The Politics and Economics of Policy Reform in Zambia

Many African governments have now liberalized their economies, but investor surveys show that there is often considerable fear of policy reversal. This paper investigates the politics and economics of a reform attempt begun by the government of Zambia in 1985 which collapsed in 1987. We argue that while in purely economic terms the reforms were initially sustainable, the apparent consequences of liberalization were politically unacceptable to the particular interest groups then in charge of the state. Ostensibly minor government backsliding causeda speculative response which became self-fulfilling.