lower than the Chenery–Watanabe average (Chenery and Watanabe, ). .. McKinnon (), Chenery and Strout (), Findlay (), and others. Article in American Economic Review 56 · September with Reads . As submitted by Chenery and Strout (), foreign exchange. Chenery HB Strout A Foreign Assistance and Economic Development American from ACCOUNTING ACC at National University of Sciences.
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Further note that k. Anx countries in the sample obtain a dominant majority of their export earnings from these broad categories of products. This leads us to the second gap which is that between exports and imports. Assuming that all savings can be translated into export—that is, there is no export constraint, one can derive: In particular, from a risk-return perspective the export portfolio of manufactured products dominates the export portfolio of food items and agricultural products which in turn dominates the export portfolio of fuel products and of ores and minerals.
Etrout common features that run through all these models are srtout they are in some sense modifica- tions of the basic Harrod-Domar model and that most of the rela- tions defining the models are linear in different variables. Aid is utilized in the first phase to the upper limit of the ab- sorptive capacity, with investment being divided equally between the traded goods sector and the non-traded goods sector.
But on the other hand, as absorptive capacity or marginal propensity to save increases, the shadow price of aid also seems to be increasing. Scientific Research An Academic Publisher. Manne and Weisskopf andd an intertemporal planning model of India. Case I is portrayed in Figure 1 a. Aggregative Models of Foreign Resource Requirements Srout what follows we describe the major aggregative models of foreign resource requirements. Help Center Find new research papers in: This alters the gap between local currency and foreign currency.
Focus on your client’s books. From the following figure Figure 2one can easily see that the impact of aid on growth is greater if the bottleneck constraint is binding rather than the savings constraint.
Another interesting feature of this model is that it incorporates the rate of 4 The Fei-Paauw model and Chenery-Strout models are very similar in spirit. If the gap is reduced it becomes easier for the economics to reach the stage of take off as postulated by Rostow in his theory, Stages of economic development. For example, three successful countries in the Fei-Paauw model -Colombia, Tunisia and Mexico- fail to pass the roughly equivalent savings criterion of Chenery-Strout; again, eight chhenery which pass the test of Chenery-Strout–Argentina, Brazil, Honduras, India, Israel, Nigeria, Panama and Peru—were among the set of unsuccessful” countries of Fei-Paauw.
He finds that with increases in resource inflow consumption in- creases but at a decreasing rate, implying decreasing marginal pro- ductivity shadow price of foreign resource inflow. Modern EconomyVol. Further, from the above eqs.
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You dismissed this ad. Answered Mar 10, The research assistance of Strour Choudhury and Akhtar Mahmood is gratefully acknowledged. Comment,” American Economic Review, Sept. The differences in the empirical results of strlut two models can of course be traced to the differences in their formulations– different, though related, ways of conceptualizing the problem.
Now calculating backwards, the required foreign investment for Y 0. On the other hand, the programming models, which can incorporate substitution only indirectly through trade, are a step forward over the aggregative two-gap models, but in no way near the ideal–they still ignore direct substitutabilities in consumption and production.
A developing country starts off with very low savings, but it has to engage in a big push by investing heavily. The optimal time pattern of aid inflow seems to form a dome-shaped curve–first increasing, then decreasing finally reducing 9166 to zero.
In xhenery second variant, they impose the savings constraint but the profile of aid in- flow is flexible. What are the development theories in economics? Which is the most suitable economic model between Nehruvian and Gandhian economic model in present economic landscape of India?
The results are that the export portfolios comprised of manufactured products have a superior performance than export portfolios comprised of non-manufactured products.
Ask New Question Sign In. It shows what Fei-Paauw would call the intermediate case. Leaving a developing country to the free market would only mean that it would get locked in to the agricultural sector and its manufacturing sector would never grow, thereby ruling out a structural transformation in the nature of the economy. There is obviously a cost differential here, because of which developing countries would necessarily face current-account deficits.
What is the backwardness model of economic development? In this case, foreign capital will be required for ever to sustain a given rate of growth of per capita income. As the volume of aid inflow increases, its shadow price declines. They postulate that, as has been mentioned before, per capita savings is a constant fraction u, of the increment in per capita income. Tendulkar presents a static, multi-sector optimizing model for India. Weisskopf–a static linear programming model- focuses on the trade-off between domestic and foreign resources in the empirical context of India.
However, none of the above is responsible for any errors that may still persist. The case of Pakistan,” in I. Answered Feb 21, What is economic cenery in a community? In particular, these models ignore the options of substitu- cbenery in consumption and production, and the resulting structural change. This shadow price approach to the problem is no doubt insightful– since it reflects in a general way the real resource trade-offs in the economy, but is not without difficulties.
The way they pose the problem is as follows: With growth targets remaining the same, by changing the relative weights between domestic and foreign resource costs in the objective function, Weisskopf derives trade-offs between external chebery inflow and domestic savings.
In his ‘closed loop’ version, Tendulkar chejery a sav- struot constraint along with the foreign exchange one. Two-gap model is an extention of harrod-domar growth model and argues that development of less developed countries is constrained due to presence of two gaps: