The Economics of Aid by Healey J. M.;

Author:Healey, J. M.;
Language: eng
Format: epub
Tags: Development Studies
Publisher: Taylor & Francis Group
Published: 2010-11-24T00:00:00+00:00

induce exports of de when savings increase. In this case there would appear to be no structural rigidity if the appropriate price policies were pursued. Moreover, if primary products face a unity elasticity of demand and manufactures face an elastic demand, then differential effective exchange rate changes would permit a net expansion of export earnings.

What about imports? A structural problem would mean that it is impossible, by changing relative prices, to reduce imports without lowering the level of domestic output. In the simple economy where all capital goods are imported and only consumer goods produced domestically, a structural problem implies that (a) in production no substitution between imported capital goods and domestic factors is possible and (b) in consumption no substitution between different consumer goods is possible.8 Although for certain products and processes rigidities of this kind exist, they are unlikely to hold generally.

The simplifications of this approach and its static nature must be borne in mind but it does suggest that the existence of a trade constraint which overrides the saving constraint on growth requires rather restrictive assumptions which are not likely to hold generally although they may apply to particular countries at a particular time.9

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.