On the problem of identifying the engines of economic growth

This article investigates the empirical relationship between sectoral growth and income growth and in so doing casts doubt on previous studies which have argued that either export or agricultural growth enhances total income growth. It is shown that the evidence from the correlation and regression models used to date is inconclusive and that much of the measured impact of sectoral growth on overall income growth may be spurious in the sense that it can be explained by growth in the underlying inputs. Professor Rittenberg’s research interests include sources of economic growth, stabilization/liberalization policies, and Third World debt, with particular emphasis on the Turkish economy.     

Price policy,poverty, and power within rural West African households

This paper explores the impact of agricultural price policy on poverty in West Africa, a region in which prices are an important tool for raising rural household incomes. A game-theoretic, collective model of household income generation and resource allocation is developed that incorporates three features typical of West African rural households: preference heterogeneity among women and men, individual resource control, and power-mediated bargaining over resource control in the face of changes in households' economic environments. To explore price effects, the model is used to simulate the income impacts of large increases in cotton prices accompanying fast-paced agricultural liberalisation in Burkina Faso in the 1980s. The paper shows that where resources are controlled individually by household members, rather than pooled, Pareto efficiency in income generation does not hold. The impact of agricultural price policy on poverty is mediated by bargaining over resource control within households. Both the relative bargaining power of women and men and the degree of preference heterogeneity between them play fundamental roles in the outcome of such bargaining. The results point to a lower ability of households to take advantage of price incentives and thereby raise their incomes than a unitary household model, in which preferences do not differ and resources are pooled, predicts. They suggest that the effectiveness of price policy in reducing poverty in the region would be enhanced by taking into account the incentive structure within households as well as individual household members' ability to bargain over the benefit and cost streams flowing from price changes.     

Egypt's multiproduct agricultural technology and agricultural policy

Based on the hypothesis that Egyptian farmers maximise economic profits, the multiproduct translog profit function is used to estimate input demand and output supply functions for corn, rice, and cotton crops grown in Egypt's Nile delta. Elasticity estimates indicate a generally high degree of price responsiveness. The estimates are used to evaluate Egyptian agricultural policies concerning labour, mechanisation, and output prices. The results show that Egypt's agricultural policies of taxing output and subsidising certain inputs have hada substantial negative impact on agricultural productivity.     

MODELLING BUREAUCRACY: THE CASE OF THE AUSTRALIAN FEDERAL BUDGET SECTOR 1982-1992

A substantial literature exists on the economic analysis of bureaucracy, which includes formal models of bureaucratic behaviour by Niskanen (1971) and Dunleavy (1991). This article develops hypotheses from those models about changes in size of bureaux over time and tests them against data on the Australian federal budget sector in 1982–83 and 1991–92. The models predict that bureaucrats usually will be able to influence the size or structure of their bureaux in line with their personal preferences. However, the Australian data suggest that the extent of such influence may be less than is assumed in either model and that the preferences of politicians are more influential than the models allow. One conclusion is that, if bureaucracy is to be modelled, a principal-agent approach will have more to offer than the neo-classical maximizing framework adopted by Niskanen in particular. A further conclusion, at odds with those of Niskanen and weakening his case for wholesale privatization, is that bureaucratic dysfunctions may be amenable to reform of the political and bureaucratic rules and systems.     

Some management objectives of the peasant farmer: An analysis of risk aversion in the choice of cropping pattern,Surat district,India

The basis of peasant farmers’ decision‐making is a critical factor in the formation of agricultural policy in developing countries. If farmers operate efficiently, implying that profits are maximised, then incomes can only be increased by introducing improved methods of production; if farmers do not act efficiently, it may be desirable to reallocate resources within traditional agriculture. Similarly, predictions of farmers’ responses to price changes and thus the impact on aggregate production and employment¹ are based on assumptions regarding farmers’ management objectives.

The primary aim of this paper is to examine empirically the cropping patterns chosen by a group of peasant farmers in Surat District, India, using a simple model of risk aversion. The data show that the observed behaviour corresponds very closely to the hypothesis that farmers allocate land to different crops by striking some balance between the competing criteria of (a) increasing income and (b) decreasing risk measured by income variability. The actual definition of risk is, in this case, the mean absolute deviation of income around its mean level. Secondly, the contrasting importance of risk and credit between irrigated and unirrigated farms is illustrated, and finally, some policy implications are discussed briefly.     

Food Price Transmission and Economic Development

In this paper we challenge the conventional wisdom that the world’s poorest countries are also the most vulnerable to spikes in international food prices. We derive an inverted U-shaped relationship between food price transmission and the development level of a country from a theoretical model. This prediction is subsequently tested in two sets of regressions where economic development is approximated by per capita income and where we control for a number of other potential determinants of food price transmission. The first set of regressions is based on estimated transmission elasticities and the second on actual domestic food price changes during spikes in international food prices. In both sets of regressions we find strong evidence of the existence of an inverted U-shaped relation between food price transmission and income. Thus, food prices in middle income (rather than in low income) countries respond the strongest to changes in international food prices, implying that the poor in these countries are the most exposed to spikes in food prices. We also show that the factors explaining the variation in the estimated transmission elasticities can explain the variation in domestic food price changes during spikes in international food prices equally well.     

Government regulations and FDI: a historical perspective of mexico

This article analyzes the development of foreign investment regulations and their impact on FDI flows in Mexico. The study covers the evolution of sectoral and aggregate investment patterns from the independence period to the 1994 Peso crisis and its aftermath. The pattern followed by FDI in Mexico has paralleled the transformation of the Mexican economy itself, focusing initially on the extractive and agricultural sectors, then on manufacturing activities, and recently on the services sector. Mexico has continuously reformed and modernized its regulatory system in order to adapt to internal political changes and changes in the world economic environment. Recent economic reforms and liberalization of FDI regulations have had a major positive impact on capital inflows, but more needs to be done, especially in the area of financial services in order to achieve a higher level of economic efficiency and to prevent financial breakdowns like the one experienced in 1994.     

A reply

On the basis of input‐output tables from developing countries sectors are distinguished according to the degree of their interdependencies. Using 20 standard sectors for all 22 tables analysed, the paper takes the intensity of interindustrial linkages as an indicator of a sector's ability to spread growth impulses to its economic environment. Backward and forward linkages are calculated; in addition, spread effects are computed via the inverse matrix. Then the sectors are classified according to their total (direct and indirect) primary input requirements per unit of final demand. The analysis is supplemented by the determination of the sectoral employment impact, i.e. applying figures for the persons engaged sectorwise.

Particularly under the linkage aspect, the obtained rankings are checked for similarity. Although some rankings are highly correlated, none of the criteria under consideration proves superior to all others.     

Foreign capital in Korea’s economic development, 1960–1985

The relationship between foreign capital and state autonomy is investigated in the rapidly developing South Korean economy. The changing composition and the sectoral distribution of the different types of foreign capital, the role of the Korean state in the acquisition and distribution of foreign capital, and the implications of foreign capital on the autonomy and capacity of the state are studied. The findings show that public loans and state-guaranteed commercial loans in the 1960s and 1970s have supported and strengthened state autonomy, while direct foreign investment (DFI) and commercial loans in the 1980s could potentially undermine it. Significant changes in the 1980s—rapid increase of Japanese DFI in hotels, commerical loans behaving more like DFI, and changing industrial orientation of the Korean economy toward more high-technology sectors—suggest that the types of foreign capital which are more independent of state control and more keen on market signals will increase in the future. This has importnat implications for future Korean economic development. Eun Mee Kim is an assistant professor of sociology at the University of Southern California. Kim has been conducting research on various topics of economic development and political development in South Korea and East Asia, and has published inPacific Focus, andThe Journal of Developing Societies. Kim’s current research includes the industrial organization and growth of the “chaebol” (business conglomerates) in Korea; the political economy of MNC investment by U.S. and Japanese corporations; and economic liberalization and political democratization in Korea and Taiwan.     

Deindustrialisation and the social and economic sustainability nexus in developing countries: Cross‐country evidence on productivity and employment

In an empirical investigation of the interactions between industrial structure and macro outcomes, an accounting framework was applied to relate changes in sectoral employment and output compositions to changes in overall productivity growth over time. The numerical results were interpreted using a taxonomy describing industrialisation and deindustrialisation in developing countries. The findings suggest that, in particular, industrial performance correlates with the overall performance of an economy, and therefore is the key sector in explaining the sustainability of different regional patterns in overall productivity and employment growth. That is, negative rates of productivity growth in the industrial sector are strongly associated with negative productivity growth for the economy as a whole, and vice versa. Further, slow industrial growth may lead to low road development, in which productivity growth trades off with employment growth, while high road development is defined as simultaneously expanding employment and overall productivity growth.     

Rentier fiscal crisis and regime stability: Business-state relations in the Gulf

Are sectorally dependent states destined to regime instability as a result of chornic fiscal crisis? Literature emphasizing the importance of a country’s sectoral endowment suggests that oil exporters in particular should exhibit similar policy stagnation and regime decay as a result of fiscal crisis. The cases of Kuwait, Qatar, and Bahrain in the 1980s and 1990s demonstrate that fiscal crisis outcomes are not uniform. This article develops the critique that structuralist assumptions about what drives business-state relations during crisis are flawed. Abstract logics typing exogenous price sifts to the character of business-state interaction neglect the historical and instituional grounding of those relations. It is variation in the historical and institutional crafting of business-state relations that best explains how these relations shape reform under crisis and how regime stability is affected.     

Book reviews

The article attempts to model structural adjustment patterns in a single, middle‐income oil exporter, Mexico. It explores the economy‐wide costs, in terms of economic growth, income inequality and poverty, of Mexico's economic stabilisation policies of the 1980s. On the basis of counterf actual simulation, it also explores the likely impacts of alternative adjustment strategies. This analysis utilises a modified Social Accounting Matrix (SAM) approach designed to overcome one of the major shortcomings of the conventional SAM: the assumption of unitary expenditure elasticities in household accounts. The base model is calibrated to track the overall and sectoral growth performance of the Mexican economy from 1980 to 1986 and becomes the foundation upon which our policy experiments are built. The article is part of an on‐going study of economy‐wide impacts of alternative structural adjustment policies in Mexico [Adelman and Taylor, 1990], and proceeds as follows: the SAM framework and estimated SAM are described in parts I and II; part III presents the base SAM model solution for 1980 to 1986; part IV presents the results of the policy experiments; and the conclusions are summarised in part V.     

Demand for tea in the UK 1874–1938: An econometric study

The main objective of this study is to provide estimates of price and income elasticities of demand for tea in order to explain the growth in tea consumption over the period 1874–1938. Numerous other factors, both economic and social, may contribute to changing patterns of consumption. Indeed, such factors as demographic and organisational changes and different social habits may exert an influence on price and income elasticities. A subsidiary aim of this study is to examine the influence of these factors on the differences in income and price elasticities in demand for tea over various sub‐periods between 1874 and 1938.     

The relationship between agricultural and industrial growth,with special reference to the development of the Punjab economy from 1950 to 1965

This paper examines the fundamental issue of intersectoral dependence, in the context of the growth of Punjab's economy. It is divided into two sections. The first section analyses the basic nature of the agriculture‐industry relationship. Particular attention is paid to the role of the marketed surplus. The second section examines Punjab's experience, both in the light of the analysis of the first section and as contrasted to the experience of India as a whole. Certain distinguishing features emerge which help to explain the success of Punjab's development, and provide conclusions about the importance of sectoral interdependence in economic development.     

SOCIAL CAPITAL,ECONOMIC DEVELOPMENT,AND THE QUALITY OF GOVERNMENT: HOW INTERACTION BETWEEN SOCIAL CAPITAL AND ECONOMIC DEVELOPMENT AFFECTS THE QUALITY OF GOVERNMENT

This study investigates the relationship between social capital and governmental quality by considering the relationship between social capital and economic development in a cross‐section of countries. It is shown that countries with both high levels of social capital and economic development exhibit higher quality of government as measured by government effectiveness, rule of law, impartiality, professionalism, and a governmental quality index. It is also shown that countries with both high levels of social capital and low levels of economic development are associated with higher governmental quality as measured by professionalism. These findings question the use of heterogeneous indicators for governmental quality and show that the relationship between social capital and the quality of government depends on the level of economic development. Thus, the importance of the level of economic development in explaining the variation in the quality of government sheds light on the social capital theories of governmental qualities.     

Testing for Fiscal Illusion in Wisconsin Towns

Fiscal illusion, a theory of the impact of government revenue structures on voter decision-making, has been studied extensively by economists and political scientists; however, empirical verification has been limited. This study builds on Lowery's (1987a) work by examining the relationship between suggested illusionary revenues and measures of electoral stress. Here, electoral stress is measured as constituent contacting—one possible measure of voter influence—for local government officials up for re-election. Using a combination of survey data from over 1,000 Wisconsin town board members, audited fiscal data and U.S. Census data, we were able to test for fiscal illusion. Our findings show that when looking at five revenue types (conditional grants, unconditional grants, property taxes, user fees and charges, and debt service) there is some evidence suggesting officials seeking another term in office will tend to support fees and charges as a revenue structure over other structures. Overall, there is little consistent evidence suggesting that elected officials are manipulating revenue structures for electoral gain. Revenue structures are mostly influenced by social and economic factors, such as median household income, population changes, and per capita property valuation.     

Converging social justice issues and movements: implications for political actions and research

Abstract

We argue that the multiple contemporary converging crises have significantly altered the context for and object of political contestations around agrarian, climate, environmental and food justice issues. These shifts affect alliances, collaboration and conflict among and between state and social forces, as well as within and between movements and societies. The actual implications and mechanisms by which these changes are happening are empirical questions that need careful investigation. The bulk of our discussion is dedicated to the issue of responses to the crises both by capitalist forces and those adversely affected by the crises, and the implications of these for academic research and political activist work. More specifically, we explore four thematic clusters, namely (1) class and intersectionality; (2) sectoral and multisectoral issues and concerns; (3) importance of immediate, tactical and concrete issues of working people; and (4) links between national and global institutional spaces and political processes. We know only a little about the questions we framed here, but it is just enough to give us the confidence to argue that these questions are areas of inquiry that deserve closer attention in terms of both academic research and political debates and actions.     

Unemployment Risks and the Origins of Unemployment Compensation

This paper focuses on the distribution of sectoral unemployment risks and the role of political regimes in the foundational moments of unemployment compensation. The institutionalization of unemployment compensation is a function of two factors. First, it depends on the distribution of unemployment risks by economic sectors. Second, the effect of risk inequality is conditional upon the political regime type. I employ event history analysis of 144 countries throughout the world for the long historical period from 1880 to 2000. The results show that an overall societal level of unemployment risk and inequality of sectoral unemployment risks in a society are positively associated with the likelihood of the institutionalization of unemployment compensation. In addition, the effect of risk inequality is much higher under democracy than under dictatorship. A broader implication is that the creation of unemployment compensation is not only a function of homogeneous working class power but also a function of working class conflict that stems from the heterogeneity of unemployment risks among workers.     

Global poverty and inequality: are the revised estimates open to an alternative interpretation?

The level of, and trends in, global inequality and global poverty are indicative assessments of who has benefited from economic growth. The revision of price data has led to a reassessment of those estimates. Through an extensive overview of the implications, we argue that the data can be read in different ways. Official estimates show global extreme poverty and global inequality are considerably lower than previously thought. We argue that these changes are much less significant than they at first appear, and we present a more nuanced alternative interpretation by exploring changes across the entire global distribution.