Overview

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The Great Debate in Economics on the role of markets and government in economic development was rekindled at the turn of the millennium as empirical results from structural adjustment programs were unveiled and globalization presented uncertainties. While the debate has evolved from the simple dichotomy of state versus markets that occupied early 20th century economists, still, no consensus currently exists on the ideal mix that can maximize the synergy between the two while minimizing the rivalry. The collapse of the former Soviet Union and its allies, mixed results from structural adjustment programs (SAPs), the raise and demise of the East Asian miracle, and the challenges and opportunities of globalization have added more fuel to that debate. Focusing on poverty alleviation in Sub-Saharan Africa, this chapter contributes to the discourse by examining two key questions: (1) What explains the success and failure of the World Bank and International Monetary Fund initiated economic structural adjustment programs? (2) What has been the impact of globalization on less developed countries?

This chapter is organized as follows: First, we highlight the key elements of the markets versus governments debate and how the debate shaped global political economies (and vice versa). Next we discuss the SAPs of the 1980s and 1990s by assessing the key factors that contributed to their successes and failures. Our discussion of globalization focuses on its economic impacts on less developed countries (LDCs). We then draw some strategic lessons from those two market-led phenomena to...