Study Abroad with CIEE International Study Programs

This paper is a comparative analysis of three countries undergoing structural (economic) reform. It is the result of comparative research, professional exchange with international faculty, and participation in short-term international faculty development seminars in Chile (1992), Vietnam (1996), and Ghana (1998). ¹ It demonstrates the value of international education and exchange for university faculty.

STRUCTURAL REFORM

The term structural reform is used interchangeably here with the term economic reform. The term is used broadly to represent a mix of policies designed to foster a transition from a socialist or government controlled economy to one more amenable to the market place. While structural reforms have been most publicized in the formerly socialist economies of Eastern and Central Europe, they have also been adopted in varying degrees by the majority of the less developed countries (LDCs) of Asia, Africa, and Latin America.

The Phases of Reform

Often there are three distinct, but interdependent phases of structural reform. First, a "stabilization" phase reflects efforts to bring under control various macroeconomic indicators, principally inflation rates and balance of payment deficits. Policy in a second phase seeks to alter the underlying "structure" of the economy, in terms of a shift from government controlled prices to market determined ones, from government owned enterprises to privatized ones, and from protectionist trade policies to liberalized ones. A third and final stage envisions a transformation of not just the economy, but a broader "transformation" whereby corruption and mismanagement are reduced, direct foreign investment encouraged, infrastructure improved, and the social sector developed. In many cases, elements of these three phases overlap and take place simultaneously.

The History Behind Reform

For much of the less developed world, the embrace of structural reforms was not necessarily a voluntary one. As a result of rising prices of oil and other imports in the 1970s, coupled with LDC desires for modernization and encouraged by low interest rates and abundant "petrodollars" available for borrowing, many developing countries took on sizeable debt during the time period. While some of the borrowed funds went into productive use, much was used to raise domestic consumption levels, to finance grandiose and inefficient modernization schemes, to line the coffers of corrupt government officials and their cronies, and to leave the country in the form of capital flight. To make a bad situation worse, worldwide recession in the early 1980s, along with rising U.S. interest rates, increased value of the dollar, and declining terms of trade for LDC commodities made debt service obligations of indebted developing countries an impossible burden. Moratoria and default on debt service became a pattern, and the financial affairs of indebted LDCs collapsed. ²

After a series of plans and programs directed by the U.S. and other Western governments and in consultation with debt-owning commercial banks and international organizations, a pattern of agreements negotiated on a country-by-country basis emerged.It is these agreements, now principally under the domain of the International Monetary Fund (IMF), that form the basis of the structural adjustment programs and policies that are creating the epoch-reaching transition to market determined economies that we see in the less developed world today. Each individual country is different, however, with differing reform packages and varying degrees of success. This is evident in the three case studies that follow.

Three international faculty development seminars, all sponsored by the Council on International Educational Exchange (CIEE) and hosted by foreign institutions at various times during the 1990s, form the basis for the case studies. In each case, the foreign institutions provided faculty speakers, written material, and opportunities for collegial exchange. CIEE and directors of the seminars also arranged for many additional expert speakers, site visits, and additional materials. The speakers cited in this paper represent just a portion of the total number of excellent speakers in each of the seminars.

THE CASE STUDIES

The three countries chosen as case studies—Chile, Vietnam, and Ghana— represent an array of the variation in LDC structural reform. While they differ widely in terms of their geography, history, culture, and politics, they also share many similarities in their economic reform packages and contend with many similar issues. And while not necessarily representative, they do encompass the three less developed regions of Latin America, Asia, and Africa.

Visitors to Santiago, the capital city of Chile, are struck by the incredible amounts of air pollution, congestion, traffic, and busyness of the Chilean population. Surprisingly, not too many examples of poverty abound. It takes a more fervent investigator to find the tremendous poverty that lies behind the scenes, literally behind the walls of the slums outside of the city. Chile is truly a country with a wide barrier between rich and poor.

Of the three countries under consideration, Chile has the highest level of GNP per capita (gross national product, or roughly income, per person, on average) at $4,810 in 1998. ³ It is one of the leading industrial nations in Latin America, and also exports fruit, wheat, and other products. Chile is a fascinating case study in terms of its recent political and economic history. And while leaders of all political parties agree that Chile grew rapidly under its period of structural reforms, they differ widely as to the nature and distribution of the benefits of this economic growth.

1960s-early 1970s. Under the Presidency of Christian Democrat Eduardo Frei (1964-1970), Chile forged ahead with modernization while attempting to placate the left with its reformist policies. Both the rightist parties and the United States Central Intelligence Agency had been instrumental in Frei’s election. Under Frei, Chile received massive doses of U.S. foreign aid; after all, Chile was a ‘model’ country in terms of keeping the left at bay. Ultimately, Frei and the Christian Democrats alienated both the left and right, and in 1970, leftist Salvador Allende was elected President. Allende tried to implement a social revolution without major backing from Congress. His policies of import substitution industrialization ⁴ , nationalization, and heavy borrowing and printing of money tore apart both the Chilean society and economy. A military regime under the leadership of Augusto Pinochet ousted Allende in 1973. ⁵

Middle 1970s-1980s. The Pinochet era (1973-1990) was a period of reform and repression. Human rights violations flourished, including execution and torture, and particularly targeting the poor, organized labor, journalists, and educators. (Social science programs in the universities were shut down, and university administrations were replaced by the military. A whole generation of social scientists, as well as social science research, was lost, creating an eerie academic emptiness that is still felt today.) Politically, Pinochet’s agenda was to destroy political parties and the party system. Economically, students of the ‘Chicago School of Economics’ were brought in to dismantle import substitution industrialization, restore nationalized enterprises to their private owners, privatize state institutions, eliminate most social programs, and generally embrace structural reforms. Indeed, Chile has experienced the longest history of economic reform in all of Latin America. Most agree that while economic performance was good, Chilean society suffered immeasurably under the brutal rule of Pinochet.

Late 1980s-1990s. In 1988, a plebiscite was held to determine whether Pinochet should continue to rule as President for the next eight years. A majority ‘no vote’ set the stage for new elections in 1989. Christian Democrat Patricio Aylwin was democratically elected, and began his four-year term in 1990. Aylwin’s center-left coalition government ended when Christian Democrat Eduardo Frei, son of former President Eduardo Frei, was elected as President, beginning a six-year term in 1994.

The New Millennium. New elections in the year 2000 validated the process of Chilean democracy, and ushered in a socialist president by the name of Ricardo Lagos. With the pledge of reducing income inequality and poverty, Chile may well become the leader of a new Latin American movement to restore social justice to the region.

With the end of military rule as the backdrop, the 1992 faculty seminar entitled "Chile After Pinochet: The Challenges of Reestablishing Democracy" was hosted by the Catholic University of Chile in Santiago and directed by Dr. Arturo Valenzuela, a leading expert on Chilean politics.⁶ The seminar afforded ample opportunity to examine the structural reforms in the context of the newly elected democratic regime.

According to Valenzuela in his opening remarks, Chile’s political system with its coalition government is an exception to the typical two-party system in much of Latin America. Under a coalition government, the views of all political parties are important, and politics intertwines with economics. Furthermore, whereas the rightist and leftist parties in much of Latin America are somewhat similar to each other, Chile’s multi-party system has sharply differing political parties. Despite Pinochet’s objective to do away with the party system, most Chileans seem very attached to the notion of political parties. As with much of Latin America, political parties are important factors in the student movement, unions, professional organizations, and many other facets of society.

Genaro Arrigada, the National Secretary for the Christian Democratic Party, was responsible for aligning the ‘no vote’ to end the leadership of Augusto Pinochet. His description of the ‘middle of the road’ policies with respect to economic growth and the needs of the poor place the political persuasion of the Christian Democratic Party somewhere in the center. Arrigada stated that he is conservative with respect to macroeconomic growth and structural reform. He is pleased with the low fiscal deficits and low inflation, and believes that reliance on the market place is the way to improve the economy. Nevertheless, unlike Pinochet, Arrigada believes that the state should take responsibility in providing education, health care, infrastructure, and policies designed to meet the needs of the poor. He argued that close to half of the nation’s poor cannot be helped through economic growth alone and depend on the state for help. Poverty is rising and there is extreme income inequality, both of which can be reduced via government policy. Assistance programs should be targeted to small entrepreneurs and the poor, retraining should be provided for displaced coal miners and agricultural workers, taxes should be restructured to improve income distribution, and the government should invest more heavily in education, health care, and other services, especially for the poor and for rural residents.

The Independent Democratic Union Party (UDI), represented by Hernan Larrarn, is clearly to the right of the Christian Democratic Party. It had its beginnings in the early 1960s at the Catholic University with students concerned that the country was headed to socialism. The UDI, along with students of the ‘Chicago School of Economics’, promoted freedom, private enterprise, and minimal state intervention in the economy. The UDI is dedicated to leading a new popular movement to defeat communist and socialist elements within Chile’s government. Larrarn supports government subsidies for people to choose private health care and vouchers for parents to choose schools for their children. The government should play an important role in developing research and infrastructure, though environmental problems should be solved through the private sector. Larran supports an immediate elimination of tariffs and a program of export-led growth, with emphasis on diversification. He believes that privatization is the way to create economic growth and that a focus on equity cannot achieve such growth. He sums up the rightist position by stating that "The first way to help the poor is through economic development; we must increase the size of the ‘torta’ rather than redistribute the slices."

At the opposite end of the spectrum, the Communist Party of Chile focuses more on equity and redistribution than on economic growth. Jaime Insunza, a member of the Central Committee of the Communist Party, argued that while there is an important role for the market place in the economy, it should not hold the prominent place. The structural reforms have created much hardship, and there is a need for much more government planning and involvement in the economy. Of particular concern are the large numbers of youth who are not in the school system, the youth in poorer community schools and isolated areas with very poor education, the poor who are heavily burdened with taxes, the indigenous people whose rights have been denied, other small landholders who have lost their land, the large share of the labor force that must work overtime in the informal sector in order to receive adequate incomes, the seasonal agricultural workers who find work only during part of the year, the large number of workers who receive declining real minimum wages, and the many workers who have been displaced from their jobs.

Insunza argued for a new left social movement encompassing the redistribution of income, nationalization and ‘transnationalization’ (of foreign enterprises), sustainable development, the rights of people, job training and increased wages, reduced spending for the military, and greater government regulation. He also maintains that Chile should initiate the second phase of export promotion, contributing more value added rather than continued export of raw natural resources. He summarized his party’s concern for the poor by referring to an earlier statement of Central Committee members that "God created the world equally, but governments divided it up unequally". There is a lack of solidarity in Chilean society and too much individualism. Under current policy, conditions will only worsen.

In addition to these four speakers, there were also meetings with the U.S. Ambassador to Chile and the Director of the National War Academy. There were additional presentations made by Catholic University faculty, representatives of the Ford Foundation, and other government and party officials. The President of the Chamber of Deputies presided over a visit to Congress in session with the President’s chief of staff and budget director present. A presentation by Roberto Mendez of the public opinion survey firm of Adimark indicated that over 80% of the Chilean population is optimistic regarding the economy, which is the highest ever recorded. The Chilean people’s political identification, as of August 1992, was approximately 23% on the right, 22% in the center, 31% on the left, and 24% independent. Mendez argued that capitalist views are replacing the 1960s-early 1970s ideology that opposed free markets.

Finally, I was graced with a tour by a delightful intelligent woman of the base community in Pudahuel, a poor ‘barrio’ on the outskirts of Santiago. Through the openness and generosity of her and her friends and neighbors, I received first-hand accounts of the conditions of poverty, limitations of government help, and self-help initiatives of the slum residents themselves.

Vietnam is pursuing a largely successful transition from a centrally planned economic system to one that is more amenable to the market. The term that is used by the Vietnamese is ‘doi moi’, or ‘renovation’. The changes are most evident to outsiders in the flow of Western business into the country since the thaw of the cold war and the easing of relations with the West. However, visitors to Vietnam can’t help but notice the energy of its people. People are up before sunrise, urban shops open at daybreak, and bicycles and motorcycles compete with cars and cyclos (bicycle-driven passenger vehicles) along crowded urban streets.

The poorest of the three countries under consideration, Vietnam’s low GNP per capita ($330 in 1998) places the country among the poorest countries of the world. The industrial and service sectors of the economy have been growing, but agriculture still represents a significant share of the economy, and the majority of the labor force works in agriculture. Crops include rice, cassava, coffee, and forestry products. Thus, it is not surprising that Vietnam’s population is primarily rural, in contrast to the heavily urbanized population of Chile. The predominance of the rural sector is typical for many South and Southeast Asian countries, such as Thailand, Cambodia, and Bangladesh, as well as sub-Saharan African countries such as Ghana.

While U.S. citizens think of the War in Vietnam when they conceptualize the country, the Vietnamese have a much longer history of colonization and warfare. Nationalistic efforts to remove first the Chinese and then the French and the Japanese led to a period of struggle for national independence from 1945 to 1975, as well as a communist government and reunification of the country in 1975.⁷The Vietnamese victory in the American war (1968–1975), as the Vietnamese refer to it, presented a favorable context for the Vietnamese people to rebuild their country and to try to catch up to the economic progress of the rest of the world. However, the shortcomings of the socialist industrial model soon became evident.⁸

Like Chile before it, Vietnam is pursuing a transition to a market-based economy. Unlike Chile, Vietnam has a far more extensive background of socialism, which continues despite many reforms. And, in contrast to the transition from socialism in much of Eastern and Central Europe, the reform process in Vietnam has focused on economic change, rather than a combination of economic and political reform. While the Vietnamese government is still dominated by the Communist Party, many feel that the extensive and successful economic reforms that have taken place have set the stage for at least modest political change.

With this background, the 1996 faculty seminar in Vietnam, entitled "Contemporary Vietnam: Recovery, Renewal, and Recognition" provided an excellent opportunity to better understand the Vietnamese process of economic reform, along with its achievements and its continued needs. The seminar was hosted by the Vietnam-USA Society, along with its Vice Director Mr. Vu Xuan Hong and Mr. Hoang Cong Thuy. The Vietnam-USA Society was founded in 1945 as the first bilateral friendship organization in Vietnam. The program was directed by Doan Ngoc Diep, Administration Director of the Council Study Center in Hanoi (in care of the Quaker Service).⁹

1986–1989: Agricultural Reform

Vietnam’s first systematic program of economic reform began in the agricultural sector in 1986. The initial policies focused on changes in land tenure, liberalization (decontrol) of farm prices, and removal of regulations on sales of agricultural output. Prior to this, production had taken place on collective farms, and agriculture was heavily taxed through a combination of price controls and restrictions on procurement. Peasant households are now recognized by policy makers as independent economic units allocated with stable, long-term land use rights, with freedom to transfer, exchange, mortgage, or lease the land. The peasants may now also decide what to produce and whether to sell their produce on the market.

Dr. Luu Trong Hieu is the Director of International Programs and the Director of Research at the University of Agriculture and Forestry, Thu Duc, in Ho Chi Minh City. According to Dr. Hieu, the initial reform of the farm sector led to important successes. Higher farm prices and the deregulation of farm sales created incentives for production, and agricultural output climbed. Average paddy yields increased from about 2.1 tons per hectare in 1980 to 3.6 tons per hectare in 1994, and land under paddy cultivation increased by 600,000 hectares. Vietnam went from being a large importer of rice to being the third largest world exporter of rice in just a few years. The same agricultural reforms led to higher incomes of farmers, and a drop in poverty rates in the rural sector.

One aspect that eased the transition from communal farming to family farming is the labor-intensive nature of Vietnamese farming. (Theoretically, it is more difficult to make the shift under a capital-intensive farming system, as in Russia.) Despite this labor-intensity, efficiency gains in the agricultural sector enabled expanded farm output while still freeing up farm labor to move into industrial and service jobs. Nevertheless, according to Hieu, "the future performance of the (agricultural) sector will be the main influence on living standards… (it) will be the mainstay for rising real wages, increasing employment, and alleviating poverty".

1989–1990s: Generalized Economic Reforms

Economic reforms accelerated and spread to the non-farm sectors in 1989. According to Professor Vu Dinh Cu, an expert on renovation in Vietnam, additional reforms envision the following:

The most prominent of the liberalization policies was the 1989 decontrol of prices (agricultural prices having been already decontrolled). The Vietnamese refer to this as "a single system of prices" (as opposed to a "two price system" of official and unofficial prices). Price decontrol occurred rapidly on most of the remaining commodities. (Exceptions include power, postal services, water, cement, and fertilizers.) The policies to decontrol interest rates and currency values were also very important in improving domestic savings rates and export levels respectively.

While product price liberalization occurred very quickly, Vietnam is taking a slower pace toward privatization. According to Professor Cu, some sixty thousand small and medium-sized private businesses had been created by 1996, and according to the World Bank, over 800,000 small private businesses were established by 1998. However, it is also true that the state continues to own a large share of the nation’s enterprises, particularly the industrial ones. Indeed, the pattern of privatization is one that is unique to Vietnam, and is referred to as "a multi-sector economy" (with private and government sectors). It is a cautious approach, with the goal of avoiding the massive unemployment created in other transition economies. It retains an important role for the state, and emphasizes competitiveness over privatization.

Like the agricultural reforms, this second phase of Vietnamese reform was also successful, but not without some temporary hardship. According to the World Bank, the rapid elimination of subsidies and the streamlining of SOEs that took place in this second phase resulted in the loss of five thousand Vietnamese enterprises. (Three thousand of these were merged to other state firms, and two thousand actually shut down.) As a result, some 900,000 workers (one-third of all industrial workers) lost their jobs during the time period 1988 to 1992. However, many workers were given financial allowances to facilitate their search for new jobs. And, jobs were quickly restored by the rapidly expanding private economy, enabling output to expand dramatically. Much of this expansion was in the labor-intensive manufactured goods in which Vietnam has a comparative advantage, and efficiency was enhanced in both privately owned and state-owned enterprises.

1990s: The Environment

Dr. Le Thac Can of the Hanoi National University believes that environmental degradation is rapidly becoming a serious problem in Vietnam. In terms of natural resources, deforestation has been occurring at a rate of 1.4 percent per year over 1990 to 1995. According to an article by Dr. Can and his colleague Vo Quy, ¹⁰ "Deforestation has led to serious impacts on water resources, soil erosion, loss of wildlife, and deterioration of landscape and climatic factors". The United Nations and others have been financing reforestation efforts, and reforestation has been occurring at a rate over 100,000 hectares per year during the 1990s.

According to Dr. Can, several other efforts are underway to reduce environmental degradation, including policies to address the problem of rural-urban migration. With major cities becoming ever larger, Can believes that rural development and lower urban/rural salary differentials are necessary to encourage rural people to stay in the countryside. Programs of rural development would include rural credit, commercial income-generating opportunities, provision of water, and development of transportation infrastructure to link rural villages to urban markets. All of these should improve rural conditions and thereby encourage rural residents to remain where they are.

Many of the programs indicated above are receiving help from the United Nation’s children’s program (UNICEF), the World Bank, the United Nations Development Program, and various non-government organizations. According to Can and Quy, "Internal efforts combined with this external assistance are creating favorable conditions for the implementation of sustainable development in Vietnam."

In addition to these speakers, there were also lectures on Vietnam’s art, music, and ethnic minorities. There were also very informative visits to the Peace Village, an institution where children affected by dioxin (Agent Orange) are given care and medical treatment, plus several museums and other site visits. Also, a meeting with a representative of the Vietnam Office of the World Bank proved very informative about Vietnam’s programs of structural reform.

Like Vietnam, Ghana is one of the poorest countries of the world. Its 1998 GNP per capita of $390 places it well below Chile and slightly above Vietnam. Like Vietnam, the country is heavily agricultural, and most workers are in the agricultural sector. Subsistence food consists of maize, plantains, rice, yams, millet, cassava, and peanuts. Cash crops include cocoa and cocoa products (representing forty-five percent of all exports), timber products, coconut and other palm products, shea nuts, and coffee. Despite the significance of the agricultural sector, Ghana’s industrial base is relatively advanced, at least in comparison with the poorest of the sub-Saharan African countries. Import-substitution industries include textiles, steel, tires, oil refining, simple consumer goods, and vehicle assembly. As in Chile and Vietnam, the people of Ghana are energetic and entrepreneurial, and the nation is struggling to develop under a package of structural reforms.

Like Chile, Ghana is a country with inconsistencies and inequality. Unlike Chile, Ghana’s poor sit side by side of the rich. Extravagant homes are built next to squalid slums. Exquisite hotels stand next to the homeless. Poor children who should be in school accost wealthy tourists in an effort to sell some items for money. The same entrepreneurial spirit that dominates the Chilean and Vietnamese economies holds true for Ghana as well.

Ghana’s history is a fascinating drama of alternating economic policies. Portuguese traders arrived in present day Ghana in 1471, exploiting the area’s gold and establishing headquarters for their slave trade. Great Britain took control of Ghana is 1874, and ruled the colony until 1957. At this time of independence, Ghana was the richest country in sub-Saharan Africa and had the most educated population. Kwame Nkrumah was the nation’s leader for the nine year time period after independence, and he moved the economy away from a relatively market-oriented one to a socialist one with state ownership, import substitution policies, and export taxes. Nkrumah was overthrown in a military coup in 1966 and the nation’s economy alternated between liberalized and socialist policies until a military coup in 1979 once again changed the economic and political situation in Ghana. Under the leadership of Flight Lieutenant Jerry Rawlings, the nation turned to liberalized policies by December 1981, with the first structural adjustment program introduced in 1983 and followed by a second adjustment program in 1986. The structural reforms continue today, and may or may not be affected by the new elections for President to be held in the year 2000. ¹¹

The 1998 faculty development seminar, entitled "Ghana and the Dynamics of Economic Development", was hosted by the University of Ghana in Legon under the leadership of Dr. Michael Williams. Dr. Williams is the Resident Director of the Council Study Center at the University of Ghana. A major portion of the seminar focused on Ghana’s structural reforms.¹²

Dr. Kwesi Jonah and Dr. J.R.A. Ayee of the Department of Political Science and Dr. Osei Barfour of the Department of Economics, all at the University of Ghana, are experts in Ghana’s structural reform. According to Dr. Jonah, the Ghanaian economy was in a state of total collapse just prior to the structural reforms. Productive activity had largely ceased. Farmers had plowed under their cocoa trees and produced for subsistence instead of cash. Exports, including cocoa, plummeted. Timber production stopped entirely, since equipment was no longer available to cut and transport the trees. Raw materials, spare parts, and machinery were unavailable for manufacturing production. Both locally produced and imported consumer goods and petroleum were scarce. There were huge budget deficits and soaring inflation rates. Unemployment and underemployment were high. There was a thriving black market for dollars and a very high debt service ratio. Ghana stopped payment on its debt at the height of the crisis. There was literally no direct foreign investment and very limited foreign aid. Not just the economy, but the entire state of affairs in Ghana had collapsed. The state no longer had control and illegal activities freely flourished. Most of the causes of the crisis were economic, including huge numbers of largely inefficient SOEs, a government unable to collect taxes, poor infrastructure, price controls, an over-valued currency, and few incentives for agricultural cash crop production. The time was ripe for reform.

Structural Adjustment

According to Dr. Jonah, the objectives of Ghana’s structural adjustment policies were as follows:

Among the most important of the reforms have been the resumption of production incentives and the expansion of exports resulting from liberalized prices. Dr. Jonah reported that administered prices on eighty-three different goods were removed during the first phase of reform, and prices of many agricultural products are now determined in the free market. Also, Ghana’s currency (the cedi) was devalued and became fully convertible in several steps from 1983–1990. By the second phase of reform, Ghanaian citizens were allowed to exchange currency legally, thereby destroying the previously thriving black market.

Conspicuously absent from price reform is Ghana’s cocoa prices. Cocoa prices continue to be administered, and are well below market levels. Furthermore, fertilizer price increases have been relatively larger than food price increases, creating difficulties for farmers.

Privatization has also been an important aspect of Ghana’s structural reform. Dr. K.A. Tutu, an economist at the University of Ghana, is an expert on Ghana’s privatization process. According to Dr. Tutu, privatization was initiated during the first phase of structural reforms, and was expanded to a large number of SOEs during the second phase. Still, by the beginning of the Public Enterprise Reform Project in 1988, Ghana had about 329 SOEs, employing over 240,000 people. To date, a little over 170 of these 329 enterprises have been privatized. Almost all of the remaining SOEs are slated for privatization.

As a result of the privatization, employment in Ghana has fallen by an average of 25 percent. Many of the SOEs have been purchased by foreigners, and many Ghanaians feel that given the stage of Ghana’s social and economic development, basic enterprises (such as water, electricity, roads, railways, airports, harbors, and telecommunications) should not be privatized.

Some of the privatized enterprises remain extremely inefficient. For example, Ghana Airways is now privatized, but has had a reputation for altering its schedule, making additional stops, and ignoring scheduled stops. The faculty seminar participants experienced a not uncommon four-hour delay going one way on Ghana Airways, and a forty-hour delay going the other way!

Dr. Nana Apt is the Chair and Senior Lecturer of the Department of Sociology at the University of Ghana. According to Dr. Apt, Ghana’s social problems include ethnic and religious conflicts, family breakdown (including alcoholism, drug abuse, and poor mental and physical health), and economic deprivation (especially among street and abandoned children, the homeless, and the aged). She argues that women, who are "the movers and doers and hard-workers" of society have poor mental health as a result of their lack of control over the income derived from their labor. Dr. Apt is critical of the World Bank, arguing that "Bank policies have not been doing enough to reduce poverty in Ghana". She is also concerned that the structural reforms that have created fees for hospitalization and education erode the well being of the people.

Agriculture and the Environment

Dr. K.A. Senah of the Department of Sociology at the University of Ghana is very knowledgeable about health and education, as well as environmental issues and problems in agriculture. He is concerned about the below-market prices for some of Ghana’s agricultural products, including cocoa, and the fact that farmers have limited access to markets and information, must pay exorbitant interest rates to money lenders, and face chaos in land ownership due to simultaneous multiple forms of ownership. He is also very concerned about problems of deforestation and declining soil fertility, which he believes result from over-grazing, slash and burn farming techniques, commercial timber operations, and urban use of charcoal. He argues that further timber processing, rather than simply export of raw timber, would benefit Ghana and reduce the need for indiscriminant deforestation.

In addition to hearing many other important lectures, seminar participants engaged in tours of the castles of Cape Coast and Elmina, as well as other site visits. I am most grateful to the many Ghanaian urban residents who allowed us into their homes and the many residents of rural villages who allowed me to interview them and learn so much more about their every day lives and lifestyles.

COMPARATIVE ANALYSIS

Against the backdrop of the seminar experiences, we must now assess the impact of reform through a comparative analysis of data for Chile, Vietnam, and Ghana. It is important to assess both the economic and socioeconomic effects of structural reform, since the economic results do not by themselves measure the final impact of reform on the lives of people. Indeed, if people are not the beneficiaries of structural reform and development, then the purposes of these become irrelevant.

Macroeconomic Indicators

Table 1 compares the three countries in terms of current macro-economic indicators. The first sets of data in Table 1 simply reaffirm that GNP per capita is highest in Chile and lowest in Vietnam and Ghana, and that Vietnam and Ghana are heavily agricultural. ¹³ As shares of gross domestic product (GDP), gross domestic investment and gross domestic saving are relatively high in Chile and Vietnam, and relatively low in Ghana. Exports as a share of GDP are very high in Vietnam, and relatively low in the two other countries. While Vietnam’s debt is relatively high, its debt service ratio (debt service relative to export earnings), which is the best measure of debt burden, is very low. The debt service ratios in Chile and Ghana are relatively high.

The data below can be summarized by noting that Ghana tends to be the worse off of the three countries in terms of investment, saving, and international trade and finance. Vietnam seems to be doing better than its GNP per capita would suggest, whereas Chile may be doing somewhat worse than expected.

Table 1. Comparative Macroeconomic Indicators, 1998*
Annual Percentage Values Chile Vietnam Ghana

GNP per capita,

$ 4,810,330,390

Agricultural Output/GDP

8 26 37 %

Industrial Output/GDP

35 31 25 %

Gross Domestic Investment/GDP

27 29 23 %

Gross Domestic Saving/GDP

22 21 13 %

Exports of Goods and Services/GDP

25 46 27 %

External Debt ($ billion), 1997

31.4 21.6 6.0 %

Debt Service Ratio, 1995

25.7 5.2 23.1 %

* Most recently available. If not 1998, the year is shown separately.

Source: World Bank, World Development Report (NY: Oxford University Press, selected issues)

Table 2 shows the effects of reform more clearly by displaying the average annual growth rates of macroeconomic variables over the two time periods 1980–1990 and 1990–1998. While economic growth (growth in GDP) was solid in the earlier time period for all three countries, it was particularly high since 1990 in Chile and Vietnam. This is especially remarkable for Vietnam, given the continued trade limitations with the U.S., the loss of Soviet assistance since the end of the Cold War, and the Asian economic crisis that has created havoc throughout the Asian economies. Industrial growth in Vietnam is particularly note-worthy over the recent time period. Export growth is now more rapid in Chile and Ghana, and is remarkable in Vietnam. Finally, while all three countries exhibit inflation rates in or near the double digits (see growth in the GDP deflator), the Vietnam data inflation reductions are nothing short of amazing.

To summarize, we can say that once again, Vietnam appears to be performing particularly well in terms of the macroeconomic variable growth rates, with Chile and Ghana merely doing well.

Table 2. Comparative Average Annual Growth Rates of Macroeconomic Indicators, 1980–1990 and 1990–1997

Average Annual Rate of Growth of: 1980-1990 1990-1998

Source: World Bank, World Development Report (NY: Oxford University Press, selected issues)

Socioeconomic Indicators

Table 3 displays socioeconomic indicators for the three countries. We see from the data that Chile and Vietnam have very high literacy rates, for women as well as men. This comes as no surprise for Chile, given its high level of GNP per capita. It is very unusual, however, for a country as poor as Vietnam to have such high literacy rates, and especially such high literacy rates for women. The very low literacy rates we see for Ghana are much more typical for very low-income countries, particularly those countries in sub-Saharan Africa. It is troubling to witness such low literacy rates for Ghana, given the very high levels of education reported in the past. Also, many people in Vietnam are concerned that school fees and other results of structural reforms may reduce literacy rates in years to come.

The life expectancy that we see in Chile is probably lower than we would expect of a relatively high-income country. The low life expectancy in Ghana is better than most sub-Saharan African countries, and as with literacy rates, Vietnam has a relatively high life expectancy. Once again, many Vietnamese people are concerned that health care fees resulting from structural reforms may ultimately harm the health of the nation, and result in lower life expectancies and higher mortality rates.

Table 3. Comparative Socioeconomic Indicators, most recent available year; 1980, 1990, and 1997; and percentage change from 1980–1997.

Country

Adult Literacy Rate (%)

Adult Female Literacy Rate (%)

Life Expectancy at Birth

Chile

Ghana

Vietnam

1980 1997 1980–97 change

Country

Under-Five Mortality Rate (per 1,000 births)

Fertility Rate

Gini Coefficient **

Chile

35 13 -63%

2.8 2.4 -14%

(1994) 56.5

Ghana

157 102 -35%

6.5 4.9 -25%

(1997) 32.7

Vietnam

105 40 -62%

5.0 2.4 -52%

(1993) 35.7

* Most recent available year, 1996 or 1997.
** Based on income for Chile, expenditure for Vietnam and Ghana, most recent available year.

Source: World Bank, or calculations based on World Bank, World Development Report (NY: Oxford University Press, selected issues)

In terms of child (under-five) mortality rates, the numbers are relatively low for Chile, as one would expect, and relatively high for Ghana, as one would also expect. Once again, Vietnam has a much lower child mortality rate than is typical for such low-income countries. Percentage-wise, the greatest declines over 1980 to 1997 are in Chile and Vietnam.

Also, we see that while fertility rates are still high in Ghana (in absolute as well as relative terms), the Vietnamese fertility rates have declined by the largest percentage among the three countries since 1980. The fertility rates in Vietnam and Chile are both relatively low as of 1997.

Finally, the Gini coefficient is a measure of income distribution, ranging from zero to 100. While not directly comparable between countries, the Gini coefficient for Chile is very high, indicating a very unequal income distribution. The Gini coefficients for Vietnam and Ghana are relatively low indicating a much more equal income distribution. (For comparison, the Gini coefficient for the United States is 40.1.) The Gini coefficients indicate one reason why living standards are lower than one would expect in the relatively high-income country of Chile, while living standards are higher than one would expect in the other two countries, particularly Vietnam. At the same time, many people in Ghana and Vietnam are concerned that the structural reforms may increase income inequality in their countries, with the rural and the indigenous people likely becoming worse off.

Based on the research and seminar experiences, I’ve arrived at several conclusions. But first and foremost, I’ve learned that it is one thing to read about structural reforms and study the data, and it is quite another thing to engage in discussion with the foremost experts as well as the everyday citizens of the country under study. Whereas the former stimulates the mind of the researcher, the sights and sounds of the people of a nation touch the heart.