Consumption,savings and investment by social class in Bangladesh: Does the rural sector support the Urban sector?

This article employs input‐output analysis and information from a social accounting matrix and the concept of net savings to examine savings, consumption and investment behaviour by various social classes in Bangladesh in urban and rural areas. Considerable differences between social classes can be identified in all three respects. A majority of the social classes in the rural sector does not appear to generate enough savings to sustain its consumption whereas the urban social classes do. There seems to be little difference in consumption pattern of the rural rich and the urban rich. There is considerable urban‐rural difference in the import intensities of consumption. The findings of this study based on the Hazari model do not establish the existence of urban bias but the problem seems to be one of ‘rich‐bias’ rather than urban‐bias per se. However, the Hazari model cannot capture all possible sources of urban bias and circumstantial evidence indicates concentration of advantages in the urban areas.     

Aggregate consumption,interest rates and inflation in LDCS: An error correction model

This article explores the relationship between the real interest rate and the consumption‐saving decisions in LDCs following the Error Correction Methodology. The model also includes an income term, the inflation rate and a term for inflation uncertainty. The main conclusion drawn from this exercise is that, for low‐inflation countries there is a positive and stronger interest rate effect on saving while this effect is less clear (and not significant) for most high‐inflation countries. Also, the results show that for at least half of the countries in the sample, an EC model with a unit elasticity restriction seems to be an adequate representation of the data.     

Questioning Women's Solidarity: The Case of Land Rights,Santal Parganas,Jharkhand, India

This paper examines the impact of foreign aid on economic development in the context of a neoclassical growth model. Its conclusion is that foreign aid, whether in the form of capital goods or consumer goods, has a purely transitory effect on an underdeveloped country's per capita consumption (which is used as the welfare criterion) in the context of the usual neoclassical growth model; when, however, alternative assumptions (which may be more appropriate to an underdeveloped country) about the rate of population growth and the propensity to save are grafted into this model, foreign aid, in the form of capital goods or consumer goods, does have a permanent effect on an underdeveloped country's per capita consumption, if the aid exceeds a critical minimum.

Section I develops the properties of a simple neoclassical growth model that are essential to the analysis; section II analyses the impact of foreign aid in this context; in section III, appropriate modifications are made to the simple model and the impact of foreign aid is then re‐analyzed.     

Inequality,earnings and participation among the poor in rural India

Emphasising that there is a relative dimension to deprivation, an attempt is made here to decompose income inequality among the rural poor into inequality in earnings per worker, in participation rate and covariance of earnings per worker and participation rate. From this decomposition, the effects of (small) changes in inequality in earnings per worker and in participation rate on income inequality are evaluated. The analysis is based on a cross‐section of rural households in 1970–71. The samples of poor cultivating households and poor casual agricultural labour households are analysed separately for each of two regions, based on a classification of villages in terms of technological advancement.     

The impact of the Owen falls hydro‐electric project on the economy of Uganda 1

Inflation induced by an increase in the money supply may be conducive to economic growth, because it can be positively related to the savings ratio. This relationship is, however, limited by a certain rate of money supply which is associated with the maximum overall savings ratio. Treating money as a consumers’ good based upon Levhari‐Patinkin [1968], this study estimates a quadratic‐form savings function using international cross‐section data. It shows that the optimal rates of money supply are 11–12 per cent and 6–8 per cent in underdeveloped and developed countries respectively.     

Industrial development in the Brazilian Northeast and the tax credit scheme of article 34/18 1

In this article we consider a twofold problem: (a) the foreign aid cost of changing a stagnant or ‘trapped’ economy to one which is capable of sustaining its own growth, and (b) the accrued benefits of a family planning programme in achieving this. Specifically, we cite the case of an economy trapped in a so‐called low‐level equilibrium and evaluate the change in the amount of foreign aid that is required to achieve self‐sustained growth when the birth rate declines. By use of a simplified model, we conclude that a general 10 per cent reduction in age‐specific birth‐rates may lead to savings of 2 5–50 per cent in discounted aid requirements.     

Standard of Living and Disability in Cambodia

Little is known about the extra costs faced by households with disabled members in low resource settings and the impact of these costs on living standards. In this paper we estimate the direct cost associated with disability for households in Cambodia. Using the Standard of Living approach, the direct cost associated with having a member with disabilities is estimated to be 19 per cent of monthly household consumption expenditure. Accounting for the direct cost of disability doubles the poverty rate amongst households with disabled members from 18 per cent to 37 per cent, and increases the poverty gap from 3 to 8 per cent. A comparison of the direct cost associated with disability and income support received from government and family sources reveals that only 7 per cent of the costs of disability are met. Our findings suggest that, in the absence of increased coverage of public income support, households with disabled members will continue to experience a lower standard of living compared to households without disability in Cambodia.     

The growth of Indian nitrogen fertilizer manufacture: Some lessons for industrial planning

Large‐scale manufacture of nitrogen fertilizers in India originated during the Second World War as a result of the interruption of the import of rice from Burma. The growth of production has been at the prodigious rate of 22 per cent per annum in the 17‐year period 1949/50–1965/6. Demand has never acted as a constraint; this suggests that agro‐industry can play an important part in an industrializing strategy for development. In spite of this success two negative features have characterized the economic history of fertilizer production: gestation lags and under‐utilized capacity. Had the establishments worked at design capacity and had the average gestation lag not exceeded three years, less than 60 per cent of the 2.1 million tons of nutrient imported into India during these 17 years would have been required. This highlights the need to include in planning models of output expansion both of these variables, getstation lag and low capacity utilization. Some of their causes have been exogenous to the industry. But a number are internal and recurrent. Unjustified technical risks, plant dis‐integration, faulty process selection and inadequate project appraisal in investment decision‐making. Attempts to reduce the balance of payments deficit have had a negative feedback on the foreign exchange flow by reducing the industry's average annual output. Such negative effects should be included in formulating import control, import substitution and export promotion policies. Finally the ubiquity of excess capacity and the invariance of labour force size with the degree of capacity utilization in this sector is shown to lead to large over‐estimates of the future required‐labour force when certain forecasting techniques are used, even in the absence of trends to increasing labour productivity.     

Economic growth and the population explosion: Simulation experiments using a growth model with population endogenous

The purpose of this analysis is to shed some light on the issue of how much economic growth, unaided by population control policies, can bring down fertility and defuse the population explosion in the less developed countries. The paper explores the demographic evolution of an ideal less developed country over a 100 years time span under alternative assumptions concerning capital accumulation, rate of technological progress, and returns to scale. The model used incorporates (a) a population projection matrix with coefficients which are a function of time and of endogenously generated levels of income per capita, and (b) a gross reproduction rate‐GNP per capita function with parameters estimated from a time series of cross sections spanning the period 1860 to 1959. This function was designed to reflect dominant traits of the historical experience concerning the effects of economic growth on fertility in a context characterised by the absence of population control policies.     

The political economy of Indian planning

Peruvian statistics were examined to see if construction remained labour‐intensive during 1955–67. Data on output, employment, capital, and materials consumption were either lacking or had defects that made a direct comparison of trends impossible. But conclusions could be drawn from relative price and wage trends. If materials and capital had not been substituted for labour, average construction costs would have risen substantially more than they did. Our estimate was that by 1967 they would have been 25 per cent higher.

Evidence from a sample of firms, however, suggested that adoption of labour‐saving techniques cannot be tied simply to changes in wages compared with other costs. All eleven innovations studied, it is true, were markedly labour‐saving; but the rate of adoption did not closely follow wage changes. Adoption came most often during those less tense years when builders were neither overstrained with orders nor lacking credit and clients. One must conclude that both rising wages and innovations can limit employment expansion in relatively poor countries.

Since both agriculture and manufacturing have been unable to absorb the growing labour force of poor countries, economists have turned their attention to other sectors for supplementary employment expansion. One of these is construction. The construction sector creates not only jobs but builds capital goods with a desirable low import content. In association with carefully structured financial institutions, it may even generate savings. How much employment a given expansion of construction will provide depends on the production functions of the sector: their slopes and their potential shifts. One must find the changes in labour productivity that go with likely changes in volume, capital accumulation, trends in material supplies, and alternate technologies.

All these questions will get imprecise answers without good statistics on output, labour, capital, and materials, both unit prices and volume. If output varies in composition and in the relative quality of components, problems of weighting and aggregating arise. Because of the sector's ? instability and footloose nature, data on construction remain inferior compared with other sectors even in the most advanced and statistics‐rich countries. Can one make anything of the sorts of data available in poor countries where the sector must play its most crucial role?

In this article, using rather limited data, we note with considerable alarm that steady labour intensity and corresponding employment expansion cannot be taken for granted. Where daily wages are but a fraction of hourly American wages, and where interest rates are a multiple of American rates, the more lavish use of materials and machinery compared with labour can nevertheless begin early.

Peru is the country selected for our study. During 1955–67 Peru had a relatively high national output growth rate of 5.6 per cent together with a moderate rate of inflation of about 9 per cent. Except for the devaluation years of 1958 and 1967, flourishing exports of fishmeal, copper, cotton, and sugar helped carry this rate of growth. Lima was one of the continent's fastest‐growing cities in population and building, particularly in squatter barriadas. But in the 1960s commercial conduction also grew at more than a 15 per cent compound rate, measured in square metres built, according to some estimates.1 During 1964–68, construction had high priority under President Fernando Belaunde, a professional architect. More U.S. foreign aid for housing (direct and guaranteed private loans) went to Peru in absolute terms during this period than to any other country. We shall analyse the consequences by examining (1) trends in relative costs, (2) relative output and import trends, and (3) data about receptivity to innovations in a sample of firms.     

Patterns of energy consumption and economic growth and structure

The role of energy utilization in economic growth has received much attention in recent years. The distinctive characteristics of our analysis are that this role is dealt with in a quantitative way and that both cross‐section and time‐series approaches are utilized. We confirm earlier findings that energy consumption tends to be more responsive to economic growth in less developed than in advanced countries. We conclude, however, that the relationship between energy and economic growth activity is affected by a variety of other factors. Multivariate tests suggest that the industrial structure of the economy and the composition of energy consumption are especially significant additional variables.     

Financial market efficiency in an Agrarian economy: Microeconometric analysis of the Pakistani Punjab

The shadow price of capital in production is a useful indicator of the efficacy of the rural financial system. Using data on participants and non‐participants in a small farm credit programme from the Pakistani Punjab, this article estimates the shadow price of capital. Endogenous switching regressions techniques are employed to control for the likely heterogeneity of borrowers versus non‐borrowers. Results indicate that an individual selected at random from the population of small farmers would experience a 200 per cent rate of return on the first rupee borrowed from the small farm credit programme, indicating a high shadow price of capital and a prima facie case for small farm credit programmes.     

Development legislation in Africa

This is the second of two articles attempting to contribute to the debate on the trends in absolute real incomes amongst propertyless groups in semi‐industrialized countries. It is based on empirical data for the standard of living of industrial working‐class households in one of the principal centres of the capitalist periphery (the Brazilian city of São Paulo) between the mid‐1930s and the mid‐1970s. Evidence is presented on real earnings trends, the composition of household expenditure, food consumption, and housing standards. The results run counter to the current view of the absolute impoverishment of the great majority of the population, but also reveal unexpected changes in the composition of consumption. An attempt is made to account for the results in terms of the analytical discussion presented in Part I of this paper, which was published in the January 1983 issue of this Journal.     

The propensities to consume labour and property incomes in the commonwealth Caribbean

This article outlines theoretically the aggregate savings implications of differences in business and personal savings propensities. Time series empirical tests for two developing economies generate the conclusion that the marginal business savings rate is much higher than the marginal personal savings rate. For double‐log consumption functions differences in the personal propensity to consume labour and property incomes are substantial and statistically significant.     

A note on the functioning of international commodity price stabilisation agreements in periods of fluctuating monetary exchange rates

A belief held by many government officials and development economists is that sizeable and irregular commodity price fluctuations have important detrimental effects on both exporting and importing countries. Given the nature of these adverse effects attempts have been made to negotiate international price stabilisation agreements under which some central authority would make market interventions to offset the random price fluctuations. However, this study argues that the utility of such agreements should be re‐examined due to the effects of floating exchange rates. Empirical evidence is also presented which shows that recent exchange rate variability has had at least as much of a destabilising influence on commodity export earnings as fluctuating prices, and that the effects are borne unevenly by exporters of the same commodity due to their association with different currency blocks. When examined from the viewpoint of commodity importers the price and exchange rate effects are also found to be very different for individual countries.     

Weather Shocks and Urban Livelihood Strategies: The Gender Dimension of Household Vulnerability in the Kumi District Of Uganda

The Teso sub-region of Uganda suffered numerous weather shocks in the past, with devastating food security consequences. Using household fixed effects and propensity score matching methods, we analyse the impact of exposure to drought, flood and severe incidence of pests and diseases on household consumption expenditure per adult equivalent for a random sample of households from Kumi Town Council. We find that weather shocks reduce consumption by 17 per cent and that the consumption decline is significantly larger among female-headed households. We also find a higher likelihood of non-farm employment, borrowing and receiving remittances in order to cope with the shocks.     

The ‘fairness’ of the standard spending assessments underlying the community charge

In this paper average domestic rate levels per adult for 1989/90 are correlated with standard measures of the socio‐economic status of English local authority districts, derived from the 1981 Census. These correlations show that rate levels tend to be higher in areas of social disadvantage and lower in more socially advantaged areas. When introducing the provisional figures for the new Community Charge for 1990/91 the Secretary of State stressed that this new charge would be fairer than the system of domestic rates. If the community charge were fairer than rates, this paper argues, the charge would not depend upon the socio‐economic status of the area in the same way. However, it is shown that, quite to the contrary, the community charge is even more strongly related to the socio‐economic status of the local authority than are rates. By using alternative cost assumptions, from consultative documents submitted to the Government by the Local Authority Associations, it is shown that community charge levels are crucially dependent on the assumptions underlying the Standard Spending Assessments, the Government's assessment of what it costs to provide a standard level of service.     

Private foreign asset accumulation,not just capital flight: Evidence from the Philippines

External debt problems have been accompanied in many developing countries with large private capital outflows. The latter phenomenon is usually identified in the literature as ‘capital flight’. This article argues that private foreign asset accumulation is a more appropriate term and compares a great variety of definitions and measurement methods and applies these to Philippine data for 1971–88. Outcomes show striking differences in assessment of the magnitude of the phenomenon. In the preferred definition of this study applied to the Philippines, unrecorded workers remittances from abroad, a factor omitted in other studies, represent a major source of foreign exchange earnings which indirectly support private foreign asset accumulation. Other definitions appear to severely underestimate private capital outflows. Econometric evidence on the causes of private foreign asset acquisition shows a strong sensitivity to the applied definition. Regression analysis for six alternative definitions shows that the expected real exchange rate depreciation and the real foreign‐domestic interest rate differential are ‐ in line with portfolio theory ‐ important determinants in the case of nearly all alternative measures, except for those that attempt to define a narrow ‘capital flight’ concept. Other determinants found significant are the availability of external finance and the previous year stock of private foreign assets. Debt‐fuelled private capital outflows are associated with the political economy of public external borrowing and the segmented nature of the foreign exchange market in the Philippines. Stock‐adjustment behaviour in the acquisition of private foreign assets in turn is interpreted as being a result of a simultaneous decision‐making process determining consumption demand and portfolio choice of high‐income Philippine households to satisfy demands related to their international lifestyles. These results have important welfare implications and policy consequences.     

Social movements amidst democratic transitions: Lessons from the Brazilian countryside

Democratic transitions represent unique opportunities in which movements of the poor can coalesce, place their demands on the national agenda, and institutionalise their access to authoritative decision‐making centres. The opportunities and constraints movements of the poor face during transitions, however, remain little understood and under‐theorised. This study develops an analytic approach that links national‐level democratisation processes to the local‐level movement dynamics that make collective action possible, particularly the creation and reproduction of collective identities and organisational structures. The approach theorises how changing elite alliance patterns during transition cycles, and redefinition of institutional linkages that bind state and society, shape the opportunities and constraints movements face at successive stages of democratic transitions. The utility of this approach is demonstrated by examining the new unionism in rural Brazil, in that country's democratic transition during the 1980s.     

Competitive industrial policy and macro performance: Has South Korea outperformed Taiwan?

Taiwan adopted a competitive industrial policy before South Korea but pursued it more cautiously. According to orthodox theory, Taiwan's less interventionist policy should have increased its initial per capita income lead over South Korea. In fact, the income gap narrowed, and income distribution improved relatively in South Korea, casting doubt on the orthodox criticism of South Korean industrial policy. But some qualification of the South Korean success is in order. The South Korean gains were achieved at the cost of greater consumption fore gone and greater concentration of economic power than in the case of Taiwan. Moreover, the crucial post‐1985 Taiwanese economic slow down was partly due to economic maturation as well as to tardy financial reform and to the opportunities created by the Chinese diaspora for Taiwanese firms to invest abroad.