Economics of Development

by Perkins, Dwight H.; Gillis, Malcolm; Radelet, Steven C.; Snodgrass, Donald R.; Roemer, Michael

• ISBN13: 9780393975178
• ISBN10: 0393975177
• Edition: 5th
• Format: Hardcover
• Copyright: 2001-01-01
• Publisher: W W Norton & Co Inc

Summary

Adopted at more than 400 colleges and universities worldwide, Economics of Development remains the standard of excellence in its market. That tradition continues with this Fifth Edition in which the all-star team of authors, including newcomer Steven Radelet, introduce a number of important improvements to the book's scope and coverage. Like previous editions, this one benefits from the wide-ranging expertise of its authors, both as researchers and field practitioners, and its approach remains steadfastly pragmatic and authoritative. Now more than ever before, Economics of Development is the book to count on in your development course.

Table of Contents

Preface	xv
International Development Resources on the Internet	xx
Part One: Theory and Patterns
Introduction	3	(24)
Terminology: The Developing World	6	(1)
Rich and Poor Countries	6	(2)
Growth and Development	8	(2)
A Development Continuum	10	(5)
A Glance at History	15	(3)
The Concept of Substitutes	18	(6)
Approaches to Development	24	(2)
Organization	26	(1)
Economic Growth: Theory and Empirical Patterns	27	(56)
Estimating Gross National Product	28	(2)
What Is Included in GNP?	30	(1)
Exchange-Rate Conversion Problems	30	(3)
Other Index-Number Problems	33	(2)
Income Levels and Economic Growth around the World: A Brief Overview	35	(4)
The Progression of Growth Theory	39	(1)
Production Functions: An Overview	39	(1)
The Basic Growth Model	40	(3)
The Harrod-Domar Growth Model	43	(1)
The Fixed-Coefficient Production Function	43	(2)
The Capital-Output Ratio and the Harrod-Domar Framework	45	(2)
Strengths and Weaknesses of the Harrod-Domar Framework	47	(5)
Economic Growth in Thailand	50	(2)
The Solow (Neoclassical) Growth Model	52	(1)
The Neoclassical Production Function	52	(1)
The Basic Equations of the Solow Model	53	(4)
The Solow Diagram	57	(2)
Changes in the Saving Rate and Population Growth in the Solow Model	59	(2)
Technological Change in the Solow Model	61	(3)
Empirical Evidence on Economic Growth	64	(1)
Convergence	64	(3)
Characteristics of Rapidly Growing Economies	67	(4)
Sources of Growth Analysis	71	(7)
Explaining Differences in Growth Rates	72	(6)
Beyond Solow: New Approaches to Growth	78	(2)
Appendix: Deriving the Sources of Growth Equation	80	(3)
Structural Change	83	(32)
Two-Sector Models	88	(1)
The Production Function	89	(7)
Labor Surplus in China	95	(1)
The Neoclassical Two-Sector Model	96	(3)
Labor Surplus in Africa	98	(1)
Industrial Patterns of Growth	99	(1)
Empirical Approaches	99	(1)
Theoretical Approaches	100	(2)
Backward and Forward Linkages	102	(2)
Quantitative Interindustry Models	104	(5)
Social Accounting Matrix	109	(3)
Computable General Equilibrium Models	112	(3)
Development and Human Welfare	115	(36)
Concepts and Measures	118	(1)
Income Distribution	118	(2)
Inequality Measures	120	(3)
Poverty Measures	123	(2)
Equality and Equity	125	(1)
Basic Human Needs and Social Indicators	125	(2)
Overall Indicators of Development	127	(2)
Patterns of Inequality and Poverty	129	(1)
Inequality and Economic Development	129	(1)
Other Influences on Inequality	130	(1)
How Growth Reduces Poverty	131	(2)
Gender, Inequality, and Poverty	133	(3)
South Korea	134	(1)
Brazil	135	(1)
Sri Lanka	136	(1)
Theories of Inequality and Poverty	136	(1)
Ricardo's Two-Sector Model	136	(2)
India	137	(1)
Marx's View	138	(1)
Neoclassical Theory	138	(1)
Labor-Surplus Model	138	(3)
Strategies for Growth with Equity	141	(1)
Redistribute First, Then Grow	141	(2)
Redistribution with Growth	143	(1)
Basic Human Needs	144	(2)
Structural Adjustment and the Poor	146	(1)
Growth and Equity: Key Policy Issues	147	(4)
Part Two: Guiding Development
Guiding Development: Markets Versus Controls	151	(44)
Managing Development	151	(1)
Market Economics	152	(4)
Socialist Economies	156	(3)
The March Toward Markets	159	(1)
The Appeal of Controls	159	(2)
Resurgence of the Market	161	(8)
The Declining Effectiveness of Industrial Policy: Korea from the 1960s to the 1990s	164	(5)
Implementing Market Reforms	169	(1)
Stabilization of Macroeconomy	170	(7)
China Joins the WTO to Speed the Transition to the Market, 1999-2000	171	(6)
Dismantling Controls	177	(2)
Stabilization That Worked: Bolivia 1985-86	178	(1)
Ensuring Competition	179	(2)
Moving toward Scarcity Prices	181	(2)
Responding to Market Signals	183	(4)
The Transition to a Market System	187	(8)
Stabilization and Deregulation, Indonesia 1986-90	192	(3)
Sustainable Development	195	(50)
Market Failures	197	(1)
The Commons	198	(1)
Externalities: A Closer Look	199	(1)
Soil Erosion in Java, Indonesia	200	(1)
Sustainable Harvests	200	(4)
The Value of Time	204	(3)
Policy Solutions	207	(1)
Property Rights	208	(2)
Communal Forest Management in India	209	(1)
Government Regulation	210	(4)
Taxation	214	(3)
Reducing Water Pollution from Palm Oil Mills in Malaysia	216	(1)
Marketable Permits	217	(3)
Policy Failures	220	(5)
Subsidized Deforestation of the Amazon	221	(2)
Kerosene Subsidy in Indonesia	223	(2)
Valuing a Recreational Facility in Bangkok, Thailand	225	(1)
Measuring Sustainability	225	(1)
Natural Capital	226	(1)
A Concept of Sustainability	227	(1)
Resources and National Income	228	(4)
Sustainable Developments in Malaysia	230	(2)
Global Sustainability	232	(1)
Malthusian Views	232	(1)
Neoclassical Views	233	(4)
Environmental Degradation and Income Levels: Three Patterns	236	(1)
Environmental Standards, International Competitiveness, and Trade	237	(3)
Poverty and the Environment	240	(2)
Rich Nations and Poor Nations	242	(3)
Part Three: Human Resources
Population	245	(36)
Demographic Measures	246	(2)
A Brief History of Human Population	248	(1)
The Preagricultural Era	248	(1)
From Settled Agriculture to the Industrial Revolution	248	(1)
From the Industrial Revolution to World War II	249	(1)
The Post-World War II Period	249	(3)
The Present Demographic Situation	252	(6)
The Demographic Future	258	(1)
The Causes of Population Growth	259	(1)
Malthus and His World	259	(2)
Mechanisms for Reducing Birthrates	261	(1)
Modern Theories of Fertility	262	(3)
Analyzing the Effects of Rapid Population Growth	265	(1)
Optimum Population	265	(2)
Dynamic Models of Population Growth	267	(1)
Concern about the Effects of Population Growth on Development	268	(1)
Doubters and Dissenters	269	(1)
Conclusion	270	(1)
Population Policy	271	(2)
Population and Family Planning in Kenya	272	(1)
Policy Alternatives	273	(6)
Population and Family Planning in China	274	(2)
Population and Family Planning in Indonesia	276	(3)
Family Planning versus Development?	279	(2)
Labor's Role	281	(38)
Analyzing Employment Issues	282	(1)
Growth of the Labor Supply	282	(1)
Patterns of Employment	283	(3)
Primary Education and Child Labor in India	286	(1)
The Structure of Labor Markets	286	(5)
The Urban Informal Sector in Indonesia	290	(1)
Measuring the Labor Supply and Its Utilization	291	(3)
Labor Reallocation	294	(1)
Costs and Benefits of Reallocating Labor	295	(3)
Internal Migration	298	(2)
International Migration	300	(2)
Employment Policy	302	(1)
Labor Absorption through Industrialization	302	(4)
Elements of Employment Promotion Policy	306	(1)
Factor Price Distortions	307	(1)
Correcting Factor Price Distortion	308	(4)
The Role of Technology	312	(1)
Technology Policies	313	(2)
Other Employment Policies	315	(3)
Employment Creation Strategies	318	(1)
Education	319	(26)
Trends and Patterns	320	(3)
Education in Indonesia	322	(1)
Types of Learning	323	(2)
Characteristics of Developing-Country Education	325	(4)
Education's Role in Development	329	(1)
Manpower Planning	330	(3)
Cost-Benefit Analysis	333	(4)
Cost-Benefit Analysis in Educational Planning	337	(5)
Educational Policy in Kenya and Tanzania and Its Results	340	(2)
Alternative Viewpoints	342	(3)
Health and Nutrition	345	(32)
Health in the Developing Countries	346	(1)
Patterns and Trends	346	(6)
HIV/AIDS in Africa	350	(2)
Causes of Sickness and Death	352	(2)
Health in Sri Lanka	354	(1)
Effects of Health on Development	354	(4)
Environmental Health	358	(1)
Malnutrition	359	(2)
Food Consumption	361	(3)
Nutritional Interventions	364	(2)
Medical Services	366	(5)
Supplying Medicines to Poor Countries	370	(1)
Health Services and the Market	371	(6)
Part Four: Capital Resources
Capital and Saving	377	(43)
Saving and Investment: The Basic Data	379	(3)
Investment Requirements for Growth	382	(1)
Types of Investment	382	(2)
Effective Use of Capital	384	(1)
Capital-Intensive or Labor-Intensive Investment: A Hypothetical Case	385	(2)
Sources of Saving	387	(1)
A Taxonomy of Savings	388	(2)
Government Saving	390	(4)
Private Domestic Saving	394	(1)
Determinants of Private Saving	395	(1)
Household Saving Behavior	395	(7)
Corporate Saving Behavior	402	(2)
Foreign Saving	404	(4)
Foreign Aid	408	(1)
Historical Role	408	(4)
Aid Institutions and Instruments	412	(2)
Aid and Development	414	(6)
Fiscal Policy	420	(56)
The Government Budget: General Considerations	421	(1)
Government Expenditures	422	(1)
Current and Recurrent Expenditures	423	(2)
Wages and Salaries	425	(1)
Purchases of Goods and Services	426	(2)
Interest Payments	428	(1)
Subsidies	428	(2)
State-Owned Enterprises	430	(1)
Intergovernmental Transfers	431	(1)
Project Appraisal and the Capital Account	432	(1)
Present Value	432	(3)
Opportunity Costs	435	(2)
Shadow Prices	437	(1)
Project Appraisal and National Goals	438	(2)
Transforming Market Prices into Shadow Prices	440	(2)
Tax Policy and Public Saving	442	(2)
Taxes on International Trade	444	(2)
Tax Rates and Smuggling: Columbia	445	(1)
Personal and Corporate Income Taxes	446	(1)
Sales and Excise Taxes	447	(3)
New Sources of Tax Revenues	450	(1)
Changes in Tax Administration	450	(2)
Tax Administration in India and Bolivia in the 1980s	451	(1)
Fundamental Tax Reform	452	(5)
Lessons from Comprehensive Tax Reform: Colombia	453	(4)
Taxes and Private Investment	457	(1)
Taxes and Private Saving	457	(3)
Taxes and Capital Mobility	460	(1)
Income Distribution	461	(1)
Taxation and Equity	462	(1)
Personal Income Taxes	463	(1)
Taxes in Luxury Consumption	464	(2)
Corporate Income and Property Taxes: The Incidence Problem	466	(2)
Limited Effects of Redistribution Policy	468	(1)
Expenditures and Equity	469	(3)
Irrigation and Equity	471	(1)
Economic Efficiency and the Budget	472	(1)
Sources of Inefficiency	472	(1)
Neutrality and Efficiency: Lessons from Experience	473	(3)
Financial Policy	476	(45)
The Functions of a Financial System	477	(1)
Money and the Money Supply	477	(3)
Financial Intermediation	480	(1)
Transformation and Distribution of Risk	481	(1)
Stabilization	482	(1)
Inflation and Savings Mobilization	482	(1)
Inflation Episodes	483	(5)
Hyperinflation in Peru: 1988-90	486	(2)
Forced Mobilization of Savings	488	(2)
Inflation as a Stimulus to Investment	490	(3)
Inflation and Interest Rates	493	(2)
Interest Rates and Savings Decisions	495	(1)
Interest Rates and Liquid Assets	496	(3)
Financial Development	499	(1)
Shallow Finance and Deep Finance	499	(1)
Shallow Financial Strategy	500	(3)
Deep Financial Strategies	503	(3)
Panic, Moral Hazard, and Financial Collapse	506	(3)
Informal Credit Markets	509	(3)
Small-Scale Savings and Credit Institutions: Bangladesh and Indonesia	511	(1)
Monetary Policy and Price Stability	512	(1)
Monetary Policy and Exchange-Rate Regimes	512	(2)
Sources of Inflation	514	(3)
Controlling Inflation through Monetary Policy	517	(1)
Reserve Requirements	518	(1)
Credit Ceilings	519	(1)
Interest Rate Regulation and Moral Suasion	520	(1)
Private Foreign Capital Flows, Debt, and Financial Crises	521	(56)
Foreign Investment and the Multinationals	523	(1)
Multinationals' Investment Patterns	524	(1)
Characteristics of Multinationals	525	(1)
Benefits of Foreign Direct Investment	526	(7)
Policies toward Foreign Direct Investment	533	(2)
Foreign Debt	535	(1)
Commercial Borrowing	536	(2)
Debt Dynamics	538	(2)
The 1980s Debt Crisis	540	(4)
Causes of the Crisis	544	(2)
Escape from the Crisis	546	(5)
The 1982 Mexican Debt Crisis	548	(3)
The Highly Indebted Poor Countries	551	(5)
Debt Relief in Uganda	554	(2)
Emerging Market Financial Crises	556	(3)
Domestic Economic Weaknesses	559	(2)
Short-Term Capital Flows	561	(3)
Creditor Panic	564	(4)
Self-Fulfilling Creditor Panics	566	(2)
Stopping Panics	568	(4)
Lessons from the Crises	572	(5)
Part Five: Production and Trade
Agriculture	577	(42)
Agriculture's Role in Economic Development	578	(2)
Self-Sufficiency and Dwindling World Food Supplies	580	(2)
Food Supply and Famine	582	(2)
Land Tenure and Reform	584	(1)
Patterns of Land Tenure	584	(2)
Tenure and Incentive	586	(3)
Land Reform	589	(1)
The Politics of Land Reform	589	(2)
Land Reform and Productivity	591	(1)
Land Reform and Income Distribution	592	(1)
Technology of Agricultural Production	593	(1)
Traditional Agriculture	593	(1)
Slash-and-Burn Cultivation	594	(1)
The Shortening of Fallow	595	(1)
Farming within a Fixed Technology	595	(1)
Modernizing Agricultural Technology	596	(3)
The Mechanical Package	599	(3)
The Biological Package and the Green Revolution	602	(2)
Mobilization of Agricultural Inputs	604	(1)
Rural Public Works Projects	605	(1)
Rural Banks and Credit Cooperatives	606	(3)
Labor Mobilization in Chinese Communes	607	(2)
Extension Services	609	(1)
The Development of Rural Markets	610	(2)
Agricultural Price Policy	612	(1)
The Multiple Role of Prices	613	(2)
The Impact of Subsidies	615	(2)
Overvalued Exchange Rates	617	(2)
Primary Exports	619	(33)
Export Characteristics of Developing Countries	619	(3)
Comparative Advantage	622	(4)
Primary Exports as an Engine of Growth	626	(1)
Improved Factor Utilization	627	(1)
Expanded Factor Endowments	628	(1)
Linkage Effects	629	(3)
Recent Empirical Evidence on Primary-Export-Led Growth	632	(2)
Barriers to Primary-Export-Led Growth	634	(1)
Sluggish Demand Growth	634	(3)
Primary-Export-Led Growth in Malaysia	636	(1)
Declining Terms of Trade	637	(4)
Ghana: A Case of Arrested Development	640	(1)
Fluctuating Export Earnings	641	(1)
Ineffective Linkages	642	(1)
Rent Seeking and Corruption	643	(1)
Dutch Disease	643	(9)
Nigeria: A Bad Case of Dutch Disease	649	(1)
Indonesia: Finding A Cure	650	(2)
Industry	652	(25)
Industry as a Leading Sector	652	(3)
Linkages	655	(3)
Urbanization	658	(3)
Investment Choices in Industry	661	(1)
Choice of Technique	661	(4)
Economies of Scale	665	(4)
Small-Scale Industry	669	(4)
Industry and Development Goals	673	(4)
Township and Village Enterprises in China	674	(3)
Trade and Development	677	(57)
Import Substitution	680	(3)
Protective Tariffs	683	(3)
Import Quotas	686	(1)
Subsidies	687	(2)
Effective Rates of Protection	689	(6)
Exchange-Rate Management	695	(5)
Import Substitution in General Equilibrium	700	(4)
Import Substitution in Kenya	702	(2)
Outcomes of Import Substitution	704	(1)
Outward-Looking Trade Strategy	705	(5)
The Advantages of Manufactured-Export-Led Growth	710	(3)
Policies Supporting Labor-Intensive Manufactured Exports	713	(6)
Possible Risks	719	(3)
Reconciling Import Substitution and Export Growth	722	(1)
World Trading Arrangements	723	(3)
Trade Reform in Mexico, 1985-89	724	(2)
Multilateral Trade Reform	726	(1)
Integration in the South	727	(5)
Trading Blocs	732	(2)
Managing an Open Economy	734	(1)
Equilibrium in a Small, Open Economy	735	(2)
Internal and External Balance	737	(3)
The Phase Diagram	740	(3)
Equilibrium and Disequilibrium	743	(3)
Stabilization Policies	746	(3)
Tales of Stabilization	749	(1)
The Dutch Disease	750	(2)
Debt Repayment Crisis	752	(2)
Pioneering Stabilization: Chile, 1973-84	754	(1)
Stabilization Package: Inflation and a Deficit	755	(2)
Drought	757	(1)
Recovering from Mismanagement: Ghana, 1983-91	758	(2)
Accumulating Reserves: Taiwan, 1980-87	760
Bibliography and Additional Readings	A1
Index	A31