Under Structural Adjustment, developing countries had been required to subject their economies to competition from international trade in exchange for loans to their governments. After the Washington Consensus was deemed to have failed, Poverty Reduction Strategies were introduced as a way of managing debt relief, addressing social objectives, and giving countries stronger 'ownership' over their recovery policies. But in what ways, regarding trade, do PRSPs and the succeeding loans improve on the preceding arrangements? This book reviews the trade and poverty content of PRSPs and the policy conditions of the lending arrangements which followed for seventeen countries. It concludes that whereas loans almost invariably still establish conditions for trade liberalisation, PRSPs, with few exceptions, neglect trade policy (tending to focus on expenditure rather than production and economic growth). There is thus asymmetry between these innovatory poverty-focused policies and IFI loan financing. The report recommends to redress this imbalance by improving the trade content of the poverty analysis in PRSPs, and for donors and lenders to address supply-side policies relating to trade infrastructure.
Adrian Hewitt and Ian Gillson