Modern Monetary Theory as an analytical framework and a policy lens: an African perspective

According to critics, Modern Monetary Theory (MMT) is irrelevant to developing countries as it would only “apply” to developed countries, or worse yet, to the few ones that issue an international reserve currency. The present chapter counters this claim by offering two arguments. As a research program, MMT is built on a number of theoretical pillars that could be used to study all economies, regardless of their level of development. MMT provides thus an original understanding of colonialism’s monetary and fiscal dimensions, which is no doubt important to developing countries, as most of them were former colonies. As a policy lens, MMT helps to clarify the nature of the constraints facing peripheral countries and the possible development options. In such a context, an MMT perspective stresses the necessity as well as the foundations of a development model based on domestic resource mobilization, and in particular on the full employment of the labor force.