Abstract
Several ways of resolving this problem of inadequate capital accumulation in a developing economy are discussed, including especially the solution that is offered by technical progress as well as land reforms. But here again, it is found that even this technical progress–based solution also depends on the nature of initial distribution of income.
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- 1.
Leibenstin, H. Economic Backwardness (1957), Chs. 1–4.
- 2.
Note that we are representing technical progress in its most general form, avoiding, for example, its representation in terms of the factor-augmenting form which is essentially a restrictive case. See Burmeister, E. and Dobell, A., Mathematical Theories of Economic Growth, pp. 67–77.
- 3.
Proof: By the property of homogeneity of degree one of F with respect to Ti, Ki, and Li, we have, for example, in the case of the family farms \( F\left({\overline{T}}_1,{K}_1,{L}_i,\lambda \right)={\overline{T}}_1\ {F}_{T1}\left({\overline{T}}_1,{K}_1,{L}_1;\lambda \right)+{K}_1{F}_{k1}\left({\overline{T}}_1,{K}_1,{L}_1;\lambda \right)+{L}_1{F}_{L1}F\left({\overline{T}}_1,{K}_1,{L}_i;\lambda \right) \).
Now, totally differentiating both sides with respect to t, we get, upon cancelling out the common terms and regrouping the terms,
$$ {\displaystyle \begin{array}{c}\frac{\partial F}{\partial \lambda }\ \frac{d\lambda}{d t}=\frac{d{k}_1}{d t}\left[{\overline{T}}_1\frac{\partial {F}_{T1}}{\partial {K}_1}+{K}_1\frac{\partial {F}_{k1}}{\partial {K}_1}+{L}_1\frac{\partial {F}_{L1}}{\partial {K}_1}\right]+\frac{d{L}_1}{d t}\left[{\overline{T}}_1\frac{\partial {F}_{T1}}{\partial {L}_1}+{K}_1\frac{\partial {F}_{k1}}{\partial {L}_1}+{L}_1\frac{\partial {F}_{L1}}{\partial {K}_1}\right]\\ {}+\left[{\overline{T}}_1\frac{\partial {F}_{T1}}{\partial {L}_1}+{K}_1\frac{\partial {F}_{k1}}{\partial {L}_1}+{L}_1\frac{\partial {F}_{L1}}{\partial {K}_1}\right].\end{array}} $$By the property of continuity of the second-order partial derivatives and homogeneity of degree zero of the partial derivatives, the first two terms of the R.H.S. are zero. Hence the required result.
- 4.
In the context of India, for example, one finds that the government policy has in fact been systematically biased against this required education throughout the period of planning. See Bhagwati , J.: “Education, Class Structure and Income Inequality,” World Development, Vol. 1, May 1973, p. 24; for similar phenomenon in other less developed countries, see Bowles, S.: “Class Power and Mass Education,” Harvard University, 1971.
- 5.
See Bhaduri , Amit, ‘A Study in Agricultural Backwardness under Semi-Feudalism’, Economic Journal, March 1973, pp. 120–122.
References
Bhagawati, J. (1973). Education, Class Structure and Income Inequality. World Development, 1, 24.
Bowles, S. (1977). Class Power and Mass Education. Cambridge, MA: Harvard University.
Burmeister, E., & Dobell, A. (1933). Mathematical Theories of Economic Growth (pp. 67–77). Aldershot: Gregg Revivals.
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Dasgupta, A.K. (2018). Different Ways of Resolving the Crisis. In: Income Distribution, Market Imperfections and Capital Accumulation in a Developing Economy. Palgrave Pivot, Singapore. https://doi.org/10.1007/978-981-13-1633-3_6
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