Structural Adjustment, Macroeconomic Adjustment and Poverty: A Methodology for Analysis

The object of this paper is to set out a methodology for analysing the impact on the poor in less developed countries of adjustment to disturbances arising in the international sectors of these economies. The methodology is not based on a detailed general equilibrium model of the whole economy, but instead focuses on the effects of the adjustment process on the sectoral composition of national output and expenditure. The paper provides a framework for the calculation of quantitative estimates of the impact of adjustment on poverty using household income and expenditure surveys currently available in LDCs. It proposes the use of decomposable poverty indices as a tractable vehicle for calculating the impact of adjustment on overall poverty. This framework does require, however, reasonably disaggregated data on income distribution.