The evolution of welfare and poverty under structural change and economic recession in Cote d'Ivoire, 1985-88

The author demonstrates what can happen to the welfare of households and individuals, and to poverty, in a low- to middle-income country, under structural adjustment and recession. Cote d'Ivoire was one of the first African countries to launch a structural adjustment program with support from the World Bank and the IMF. The program was sustained for six years (1981-86), then abandoned in 1987-88 when a severe recession hit the country. A new economic recovery program was initiated in 1989. Cote d'Ivoire presents a unique case study - certainly in Africa - because four consecutive years of comprehensive data on levels of living are available for the period 1985-88, from the Cote d'Ivoire Living Standards Survey. The first two years of data capture the situation at the end of a sustained adjustment effort, when the economy was growing moderately; the last two years capture a period of pronounced macroeconomic decline and destabilization. The author found that in the first period, the incidence of poverty remained steady and the welfare level of the pooractually rose. In 1987, on the other hand, poverty and extreme poverty both became more widespread - a trend that accelerated dramatically in 1988, when the incidence of poverty rose from 35 percent to 46 percent. Over 1985-88, the regional and socioeconomic patterns of poverty changed markedly. The most important shift was the rapid increase in urban poverty. Especially households of public sector employees and those working in the informal sector were hardest hit. Farmers appear to have benefitted during the final years of the adjustment phase, while poverty incidence among them increased sharply in 1987-88, especially among export crop farmers. This occurred in spite of continued maintenance of producer prices, suggesting that price support alone is not sufficient to protect farm incomes. The entire system of agricultural support must be maintained and improved. The author found that basic needs fulfillment did not decline as much as expenditure. But the burden of whatever declines did occur fell disproportionately on the very poor. The targeted provision of public services (health, education, tap water, and so on) is thus a high priority.