On optimal growth models when the discount factor is near 1 or equal to 1

The aim of this paper is to fill the gap between intertemporal growth models when the discount factor is close to one and when it equals one. We show that the value function and the policy function are continuous with respect both to the discount factor, β, and the initial stock of capital,   x ₀  . We prove that the optimal policy   g ^β( x ₀)  is differentiable and that   Dg ^β( x ₀)  is continuous with respect to  (β, x ₀)  . As a by-product, a global turnpike result is proved.     

Some maize production parameters for KwaZulu

As part of a farming systems research project in KwaZulu, a range of agronomic variables (hybrid and open‐pollinated seed, frequeincy of weeding and fertilizer rates) were evaluated for small‐scale subsistence and commercial maize (Zea mays L.) production.

Not all hybrids performed well but a group of adapted cultivars outyielded the open‐pollinated cultivars consistently. The grain yield regression equation of a leading hybrid (PNR6549) on the best open‐pollinated cultivar (Kalahari Early Pearl) was y = 0,32 + l,2x (yield range: 1 t ha‘¹ to 8 t ha^‐1). The large‐grained Hickory King and a traditional cultlvar (Maputaland), while giving lower grain yields than other open‐pollinated and hybrid culttvars, were preferred for consumption as green mealies (corn‐on‐the‐cob).

Weed control was a major determinant of yield. At the lowest level of purchased input (open‐pollinated seed, no fertilizer), increasing the number of weedings from one to three raised the mean grain yield over two seasons from 1,1 t ha^‐1 to 2,0 t ha^‐1, and from 2,2 t ha‘¹ to 3,8 t ha‘¹ in the treatment incorporating a hybrid cultivar and the highest fertilizer level.

Production objectives and labour and cash constraints in KwaZulu differ between subsistence farmers and semi‐commercial and commercial farmers. The data presented here provide guidelines to the selection of suitable options for the various categories of farmer.     

Conjunctuurpolitiek en internationale verhoudingen

Summary Some problems of business cycle policy are considered with the aid of a simplified model of dutch business life. This model is described by 21 equations, the meaning of which has been discussed elsewhere. In the present article special attention is given to the influence of a given cyclic movement of foreign prices and demand on profits and employment in the Netherlands, under different régimes of economic policy. Chart 1 shows the movements under existing conditions, chart 2 those occurring under a régime of compensating public investment, chart 3 those under a régime of compensating exchange rates and chart 4 gives the consequences of a combination of these two forms of business cycle policy. In a somewhat more general way the question is treated which among a greater number of possibilities would constitute the best policy and it is argued that a combination of compensating exchange rates, compensating public investment, stabilisation of consumption outlay and reduction of speculation opportunities would show the best results.Finally the question of directives as distinguished from that of the instrument of business cycle policy is discussed somewhat nearer. The author is of the opinion that a useful directive for the different forms of business cycle policy discussed is to be seen in the tension barometers given by the Central Bureau of Statistics in De Nederlandsche Conjunctuur (August 1936, p. 16–17).     

Book Reviews

Ross H, McLeod (ed.), Indonesia Assessment 1994: Finance as a Key Sector in Indonesia's Development, Research School of Pacific and Asian Studies, The Australian National University, Canberra, and Institute of Southeast Asian Studies, Singapore, 1994, pp. 353. $25.00; S$35.00; A$30.00.

Miranda S. Goeltom, Indonesia's Financial Liberalization: An Analysis of 1981–88 Panel Data, Institute of Southeast Asian Studies, Singapore, 1995, pp. xii + 93.

Joan Hardjono and Charles Warner (eds), In Love with a Nation: Molly Bondan and Indonesia, published by Charles Warner, Picton, NSW, 1995, pp. 256. A$16.95.

ln Love with a Nation is privately published and obtainable from the following Australian suppliers: Gleebooks, 49 Glebe Point Rd, Glebe 2037; Nusantara Bookshop, 72 Maroondah Hwy, Croydon 3136; or from Charles Warner, PO Box 194, Picton 2571. (If ordered from Charles Warner, price including postage is AS20 within Australia; A$25 to Europe, America or Africa; A$23 to Asia, Pacific.)     

Book Reviews

Ian Chalmers and Vedi R. Hadiz (eds) (1997), The Politics of Economic Development in Indonesia, Routledge, London, pp. xxx + 269. A$155.00.

Geoff Forrester (ed.) (1999), Post-Soeharto Indonesia: Renewal or Chaos? Institute of Southeast Asian Studies, Singapore, and KITLV Press, Leiden, pp. 373. Cloth: S$49.90/US$32.90; paper: S$29.95/US$19.95/A$29.95.

Corden, Max (1999), The Asian Crisis: Is There a Way Out?, Institute of Southeast Asian Studies, Singapore, pp. 82. S$19.90/US$12.90.

Karl D. Jackson (ed.) (1999), Asian Contagion: The Causes and Consequences of a Financial Crisis, Westview Press, Boulder CO, pp. xvi + 312. Cloth: US$75.00; Paper: US$30.00.

H.W. Arndt and Hal Hill (1999), Southeast Asia's Economic Crisis: Origins, Lessons and the Way Forward, Institute of Southeast Asian Studies, Singapore, pp. 192. Cloth: S$66.90/US$44.90; paper: S$28.00/US$17.90/A$29.95.

Manuel F. Montes (1998), The Currency Crisis in Southeast Asia: Update, Institute of Southeast Asian Studies, Singapore, pp. xl + 62. Cloth: S$36.00 /US$24.00; paper: S$25.90/US$17.90.     

Publications

Anne Booth and Peter McCawley, (eds), The Indonesian Economy During The Soeharto Era. Kuala Lumpur, Oxford, New York and Melbourne: Oxford University Press, 1981, pp. xxv + 329, $M60.00 (bound), $M30.00 )paper).

R. G. Garnaut and P. T. McCawley, (eds), Indonesia: Dualism, Growth, and Poverty, Research School of Pacific Studies, The Australian National University, Canberra, 1980, pp. iii + 288, $A10.00.

H. Dequin, lndonesien—zehn Jahre danach — Agrarwirtschaft und Industrie in der Regionalentwicklung einer tropischen Inselwelt (Indonesia— Ten Years Later—Agriculture and Industry in the Regional Development of a Tropical Archipelago). Riyadh, 1978, pp. xvi + 344.

Heather Sutherland, The Making of a Bureaucratic Elite — The Colonial Transformation of the Javanese Priyayi, Singapore: Heinemann Educational Books (Asia) Ltd., 1979. (ASAA Southeast Asia Publications Series No. 2), pp. xx + 182. $A18.00 (bound), $A7.90 (paper).     

Survey of recent developments

There is a growing confidence in policy, business and finance circles about Indonesia's ability to withstand global economic and financial shocks, and a renewed belief in domestic sources of growth. Despite uncertainty in Europe and slower than expected recovery in the US, Indonesia is well placed for moderately high growth in the medium term, and economic stability in the shorter term. At the end of June 2011, foreign reserves were at a record high, inflation was down, annual growth was steady at 6.5%, and investment – especially foreign direct investment (FDI) – was up significantly.

Consumer price inflation had fallen to just below 5% by August, from double-digit levels earlier in the year. This was due partly to low food prices and success in sterilising the effects of capital inflows. However, turmoil in international markets led to a sharp fall in the Indonesia stock exchange index and a mild currency depreciation in August– September, prompting central bank intervention in the foreign exchange market. Fiscal policy has remained conservative, aiming for a balanced budget by 2014. However, the government has still not moved to reduce growing fuel and energy subsidies.

While the service sectors have continued to record high rates of growth, there has been a revival of manufacturing in 2011. This is partly underpinned by strong inflows of FDI, and is especially evident in the labour-intensive textiles, clothing and footwear industries after a decade of stagnation. Multinationals have announced plans to expand operations in Indonesia in the past six months to take advantage of new tax incentives. Overseas investors have also been attracted by Indonesia's growing middle class – a result partly of higher rural incomes driven by the commodity boom outside Java.

Some recent ministerial announcements about initiatives to promote domestic industry have a protectionist flavour. A cabinet reshuffle in October may signal a more dirigiste approach to industrial policy – especially the shifting of internationally respected economist Mari Pangestu from the trade portfolio to that of tourism and creative economy.

One important outcome of recent growth has been falling unemployment rates. However, youth unemployment remains a major problem, and efforts to overcome it have been fragmentary. A recent ban on overseas migration of domestic helpers (maids) seems certain to add to labour supply pressures among young people.

The government is now considering how to mobilise its large population base, abundant natural resources and strategic location to play a greater role in the world economy. These assets are central to the ambitious ‘Master Plan’ for longer-term development (2011–25), announced in May. It focuses on developing the resource-rich Outer Island regions, with massive investments in energy and ‘connectivity’ to link the major centres and islands with each other, and centres with their hinterlands. Funding (to come mainly from the private sector), implementation and coordination are all major challenges.     

Reviews

POLICIES FOR TRAINING AND THE LONG-TERM UNEMPLOYED.

Corney, M. 1990: The Black Hole in Britain's Training System; Training for People in Employment: Robinson, P. 1989: Stagflation; Lessons from Other Places; and Meacher, M. 1990: Adopting the Employment Principle: A Green Paper. All published by the Campaign for Work. The price of the first is £4.00, the second £5.00 and the third £3.50.

US LESSONS IN EVALUATION.

Bingham, R. D., Hill, E. W. and White, S. B. (eds) 1990: Financing Economic Development: An Institutional Response. Newbury Park, California and London: Sage Publications, £33.25 cloth, £16.75 paper.

LESSONS FROM THE USA.

Hambleton, R. 1990: Urban Government in the 1990s: Lessons from the USA,

Occasional Paper No. 35, Bristol: School for Advanced Urban Studies. No price stated.

SKILLS TRAINING.

CBI, 1989: Managing the Skills Gap. London: CBI, £10.00 paper; Report of the Vocational Education and Training Task Force, 1989: Towards a Skills Revolution. London: CBI, £20.00 paper; Association of London Authorities, 1990: Training for London. London: ALA.     

Basic socio‐economic elements of a development theory for traditional societies

Notwithstanding the existence of various ‘development paradigms’, little has been done to analyse the fundamental economic determinants of development.

Most important is the basic functioning of supply and demand which, in the traditional society, is determined by religion, customs and rules, resulting in a limited choice and volume of consumption, as well as limited production.

Stimulation of the economy can according to community development principles, be brought about by an increase in demand (needs) to serve as motivation for increased production.

Higher production though, necessitates a change in traditional values and the development of abilities and skills. This is primarily the field of community development.     

Reviews

“THE POLL TAX” Flannery, Kate, 1987: More than Just a Poll Tax. Centre for Local Economic Strategies, £5.00. MacGregor, Susanne, 1988: The Poll Tax and the Enterprise Culture. Manchester: Centre for Local Economic Strategies, £3.95.

“ECONOMIC THEORY AND THE LOCAL ECONOMY” Smith, D., 1987: The Rise and Fall of Monetarism: The Theory and Politics of an Economic Experiment. Penguin, £3.95.

Holland, S., 1987: The Market Economy: From Micro to Mesoeconomics and The Global Economy: From Meso to Macroeconomics, Weidenfeld, £12.95 each.

Green, F. and Sutcliffe, B., 1987: The Profit System: The Economics of Capitalism. Penguin, £5.95.

“THE SERVICES REVOLUTION?” Rajan, A., 1987: Services: The Second Industrial Revolution? London: Butterworths, £27.50.

“ENVIRONMENT AND ECONOMY IN EUROPE” Joyce, F. E. and Schneider, G. (editors), 1988: Environment and Economic Development in the Regions of the European Community. Aldershot: Avebury/Gower, £18.50 hb.

“POLITICS OF PRIVATISATION” Ascher, K., 1987: The Politics of Privatisation: Contracting Out Public Services. London: Macmillan Education Ltd. £30.00 cloth, £8.95 paper.

“RECRUITMENT AND TRAINING POLICY” Davies, T. and Mason, C., 1986: Shutting out the Inner City Worker. University of Bristol, School for Advanced Urban Studies, £4.30.

Chapman, P. G. and Tooze, M. J., 1987: The Youth Training Scheme in the United Kingdom. Avebury: Gower Publishing Company, £22.50.

“JOB GENERATION RESEARCH” Storey, D. J. and Johnson, S., 1987: Job Generation and Labour Market Change. London: Macmillan.     

Survey of recent developments

The arrival of a new year has brought with it an increased focus on Indonesia's 2014 legislative and presidential elections. While voters may be disillusioned with established political figures, a strong presidential candidate has yet to emerge. Many voters appear to yearn for an experienced and uncorrupt leader with new and proactive policies, which is why Jakarta's new governor, Joko Widodo, is being viewed as a potential candidate.

The Constitutional Court has made two major, controversial rulings in recent months: the first concerned the upstream oil and gas regulator BPMigas, the second the international-standard pilot-project schools (Rintisan Sekolah Bertaraf Internasional, RSBIs). The Court ruled both institutions unconstitutional and called for their immediate disbandment.

In 2012, Indonesia's year-on-year economic growth slowed slightly, to a still healthy 6.2%, owing to continued weak global demand for its exports and a contraction in government expenditure. In contrast, foreign direct investment and portfolio investment were particularly strong, with respective increases of 25% and more than 142%. At 4.3%, inflation for the 2012 calendar year still remains well within the government's and Bank Indonesia's expectations. However, inflation expectations are high for 2013, owing to likely reforms to energy subsidies; the expected effect of bad weather on food prices; and increases in minimum wages, which attracted attention in 2012 because of their magnitude and their apparent disparity among regions. Concerns also exist that these rises in minimum wages will hamper Indonesia's international competitiveness and could discourage investment in labour-intensive industries.

Minimum-wage policy is also controversial because of doubts about its relevance to the genuinely poor sections of society – those in informal employment or with primarily subsistence income, who constitute a large proportion of the population. Indonesia has experienced a steady increase in income inequality in the last decade, indicating that the benefits of strong economic growth have not been shared equally. Potential reasons for this increasing inequality relate to labour-market segmentation amid a growing middle class, weak institutional foundations, and commodity-driven growth.

It appeared in 2012 that Indonesia has also been one of the world's poorest performers in HIV/AIDS prevention in recent years. While prevalence rates are low, the number of new HIV infections in 2011 was more than four times that of any other South Asian or Southeast Asian country, and the infection rate among the working-age population has risen by more than 25% since 2001. Infection rates among high-risk groups are also alarmingly high compared with those of other Southeast Asian countries. Targeted prevention, treatment and support programs among these groups are paramount.     

Publications

The Kian-wie, Plantation Agriculture and Economic Growth: An Economic History of East Sumatra, 1863–1942, Jakarta, National Institute of Economic and Social Research (LEKNAS-LIPI(, 1977. Pp 142 + xii. Price not given.

Rodolphe De Koninck, D.S. Gibbons, and Ibrahim Hasan, “The Green Revolution, Methods and Techniques of Assessment: A Handbook of a Study in Regions of Malaysia and Indonesia', Notes et Documents de Recherche, No. 7, December 1977, Department of Geography, Universite Laval, Quebec, pp 409 + xiii.

Graeme J.Hugo,Population Mobility in west Java, Gadjah Mada university Press Yogyakarta, 1978,pp.

John Ingleson, Road to Exile: The Indonesian Nationalist Movement 1927–1934, Singapore: Heinemann for the Asian Studies association of Australia, 1979, pp. 254.

The Population of North Sulawesi by G.W. Jones, Gadjah Mada C. E. Beeby,Assessment of Indonesian Education, a Guide in Planning, Wellington, New Zealand Council for Educational Research in association with Oxford University Press, 1979, pp. 349. (Educational Research Series no. 59; appendices, tables and index; no price given).

Haryati Soebadio and Carine A. du Marchie Sarvaas (eds.),Dynamics of Indonesian History,Amsterdam, North-Holland, 1978, pp. 395 + xvi, $53.25.     

Optimal technology for different levels of managerial ability: A case study of maize cultivar selection

The higher the genetic potential, the more reliant a cultivar will be on the creation of a favourable environment by man. The ability to create a favourable environment is partially a function of the farmer's managerial ability. Due to differences in managerial ability between developed and less developed agriculture, high yield varieties often perform more poorly than lower yield varieties in less developed agriculture and are also more risky.

Regression line graphics may be used to illustrate the effect of managerial ability on cultivar selection. Less sensitive cultivars, although often regarded as low yield cultivars, should be recommended in areas or on projects with lower yield potential or where the level of managerial ability is relatively low.

In less developed agriculture, farmers’ thresholds of resistance to setbacks are rather low. This makes risk behaviour a rational mode of behaviour. Thus, the optimal choice will be to select less risky cultivars that will produce, under less than ideal circumstances, higher yields than those cultivars regarded as high producers only under ideal conditions.

This principle also applies to many other facets of technology and should also continually be considered by advisers and planners in less developed regions.     

The Ju/'hoan Bushman Development Foundation and basic needs in eastern Bushmanland,Namibia

The Ju/'hoan Bushman Development Foundation (JBDF) is a multi‐dimensional development foundation which has as its main objective the raising of the standard of living of the indigenous Ju/'hoan Bushmen in eastern Bushmanland, Namibia. It has a basic needs approach to development.

The development activities of the Foundation started in 1981. The Nyae Nyae Farmers’ Cooperative, through which the Foundation now directs its development activities, was established in 1986. It is funded by various international development agencies, such as Christian Aid, NORAD, SIDA, Bread for the World, Oxfam Canada, and the EEC.

The basic needs approach of the Foundation addresses the following dimensions: water, food, cash, clothing, health, literacy and education, community esteem, and problems and propositions.     

Survey of recent developments

The Indonesian public is becoming increasingly concerned about the gap between policy rhetoric and action. A strong contributor to this has been a long-running corruption saga involving a tax official, Gayus Tambunan, whose activities have helped confirm the public's worst fears about the ineffectiveness of the anti-corruption campaign. Claims of progress in this and other fields, including the economy, are often overstated, and opinion polls suggest that people are increasingly unwilling to take them at face value.

Nevertheless, the most recent data reveal a surprising surge of GDP growth, driven mainly by investment spending. Inflation has been quite steady for the last six months, albeit a little above the target range; this is disappointing, but not a major problem. In response to surging food prices the government has temporarily removed tariffs on rice, wheat and soybeans, and ordered increased rice imports. Energy subsidies continue to weigh heavily on the budget; the plan to remove the subsidy from petrol used in private cars but not from that used in motor cycles makes good political – if not economic – sense, since motor cycle owners greatly outnumber car owners. The 2011 budget is unlikely to have a stimulatory impact.

The composition of exports has altered quite dramatically over the last two decades, albeit in unexpected directions. The pattern of export destinations has also undergone significant change, reflecting the growing relative importance of Asia to the global economy.

The president's proposal for a new capital as the solution to the congestion problem in Jakarta is questionable. If policy makers fail to understand why existing cities perform their diverse functions poorly, the creation of a new capital is more likely to replicate than to solve problems. Cities are crucial to the modernisation of the economy, and are important vehicles for poverty reduction. City governments could greatly improve their performance by adopting a strategy of financial self-reliance.

The decision to establish a single authority to supervise the entire financial sector has now been delayed for almost 11 years. The draft law currently under discussion suggests that the central bank has no intention of giving up its role as supervisor of the banks. This means there would be wasteful and confusing duplication of that function in the new authority. In any case, it remains unclear exactly what purpose the authority's establishment is intended to achieve.

There have been several reminders recently of Indonesia's vulnerability to natural disasters, including multiple eruptions of Mount Merapi in central Java, which caused almost 400 fatalities and considerable damage to the local economy and infrastructure. Evacuation of residents of the area worst affected seems to have been handled well. An important policy decision needs to be made about whether those who lost their houses, crops and livestock should be permitted to return permanently to their villages.     

Book briefs

Eastern Cape publication

Institute of Social and Economic Research

Development issues in the Eastern Cape: A review and assessment Working Paper 25, University of Rhodes, 1986, 96 pp. R5.

Richard N Langlois (ed)

Economics as a process ‘Essays in the New Institutional Economics’, Cambridge University Press, London, 1986, xi + 262 pp, R87,70

Paul Collier, Samir Radwan and Samuel Wangwe with Albert Wagner

Labour and poverty in rural Tanzania ‘Ujamaa and Rural Development in the United Republic of Tanzania’, Clarendon Press, Oxford, 1986, vii + 143 pp, £17,50

Allen Buchanan

Ethics, efficiency, and the market Clarendon Press, Oxford, 1985, xi + 135 pp, £15,00     

Ecology and development

There is an increasing realization, world‐wide and in Southern Africa, that conservation and development are compatible.

Because human communities in the less developed rural areas are dependent on a renewable group of resources, including soil, water and forests, it is imperative that land use systems that protect these resources are introduced.

The predominance of subsistence agriculture in these areas is the most difficult syndrome of under‐development. An overall rural development strategy is required that integrates human development with resources management Where the population carrying capacity of the land has already been exceeded, a process of rapid villagization/urbanization is required. Village/urban growth and agricultural development require a carefully co‐ordinated programme of land capability analysis and planning, as well as active investment in infrastructure and the introduction of appropriate technologies and institutions.     

Publications

Food Research Institute Studies, Vol XIII (1974) No 2, the Food Research Institute, Stanford University.

R. I. McKinnon, Money and Capital in Economic Development, The Brookings Institution, Washington. D.C., 1973, pp xii, 184. Index.

Soekirman, Priorities in Dealing With Nutrition Problems in Indonesia, Cornell International Nutrition Monograph Series, Number 1, 1974.

George Rosen, Peasant Society in a Changing Economy: Comparative Development in Southeast Asia and India, University of Illinois Press, 1975, pp. 54. US$8.95     

Publications

Sumitro Djojohadikusmo, Indonesia Dalam Perkembungan Dunia: Kini dan Masa Datang [Indonesia in world development: The Present And The Future], Jakarta, LP3ES, 1976, pp. 229.

Indonesia: Business Opportunities in a Resource-Rich Economy, A Business International Asian Research Report, Asian House, Hong Kong, October 1975.

J. Stephen Hoadley, The Military in the Politics of Southeast Asia. A Comparative Perspective, Cambridge, Mass., Schenkman Publishing Co., 1975.

Masashi Nishihara, The Japanese and Sukarno's Indonesia: Tokyo-Jakarta Relations, 1961–1966, Monograph of the Center for Southeast Asian Studies of Kyoto University, Honolulu, University of Hawaii Press, 1976, pp. 24.