Problems of monetary management in East Africa 1961-1970

Abstract

This is an attempt to study the role of monetary and credit policy in the context of the East African Community. The research starts off with an introductory chapter on monetary theory and the extent of its applicability to developing countries. The theoretical framework is based on institutional and structural assumptions relevant to developed countries. As the economic structure of the developing countries is different from that of the developed countries, these assumptions would not hold in the context of the former. For this reason, the application of the monetary theory to developing countries is limited. This is not to say that analytical approaches of the monetary theory are of no value to the study of the monetary problems of developing countries. It is only to emphasize that the assumption of general validity of monetary theory is challenged by the very fact that sharp structural and institutional differences do exist between developed and developing countries. In this theory, it studies monetary and credit policy. In this paper monetary and credit policy is defined as the measures that influence the supply of money, the terms and the availability of credit in order to expand. Or contract the volume of purchasing power in the economy and hence to reduce or increase the level of demand.