Introduction to Development Economics

Transcription

1 Introduction to Development Economics Fourth edition Subrata Ghatak O Routledge g ^ ^ Taylor &. Francis Group LONDON AND NEW YORK

2 Contents Preface to the fourth edition Preface to the third edition Preface to the second edition Preface to the first edition Acknowledgements xi xii xiii xiv xvi 1 INTRODUCTION Introduction Characteristics of the less developed countries Types of markets in less developed countries Production conditions in less developed countries Growth and development Human development index 26 Appendix 1.1 Measurement of income inequality 28 Appendix 1.2 A note on production functions 30 PARTI The economic theory of growth and development 35 2 GROWTH THEORIES AND THEIR RELEVANCE TO LESS DEVELOPED COUNTRIES Introduction Classical scenario The Keynesian theory and less developed countries The Harrod-Domar model and its applications The neoclassical theory and less developed countries Marx's theory and less developed countries The Kaldor-Mirrlees model The neoclassical growth accounting formula and the new endogenous growth theory Differences in economic growth 60

3 vi Contents Appendix 2.1 The basic equations of the neoclassical economic growth model 71 Appendix 2.2 Endogenous growth models 73 3 DUAL ECONOMY MODELS Introduction : The 'surplus' labour and its contribution to development The Fei-Ranis model The Jorgenson model Some extensions of the dual economy models: the Dixit-Marglin model The Kelly et al. model Dual economy models: a critique 91 Appendix 3.1 Employment and growth 94 Part II Investment, saving, foreign resources and industrialization in less developed countries 97 4 ALLOCATION OF RESOURCES: INVESTMENT CRITERIA The need for investment criteria in less developed countries The capital turnover criterion The social marginal productivity criterion The maximization of the rate of creation of investible surplus principle The reinvestible surplus criterion Balanced and unbalanced growth 109 Appendix 4.1 The dichotomy between savings and output maximization and its solution DOMESTIC RESOURCES FOR DEVELOPMENT Introduction The nature of money markets in less developed countries Money and economic growth Inflation and economic growth Financial liberalization in LDCs: causes and consequences Objectives of fiscal policy in less developed countries Fiscal policy and growth Deficit financing and less developed countries The tax structure in less developed countries Taxation and domestic resource mobilization in less developed countries: the evidence 138

4 Contents vii 5.77 Tax reforms in less developed countries in the 1980s Budgetary deficits and Ricardian equivalence: the case of India FOREIGN RESOURCES AND ECONOMIC DEVELOPMENT Introduction The concept of foreign resources Criteria for distribution of foreign resources Different types of foreign resource Dual-gap analysis and its evaluation Gains and losses of investment by multinational corporations in less developed countries: some theoretical issues Private foreign investment and the transfer of technology to less developed countries Special drawing rights and the 'link' Foreign aid and economic growth 176 Appendix 6.1 Less developed countries and world trade INDUSTRIALIZATION, PROTECTION AND TRADE POLICIES Major reasons jor industrialization in less developed countries The role of tariff's in economic development The optimum tariff argument The infant industry argument Distortions in the factor markets The balance of payments argument The employment argument 'Nominal' and 'effective' rates of protection The 'cost'of protection Economic growth and trade Terms of trade between developed countries and less developed countries Export instability and economic growth in less developed countries The role of the United Nations Conference on Trade and Development and some trade policies to help less developed countries Non-tariff barriers and the generalized system of preferences Regional co-operation among less developed countries Trade liberalization and industrialization The North-South models and intra-industry trade Conclusion 220 Appendix 7.1 Indices of instability of exports 223

5 viii Contents Part III Sectoral development and planning SECTORAL ALLOCATION OF RESOURCES: AGRICULTURE Introduction : The role of agriculture in economic development The concept of 'marketed surplus' A model to mobilize agricultural surplus Acreage response to prices Marketed surplus, size-holdings and output Limitations of price policy and some alternatives Conclusion GREEN REVOLUTION AND INCOME DISTRIBUTION Introduction The nature of the Green Revolution Causes of the Green Revolution Effects of the Green Revolution on income: a simple theory Effects of the Green Revolution on relative factor shares Problems and prospects of the Green Revolution The basic needs approach Growth theory and basic needs A note on famines POPULATION, POVERTY, INCOME DISTRIBUTION, EMPLOYMENT AND MIGRATION Population and economic development Population explosion in less developed countries and the theory of demographic transition Low-level equilibrium trap 21A 10.4 Fertility and population growth in less developed countries Poverty and income distribution Income inequality Absolute poverty Redistribution with growth The employment problem The Todaro model / Migration theory and evidence: an assessment Stork's model Employment policy 299

6 Contents Poverty, inequality and financial development 300 Appendix 10.1 The definition of a poverty line 304 Appendix 10.2 Migration 306 Appendix 10.3 Schultz's model of the household production approach to fertility 307 Appendix 10.4 Poverty and nutrition DEVELOPMENT PLANNING Concept of economic planning Types of planning Economic models and economic planning The case for and against planning Development planning models Application of the Harrod-Domar model in development planning: India's first five year plan A two-sector Harrod-Domar model for planning: the Kenyan case Feldman-Mahalanobis sectoral planning and the Indian secondfi,ve year plan Macroeconometric models in development planning Input-output analysis in development planning / Linear programming and development planning Micro-planning: aims of cost-benefit analysis The Little and Mirrlees method of project evaluation in less developed countries The United Nations Industrial Development Organization (1972) guidelines Social accounting and development planning by Barbara M. Roberts 343 Appendix 11.1 The Feldman Mahalanobis model 347 L2 STRUCTURAL ADJUSTMENT AND DEVELOPMENT Structural adjustment and economic growth The structural adjustment and stabilization policies of the IMF Trade adjustment Structural adjustment, stabilization and trade policies Exchange rate and trade reforms Structural adjustment programmes: the experience of sub-saharan African countries Conclusion 361 ix

7 x Contents Part IV A new deal in commodity trade? THE NEW INTERNATIONAL ECONOMIC ORDER Introduction The evolution of the new international economic order :3 The main objectives of a new international economic order The theory of commodity price stabilization: demand/'supply shifts Commodity price stabilization: gains and losses Implications of international commodity agreements, buffer stocks and compensatory finances Conclusion THE INTERNATIONAL DEBT CRISIS with Nigel M. Healey Introduction The evolving debt position of the developing world Why do developing countries become indebted? Sources of external finance Why do debt servicing problems arise? The external dimensions of the 1982 crisis Phase one: 'muddling through' the debt crisis, Phase two: debt forgiveness and the Brady Plan ENVIRONMENT AND DEVELOPMENT Introduction Deforestation and macroeconomic environment The 'tragedy of the commons' Externalities, natural resource degradation and economic policies A case study: the importance of fuelwood in household energy consumption (5 An alternative jarming system: alley cropping in humid West African agriculture Conclusion 413 Bibliography 416 Index 452