The IMF Research Bulletin, a quarterly publication, selectively summarizes research and analytical work done by various departments at the IMF, and also provides a listing of research documents and other research-related activities, including conferences and seminars. The Bulletin is intended to serve as a summary guide to research done at the IMF on various topics, and to provide a better perspective on the analytical underpinnings of the IMF’s operational work.


The IMF Research Bulletin, a quarterly publication, selectively summarizes research and analytical work done by various departments at the IMF, and also provides a listing of research documents and other research-related activities, including conferences and seminars. The Bulletin is intended to serve as a summary guide to research done at the IMF on various topics, and to provide a better perspective on the analytical underpinnings of the IMF’s operational work.

Arvind Subramanian

Raising economic growth in sub-Saharan Africa and the role of trade in achieving this objective have been important areas of research at the IMF. While the focus has mainly been on the policy determinants of growth, many studies have also explored the contributions of good governance, strong institutions, and the external environment. On globalization, the role of regional integration and the extent to which Africa has integrated with the world economy are two key issues in research done at the IMF.

Raising economic growth so that countries can attain higher standards of living and reduce poverty remains the central policy challenge for sub-Saharan Africa. And facilitating the attainment of this objective through rapid trade integration, which is one of the most important vehicles for poorer African countries to “catch up” with their richer partners, is another related challenge.

The question of why growth has been slow in Africa has been extensively studied by numerous academics on the basis of cross-country growth regressions.1 The causes fall into four broad categories: (1) adverse inheritance of conditions—geographic, social, and human capital; (2) poor macroeconomic and structural reform policies; (3) external and internal shocks; and (4) weak domestic institutions and governance. Unsurprisingly, research at the IMF has focused on the importance of the policy determinants for growth, although increasingly it has extended to nonpolicy factors as well. Ghura and Hadjimichael (1996) find that per capita real GDP growth in Africa is boosted by increases in investment, particularly private investment, and human capital, as well as by policies that promote macroeconomic stability and external competitiveness on a sustained basis.2 These results are confirmed with an extended dataset by Calamitsis and others (1999).3 Hernández-Catá (2000) emphasizes the need to deal with three types of risk (macroeconomic instability, nonenforcement of contracts, and armed conflicts) that reduce investment and hinder the prospects for sustained growth.4 Leite and Weidman (1999) identify corruption as an explanation for slow growth in resource-rich economies, but conclude that neither the degree of corruption nor the growth process is different in Africa than else-where.5

A substantial portion of the research on growth-related issues has been at the country level.6 A study on Cameroon by Ghura (1997) confirms the conclusions of Ghura and Hadjimichael (1996) at the aggregate level. Jonsson and Subramanian (2001) use time-series and cross-sectional (across industries) methods to demonstrate the sizable gains to total factor productivity growth from trade liberalization in South Africa. Sacerdoti, Brunschwig, and Tang (1998) build a time series for human capital for eight West African countries, using data on school enrollment and on wage structure by education attainment, and show that schooling in itself is not sufficient to generate growth, and that investment in education must be supported by an environment favorable to the productive application of skills. For Ghana, Bulíř (1998) reports that policies that provide an incentive for smuggling account for a substantial share of output variations in the cocoa sector.

A number of studies emphasize the impact on growth of factors other than domestic policies.7 Fanizza (2001) provides evidence that aid, by financing increased domestic government spending (particularly consumption) and by not facilitating policy adjustment, failed to favorably affect growth in Malawi. Examining the Mauritian growth experience, Subramanian and Roy (2001) conclude that a combination of strong domestic institutions and idiosyncratic factors, particularly its diversity, rather than its unorthodox form of outward orientation, accounts for the country’s impressive growth record.

The AIDS epidemic sweeping Africa has prompted research on its impact on growth.8 MacFarlan and Sgherri (2001) use simulation techniques to show that AIDS is likely to reduce trend GDP growth by about 3–4 percentage points per year in Botswana. Haacker (2001), based on a neoclassical growth model, estimates that the levels of GDP per capita in Southern Africa will decline consider-ably—from 5 percent for Mozambique to 13 percent for Botswana—over a 20-year period, owing mainly to a decline in the supply of human capital. For South Africa, real GDP could be as much as 8–17 percent below the level attained under a no-HIV/AIDS scenario.

IMF Staff Papers

Volume 48, Issue 2

Product Variety and Economic Growth: Empirical Evidence for the OECD Countries

Michael Funke

Inflation, Money Demand, and Purchasing Power Parity in South Africa

Gunnar Jonsson

Exchange Rate Movements and Tradable Goods Prices in East Asia: An Analysis Based on Japanese Customs Data, 1988–98

Shinji Takagi and Yushi Yoshida

Military Spending, the Peace Dividend, and Fiscal Adjustment

Hamid Davoodi, Benedict Clements, Jerald Schiff, and Peter Debaere

Inflation Targeting in Korea: An Empirical Exploration

Alexander W. Hoffmaister

Can Currency Demand be Stable Under a Financial Crisis: The Case of Mexico

May Khamis and Alfredo M. Leone

Sectoral Macroeconomic Interdependence: Evidence for Latin America, East Asia, and Europe

Norman Loayza, Humberto Lopez, and Angel Ubide

The Complier Pays Principle: The Limits of Fiscal Approaches Towards Sustainable Forest Management

Luc Leruth, Remi Paris, and Ivan Ruzicka

IMF Staff Papers, the IMF’s scholarly journal, edited by Robert Flood, publishes selected high-quality research produced by IMF staff and invited guests on a variety of topics of interest to a broad audience, including academics and policymakers in IMF member countries. The papers selected for publication in the journal are subject to a rigorous review process using both internal and external referees. The journal and its contents (including an archive of articles from past issues) are available online at the Research at the IMF website at

Reflecting the importance of trade integration as a vehicle for accelerating growth, African countries undertook significant trade liberalization during the 1990s both at the national and regional levels.9 In fact, the proliferation of regional integration initiatives in Africa has led to a greater focus on making regional integration consistent with and supportive of broad-based liberalization. Subramanian and others (2000) analyze trade developments in eastern and southern Africa, highlighting their macroeconomic aspects and the particular challenges posed by the multiplicity of regional integration efforts. Hernández-Catá and others (1998) describe trade policy developments for the countries that have come together to form the Western Africa Economic and Monetary Union (WAEMU). Masson and Pattillo (2001) evaluate the plans for monetary union within the Economic Community of Western African States (ECOWAS) and stress the importance of achieving convergence to low inflation (as already achieved in WAEMU) in moving toward the goal of monetary union.

Whether trade liberalization has led to Africa’s integration with the world economy is the subject of two papers, both based on a gravity model of trade.10 Coe and Hoffmaister (1999) analyze trade between developing countries and their richer industrial-country partners and conclude that the magnitude of Africa’s trade is not different from that of the average developing country after controlling for the standard determinants of trade (income, transport cost, and size). Subramanian and Tamirisa (2001), using data on trade flows between and within developing and industrial countries, find that Africa does appear to be disengaging from the world economy, a finding that is especially strong for some francophone countries in the region and this was particularly evident during the latter half of the 1990s. Bayoumi, Coe, and Helpman (1999) obtain simulation results indicating that Africa has not benefited from R&D spillovers to the extent that developing countries in other regions have.11

Books from the IMF

A Decade of Transition: Achievements and Challenges

Oleh Havrylyshyn and Saleh Nsouli, Editors

This volume contains the proceedings of a conference, organized by the IMF, to review the key lessons learned from a decade of experiences with economic transition. In February 1999, the IMF brought together senior government officials from transition countries and experts from academia and international institutions to explore the key elements of the transition process: macroeconomic stabilization, growth recovery, privatization, banking reform, income inequality, and the changing role of government.

Four main lessons are drawn. First, while macroeconomic stabilization has largely been attained, progress on structural and institutional reform lags behind—to a considerable extent in some countries. Second, privatization has, in some cases, led to inequity and undesirable anticompetitive consequences, but, on balance, economic performance is better than what occurs under state ownership. Third, sustained “success” and economic growth requires going beyond stabilization to managing the structural-institutional elements. Fourth, in dealing with these elements, more emphasis needs to be placed on accelerating institutional development; instilling a “rule-of-law” climate; addressing egregious income inequalities; and dealing firmly with corruption and commercial, vested interests.

Full-text versions (or, in some cases, detailed summaries) of books published the IMF are available online at the Research at the IMF website at Follow the link to IMF Publications.


See, for example, J. Sachs and A. Warner, “Sources of Slow Growth in African Economies,” Journal of African Economies, Vol. 6, pp. 335–76, 1997; P. Collier and W. Gunning, “Africa’s Economic Performance,” Journal of Economic Literature, Vol. 37, pp. 64–111, 1999; and W. Easterly and R. Levine, “Africa’s Growth Tragedy: Policies and Ethnic Divisions,” Quarterly Journal of Economics, Vol. 112, pp. 1203–50, 1997.


D. Ghura, and M. Hadjimichael, “Growth in Sub-Saharan Africa,” IMF Staff Papers, Vol. 43, No. 3, 1996.


E. Calamitsis, A. Basu, and D. Ghura, “Growth in Sub-Saharan Africa: An Empirical Analysis and Policy Implications,” IMF Working Paper 99/51, 1999.


E. Hernández-Catá, “Raising Growth and Investment in Sub-Saharan Africa: What Can be Done?” International Economic Policy Review, Vol. 2, pp. 3–15, 2000.


C. A. Leite and J. Weidman, “Does Mother Nature Corrupt?: Natural Resources, Corruption and Economic Growth,” IMF Working Paper 99/85, 1999.


D. Ghura, “Private Investment and Endogenous Growth: Evidence from Cameroon,” IMF Working Paper 97/165, 1997; G. Jonsson, and A. Subramanian, “Dynamic Gains from Trade: Evidence from South Africa,” IMF Staff Papers, Vol. 48, No. 1, 2001; E. Sacerdoti, S. Brunschwig, and J. Tang, “The Impact of Human Capital on Growth: Evidence from West Africa,” IMF Working Paper 98/162, 1998; Z. Brixiová, A. Bulíř, and J. Comenetz, “The Gender Gap in Education in Eritrea in 1991–98: A Missed Opportunity?” forthcoming IMF Working Paper, 2001; and A. Bulir, “The Price Incentive to Smuggle and Cocoa Supply in Ghana, 1950–96,” IMF Working Paper 98/88, 1998.


D. Fanizza, “Foreign Aid, Macroeconomic Stabilization and Growth in Malawi,” forthcoming IMF Working Paper, 2001; and A. Subramanian and D. Roy, “Who Can Explain the Mauritian Miracle: Meade, Romer, Sachs, or Rodrik?” forthcoming IMF Working Paper, 2001 (also forthcoming in Analytical Development Narratives, ed. by D. Rodrik, Princeton: Princeton University Press).


M. MacFarlan, and S. Sgherri, “The Macroeconomic Impact of HIV/AIDS in Botswana,” IMF Working Paper 01/80, 2001; and M. Haacker, “The Economic Consequences of HIV/AIDS in Southern Africa,” forthcoming IMF Working Paper, 2001.


A. Subramanian, E. Gelbard, R. Harmsen, K. Elborgh-Woytek, and P. Nagy, “Trade and Trade Policies in Eastern and Southern Africa,” IMF Occasional Paper No. 196, 2000; E. Hernández-Catá, C. Francois, P. Masson, P. Bouvier, P. Deroz, D. Desruelle, and A. Vamvakidis, “The West African Economic and Monetary Union: Recent Developments and Policy Issues,” IMF Occasional Paper No. 168, 1998; and P. Masson, and C. Pattillo, “Monetary Union in West Africa (ECOWAS): Is It Desirable and How Could It Be Achieved?” IMF Occasional Paper No. 204, 2001.


D. Coe and A. Hoffmaister, “North-South Trade: Is Africa Unusual?” Journal of African Economies, Vol. 8, No. 2, pp. 228–56, 1999; and A. Subramanian and N. Tamirisa, “Africa’s Trade Revisited,” IMF Working Paper 01/33, 2001.


T. Bayoumi, D. Coe, and E. Helpman, “R&D Spillovers and Global Growth,” Journal of International Economics, Vol. 47, pp. 399–428, 1999.

Books from the IMF

Legal Aspects of Regulatory Treatment of Banks in Distress

Tobias M. C. Asser

This new book discusses banks in distress—defined as banks that are not in compliance with prudential banking law—and, specifically, legal aspects of their regulatory treatment. The work is based on a comparative study of laws in selected countries with banking legislation that may serve as a standard for treating banks in distress. Because the book focuses on the legal aspects, it addresses only those banking and economic policy issues required for a proper understanding of banking law or the legal strategies, procedures, and practices that have evolved in the treatment of banking problems.

The starting-off point of the study is where prudential enforcement gives way to corrective action. It is organized with progression from noncom-pliance with prudential requirements and early signs of financial distress to insolvency; from relatively simple corrective measures to receivership, culminating in revocation of the bank’s operating license and closure of the bank. Although the book focuses on banks, many of the conclusions and recommendations are also relevant for nonbank financial institutions.

Full-text versions (or, in some cases, detailed summaries) of books published the IMF are available online at the Research at the IMF website at Follow the link to IMF Publications.

Call for Papers IMF Conference on Macroeconomic Policies and Poverty Reduction

The International Monetary Fund is organizing a conference on Macroeconomic Policies and Poverty Reduction in Washington DC on March 14–15, 2002. Research papers of operational relevance for the IMF are being sought on topics at the intersection of macroeconomics and poverty. Suggested topics include:

1. Macroeconomic Shocks and Poverty—the nature of shocks likely to hurt the poor, their mechanisms of transmission, and the role of country risk management in mitigating their incidence and persistent effects.

2. Fiscal Policy and Poverty—the stance, composition, and rules relevant for poverty reduction.

3. Growth, Macroeconomic Stability, and Poverty—the growth policies that are beneficial to the poor, and the channels through which inflation, output, and employment trends and cycles may have an impact on inequality and poverty.

4. Foreign Aid, Debt Reduction, Official Flows, and Private Flows—the role of foreign aid and debt reduction in poverty reduction, including the cyclical behavior of aid and the observed relationships between private and official flows.

5. Political Sustainability of Reform—the implications of a country’s income distribution pattern for sustainable reform.

The intention is to publish the selected papers in a special issue of a scholarly journal. Paper proposals (of about 1000–2000 words) should be submitted to macro& by September 15, 2001.