The State and Global Change by Hassan Hakimian Ziba Moshaver

Author:Hassan Hakimian, Ziba Moshaver [Hassan Hakimian, Ziba Moshaver]
Language: eng
Format: epub
Tags: Business & Economics, Economic History, Political Science, Public Policy, Economic Policy, General, Social Science, Regional Studies
ISBN: 9781000143997
Google: Q-TzDwAAQBAJ
Publisher: Routledge
Published: 2020-08-11T05:03:15+00:00

The Onset of Reform

President Zine el Abidine Ben Ali came to power in Tunisia via a constitutional coup on the night of 6 November 1987 and launched a new era for the country characterized by profound economic liberalization and a corresponding process of political change.1

The structural adjustment programme in Tunisia has been implemented over the course of three development plans. The Seventh Development Plan (1987-1991) was intended to achieve macro-economic stability and to put in place initial structural changes that would pave the way for consolidating deeper liberalization measures in the Eighth Plan (1992-96). Thus a sharp reduction in the budget deficit, the control of inflation, financial sector reform and trade liberalization would be followed by legislative arrangements to encourage foreign investment, an accelerated privatization programme, development of capital and equity markets, and closer integration of Tunisian trade into world, and especially European, markets. The Eighth plan also focused on developing human resources, among other things improving the educational and skills base of the labour force. The Ninth Development Plan (1997-2001) is intended to all but complete the liberalization process and take Tunisia to developed nation status by the turn of the century.

Broadly speaking, Tunisia's SAP has been a success, at least if one judges it in terms of economic growth, increased diversity of production and exports, rising living standards and the restored financial credibility of the government. By 1996, the country ranked 69th on the UN's Human Development Index, way ahead of neighbours Algeria (85th) and Morocco (117th), and 37th on the Economic Freedom index. The American Heritage Foundation declared the country to be in the category of 'wholly liberalized economies', along with France, Germany and Italy among others (Conjuncture 1995). GNP per capita, at over $5000, is within the realms of Europe's poorer periphery, and less than 6 per cent of the population live below the official poverty line. The Seventh Development Plan saw an average annual growth rate of 4.3 per cent, despite the problems created by the Gulf War, poor agricultural performance and declining oil-sector output. Exports grew at an average of 9 per cent per annum; non-energy exports by more than 10 per cent per annum and demonstrated increasing diversity (manufacturing exports grew by 13.4 per cent per annum) (Nsouli et al. 1993: 39-41). The budget deficit was reduced from 5.3 per cent of GDP in 1986 to 3.5 per cent in 1991, and some progress was made in terms of debt reduction and public sector reform. However, overall levels of external debt remained a problem2, as did low investment rates, high unemployment levels and bureaucratic obstruction to privatization. Overall, a 1992 study concluded that the Tunisian economy was 40-50 per cent liberalized (Larbi 1993: 14-23).

The Eighth Development Plan accelerated the pace of structural reform, despite growing public awareness of its pitfalls inside Tunisia. Urgency was added by the fact that in 1994 the country became a net energy importer for the first time in many years. Privatization still proceeded much more slowly than hoped, although sixty public enterprises had been wholly or partially privatized by 1995.

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