The Gap Between Rich and Poor Nations: Proceedings of a Conference held by the International Economic Association at Bled, Yugoslavia

457 Pages·1972·52.167 MB·English

by  Gustav Ranis (eds.)

INTERNATIONAL ECONOMIC ASSOCIATION
CONFERENCE VOLUMES. Numbers 1-50
NUMBER 32
The Gap between Rich and Poor
Nations
The Gap between
Rich and Poor Nations
Proceedings of a Conference held by the
International Economic Association at
Bled, Yugoslavia
EDITED BY
GUSTAV RANIS
pal grave
macmillan
International Economic Association © 1972
Softcover reprint of the hardcover 1st edition 1972 978-0-333-13193-0
All rights reserved. No reproduction, copy or transmission of
this publication may be made without written permission.
No portion of this publication may be reproduced, copied or
transmitted save with written permission or in accordance with
the provisions of the Copyright, Designs and Patents Act 1988,
or under the terms of any licence permitting limited copying
issued by the Copyright Licensing Agency, Saffron House,
6-10 Kirby Street, London EC1N 8TS
Any person who does any unauthorised act in relation to this
publication may be liable to criminal prosecution and civil
claims for damages.
The author has asserted his right to be identified
as the author of this work in accordance with the
Copyright, Designs and Patents Act 1988.
Published by
PALGRAVE MACMILLAN
Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited,
registered in England, company number 785998, of Hound mills,
Basingstoke, Hampshire RG21 6XS
Palgrave Macmillan in the US is a division of StMartin's Press LLC, 175
Fifth Avenue, New York, NY10010.
Palgrave Macmillan is the global academic imprint of the above companies
and has companies and representatives throughout the world.
Palgrave® and Macmillan® are reistered trademarks in the United States,
the United Kingdom, Europe and other countries.
ISBN 978-1-349-15458-6 ISBN 978-1-349-15456-2 (eBook)
DOI 10.1007/978-1-349-15456-2
This book is printed on paper suitable for recycling and made from fully
managed and sustained forest sources. Logging, pulping and manufacturing
processes are expected to conform to the environmental regulations of the
country of origin.
A catalogue record for this book is available from the British Library.
Contents
Acknowledgements vii
List of Participants ix
Introduction G. Ranis xi
PART ONE: THE SIZE AND CONSEQUENCES OF THE GAP
1 The Gap: Concept, Measurement, Trends Simon Kuznets 3
Discussion 44
2 The Contemporary Consequences of the Gap Goran Ohlin 59
3 The Contemporary Consequences of the Gap Oktay Yenal 10
Discussion 81
4 The Gap between Rich and Poor Nations from the Socialist 96
Viewpoint Branko Horvat
Discussion 112
5 Reduction of a Gap between Rich and Poor Regions: The 122
Case of Yugoslavia Albin Orthaber
Discussion 137
PART TWO: INTERNATIONAL FLOWS AND THEIR EFFECTS ON
THE GAP
6 The Grants Economy and the Development Gap Kenneth E. 143
Boulding and Marlin Pfaff
7 Should the Rich Countries Help the Poor? How could they 171
do so? Chris Economides
Discussion 183
8 On Measuring the Value of Private Direct Overseas Invest- 201
ment I. M. D. Little
9 United States Enterprise in the Less Developed Countries: 215
Evaluation of Cost and Benefit Raymond Vernon
Discussion 229
10 Trade Policies for Development Jagdish N. Bhagwati 245
11 Some Theoretical Notes on the Trade-Growth Nexus 270
Ronald Findlay
Discussion 281
vi Contents
12 Bridging the Technological Gaps between Rich and Poor 299
Countries Jack Baranson
13 Less Developed Country Innovation Analysis and the Tech- 312
nology Gap John Fei and Gustav Ranis
14 Science Policy in the Developing Countries: the Role of the 336
Multinational Firm Nicolas Jequier
Discussion 348
15 The Brain Drain and the Development Process Richard 365
Jolly and Dudley Seers
16 Labour Mobility and the Brain Drain Harry G. Johnson 380
Discussion 392
PART THREE: THE OUTLOOK
17 Objectives and Prognostications W. Arthur Lewis 411
Discussion 421
Index 435
Acknowledgements
The International Economic Association wishes, as always, to express its
gratitude to the two bodies whose financial support made possible the
holding of the conference here recorded and the publication of this
volume-the Ford Foundation and UNESCO. The interest of both of
them in the subject-matter of this conference has been evident in all their
policies. For their assistance in making it possible to hold the conference
in the very attractive surroundings of Bled in the north of Yugoslavia the
Association is deeply indebted to the President and Officers of the Union
des Associations d'Economistes de Yougoslavie. May we express our
gratitud~ to the authorities and staff of the Golf Hotel in Bled for all they
did for our comfort, and not least for demonstrating to those who came
from capitalist countries that the amenities of a socialist holiday-resort
hotel are in no sense inferior to those to which they may have been
accustomed. Finally this volume will, we believe, provide the best testimony
to the Association's debt to Professor Ranis and the programme committee
that planned the conference and to the paper-writers who provided the
material for its discussion; not least among the latter was Professor
Kuznets, whose well-earned Nobel Prize has delighted all who have
participated with him in the work of this and other conferences.
List of Participants
Professor Aleksander Bajt, University of Ljubljana, Yugoslavia
Dr. Jack Baranson, Economics Department, World Bank, Washington, U.S.A.
Professor Dr. Mara Bester, University of Ljubljana, Yugoslavia
Professor Jagdish Bhagwati, Massachusetts Institute of Technology, Cambridge, U.S.A.
Professor .Ksente Bogoev, University of Skopje, Yugoslavia
Professor Kenneth E. Boulding, Institute of Behavioral Science, University of Colorado,
U.S.A. .x
Professor France urne, University of Ljubljana, Yugoslavia
Professor Hollis B. Chenery, Harvard University, Cambridge, U.S.A.
Dr. W. M. Corden, Oxford University, Oxford, England
Professor Hector Correa, Tulane University, New Orleans, U.S.A.
Professor H. C. Eastman, University of Toronto, Canada
Mr. Chris Economides, Cyprus Economic Society, Nicosia, Cyprus
Professor Luc Fauvel, Faculte de Droit et des Sciences Economiques, Paris, France
Professor John C. H. Fei, Yale University, New Haven, U.S.A.
Professor R. Findlay, Columbia University, New York, U.S.A.
Dr. Julio Gamba, Buenos Aires University, Argentine
Professor Dharam P. Ghai, Institute of Development Studies, University of Nairobi,
Kenya
Professor Bozidar Gluscevich, Institute for Economic Research, Titograd, Yugoslavia
Mr. Roland Granier, Universite d'Aix-Marseille, Aix-en-Provence, France
Professor Hassan Hadjiomerovitch, University of Sarajevo, Yugoslavia
Professor D. C. Hague, Manchester Business School, University of Manchester,
England
Dr. Mahbub ul Haq, Programming Adviser, International Bank for Reconstruction
and Development, Washington, U.S.A.
Professor Sir John Hicks, All Souls College, Oxford, England
Professor Branko Horvat, Institute of Economic Studies, Belgrade, Yugoslavia
Professor Nurul Islam, Pakistan Institute of Development Economics, Karachi,
Pakistan
Dr. Nicolas Jequier, Directorate for Scientific Affairs, O.E.C.D., Paris, France
Professor Harry G. Johnson, The London School of Economics and Political Science,
London, England
Professor T. S. Khachaturov, Academy of Sciences of the U.S.S.R., Moscow
Mr. Edo Klansek, Association of Economists of Slovenia, Ljubljana, Yugoslavia
Dr. Bruno Knall, South Asia Institute, University of Heidelberg, Germany
Professor Simon Kuznets, Harvard University, Cambridge, U.S.A.
Professor W. Arthur Lewis, Princeton University, Princeton, U.S.A.
Professor Staffan B. Linder, Stockholm School of Economics, Sweden
Dr. I. M.D. Little, Nuffield College, Oxford, England
Professor E. Lundberg, University of Stockholm, Stockholm, Sweden
Professor Jean Marchal, Faculte de Droit et des Science Economiques, Universitc de
Paris, France
Professor Goran Ohlin, Uppsala University, Uppsala, Sweden
Professor Osman Okyar, Hacettepe University, Ankara, Turkey
Professor Albin Orthaber, University of Ljubljana, Yugoslavia
Professor Josef Pajestka, Komisja Planowania, Warsaw, Poland
Professor Don Patinkin, Hebrew University of Jerusalem, Israel
A2
X List of Participants
Dr. Martin Pfaff, Wayne State University, Detroit, U.S.A.
Dr. Marian Radetzki, Stockholm School of Economics, Sweden
Professor Gustav Ranis, Yale University, New Haven, U.S.A.
Professor P. Nerregaard Rasmussen, University of Copenhagen, Denmark
Professor Austin Robinson, Cambridge University, England
Professor Anthony Scott, University of British Columbia, Canada
Professor Dudley Seers, Institute of Development Studies, Brighton, England
Professor Berislav Sefer, Yugoslav Economists Association, Belgrade, Yugoslavia
Professor T. N. Srinivasan, Indian Statistical Institute, New Delhi, India
Professor Radmila Stoianovitch, University of Belgrade, Yugoslavia
Mr. Paul Streeten, Queen Elizabeth House, Oxford University, England
Professor Luigi M. Tomasini, University of Rome, Italy
Mr. Dusan Tratnik, Association of Economists of Slovenia, Ljubljana, Yugoslavia
Professor Shigeto Tsuru, Hitotsubashi University, Tokyo, Japan
Mr. Baran M. Tuncer, Ankara, Turkey
Professor Raymond Vernon, Harvard University, Cambridge, U.S.A.
Professor Dr. Dragomir Vojnic, University of Zagreb, Yugoslavia
Professor Borivole Yelitch, Yugoslav Economists Association, Belgrade, Yugoslavia
Professor Oktay Yenal, Robert College, Istanbul, Turkey
Observers
Miss Anquetil, University of Paris, France
Mr. Edgar Edwards, International Division, The Ford Foundation, New York, U.S.A.
Ursula K. Hicks, Fellow Emeritus, Linacre College, Oxford, England
Dr. Anita B. Pfaff, Wayne State University, Detroit, U.S.A.
Mr. Bevan Stein, O.E.C.D., Paris, France
Introduction
Gustav Ranis
YALE UNIVERSITY
Chairman of Programme Committee
Most of us will agree that, of all the problems on mankind's agenda,
three have unmistakably emerged as of overwhelming importance in
recent years: the avoidance of nuclear holocaust, the gap between rich
and poor and the befouling of spaceship earth- probably, but not neces
sarily, in that order.
The I.E.A. Conference at Bled (27 August-2 September 1970), which led
to the present volume, attempted to deal with the second of these issues,
principally, as the title indicates, at the international level. The sessions
were organised to permit the Conference to first take up the fundamental
question of the meaning of 'the gap', both conceptually and statistically;
to then turn to its most important historical causes and contemporary
consequences; thirdly, to analyse the various ways in which the co
existence of rich and poor countries helps or hinders in closing the gap,
or aiding the process of growth in the poor countries; and finally, to
attempt some overall assessment and prognostication on the likely future
contours of the problem.
Kuznets' opening paper, dealing mainly with the statistical measurement
of the gap over time, in terms of both per capita output and sectoral
structure, finds evidence of a growing distance between the rich and poor
countries over the long haul, even though convergence in other areas,
e.g. literacy and death rates, is also noted. In looking at the historical
record and assessing its significance, two main questions seem to arise:
one, is 'the gap' really a substantive issue or should we rather be concerned
with the problem of growth within the developing world? Second, if we
are going to measure gaps between countries, changing over time, should
physical gaps, taking into account other measures of welfare (remi
niscent of earlier discussions of some of the inadequacies of national
income accounting), be viewed as superior? Moreover if the existence of
any kind of gap is to be judged mainly a psychological problem - with
growth within the L.D.C.s the real criterion of progress - then other
amendments to the conventional wisdom currently being put forward,
e.g. a new emphasis on intra-country distribution, welfare and employ
ment, must surely also be made consistent with that view. For if man does
not live by growth rates alone as he looks horizontally across regions or