Book

notices
Ian M. D. Little
to agriculture and less to industry." "Mis- countries. The author goes on to dismiss the
Economic Development: Theory, guided" industrialization is a recurrent view that a linkage exists between capitalism
Policy, and International theme in Little's analysis. and dependence. Quite appropriately, he
Relations The planning emphasis of the 1950s is, notes that "the hallowed capitalist-socialist
Basic Books, Inc., New York, 1982, xi + 452 pp.,
with considerable justification, termed dichotomy is a bad guide as to where
$22.95.
"topsy-turvy." The focus had been on com- fundamental changes in the socioeconomic
Covering a span of nearly four decades, prehensive planning, when project level order are required."
Little has produced a masterly overview of planning was crucial and largely neglected. In a brief treatment of the structure of de-
the recent history of development eco- Little examines some of the important theo- veloping countries and structural change,
nomics—both theory and practice—and retical contributions to the development of Little focuses on a few features that he had
international economic relations. He has, in project-level planning techniques and in- found "underemphasized or even misrep-
addition, proposed a number of reforms of vestment analysis in the context of the grow- resented." This chapter is, on the whole,
international economic arrangements. ing recognition of some of the undesirable rather disappointing precisely because of its
Somewhat simplified, his main theses are consequences of the import substitution pol- brevity. Perhaps the most interesting feature
that: (1) there has been a failure of the de- icies that most developing countries followed is a set of calculations that show that be-
tailed and ambitious planning efforts in de- in the 1950s. He marshalls impressive docu- tween 1960 and 1978, relative agricultural
veloping countries, which have generally mentation of the literature on trade regimes productivity, already low, declined for the
been associated with large investments in and of studies casting doubt on the so-called low-income developing countries, increased
industry under heavy protection; (2) devel- "export pessimism," and emphasizes the by somewhat for the middle-income developing
oping countries that have relied more on now familiar argument of the crucial role of countries, and more than doubled for the
market forces and export-oriented strategies export incentives. The structuralist precon- developed countries.
have fared far better; and (3) the preoccu- ceptions of the 1950s were, Little concludes, Little grapples in greater detail with both
pation with the "New International Economic considerably weakened in the ensuing the old order and the "New International
Order" by developing countries is mis- decade, and among the book's many witty Economic Order" (NIEO). The author's two
guided; they should instead work for a more observations are broadsides at the "two- chapters on the old order—the trade regime
liberal international trade environment, in gap" and "surplus labor" notions. (1945-73) and the monetary system
which they would participate actively and After a brief consideration of the "new top- (1944-73)—are the most succinct analyses
forgo special privileges. These views will ics" of the 1960s—agriculture, technology of the issues I have seen. Little holds strong
not come as a surprise to those who have and capital-labor substitutability, the trans- views on the trade regime—lamenting the
followed Little's previous writings. national corporations, human resource de- failure of the Havana Conference to reach
The author begins with a useful dis- velopment, population, and capital mar- agreement on an International Trade Or-
cussion of "Basic Notions," including the kets—Little embarks on a more extensive ganization, based on free trade and a non-
meaning of development and such charac- discussion of the questions that engaged the preferential world system. He dismisses as
terizations as "neoclassical" and "struc- 1970s. inconsequential, in terms of economic bene-
turalist" visions of economics, noting that He challenges the "radical view" that es- fits, the Generalized System of Preferences,
many analyses and policy prescriptions con- sentially attacked growth where the poor and is sharply critical of the developing
tain elements of both. With his terms de- were excluded from its benefits. Little argues countries for remaining highly protectionist
fined, Little proceeds to an excellent dis- that "where growth has been rapid, the poor- and resisting reciprocity.
cussion of the theoretical developments and est have benefited" and t h a t " . . . one should With respect to the monetary system, the
debates, as well as practice in the field, worry about relative inequality only to the author notes that by 1963 many economists
during 1943-60. This includes a compact extent that it causes absolute poverty." His recognized that the basis of reserve creation
discussion of pre-World War II planning, its emphasis on absolute poverty is well placed, had to be changed, otherwise the system
evolution, and the extension of this concept but it is difficult to accept the implied cavalier was bound to fail. The subsequent creation
to developing countries in the 1950s. Con- attitude toward income distribution. of the SDR, however, came too late to have
siderable attention is given to India's efforts Little does not find much substance in the much impact. On the International Monetary
at planning, which is described as having emotion-laden debate over "dependency Fund as lender, Little shares the widely held
been "non-Western." Little views the devel- and underdevelopment." In trade, resource view that the institution was not intended to
oping countries' planning efforts quite nega- transfers, and technology, he maintains that resolve crises that stem from a long period
tively, emphasizing the bias that resulted dependence is not automatic, unless mo- of policy bias against exporting and of
from equating development with industri- nopoly or oligopoly exists—something not excessive borrowing to support import
alization and noting the consequent neglect generally the case. Sovereign governments substitution.
of agriculture and rural development (except can control their own fates; it is the "cor- The author exhibits little patience for NIEO
for land reform) in the 1950s. Reflecting the ruptibility of the host," the author suggests, and the events of 1973-80. He finds essen-
consensus of the 1970s, the author argues "that is the worm in the bud." This is, of tially no new content in the demands of de-
that "growth or equity, or both would have course, a simplistic view of the world and veloping countries: "Virtually everything had
been improved if the terms of trade for agri- Little, remarkably, avoids mention of any of been on the agenda since UNCTAD I, and
culture had been better... or if more public the well-known incidents of extra-economic most of it since the 1940s. All that was
expenditure and attention had been diverted activity by transnational corporations in host new was the increased stridency, together

48 Finance ty Development I June 1983

©International Monetary Fund. Not for Redistribution

perhaps with the increased use of the Gen- assistance (ODA) target. Little suggests that Under his aid proposals, Little argues for
eral Assembly as a forum for economic de- developing countries might find it worthwhile more grants and urges "untying" (to remove
mands." The latter he attributes mainly to to forgo their trade preferences, if some way a particular form of protectionism). Sur-
the success of the Organization of Petro- could be found to bind developed countries veillance and project versus program
leum Exporting Countries in raising the oil to the existing or even a higher ODA target. assistance are, he feels, the main issues.
prices. Unfortunately, this proposal is almost as Uto- Surveillance has to exist and, while greater
pian as those he dismisses on the same program aid is needed for adjustment, the
The Program of Action of NIEO, Little con- author opposes "indiscriminate de-projecti-
grounds.
tends, asks for "aid with everything." On
On money and credit matters, issues are zation" on welfare grounds.
debt burden and rescheduling, he maintains,
much less clear-cut. Little ruefully observes If the book falls short of expectations, it is
rather irritably, that "countries complain if
that the "unfortunate fact that developed mainly in its proposed reforms of interna-
they cannot borrow and complain of the bur-
countries cannot handle their affairs in a tional economic arrangements. Many of
den when they have borrowed." Somewhat
manner that is best for developing countries Little's proposals have previously been of-
prematurely, as recent events have shown,
(and themselves) has to be accepted." The fered elsewhere (for example, by the Brandt
he also dismisses the alarmist views on
idea of a supranational money is floated, but Commission). Inasmuch as several of them,
developing countries' debt.
dismissed because it would require an effec- such as the untying of aid and the linking of
Little organizes his own recommendations tive central bank, which in turn would require ODA with trade reform, involve deep-rooted
around trade, money and credit, and aid. On a world government! Little is unsympathetic political considerations, it is difficult to be
trade he stresses the absence of any eco- toward the blanket demand for weaker Fund sanguine about their acceptability, particu-
nomic justification for the highly restrictive conditionality, but begs the question when larly in the present international economic
trade regimes of most developing countries he notes that "IMF conditions should be ap- climate. Moreover, Little's recommendations
and cautions that the politicization of trade is propriate to the conditions and possibilities, fail to reflect the concern over the magnitude
likely to benefit the strong, and very few de- both economic and political, of the borrower; of the external debt of developing countries
veloping countries are in that position. He but it may often be hard to agree as to what and the high real rates of interest, as well as
favors the creation of an International Trade is appropriate." He more wisely counsels on the 30-year low in commodity prices. The
Organization to be based around GATT (not the issue of greater voice for the developing search for feasible solutions will, no doubt,
UNCTAD), which would also cover services, countries, warning that "too much voice can continue. In the meantime, one need not
agriculture, and export controls. Though be counterproductive" and lead to important agree with Little on every issue to partake of
developing countries are counseled to aban- decisions being taken outside the institution. the sheer delight and stimulation afforded
don the NIEO principle of "aid with every- More broadly, in the dialogue between de- by a serious reading of this major work on
thing," the author calls for associating "aid veloped and developing countries, Little development economics.
and trade in a suitable forum" and urges an correctly stresses the need for reduced
early fulfillment of the official development confrontation. Javad Khalilzadeh-Shirazi

trial innovation first published in 1974. The public sector enterprise in India that started
Christopher Freeman
first two parts—the rise of science-related producing machine tools in 1956 and suc-
The Economics of Industrial technology, and innovation and the theory of cessfully diversified into watches, tractors,
Innovation (Second Edition) the firm—have been updated with more re- lamps, and printing machines. He focuses
MIT Press Cambridge, MA. USA, 1982, viii < 250 pp cent statistical information and new exam- on the strategies and problems in acquiring,
$25
ples from more current research. The third absorbing, and adapting different types of
J Davidson Frame part—innovation and government—has technologies from countries and companies
International Business and been completely rewritten to reflect further that have different approaches to technology
Global Technology research by the author and others, and new transfer. He also covers the development of
Lexington Books, Lexington, MA, USA, 1982, policy developments in the United States indigenous substitutes for imported com-
xiv -t 206 pp., $24.95. and the United Kingdom. ponents and the local generation of some-
product technology. Finally, he examines
R C. Mascarenhas Frame's book is a general introduction to
how the enterprise's leaders responded to
Technology Transfer and the interdependence between technological
challenges, and how the organization of Hin-
Development: India's Hindustan advances and transnational commercial re-
dustan Machine Tools itself had to evolve
Machine Tools Company lations, written for both business students
with changing circumstances, including its
Westview Press, Boulder, CO, USA, 1982, xv i and scientists/engineers. It compares sci-
relationships with the government agencies
270 pp., $19.50. ence and technology activities and policies
to which it was accountable and whose sup-
in developed and developing countries. It
These three books on technology and tech- port it had to enlist. The book persuasively
emphasizes the transfer of technology, with
nical change focus on different aspects of makes the point that a successful transfer of
a special focus on multinational corpora-
the subject, ranging from a perceptive exam- technology "should lie within the overall
tions, but also includes chapters on Third
ination of the process of industrial innovation strategy of an enterprise and should include
World demands for developed country tech-
in developed countries to a study of the ac- the choice of technology to translate that
nology, and on military research and devel-
quisition and absorption of technology by a strategy and an organization with which to
opment and arms transfers.
firm in a developing country. implement it."
Freeman's book is a considerably revised Mascarenhas' book is an excellent case
and updated version of his classic on indus- study of Hindustan Machine Tools, a premier Carl Dahlman

I inum.c l:> Lk'1't'iofniii'nl \iinc 1983 4"

©International Monetary Fund. Not for Redistribution

Paul W. MacAvoy OPEC—determined the crude oil price in- 1979 level, in real terms. But a modest in-
Crude Oil Prices: As Determined creases of the past ten years. The price crease in real prices, as determined by mar-
by OPEC and Market shocks of 1973/74 and 1979/80 are attrib- ket fundamentals, is projected for the rest of
Fundamentals uted to severe supply shortages that the decade.
resulted from events such as the 1973 Although certain aspects of supply and
Ballinger Publishing Co., Cambridge, MA, USA, 1982,
xv 4- 224 pp., $24.50.
embargo, the Iranian revolution, and the demand are not rigorously treated, this book
Iran-Iraq war that would have occurred with- meets the oil market analysts' need for a
Some "popular beliefs" about the Organi- out OPEC action. OPEC's influence on oil sound handbook useful for forecasting price
zation of Petroleum Exporting Countries prices is seen as limited to sustaining such developments and understanding the impli-
(OPEC) and its effectiveness in raising and price increases for a year or two longer than cations of varying assumptions and parame-
maintaining oil prices are examined in this they would have lasted under a free market ters. Appendix A is a printout of the Fortran
book. In a succinct analysis presented with system. source program of the model that can be run
the help of a computerized econometric The current weakening of the market is in any medium-sized computer.
model, the book concludes that market fun- also anticipated in the book: oil prices in
damentals and random political events—not 1981-83 are predicted to fall to near their Adrian Lambertini

Other books received Ralf Dahrendorf (editor) Jacques Bourrinet and Maurice Flory

Europe's Economy in Crisis L'Ordre Alimentaire Mondial

Holmes and Meier, New York. NY. USA., 1982, xn f274 pp., Economica, Paris, France, 1982, 332 pp., F 85.
Samuel Paul
$24.95.
Managing Development Programs: The 17 papers contained in this book do not pre-
The Lessons of Success This collection of articles by 11 eminent European tend to provide a comprehensive analysis of food
personalities offers both analysis of and solutions issues nor do they offer dogmatic answers. They
Westview Press, Boulder, CO, USA., 1982, xvi+247 pp., $20
to the deepening European malaise of unemploy- reflect the views of their authors, who are re-
(paper).
ment and stagnation. From the different national searchers of various disciplines, and national and
This book concentrates on the contribution of perspectives emerge common threads: the bur- international civil servants. The contributions,
management and administrative planning to the dens imposed by an expanding public sector several of which are of high quality, are grouped
success of six public sector programs from as resistant to change, high wages, reduced com- around two broad themes: the world food
many developing countries. The positive results petitiveness, and the legacy of inflation and anti- challenge—the persistence of hunger when it is
emerging from these schemes, which included inflationary policies. Virtually no contributor technically feasible to produce enough food to
the National Dairy Development Program in India suggests the traditional response of boosting de- feed everyone—and the potential for an Inter-
and the Public Health Program of China, are mand, but unemployment has worsened since national Food Order to meet it.
linked to managerial innovativeness, clearly de- these articles were written, and inflation has mod-
fined goals, phased program implementation, erated further. All favor reducing government ac-
organizational autonomy, the use of network tivity, restraining wages, and rebuilding investor
structures, and the creation of simple information confidence. There is only limited analysis, how-
ever, of the distortions produced by exchange rate Vernon W. Ruttan
systems that provided rapid feedback. While
those administering rural development programs movements in recent years, and their impact on Agricultural Research Policy
will find this book especially useful, economists the spread of protectionist tendencies in Europe University of Minnesota Press, Minneapolis, MN, USA.. 1982,
would also profit by viewing the world from and elsewhere. xiv 4369 pp., $32.50 (cloth), $13.95 (paper).
Dr. Paul's angle.
How can an agricultural research system be or-
ganized and managed to maximize the returns to
George J. Stigler
Sylviane Guillaumont Jeanneney the human and financial resources invested? The
The Economist as Preacher and book's answer is based mainly on experience in
Pour la politique monetaire: Other Essays the United States and in international agricultural
Defense d'une mal aimee University ol Chicago Press, Chicago, 1982, VIH 259 pp., $20 research institutions, but it is broadly relevant to
Presses universitaires de France, Paris, 1982, 292 pp.. F 145. (cloth). developing countries. The chapters on research
resource allocation and the regulation of seed
This is a historical analysis (or rather a defense) of The title of this book is catchy, but curious for two
production and marketing systems are especially
the postwar theoretical "battle" between Keynesi- reasons: first, as Professor Stigler states on the
interesting.
ans and monetarists; the title and subtitle make very first page, economists have done very little
clear the author's sympathies. In places, the nar- preaching; second, it does not do justice to the
rative reads as though it were describing an im- wide range of eminently readable, erudite, and
portant religious schism. The pat classification of entertaining essays on a variety of topics. The
economic theory between the two schools is also author specifies the central concern of econo- M. Gersowitz, C. F. Diaz-Ale|andro, G. Ranis, and M. R.
reflected in the analysis, as when the author com- mists with the use of efficiency as the criterion for Rosenzweig (editors)
pares the relative efficacy of monetary and fiscal the desirable economic policy but notes that the
The Theory and Experience of
policy under different conditions. In fact, the differ- meager success of economists in changing poli-
Economic Development; Essays in
ences between the two schools are not that stark. cies considered inefficient is because more than
Honour of Sir Arthur Lewis
There is much emphasis on the importance of narrow efficiency was involved in almost every
Allen and Unwm, Inc. Winchester, MA, USA, 1982, ixt403 pp.,
economic theory in policymaking; however, in the case. Elsewhere he writes: "My central thesis is
$37.50 (cloth).
determination of economic policy, governments that economists exert a minor and scarcely de-
are guided by a host of considerations other than tectable influence on the societies in which they Sir Arthur's many contributions to economics are
economic "doctrine," to use the author's term. live." In which case one is tempted to ask: why all reviewed, refined, and extended in this stimu-
Nevertheless, this is a valuable tour d'horizon of this attention on economists? Altogether a lucid lating collection of articles by a group of leading
the literature, particularly for French readers. and enjoyable selection. economists.

50 finance & Development / June 1983

©International Monetary Fund. Not for Redistribution

Other books received (continued)
Robert L. Ayres, Banking on the Poor, MIT Press,
Cambridge, MA, USA, 1983, xiv + 282 pp.,
$17.50.
Letters
Arthur S. Banks (series editor), Economic Hand-
book of the World: 1982, McGraw-Hill Book
Co., New York, 1982, viii + 696 pp., $44.95.

David Bigman and Teizo Taya, Exchange Rate

and Trade Instability: Causes, Conse-
quences, and Remedies, Ballinger Publishing
Co., Cambridge, MA, USA, xxvii + 340 pp.,
past suffered from a lack of professional
$39.95. Arms for the needy? attention and in-depth research. It has
R. B. Johnston, The Economics of the Euro-
Market: History, Theory and Policy, St. Mar
Your article, "Economic impact of defense probably also suffered from a too-narrow
tin's Press, New York, 1982, x + 321 pp., $30. expenditures" by Shuja Nawaz in the view of development, as evidenced in the
Jean Lecerf, Creer L'Emploi: La Micro-
March edition of Finance & Development, is Benoit study. The significance for devel-
Economie, Le Hameau Editeur, Paris, 215 pp., the first treatment I have seen of this im- opment in the broad sense may be consid-
F69. portant subject in F&D, I hope it means erably greater than the relatively small
Neil McMullen, The Newly Industrializing Coun- that you will continue to explore it. share of the total economic product that
tries: Adjusting to Success, British-North Through the balanced, careful marshalling military expenditures represent.
American Committee, Washington, DC, 1982, of the pros and cons of the relationships, I hope interest in these questions will
xii + 124 pp., $7 (£3.50).
and through its appearance in F&D, the also stimulate IMF research leadership in
James Plummer (editor), Energy Vulnerability, article should make a major contribution to the field. It could have important con-
Ballinger, Cambridge, MA, USA, 1982,
debate on these questions. sequences for us all.
xviii-t-458 pp., $37.50.
While I have not yet seen the recent Ruth Sward, Washington, DC
Emmanuel N. Roussakis (editor), International
Banking: Principles and Practices, Praeger,
Taylor paper which the article cited, my (Author, World Military and Social
New York, 1983, xviii + 528 pp., $29.95. impression is that the subject has in the Expenditures, 1982)
Claude Rucz, Le Conseil Economique et Social
de I'O.N.U. et La Cooperation Pour Le De-
veloppement, Economica, Paris, xii + 501 pp.,
F125. Each quarter we receive numerous letters from
W. W. Shaner, P. F. Philipp, and W. R. Schmehl readers. Frequently, readers enquire about their
(editors), Farming Systems Research and De- subscriptions. We have attempted to answer the
velopment: Guidelines for Developing Coun- most commonly asked questions in the note to
tries, Westview Press, Boulder, CO, USA, 1982,
readers below. Letters that discuss issues raised
xviii + 414 pp., $25 (cloth), $18.95 (paper).
by our articles and that might be of interest to
W. W. Shaner, P. F. Philipp, and W. R. Schmehl our readers are published, as space permits.
(editors), Readings in Farming Systems Re-
search and Development, Westview Press,
The Editor
Boulder, CO, USA, 1982, xiv+ 175 pp., $19
(cloth).

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Finance & Development I June 1983 51

©International Monetary Fund. Not for Redistribution