Employment and Growth: Issues for the 1980s

315 Pages·1987·9.729 MB·English

by  A. Steinherr, D. Weiserbs (auth.), Alfred Steinherr, Daniel Weiserbs (eds.)

EMPLOYMENT AND GROWTH: ISSUES FOR THE 19805
INTERNATIONAL STUDIES IN ECONOMICS AND
ECONOMETRICS
Volume 16
1. Harder T: Introduction to Mathematical Models in Market and Opinion
Research With Practical Applications, Computing Procedures, and Estima
tes of Computing Requirements. Translated from the German by P.H. Fried
lander and E.H. Friedlander. 1969.
2. Heesterman ARG: Forecasting Models for National Economic Planning.
1972.
3. Heesterman ARG: Allocation Models and their Use in Economic Planning.
1971.
4. Durdag M: Some Problems of Development Financing. A Case Study of the
Turkish First Five-Year Plan, 1963-1967. 1973.
5. Blin JM: Patterns and Configurations in Economic Science. A Study of So
cial Decision Processes. 1973.
6. Merkies AHQM: Selection of Models by Forecasting Intervals. Translated
from the Dutch by M. van Holten-De Wolff. 1973.
7. Bos HC, Sanders M and Secchi C: Private Foreign Investment in Developing
Countries. A Quantitative Study on the Evaluation of its Macro-Economic Im
pact. 1974.
8. Frisch R: Economic Planning Studies Selected and Introduced by Frank
Long. Preface by Jan Tinbergen. 1976.
9. Gupta KL: Foreign Capital, Savings and Growth. An International Cross
section Study. 1983.
10 Bochove CA van: Imports and Economic Growth. 1982.
11. Bjerkholt 0, Offerdal E (eds.): Macroeconomic Prospects for a Small Oil Ex
porting Country. 1985.
12. Weiserbs D (ed.): Industrial Investment in Europe: Economic Theory and
Measurement. 1985.
13. Graf von der Schulenburg J-M, Skogh G (eds.): Law and Economics & The
Economics of Legal Regulation. 1986.
14. Svetozar Pejovich (ed.): Socialism: Institutional, Philosophical and Eco
nomic Issues. 198?
15. Neudecker H, Heijmans R (eds.): The Practice of Econometrics. 1987.
16. Steinherr A, Weiserbs D (eds.): Employment and Growth: Issues for the
1980s. 1987.
Employment and Growth:
Issues for the 1980s
edited by
Alfred Steinherr and
Daniel Weiserbs
(Universite Catholique de Louvain, Belgique)
1987 KLUWER ACADEMIC PUBLISHERS ~,
DORDRECHT I BOSTON I LANCASTER •
Distributors
for the United States and Canada: Kluwer Academic Publishers, P.O. Box 358,
Accord Station, Hingham, MA 02018-0358, USA
for the UK and Ireland: Kluwer Academic Publishers, MTP Press Limited,
Falcon House, Queen Square, Lancaster LAI I RN, UK
for all other countries: Kluwer Academic Publishers Group, Distribution Center,
P.O. Box 322, 3300 AH Dordrecht, The Netherlands
Library of Congress Cataloging in Publication Data
Employment and growth.
(International studies in economics and
econometrics; v. 16)
Papers presented at a conference honoring
Albert Kervyn de Lettenhove, held at Louvain-La-Neuve,
May 29-30, 1986.
Includes index.
1. Economic development--Congresses. 2. Economic
policy--Congresses. 3. International finance-
Congresses. 4. Manpower policy--Congresseso
5. Belgium--Economic policy--Congresses. I. Steinherr,
Alfred. II. Weiserbs, Daniel. III. Kervyn de
Lettenhove, A. IV. Series.
HB73.E46 1987 331.11 87-3184
ISBN-13: 978-94-010-8113-9 e-ISBN-13: 978-94-009-3605-8
DOl: 10.1007/978-94-009-3605-8
Copyright
© 1987 by Martinus Nijhoff Publishers, Dordrecht.
Softcover reprint of the hardcover 1s t edition 1987
All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted in any form or by any means, mechanical,
photocopying, recording, or otherwise, without the prior written permission of
the publishers,
Martinus Nijhoff Publishers, P.O. Box 163, 3300 AD Dordrecht,
The Netherlands.
In Honour of Albert Kervyn de Lettenhove
Albert Kervyn retired from his post of Professor of Econom
ics and President of the Institut de Recherches Economiques
(IRES) at the Catholic University of Louvain in 1984. On
May 29 and 30, 1986 a conference was held at Louvain-La
Neuve to allow his friends, former students and colleagues to
present papers they had prepared for the occasion to honour
Albert and to manifest their appreciation and esteem. We
wish to express our gratitude to His Majesty the King for
granting his patronage to this conference; to President Delors
of the Commission of the European Communities for pro
viding financial support and to Dominique De Gand and
Claudine Stage of our Department for their unswerving en
thusiasm and organisational talent. All these contributions
are demonstrations of affection and of deep respect for Al
bert and his achievements.
A Symposium to mark the official retirement from a uni
versity career and a book in honour of a colleague, are not
part of our university traditions, nor are they regular events
anywhere else. In this university as elsewhere they are rare
and special to distinguish somebody of rare qualities and
special relationships with his own and future generations of
scientists.
The timing of such an event is never obvious: exceptional
people do not stop their activities at a time imposed by legis
lators as the end of active life. This is a particular difficulty
in the case of Albert: we ran a test based on splitting 41 years
of observation into a group of 39 professional years and 2
years of retirement. Especially for long-term forecasts these
VI
tests may not be terribly useful, but they did not allow to
maintain the null hypothesis of a decline in output, while the
alternative hypothesis of an increase in professional activity
was not rejected by the data. So, what we commemorate with
this book is just a moment in Albert's life, a particular one,
like a birthday. While one is not a year older just because a
birthday adds another ring to the tree of life, it provides a
signal. We might not have noticed - desperately trying to fol
low Albert in an argument or on a cross-country trail wind
ing through the Condroz, the territory of his family and his
permanent retreat - that he also ages and therefore his retire
ment may be a useful reminder.
Whilst the timing is arbitrary, the motivations are clearly
not. Most of his students and colleagues have accumulated
over the years an ever rising debt toward Albert for his
advice, encouragement and friendship. Instead of seeking a
now fashionable but impossible adjustment solution we just
do what any debtor would wish to do: to declare default and
instead express our gratitude with this book.
Gratitude is however strongly mixed with admiration. He
graduated in law in 1939, probably just to illustrate the then
unknown turnpike theorem: even a detour in law doesn't
make it impossible to become a brilliant economist. The next
step brought him closer into the wind: he finished his eco
nomics degree in 1941. During the war years, Albert did not
attach priority to intellectual or professional achievements,
but rather to an engaged defense of this deeply felt convic
tions. More than three years of captivity represented an inhu
man test of his willpower and capacity to survive. The man
we know is unlikely to be the same as the young Belgian
nobleman most of us had never known.
The war over he needs some time to readjust and to give
his generous nature and deep religious convictions a chance
to dominate his perspectives of the future. As a man of
action with an acute sense of social responsibilities and an
ever sharp interest in understanding and then contributing to
shaping institutions and policies, he is participating in the
reconstruction of Europe -like other contributors to this vol
ume: Lord Kaldor, Charles Kindleberger, Walt Rostow and
VII
Robert Triffin. In 1946, Albert divides his time between the
London School of Economics and the Belgian Embassy in
London where is appointed economic counsellor. He then
spends a year at United Nations Headquarters in New York
and four years with the UN Economic Commission for Eu
rope in Geneva, surrounded by Gunnar Myrdal, Lord Kal
dor, Walt Rostow, Joan Robinson and others. In 1951 begins
a serious flirt with academia: invited by Walt Rostow he
joins the economics department of the Massachusetts Insti
tute of Technology for two years and works and publishes on
growth and development planning in company of Francis
Bator, Charles Kindleberger, Paul Samuelson and Robert
Solow. Never entirely satisfied with an ivory tower view he
decides to have a closer look, accepting in 1953 an offer from
the UN Economic Commission for Asia in Bangkok.
During all these years Belgium faced the risk of perma
nently losing all this talent. Very fortunately therefore for his
country he decides to return in 1954 to manage the research
department of one of the largest Belgian banks - the Banque
de Bruxelles - where, in order to further stem Belgian's brain
drain he convinced Alexandre Lamfalussy to become his
deputy. By now his versatility needed no more demonstra
tion, but he goes on to become economic counsellor of the
Minister of Finance, before launching the Belgian Planning
Bureau and becoming its first Secretary General. During
these extremely productive years, from 1959 to 1965, the
basis was created for anchoring policies in this country on a
detailed and coherent macroeconomic and sectoral frame
work, including construction of the first input-output table
for Belgium. This basis was further expanded under the pre
sent Commissaire au Plan, Robert Maldague, and plays a
crucial role for policy preparation in this country.
It is in 1966 that Albert finally is ready to go beyond flir
tation and to settle down definitely in academic life at our
University, to the great delight of Professor Woitrin and of
his future colleagues in the economics department. He is
doubtlessly very happy to spend the second half of his pro
fessional career in an academic environment. His enthusiasm
and satisfaction with university life soon contaminates his
VIII
colleagues and transpires in his relationships with students.
His teaching is also appreciated widely outside our universi
ty: at the University of Namur, in fact since 1954, at the
Universities of Leuven and Brussels, and at the University of
Nancy in France.
And he publishes widely. Regularly his research contri
butes to and enlightens the policy debate of key problems in
this country. Citing only a few of his contributions, some of
them in collaboration, gives already a flavour of his broad
range and of the continuous production of his pen. In devel
opment economics: ' Approaches to the problem of econom
ic development'. World Politics (1953), 'Lags in growth the
ory', Review ofE conomic Studies (1954); in planning: 'Euro
pean Programming', OECD (1963), 'La programmation
beige', Reflets et Perspectives (1963); in monetary economics:
'Les mecanismes monetaires: un projet de reforme' (1957),
, Anemone: a monetary model for Belgium' (1974), all in
Recherches Economiques de Louvain, 'Europe and the Inter
national Monetary System' in Kohnstamm (ed.) A Nation
Writ Large, Macmillan (1973); in macroeconomics: 'Les sal
aires, les prix et l'index' (1975), 'Exportation, specialisation
et emploi' (1977), 'Taux de change, inflation et competitivite
exteme' (1979), three essays on 'La repartition regionale des
comptes de l'Etat, des menages et des entreprises (1980)';
a
'La politique economique face la crise' (1981), all in
Recherches Economiques de Louvain; 'Steel: a case study in
industrial policy' in A. Jacquemin (ed.), European Industry,
Oxford, (1984); 'Les investissements dans la Communaute
Europeenne', Luxembourg, EIB (1984); and 'La politique
a
economique moyen terme', Bruxelles, Bureau du Plan, (1985).
The European Communities rely heavily on him for this
expertise in economic development, and above all for 13
years as chairman of the working party on medium-term per
spectives. Now, in retirement, he is more than ever busy with
teaching in several continents and with advisory work in Bel
gium and in the Third World. At present he is Vice-Chair
man of the Conseil Superieur de la Statistique, member of
the Conseil Superieur des Finances and member of the group
de travail pour la reforme de l'Etat.
IX
We all have learned from him when we use statistical data
without discrimination, when theory and common sense
clash, or when intellectual curiosity succombs to established
patterns of thought. For all his inspiration, generosity, help
and for the model of human grandness and of scientific com
mitment he has provided for the people around him, the
contributors to this volume join Albert's numerous friends
present at the colloquium in thanking him with this book.
Our thanks also embrace his wife Benedicte and his family,
for over 40 years providing the support he needs and a social
fix-point for his friends. Our profound admiration and grati
tude is embedded in profuse feelings mingled with joy and
sadness, as time will so ungenerously create and amplify dis
tances between him and us.
A. Steinherr
Table of Contents
v
In Honour of Albert Kervyn de Lettenhove
Contributors XIII
Introduction and Summary 1
I. A re-examination of the state of growth and stabil-
ization theories 11
1. R.M. Solow, Second Thoughts on Growth
Theory 13
2. F.M. Bator, The State of Macroeconomics 29
3. W. W. Rostow, The Rich Country-Poor Coun
try Problem: From the Eighteenth to the
Twenty-First Centuries 47
II. Innovations in financial markets and policies 85
4. N. Kaldor, The Rise and Decline of Monetar-
Ism 87
5. A. Lamfalussy, International Financial Inte-
gration: Policy Implications 99
6. R. Triffin, A European Monetary Bank with
Central Bank Functions 119
7. G. Basevi and F. Giavazzi, Conflicts and Coor-
dination in the European Monetary System 133
III. Policy studies with particular reference to Belgium 165
8. Ch. Kindleberger, Belgium after World War II:
An Experiment in Supply Side Economics 167