ABSTRACT
The debate surrounding the effectiveness of World Bank/IMF structural adjustment programmes in sub-Saharan Africa is usually constructed around econometric analyses which attempt to measure the effect of these programmes on GDP growth (see, for example, World Bank, 1995; Mosley, 1996). However, a large part of most of these countries’ GDP is derived from the agricultural sector. The original World Bank (1981) report (the ‘Berg report’), which led to the emergence of economic liberalisation programmes, laid considerable emphasis on the importance of improving the performance of the agricultural sector, and especially of its export cash crop component. The key factors that were expected to contribute to this improvement were an increase in producer prices and devaluation of an overvalued exchange rate. The former would give appropriate incentives to producers to increase marketed output of these tradables, while the latter would allow marketing agents to increase the share of the export parity price going to producers while at the same time covering their marketing costs. Increased tradables output would lead to an increase in export revenue (and in some case a reduction in the food import bill) and so help to alleviate balance of payments deficits. Recent work on supply response has confirmed that agricultural producers respond positively to increases in producer prices and that they react positively to changes in relative prices between tradables and non-tradables (see McKay et al., 1999). Similarly, recent work on price transmission has confirmed the importance of passing on to farmers a higher proportion of the export parity price (Lloyd et al., 1999).
