Industrial performance: some stylized facts

Roughly a decade ago, external shocks began to create major adjustment problems for developing countries. In many cases these problems were exacerbated by excessive public spending, overvalued exchange rates, and various stopgap policies designed to maintain macroeconomic stability or external balance. By the early 1980s some combination of adverse external shocks and unwise domestic policies had placed a number of countries on the brink of economic crisis. Either voluntarily or as a condition for external assistance, many countries began a process of policy reform. The new policies, which amounted largely to devaluation and trade promotion, had two basic objectives: to restore stability and external balance without distortionary interventions; and to lay the foundation for a new era of sustained growth. This chapter analyzes the performance of the manufacturing sector during the adjustment process in a sample of 15 countries that were heavily involved in adjustment programs and had received adjustment loans from the World Bank. There are comments by M. Nishimizu on pp 187-190. -from Author