The socioeconomic impacts of structural adjustment

The 1980s were painful years of structural adjustment during which many dev eloping countries abandoned statist economic models in favor of market-orie nted paradigms. The proponents of structural adjustment, including internat ional lending agencies such as the IMF and World Bank, argued that reforms were necessary to restore growth and curtail inflation. The opponents of ad justment claimed its macroeconomic results were not a foregone conclusion a nd, regardless of them, such changes would drastically affect the already p recarious position of the poor. We use data from sixteen Latin American cas es to examine the socioeconomic impacts of structural adjustment. Adjustmen t was weakly associated with growth, and reform did seem to reduce inflatio n. Counterintuitively, the extent of structural adjustment appears to be ne gatively associated with both poverty and inequality. Finally, empirical da ta show that low levels of growth or even mere economic stability are the b est remedy for poverty and inequality.