Economic Reform and Development

Abstract: Development is the primary objective of economic reforms. There has been varying levels of development in Asia, Latin America and Africa from comic reforms. Asian countries like China and India have experienced significant developments. Latin American countries have benefited from trade liberalization, while African countries have shown sign of growth in recent years.

Economic reforms are implemented with the primary objective of attaining development. Third world countries have implemented economic reforms with the intention of achieving fast economic growth. The success of economic reforms thus depends on the development the reforming country can achieve. Development however consists of several parameters. While on the one hand economic growth in terms of GDP growth rates, per capita income, etc is an the most important parameter, other issues like social development, access to goods, services and information, standard of living, availability of basic facilities like health care, education, etc are all important attributes to development. Generally, these factors are all interrelated and successful attainment of one or some leads to the attainment of others in due course and over time. Economic growth, in terms of GDP, however remains the primary determinant.

Third world countries in Asia, Latin America and Africa have attained varying levels of development from economic reforms.

Economic reforms and development in Asia

The Asian countries have registered significant growth with the implementation of economic reforms. Most remarkable developments have been experienced in China and India.

Developments in China: China has been the most successful of all countries in terms of development from economic reforms. During the reform period of 1979 to 2005, China has registered an average GDP growth rate of 9.6%. In 2002, per capita GDP in China neared US $1000. These are clear indications that China is at the crossroads of a new period of economic growth. There are speculations that China, in the near future may assume the status of the largest economy of the world.

Developments in India: India is another nation to have registered significant development from the implementation of economic reforms. Indian GDP has grown by an average of 7-8% per annum. More than 100 billion US dollars has accrued to India's foreign exchange reserves. Moreover since 2000, India has registered a surplus in current account, which previously used to be in deficit. A significant achievement in terms of development has been reduction of poverty in India. Economic reforms have enabled the process of bringing a significant part of the Indian population out of poverty.

Economic reforms and development in Latin America

In Latin America, major developments from economic reform have come from liberalization of trade. Moreover with private investment in banking and growth of the stock markets, financial development has occurred too. However lack of reforms in labor markets has been a constraint to development in Latin America. The Latin American economies still have a long way to go in comparison with the developments in Asia.

Economic reforms and development in Africa

Although African countries have lagged behind in reaping the benefits of economic reforms, yet significant development has been made in recent years, after the onset of the 21st century. In Sub-Saharan Africa, the economic reform programs were instituted with the aid of International Financial Institutions (IFIs), 5.1 % growth in GDP has been registered in 2004. One-third of the non oil producing African countries, including countries like Ethiopia, Gambia, etc, have grown by more than 5 % in terms of average real GDP. Per capita real GDP has grown by 2.8%. Countries like Uganda, Sierra Leone, Tanzania and Ghana have continued their high growth.