways. Some policy reversals are intentional; some result from the inability of African governments to effectively manage the economic system. The paper concludes with suggestions of institutional and policy-related modifications that can assist reform-minded governments in sustaining key policy changes once they have been made. (Author abstract, modified)