In this book Nobel Laureate Joseph Stiglitz and co-author Raaj Sah address one of development's major issues. During the early phases of economic development, there are often serious conflicts between the interests of town and country. The Corn Law Debate in England, the economic conflicts between the North and the South prior to the US Civil War, and the Soviet Industrialization Debate are among the historical examples. Most of today's countries face town versus country tensions of increasing severity, including such issues as who should pay how much in taxes, who should get how much in subsidies, and what forms the taxes and subsidies should take. This volume analyses these tensions and issues, taking into account the great diversity of institutions and economic environments observed in different developing countries. While dealing primarily with today's developing countries, the book also sheds some new light on some of the historical controversies. Each chapter contains a non-technical statement of the problems at hand and a summary of the analysis. The book will be of interest to public finance economists, and practitioners and researchers of economic development, as well as to economic historians.
Author(s): Raaj Kumar Sah; Joseph E. Stiglitz
Publisher: Oxford University Press
Year: 1992
Language: English
Pages: 223
City: Oxford
PREFACE
Contents
PART I: AN INTRODUCTION TO ISSUES AND METHODOLOGY
1. INTRODUCTION
1.1 Normative versus Positive Analysis
1.2 Analysis under Limited Data Availability
1.3 Policy and Political Economy
1.4 General-Equilibrium Analysis
1.5 The Structure of the Book
1.6 The Nature of the Results
1.7 Some Remarks on the Role of Theory
2. THE OBJECTIVES AND INSTRUMENTS OF GOVERNMENT POLICY AND THE STRUCTURE OF THE ECONOMY IN LDCs
2.1 Stated Objectives of Food-Related Policies
2.2 Putting Agricultural Policies in Perspective
2.3 The Economic Structure of LDCs
2.4 Concluding Remarks
3. AN APPROACH TO APPLIED WELFARE ECONOMICS
3.1 Introduction
3.2 Theoretical Background
3.3 Applied Welfare Economics for LDCs
PART II: INTER-SECTORAL TAXATION POLICIES
4. RURAL-URBAN PRICES IN OPEN ECONOMIES
4.1 Introduction
4.2 A Simple Model
4.3 Analysis of Changes in Agricultural and Industrial Prices
4.4 Price-Productivity Effects
Appendix
5. THE PRICE SCISSORS IN OPEN ECONOMIES
5.1 Introduction
5.2 Effects on the Investible Surplus of Changes in the Price Scissors
5.3 Welfare Effects of Changing the Price Scissors
5.4 Optimal Price Scissors
5.5 Concluding Remarks
6. THE PRICE SCISSORS IN CLOSED AND PARTIALLY CLOSED SOCIALIST ECONOMIES
6.1 Introduction
6.2 The Model
6.3 Reform in the Price Scissors
6.4 Optimal Price Scissors
6.5 Economies with Traded and Non-Traded Goods
6.6 Concluding Remarks
Appendix
7. THE SOVIET INDUSTRIALIZATION DEBATE AND COLLECTIVIZATION
7.1 Introduction
7.2 Preobrazhensky's Propositions
7.3 The Correct Size of the Price Scissors
7.4 Collectivization
7.5 A Postscript on the Soviet Debate
PART III: THE RURAL SECTOR
8. INCOME DISTRIBUTION AND ALTERNATIVE ORGANIZATIONAL FORMS WITHIN THE RURAL SECTOR
8.1 Introduction
8.2 Distributional Effects
8.3 Alternative Forms of Rural Organization
8.4 Effects of Wages and Prices on Rural Productivity
8.5 Concluding Remarks
9. TAXES AND SUBSIDIES ON DIFFERENT GOODS IN THE RURAL SECTOR
9.1 Introduction
9.2 A General Formulation
9.3 Informationally Parsimonious Pareto-Improving Price Reforms for Cash-Crops and Manufactured Inputs
9.4 Should Some Cash-Crops or Manufactured Inputs be Taxed and Others Subsidized?
9.5 Some Caveats
Appendix
PART IV: THE URBAN SECTOR
10. THE IMPACT OF URBAN WAGE AND EMPLOYMENT DETERMINATION ON TAXATION POLICIES
10.1 Introduction
10.2 A General Formulation of Urban Wage-Determination
10.3 Urban-Rural Prices with an Endogenous Urban Wage
10.4 Price Scissors with Endogenous Wages
10.5 Endogenous Urban Wage versus Government-Controlled Urban Wage: Which is the Appropriate Assumption for LDCs?
10.6 Note on the Urban Wage Fixed in Terms of the Utility Level
10.7 Urban Unemployment
11. SOME ASPECTS OF THE WAGE-PRODUCTIVITY HYPOTHESIS THAT ARE RELEVANT FOR TAXATION ANALYSIS
11.1 Introduction
11.2 Why Do Wages and Prices Affect Productivity?
11.3 A Model of Wages, Prices, Productivity, and Unemployment
12. TAXES AND SUBSIDIES ON DIFFERENT GOODS IN THE URBAN SECTOR
12.1 Introduction
12.2 A General Formulation
12.3 Generalizations
Appendix
13. TAX POLICY IN THE PRESENCE OF MIGRATION AND URBAN UNEMPLOYMENT
13.1 Introduction
13.2 The General Migration Relationship
13.3 Rural-Urban Prices
13.4 Pareto-Efficient Urban Taxes on Different Goods
13.5 Concluding Remarks
Appendix
14. TAXATION IN THE URBAN SECTOR: SOME ASPECTS OF THE UNDERLYING MODEL
14.1 Introduction
14.2 A General ModeI of the Urban Sector
14.3 Inefficiency of Market Equilibrium
14.4 Interdependence of Demand and Supply of Urban Labour
14.5 Concluding Remarks
15. THE SOCIAL COST OF LABOUR
15.1 Introduction
15.2 The Model
15.3 Special Cases
15.4 Concluding Remarks
16. CONCLUDING REMARKS
16.1 Some Key Issues
16.2 Political Economy Considerations
16.3 The Policy Predicament
References
Index
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