The Crisis of the 1980s in Sub-Saharan Africa,Latin America and the Caribbean: Economic Impact,Social Change and Political Implications

The purpose of this paper, prepared as a background document for the UNRISD/University of the West Indies conference on Economic Crisis and Third World Countries, is to provide a framework for consideration of societal changes accompanying economic recession and restructuring in Africa, Latin America and the Caribbean over the past decade. It is the central argument of the paper that adaptation to crisis should not be considered a temporary phenomenon, interrupting a single, lineal process of modernization which can be expected to resume its course once current difficulties are overcome. On the contrary, both crisis and adjustment have profoundly modified the structure of incentives within which individuals and households must attempt to ensure their livelihood, encouraging new patterns of behaviour with long-term implications for the nature of the economy, society and political practice. After a brief review of the macroeconomic background of crisis in each region, this central hypothesis is explored through a very preliminary analysis of the changing life chances of various kinds of upper, middle and lower income groups — emphasizing not only the costs but also the opportunities which have been associated with economic restructuring. Some individual and collective reactions to change are then considered, before raising a series of questions concerning the implications of crisis and adjustment for the state and civil society.     

LEADERS,FOLLOWERS, AND ASYMMETRIC LOCAL TAX POLICY DIFFUSION

Complementing recent theoretical models of tax competition with endogenous leadership, we empirically model local policy diffusion as a dynamic asymmetric process. Using a setting where local option sales taxes rapidly transitioned from nonexistence to ubiquity, we construct a policy leadership index to classify jurisdictions as leaders or followers. Using models that control for vertical tax competition effects, we show how asymmetric leader–follower dynamics characterize horizontal tax competition over the three decades that follow. A placebo test further supports our main conclusions. This methodological approach could be adapted to other settings where policies exhibit both extensive and intensive margins.