Showing papers in "Journal of Economic Studies in 1974"

The “leading sector” model of growth in developing countries

Abstract: Since the original Harrod‐Domar capital‐output models, and the highly influential work of Ragnar Nurkse, nearly all writers have found the effective constraints on growth to be on the side of supply. Thus stress has been placed on the “exchange gap” (shortage of imports) or the “savings gap” (shortage of capital formation) or on shortages in skills or natural resources. Others focus on constraints imposed by institutional or cultural factors, though often these are assumed to be fixed. An implicit assumption of all such models is that no problem will be posed by lack of effective demand, which may therefore be safely neglected. The apparent basis for this view is the presence of inflation, which suggests excessive demand. However, many writers do express great anxiety about the possibility of an inadequate demand for labour. They claim that excessive concern for the goal of maximum output gives rise to a shortage of capital and a “maluse” of capital in capital intensive processes, thus reducing the demand for labour and causing growing unemployment. The inconsistency of an insufficient demand for labour and an excessive demand for goods is not recognized nor is explained in terms of maldistribution of income or excessive use of capital intensive methods of production.

A quantitative analysis of wage strikes in four u.k. industries, 1962–1970

Abstract: A strike is not the only available collective sanction open to a dissatisfied workforce, which may have recourse to alternative forms of militant action such as the go‐slow or overtime ban. Nevertheless, despite their well known limitations, strike statistics constitute the only available quantitative barometer of overt and organised industrial conflict. In order to explain the incidence of strike action at an aggregative level a number of studies have been carried out in recent years which test quantitative relationships via the use of multiple regression techniques and which postulate an economic interpretation of strike activity. The advantage of the quantitative approach as a method of analysis and insight into the relationships involved is that it “replaces improvised ad hoc explanations of strike activity with a behavioural model which….does yield refutable implications”. That is, in terms of providing more solid and systematic empirical knowledge, its performance is testable and, by amendments and refinements, capable of improvement.

The pattern of trade and specialisation in the central american common market

Abstract: The purpose of this paper is to analyse the structural changes and pattern of specialisation that followed the formation of the Central American Common Market (CACM) in the early 1960s. In the first section it is shown that the fear did exist that trade‐creating and “backwash” effects would dominate as a result of unrestricted free trade in the region. In sections two and three, evidence is presented to suggest that these fears have proved to be largely unfounded. The operation of market forces has led to an unplanned reciprocal exchange of manufactures for manufactures and non‐manufactures for non‐manufactures. Moreover, most of the structural changes within the manufacturing sector appear to have taken the form of intra‐industry specialisation, i.e. specialisation in the differentiated products of an industry with no need to abandon entire high‐cost industries.

Changes in local income multipliers over time

Abstract: Considerable interest has been shown in recent years in the calculation of regional income and/or employment multipliers. Their role in the formulation and evaluation of regional policy has been stressed by Wilson (1968) and some writers have been prepared to suggest that high levels of leakage and consequent low multipliers are causes of economic decline or slow growth in the peripheral regions just as much as are economic structure or locational disadvantages (Thirlwell, 1972). The early approaches to the calculation of income or employment multipliers generally used aggregate data on employment, where data on output were not available, national input—output tables to identify input mixes and generalised economic base concepts to distinguish local and nonlocal purchases and sales (Archibald, 1967; Brown et al, 1967; Steele, 1969). More recent work, however, had identified another approach, forsaking the use of aggregated national data sets and employing intensive survey methods of individual industrial plants, such as Greig's study of the pulp and paper mills at Fort William (1971), of educational establishments such as universities (Brownrigg, 1973; Lewes and Kirkness, 1973) or of service sectors such as tourism (Blake and MacDowell, 1967). More recently Lever (1974a) has introduced a more rigorous comparative method into the study of individual manufacturing establishments.

A simple determinate solution for bilateral monopoly

Abstract: Many modern microeconomic theory textbooks similarly conclude that the bilateral monopoly equilibrium price and quantity are theoretically indeterminate given the usual assumptions of the theory of the firm; they usually state that additional assumptions about bargaining power or firm behaviour are required for a determinate solution. The past literature on bilateral monopoly generally supports the textbook position with respect to price but not with respect to quantity. For example, von Stackelberg (1952, 182–9) and Fellner (1947, 523–8) argued that quantity is determinate at the joint profit maximizing level for bilateral monopoly between profit maximizing firms which employ “all or none” offers; price, however, must still be determined by relative bargaining power which is unspecified.

Education and income in chile

Abstract: From December, 1969 to March, 1970 a sample survey was conducted throughout Chile to determine individual utilization and expenditures on health services. As a by‐product of this survey, information was obtained on individual schooling and income by age, occupation, and region of residence. This paper analyzes the latter information. The sample consists of 3,839 Chilean males who were heads of households and who were employed during 1969.

The role of r&d in the international trade and investment of u.k. manufacturing industry

Abstract: The general importance of technological advances, based on successful industrial research and development, is well established in the economics of international trade and investment. A part of the emphasis on technology as a factor in international trade has resulted from the general reaction to Leontief's findings about the apparent factor intensity of U.S. trade: findings which went against the accepted pattern of the capital‐ and labour‐ based Heckscher‐Ohlin model of international trade. More important though is the recognition of the commercial significance of product‐ and process‐ oriented industrial innovation in an industry's international operations. There is ample evidence to support the usually accepted connection between research and development and international trade and investment in the case of United States' manufacturing industry. There has not, however, been a proper examination of the nature of this relationship in U.K. manufacturing industries. With the availability of new data on book values of British direct investment abroad by industry groups, some assessment of the connection between research activity and export‐ and foreign‐investment positions can now be undertaken.

The possibility of dynamic immiserising growth: a disproof

Abstract: Immiserising growth is a phenomenon whereby an increase in the productive capacity of an economy — due to growth in factor endowments or technological progress — results in a reduction in social welfare.

Labour supply and income uncertainty: the geometry of a special case

Abstract: The effect of increased uncertainty on the agent's allocation decision is an intriguing general question and has recently received some systematic attention in the literature. Sandmo has analyzed the effect of savings rate uncertainty on the savings decision and both he and Leland have explored the effect of “income uncertainty” on the same decision. In addition, Leland has investigated the effects of uncertainty on optimal foreign exchange positions and both authors, Leland and Sandmo have begun an exploration of the effects of uncertain demand on the firm's output decision. Finally, Block and Heineke have analyzed the effect of income, savings rate, and wage uncertainty on the agent's labour allocation. However, in all of this work there has not been a geometric treatment of even a restricted case. The purpose of this note is to develop such an analysis for a special, but interesting labour allocation problem, and thereby derive the results of income uncertainty in a transparent fashion.