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Fiscal and Monetary Policies and Problems in Developing Countries : Modern Cambridge Economics (Paperback) - Eprime Eshag

Fiscal and Monetary Policies and Problems in Developing Countries

Modern Cambridge Economics (Paperback)

Paperback Published: 12th March 1984
ISBN: 9780521270496
Number Of Pages: 312

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This book is concerned with the use of fiscal and monetary policies to overcome three major obstacles to development commonly faced by less developed countries: inadequate investment; misallocation of investment resources; and internal and external imbalances i.e. inflation and balance of payments deficits. The book is divided into six chapters the first two of which are devoted to the definition of concepts and to an explanation of the Keynesian model of income determination and of Kalecki's model of financing investment, within the framework of which the role of fiscal and monetary measures and of foreign capital is later examined. Chapters 3 and 4 discuss the role of fiscal measures and of foreign capital, respectively, in promoting domestic investment. Chapter 5 examines the use of both fiscal and monetary instruments, including industrial and agricultural development banks, to influence the pattern of investment. The last chapter is devoted to the problems of internal and external imbalances. The author examines policies pursued by a representative sample of developing countries and concludes that most of them fail adequately to exploit the potential of fiscal and monetary instruments and of foreign capital to overcome the three sets of obstacles to development largely bacause of institutonal (socio-political) constraints. The approach to inflation and balance of payments difficulties followed in the book differs significantly from that of monetarists, notably the Chicago school and the IMF, whose basic propositions are reviewed and critically examined in some detail in Chapters 2 and 6. Although the primary focus of the book is on developing economies, this part of it is also relevant to industrial countries.

List of tables and chartp. xi
Series prefacep. xiii
Prefacep. xv
List of abbreviationsp. xxi
Symbols and terminology usedp. xxii
The Meaning and the Strategy of Economic Developmentp. 1
The meaning and measurement of economic developmentp. 1
The process of growthp. 3
Economic welfare indexp. 5
Essential and inessential investment and consumer goodsp. 8
Lop-sided developmentp. 10
Strategy of developmentp. 10
Raison d'etre for government interventionp. 11
Lower efficacy of the market mechanismp. 11
Unequal distribution of incomep. 12
Divergence between private and social costs and benefitsp. 15
Long-term dynamic considerationsp. 16
Shadow pricingp. 20
The key role of socio-political factors in developmentp. 23
Quality of the administrationp. 24
The Scope and Role of Fiscal and Monetary Policiesp. 28
Background to the modern approachp. 29
The management of demand and productionp. 32
Keynesian model of income determinationp. 36
Fiscal and monetary measuresp. 41
The effect of changes in the supply of money on private demand and on pricesp. 42
Monetary policy and private consumptionp. 44
Monetary policy and private investmentp. 47
Monetary policy and the price levelp. 49
The counter-revolution against Keynesp. 50
Financing of economic developmentp. 53
Kalecki's modelp. 54
Formal modelp. 57
Foreign trade and capitalp. 60
The role of fiscal and monetary policies in developmentp. 63
The neo-monetarist approachp. 65
The key propositions of monetarismp. 65
Excess money balancesp. 68
Changes in the supply of moneyp. 70
Laissez-faire aspect of neo-monetarismp. 73
Policy prescriptionsp. 74
Financing Economic Development (1) Domestic Savingsp. 77
Public consumptionp. 78
Expenditure on defence, education and healthp. 81
Fiscal policy and private consumptionp. 88
Taxation target and potentialp. 89
Tax ratiosp. 92
Organisation of Petroleum Exporting Countries (OPEC)p. 97
Guidelines on taxationp. 100
Essential characteristics of a taxation systemp. 100
Taxation measuresp. 103
Indirect taxesp. 103
Direct taxes outside agriculturep. 106
Direct agricultural taxesp. 109
Land reform and farm co-operativesp. 118
Wealth, gift and inheritance taxesp. 120
Conclusionp. 122
Financing Economic Development (2) Foreign Capitalp. 124
The dual function of foreign capital in developmentp. 125
Absorptive capacity for foreign capitalp. 130
Major types of capital flowp. 131
Economic aid and its cost to donorsp. 132
Volume, composition and distribution of capital flowsp. 136
Composition and distribution of capitalp. 141
Development potential of different categories of external capitalp. 145
Grants and concessional loans (ODA)p. 145
Tied aidp. 146
Non-concessional loansp. 149
Direct investmentp. 151
Drawbacks, compared with loansp. 153
Special advantagesp. 156
Evaluation of the actual contribution of foreign capital to developmentp. 159
International aid and capital flow targetsp. 162
Recommendationsp. 163
Compliance with recommendationsp. 165
Growth in external debt of developing countriesp. 167
The Pattern of Investmentp. 172
Investment in the public sectorp. 173
Guidelines on the choice of public investment projectsp. 173
Pricing policies in the public sectorp. 175
Private investmentp. 179
Fiscal measuresp. 180
Tariffs and quotasp. 180
Tax concessionsp. 182
Subsidiesp. 183
Multiple exchange ratesp. 184
Monetary instrumentsp. 186
Industrial development banksp. 188
Sources of fundsp. 189
Investment policiesp. 193
Agricultural credit institutionsp. 196
Development potentialp. 197
Distribution of institutional creditp. 201
Subsidised creditp. 207
Conclusionp. 209
Internal and External Equilibriump. 211
The meaning and significance of equilibriump. 211
Internal equilibriump. 211
External equilibriump. 213
Causes of disequilibriump. 216
The structure of productionp. 218
Supply of foodp. 218
Production bottlenecks and sectoral demand pressuresp. 221
Size of harvestsp. 222
The structure of foreign tradep. 222
Diagnosis of imbalancesp. 227
Analysis of demand conditionsp. 228
Inflationary pressuresp. 231
External imbalancesp. 234
Remedies for imbalancesp. 236
Direct controls and selective measuresp. 237
Global deflationary measuresp. 239
Foreign loansp. 241
The IMF monetary approach to the balance of paymentsp. 243
The basic propositions of monetarismp. 244
IMF edecticismp. 247
The organisation, resources and credit facilities of the IMFp. 252
The organisation and resources of the IMFp. 253
Quotas and SDRsp. 253
The IMF regular credit facilitiesp. 256
Conditionality of the IMF credit facilitiesp. 257
IMF stabilisation policiesp. 259
Restriction of effective demandp. 260
Promotion of the market mechanismp. 262
Foreign exchanges and devaluationp. 263
Concluding notep. 267
IMF special facilitiesp. 269
Compensatory Financing Facility (CFF)p. 270
The Buffer Stock Financing Facilityp. 272
The Oil Facilityp. 272
Extended Fund Facility (EFF)p. 273
Supplementary Financing Facility (SFF)p. 273
The Trust Fundp. 275
General Arrangements to Borrow (GAB)p. 275
Indexp. 276
Table of Contents provided by Syndetics. All Rights Reserved.

ISBN: 9780521270496
ISBN-10: 0521270499
Series: Modern Cambridge Economics (Paperback)
Audience: Professional
Format: Paperback
Language: English
Number Of Pages: 312
Published: 12th March 1984
Country of Publication: GB
Dimensions (cm): 21.69 x 14.17  x 2.11
Weight (kg): 0.43