Partnership in Development

Purushottam Narayan Mathur
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Purushottam Narayan Mathur: University College of Wales

Chapter 16 in Why Developing Countries Fail to Develop, 1991, pp 244-257 from Palgrave Macmillan

Abstract: Abstract The process of ‘developing’ changes traditional techniques of production based primarily on human and animal energy, to the modern ones based on chemicals and fossil energy. These are responsible for increasing the productivity of labour manyfold, with the help of modern electrical and non-electrical machinery and fossil fuel-operated transport equipment. For this transformation, a developing country requires the implementation of such technology, an implementation which requires not only the import of know-how but also the import of the relevant equipment until the recipient country is advanced enough to produce it for itself. It also requires the import of chemicals and other intermediate goods before their own capacity for production is created. And, of course, it needs to import the raw materials and fuel, etc. not produced in the country itself. This really implies that until the time it is completely developed it will require a continuous stream of imports, and foreign exchange earnings will be a sine qua non for the purpose. The availability of loans from international or national agencies in developed countries for the purpose will result in long-term repayment commitments in foreign exchange, the sustenance of which, as we have seen, will help to keep the country under-developed.

Keywords: Foreign Exchange; Real Interest Rate; Capital Good; Intermediate Good; Shadow Price (search for similar items in EconPapers)
Date: 1991
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-21343-6_17

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DOI: 10.1007/978-1-349-21343-6_17

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