Adjustment is best considered as the implementation of comprehensive reforms of macro and micro policies, in response to various shocks, and to rectify inappropriate past policies that have hampered economic performance. These shocks have adversely affected the whole range of economic policy objectives, including the balance of payments, price stability, full employment, economic growth, the protection of the environment, and equity/poverty reduction. Shocks, whether internal or external, affect all policy objectives, and not simply the balance of payments, price stability, and growth which are the traditional focus. We are here concerned with how adjustment programs have affected the wider social objectives of governments, and especially poverty reduction.

This document was written as part of the work undertaken under the Social Dimensions of Adjustment (SDA) Program in Africa. The program aims at thoroughly integrating social dimensions into economic and financial decision-making. To do so, it pursues several parallel tracks. 1) within each country a special institution building effort is being launched to strengthen national capability for policy analysis and project identification, preparation and implementation. 2) country-specific studies dealing with poverty alleviation and economic policy are being undertaken. 3) developing an adequate data base for analysis of social issues and formulating socioeconomic policy through monitoring surveys and integrated household surveys. 4) improving the understanding of the links among conceptual, empirical, and policy issues involved in the integration of social and economic policies and programs. This report deals mostly with the last track. The objective is to provide guidance to researchers and practioners in assembling and anlyzing the necessary data in order to achieve the objectives of the SDA initiative. It then explores the major policy issues that must be faced by governments to integrate social dimensions in the design of their structural adjustment programs and development plans.

The last decade has bought sharp adjustments and rising poverty to much of the developing world. The experiences of Africa and Latin America are contrasted with areas which were able to combine adjustment with protecting the poor.