Africa Growth Initiative at Brookings 3
spending on subsidies would support stronger economic growth. Several African countries adopted
these market-oriented policies beginning in the 1980s. The number of reform adopters increased
further following the introduction of the Highly Indebted Poor Countries (HIPC) initiative by the World
Bank and IMF in the mid-1990s. The HIPC program provided debt relief to countries with
‘unsustainable’ debt provided they enacted many of the SAP policies (Onyekwena and Ekeruche,
2019). It has been over three decades since these policies were first adopted across Africa and other
developing countries, yet the evidence of their impact on economic outcomes has not been
conclusively established in the literature.
Most early literature finds that the policies failed to improve economic conditions in African countries
for several reasons centered on the failure to account for political economy within countries, and the
politics of conditionality and reforms that did not adequately emphasize the role of local ownership in
shaping domestic economic policy (Ekpo, 1992; Easterly, 2000; Due and Gladwin, 1991; Birdsall,
Caicedo, and De la Torre, 2010; Adedeji, 1999; Mkandawire and Olukoshi, 1995; Rodrik, 2006;
Stiglitz, 2005). Other studies attribute the failures of the reforms to increases in domestic inflation
and its adverse effect on real incomes and well-being post-reform (Due and Gladwin, 1991; Ekpo,
1992). The negative effects of the reforms were also disproportionately felt by rural farmers, especially
women working in food crop production. Ironically, while IFIs were advocating for the removal of
agricultural subsidies in Africa, the advanced economies, including the United States and OECD
countries, heavily subsidized agricultural production making it difficult for African farmers to compete
(Due and Gladwin, 1991; Mkandawire and Olukoshi, 1995). The outcome of these market-oriented
reforms was increased unemployment and socio-political unrest in several African countries in the
1980s and 1990s (Mkandawire and Olukoshi, 1995; Due and Gladwin, 1991; Ihonvbere, 1993; Elson,
1995).
A more recent literature has highlighted that the reforms were successful in improving economic
growth, particularly when policymakers had the state capacity to implement them (Prati, Onorato, and
Papageorgiou, 2013; Grier and Grier, 2020; Dollar and Svensson, 2000). Taken at face value, these
studies suggest that the de facto reductions in state capacity required by some reforms may have
contributed to their failure in some countries. For instance, the ratio of civil servants to the population
in all sub-Sahara Africa (SSA) fell to 1 percent in 1996, lower than the 3 percent for other developing
countries and much lower than the OECD average of 7 percent (Sender, 1999). Without a motivated,
well-equipped, civil service, proper implementation and regulation of these reforms was often
incredibly difficult.
Over 30 years after the initial adoption of reforms in African countries, we re-examine the relationship
between reform adoption and economic performance. The predictions of the Washington Consensus
policies amount to the following testable hypotheses: (i) First, countries that implemented the market-
oriented reforms will experience better economic outcomes in the following years compared to the
years preceding the reforms; and (ii) second, countries that implemented reforms will perform better
than the countries that did not. Since the early 2000s, African economies have experienced
remarkable improvement in economic growth, with median country real GDP per capita growth rising
from 0.2 percent per year on average in the 1980s and 1990s, when many of the reforms were first
implemented, to 1.6 percent over 2000 to 2019 as shown in Figure 1. The reforms also aimed to
achieve lower and more stable inflation rates, partly through improved fiscal discipline. The rate of
inflation in the region declined from double digits in the 1980s and 1990s to stabilize at around 5
percent in the past two decades (Figure 2), suggesting that inflation stabilization has been relatively
successful in many African countries. These observations raise the question of whether the reforms of