I. THE SUBJECT Our definition of the subject will be the use of economic analysis to understand the economies of poor or developing countries. This includes, in particular, how standards of living in the population are determined, and how they change over time, and further how policy can or should be used in the influence of these processes. The definition contains, in principle, much or most of analytical methods in economics insofar as they can be put to use in the examination of the issues of interest. This is as it should be but it poses a problem for a survey in a journal. A comprehensive treatment is infeasible so we shall follow a different route. The survey will focus on what I take to be the major themes and approaches which characterise the productive aspects of the subject. There is, therefore, no pretence at being exhaustive. The purpose is rather to highlight some of the advances. Many of these have been of real substance. There are a number of possible purposes for a survey and it is important to be clear at the outset for whom it is intended, what it is, and what it is not. This survey is addressed to economists and students of economics who .know the tools of their trade but not necessarily how they have been applied to, and fashioned for, the analysis of the economics of developing countries. It is a description of the ways in which problems can be productively formulated and approached, in terms of examples chosen for their intrinsic importance and interest. The vastness of the subject means that we have to be highly selective. It does not seek to provide a summary evaluation of the current view of the 'appropriate' response to immediate policy questions. It is not a history of thought, nor a research manifesto nor an attempt to adjudicate or settle the major debates. Where they arise naturally from the major purpose some judgements on these subjects will be offered, but they do not themselves constitute the primary intent of this survey. There are three lines of enquiry, or sets of questions, which have, I suggest, been distinctive of the most fruitful work in development economics. They will

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The Economics of Development: A Survey

An economic analysis of the duty-free zone

This paper extends the theory of optimal taxation and government production to open economies. Appropriate rules for project evaluation and the determination of consumption, production, and trade taxes under a variety of restrictions (e.g., less than 100 percent profit taxes, government budget constraint, foreign exchange constraint) are derived. Among the results are (a) international prices should be used for evaluating public projects, unless there is a government budgetary constraint or there is a quota (this result does not require that tariff rates be optimally chosen); (b) no tariff should be levied on intermediates and only consumption taxes should be employed if there are 100 percent profit taxes. If profits are not taxed at 100 percent, both consumption and trade taxes should be employed.

/pdf/benefit-cost-analysis-and-trade-policies-1ajx77w2hp.pdf

Benefit-Cost Analysis and Trade Policies

Input tariffs, duty drawbacks, and tariff reforms

Optimal revenue-raising trade restrictions under uncertainty

Trade taxes are widely used to collect revenue. The levy, instead of a uniform consumption tax, would secure revenue without welfare loss, if factor supplies are inelastic. It is, however, often not feasible, particularly in underdeveloped countries, to tax the consumption of much of home output. It is therefore of practical importance to determine the optimal policies for collecting specified revenue through trade taxes. Yet, while the optimum tariff for the exercise of national monopoly power has been extensively and elegantly analyzed in the literature, there has been little discussion of the optimum revenue tariff.1 Our first task in this paper is to analyze this problem, taking trade in intermediate goods into account. As has been pointed out by Bhagwati in his invaluable survey (1964, p. 3), the assumption that only final goods are traded has been a central limitation of trade theory in a real world in which a large portion of world trade consists of intermediate goods. Consider a small country confronted by given world prices2 and endowed with a single factor, labor (L),which is inelastic in supply, immobile

https://www.jstor.org/stable/pdfplus/1830050.pdf

V. K. Ramaswami

Papers

Optimal Subsidies and Taxes When Some Factors Are Traded