Analytical Development Economics: The Less Developed Economy Revisited / Edition 1

Analytical Development Economics: The Less Developed Economy Revisited / Edition 1

by Kaushik Basu
     
 

ISBN-10: 0262523442

ISBN-13: 9780262523448

Pub. Date: 01/24/2003

Publisher: MIT Press

Virtually all industrialized nations have annual per capita incomes greater than $15,000; meanwhile, over three billion people, more than half the worlds population, live in countries with per capita incomes of less than $700.
Development economics studies the economies of such countries and the problems they face, including poverty, chronic underemployment,

Overview

Virtually all industrialized nations have annual per capita incomes greater than $15,000; meanwhile, over three billion people, more than half the worlds population, live in countries with per capita incomes of less than $700.
Development economics studies the economies of such countries and the problems they face, including poverty, chronic underemployment, low wages, rampant inflation, and oppressive international debt. In the past two decades, the international debt crisis, the rise of endogenous growth theory, and the tremendous success of some
Asian economies have generated renewed interest in development economics, and the field has grown and changed dramatically.

Although
Analytical Development Economics deals with theoretical development economics, it is closely grounded in reality. The author draws on a wide range of evidence, including some gathered by himself in the village of Nawadih in the state of Bihar, India, where -- in huts and fields, and in front of the village tea stall -- he talked with landlords, tenants, moneylenders, and landless laborers.
The author presents theoretical results in such a way that those doing empirical work can go out and test the theories.

The book is a revision of
Basu's The Less Developed Economy: A Critique of Contemporary
Theory
(Blackwell, 1984). The new edition, which has several new chapters and sections, incorporates recent theoretical advances in its comprehensive,
up-to-date treatment of the subject. It is intended primarily as a textbook for a one-semester graduate course, but will also be of interest to researchers in economic development and to policymakers.

Product Details

ISBN-13:
9780262523448
Publisher:
MIT Press
Publication date:
01/24/2003
Edition description:
New Edition
Pages:
386
Product dimensions:
6.00(w) x 9.00(h) x 0.80(d)
Age Range:
18 Years

Table of Contents

Prefacexiii
Preface to The Less Developed Economy, 1984xvii
IPreliminaries1
1Introduction3
1.1The Scenario3
1.2Prospectus6
1.3Economic Rationality and Norms8
1.4On Weighing Scales Known to Be Biased12
1.5From Analysis to Prescription13
IIMacro Perspectives15
2The Vicious Circle of Poverty17
2.1Introduction17
2.2The Idea of the Vicious Circle19
2.3The Vicious Circle, Industrialization, and Balanced Growth23
2.4The O-Ring Theory of Low Productivity33
2.5Manifestations of Unemployment39
3Growth and Development43
3.1The Harrod-Domar Legacy43
3.2The Neoclassical Model46
3.3Endogenous Growth50
3.4Distribution and Development55
3.5Limitations62
4Inflation and Structural Disequilibrium65
4.1Employment Policy and the Inflation Barrier65
4.2Notes on Michal Kalecki66
4.3Structural Disequilibrium72
5Foreign Exchange and Trade: Some Considerations83
5.1Closed and Open Economies83
5.2Foreign Exchange Constraints and Growth: A Two-Gap Model88
5.3Aid and Welfare: A Paradoxical Theorem93
5.4The Terms of Trade in the Long Run98
6International Debt103
6.1The Agenda103
6.2The Background104
6.3Sovereign Risk and Rationality108
6.4Some Standard Models117
6.5Loan Pushing126
6.6Debt Forgiveness138
6.7Buybacks and Debt-Equity Swaps142
IIIThe Dual Economy149
7The Structure of a Dual Economy151
7.1Introduction151
7.2The Lewis Model153
7.3Critiques157
8Migration163
8.1Migration and Urban Unemployment163
8.2The Harris-Todaro Model166
8.3Policy Issues173
AppendixThe Monotonicity Proposition179
9The Rural-Urban Wage Gap183
9.1The Labor Turnover Model183
9.2Extensions and Critique189
9.3Labor Turnover and Duopsony: A Digression193
10Unemployment and Surplus Labor197
10.1Preliminary Remarks197
10.2The Wage-Productivity Model198
10.3Surplus Labor and the Efficiency Wage205
10.4Surplus Labor in the Casual Labor Market208
10.5A Comment on Dualism215
10.6A Collusive Theory of Unemployment216
IVThe Rural Economy223
11Stagnation in Backward Agriculture225
11.1Introduction225
11.2A Theory of Stagnation227
11.3The Debt Trap: By Chance or by Design?234
11.4Stagnation and Tenurial Laws238
11.5Alternative Explanations of Stagnation246
11.6Desiderata249
12Tenancy and Efficiency251
12.1Forms of Agricultural Land Tenure251
12.2Share Tenancy252
12.3Screening and Entrepreneurial Ability261
12.4Scale, Productivity, and Tenancy263
13Rural Credit Markets267
13.1The Lender's Risk Hypothesis267
13.2Monopolistic Markets269
13.3Market Fragmentation274
13.4Credit Policy278
14Interlinkage in Rural Markets281
14.1Antecedents281
14.2Potential Risk and the Emergence of Interlinkage282
14.3Partial Equilibrium in an Interlinked Market286
14.4Market Equilibrium291
14.5The Structure of Wages and Interest294
14.6The Intertemporal Earnings Approach299
14.7Response to Exogenous Changes303
14.8Moral Hazard and Interlinkage306
14.9Triadic Interactions312
AppendixThe Algebra of the Intertemporal Earnings Approach314
VConcluding Remarks317
15The Limits of Economic Analysis319
15.1Introduction319
15.2On Power, Custom, and Social Institutions319
15.3Some Comments on Method326
15.4Concluding Remarks328
References331
Name Index355
Subject Index361

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