In the authors' views, neither Latin American nor Asian experiences are relevant for African LDCs. Reform yields no clear economic winners in Africa so, in the short and medium terms, there will be little correlation between political liberalization and economic reform. Herbst is traveling to South Africa and Mozambique in July 1996 for a USIA-sponsored speaker program. Since adoption of a flexible exchange rate system in 1973, central banks of most industrialized countries have continued to intervene in foreign exchange markets, in part because exchange rate volatility has increased.
Opinions differ on whether central banks can stabilize exchange rates.
Bonser-Neal presents empirical evidence suggesting that central bank intervention does not generally reduce exchange rate volatility. El-Erian, director of the Middle Eastern Department of the International Monetary Fund, shows the impact of the Uruguay Round and the globalization of capital on mostly Arab economies. He contends that the region will see few benefits, as markets are generally inward looking and inadequately diversified. He maintains that reducing the fiscal deficits that accompany incentives to the private sector is key to broadening the scope for foreign investment. Kapstein contends that a new coordination of policies is needed to create jobs and retrain workers.