INTEREST,DISTRIBUTION OF VALUE ADDED AND INFLATION: INFLATION-INDUCED DIFFICULTIES IN THE INTERPRETATION OF DUTCH NATIONAL ACCOUNTS*

The present paper examines the inflationary bias of sectoral income transactions in national accounting data. An inconsistency of these data is pointed out. Alternative income measures are estimated by adjusting the standard national accounting data for inflationary gains and losses. These gains and losses arise from financing by loan capital. Several issues concerning income concepts and alternative methods for the measurement of inflationary gains and losses are discussed. It is concluded that an adjustment of sectoral income data for these gains and losses produces a very different picture of the sectoral distribution of income.     

中国高储蓄率问题探究——1992-2003年中国资金流量表的分析

本文以国家统计局公布的1992—2003年中国资金流量表为基础,从收入分配和部门储蓄倾向等两个方面对居民、企业和政府等国内三个部门的储蓄率进行了比较分析。我们发现,尽管居民部门的储蓄率最高,但是,自1992年以来,它实际上呈逐步下降趋势,其主要原因在于居民部门获得的劳动报酬、财产收入和再分配收入均有所下降;企业储蓄率呈现缓缓上升趋势,主要原因并不在于企业盈利能力的提高,而在于其主要支出——对居民部门的劳动报酬支出和利息支出长期被稳定在较低的水平上;政府储蓄率在经历了上个世纪的低位徘徊之后,于2000年以后急剧上升,其主要原因在于,通过初次分配和再分配,政府的可支配收入在国民收入的分配中占据了越来越大的份额,同时政府部门的储蓄倾向也在不断提高。本文的政策建议是:为了实现以提高国内消费率为核心的经济发展战略,我国的经济运行应全面转向以改善收入分配结构、提高居民收入为重点的轨道上。为达此目的,加速财政政策向公共财政转型,增加公共支出和对居民的福利支出,在提高劳动生产率的基础上提高企业对劳动者的支付水平,应成为今后我国宏观调控的长期任务。     

Comparing approaches to valuing sectoral net investments

In the literature of comprehensive national accounts, national net investments are used to indicate dynamic welfare improvement in an economy. A well-known approach associates national net investments with the shadow value of change in stock of capital assets in an economy. Following this capital stock approach, sectoral net investments can be defined as the shadow value of change in stock of capital assets owned by a sector in an economy. An alternative approach is based on future commodity flows to a sector. This commodity flow approach associates sectoral net investments with the present value of changes in future commodity flows to a sector. In the present paper, I compare these two approaches and prove that they coincide with each other only if the future commodity flows to the sector can be attributed to current stock of capital assets in the sector alone. In empirical studies, commodity flow approach can be a better alternative if the purpose is to estimate the contributions to national net investments of a recipient of future cash flows.     

A NOTE ON MEASURING SECTORAL INPUT PRODUCTIVITY*

This note attempts to shed some light on the relationship between the total factor productivity derived from national income accounts and the total input productivity based upon input-output accounts, especially on a sectoral basis. Since there has been no positive evidence to support a constancy between changes in net and gross output in individual industries, the formulation of a measure of sectoral input productivity change by using the formula of the Divisia index based on input-output accounts may be valuable in examining possible biases which are associated with a common notion of the total factor productivity. An operational definition of sectoral input productivity change and its relation to sectoral total factor productivity are discussed in the present note, in addition to its empirical application to the Japanese data.     

Foreign direct investment and inequality in developing countries: Does sector matter?

Scholars have studied the relationship between inward foreign direct investment (FDI) and within‐country income inequality in cross‐national contexts, but have not empirically investigated how FDI in different sectors might affect inequality in different ways. We use error correction models to analyze sectoral FDI data compiled from UNCTAD investment reports in 60 middle‐income countries from 1989 to 2010, arguing that FDI in services is more likely to be associated with inequality than FDI in other sectors. We argue that skill biases and changes in employment patterns associated with service sector investments can help explain these findings.     

AN APPROPRIATE SYSTEM FOR DEFLATION OF SECTORAL INCOME IN A DEVELOPING ECONOMY ILLUSTRATED BY THE INDUSTRIAL SECTOR OF THE INDIAN ECONOMY FROM 1951 to 1965*

The technique of national income accounting is a part of what Hicks has termed “The Fixprice Method”. Deflation is an attempt to approximate a real economy to a fixprice economy. It is shown that if the propositions of macro-dynamics are to hold, this deflation cannot be done in accordance with the price structure prevailing at any particular historical time, but must use that given by the capital theory of value, viz., when returns to labour are equal to zero. For a labour-abundant developing economy this will correspond to prices based on opportunity cost principles. As an illustration, sectoral incomes on this basis have been calculated for the industrial sector of the Indian economy for the years 1951 to 1965.     

Determinates of the decline in the income-velocity of money in China: a new perspective

The income velocity of money in China has been declining since the country’s reform. By studying the money demand behavior in the agricultural and non-agricultural sectors, we found that the marginal propensity to money demand is much higher in the non-agricultural sector. This implies that as the share of the agricultural sector in national income declines, monetary expansion is expected to meet not only the needs of income growth, but also the rapid structural shifts in the sectoral composition of income. Hence, non-inflationary monetary expansion is possible as development proceeds. This provides a new perspective in understanding the decline in the income-velocity of money in China. __________ Translated from Social Sciences in China (中国社会科学), 2005,(4) (in Chinese)     

SAVING AND FLOW OF FUNDS ANALYSIS: A TOOL FOR FINANCIAL PLANNING IN INDIA*

Overall balance between expected available resources and planned investment is not sufficient to ensure development with stability. Imbalances and inflationary pressures could develop as a result of inconsistencies between sector-wise investment structure and the sector-wise structure of saving. This means that the dichotomy between real and financial planning needs to be eliminated not only at the national level but at the sectoral levels as well, so that the sector-wise investment pattern is consistent with the emerging structure of saving and the flow-of-funds. This presents an analysis of the structure of saving and flow-of-funds in India, shows how it is actually used for the purpose of financial planning, and attempts to derive a formalized technique of financial planning. Analysis of the structure of saving in India during 1954–1955 to 1967–1968 indicates the importance of the household sector as the net lending sector to the borrowing sectors, the government and the private corporate sectors. On the basis of the feasible sectoral rates of growth in income and the past trends in sectoral saving-income ratios and household saving pattern with such modifications as are necessary in the light of expected changes in various policies, sector-wise saving structure and the pattern of household sector saving are projected for the Fourth Plan period (1969–1974). Then a flow-of-funds matrix is prepared to derive sector-wise investment estimates as are consistent with the estimated structure of saving and the likely changes in the lending policies of the financial institutions. A formalized technique of financial planning based on the Indian planning experience is presented in the last section of the paper.     

Economic reform and interprovincial inequalities in China

This note is an attempt to explore two issues: (1) the trend of interprovincial inequality in the post-1978 reform era in China; and (2) the factors behind the dynamics of interprovincial inequality. Using recently released provincial gross domestic product (GDP) data, we have shown that interprovincial inequality decreased in the fast half of the 1980s, but started to increase in the second half of the 1980s. To understand the impact of sectoral reforms on interprovincial inequality, the overall inequality in provincial per capita GDP is decomposed into the contributions by the primary, secondary and tertiary sectors. It seems that the trend of interprovincial inequality has been largely induced by the reforms of the industrial sector which make up a large share of the secondary sector. In addition, national income data from the socialist national accounting system are used to identify the impact of interprovincial resource flows on interprovincial inequalities. The findings seem to suggest a relative decline in the role of redistributive budgetary transfers.     

Diversification across ASEAN-wide sectoral and national equity returns

This paper examines the effects of local and global shocks on the sector indices and national returns of the Association of Southeast Asian Nations (ASEAN) by using the univariate AR-GARCH model. We find that regional and global shocks have different influences on the ASEAN-wide sector and national equity indices. There is evidence that the ASEAN-wide sectoral returns are mostly driven by local shocks, except for the insurance and technology sectors. The volatility of Singapore's and Vietnam's national returns mostly results from their own shocks rather than local and global shocks. Applying the trend spillover model, this paper also shows that the effects of regional and global shocks on return volatility have been decreasing for almost all ASEAN-wide sectors' equity indices, while the trend for the volatility spillover effects of those shocks are positive and significant for the production and industries group sectors, as well as the food and beverage sector. Comparing the variance ratios of ASEAN sectoral and national returns, it is evident that the percentage of national equity returns belonging to their own shocks is higher than that of sectoral returns, indicating that investors might be better off diversifying their assets across countries rather than sectors in ASEAN area. This finding is consistent with the results of the mean–variance frontiers, as the portfolio composed purely of ASEAN national returns has a stronger efficiency frontier than a portfolio of all ASEAN-wide sector equity returns. By using the spanning and intersection tests, the paper also indicates that adding ASEAN national equity returns might improve the efficiency frontiers of investors' holding portfolios.     

Labor reallocation in China: 1978–2011

This paper develops a three-sector model to analysis the mechanism of cross sectoral labor reallocation in China over the period of 1978–2011. The model incorporates factors of sectoral differences in productivity, non-homothetic preference characteristics of consumers, and institutional barriers of labor mobility. Moreover, the model considers changes in the scale of the public sector as an important driving force. We find that there are two effects of changes in the scale of the public sector in declining public sector output on labor reallocation. First, enterprises will increase the share of capital input to labor, resulting in relative expansion of non-agricultural production. Second, residents' income will also increase, together with the relative increase in demand towards non-agricultural goods due to non-homothetic preference characteristics of consumers. Therefore the non-agricultural production will further expand.     

Disentangling the Poverty Effects of Sectoral Output,Prices, and Policies in India

This paper attempts to disentangle the poverty effects of key policy variables that directly affect the poor (namely the government‐led channel of development spending and financing) in both agricultural and non‐agricultural sectors after accounting for the effect of respective sectoral per capita income and prices, using data from India over five decades. The paper emphasizes the sectoral composition of income and prices as mechanisms influencing the level of poverty and establishes empirically that it is the rise in non‐agricultural per capita income that reduces rural poverty via the channel of internal migration, after having controlled for the variation in key components of fiscal spending and monetary/financial policy via the availability of credit. Uneven sectoral growth pattern explains why urban poverty becomes a spill‐over of persistent rural poverty when the agricultural sector shrinks. While checking for robustness, there is evidence that the rise in non‐agricultural income alone may not reduce rural poverty, when measured in terms of rural infant mortality rate as a non‐income indicator of well‐being.     

部门间生产率差距、劳动力去工业化与结构性减速

基于中国劳动力就业结构出现过快和过早去工业化的迹象，本文从部门间生产率差距的视角，利用多部门一般均衡模型、数值模拟和计量实证分析方法研究发现：（1）理论上，当服务业劳动生产率增长慢于工业，部门间生产率差距将扩大，导致劳动力去工业化速率加快；且部门间生产率差距的存在使得劳动力去工业化对经济增长产生结构性减速效应。服务业部门生产率加快提升，部门间生产率差距将会缩小，从而减缓去工业化速率和降低结构性减速压力；工业部门生产率提升尽管会扩大部门间生产率差距从而加快劳动力去工业化，但在长期中起到均匀化经济增长速率的作用。（2）利用2001—2018年中国省级和城市级面板数据的计量实证分析发现，部门间生产率差距的存在导致劳动力去工业化的效应在全时段样本下显著，但劳动力去工业化对经济增长的结构性减速效应仅在2009—2018年区间样本下显著，表明近年来中国经济增长减速与部门间生产率差距及其导致的劳动力去工业化相关。（3）赶超成功与失败国家的经验比较也表明，工业与服务业部门劳动生产率的改善与协调是跨越中等收入陷阱以及跨越后实现持续赶超的关键。     

The interactions between national systems and sectoral patterns of innovation

Do national and sectoral innovation systems interact with each other? The paper explores this unexplored question by carrying out a cross-sector cross-country analysis of European systems of innovation in the 1990s. The empirical study takes Pavitt’s (Res Policy 13:343–373, 1984) taxonomy as a starting point, and it investigates the cross-country variability of Pavitt’s sectoral patterns of innovation. The analysis leads to three main results. First, the various technological trajectories show large differences across countries, due to the influence of national innovation systems. Second, there is evidence that the interaction between national systems and sectoral patterns of innovation constitutes an independent source of variability in the sample. Third, the analysis leads to the identification of eight sector- and country-specific technological trajectories in European manufacturing industries, and, based on that, proposes a refinement of Pavitt’s taxonomy. The refined taxonomy, in a nutshell, suggests that sectoral systems must be supported by and interact with their respective national systems in order to become industrial leaders.     

Borrow and Adjust: Fiscal Policy and Sectoral Adjustment in an Open Economy*

Should the government run fiscal deficits in response to an adverse external shock that warrants transfer of resources from production of nontraded to traded goods? This article considers normative fiscal policy implications of sectoral adjustment costs in a two‐sector model with overlapping generations. Fiscal deficits benefit present generations by depleting foreign assets and slowing down the adjustment process. We show that despite no nominal rigidities, temporary fiscal deficits increase social welfare if adjustment costs prevent immediate sectoral reallocation of inputs. If there are no adjustment costs, the case for fiscal deficits vanishes.     

Regional divergence and club convergence in India

This paper examines regional divergence in income across different states in India, and estimates convergence clubs endogenously. The paper makes two useful contributions. First, the data is analyzed using a novel method due to Phillips and Sul (2007) leading to different conclusions in comparison to past studies, and secondly sectoral level data is employed which to our knowledge has not been employed in the literature before. Applying the novel approach to panel data relating to fifteen major states of India for the period 1968/69–2008/09, the results display significant divergence in per capita income across states at the aggregate and sectoral levels. There is also evidence of convergence clubs and variations in the number and composition of clubs across sectors. While three clubs are identified at the aggregate level, at the sectoral level we find three clubs in the industrial sector, two clubs are identified in both the agriculture and services sectors. The final part of the paper deals with the policy implications.     

POLICY EVALUATION IN THE PRESENCE OF OUTSOURCING: GLOBAL COMPETITIVENESS VERSUS POLITICAL FEASIBILITY

We analyze the effects of outsourcing in the presence of a minimum wage by presenting a general-equilibrium model with an oligopolistic export sector and a competitive import-competing sector. An outsourcing tax is politically popular because it switches jobs to unemployed natives. It is also economically sound because it raises national income. An export subsidy may or may not be justified on welfare grounds. Increased international competition has no effect on the level of outsourcing, but the direction of its effect on unemployment and national income depends on the relative factor intensities of the two sectors.     

NATIONAL AND SECTOR BALANCE SHEETS IN THE UNITED KINGDOM

Although national and sector balance sheets have long been regarded as part of the national accounting framework, for a variety of reasons their compilation by official statisticians has been the exception rather than the rule. A programme of balance sheet work in the United Kingdom Central Statistical Office has recently been completed and the results published. The theoretical and practical problems arising in the course of this work are described and discussed. Summary results are given together with an interpretation of the main changes in the sectoral composition of national wealth between 1957 and 1975.     

The Effects of Technology Changes on Sectoral Trade Patterns*

We develop a model in which sectoral trade patterns depend on both the technology common to all sectors and the technologies specific to each sector. Changes in the common technology level affect sectoral trade patterns through their impact on intertemporal optimization behavior, while changes in the sector‐specific technology levels affect sectoral trade patterns by influencing comparative advantage. The model shows: (1) unexpected increases in the common technology level worsen sectoral trade balances, but expected increases in the common technology level improve them; and (2) given other countries’ sectoral technology levels, an increase in a sector‐specific technology level relative to other sectors improves sectoral trade balances through its operation on comparative advantage. Using Japanese data, the empirical results reported in this paper support the model’s predictions.     

A tale of two states: Maharashtra and West Bengal

In this paper we study the decline of West Bengal relative to Maharashtra, historically two of the most important states of India. In 1960, West Bengal's per capita income exceeded that of Maharashtra, the third richest state at the time. By 1993, it had fallen to just 69 percent of Maharashtra's per capita income. We employ a “wedge” methodology based on the first order conditions of a multi-sector neoclassical growth model to ascertain the output and factor market sources of the divergent economic performances. Our diagnostic analysis reveals that a large part of West Bengal's development woes can be attributed to: (a) low sectoral productivity, especially in manufacturing and services; and (b) sectoral misallocation in labor markets between the manufacturing sector and the other sectors of the economy. We also present evidence on the labor market, the manufacturing sector, and public infrastructure that suggest a systematic worsening of the business environment in West Bengal during this period.