From Classical Economics to Development Economics
Most development economists are versed only in the post-World War II period of their subject. But economic growth was a major concern in the 18th century, and colonial economics and policy commanded much attention in the 19th and first half of the 20th ce
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Also by Gerald M. Meier ASIAN DEVELOPMENT (co-author) ECONOMIC DEVELOPMENT EMERGING FROM POVERTY: The Economics that Really Matters EMPLOYMENT, TRADE, AND DEVELOPMENT FINANCING ASIAN DEVELOPMENT INDUSTRIAL ADJUSTMENT IN SUB-SAHARAN AFRICA (co-editor) INTERNATIONAL ECONOMIC REFORM: Collected Papers of Emile Despres (editor) INTERNATIONAL ECONOMICS: Theory of Policy INTERNATIONAL TRADE AND DEVELOPMENT LEADING ISSUES IN ECONOMIC DEVELOPMENT PIONEERS IN DEVELOPMENT (editor) POLITICS AND POLICYMAKING IN DEVELOPING COUNTRIES: Perspectives on the New Political Economy (editor) PRICING POLICY FOR DEVELOPMENT MANAGEMENT PROBLEMS OF COOPERATION FOR DEVELOPMENT PROBLEMS OF TRADE POLICY PROBLEMS OF A WORLD MONETARY ORDER THE INTERNATIONAL ECONOMICS OF DEVELOPMENT
From Classical Economics to Development Economics Edited by
Gerald M. Meier
Konosuke Matsushita Professor of International Economics and Policy Analysis, Emeritus Stanford University
First published in Great Britain 1994 by
MACMILLAN PRESS LTD
Houndmills, Basingstoke, Hampshire RG21 6XS and London Companies and representatives throughout the world A catalogue record for this book is available from the British Library. ISBN 978-1-349-23344-1 ISBN 978-1-349-23342-7 (eBook) DOI 10.1007/978-1-349-23342-7
First published in the United States of America 1994 by
ST. MARTIN'S PRESS, INC., Scholarly and Reference Division, 175 Fifth Avenue, New York, N.Y. 10010 ISBN 978-0-312-12033-7
Library of Congress Cataloging-in-Publication Data From classical economics to development economics I edited by Gerald M. Meier. p. em. Includes index. I. Economic history. 2. Economic development-History. 3. Classical school of economics. 4. Asia-Economic conditions. 5. Asia-History. 6. Development economics. I. Meier, Gerald M. HC5I.F76 1994 330'.09--0, ql' (N) > 0 where qi(N) is the marginal cost of "clearing" a unit of land, which is a "convex" function of the amount of land that is cleared. It will be convenient to choose Mas the numeraire, and sop is the relative price of A and w the real wage, both in terms of M. If we define output per worker and capital per worker in the M sector as m and k respectively, we can then write the production function for M in intensive form as
m =m (k)
(2')
Profit maximization under project competition must then result in
m' (k) =p
(5)
Vent-for-Surplus and the Staples Theory
84
The value k of k that satisfies (5) also determines the equilibrium real wage as
(6) The given value of the rate of interest p thus determines k and hence w because of constant returns to scale in the M sector. Writing a and n for output per worker and "land" per worker in the A sector, perfect competition and free mobility between sectors for labor result in
p[a- a'(n) n] =
w
(7)
Thus to each value of p there corresponds a unique value of n, and hence of the marginal productivity of land a'(n), that satisfies (7). The extent of the frontier, and hence the amount of land N, is determined by the condition that the rate of return on clearing land must, in the lo
