Resource Allocation in Underdeveloped Countries

Abstract

The purpose of this note is to point out the need for coordination in the theory of resource allocation in underdeveloped countries. At present there are three approaches to this problem?(a) the Investment Cri? teria approach associated with J. J. Pollack, N. S. Buchanan, A. E. Kahn, H. B. Chenery, Harvey Leibenstein, Otto Eckstein and others,1 (b) the Cost-Benefit analysis as used in the United States and other developed countries; and (c) the Development Strategy approach of Ragnar Nurkse and Albert Hirschman. First, we discuss a very impor? tant assumption and the major weakness of approach (c) ; second, the relevance of Cost-Benefit analysis to underdeveloped countries and its relationship to the Investment Criteria approach, and, finally a few con? cluding comments?all this with reference to mixed economies.