The Political Economy of Poverty, Equity, and Growth Nigeria and Indonesia

by Bevan, David; Collier, Paul; Gunning, Jan Willem

• ISBN13: 9780195209860
• ISBN10: 0195209869
• Format: Hardcover
• Copyright: 1999-10-07
• Publisher: World Bank

Summary

This volume analyzes and compares economic growth in Nigeria and Indonesia during the period from 1950 to 1985, addressing questions as to why one country was so much more successful than the other. Providing some surprising answers for those who believed that the divergence would be found in deeply rooted, long term trends, the authors also offer insight into what has become a reversal of fortune in the late 1990's, as Indonesia has experienced decline, and the Nigerian economy has stabilized.

Author Biography

David Bevan is a lecturer in economics at Oxford University.

Table of Contents

Introduction 1
I Nigeria 7
1 The Colonial Period	9	(15)
The Colonial Economy and the Growth of Agricultural Exports	10	(3)
Instability: Trade Shocks before 1945	13	(2)
Constitutional Change	15	(3)
Economic Conditions and Policies	18	(5)
Conclusion	23	(1)
2 From Independence to Chaos: 1960-66	24	(11)
Political Developments	24	(2)
Exogenous Economic Changes	26	(1)
Macroeconomic Developments	27	(3)
Agriculture	30	(1)
Industry	31	(1)
Trade Policies	32	(1)
Wage Employment	32	(1)
Social Services	33	(1)
Conclusion	33	(2)
3 Civil War and Reconstruction: 1966-73	35	(11)
The Role of Civilians in the Military Government	39	(1)
The Economy	40	(4)
Conclusion	44	(2)
4 The First Oil Cycle: 1973-79	46	(22)
The Magnitude of the Oil Shock and Asset Choices	47	(3)
General Equilibrium Effects of the Foreign Exchange Influx	50	(5)
The Politics of Oil Revenue	55	(6)
Pattern of Federal Expenditure	61	(3)
Beneficiaries of Public Expenditure	64	(2)
Conclusion	66	(2)
5 The Second Oil Cycle: 1979-87	68	(32)
The Magnitude of Shocks and Asset Choices: 1981-90	68	(20)
General Equilibrium Effects 79	88	(12)
The Politics of the Second Oil Cycle
6 Economic Growth and Living Standards: 1950-92	100	(17)
Living Standards, Poverty, and Inequality	100	(17)
Growth Outcomes 111	117	(1)
7 Factor and Product Markets
The Capital Market	117	(4)
The Labor Market	121	(17)
The Land Market	138	(2)
Product Markets	140	(7)
Import Licensing	147	(3)
8 Government Finance and the Political Economy of Public Policy	150	(34)
Trends in Public Sector Revenue and Expenditure	151	(13)
Rents, Interest Groups, and Policy Decisions	164	(11)
Model of Public Sector Employment Rents	175	(9)
9 Explaining the Outcomes	184	(9)
Growth Outcomes	184	(3)
Distributional Outcomes	187	(1)
The Evolution of Policy	188	(7)
II Indonesia	193	(182)
10 The Colonial Period	195	(14)
The Emergence of an Independent State	199	(4)
Obstacles to National Unity	203	(4)
Economic Conditions	207	(1)
Economic Interventions	207	(2)
11 Parliamentary Democracy: 1950-57	209	(17)
Political Developments	209	(5)
Economic Policy	214	(12)
12 Guided Democracy: 1957-66	226
The 1957-58 Expropriations and the Move to State Ownership	229	(6)
Macroeconomic Policies 230	235
The Squeeze on Civil Service Incomes	233	(1)
The Overthrow of Sukarno	234
13 Stabilization and the New Order: 1966-	-73	(317)
Fiscal Policy 235	239
Financial Reform	237	(2)
Trade and Exchange Liberalization	239	(1)
Stabilization, Growth, and Income Distribution
Rice Policy	240	(1)
Economic Policy and the Technocrats	241	(3)
14 The First Oil Boom: 1973-79	244	(15)
Bappenas versus Economic Nationalism	246	(5)
Pertamina	251	(2)
Industrial Policy: Rising Protectionism	253	(3)
The 1978 Devaluation	256	(3)
15 The Second Oil Cycle: 1979-88	259	(22)
The Boom Phase: 1979-81 260	281
The Oil Slump: 1981-83	266	(5)
The 1983 Crisis	271	(3)
Postcrisis Reforms: 1984-88	274	(5)
Conclusion	279	(2)
16 Long-Term Trends in Poverty and Equity
Evidence on Mean Living Standards	281	(2)
Poverty	283	(6)
Inequality	289	(13)
GDP Growth	302	(4)
17 Factor and Product Markets	306	(31)
The Labor Market	306	(14)
Financial Markets	320	(2)
The Market in Land and Rural Credit	322	(2)
Product Markets: Institutions and Interventions	324	(8)
Food Policy	332	(5)
18 Government Finance and Public Policy	337	(31)
Fiscal Policy	337	(10)
The Political Economy	347	(21)
19 Explaining the Outcomes	368	(7)
The Evolution of Policy	368	(5)
Growth and Equity Objectives	373	(4)
III A Concluding Comparison	375	(58)
20 A Comparison	377	(56)
Poverty and Equity	378	(8)
Economic Growth	386	(3)
Macroeconomic Policies	389	(16)
Markets	405	(6)
Agricultural Performance	411	(6)
Why Policies Differed	417	(7)
Conclusion	424	(2)
Appendix 20A Construction of the Protection Index for Indonesia	426	(5)
Appendix 20B The Geometry of Open-Economy Macroeconomics	431	(2)
Notes	433	(8)
References	441	(12)
Index	453