Structural determinants of government budget deficits in developing countries

The purpose of this study is to examine the possibility that certain structural factors make some developing countries more likely to incur government budget deficits than others. Empirical evidence is provided to support the hypotheses that developing countries are likely to have larger government budget deficits the lower their level of economic development, the greater the degree of government participation in the economy, and the less control exercised over government expenditures. Less convincing support is given for the hypothesis that revenue instability contributes to government budget deficits. An unexpected result of the study is that growth of government revenues is positively related to budget deficits, which leads the author to consider the possibility of a ‘Please effect’.     

Saving,investment, fiscal deficits,and the external indebtedness of developing countries

This paper investigates selected aspects of the external indebtedness of the developing countries. It examines both the theoretical and empirical sides of the debt servicing capacity issue, focussing on the role of domestic savings and investment as well as the budget deficits of the public sector in the recent widening of their current account deficits. The results of the study do not support the proposition that increases in external indebtedness among developing countries reflect overconsumption. Capital inflows did not partly or wholly displace domestic saving for the sample of countries examined; rather, the increase in external deficits can in most cases be accounted for by expansion in investment (relative to total output). However, the author qualifies his basically optimistic conclusions in pointing out that countries' ability to repay debt depends not only on whether initial borrowing sustained consumption or investment. but also, if the latter, on the quality of the investment spending.     

Chinese contractors in developing countries

This paper uses turnover data from Chinese contracted projects in as many as 87 low and lower middle income countries from 1998 to 2009. Economic fundamentals motivate Chinese contractor presence in developing countries as their revenues are positively associated with countries’ per capita income and expected growth. All else equal, contractor project revenues are higher in countries with stronger political rights regimes. Moreover, the estimated positive effect of improvements in political freedom is largest among countries with high fuel endowment, but lowest among countries with high ores and metals endowments. Conclusions relating Chinese contractor activities, perceptions on the level corruption, and resource endowment among sub-Saharan African countries must remain tentative as the estimated relationships are sensitive to the corruption indices used.     

Construction industry in developing countries

This paper provides a review of the construction capability available in the developing countries to meet the demand for shelter. It discusses the role of construction in the process of development and its importance to economic growth. It considers the issues facing the growth of a viable indigenous construction industry in the developing world within the context of the activities involved in the creation of constructed facilities – planning, design, construction and maintenance; it also examines the environment within which the industry has developed. For each construction activity the paper reviews available capabilities, the various resources needed for the development of an indigenous industry, and some possible means of accommodating these needs.     

Fiscal disequilibrium in developing countries

Fiscal equilibrium necessitates that ‘permanent’ government expenditures be covered by ‘permanent’ government revenues. The concept of ‘permanent’ goverment expenditures and revenues takes into account future revenue from capital investments as well as temporary windfalls. Hence, equilibrium may exist despite temporary imbalance between revenue and expenditure. The causes of disequilibrium can be classified into five categories: export boom; price-inelastic tax system; public enterprise performance; increased expenditure produced by political exigencies or administrative weaknesses; and worsening terms of trade. In practice, unrealistic customs valuations, specific as opposed to ad valorem taxes and administrative difficulties have been the most common sources of declining government revenue as a percentage of gross domestic product. Increased subsidies both to consumer goods and to public enterprises as well as inadequate control mechanisms have been the most frequent causes of rising government expenditure.     

Foreign trademarks in developing countries

Foreign trademarks are used in some cases to cover imported goods and generally products made in the host countries by foreign manufacturing subsidiaries and licensees. This industrial property right is a major source of market power for those subsidiaries making consumer goods. Domestic enterprises making similar goods must either accept a reduced share of the market or must enter into trademark license agreements. But even in those cases, although licensees of foreign-owned trademarks receive a current profit out of the licence, they cannot enjoy the result of the goodwill development.Although the advertising expenditures are borne by the consumers of the developing countries, the accrual in goodwill is for the benefit of non-resident owners of this intangible asset. These private benefits — mostly appropriated by the foreign trademark owner — can be considered as net social costs to the recipient country.     

Openness and economic growth in developing countries

Openness and Economic Growth in Developing Countries. — Openness appears to have a strong impact on economic growth especially in DCs which typically exhibit a high share of physical capital in factor income and a low share of labor. In the neoclassical growth model with partial capital mobility, physical capital’s share in factor income determines the difference in the predicted convergence rates for open and closed economies. With a 60 percent share as in many DCs, the convergence rates should differ by a factor of 2.5. The regression results for a sample of open and closed DCs roughly confirm this hypothesis.     

Trade policy and specialization in developing countries

This paper examines the impact of trade policy on specialization patterns in ten Latin American countries over the period 1985–1998. These countries are natural case studies because in the last decades they implemented comprehensive trade liberalization programs, both generally and preferentially, starting from relatively high tariff protection levels. Our econometric results suggest that reducing own most favored nation tariffs is associated with increasing manufacturing production specialization. Furthermore, we find that preferential trade liberalization and differences in the degree of unilateral openness have resulted in increased dissimilarities in manufacturing production structures across countries. These results are robust across specialization measures and estimation methods.

Education and population awareness in developing countries

Rapid population growth is a fundamental concern of contemporary society, particularly in developing countries. One of the immediate results of rapid population growth in a country is the explosive growth of the school‐age population. This often militates against improvement of the quality of education. To facilitate population awareness among national populations from an early age, many governments introduce population education into school syllabuses. In South Africa such a step has not yet been taken, even though it seems warranted.     

Output,devaluation and the real exchange rate in developing countries

Zusammenfassung Produktion, Abwertung und realer Wechselkurs in Entwicklungsl?ndern. — Der Verfasser untersucht, ob — wie neuerdings von den ⋯neuen Strukturalisten” behauptet wird — Abwertungen in Entwicklungsl?ndern kontraktive Wirkungen haben. Nach einem kurzen überblick über die Literatur werden Daten für 23 Entwicklungsl?nder aus den Jahren 1978 bis 1987 benutzt, um ein Modell zu sch?tzen, das die Entwicklung der realen Produktion explizit aus einem Gleichgewichtssystem von aggregierten Nachfrage- und Angebotsgr?\en bei rationalen Erwartungen ableitet. Es ergibt sich, da\ antizipierte Abwertungen des realen Wechselkurses eine negative Auswirkung auf die Produktion haben, w?hrend Abwertungen, die nicht antizipiert werden, positiv wirken. Au\erdem zeigt sich, da\ die kontraktiven Effekte noch nach einem Jahr andauern, was der Ansicht widerspricht, Abwertungen seien auf ⋯mittlere” Sicht neutral.

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Resumen Producción, devaluación y tasa de cambio real en los países en desarrollo. — En esta trabajo se evalúa si, como los “Nuevos Estructuralistas” han enfatizado recientemente, las devaluaciones en los países en desarrollo son contractivas. Después de pasar revista a la literatura existente, se utilizan datos de 23 países en desarrollo para 1978–1987 para estimar un modelo de comportamiento de la producción real, explícitamente derivado de un modelo de equilibrio general de oferta y demanda con expectativas racionales. Los resultados indican que devaluaciónes anticipadas de la tasa de cambio real tienen un impacto negativo sobre la producción, mientras que cambios no anticipados tienen un efecto positive Además, se demuestra que el efecto contractivo persiste después de un a?o, contradiciendo así la opinión que las devaluaciónes son neutrales en el mediano plazo.

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Résumé Output, dévaluation et taux de change réel dans les pays en voie de développement. — Cette étude évalue si les dévaluations dans les pays en voie de développement ont un effet de contraction comme les Nouveaux Structuralistes l’ont récemment souligné. Après avoir briévement examiné la littérature, l’auteur se sert de données relatives à 23 pays en voie de développement pour la période 1978 à 1987 afin d’estimer un modèle de la production réelle. Ce modèle est explicitement dérivé d’un système d’équilibre de l’offre et de la demande globales avec anticipations rationnelles. Les résultats indiquent que des dépréciations anticipées du taux de change réel ont un effet négatif sur l’activité, tandis que des dévaluations non-anticipées ont un effet positif. En outre, il est montré que l’effet de contraction persiste plus qu’une année ce qui contredit l’hypothèse que les dévaluations sont neutres à moyen terme.

     

Brewing projects in developing countries: Technology, costs and employment

Recently established industries in developing countries are often criticized for high costs and low employment-generation, and a coincidence is sometimes supposed, given low wage rates, between minimization of costs and substantial direct employment creation. Analysis of alternative technologies reveals this supposition to be largely unfounded, as far as lager brewing is concerned, over a wide range of developing country circumstances; but a set of low-cost, labour-intensive techniques is suggested as approximately meeting requirements both for low costs and for equitable distribution of employment and income opportunities.