Abstract
This dissertation consists of four chapters. Chapter 1: Introduction and summary of the thesis. This thesis consists of three essays (chapters 2-4) within the field of macroeconomics and development. The purpose of this first chapter is to provide an overview of the issues covered and the results obtained. Chapter 2: Life cycles, oil cycles, or financial reforms? Private savings rates in Indonesia. What goes steady with private savings? This chapter investigates reasons for the sustained growth in private savings in Indonesia between 1970 and 1994, in a period characterised by economic growth, demographic changes, terms of trade movements, and some financial reforms. The main finding is that predictions from a simple life cycle model do well in as much as the growth in private savings rates is associated with a fall in the dependency ratio. This suggests that the a reduction in the number of children relative to working age population has alleviated houshold budget constraints, thereby boosting savings rates. Chapter 3:Incredibly helpful?Foreign aid and stabilisation reforms in sub-Saharan Africa. What is the role of foreign aid in macroeconomic stabilisation? This study addresses the ambiguous impact of aid on stabilisation reforms in the Gambia, Ghana, Guinea-Bissau, Kenya, Tanzania, Uganda, Zaire and Zambia. These countries have all received significant amounts of aid in connection with stabilisation attempts, but differ in their respective achievements. One important reason for the discrepancies appears to be that reform commitment as well as aid conditionality is more credible in some circumstances tha others. A review of factors with potential influence on reforms suggests that stabilisation aid has been less effective in countries with a history of high levels of aid, and that stabilisation has followed on comprehensive reform programs which have not been undermined by preceding failed reform attemts. Chapter 4: Foreign direct investment and Structural adjustment Lending. The recent surge in FDI flows to developing countries has been attributed to liberalisation efforts. Using data on World Bank structural adjustment lending for a sample of developing countries, this chapter looks at the impact of the design and outcome of structural adjustment programs on multinational firms’ investments. An important finding is that there are considerable changes before and after reforms regarding the characteristics which attract FDI, with an increased importance of the economic environment of host countries. While we find no convincing relationship between the results of reforms and an increase in FDI inflows, there is evidence that countries that undertook consecutive reform programs experienced higher growth in FDI.