{
  "title": "IMF Survey : Strong Reforms Offer Countries Path to High-income Status",
  "publication": "IMF News, December 17, 2014",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/53/socar121614a",
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  "summary": "Sub-Saharan Africa’s small middle-income countries should implement strong reforms to boost growth and avoid the “middle-income trap,” seminar participants conclude in Mauritius, after reviewing the track records of seven countries and how the IMF can help.",
  "authors": [
    "Lamin Leigh",
    "Marshall Mills IMF African Department December"
  ],
  "publishDate": "2014-12-17",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Publication: IMF Survey\n- Authors: Lamin Leigh and Marshall Mills, IMF African Department\n- Date: December 17, 2014\n- Event: Seminar organized by the IMF African Department and the Africa Training Institute (November 18–21)\n- Focus: Policy challenges and reform approaches for seven small middle-income countries in sub-Saharan Africa aiming for high-income status and seeking to avoid the “middle-income trap.”"
    },
    {
      "heading": "Small middle-income countries and context",
      "content": "- Countries examined: Botswana, Cabo Verde, Lesotho, Mauritius, Namibia, Seychelles, and Swaziland.\n- Background: Seminar built on initial discussions during two earlier high-level meetings on the sidelines of the 2013 and 2014 IMF–World Bank Spring Meetings and on joint work toward a forthcoming book titled “Africa on the Move: Unlocking the Potential of Small Middle Income Countries (SMICs).”\n- Sponsorship: IMF’s African Technical Assistance Centers in Ghana and Mauritius, the Africa Training Institute in Mauritius, the Regional Multi-Disciplinary Center of Excellence in Mauritius, and the European Union."
    },
    {
      "heading": "Avoid the trap",
      "content": "- Key concern: The “middle-income trap” — middle-income countries graduate to high-income status far less often than low-income countries graduate to middle-income status.\n- Historical statistic: From 1960–2012, fewer than 20 percent of middle-income countries—and none from sub-Saharan Africa—became high-income states, compared with more than half of low-income countries graduating to middle-income status.\n- Current challenge: While growth remains positive, growth has slowed as previous growth drivers weaken and the rise in per capita income wanes."
    },
    {
      "heading": "Boosting growth — seminar focus areas",
      "content": "Participants explored policy responses in five key areas:\n- Macroeconomic vulnerability\n- Employment and inclusiveness\n- Productivity growth\n- Financial inclusion\n- Political economy of economic reform\n\nSeminar format: Peer-to-peer learning with small breakout sessions, group discussions, and country presentations reviewing experience and failures of specific policy initiatives."
    },
    {
      "heading": "Consensus findings and policy implications",
      "content": "- Macroeconomic buffers and trade-offs:\n  - Small middle-income countries are highly vulnerable to shocks.\n  - Importance of building sufficient policy buffers to absorb external shocks, especially since official financing flows for these countries will fall over time.\n  - Recognition of significant opportunity costs of buffers such as holding large reserves, given important infrastructure gaps that restrain long-term growth.\n- Labor markets and diversification:\n  - Need for policies to reduce skills mismatch to promote diversification.\n  - Properly designed policies could “crowd in” private sector employment while the state fosters labor market functioning and provides safety nets.\n  - Need to implement public employment and wage policies that improve labor market outcomes and avoid the government becoming the “employer of last resort”.\n- Productivity and public spending:\n  - Returning to strong growth is necessary to achieve high-income status and will require deeper reforms and innovative policies to boost productivity.\n  - Quality of public spending—especially for education and economic governance—is an important tool for supporting productivity growth.\n- Financial inclusion:\n  - Emerging evidence that financial inclusion is crucial for structural transformation and inclusive growth.\n  - Small middle-income countries have some of the most uneven distributions of income in the world.\n  - Need to go beyond relaxing financing constraints (e.g., loan subsidy programs) to address underlying market failures and structural weaknesses that keep intermediation costs high.\n  - Efforts to promote financial inclusion should be pursued in a manner that preserves financial stability.\n- Political economy of reform:\n  - Effective communication important to build support for reforms.\n  - Appropriate sequencing can reduce chances of reform fatigue.\n  - Value of “reform champions” insulated from short-term political cycles.\n  - Strategies to advance reforms need to be driven by country-specific circumstances."
    },
    {
      "heading": "Benefits of peer learning and next steps",
      "content": "- Peer learning viewed as an untapped potential to help move reforms forward in these countries.\n- The forthcoming book was seen as a vehicle to foster peer learning; country participants offered to contribute experiences to enrich analysis.\n- Interest in cost-effective knowledge-sharing tools, including online platforms, which the IMF African Department and the Africa Training Institute will help explore.\n- Capacity building and regional training institutions could become vehicles for peer-to-peer learning and support.\n- Long-term vision: Countries could set common policy goals among themselves, with better-performing countries helping those lagging behind.\n\nSource: IMF African Department; December 17, 2014.\n\n---\n\n\n References\n\n- https://www.imf.org/en/News/country-focus\n- PRESS CENTER\n- IMF Country Focus\n- Turkey’s middle-income recipe\n- Productivity key to growth\n- Ghana’s middle-income target\n- Rwanda’s middle income aim\n- African Technical Assistance Centers\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/53/socar121614a"
    }
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    "Authors: Lamin Leigh, Marshall Mills IMF African Department December",
    "Published: December 17, 2014",
    "Publication: IMF Survey",
    "Authors: Lamin Leigh and Marshall Mills, IMF African Department",
    "Date: December 17, 2014",
    "Event: Seminar organized by the IMF African Department and the Africa Training Institute (November 18–21)",
    "Focus: Policy challenges and reform approaches for seven small middle-income countries in sub-Saharan Africa aiming for high-income status and seeking to avoid the “middle-income trap.”",
    "Countries examined: Botswana, Cabo Verde, Lesotho, Mauritius, Namibia, Seychelles, and Swaziland.",
    "Background: Seminar built on initial discussions during two earlier high-level meetings on the sidelines of the 2013 and 2014 IMF–World Bank Spring Meetings and on joint work toward a forthcoming book titled “Africa on the Move: Unlocking the Potential of Small Middle Income Countries (SMICs).”",
    "Sponsorship: IMF’s African Technical Assistance Centers in Ghana and Mauritius, the Africa Training Institute in Mauritius, the Regional Multi-Disciplinary Center of Excellence in Mauritius, and the European Union.",
    "Key concern: The “middle-income trap” — middle-income countries graduate to high-income status far less often than low-income countries graduate to middle-income status.",
    "Historical statistic: From 1960–2012, fewer than 20 percent of middle-income countries—and none from sub-Saharan Africa—became high-income states, compared with more than half of low-income countries graduating to middle-income status.",
    "Current challenge: While growth remains positive, growth has slowed as previous growth drivers weaken and the rise in per capita income wanes.",
    "Macroeconomic vulnerability",
    "Employment and inclusiveness",
    "Productivity growth",
    "Financial inclusion",
    "Political economy of economic reform",
    "Macroeconomic buffers and trade-offs:",
    "Labor markets and diversification:",
    "Productivity and public spending:",
    "Financial inclusion:",
    "Political economy of reform:",
    "Peer learning viewed as an untapped potential to help move reforms forward in these countries.",
    "The forthcoming book was seen as a vehicle to foster peer learning; country participants offered to contribute experiences to enrich analysis.",
    "Interest in cost-effective knowledge-sharing tools, including online platforms, which the IMF African Department and the Africa Training Institute will help explore.",
    "Capacity building and regional training institutions could become vehicles for peer-to-peer learning and support.",
    "Long-term vision: Countries could set common policy goals among themselves, with better-performing countries helping those lagging behind.",
    "[https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[IMF Country Focus](https://www.imf.org/en/news/country-focus)",
    "[Turkey’s middle-income recipe](http://blog-imfdirect.imf.org/2014/12/15/turkeys-recipe-to-escape-the-middle-income-trap/)",
    "[Productivity key to growth](http://www.imf.org/external/pubs/ft/survey/so/2013/car051313a.htm)",
    "[Ghana’s middle-income target](http://www.imf.org/external/pubs/ft/survey/so/2013/car061213a.htm)",
    "[Rwanda’s middle income aim](http://www.imf.org/external/pubs/ft/survey/so/2014/car122214a.htm)",
    "[African Technical Assistance Centers](http://www.imf.org/external/np/exr/facts/afritac.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
  ],
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