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Tied Credits —A Quantitative Analysis

  • Mahbub ul Haq
Chapter
Part of the International Economic Association Conference Volumes book series (IEA)

Abstract

The developing economies will do well to recognize that they have to live with tied credits for a long time to come.1 It is largely academic at this stage to argue that the world would have been better off if the credits were untied and if the pattern of foreign assistance was more liberal and less restrictive. Tied credits, after all, are merely a symptom of the basic maladjustments in the international balance of payments and the lack of any automatic mechanism for the correction of these maladjustments. If world trade becomes more genuinely multilateral in nature and some success is achieved in devising an international system to take care of the recurrent balance of payments crises in the developed countries, the problem of tied credits will lose much of its current significance. But the prospects for such favourable developments are hardly bright at present. Nor would it be wise to count on them. A more realistic course would be to explore carefully the adverse implications of tied credits for the recipient countries and to devise concrete institutional arrangements to overcome or minimize these implications. The intention of this paper is to offer a quantitative analysis of tied credits from the experience of Pakistan so as to present the general problem in a concrete and sharper focus.

Keywords

Recipient Country Donor Country Capital Movement Price Quotation Foreign Assistance 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Notes

  1. B. Balassa, Trade Prospects for Developing Countries, Homewood, Illinois, 1964.Google Scholar
  2. J. H. Adler, Absorptive Capacity: The Concept and its Determinants, Washington D.C., 1965.Google Scholar
  3. E. S. Mason, ‘On the Appropriate Size of a Development Program’, Occasional Papers in International Affairs No. 8, Cambridge, Mass., August 1964.Google Scholar
  4. Harvey Leibenstein, Economic Backwardness and Economic Growth, New York, 1957, p. 178.Google Scholar
  5. Evsey Domar, ‘The Effect of Foreign Investment on the Balance of Payments’, The American Economic Review, September 1950, pp. 805–826.Google Scholar
  6. Dragoslav Avramovic and Ravi Gulhati, Debt Servicing Problems of Low-Income Countries 1956–58, Baltimore, 1960.Google Scholar

Copyright information

© International Economic Association 1967

Authors and Affiliations

  • Mahbub ul Haq
    • 1
  1. 1.Planning CommissionGovernment of PakistanPakistan

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