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[Washington, D.C.], U.S. Agency for International Development, 1988 Mar. xix, 90 p. (A.I.D Evaluation Special Study No. 53)This report is based on an examination of over 30 projects designated as "employment generation" in as many countries during the period from the early 1970s to 1982 sponsored by USAID. The focus is on the policy environment of these projects, building on a World Bank study that highlights the positive relationship between growth, equity, and an economy relatively free of distortions in foreign exchange, factor, and product pricing. 1 major conclusion must be stressed: the policy environment is the single most important determinant of project success. Although not examined directly in the study, 3 related suggestions can be gleaned from the overall economic background of the economies examined. 1) The administrative environment (contract laws, public accountancy, ease of entry into business, "honest weights and measures," and the like) can reduce the effectiveness of projects in otherwise supportive policy environments. 2) The continued provision and expansion of social overhead capital, such as education and health, is an important foundation for the expansion of the private sector. 3) The informal sector exhibits extraordinary vitality, and further attempts should be made by USAID to understand that vitality may pay large dividends in future USAID programming. Rapid population growth and policy distortions that have weakened both the formal and informal sectors of the economies of developing countries have retarded a transformation in the sectorial structure of the labor force. As a result, vast numbers of people remain in low-productivity agricultural, off-farm, and urban activities. They need to be moved into productive employment, which is the major link between growth and equity.