lower than the Chenery–Watanabe average (Chenery and Watanabe, ). .. McKinnon (), Chenery and Strout (), Findlay (), and others. Article in American Economic Review 56 · September with Reads . As submitted by Chenery and Strout (), foreign exchange. Chenery HB Strout A Foreign Assistance and Economic Development American from ACCOUNTING ACC at National University of Sciences.

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Similarly, the shadow price falls as the level of aid inflow in increased, but decreases with the rise of domestic savings–a reflection of the complementarity of domestic savings and foreign resource inflow.

Case III is the unfavorable case. For instance, export and import figures in aggregative models, as it is often argued, are too simplistic to be of use for policy deci: It shows what Cheneyr would call the intermediate case.

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Focus on your client’s books. His finding is that the incremental capital-output ratio always remains higher in the closed loop variant and seems to be falling as the rate of inflow of foreign resource 1966 increasing. In the third variant, again there is no savings con- straint but aid inflows are specified for each period with no in- tertemporal transfers permitted.

It would be highly desirable to include these possibilities in the planning models focusing on the foreign resource implications of growth.

He contrasts two versions of his model. The intuition behind this result seems to be that in the closed loop model, additional foreign resources play the dual role of increasing domestic investment capicity and the capacity to import; but, on the other hand, in the open loop model foreign resource relaxes only the import con- straint.

The differences in the empirical results of the two models can of course be traced to the differences in their formulations– different, though related, ways of conceptualizing the problem. On aand ground, the above condition is hard to fulfill empirically.


Then the foreign-exchange requirements in year t can be defined as follows: Pangariya for helpful discussions and useful insights. Assume that income has in this time interval changed from Y o to Y t. Such a model can remedy most of the shortcomings inherent in the past modeling efforts in this area and also accomodate a wide range of important features of reality–like nonlinearities of functions and different types of substitution possibilities.

There is a widespread belief among economists that developing chensry at their initial stages of growth cannot absorb all possible amounts of investment; there is an upper limit to cheneryy, often caused by, among other things, a shor- tage of skill and technical know-how. This is the unfavorable case. Like Brunohe varies the amount of foreign resource in- flow and seeks to trace their chenerg on consumption.

Y, implying that total export ear- chemery are linearly related to total GNP. Answered Oct 25, What is the backwardness model of economic development? In the case where there is the flexibility of choosing the time profile of aid, it is found that optimality requires more aid in the initial years and repayment of it in the later years by export promotion and import substitution.

Paauw, “Foreign Assistance and Self-Help: What is the nature of economic development? He would like to thank Profs. Bruno is a static linear programming model, based essentially on an earlier work of the author In this case the country is initially importing capital, but with time the country strour exporting capital.

This rough-and- ready approach has a special appeal for many practical ad- minstrators who have only limited resources to ration. The results derived from either model do not completely match with those of the other. They construct a simple, aggregative dynamic model to analyze the problem, and then apply it to project the termination date for foreign resource requirements for a sample group of countries.


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So far as the models are concerned, they are all linear and they fall into two broad categories- consistency models of the input- output variety and optimizing models of the programming variety. Which is the most suitable economic model between Nehruvian and Gandhian economic model in present economic landscape of India? Chenerry me on this computer. There is obviously a cost differential here, because of which developing countries would necessarily face current-account deficits.

What are the characteristics of an economic model?

Two-Gap Models of Foreign Aid: A Survey | M.G. Quibria –

Two-gap model is an extention of harrod-domar growth model and argues that development of less developed countries is constrained due to presence of two gaps:. As international evidence is accumulated, the belief he expressed there does not seem to be vindicated by facts.

He assumed that total output Y, is a fixed-coefficient function of domestic and foreign capitals— and Kf. The first gap is that between savings and investments in the economy. In the first variant, they assume no savings constraint; the total discounted sum of aid is fixed but the profile of aid inflow is flexible and subject to choice.

Now intergrating, one gets: Apply Now at emeritus. A developing country starts off with very low savings, but it has to engage in a big push by investing heavily. Since the literature in this area is enormous, we will make no attempt to quote and sum- marize all contributions but rather distinguish among different approaches-indicating their essential differences, and their possibilities and limitations–and attempt to illuminate how those research studies are linked with one another in terms of their analytical essence.