Income Distribution Policy Research Articles

Income Distribution Policy in Developing Countries. A Case Study of Korea.

Income Distribution Policy in Developing Countries. A Case Study of Korea.

BOOK REVIEWS

Book Reviewed in this article: Income Distribution Policy in Developing Countries: A Case Study of Korea by Irma Adelman and Sherman Robinson Revolutionary Violence: A Study of the Maoist Movement in India by Manoranjan Mohanty

Income Distribution Policy in Developing Countries: A Case Study of Korea.

Income Distribution Policy in Developing Countries: A Case Study of Korea.

Effects of Major Currency Realignment of Philippine Merchandise Trade

THE quantitative analysis of some economic effects of changes in exchange rates of the world's key currencies has been the subject of a few recent empirical studies,1 inspired presumably by the greater flexibility in currency exchange rates among developed countries that was initiated in the early part of this decade. Relatively large-scale equation systems are employed that take into account the simultaneous interaction among prices, incomes and spending in the economy usually divided into a number of developed countries and a Crest of the world category, the latter subsuming the less developed countries (LDCs). In the context of a small LDC, however, the complexity of the problem is somewhat reduced by the exogeneity of export and import prices (expressed in foreign currency) and the market concentration of LDC foreign trade typically in only a few developed countries. The Philippines is a case in point, about three-fourths of its trade flows throughout most of the post-war period being accounted for by Japan and the United States; moreover, certain principal trade commodities are dependent to a significant degree on only one or two dominant markets. Currency realignments involving these two countries, as exemplified by the 1971 Smithsonian Agreement, represent, therefore, a new form of external economic disturbance which may have significant repercussions on the country's balance of payments, output growth, income distribution and other policy objective variables. In this paper we attempt an evaluation of the direct effects on Philippine merchandise trade of the 1971 realignment of major currencies and the Central Bank decision to keep the exchange rate of the domestic currency (peso) fixed with respect to the U.S. dollar. First, a simplified framework of analysis is presented that identifies the parameters to be estimated for a quantitative assessment of the trade effects. We then estimate export supply and import demand functions for various trade commodities using annual data in the postwar period. The price coefficient estimates, together with the geographic distribution of Philippine trade flows in 1970, provide the empirical basis for examining the quantitative effects on Philippine merchandise trade of the altered sets of peso export and import prices attributable to the 1971 exchange rate changes.

Food Aid: Disincentive Effects and Their Policy Implications

Food in the present situation can be considered as one of the world's limited, scarce, and vital natural resources such as the atmosphere, or, for that matter, oil. The world is generally agreed that in the interests of mankind as a whole access to such scarce resources vital for a country's existence should be more equitably shared and, specifically, should not be made dependent only on the market, which allocates according to current purchasing power. (In the case of food, animal feeds bid away land, fertilizer, and even grains from the needs of the poor for the grains for themselves.) We are all concerned that the poorest countries need special help in the situation created by the rise in oil prices. The case of food is in many ways even clearer: food aid appears to be an obvious mechanism by which scarce and vital supplies can be allocated outside the normal market mechanism to help meet this basic human need. However, there is also general agreement that the long-run answer to food shortages in the poor countries must be sought in expanded food production in the poor countries themselves, and in employment and income distribution policies which provide sufficient incomes for the poor to be able to buy enough food. There is sufficient concern about the possible harmful effects of food aid on domestic food production that many economists recommend less or no food aid (other than, perhaps, for emergencies) even in cases where nutritional and other human needs are strongest. It is the purpose of this article to review some of the analytic issues and literature relevant to this concern about the disincentive effects and risks of food aid, which we have found to be strongly held by agricul-

Income Distribution and Regional Policy: The Case of Appalachia

The fundamental question examined by this paper is whether the size distribution of income in depressed areas is a factor of sufficient significance to warrant explicit concern in regional development policy. In the past, estimates of regional inequalities have explicitly focused upon differences in per capita income and unemployment rates, and regions, however large, have been viewed as homogeneous units with respect to these welfare measures. While these indicators of economic welfare reduce a complex array of factors to several proxy variables, insufficient treatment of supplementary welfare measures is an unfortunate possibility.

Income Distribution and Tax Policy in Colombia

Taxation in a developing country is not only a means of providing public savings and of correcting imperfections in the price system, it is also usually conceived of as a major means of effecting any income redistribution thought desirable. role of taxes in achieving economic equality is sometimes considered even in the poorest countries to be as important as their role in achieving economic growth. This question deserves special attention since many see a necessary conflict in the degree to which these two goals can be achieved-a conflict well expressed by W. Arthur Lewis: The less developed countries have awakened into a century where everybody wishes to ride two horses simultaneously, the horse of economic equality, and the horse of economic development. USSR has found that these two horses will not go in the same direction, and has therefore abandoned one of them. Other less developed countries will have to make their own compromises.' central concern here, of course, is the effect of income redistribution on the level of capital formation. In order to appraise the tax structure of any country, one must therefore have at least some idea, in quantitative terms, of the distribution of income-preferably both by income classes and by factor shares. This knowledge is particularly important when the government must decide on the distribution of tax increases, as is almost certain to be essential in Colombia, as in most developing countries, in the near future. While information on income distribution is no better in Colombia than in other poor countries, fortunately enough data exist to serve as a first step in the appraisal of the appropriate distributional role of the tax system. great inequality of income by income classes is strikingly evident in the 1961 figures carefully assembled by a recent Joint Tax