Introduction to Development Economics

by Ghatak,Subrata

• ISBN13: 9780415280754
• ISBN10: 0415280753
• Edition: 4th
• Format: Hardcover
• Copyright: 2003-12-29
• Publisher: Routledge

Summary

Development Economics is arguably the most important field within economics. Charged with analyzing and criticizing the way economies develop and grow, development economists play a vital role in attempting to reduce inequality across the world. The new edition of this excellent textbook introduces students to this vital field. Also new in this book is the introduction of endogenous growth theory. Defined, this is growth that occurs from within the economy, which is not reliant on trade, and can include improvements in education, health and technology. With vastly improved and updated pedagogical features such as new topical case studies and questions for discussion, Subrata Ghatak introduces what can be a difficult topic with a welcome clarity.

Author Biography

Subrata Ghatak is Research Professor in Economics and Director of Research Studies in Economics at Kingston University, England.

Table of Contents

Preface to the fourth edition	xi
Preface to the third edition	xii
Preface to the second edition	xiii
Preface to the first edition	xiv
Acknowledgements	xvi
Introduction	1	(34)
Introduction	1	(1)
Characteristics of the less developed countries	1	(19)
Types of markets in less developed countries	20	(1)
Production conditions in less developed countries	20	(3)
Growth and development	23	(3)
Human development index	26	(9)
Appendix 1.1 Measurement of income inequality	28	(2)
Appendix 1.2 A note on production functions	30	(5)
PART I The economic theory of growth and development	35	(62)
Growth Theories and Their Relevance to Less Developed Countries	37	(42)
Introduction	37	(1)
Classical scenario	37	(2)
The Keynesian theory and less developed countries	39	(3)
The Harrod--Domar model and its applications	42	(1)
The neoclassical theory and less developed countries	43	(4)
Marx's theory and less developed countries	47	(5)
The Kaldor--Mirrlees model	52	(3)
The neoclassical growth accounting formula and the new endogenous growth theory	55	(5)
Differences in economic growth	60	(19)
Appendix 2.1 The basic equations of the neoclassical economic growth model	71	(2)
Appendix 2.2 Endogenous growth models	73	(6)
Dual Economy Models	79	(18)
Introduction	79	(1)
The `surplus' labour and its contribution to development	79	(4)
The Fei--Ranis model	83	(4)
The Jorgenson model	87	(3)
Some extensions of the dual economy models: the Dixit--Marglin model	90	(1)
The Kelly et al. model	91	(1)
Dual economy models: a critique	91	(6)
Appendix 3.1 Employment and growth	94	(3)
Part II Investment, saving, foreign resources and industrialization in less developed countries	97	(130)
Allocation of Resources: Investment Criteria	99	(16)
The need for investment criteria in less developed countries	99	(1)
The capital turnover criterion	100	(1)
The social marginal productivity criterion	101	(1)
The maximization of the rate of creation of investible surplus principle	101	(2)
The reinvestible surplus criterion	103	(6)
Balanced and unbalanced growth	109	(6)
Appendix 4.1 The dichotomy between savings and output maximization and its solution	112	(3)
Domestic Resources for Development	115	(31)
Introduction	115	(1)
The nature of money markets in less developed countries	115	(1)
Money and economic growth	116	(1)
Inflation and economic growth	117	(7)
Financial liberalization in LDCs: causes and consequences	124	(2)
Objectives of fiscal policy in less developed countries	126	(1)
Fiscal policy and growth	127	(4)
Deficit financing and less developed countries	131	(1)
The tax structure in less developed countries	132	(6)
Taxation and domestic resource mobilization in less developed countries: the evidence	138	(2)
Tax reforms in less developed countries in the 1980s	140	(1)
Budgetary deficits and Ricardian equivalence: the case of India	141	(5)
Foreign Resources and Economic Development	146	(44)
Introduction	146	(1)
The concept of foreign resources	146	(1)
Criteria for distribution of foreign resources	147	(3)
Different types of foreign resource	150	(4)
Dual-gap analysis and its evaluation	154	(3)
Gains and losses of investment by multinational corporations in less developed countries: some theoretical issues	157	(5)
Private foreign investment and the transfer of technology to less developed countries	162	(8)
Special drawing rights and the `link'	170	(6)
Foreign aid and economic growth	176	(14)
Appendix 6.1 Less developed countries and world trade	180	(10)
Industrialization, Protection and Trade Policies	190	(37)
Major reasons for industrialization in less developed countries	190	(100)
The role of tariffs in economic development	290
The optimum tariff argument	191	(2)
The infant industry argument	193	(3)
Distortions in the factor markets	196	(1)
The balance of payments argument	197	(1)
The employment argument	197	(1)
`Nominal' and `effective' rates of protection	198	(5)
The `cost' of protection	203	(2)
Economic growth and trade	205	(1)
Terms of trade between developed countries and less developed countries	206	(2)
Export instability and economic growth in less developed countries	208	(2)
The role of the United Nations Conference on Trade and Development and some trade policies to help less developed countries	210	(2)
Non-tariff barriers and the generalized system of preferences	212	(1)
Regional co-operation among less developed countries	213	(1)
Trade liberalization and industrialization	214	(5)
The North--South models and intra-industry trade	219	(1)
Conclusion	220	(7)
Appendix 7.1 Indices of instability of exports	223	(4)
Part III Sectoral development and planning	227	(136)
Sectoral Allocation of Resources: Agriculture	229	(17)
Introduction	229	(1)
The role of agriculture in economic development	229	(2)
The concept of `marketed surplus'	231	(4)
A model to mobilize agricultural surplus	235	(3)
Acreage response to prices	238	(1)
Marketed surplus, size-holdings and output	238	(6)
Limitations of price policy and some alternatives	244	(1)
Conclusion	245	(1)
Green Revolution and Income Distribution	246	(25)
Introduction	246	(1)
The nature of the Green Revolution	246	(5)
Causes of the Green Revolution	251	(4)
Effects of the Green Revolution on income: a simple theory	255	(1)
Effects of the Green Revolution on relative factor shares	255	(3)
Problems and prospects of the Green Revolution	258	(2)
The basic needs approach	260	(2)
Growth theory and basic needs	262	(3)
A note on famines	265	(6)
Population, Poverty, Income Distribution, Employment and Migration	271	(40)
Population and economic development	271	(2)
Population explosion in less developed countries and the theory of demographic transition	273	(1)
Low-level equilibrium trap	274	(1)
Fertility and population growth in less developed countries	275	(6)
Poverty and income distribution	281	(1)
Income inequality	281	(3)
Absolute poverty	284	(3)
Redistribution with growth	287	(2)
The employment problem	289	(2)
The Todaro model	291	(5)
Migration theory and evidence: an assessment	296	(2)
Stark's model	298	(1)
Employment policy	299	(1)
Poverty, inequality and financial development	300	(11)
Appendix 10.1 The definition of a poverty line	304	(2)
Appendix 10.2 Migration	306	(1)
Appendix 10.3 Schultz's model of the household production approach to fertility	307	(3)
Appendix 10.4 Poverty and nutrition	310	(1)
Development Planning	311	(40)
Concept of economic planning	311	(1)
Types of planning	311	(1)
Economic models and economic planning	312	(1)
The case for and against planning	313	(1)
Development planning models	314	(2)
Application of the Harrod--Domar model in development planning: India's first five year plan	316	(1)
A two-sector Harrod--Domar model for planning: the Kenyan case	317	(1)
Feldman--Mahalanobis sectoral planning and the Indian second five year plan	318	(2)
Macroeconometric models in development planning	320	(2)
Input--output analysis in development planning	322	(4)
Linear programming and development planning	326	(5)
Micro-planning: aims of cost--benefit analysis	331	(4)
The Little and Mirrlees method of project evaluation in less developed countries	335	(5)
The United Nations Industrial Development Organization (1972) guidelines	340	(3)
Social accounting and development planning	343	(8)
Barbara M. Roberts
Appendix 11.1 The Feldman--Mahalanobis model	347	(4)
Structural Adjustment and Development	351	(12)
Structural adjustment and economic growth	351	(1)
The structural adjustment and stabilization policies of the IMF	351	(2)
Trade adjustment	353	(1)
Structural adjustment, stabilization and trade policies	354	(2)
Exchange rate and trade reforms	356	(3)
Structural adjustment programmes: the experience of sub-Saharan African countries	359	(2)
Conclusion	361	(2)
Part IV A new deal in commodity trade?	363	(53)
The New International Economic Order	365	(13)
Introduction	365	(1)
The evolution of the new international economic order	366	(2)
The main objectives of a new international economic order	368	(1)
The theory of commodity price stabilization: demand/supply shifts	369	(2)
Commodity price stabilization: gains and losses	371	(2)
Implications of international commodity agreements, buffer stocks and compensatory finances	373	(2)
Conclusion	375	(3)
The International Debt Crisis	378	(20)
Nigel M. Healey
Introduction	378	(1)
The evolving debt position of the developing world	378	(3)
Why do developing countries become indebted?	381	(1)
Sources of external finance	382	(1)
Why do debt servicing problems arise?	383	(1)
The external dimensions of the 1982 crisis	384	(1)
Phase one: `muddling through' the debt crisis, 1982--9	385	(6)
Phase two: debt forgiveness and the Brady Plan	391	(7)
Environment and Development	398	(18)
Introduction	398	(1)
Deforestation and macroeconomic environment	399	(2)
The `tragedy of the commons'	401	(1)
Externalities, natural resource degradation and economic policies	402	(4)
A case study: the importance of fuelwood in household energy consumption	406	(6)
An alternative farming system: alley cropping in humid West African agriculture	412	(1)
Conclusion	413	(3)
Bibliography	416	(36)
Index	452