The Employment Challenge in Developing Countries during Economic Downturn and Recovery

Abstract

Fluctuations in economic activities are quite normal in market-based economies. However, such fluctuations may become severe and take the form of a crisis. Indeed, both the volatility of economic growth and the frequency of severe fluctuations in growth that warrant the use of the term ‘crisis’, appear to have increased during the past three decades compared to the earlier decades. An ILO report (2004b) shows that during the period 1980–2000, the degree of volatility of GDP growth and per capita GDP growth has been higher than that observed during the period 1960–80. Lustig (2000) mentioned that, during the period 1990–98, there were over 40 cases in Latin America alone in which per capita GDP fell by 4 per cent or more. During the Asian economic crisis of 1997–98, a number of countries of East and South East Asia experienced sharp declines in the levels of economic growth. Sharp economic downturns experienced by several central Asian countries during their period of economic reforms in the 1990s also assumed crisis proportions (Torm 2003). The global economic recession of 2008–09 caused down-turns in economic activities in a large number of developing countries.