top of page

Developmental fiscal and monetary policy

Post-Second World War lessons from selected democratic states, developmental states and populist states

Occasional paper 5/2020

Copyright © 2020

Inclusive Society Institute

50 Long Street

Cape Town

South Africa


235-515 NPO

All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without permission in writing from the Inclusive Society Institute


Views expressed in this report do not necessarily represent the views of the Inclusive Society Institute or those of their respective Board or Council members or Members.

Author: Prof. William Gumede

Associate Professor, and former Convener, Political Economy, School of Governance, University of the Witwatersrand; and former Senior Associate and Programme Director, Africa Asia Centre, School of Oriental and African Studies (SOAS), University of London; and author of South Africa in BRICS (Tafelberg)


Prudent macro-economic policy, especially the management of monetary, fiscal, and public debt is more crucial in developing countries wanting to catch up to or surpass industrial countries in terms of development.

In the postcolonial period many developing countries who genuinely pushed broad-based development fell short when they neglected fiscal and monetary discipline, undoing their development efforts.

Unpacking the terms: “Fiscal policy” relates to the policy decisions on the levels of government spending, taxation and borrowing. Whereas “monetary policy” is the coordination of the supply of money in the economy to influence inflation, the value of the currency and employment.

Many developing countries put little focus on curbing inflation, keeping exchange rates stable or managing public debt levels. Furthermore, they often allow large budget deficits, where expenses exceed revenue by huge margins. Milton Keynes in his General Theory made an argument for “functional finance”, the use of deficit spending to overcome “cyclical fluctuations in the economy” (Keynes, 1936).

However, many developing countries by the 196os onwards pursued persistent deficit spending which over time ballooned into large national debts (Emenike et al, 2017). For example, by the 1960s many African governments had, on average, budget deficits of 30% of GDP. The Nigerian economist Bade Onimode writes that many African countries have, since independence from colonialism, experienced a “chronic balance of payments crisis” (Onimode, 2000).

The economists John Healy and Mark Robinson say: “There was a fairly common pattern to African economic policy in the 1970s and early 1980s which included the following recurring features: the persistence of high and volatile public sector deficits, often financed from the banking system; failure to stabilise inflation, especially in the face of terms-of-trade shocks; lack of clear prioritisation of public expenditure and weak economic appraisal of investment together with overvalued exchange rates” (Healy & Robinson, 1992).

Chronic balance of payments crises undermine development

Many developing countries also mismanaged their balance of payments situations (Ocampo, 2016). The balance of payments being the record of all transactions between the residents, firms and government of a country and the rest of the world. There are three parts to this record: a current account, a capital account and an official financing or balancing account.

The current account is the balance of trade, which includes both government and private sector payments and the earnings on foreign investments excluding payments made to foreign investors and cash transfers. Whereas the capital account is sales and transfers of contracts, ownership of fixed assets and patents. The financial account is the transfers of financial assets and liabilities between residents and non-residents, including banking flows – hot money, portfolio flows – debt and equity and foreign investment flows, and official reserves.

Developing countries often struggle to manage their budget deficits, current accounts, and their exchange rates. Setting developmental interest rates – which promote the outcomes set out in the national industrial or developmental plan, keeping inflation manageable and setting sustainable exchange rates are crucial for development.

Moreover, public spending is often not disciplined and in many cases developing countries do not use taxes towards increased development. The result is that they pay the price in rising levels of poverty, underdevelopment, and financial instability.

Therefore, the challenge for many developing countries is “balancing the competing objectives of economic policy: price stability, exchange rate stability and free capital mobility” (Nassif et al, 2011; Williamson, 2008; UNCTAD, 2011; Rodrik, 2008).

Furthermore, the Brazilian economist Luiz Carlos Bresser-Pereira points out how “the experience of the East Asian countries has demonstrated, keeping the budget deficit as well as the current account under control is a necessary condition for keeping the macroeconomic prices right and the macroeconomic aggregates balanced” (Bresser-Pereira, 2017).

Naturally then, when developing countries pursue expansionary fiscal policies – whereby they increase public spending to stimulate aggregate demand in the economy – ill-discipline results in unchecked government spending, which may cause harm including rising inflation and crowding out private investment.

Developing countries often increase public spending to levels where they end up increasing the budget deficits. The government spends more than it collects in revenue and grants, thereby running a budget deficit, resulting in macroeconomic imbalances. Unless the budget deficit is covered by private savings, it creates a current-account deficit with the rest of the world, obliging the country to borrow to finance said deficit.

If the government cannot finance the deficit by borrowing, pressure builds to finance it through depreciation of the national currency. Depreciation then leads to greater exports and, hence, reduces the current-account deficit. The problem with this is, firstly, that many developing countries export single commodities, with prices dependent on demand in buying countries. Secondly, depreciation may lead to inflation, which cuts purchasing power.

Another issue is that developing countries often hold their currency at too high a rate for the state of the economy, meaning the country’s exports are more expensive than its imports. And during periods of low growth, an overvalued currency is bad for the economy.

Brazil, for example, experienced overvaluation of its currency for most of the mid-1990s period. It has worsened now because many industrial country investors move their money to developing countries when interest rates in those countries are low, to seek higher investment returns. Then, when interest rates increase again or during times of economic and political uncertainty within those countries, the investors move their money out to avoid losses.

Post-Second World War macroeconomic management success in Japan

For a brief period following the Second World War, during the occupation of the country, the operations of the Bank of Japan (BOJ), the central bank, was suspended and a special military currency used in the country. The bank was restructured in 1949 and began to play its central developmental role in Japan’s post-war economic miracle.

The BOJ operated with reasonable autonomy during the post-war period, although critics throughout have criticised it for being too independent (Horiuchi, 1993).

Many East Asian developmental states have been successful in reducing the volatility in their currencies by building up large international reserves (Aizenman & Ito, 2014; Rodrik, 2008; UNCTAD, 2011). Many of these states, such as South Korea, Malaysia and Singapore, pegged their currencies to a basket of currencies. In the post-war period, Japan focused its monetary policy on promoting “export- and investments-led growth”, focussing determinedly on ever-diversified exports.

A pillar of the BOJ’s monetary policy was called “window guidance”, in which the central bank gives credit quotas to commercial banks, which they must channel to specific industries prioritised by government as growth sectors (Cargill, Hutchison and Itō 1997; Werner 2005).

The BOJ would directly communicate the industries that should get quicker loans, thereby directly influencing the activities of commercial banks. Japan’s Ministry of International Trade and Industry (MITI) was one of the key institutions in setting fiscal policy. MITI managed the allocations of foreign exchange to companies, with which they bought raw materials or equipment.

Government subsidies to prioritised industries were also crucial to expand industrialisation. To secure foreign exchange, companies had to, in return, support the government’s export and investment-led strategy (Pham, 2017). Many Asian economies, more recently including China, have copied the Japanese monetary policy of “window guidance” as “an effective tool to control the total volume of credit to financial institutions” and to “regulate the growth rates of money and investment spending more easily” (Pham, 2017).

In the two decades before the collapse, in 1971, of the Bretton Woods System of linking currencies to the value of gold, the Japanese currency was fixed at 360 yen to the US dollar. The collapse of the Bretton Woods System caused the Japanese currency to appreciate sharply. Japan then devaluated its currency, and in 1973, set a floating exchange rate with the mission to stabilise the exchange rate.

In the immediate post-war period, Japan’s external current account had large deficits which were financed by US aid. The country also experienced hyper-inflation. “Monetary policy faced difficulty in pursuing two contradictory purposes at the same time, namely stimulating investments to restore supply capacity and depressing the hyper-inflation” (Suzuki, 2017).

During the same period, Japan rolled out a massive infrastructure rehabilitation and expansion programme. In addition, the government had to make large payments in reparations for damage it inflicted during the war – both of which were financed by government bonds, underwritten by the Bank of Japan (BOJ).

The government formed the Reconstruction Public Finance Corporation in 1947, underwritten by the BOJ, to issue bonds to state-owned entities for industrial rebuilding. Private businesses also expanded dramatically, borrowing from private banks to finance their expansion. The BOJ provided lending to private banks who in turn provided lending to private firms. Importantly, the country’s savings were channelled into investment projects (Hamada & Kasuya, 1992).

The government provided subsidies to crucial sectors, called “priority production system” (Hamada & Kasuya, 1992). By 1948, such subsidies came to 24% of the country’s general account (Hamada & Kasuya, 1992). These subsidies were financed by the Bank of Japan and also increased inflation.

The Japanese government had a Trade Financial Special Account which sold crucial imports at a much lower price than the international prices. This was subsidised by the BOJ. This also caused additional inflation. There were strong arguments for deficit budgeting – which was rejected In 1946, then Fiscal Minister Tanzan Ishibashi, in his budget speech, basing his argument on Keynes General Theory, argued: “In order to achieve the goal of resuming production there is no harm if government deficits occur. Since both capital stock and labour force were clearly underemployed, the problem was simply that bottleneck factors such as the lack of raw materials from overseas stood in the way” (Hamada & Kasuya, 1992).

The government until the 1950s maintained a balanced of payments equilibrium, maintaining similar levels of investments abroad to foreign investment locally. During this period, infant industries became competitive.

Japan, from the 195os to the 1970s, undervalued its currency in relation to the US dollar. Furthermore, throughout the post-Second World War period, Japan undervalued its currency to encourage export manufacturing. Then, from the 1970s, the focus became currency stability (Green, 1990). The government regularly intervened in the market to either buy or sell dollars to gain that stability. Furthermore, the government regulated capital flows (Hutchison, 1984; Suzuki, 1986).

Japan’s current account was in surplus since 1968. The country accumulated large foreign reserves and the country’s citizens were encouraged to save. Until 1965, the Japanese government implemented a balanced budget principal.

Then, in 1965, the Japanese economy experienced a recession. The government for the first time introduced an expansionary fiscal policy, financing a budget deficit with a national bond (Takagi, 2015). The government maintained price stability – targeting inflation at 5.5% per year. The export growth focus provided a surplus in the country’s balance of payments with the world, and foreign investment was introduced selectively in targeted industries. However, capital liberalisation, whereby foreign companies could enter unencumbered, was only introduced in 1973.

From 1966 to 1973, the government financed a deficit on the capital accounts, through the issuing of a national construction bond.

The government also built up foreign exchange reserves which, by the early 1990s, totalled over US$100bn – a record amount for the IMF (International Monetary Fund, N.d.). During the period leading up to 1990, Japan’s currency was knocked by three international crises. In 1971, the US withdrew from the Bretton Woods System which pegged the US dollar to the value of gold. This caused an appreciation in the yen, which had been under a fixed rate to the value of the US dollar. The government responded by depreciating the currency and adopting a free-floating currency exchange policy.

During the first oil shock, in 1972, Japan’s balance of payments accounts declined. This put pressure on the value of the currency, and so, the government restricted capital outflows (Green, 1990). The first oil crisis in 1973 exposed the deficit financing through national bonds. All throughout Japan’s high growth period, the government used monetary policy as a counter cyclical tool to encourage growth, rather than fiscal policy (Funabashi, 1988; Ito, 1987 and 2003; Takagi, 2015).

Another shock to the Japanese yen was the Plaza Accord and Louvre Accord of 1985-1987, which again appreciated the value of the dollar. Between 1980 and 1985, there was a dramatic appreciation of the dollar against the currencies of the major industrial countries – almost 50% against the Japanese yen. All as a result of the US Federal Reserve System fighting stagflation, which hounded the US dollar in the 1970s (Frankel, 2015). However, the intervention went belly-up when the dollar became overvalued (US Department of Treasury, 1983).

In 1985 the Ministers of Finance and central bank Governors of the G5 countries – the US, Japan, Germany, France and the United Kingdom – signed the Plaza Accord, which agreed on a planned devaluation of the dollar, with the other countries coordinating their activities with that of the US central bank. By the time of the Plaza Accord the US economy was in recession, its current-account deficit was at 3.5% of GP and its exporters uncompetitive. The intervention helped to narrow the US trade deficit with major industrial countries.

By 1987, the devaluation of the US dollar had now decreased the value of the dollar against the yen by 51%, and Japan had restrictions on imports. The appreciation of the yen forced the country to respond with an expansionary monetary policy. It increased the money supply, lowered interest rates and decreased the value of the yen – to increase aggregate demand, the total use of goods and services in the economy. However, this in turn caused an asset price bubble, deflation and low growth. The combination of these would become known in Japan as the Lost Decade (Obstfeld, 1990).

In 1987, the US industrial country partners signed the Louvre Accord to stop the devaluation of the dollar. In a coordinated approach, the US would in 1988, reduce its deficit to 2.3% of GDP, cut interest rates and cut government spending by 1% (US Department of Treasury, 1983; Krugman, 1991). All four of Japan, Germany, France and the UK would cut interest rates, reduce public spending and taxes. Japan would reduce its trade surplus.

Throughout the period, the Japanese government emphasised currency and price stability. The government maintained a low interest rate policy throughout the high growth phase and contained inflation. It also eschewed used tax increases to finance budgets and channelled savings to support targeted export manufacturing, infrastructure and housing.

Lessons from Japan

  • Independent central bank, the Bank of Japan (BOJ)

  • Developmental monetary policy prioritised export- and investment-led growth

  • Ministry of International Trade and Industry (MITI) set fiscal policy

  • Monetary and fiscal aligned to prioritise export and investment-led growth

  • Throughout Japan’s post-Second World War high growth period, monetary policy was used as a counter cyclical tool to encourage growth, rather than fiscal policy

  • The BOJ provided lending to private banks who in turn provided lending to private firms

  • Throughout the post-Second World War period, Japan undervalued its currency to encourage export manufacturing

  • The government regulated capital flows

  • Until 1965, the Japanese government implemented a balanced budget principle

  • Only in 1965, when the economy was in recession, an expansionary fiscal policy was introduced, financing a budget deficit with a national bond

  • The government maintained price stability throughout the postwar period, targeting inflation at 5.5% per year

  • Capital liberalisation, whereby foreign companies could enter unencumbered, was only introduced in 1973

  • From the 1970s currency stability became the focus

Persistent balance of payment crisis undermined Brazil's post-Second World War development

In Brazil, the military took power in 1964 and ruled until 1985. The military governments prioritized high growth rates to maintain support. The high initial growth rates – from 1960 to 1980, came through state investments in infrastructure, telecommunications, mining and atomic energy. It was dubbed the Brazilian Miracle.

The high economic growth rates came with high inflation and large budget deficits. From 1981 to 1994, growth slowed down, and was accompanied with hyperinflation and large deficits (Ayres et al, 2018). Throughout the period from 1960 to 1994, Brazil’s central bank was not independent (Ayres et al, 2018).

Brazil fell into a balance of payments crisis in early 1970s, as global demand for its commodities slumped because of slowdowns in industrial country economies buying its commodities (Ayres et al, 2018). The government pursued import substitution industrialisation, economic diversification and self-sufficiency. The import of products that were already locally produced was restricted.

The costs of this conversion were paid by foreign loans. The plan was that over time a structure in the economy would materialise, whereby more local products would be produced for export, and the foreign earnings would pay for the accumulated debt. The Brazil government ran a large current account deficit. In 1973, the deficit was US$1.7bn and by 1980 it was US$12.8bn. Foreign debt became more expensive to repay because of higher interest rates charged by lenders.

In the 1960s Brazil introduced what it called “indexation”, in which it tried to align prices, interest rates and wages, to past inflation levels, to keep inflation constant across the economy. This, in the absence of firm monetary policy, actually increased inflation (Ayres et al, 2018).

By the mid-60s until the early 1970s, the government increased taxes to plug deficit holes, including introducing value added tax (VAT). Until 1964, Brazil had no official central bank. The Treasury implemented monetary policy through the Bank of Brazil, which was a state-owned bank, while at the same time being a commercial bank (Ayres et al, 2018). The government had in 1945 established a Superintendency of Money and Credit (SUMOC) committee, with powers over monetary policy. The Bank of Brazil had majority seats on the SUMOC, giving it a controlling say over monetary policy.

In 1964, the government created the Central Bank of Brazil (CBB). At the same time the government restructured the SUMOC into a National Monetary Council (CMN), which oversaw the central bank. The Central Bank of Brazil has been nominally independent, however, in 1994 the bank was given formal independence, and put fully in charge of monetary policy (Ayres et al, 2018).

By 1983 Brazil had the largest foreign debt of any country in the world – standing at US$92bn. The government responded by hiking interest rates to record levels, and Brazil’s terms of trade – the ratio between a country’s export prices and import prices – deteriorated by 10% between 1971 and 1979.

The 1973 oil crisis, in which the price of oil spiked, hit the economy badly. In addition, the US ran up large budget deficits in the early 1970s, of US$200bn annually, which forced its main trading partners to increase interest rates. Developing countries such as Brazil with very high foreign debts struggled to pay interest on their debts because of the higher interest premiums. Worse, Brazil imported large numbers of products, from machinery, components and raw materials.

Efforts to diversify local production of at least consumer goods were pedestrian. The government also repeatedly devaluated the currency, which increased inflation. Low growth, high inflation and high interest rates caused the collapse of many local companies.

The second oil crisis in 1979 gave the Brazilian economy another knock, increasing the foreign debt, as interests on repayments of foreign loans rose further, lowering the terms of trade and worsening the balance of payments crisis. Until then, the early 1980s, the government maintained its strategy to lift growth. However, as the debt accumulated, the government changed tack to foster trade surpluses, by pushing exports, and using the income to pay off debt. The 1982 Mexican debt crisis had a further knock-on effect on the Brazilian economy.

The International Monetary Fund and Western commercial banks put pressure on the government to introduce a structural adjustment programme, adopted by the country’s legislature in 1983, which included reducing inflation, cutting wage increases and privatisation of state-owned entities. In 1994, Fernando Henrique Cardoso was elected president, and introduced a stabilisation programme, the Real Plan, with a new currency. Monetary policy was tightened, the new currency was anchored to the US dollar, and inflation was reigned in.

Lessons from Brazil

  • Military took power in 1964, ruled until 1985

  • In 1945 a Superintendency of Money and Credit committee was established, with powers over monetary policy

  • Until 1964, Brazil had no official central bank

  • In 1964, the government created the Central Bank of Brazil

  • Throughout 1960 to 1994, Brazil’s central bank was not independent

  • Treasury implemented monetary policy through the Bank of Brazil, a state-owned bank, operating as a commercial bank

  • Import substitution industrialisation strategy, a trade and economic policy focusing on replacing foreign imports with domestic production

  • The military governments prioritised high growth rates to maintain support

  • Initial growth rates – from 1960 to 1980 - came through state investments in infrastructure, telecommunications, mining and atomic energy. It was dubbed the Brazilian Miracle.

  • The high economic growth rates came with high inflation and large budget deficits.

  • From 1981 to 1994, growth slowed, accompanied with hyperinflation and even larger deficits

  • Overvalued currency in early 1970s undermined export

  • 1970s oil crises caused a trade imbalance

  • Heavy borrowing increased the current-account deficit

  • Current account deficit financed through foreign debt

  • Expected import substitution industrialisation with exports rising over time, which was anticipated to result in trade surpluses, failed

  • In 1983, the International Monetary Fund and Western commercial banks pressured Brazil into a structural adjustment programme, resulting in the reduction of inflation, the cutting of wage increases and the privatisation of state-owned entities.

Prudent macroeconomic management under Sweden's Rehn-Meidner economic model

Left of centre governments in industrial countries – such as Sweden, which was governed by the Social Democratic Party – maintained prudent monetary and fiscal policies to finance the welfare state (Braconier & Steinar, 1999; Calmfors, 1993; Calmfors et al, 2001; Erlandsen & Lundsgaard, 2007; Forslund and Krueger, 1997). In 1951, Swedish trade union economists Gosta Rehn and Rudolf Meidner, at the Swedish Trade Union Congress, designed what would be called the Rehn-Meidner economic model (Rehn, 1952, 1969, 1977, 1982 and 1987; Meidner, 1952 and 1988), which was based on high growth, low inflation, full employment and income equality (The Swedish Confederation of Trade Unions [LO], 1951).

The model was based on a “third away” between Keynesian, central planning and neoclassical economics. After the Second World War until the end of the 1970s, the Swedish model was “able to combine a relatively fast rate of GDP growth with full employment, considerable economic security, and a rather equalitarian distribution of income” (Lindbeck, 1997: 1273).

The Swedish economist, Assar Lindbeck, who chaired what became the Lindbeck Commission - an inquiry in 1993 into the reasons for Sweden’s economic decline in the late 1980s and early 1990s - listed seven crucial institutional elements of the Swedish “third way” model. These are according to Lindbeck (1997: 1274): “ (a) large public-sector spending and high taxes; (b) a stabilisation policy, to foster full employment, with an active labour market policy as a tool; (c) government intervention to influence aggregate saving, credit supply, and investment, as well as their allocation, by public sector saving, capital market regulations, taxes, and subsidies; (d) strong central government control of local governments; (e) centralised wage bargaining on a national level; and (f) centralised decision making in the private sector, where a small group of large firms dominates on the production side and where the holdings of financial assets, including shares, are highly concentrated in a few large institutions, banks, insurance companies, and investment firms; with (g) the centralised private sector system being combined with a strong free trade regime.”

At the heart of the Swedish model was a growth policy, based on disciplined macroeconomics, with price stability, but still advocating for fair wages, through using an active labour market policy. Immediately after the Second World War, a number of Western European Social Democratic Parties implemented Keynesian policies, which were “counter-cyclical” fiscal policies, by reducing spending and raising taxes during boom times, and increasing spending and reducing taxes during downtimes (Beveridge, 1944).

These governments pursued expansive macroeconomic policies. They used expansionary fiscal policy by using their budgets to increase spending or cut taxes; and expansionary monetary policy through expanding the money supply through lowering reserve requirements, lowering interest rates and lowering the currency.

In the Swedish model, applied during the country’s golden growth period from the late 1940s to the late 1970s, the “expansionary macroeconomic policy measures are combined with selective fiscal measures and with regulation to conquer inflation” (Erixon, 2010). For example, the Swedish Social Democratic Party reduced possible rising inflation, current deficits and overvaluation of the currency that would result from expansionary policy, by “regulation, including informal incomes policy, and by extraordinary fiscal measures” to “moderate price and wage increases in the most overheated industries” (Erixon, 2010).

The Swedish central bank, the Riksbank, had both functional and institutional independence, and was one of the agencies that were directly reporting to Parliament (Commission of Inquiry, 2007). The country has a National Debt Office, a public entity reporting to Parliament, which ensures that government borrows prudently.

The government used restrictive fiscal policy, particularly indirect taxes to hold down inflation. The country introduced consumption taxes – taxing people when they spend money on goods and services, rather than on income or profits, and devaluated the currency in 1949. “Sweden met actual and expected deficits in the current account with a devaluation of the krona, not with deflationary macroeconomic policy measures” (Erixon, 2010). Sweden in the 1950s to the 1970s began to coordinate wage bargaining, to protect weak industries and to manage inflation (Nickell et al, 2005; Johannesson, 1981).

Although the model envisaged wage increases linked to productivity, and wage restraint during tough times, underproductive firms would necessarily go under (Rehn, 1982). However, the argument was that new industries would be created simultaneously through investments in new more market-relevant industries, active labour policies, including continuous industrially relevant training and social welfare (Gowan & Viktorsson, 2017).

Wages are determined centrally through collective bargaining. This often resulted in uncompetitive and low-productivity firms, that were unable to afford the agreed wages, to collapse. More productive firms secured comparatively lower wages “than they would have to pay in a ‘free’ labour market” (Ryner, 2003).

In the Swedish model, during recessions, a countercyclical fiscal policy, reducing spending and raising taxes during boom times, and increasing spending and reducing taxes during downtimes, was still part of the macroeconomic arsenal. In the model, during a recession the temporary use of budget deficits, moderating wage increases and selective employment subsidies in weaker industries are practical options.

To prevent inflation, the government used prudent public finance management. It pursued strict fiscal policy, focusing on generating budget surpluses. Uncompetitive companies with high costs and poor price structures struggled, whereas highly productive companies, with favourable cost and price structures were advantaged (Erixon, 2010). Through effective coordination of the economy, the government continually shifted employees from low-growth to high-growth sectors (Blanchflower et al, 1995).

The government managed an active labour market policy: comprehensive industrial skills, training, education, life-long adult-education programmes to cushion the “losers” (Erixon, 2010). Full employment was seen as unemployment below 3%.

A core part of the Swedish welfare state was universal education, health and pensions. The model also has a high degree of gender equality, including in the labour market. Private property rights and the freedom of companies to trade internationally were pillars of the model (Bergh, 2017). Progressive taxation, including that on property, funded many of the welfare programmes (Lindbeck, 1997).

During the 1950s to the 1970s, Sweden extraordinarily for the country’s size, had large global engineering firms – SAAB, Ericsson, SKG, Electrolux, Volvo and others – which by the 1960s had accounted for 20% of the country’s total exports. In the early 1970s there were criticisms that wage constraints in profitable firms meant that massive profits went to a small circle of private company shareholders and owners.

The Swedish Trade Union Confederation (LO), ally of the Social Democratic Party, proposed the establishment of a worker controlled, “wage-earner” funds, which would be funded through taxes. The proposal would give trade unions a direct say in the investment decisions of listed companies. Organised business saw it as a “collectivism of corporate ownership” (Gylfason, 2020).

The Swedish government established commission in 1973, proposing employees become shareholders over time. This would be done through setting up sector-based wage-earner funds which would get a proportion of company profits through shares.

These funds would be managed by employees. Proportions of the proceeds of the wage-earner funds would be reinvested in their companies, used to finance research and specialist management training for employees, to provide them with the skills to run businesses. However, the wage-earner fund proposals were not implemented – as it faced opposition from employer organisations (Gowan & Viktorsson, 2017). More importantly, the disagreement over the wage earner proposals would collapse the famous Swedish tripartite consensus model (Lindbeck, 1997).

Sweden was also hit by the 1973 and 1979 oil crises. The Bretton Woods System of fixed exchange rates, with the US dollar’s value fixed to gold, was ended in 1971, essentially collapsing the fixed currency system (International Monetary Fund, 1972-810). In addition, Sweden struggled in the new conditions to stabilise the value of its currency. The rise of Japan and East Asian developmental states now also provided competition to Swedish global manufacturing. Furthermore, the global recessions sparked by the oil and currency crises meant diminished markets for Swedish products – the Swedish economy faced headwinds (Erixon, 2010).

The Swedish Social Democratic Party lost power in the 1976 elections; and only returned to power in 1982. A limited form of wage-earner funds was established in 1984, funded through “excess” profit tax over a 7-year period, rather than through acquiring company shares (Gowan & Viktorsson, 2017). It was not employee managed. The Swedsh Social Democratic Party lost power again in 1991, and the funds were privatised by the new government post-1992, after the Social Democratic Party were out of power again.

In the post 1970s oil crisis period, Sweden, whether governed by the Social Democratic Party, or the centre-right coalitions that took power for periods thereafter, struggled to maintain Sweden as an open, competitive economy. And amid the global economic crises, together with increased competition from the rising East Asian economies, they battled to maintain the social benefits of the welfare state, (Bergh, 2017).

Until the early 1990s, successive governments tried to maintain the economy’s competitiveness through currency devaluations (Lindbeck, 1997). The policy of high marginal taxes to fund the welfare system, saw many high net individuals seeking ways to avoid tax; and at the same time generous welfare benefits discouraged many who could work from seeking work (Bergh, 2017). The support to companies to protect jobs often led to the cushioning of uncompetitive businesses. Rather than innovate to stay competitive, many companies sought government bailouts.

Furthermore, wages increasingly rose above productivity increases, causing rising inflation. “Repeated currency devaluations led to both a lower living standard and investment-sapping uncertainty” (Bergh, 2017). Between 1991 and 1993, struck by the most severe financial crisis since Great Depression that hit several Scandinavian countries, the Swedish government instituted an inquiry into why the successful post-war model had faltered after three decades and how it could be refined for new times. Both the government and opposition parties accepted the criticisms and advice of the report and implemented its key proposals to modernise the Swedish welfare state (Gylfason, 2020).

Lessons from Sweden

  • “Third away” between Keynesian central planning and neoclassical economics

  • Growth policy, based on disciplined macroeconomics, with price stability, but still advocating for fair wages, using an active labour market policy

  • Expansionary macroeconomic policy combined with selective focused fiscal measures

  • Combat possible rising inflation, current deficits and overvaluation of the currency that result from expansionary policy

  • Through regulation, including informal incomes policy, fiscal measures taken to moderate price and wage increases

  • Focused on generating budget surpluses

  • Restrictive fiscal policy, using indirect taxes to lower inflation

  • Dealt with expected deficits in the current account through a devaluation of the currency

  • Actively coordinated wage bargaining to protect weak industries and to manage inflation

  • During recessions, a countercyclical fiscal policy, reducing spending and raising taxes during boom times

  • The temporary use of budget deficits during recessions, moderating wage increases and practical options such as selective employment subsidies in weaker industries

  • Increasing spending and reducing taxes during downtimes part of the macroeconomic arsenal

  • To prevent inflation, the government used prudent public finance management

  • Central bank, the Riksbank, has been relatively independent and one of the agencies reporting directly to Parliament

Botswana's prudent macroeconomic management is an African post-colonial exception

Botswana is one of the few African countries since colonialism to pursue prudent macro-economic policy, especially the management of monetary, fiscal and public debt (Maipose, 2008). When Botswana became independent in 1966 it was among the poorest countries in the world, but through prudent economic management, the country achieved real GDP growth averaging 9 percent between 1965/66 and 2005/06. The country is now an upper middle-income country (Rodrik, 2003).

Immediately after independence, Botswana borrowed from abroad, like many African countries (Maipose, 2008). However, the foreign loans were used for infrastructure, unlike in most African countries in the immediately post-colonial period. Botswana also immediately went searching for foreign investment, specifically to develop new industrial sectors (Maipose, 2008). Many African countries immediately after independence discouraged the entry of private investment, often nationalising or indigenising, replacing the owners, managers and employees with locals, frequently members of the governing party, not necessarily with the experience to manage sophisticated private sector firms (World Bank, 1989; Young, 1982; Elbadawi, 1996; Rosberge and Jackson, 1982; Ndulu & O’Connell, 1999; Collier & O’Connell, 2007).

The government was also tougher on corruption than most African countries. In 1976, it enacted a law, the Finance and Audit Act, which made accounting and project officers personally liable for waste, misuse and stealing of public funds (Crisuoldo, N.d.).

The government ran budget surpluses for 16 years since 1982; and only in 1998/99 ran up a budget deficit (Harvey, 1997; Gaolathe, 1997; Lewis, 1993; Mupimpila, 2005; Sentsho, Eds.; UNDP, 1998). It judiciously accumulated foreign reserves and used the savings from these to finance the budget deficits of the 1998/1999 and 2002/2003 financial years.

The Botswana government has a National Employment, Manpower and Income Council which annually determines public service wage increases. The Council does this by taking into consideration the overall macroeconomic targets, including inflation levels, whether the country has a budget deficit and the levels of public debt. During budget deficit years, the government has capped public salary increases (Maipose, 2008).

Like many other African countries, Botswana relied on a single or two commodities – in the case of Botswana, beef. This often causes “boom and bust” cycles, with revenue depending on the price and uptake of the commodity (Brautigam, 1996; Gaolathe, 1997; Hyden, 1983; World Bank, 1989). Since commodity prices are volatile, African economies have years of booms followed by recessions, depending on the global commodity price they export.

In 1973, the Botswana government put together a long-term strategy which would build up reserves during boom periods to be used during downturns. The government planned much more competently than most other African governments. “The government explicitly pursued a counter-cyclical policy in the management of foreign exchange reserves and government cash balances, basing year-to-year spending decisions on the intermediate-term forecasts of export earnings and government revenue, and on a realistic view of spending capacity” (Maipose, 2008).

Furthermore, the Bank of Botswana has exceptionally been one of the most independent central banks in Africa, where central banks are often appendages of the governing party or used by the leader as a private bank. It has been central to consistent exchange rate stability, low inflation and sustainable current account levels (Hill & Knight, 1999). The Bank of Botswana also judiciously invested commodity surpluses. Monetary and fiscal policies are tightly coordinated between the central bank and the Department of Finance and Development Planning to ensure alignment of objectives. The Pula has been consistently under-evaluated to “a level below the perceived equilibrium” (Maipose, 2008), to promote exports.

In 1973, the Botswana government resolved to establish three funds to stabilise debt, reserve and to fund local development. In 1979, the Public Debt Service Fund (PDSF) and the Revenue Stabilisation Fund (RSF) were established.

The main Revenue Stabilisation Fund became the repository of export surpluses to finance the budget during downturns. By 1995 Botswana had the highest domestic savings rate in Africa at 45% of GDP (Motsomi, 1997). In 1975 it was 16% of GDP (Motsomi, 1997). By 1984, all gross fixed capital formation, the acquisition of new fixed assets, minus disposals, by government, business and households were financed by local savings (Maipose, 2008; Motsomi, 1997).

The Botswana government have maintained strict discipline in using the Revenue Stabilisation Fund only for the purposes of creating budget surplus during downturns and not for other things, as is the case in many African countries which set up such funds (World Bank, 1989; Elbadawi, 1996). The government also built up large foreign exchange reserves. “The high level of foreign exchange reserves is a result of a deliberate policy to accumulate as much as possible for unexpected changes regarding the balance of payments” (Maipose, 2008).

The Public Debt Service Fund was to pay off public debt. It was financed by appropriations from the national budget, budget surpluses and the profits of investments that were made by the fund. The fund essentially, over time, became an investment fund, loaning funds to state-owned enterprises for the purposes of infrastructure, new investments and buying new stock.

Subsequently, the government established the Domestic Development Fund to finance local development. Foreign funding was initially deposited into the Domestic Development Fund. Later, money specifically set aside for capital spending is also deposited into the fund. Development project proposals are evaluated by the fund, and if they meet the requisite standards, funds are disbursed (Maipose, 2008). Depositing donor money into a separate fund, dedicated to development, is also a departure from general African practice of donor funding going uncoordinated to different government departments and local projects (Brautigam, 1996; Gaolathe, 1997; Hyden, 1983; World Bank, 1989).

Lessons from Botswana

  • The Bank of Botswana has been one of the most independent central banks in Africa

  • The central bank has been central to consistent exchange rate stability, low inflation and sustainable current account levels

  • Botswana ran budget surpluses for 16 years since 1982

  • Only in 1998/99 did Botswana run up a budget deficit for the first time since 1982

  • It judiciously accumulated foreign reserves and used the savings from these to finance the budget deficits of the 1998/1999 and 2002/2003 financial years

  • To ensure alignment of objectives, monetary and fiscal policies are tightly coordinated between the central bank and the Department of Finance and Development Planning

  • The Pula has been consistently under-valued to promote exports

  • Export surpluses finance the budget during downturns

  • By 1995 Botswana had the highest domestic savings rate in Africa - 45% of GDP

  • The government built up large foreign exchange reserves

  • After independence Botswana borrowed from abroad, however the loans were used for infrastructure

  • Botswana also searched for foreign investment, specifically to develop new industrial sectors

  • The government was tougher on corruption than most African countries

  • A National Employment, Manpower and Income Council determines public service wage increases on an annual basis

  • The Council takes the overall macroeconomic targets, including inflation levels, whether the country has a budget deficit and the levels of public debt into consideration

  • During budget deficit years, the government has capped public salary increases

  • The government pursued a counter-cyclical policy in the management of foreign exchange reserves and government cash balances

  • It based year-to-year spending decisions on the intermediate-term forecasts of export earnings and government revenue

Developmental fiscal and monetary policy lessons for South Africa

Developmental fiscal and monetary policy must, in the public interest, be done in partnership with social partners and be part of an overarching national industrial plan. Brazil during its period of high growth with inflation, balance of payments crises were run by dictatorship – and alternative policy voices were snubbed out. Botswana in the first two decades after independence was more inclusive in economic policymaking, bringing in government and business to cobble together macroeconomic policy.

In Sweden, there was a partnership between government, labour and business to jointly strike developmental fiscal and monetary policies. Japan, Asia’s most democratic nation, struck up partnership agreements over economic policy between governing and opposition parties, and with business and labour.

Macroeconomic policy must be aligned to and support the national industrial plan. It must focus on growth. However, successful broad-based development necessitates prudent macroeconomic policies. It needs fiscal and monetary discipline.

This means keeping inflation at low levels, keeping exchange rates stable and sustainably managing public debt levels. Public spending has to be disciplined. Setting developmental interest rates, keep inflation manageable and setting sustainable exchange rates are crucial for development.

Developmental fiscal and monetary policy is complicated, sophisticated and complex. It means the institutions that oversee fiscal and monetary policy must be staffed by competent people. There has to be the policy sophistication to deliberate on the appropriate policy solution, to correctly analyse the environment and to change tactics, when there are economic shifts.

All of this demands coordination between the private sector, government and local and global markets. For government to be trusted by the markets, private sector and implementing government entities, it must be seen as credible, honest and competent. In this regard, the National Economic Development and Labour Council (NEDLAC), which has established fiscal and monetary policy chambers in place, should more strongly and urgently perform its central role in charting the fiscal and monetary course South Africa should take to place the economy on a sustainable path to growth.


Aizenman, J. & Ito, H. 2014. Living with the Trilemma Constraint: Relative Trilemma Policy Divergence, Crises, and Output Losses for Developing Countries. Berkeley: University of Southern California and NBER, April.

Ayres,J., Garcia, M.,Guillen, D. & Kehoe,P. 2018. The Monetary and Fiscal History of Brazil, 1960-2016, December 20, Monetary and Fiscal History of Latin America workshop, University of Chicago, LACEA-LAMES, PUC-Rio, Central Bank of Chile, and Inter-American Development Bank. Cambridge, MA: NBER.

Bergh, A. 2017. ‘Triumph of Social Democracy — or Serendipity?’ Milken Review, January 17 []

Beveridge, W.H. 1944. Full Employment in a Free Society. London: George Allen & Unwin.

Blanchflower, D., Jackman, R.G. & Saint-Paul, G. 1955. Some Reflections on Swedish Labour Market Policy. Report to the Committee on Swedish Labour Market Policy. Stockholm: Fritzes.

Braconier, H. & Steinar, H. 1999. The Public Budget Balance: Fiscal Indicators and Cyclical Sensitivity in the Nordic Countries. NIER Working Paper No. 67. Stockholm and Oslo: The National Institute of Economic Research (Konjunkturinstitutet) and Department of Economics.

Brautigam, D. 1996. 'State capacity and Effective Governance', in Ndulo, B. and Van de Walle, (eds.) Agenda for Africa's Economic Renewal. New Brunswick and Oxford: Transaction Publishers.

Bresser-Pereira, L.C. 2017. ‘The two forms of capitalism: developmentalism and economic liberalism’, Brazilian Journal of Political Economy, 37 (4) October/December [Online] Available at: [accessed.: 11 September 2020].

Calmfors, L. 1993. ‘Lessons from the Macroeconomic Experience of Sweden’, European Journal of Political Economy 9 (1) 25-72.

Calmfors, L., Forslund, A. & Hemstrom, M. 2001. Does Active Labour Market Policy Work? Lessons from the Swedish Experiences. Swedish Economic Policy Review 8 (2): 61 -124.

Cargill, T., F., Hutchison, M.M., and Itō, T. 1997. The political economy of Japanese monetary policy. Cambridge: MIT Press.

Commission of Inquiry. 2007. ‘The Riksbank’s Financial Independence’. Swedish Government, Stockholm, June.

Collier, P. & O’Connell, S. 2007. ‘African Economic Growth: Opportunities and Choices’, in B. Ndulu, B., R. Bates, P.

Collier & S. O’Connell (eds.), The Political Economy of African Economic Growth 1960-2000. Cambridge: Cambridge University Press.

Crisuoldo, A. N.d. Botswana: Briefing Note. Washington, DC: World Bank.

Elbadawi, I. 1996. ‘Consolidating Macro-economic stabilisation and Restoring Growth in Sub-Saharan Africa’, in B.

Emenike,E., Ezinando Ekenechukwu, E. & Edirin,J. 2017. ‘Budget Deficit and Fiscal Administration in Selected Sub-Saharan African Countries’, Trends Economics and Management, 29(2): pp. 21–33.

Erixon, L. 2010. ‘The Rehn-Meidner Model in Sweden: Its Rise, Challenges and Survival’, Journal of Economic Issues, 44 (3), pp. 677-715.

Erlandsen, E. & Lundsgaard, J. 2007. How Regulatory Reforms in Sweden Have Boosted Productivity. OECD Economics Department Working Papers No. 577. Paris: OECD.

Forslund, A. & and Krueger, A.B. 1997. ‘An Evaluation of the Swedish Active Labour Market Policy: New and Received Wisdom’. In R.B. Freeman, Robert H. Topel and Birgitta Swedenborg (eds.), The Welfare State in Transition: Reforming the Swedish Model. Chicago and London: The University of Chicago Press, pp. 267-298.

Frankel, J. 2015.The Plaza Accord 30 Years Later - Currency Policy Then and Now: 30th Anniversary of the Plaza Accord, Conference Paper, Baker Institute for Public Policy, Rice University, Oct. 1, 2015. NBER Working Paper 21813, Dec. 2015. Cambridge, MA: NBER.

Funabashi, Y. 1988. Managing the Dollar: From the Plaza to the Louvre. Washington: Institute for International Economics.

Gaolathe, N. 1997. Botswana’s Boom and Recession Experience: A Discussion, in J. Salkin, et al (eds.), Aspects of the Botswana Economy: Selected Papers, Gaborone: Lesedi La Lentswe Publishers.

Gowan, P. & Viktorsson, M.T. 2017. Revisiting the Meidner Plan, Jacobin Magazine, August 22 [Online] Available at: [accessed.: 11 September 2020].

Green, D.J. 1990. Exchange Rate Policy and Intervention in Japan, Journal of Asian Economics, 1 (2), pp. 249-271.

Gylfason, T. 2020. ‘Assar Lindbeck: an appreciation’. Social Europe, September 21.

Gylvason, T. 2017. ‘Sweden: From Achievements to Uncertainty’. Social Europe, July 26.

Hamada, K. & Kasuya, M. 1992. The Reconstruction and Stabilization of the Postwar Japanese Economy: Possible Lessons for Eastern Europe?, Center Discussion Paper, No. 672. New Haven: Yale University, Economic Growth Center.

Harvey, C. 1997. Monetary Independence: The Contrasting Strategies of Botswana and Swaziland, in J.S. Salkin, et al (eds.), Aspects of the Botswana Economy: Selected Papers. Oxford: James Curry Limited.

Healey,J. & Robinson,M. 1992. Democracy, Governance and Economic Policy: Sub-Saharan Africa in Comparative Perspective. London: Overseas Development Institute & Russell Press

Hill, C. & Knight, J. 1999. The Diamond Boom, Expectations and Economic Management in Botswana, in P. Collier & J.W. Gunning (eds.), Trade Shocks in Developing Countries, Vol. I(Africa). Oxford: Oxford University Press.

Horiuchi, A. 1993. ‘Japan’ in Chapter 3, ‘Monetary policies’. In Fukui, H., Merkl, P. H., Mueller-Groeling, H. and Watanabe, A. (eds.), The Politics of Economic Change in Postwar Japan and West Germany, vol. 1, Macroeconomic Conditions and Policy Responses. London: Macmillan.

Hutchison, M. M. 1984. Intervention, Deficit Finance and Real Exchange Rates: The Case of Japan, Federal Reserve Bank of San Francisco, Economic Review, 1:27-44.

Hyden, G. 1983. No Short Cuts to Progress: African Development Management in Perspective. London: Heinemann.

International Monetary Fund (IMF), N.d. International Financial Statistics. Washington, DC: IMF.

International Monetary Fund. N.d. The end of the Bretton Woods System (1972-810) Washington DC: IMF [Online] Available at: [accessed.: 11 September 2020].

Ito, T. 1987. The Intradaily Exchange Rate Dynamics and Monetary Policies after the Group of Five Agreement. Journal of the Japanese and International Economies 1, no. 3: 275–98.

Ito, T. 2003. Is Foreign Exchange Intervention Effective: The Japanese Experience in the 1990s. Paul Mizen (ed.) Monetary History, Exchange Rates and Financial Markets, Essays in Honour of Charles Goodhart, Volume 2. NBER Working Paper 8914. Cheltenham: Edward Elgar Publishers.

Johannesson, J. 1981. On the Composition of Swedish Labour Market Policy, The Expert Group for Labour Market Policy Evaluation Studies. Stockholm: Ministry of Labour.

Keynes, J.M. 1936. The General Theory of Employment, Interest and Money. London: Macmillan.

Krugman, P. 1991. International Adjustment and Financing: The Lessons of 1985–1991, (ed.) C. Fred Bergsten, 3–12. Washington: Institute for International Economics.

Lewis, S. 1993. Policy making and Economic Performance: Botswana in comparative Perspective, in J.S. (ed.), Botswana: The Political economy of Democratic Development. Boulder: Lynne Rienner Publishers.

Lindbeck, A. 1997. The Swedish Experiment, Journal of Economic Literature, Vol. 35, No. 3. (Sep., 1997), pp. 1273-1319.

Maipose, G.S. 2008. Institutional Dynamics of Sustained Rapid Economic Growth with Limited Impact on Poverty Reduction. Geneva: United Nations Research Institute for Social Development (UNRISD).

Meidner, R. 1952. "The Dilemma of Wages Policy under Full Employment." In Wages Policy Under Full Employment, by Ralph Turvey (ed.), pp. 16-29. London: William Hodge and Company.

Meidner, R. 1988. Gosta Rehn as an LO Economist. Journal of Economic and Industrial Democracy 9 (4): 455-474.

Motsomi, A. 1997. Policy Options for Savings Mobilisation in Botswana, in J.S. Salkin, et. al (eds.), Aspects of the Botswana Economy: Selected Papers. London: James Curry Limited.

Mupimpila, C. 2005. Fiscal system and Policy in Botswana, in H.k. Siphambe, N.N.O. Akinkugbe & J. Sentsho (eds.) Economic Development in Botswana: Facets, Policies, Problems and Prospects. Gaborone: Bay Publishing.

Nassif, A., Feijó, C. & Araújo, E. 2011. The long-term “optimal” real exchange rate and the currency overvaluation trend in open emerging economies: The Case of Brazil, Discussion Papers, No 206, United Nations Conference on Trade and Development (UNCTAD), December. Geneva: UNCTAD

Ndulu, B. J and O’Connell, (1999). Governance and Growth in Sub-Saharan Africa, Journal of Economic Perspective, 13(3):41-66.

Ndulo & N van de Walle (eds.), Agenda for Africa’s Economic Renewal. Washington DC: Overseas Development Council.

Nickell, S., Luca, N. & Ochel, W. 2005. Unemployment in the OECD since the 1960s: What Do We Know? The Economic Journal 115, 1 (2005): 1-27.

Obstfeld, M. 1990. The Effectiveness of Foreign-Exchange Intervention: Recent Experience, International Policy Coordination and Exchange Rate Fluctuations, W.H.Branson, J. Frenkel, M. Goldstein. Chicago: University of Chicago Press.

Ocampo, J.A. 2016. Balance-of-Payments Dominance: Implications for Macroeconomic Policy, in Mario Damill, Martin Rapetti and Guillermo Rozenwurcel (eds.), Macroeconomics and Development: Roberto Frenkel and the Economies of Latin America. New York: Columbia University Press.

Onimode,B. 2000. Africa in the World of the 21st Century. Ibadan: Ibadan University Press.

Pham, P. 2017. ‘How Do Asian Central Banks Distort And Destroy’, Forbes, December 4

Rehn, G. 1952. The Problem of Stability: An Analysis and Some Policy Proposals, in R. Turvey (ed.), Wages Policy Under Full Employment. London: William Hodge and Company, pp. 30-54.

Rehn, G. 1969. The Relationship between Productivity Development and the State of Overall Demand/Labour Market Policy and the 'Rehn Model'. Paper and Proceedings from a Conference in Honour of Erik Lundberg. The Industrial Council for Social and Economic Studies, Stockholm, pp. 63-81

Rehn, G. 1977. Towards a Society of Free Choice, in Wiatr, J.J. & Rose, R., Comparing Public Policies. Wroclaw: Ossolineum, pp. 121-157.

Rehn, G. 1982. Anti-inflationary Expansion Policies (with Special Reference to Marginal Employment Premiums). Occasional Paper, 4. Brussels: Commission of the European Communities.

Rehn, G. 1987. State, Economic Policy and Industrial Relations in the 1980s: Problems and Trends. Economic and Industrial Democracy 8, (1):61-79.

Rodrik, D. 2003. In Search of Prosperity: Analytic narratives on economic growth, Princeton and Oxford: Princeton University Press.

Rodrik, D. 2008. The Real Exchange Rate and Economic Growth. Brookings Papers on Economic Activity, (2):365–412. [Online] Available at: https://www.brookings.ed.u/wp-content/uploads/2008/09/2008b_bpea_rodrik.pdf [accessed.: 11 September 2020].

Rosberge, C. & Jackson, R. 1982. Personal Rule in Black Africa. Berkeley & Los Angeles: University of California Press.

Ryner, M. 2003. ‘What is living and what is dead in Swedish social democracy?’. Radical Philosophy 117, January/February.

Suzuki, Y. 1986. Money, Finance, and Macroeconomic Performance in Japan. New Haven, CT: Yale University Press.

Suzuki, Y. 2017. Difficulties and Challenges: Japan’s Post-War History of Economic Trends and Monetary Policy, Working Paper Series, No. 360, Columbia University, August, p.4.

Takagi, S. 2015. Conquering the Fear of Japanese Exchange Rate Policy Since 1945. Oxford: Oxford University Press.

The Swedish Confederation of Trade Unions (LO) (1951). Trade Unions and Full Employment. Report to the LO Congress 1951. Stockholm: The Swedish Confederation of Trade Unions (LO).

UNCTAD. 2011. Global Imbalances: The choice of the exchange rate-indicator is key. UNCTAD Policy Briefs no.19. Geneva: UNCTAD

UNDP, 1998. Botswana Human Development Report 1997: Challenges for Sustainable Human Development - A Long Term Perspective. Gabarone: United Nations Development Programme.

US Department of Treasury. 1983. Report of the Working Group on Exchange Market Intervention (‘Jurgensen Report’). Washington: US Department of Treasury.

Werner, R.A. 2003. Princes of the Yen: Japan's Central Bankers and the Transformation of the Economy. New York: M.E. Sharpe.

Werner, R. A. 2002. ‘Monetary Policy Implementation in Japan: What They Say vs. What they Do’. Asian Economic Journal, vol. 16, no. 2: 111-151, Oxford: Blackwell

Williamson, J. 2008. Exchange Rate Economics. Working Paper Series WP 08–3. Washington, DC: Peterson Institute for International Economics.

World Bank. 1989. Sub-Saharan Africa from Crisis to Sustainable Growth: A Long-term Perspective Study. Washington DC: World Bank.

Young, C. 1982. Ideology and Development in Africa. New Haven: Yale University Press.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

This report has been published by the Inclusive Society Institute

The Inclusive Society Institute (ISI) is an autonomous and independent institution that functions independently from any other entity. It is founded for the purpose of supporting and further deepening multi-party democracy. The ISI’s work is motivated by its desire to achieve non-racialism, non-sexism, social justice and cohesion, economic development and equality in South Africa, through a value system that embodies the social and national democratic principles associated with a developmental state. It recognises that a well-functioning democracy requires well-functioning political formations that are suitably equipped and capacitated. It further acknowledges that South Africa is inextricably linked to the ever transforming and interdependent global world, which necessitates international and multilateral cooperation. As such, the ISI also seeks to achieve its ideals at a global level through cooperation with like-minded parties and organs of civil society who share its basic values. In South Africa, ISI’s ideological positioning is aligned with that of the current ruling party and others in broader society with similar ideals.

Phone: +27 (0) 21 201 1589



bottom of page