Past, present and future perspectives




The Market Forces scenario assumes that world development evolves without major discontinuities, changes in values or other structural ruptures from the position as it existed at the end of the 20th century. However, in this scenario, the world becomes increasingly more integrated, both economically and culturally. Globalization of product and labour markets continues apace, catalysed by free trade agreements, unregulated capital and financial flows, and information technology. A number of important initiatives pave the way. The World Trade Organization (WTO) provides the legal basis for the global trading system. Barriers to trade and capital movements gradually vanish, as protectionism becomes a thing of the past. New institutional instruments promote market openness and global competition. Virtually all national governments advance a package of policy adjustments, which include: modernization of financial systems; investment in education to create a workforce that is competitive in the emerging global market; privatization; reduced social safety nets; and, in general, reliance on market-based approaches.

In the context of Africa, the Market Forces scenario is based on the assumption that African countries will adopt, willingly or otherwise, the range of policy reforms promoted by the WB and the IMF since the late 1980s. These reforms aim to improve the economic performance of developing countries by encouraging them to restructure their economies through a combination of tight fiscal and monetary policies. The objective is to limit budget deficits and to allow marketdetermined interest rates, more free trade, capital flows and unencumbered foreign direct investment. The reforms also include: privatization of state enterprises; extension and consolidation of private property rights; and a shift in public expenditure away from subsidies and administration towards infrastructure development and support for sectors of the economy-such as primary health care and education-which are likely to provide ultimately greater economic returns and more equitable income distribution. From a trade perspective, the main outcomes of this strategy are: global integration of commodity markets; opening up of investment markets; more mobile labour markets; and the application of global standards and regulations.

The assumptions of the Market Forces scenario may be summarized as follows: