Structural re-adjustment programmes in developing countries: the case of the transport industry in Sri Lanka

Abstract

The human costs of trimming the public sector and re-structuring state industries, under the IMF-IBRD-MONETARISTS policy reform package for the developing countries (minimalism), are examined in this paper. Since costs involved are quite high, an alternative restructuring package, which increases supply to meet the excess demand while keeping employment unchanged, has also been explored. However, IMF-IBRD-MONETARISTS choose the former, as they believe that the latter creates a macro-imbalance which would erode the comparative advantage. The price of implementing the second option, macro-imbalance, must be weighed against the benefits of reducing human suffering. It appears that the benefits overweigh the price.