Economic Development and Planning

The construction of quantitative measures of national capacity to develop along a broad front is desirable to facilitate investigation of the interactions involved in the development process and to improve the design of development strategies. Broad measures of development capacity provide a better focus than do narrow ones for systematic study of the empirical regularities characterising economic growth and furnish an improved basis for the formulation of comprehensive theories identifying critical interdependencies among economic, social, and political aspects of development. They also facilitate integrated approaches to development planning by making possible quantitative evaluation of the joint impact of social and political as well as economic influences on development.

The paper deals with some theoretical issues related to project appraisal in developing countries. It examines criteria for project appraisal under alternative policy assumptions: (a) optimal policies are applied throughout the economy, (b) non-optimal trade policies are applied but these will give place to optimal policies by the time the project is implemented, and (c) nonoptimal policies will continue to be applied during the lifetime of the project.

In the planned economy of the Soviet Union, macroeconomic forecasts have the following main goals:

It is notoriously difficult to measure unemployment in less developed countries (l.d.c.s hereafter) in terms which make it comparable with unemployment in the richer countries. Its forms and apparitions are too different, and I agree with Gunnar Myrdal, Michael Lipton, Paul Streeten and others that we must be wary of transferring uncritically Western concepts to the different Third World. However, we must be equally careful not to jump from the legitimate refusal to apply First World concepts — or Second World concepts for that matter — to Third World problems, to the illegitimate assumption that unemployment and underemployment in open and disguised forms do not exist, or are not serious, merely because they cannot be measured by familiar concepts and caught by familiar definitions, or because the data are lacking. Without labouring the point, for my present purposes I shall simply assert: (a) that unemployment is extremely serious in the l.d.c.s; (b) that it is much more serious at present in the l.d.c.s than in the richer countries; (c) that on reasonable definitions unemployment is of the order of magnitude of 25–30% in many l.d.c.s, and 20–25% in the overall picture; (d) that it is serious, more or less equally so, both in its rural and urban manifestations; (e) that unemployment has become increasingly serious in the last 10–20 years; (f) that on present indications it is bound to increase further, unless counter-influences appear (which must probably include a vigorous and balanced development of science and technology in directions more relevant to the l.d.c.s and their factor endowments, and in the longer run a slowing down of population growth).