Overinvoicing and Industrial Efficiency

Gordon Winston

Chapter 6 in Growth and Inequality in Pakistan, 1972, pp 169-187 from Palgrave Macmillan

Abstract: Abstract Much of the corruption1 in Pakistan industry stems from an unrealistic official exchange rate. The dollar sells for Rs. 4·75 in the official market but for two to three times that much in the free market, allowing handsome profits for those who can trade in both. This paper describes how corruption works through overinvoicing of capital equipment imports. Moral dimensions of the problem are ignored; the central question is how over-invoicing affects the allocation of investment and therefore the structure of industry — how (and by how much) over-invoicing changes the costs of capital to the men who make investment decisions.2 The logic of the problem can be developed with simple equations but an understanding of overinvoicing and its consequences does not depend on algebra. The reader who finds equations more a hindrance than a help can omit them and still get a clear sense of the shape and magnitude of the problem.

Keywords: Exchange Rate; Foreign Exchange; Capital Good; Foreign Capital; Black Market (search for similar items in EconPapers)
Date: 1972
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-01275-6_7

Ordering information: This item can be ordered from
http://www.palgrave.com/9781349012756

DOI: 10.1007/978-1-349-01275-6_7

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().