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Finance & Development, September 1981
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Book notices

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
September 1981
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Geoffrey H. Moore

Business Cycles, Inflation, and Forecasting

Ballinger Publishing Co., Cambridge, MA, U.S.A., 1980, xxii + 461 pp., $40.

Geoffrey Moore is one of today’s leading proponents of the type of business cycle analysis pioneered by Wesley Mitchell well over half a century ago and nurtured by the National Bureau of Economic Research (NBER) ever since, particularly in its series of Studies in Business Cycles. The present collection of essays is very much a part of this tradition. This is evident in the emphasis on cyclical phenomena, in the techniques of data analysis (which follow classical NBER lines with its emphasis on turning points), in the pride in “simple theoretical structures,” in the first-rate knowledge of the empirical data, and in the simple but enduring themes which, although technical, never veer very far from matters of policy concern. The essays part company with this tradition mainly in that the many topics are treated less intensively. However, this will, if anything, broaden the appeal of the book.

Moore is at his best dealing with such business cycle phenomena as cyclical and structural relationships among various labor market indicators; the secular changes to these relationships brought about by the shift toward an increasingly service-oriented economy; the effect of the business cycle on security markets, price, productivity, and profits; and the various indicators, be they coincidental, leading, lagging, or leading lagging (see “When Lagging Indicators Lead”). A good example is provided by the short essay on “The Federal Deficit as a Business Cycle Stabilizer.” The point here is simply that, while both the automatic and discretionary components of the U.S. federal deficit have a long history of contracyclical behavior, this behavior has been more “consistently consequential” in the contractionary than in the expansionary phase of the cycle. That is, the budget has traditionally been insufficiently restrictive in the upswing phase of the cycle. This is a simple, easily demonstrable point of enduring policy interest. It is, however, too often forgotten, and Moore’s straightforward, easy-to-read essay on the subject well deserves the wider audience that this book should provide.

The same can be said of Moore’s analyses of various labor market indicators, particularly his advocacy of the employment ratio (civilian employment as a percentage of the noninstitutional population 16 years of age or older) as an indicator deserving equal billing with the unemployment rate. Because of the cyclical behavior and the sustained rise in U.S. labor force participation rates, the unemployment rate has become an incomplete, if not misleading, indicator of labor market conditions. For instance, the unemployment rate and the employment ratio provide quite contrasting impressions both of the degree of labor utilization at the 1973 peak compared with other cyclical peaks and of the relative increase in slack in the ensuing contraction as compared with earlier contractions. In the same vein, there surely was a cautionary flag for U.S. policymakers toward the end of 1977 in the fact that, while the unemployment rate had subsided to about 6 per cent, the employment ratio had already surpassed its postwar peak by a significant margin.

Moore is less sure-footed when it comes to noncyclical phenomena. It is noteworthy, for instance, that the 100-odd pages devoted to inflation deal almost exclusively with its cyclical aspects. Indeed, if one ignores the occasional perfunctory allusions to “many other factors,” one is left with the impression that cyclical, or at least “real,” factors are the only systematic factors. This is most apparent in one essay on the inflation trade-off that suggests that the employment ratio has been the dominant explanatory factor behind both the cyclical behavior and the secular escalation of inflation over the past 20 years. If this is indeed Moore’s view, he should have explained why. Further, most readers would have welcomed some sort of reconciliation or at least comparison with orthodox “augmented” Phillips-curves. Inflationary expectations are never mentioned.

While I found much of the substance of this book stimulating, I found aspects of its presentation less enjoyable. First, the title promises too much: it should read “Essays on Selected Aspects of…”. This is not the integrated or comprehensive treatment of the topic suggested by the title. Second, there is too much overlapping material. Although each essay has its own distinct theme, many of these rely on common building blocks which are introduced anew each time, a repetition that can hardly fail to annoy the cover-to-cover reader. Also unfortunate is the fact that much interesting analytical material is subordinated to a prosaic theme. Thus, in one chapter, interesting material on labor market statistics is presented in only as much depth as is necessary to establish the need for more and better labor market statistics and statistical publications. While I endorse Moore’s view of this need and recognize the interest of the original audience (the U.S. National Commission on Employment and Unemployment Statistics) in the issue, readers of the present volume would have preferred a more analytical focus.

Michael C. Deppler

Edmond Malinvaud

Profitability and Unemployment

Cambridge University Press, New York, NY, U.S.A., 1980, viii + 108 pp., $12.95.

The present book, based on Malinvaud’s Marshall Lectures at the University of Cambridge in 1978, is best understood as a sequel to his Theory of Unemployment Reconsidered. In Unemployment Reconsidered Malinvaud constructed a very simple, heuristic model to analyse the consequences of rigid prices and wages for macroeconomic equilibrium. With rigid prices and wages, markets do not clear, and rationing—either of suppliers or buyers—occurs. The significance of this effect is that rationing, in either the labor or product market, can influence other markets and thus affect both employment and the level of overall demand. In an economy where rationing prevails, Malinvaud identifies two very distinct types of unemployment: Keynesian and classical. Broadly speaking, the former is caused by pricing disequilibrium in the product market, when firms set prices too high relative to the nominal stock of money, which rations their output—they cannot sell all they would like to at prevailing prices and wages. As a result, their effective demand for labor is reduced. In contrast, classical unemployment emerges when the real wage rate is too high for the economy as a whole, and firms do not find it profitable to hire all the labor supplied at this real wage rate.

In Profitability and Unemployment Malinvaud attempts to extend these arguments to explain the medium-term evolution of an economy. He introduces two dynamic components into his model—an investment function and a description of how prices and wages behave over time. Investment is made to depend not only on the level of demand in relation to capacity, as in the familiar accelerator model, but also on the profitability of the firm. Since the latter in turn depends on the relationship between labor productivity and the real wage rate, a complex set of relations exists between the level of unemployment, the real wage rate, profitability, and the level of investment. Hence the title of the book. Malinvaud also argues, quite plausibly, that prices and wages respond to disequilibria by rising faster when excess demand prevails and more slowly in situations of excess supply.

The resulting model, which attempts to capture these complex interactions, is essentially a variant of the Harrod-Domar growth models. It differs by incorporating an explicit analysis of wages and unemployment and their effects on both investment and savings. In spite of Malinvaud’s efforts to reduce the number of variables under consideration, the model is still very complex—as dynamic models that do not rely on steady state growth paths inevitably are. However, using simple numerical simulations, Malinvaud does succeed in highlighting certain notable results. For example, situations of Keynesian unemployment with excess capacity tend to be persistent, in part because high prices and low real wages increase the firm’s profitability and thus encourage capacity growth. At the same time real wages, responding to unemployment, remain stable or decline, thus exacerbating the problems of effective demand.

The major implications for policy of Malinvaud’s book stem not so much from the particular results of his model but from the general approach of focusing on economies in disequilibria with less than perfectly flexible prices and wages and markets that do not clear. The structural relationships that govern aggregate behavior in such an economy can vary dramatically, depending on the nature of the disequilibrium. Simple macro-economic models, whether based on Keynesian or monetarist assumptions, will only be valid in very particular situations. Effective policies therefore depend on a correct diagnosis of the source of disequilibrium. Structuralists have been saying this for years, in a somewhat different context. They have argued that monetary restraint alone will only reduce inflation in less developed countries at the cost of substantial short-term reductions in growth. While they have recognized that this thesis depended on the fact that price and wages do not adjust immediately to market conditions, they have been unable to translate their analysis into rigorous models. It is encouraging that mainstream neoclassical economics is beginning to address the same issues.

Liaquat Ahamed

John L. Esposito (editor)

Islam and Development: Religion and Sociopolitical Change

Syracuse University Press, Syracuse, NY, U.S.A., 1980, xix + 268 pp., $9.95 (paperback).

International Institute for Labor Studies

Islam and a New International Economic Order:

The Social Dimension

International Institute for Labor Studies, Geneva, Switzerland, 1980, 168 pp., Sw F 20.

A few significant events and trends in recent years, such as the Iranian revolution, the attempts to establish an Islamic order in Pakistan, and the increasing prominence of the oil-rich Persian Gulf states in the international economic and political scene, have heightened the attention and curiosity of the Western world in Islam and Islamic revivalism. Students of development policy are increasingly concerned with the connections between religion and development, particularly with the types of development policies that are or are not socially and politically feasible in Islamic societies. A frequent issue is whether the fact that Islam incorporates a “total way of life” allows for dynamic change in society. This is one of the central themes of the Esposito volume. Another equally important question is the compatibility of Islamic principles with particular development ideologies, such as various forms of capitalism or Marxism. A third concern, a corollary of the preceding two, is the limits to the role of the state in nonsecular social systems dominated by Islamic rules. The second work reviewed looks primarily at the last two questions.

The Esposito volume is a scholarly collection of country case studies aimed mainly at academicians and researchers interested in political and social development in the Islamic world. It contains articles on Egypt, Iran, Malaysia, Nigeria, Pakistan, Saudi Arabia, and Senegal. There are also two informative overview chapters, one on Islam and political development and the other on Islam and economic change. These two chapters illustrate clearly that in the ideal Muslim society the religion is the major provider of ethical norms of individual behavior. These norms cover all aspects of a Muslim’s life, including his social, economic, and political relations with other individuals and with the institutions in the community. The book demonstrates the clear contrast of this God-centered world view against the man-centered social norms prevalent in the Western world. This contrast also brings into question the adequacy and the relevance of the methodologies of Western social science in understanding and explaining societies in the non-Western world.

The general thesis of the pieces in the Esposito volume is that Islam should not be seen as an impediment to but as a fashioner of development. Prescriptions of Islam on taxation, interest, inheritance, private ownership, and income distribution point to Islamic solutions to development problems. For example, on taxation, zakat, the voluntary act of giving to the poor and needy based on one’s wealth, provides an important channel for redistributing income. On interest, Islam outlaws charging interest on the grounds that it leads to economic exploitation. Although Islamic economic principles are compatible with both the capitalist and the Marxist paths to development, it is argued that, because they are connected with the other parts of a comprehensive moral system, it is more appropriate to talk of “Islamic development” as a unique and separate ideology firmly based on the values expressed in the Quran and the Shariah (the Divine Law, that is, Allah’s commands as deduced from the Quran and the Prophet’s sayings).

This book also illustrates that, though its ideology is internally consistent and comprehensive, the interpretation and application of Islam has not been uniform across the Muslim world. Esposito concludes that it would be more fruitful to study Islam’s role in sociopolitical change in specific societal contexts rather than across-the-board. A particular shortcoming of this volume is that it pays no attention to the only major secular experience in the Islamic world: that of Turkey since the 1920s.

The International Institute for Labor Studies (IILS) volume, which is a collection of documents presented at a symposium held in 1980, has more militant overtones and is aimed at the international community taking part in the dialogue on a new international economic order. It pursues the thesis that a development strategy firmly based on Muslim values and culture has a greater chance of success in Islamic countries than Western models that do not take into account the spiritual and cultural fabric of a Muslim society.

The papers in this volume, as did the symposium, focus on three elements of an Islamic state: Its cultural foundations, the institutional/structural makeup of an Islamic society, and implications of Islamic culture for socioeconomic development and a new world order. On Islamic culture, the discussion stresses the links between economic, social, and religious spheres and the interdependence of the temporal and the spiritual as laid out in the Quran and the Shariah. On institutional issues, the book underlines the political and religious unity of Islam. The state is seen as a “community of believers” empowered to translate the ethical code of Islam into rules of behavior—social and economic among them—and to enforce them. On development, the economic doctrine of Islam, itself incorporated in the total value system outlined in the Quran, is viewed as resting on four basic axioms: unity, equilibrium, free will, and social responsibility. Finally, it is postulated that a new international economic order can draw from Islam the cultural and spiritual sustenance it needs in promoting equality and cohesion within and among nations.

There is a great deal of emphasis in both these books, especially in the MLS volume, on the Islamic ideal but not enough on the present realities in the Muslim world. While Islam is praised in the MLS book because of its internal consistency and egalitarian spirit, there is practically no explanation of the reasons for and the consequences of deviations from the “model society” of the Islamic doctrine.

With the exception of a piece in the Esposito volume on the trend toward the veiling of women in Egypt, both books ignore the issue of the values, attitudes, and behavior of the individual in Muslim society in favor of historical and structural analysis. Yet some discussion of the role of the individual would have been illuminating. Islamic principles govern not only man’s relationship to God but also his relations with other men, and the ensuing pattern of social relations covers the totality of the individual’s day-to-day interactions. A focus on the individual would have better highlighted the tensions resulting from incompatibilities of the Islamic pattern of social relations with that inherent in imported technological, economic, legal, and administrative systems, which carry to the importing country a normative view of man and society different from that of Islam.

These shortcomings, however, do not lessen the value of the two studies; both of them are useful as confirmation of the view that analysis of development questions outside the sociocultural context of any society is like playing a game of darts in the dark.

Selçuk Özgediz

Other books received

Alan Altshuler with James P. Womack and John R. Pucher

The Urban Transportation System: Politics and Policy Innovation

The MIT Press, Cambridge, MA. U.S.A., 1981, xxxxii + 558 pp., $12.50 (paperback).

While this well-written book is largely about the politics and problems of the American urban transport system, there are a number of useful sections for readers from other countries. The dominant interests that have shaped urban transport policy in the United States—a large automobile industry and almost universal access to private cars—do not exist in most other countries but the process by which they have influenced decisions may be instructive elsewhere. Moreover, the energy crisis is universal, and most readers will respond to the authors’ provocative argument that mass transit expansion that requires new construction cannot be justified solely on the grounds that it saves energy. Since the construction of a typical new subway uses up as much energy as is absorbed in running it for 25 years, any saving to be realized once it is under way is hardly relevant in the near future. Pragmatic ideas for low-cost traffic engineering and management are probably more important than those for subways for countries in the rest of the world, which are not so heavily dependent on the private automobile.

Michael P. Todaro and Jerry Stilkind

City Bias and Rural Neglect: The Dilemma of Urban Development

The Population Council, New York, NY, U.S.A., 1981, xiv + 93 pp., $2.50 (paperback).

This brief volume outlines the ills of excessive urbanization—a stagnating agriculture and cities that are increasingly overpopulated and badly serviced—and proposes a balanced solution based on expanding economic opportunities in rural areas and restructuring existing national policy biases that favor cities.

Jorge Braga de Macedo and Simon Serfaty (editors)

Portugal Since the Revolution: Economic and Political Perspectives

Westview Press, Boulder, CO, U.S.A., 1981, xiv + 217 pp., $16.

This book brings together four papers presented at a series of seminars on Portugal at the Washington Center of Foreign Policy Research in Washington, D.C. in May 1979. In his paper “Patterns of Politics in Portugal Since the April Revolution,” Thomas C. Bruneau evaluates the prospects for maintaining a liberal democratic regime in Portugal, based mainly on a survey of public opinion in Portugal in the spring of 1978. In their paper “The Economic Consequences of the April 25th Revolution,” Paul Krugman and Jorge Braga de Macedo analyze the role that market forces played in shaping economic developments in the years after the revolution, and Barbara Stallings takes a highly critical look at the role played by the Fund in Portugal during this period in her paper, “Portugal and the IMF: The Political Economy of Stabilization.” Looking ahead, Jorge Braga de Macedo examines a number of the implications of Portugal’s joining the European Community. Each paper is accompanied by the comments of two discussants who are also experts in their respective fields.

Joan Robinson

What are the Questions? And Other Essays

M.E. Sharpe, Inc., Armonk, NY, U.S.A., 1981, xiv + 202 pp.. $15 (cloth), $6.95 (paperback).

A collection of papers published in the 1970s by the distinguished Cambridge University economist.

Chinyamata Chipeta

Indigenous Economics: A Cultural Approach

Exposition Press, Smithtown, NY, U.S.A., 1981, xiii + 267 pp., $12.50.

An interesting venture by an African author into explaining tribal economics in counterpoint to traditional Western economics.

Leonard L. Fischman

World Mineral Trends and U.S. Supply Problems

The Johns Hopkins University Press, Baltimore, MD, U.S. A., 1981, xxxiv + 535 pp., $15 (paperback).

Ever since the Club of Rome warned of a possible exhaustion of certain important mineral resources, there has been persistent and widespread curiosity about the future availability of fuels and minerals, which are the lifeblood of industrial societies. This volume, prepared by Resources for the Future, Inc., will provide the serious student of such concerns with a helpful mix of quantitative information, analysis, and projections on seven nonferrous metals: aluminum, chromium, cobalt, copper, lead, manganese, and zinc. A substantial body of price and supply data, drawn largely from the 1960s and the 1970s, is presented and then used to derive supply and price projections for the next two decades. Various contingencies that might affect supplies to the United States in the short as well as the longer term are identified. By and large the conclusions are reassuring. Metals, other than ferrochromium, should be in adequate supply for the balance of this century. Price forecasts are more mixed, however, with large increases projected for lead, aluminum, and chromite. Aluminum is expected to experience the fastest growth; its consumption, which tripled between 1960 and 1975, is likely to triple again in the last quarter of this century.

Gary E. Hansen

Agricultural and Rural Development in Indonesia

Westview Press, Boulder, CO, U.S.A., 1981. xiv + 312 pp.. $20.

Indonesian agriculture is at last receiving the detailed attention it deserves. This collection of 16 essays, which includes contributions by Peter Timmer on rice policy, William Collier on agriculture, and Benjamin White on employment, shows how rural Java and its sociopolitical institutions are changing under the influence of the Green Revolution, migration, and population growth. The material is deftly presented, the choices facing policymakers are clearly delineated, and the book can be recommended to all those with a serious interest in Southeast Asian agriculture.

Milton Gilbert

Quest for World Monetary Order: The Gold-Dollar System and Its Aftermath

John Wiley & Sons, Inc., Somerset, NJ, U.S.A., 1980, xx + 255 pp.. $19.95.

A survey of post-World War II international monetary developments by the Economic Adviser of the Bank for International Settlements from 1960 to 1975. The author provides a comprehensive record of the course of major world currencies—the pound sterling, the French franc, the deut-sche mark, and the U.S. dollar—during this period and reviews the negotiations first for the creation of the special drawing right (SDR) during the late 1960s and, subsequently, for the reform of the international monetary system in the early 1970s. Analytically, the book is distinguished by the author’s presentation of his reasons for advocating a major increase in the price of gold at that time as the way to resolve the difficulties of the dollar, in particular, and of the international monetary system, in general.

J. Rada

The impact of micro-electronics

International Labor Organization, Geneva. Switzerland. 1980. viii + 109 pp., $10.

Tom Forester (editor)

The Microelectronics Revolution: The Complete Guide to the New Technology and Its Impact on Society

The MIT Press. Cambridge, MA. U.S.A., 1981, xvii + 589 pp., $25 (cloth), $12.50 (paperback).

The Rada volume is an introductory and therefore abbreviated look at the economic effects of the new information technology on developed and developing countries, especially on the comparative advantage of labor-intensive economies. Forester has assembled a broader collection of articles covering the technological aspects as well as the economic and social implications of the microelectronic age. Each chapter includes a useful guide to further reading.

Lawrence B. Krause and Sueo Sekiguchi (editors)

Economic Interaction in the Pacific Basin

The Brookings Institution, Washington, DC, U.S.A., 1980. xii + 269 pp., $14.95 (cloth), $5.95 (paperback).

Krause, Sekiguchi, and their coauthors, after underlining the growing interdependence of the economies encircling the Pacific Basin, proceed to evaluate their performance during the 1970s, especially during the first oil shock and its aftermath. They conclude that the less developed countries, such as Korea, Thailand, and the Philippines, showed a greater readiness to make the adjustments necessitated by higher oil prices. They were also more successful in regaining the high growth rates that had characterized their economies in the late 1960s. Australia and Japan, however, were unable to reach their economic potential in this same period. The United States fell midway between these two groups.

Other topics discussed include the unwillingness of the various Pacific economies to fully recognize their interdependence and the lessons that can be drawn from the 1970s regarding the exchange rate, trade, and industrial policies needed to maintain economic dynamism.

David T. Llewellyn

International Financial Integration

John Wiley & Sons, Inc., Somerset, NJ, U.S.A., 1980, x + 215 pp., $32.95.

Jacques Riboud

The Mechanics of Money

St. Martins Press. New York, NY, U.S.A., 1980, 319 pp., $27.50.

Two analyses of current international financial mechanisms with proposals for monetary stabilization. The Llewellyn book, with its summary of current academic theory in this area, supports a regime of target exchange rates for a world in which national autonomy in economic policy-making is severely limited. The Riboud book presents the case for the creation of a new international payments unit, the Eurostable, which would be stable in terms of price level and exchange market fluctuations.

Nazil Choucri

International Energy Futures: Petroleum Prices, Power, and Payments

The MIT Press, Cambridge, MA. U.S.A., 1981, x + 247 pp.. $27.50.

Richard Eden, Michael Posner, Richard Bending, Edmund Crouch, and Joe Stanislaw Energy

Economics: Growth, resources and policies

Cambridge University Press, Cambridge, U.K., 1981, xiii + 442 pp., $34.95.

Two basic studies on world energy problems. The Choucri volume explores a simulation model of the world petroleum market, taking into account the political context within which the economic mechanisms operate. The Eden volume is distinguished by an emphasis upon the relationship between the economics and technology of energy.

Karl P. Sauvant

The Group of 77: Evolution, Structure, Organization

Oceana Publications, Inc., New York, NY, U.S.A., 1981, xv + 232 pp., $22.50.

This collection of basic documents and descriptive narrative of the organization of the Group of 77 is a handy reference book for those interested in the development of North-South negotiations in major international bodies.

Sean MacBride, et al

Many Voices, One World

United Nations Educational, Scientific, and Cultural Organization (UNESCO), Paris. France, 1980, xx + 312 pp., $19.75.

The report of the MacBride Commission set up by UNESCO to study international communication problems. It tries to bring together widely different views of the role and effects of mass communication in the world today and offers suggestions for improving the flow and exchange of information among and within nations. Topical reading on a complex and controversial subject.

New from the World Bank

The McNamara Years at the World Bank Major Policy Addresses of Robert S. McNamara, 1968-1981 Robert S. McNamara

To mark the retirement of Robert S. McNamara as President of the World Bank, the Bank’s Executive Directors commissioned a book that would bring together the principal public statements of his 13 years of service. During that time he transformed the Bank into the world’s largest single source of international development assistance.

These addresses present a clear picture of the progression of Mr. McNamara’s philosophy of development. They show how, from year to year, he responded to the challenges of international events and how he perceived the process of development. They highlight his tireless efforts to arouse the world’s conscience to the plight of the poorest and give insight into his wide-ranging interests and the directness with which he confronted controversial problems.

Helmut Schmidt, Chancellor of the Federal Republic of Germany, and Leopold Sedar Senghor, former President of the Republic of Senegal, each have contributed a foreword to the volume, and the World Bank’s Executive Directors have provided an introduction.

704 pages. Cloth only US$30.00.

Farmer Education and Farm Efficiency Dean T. Jamison and Lawrence J. Lau

Most studies of the economic benefits of education have been made in urban areas, where most of the labor force works for wages, and have assessed the effect of education on wages and employment. There is increasing concern, however, with the benefits of education for the self-employed, particularly in the important agricultural sector.

This book complements earlier studies by reviewing existing literature on the relation between farmer education and farm efficiency. The authors then are able to confirm these earlier findings—which strongly suggest that the more educated farmers are more productive, particularly where new inputs and methods are available—by using new techniques to examine new data sets from Korea, Malaysia, and Thailand. Price data from Thailand are used to test the effect of education on the ability of a farmer to adjust the prices and composition of his output to the prevailing prices.

Approximately 216 pages. Cloth only US$18.50.

The above two books are published for the World Bank by The Johns Hopkins University Press and are available from booksellers; directly from the Press (Baltimore, MD 21218, U.S.A., or Ely House, 37 Dover Street, London W1X 4HQ, U.K.); or from Press distributors throughout the world.

Why the Emperor’s New Clothes Are Not Made in Colombia A Case Study in Latin American and East Asian Manufactured Exports David Morawetz

This is the first study in which the performance of Latin America and East Asia as exporters of manufactured goods is compared and in which the price and nonprice determinants of success in exporting are examined in detail.

The study is based on interviews with Colombian clothing exporters and U.S. clothing buyers. It attempts to answer four questions: Why did Colombia’s clothing exports suddenly climb in 1974? Why did Colombia’s clothing exports to the United States and Europe steadily decline after 1974? Why is Colombia less successful in exporting garments than are Hong Kong and Korea? What lessons can be drawn from experience with clothing exports? Policy options available to Colombian exporters are described, and the conclusions are generalized to apply to other industries and other Latin American countries.

Approximately 208 pages. Cloth only US$22.00.

Capital Utilization in Manufacturing Colombia, Israel, Malaysia, and the Philippines Romeo M. Bautista, Helen Hughes, David Lim, David Morawetz, and Francisco E. Thoumi

It has been widely argued that capital utilization in manufacturing is low in developing countries, with most plants working only one shift a day. This book surveys the manufacturing industry in four developing countries—Colombia, Israel, Malaysia, and the Philippines—to establish actual levels of capital utilization. The information collected from 1,200 firms is the only data base available on this subject.

The authors found that capital utilization was not as low as has been supposed. Capital-intensive sections of firms were often worked quite extensively, even though labor-intensive plants were worked only one shift because of the high costs of mounting second and third shifts. Factors that cause differences in levels of capital utilization are discussed, and policies that might be used to increase it are suggested.

Approximately 344 pages. Cloth only US$22.00.

The above two books are published for the World Bank by Oxford University Press and are available from booksellers, directly from the Press (200 Madison Avenue, New York, NY 10016, U.S.A., or Press Road, Neasden, London NW10 0DD, U.K.); or from Press branches and distributors throughout the world.

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