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close this bookPrivate Sector Development in Low-Income Countries - Development in Practice (WB, 1996, 188 p.)
close this folderChapter 1-From state to market uneven progress
View the document(introduction...)
View the documentRecent policy reforms
View the documentFast and slow growers
View the documentThe drag of public
View the documentRegulation and barriers to competition a harsh business environment
View the documentPoor quality of physical infrastructure and human resources
View the documentThe reform agenda


THE development strategies of most low-income countries in the 1960s and 1970s emphasized import-substituting industrialization with economic growth led by the state. Public enterprises dominated strategic industries, and publicly owned banks served as conduits of financial flows to prop up the enterprises. Governments generated resources by taxing agriculture and trade.

This model of development had early successes, but it was increasingly viewed as ineffective in the late 1970s and early 1980s, as economic growth slowed. Many lowincome countries found themselves with large fiscal deficits and overvalued exchange rates that were unsustainable.