Crisis, Adjustment and Growth in Uganda: A Study of Adaptation in an African Economy

262 Pages·1999·29.61 MB·English

by  Arne Bigsten

STUDIES ONTHE AFRICANECONOMIES
General Editors: Paul CollierandJan Willem Gunning
Publishedinassociationwith theCentrefor the Study ofAfrican
Economies,UniversityofOxford
EditorialBoard:
Paul Collier, Director,DevelopmentResearchGroup, WorldBank, and
ProfessorofEconomics, UniversityofOxford; Jan Willem Gunning,
ProfessorofEconomics, UniversityofOxford, andFree University,
Amsterdam,andDirector, Centreforthe StudyofAfricanEconomies,
UniversityofOxford;Ibrahim Elbadawi, WorldBank;John Hoddinott,
Research Fellow,InternationalFood PolicyResearch Institute,
Washington, DC;Chris Udry,ProfessorofEconomics, YaleUniversity
This important new series provides authoritative analyses of Africa's
economies, their performanceand future prospects. The focus will be on
applying recent advances in economic theory to African economies to
illuminate and analyse the recent processes of economic reform and
future challengesfacing Africa.The books, published inassociation with
the Centre for the Study ofAfrican Economies, will bring together top
scholars from universities and international organizations across the
world.
Titlesinclude:
ArneBigsten andSteveKayizzi-Mugerwa
CRISIS,ADJUSTMENTAND GROWTHIN UGANDA
AStudy ofAdaptation inan African Economy
PaulCollierandCathy Pattillo(editors)
REDUCING RISK OF INVESTMENTIN AFRICA
Paul Glewwe
THE ECONOMICSOF SCHOOLQUALITYINVESTMENTSIN
DEVELOPINGCOUNTRIES
An Empirical Study ofGhana
John Knight andCarolyn Jenkins
ECONOMICPOLICIESAND OUTCOMESINZIMBABWE
Lessons for South Africa
Jo Ann Paulson (editor)
AFRICANECONOMIES INTRANSITION
Volume I:The Changing Role oftheState
Jo Ann Paulson (editor)
AFRICANECONOMIES INTRANSITION
Volume2:TheReform Experience
Crisis, Adjustment and
Growth in Uganda
A Study ofAdaptation in
an African Economy
Arne Bigsten
ProfessorofDevelopmentEconomics
Gothenburg University
Sweden
and
Steve Kayizzi-Mugerwa
AssociateProfessor(DevelopmentEconomics)
Gothenburg University
Sweden
in association with
Palgrave Macmillan
First published in Great Britain 1999 by
MACMILLAN PRESS LTD
Houndmills, Basingstoke, Hampshire RG21 6XS and London
Companies and representatives throughout the world
A catalogue record for this book is available from the British Library.
ISBN 978-1-349-15037-3 ISBN 978-1-349-15035-9 (eBook)
DOI 10.1007/978-1-349-15035-9
First published in the United States of America 1999 by
ST. MARTIN'S PRESS, INC.,
Scholarly and Reference Division,
175 Fifth Avenue, New York, N.Y. 10010
ISBN 978-0-312-22134-8
Library of Congress Cataloging-in-Publication Data
Bigsten, Arne.
Crisis, adjustment and growth in Uganda : a study of adaptation in
an African economy I Arne Bigsten and Steve Kayizzi-Mugerwa.
p. em.-(Studies on the African economies)
"In association with the Centre for the Study of African
Economies, University of Oxford."
Includes bibliographical references and index.
ISBN 978-0-312-22134-8 (cloth)
I. Uganda-Economic conditions. 2. Income-Uganda. I. Kayizzi
-Mugerwa, Steve. II. Title. III. Series.
HC870.B535 1999
338.96761--<lc21 98-47235
CIP
© Centre for the Study of African Economies 1999
Softcover reprint of the hardcover 1st edition 1999 978-0-333-76384-1
All rights reserved. No reproduction, copy or transmission of this publication may be made
without written permission.
No paragraph of this publication may be reproduced, copied or transmitted save with
written permission or in accordance with the provisions of the Copyright, Designs and
Patents Act 1988, or under the terms of any licence permitting limited copying issued by
the Copyright Licensing Agency, 90 Tottenham Court Road, London WI P 9HE.
Any person who does any unauthorised act in relation to this publication may be liable to
criminal prosecution and civil claims for damages.
The authors have asserted their rights to be identified as the authors of this work in
accordance with the Copyright, Designs and Patents Act 1988.
This book is printed on paper suitable for recycling and made from fully managed and
sustained forest sources.
10 9 8 7 6 5 4 3 2 I
08 07 06 05 04 03 02 01 00 99
Contents
List ofFigures ix
List ofTables xi
Acknowledgements xv
List ofAcronyms ........................................ xvii
Map ofthe RepublicofUganda xix
1. Introduction .... .. .. .... .... ......... ......... ........ 1
2. The Years ofOptimism(1960-71) 7
2.1 Introduction 7
2.2 EconomicPolicy in the 1960s 8
2.3 EconomicPerformance(1960-71) 12
2.4 Conclusions 17
3. CrisisandDecline(1972-80) 20
3.1 Introduction 20
3.2 EconomicPolicy in the 1970s 21
3.3 EconomicPerformance(1972-80) 25
3.4 Conclusions ...................................... 30
4. ReformwithoutStability:
OboteIIto the NRM (1981-86) 32
4.1 Introduction. ..................... .. ... ........ .. . 32
4.2 InitiatingEconomicReform 33
4.3 ProductionandTradePerformance 40
4.4 SummaryandConclusions ......................... 43
Appendix4A:AnalyticalFramework 46
Appendix4B:OfficialExchangeRate 1981-96 48
5. Fully-fledgedLiberalisation (1987-) 50
5.1 Introduction 50
5.2 IMPandWorld BankStrategiesfor Reform 52
5.3 PreliminaryReforms in the Late 1980s 55
5.4 DeepeningReforms in the 1990s 61
5.4.1 PublicSector Reforms andDecentralisation 63
5.4.2 FiscalPolicies 67
v
vi Contents
5.4.3 Financial,Monetary,andExchange
Rate Policies 69
5.4.4 Privatisation,Investment,Trade,
Aid and Infrastructure 72
5.4.5 Coffee Policy. ............................... 75
5.4.6 LandReformandResourceHusbandry......... 79
5.5 EconomicPerformanceUnderFull Liberalisation 81
5.5.1 Output 81
5.5.2 InvestmentandSavings 85
5.5.3 Trade 87
5.6 Changesin EconomicStructure 90
5.7 ConcludingRemarks .............................. 96
6. Income,PovertyandSocialServices. ................... 106
6.1 Introduction 106
6.2 Changesin RealIncomes 107
6.3 IncomeDistributionandPoverty ................... 113
6.4 Education 119
6.5 HealthCare 122
6.6 SummaryandConclusions. ....................... 127
7. LookingAhead 133
7.1 Introduction 133
7.2 AddressingPoverty .............................. 135
7.3 DevelopingMarketsandDomesticCapacities 136
7.4 Foreign AssistanceandDebt 140
8. ConcludingRemarks 144
AppendixA:UrbanResponses:
aStudyofKampala Households 148
1. Introduction 148
2. AspectsofUrbanResponses 149
3. The KampalaSurvey 153
4. The StructureofIncomesin Kampala ............... 154
4.1 IncomeStructureby Quintile 158
4.2 IncomeStructureby SocioeconomicClass 159
4.3 Summary 161
Contents vii
5. AnalysisofIncome-Generation 161
5.1 WagesandAllowances 161
5.2 EconometricAnalysisofthe
DeterminantsofEmployment
andRemuneration ............................ 164
5.3 BusinessIncomes 169
5.4 Remittances 172
6. ChangesUnderEarly Adjustment,1985-90 173
7. SummaryandConclusions 174
AppendixAI:DescriptiveStatistics forVariables
in the EarningsFunction .......................... 178
AppendixA2:The Double-hurdleModel 178
AppendixA3:SampleParishes/Wards andVillages 179
AppendixB:RuralAdaptation:
Evidencefrom MasakaDistrict " 183
1. Introduction. .... ............ ...... .......... .... 183
2. AspectsofRural Responses 186
2.1 Introduction 186
2.2 DeterminantsofRural HouseholdResponses 187
2.3 IntroducingImperfectionsandRisk. ............ 187
2.4 Life-cycleAspects 188
2.5 ImpactofEconomic Policies 189
3. The MasakaSurvey 190
4. The StructureofRuralIncomes 190
4.1 IncomeStructureby Quintile 191
4.2 IncomeStructureby Age ofHouseholdHead 194
4.3 IncomeStructurebySizeofHolding ............ 196
5. AnalysisofIncome Generationand
LabourAllocation ................................ 196
5.1 FarmProduction 196
5.2 RuralBusiness Activity 203
5.3 FormalandOtherWageEmployment 206
6. The EfficiencyofLabourAllocation 209
7. ChangesUnderEarly Adjustment1985-90 210
8. SummaryandConclusions ........................ 212
AppendixBl:SampleCounties,Parishes andVillages .... 216
viii Contents
References 218
Index 234
List of Figures
3.1Sharesofinvestment,exportsand government
expendituresin GDP .................................. 28
3.2Inflationandmoney,1972-80 28
4.1Official,window2andparallelexchangerates, 1981-86
(UshsperUS$) 34
4.2Relativeprices,1981-86 35
4.3Relativecommodityprices,1981-86 39
5.1Officialandparallelexchangerates,1987-95
(Ushs perUS$) ........................... 56
5.2Relativeprices,1981-94 82
5.3Relativecommodity prices,1987-94 82
5.4AveragesectoralandGDP growthrates,
1962-71,1987-95 95
6.1Lorenzcurvesfor Kampalaemployeesin 1971
and1990 110
6.2Distributionofincomeamongtaxpayers,1969 114
6.3Distributionofincomeamongpersons,1992-93 114
ix