Theories of sectoral balance
With an emphasis on models with practical relevance to policy issues in the Third World, this paper reviews the literature on the treatment of separate economic sectors in models concerned with economic development. The most common demarcations of economic sectors are set out in section 1. Section 2 outlines six kinds of circular flow, i.e., how sectors interact macroeconomically, which differ as to whether basic causality comes from the side of demand or supply, and the means via which macro balance (or savings-investment equilibrium) is attained. All six variants appear in the development literature. Once their accounting and causal structures are specified, multi-sectoral models should fit the (stylized) facts. There are well-known regularities to the growth process, described in section 3. With structure, macro closure and relevance in hand, how theories work out in practice can then be addressed. Section 4 takes up models where circular flow is driven by conditions of farm labour and/or food supply, the emphasis is on agriculture/industry linkages which affect resource growth and allocation. Aggregate demand enters the discussion in section 5, food or non-traded goods limit activity in other sectors and the terms-of-trade or the real exchange rate becomes the key adjustment variable. Other commodities, capital goods of foreign resources, may constrain the system, as in section 6. Demand composition figures in section 7 where feedbacks between income distribution and sectoral growth are considered. Section 8 concerns extensions of sectoral schemes to deal with new institutions and technologies for production and use of foods. It is concluded that a renewed, classically-based attempt to formulate development theories on the basis of institutions, macroeconomic power, and sectoral and class relationships that exist, may prove more successful. c CAB International
| Main Authors: | , , , |
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| Format: | Texto biblioteca |
| Language: | eng |
| Published: |
Basingstoke, Hamshire (RU) Macmillan
1988
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| Summary: | With an emphasis on models with practical relevance to policy issues in the Third World, this paper reviews the literature on the treatment of separate economic sectors in models concerned with economic development. The most common demarcations of economic sectors are set out in section 1. Section 2 outlines six kinds of circular flow, i.e., how sectors interact macroeconomically, which differ as to whether basic causality comes from the side of demand or supply, and the means via which macro balance (or savings-investment equilibrium) is attained. All six variants appear in the development literature. Once their accounting and causal structures are specified, multi-sectoral models should fit the (stylized) facts. There are well-known regularities to the growth process, described in section 3. With structure, macro closure and relevance in hand, how theories work out in practice can then be addressed. Section 4 takes up models where circular flow is driven by conditions of farm labour and/or food supply, the emphasis is on agriculture/industry linkages which affect resource growth and allocation. Aggregate demand enters the discussion in section 5, food or non-traded goods limit activity in other sectors and the terms-of-trade or the real exchange rate becomes the key adjustment variable. Other commodities, capital goods of foreign resources, may constrain the system, as in section 6. Demand composition figures in section 7 where feedbacks between income distribution and sectoral growth are considered. Section 8 concerns extensions of sectoral schemes to deal with new institutions and technologies for production and use of foods. It is concluded that a renewed, classically-based attempt to formulate development theories on the basis of institutions, macroeconomic power, and sectoral and class relationships that exist, may prove more successful. c CAB International |
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