Below is given the Table of Contents of the
Issues listed above:
Volume
55. Number 2. July-Sept, 2007
ARTICLES
/ 1
Poverty and Inclusive Growth S.R. Hashim
Despite all the well-intended plans
and programmes and reasonably good
growth since the early eighties,
Poverty, one of the starkest
manifestations of ‘exclusiveness’,
has remained at unacceptably high
levels. Poverty alleviation
programmes have been ineffective in
the past for want of proper
implementation. It is difficult to
say how much of poverty alleviation
has taken place due to the
programmes for poverty alleviation
and how much due to growth itself.
It is generally agreed that the
reach of most of these programmes
was quite weak. Normally, growth
processes with a favourable macro
environment should be able to
alleviate poverty. However, if the
growth processes are so weak that
their beneficial impact does not
trickle down to the poor, or they
are so distorted that they bypass
the poor altogether, special efforts
have to be made to alleviate poverty
through programmes which address the
poor directly. The ultimate solution
to poverty lies not just in doling
out aid and help to the poor in
need, but to enable the poor to join
the mainstream of economic
activities whereby the poor start
contributing to economic
development. This is only possible
through empowering the poor and
building his capacity for which the
group approach has proved to be the
best.
Education and Economic Growth:
Complementarities or Threshold
Effects?
Some Empirical Evidence from China
Xiaolei Qian and Russell Smyth
In this study we apply a
meta-production function approach to
examine the effect of education on
economic growth in China over the
course of the 1990s, using data from
the latest national censuses in 1990
and 2000. We find that growth in
human capital made a statistically
significant contribution to China’s
economic growth and that growth in
human capital accounted for
approximately 19 per cent of growth
in real GDP from 1990 to 2000. We
explore whether the effect of
education on economic growth can be
attributed to complementarities or
threshold effects. We find that
capital-education and
education-technical progress
complementarities may be a plausible
explanation for the high measured
effect of education on economic
growth.
Role of Agriculture in Poverty
Reduction
Some Evidence from Indonesia
Tulus Tambunan
Although poverty is generally
recognised as a highly
multidimensional phenomenon, in the
Indonesian context, poverty has been
mainly an agricultural or a rural
phenomenon. This has of course an
important policy implication for
poverty reduction in Indonesia. This
study examines the importance of
agricultural growth for poverty
reduction in Indonesia. It shows
that: (i) agriculture is still the
biggest employment-generating
sector; (ii) vast majority of poor
families are in agriculture,
consisting mainly of the marginal
farmers and agricultural labourers;
(iii) one percentage growth in gross
domestic product (GDP) has the
greatest impact on poverty reduction
in rural areas; and (iv) the
decomposition of changes in poverty
by sector shows that the output
growth in agriculture appears to
have the strongest effect on the
change in poverty.
The author is at the Centre for
Industry and SME Studies, University
of Trisakti, Indonesia. Email:
sjahrir@rad.net.id
ARTICLES
/ 4
Vulnerability and Natural Disasters
in Fiji, Papua New
Guinea, Vanuatu and the Kyrgyz
Republic*
Raghbendra Jha
This paper analyses vulnerability in
Fiji, the Kyrgyz republic, Papua New
Guinea and Vanuatu and assesses
prospects for these countries
attaining Millennium Development
Goal 1 (MDG 1), i.e., reducing the
proportion of the poor in the
population to half between 1990 and
2015 and argues that debates around
poverty-growth elasticities assume a
riskless world. However, in reality
the poor are subject to risks, both
general and idiosyncratic, which
affect their welfare. Thus poverty
should be viewed in dynamic terms
and should permit a framework
allowing for changing states of the
world, in this paper’s case
certainty equivalent per capita
consumption. It is discovered that
certainty equivalent per capita
consumption growth has been much
lower than real per capita
consumption growth indeed, in some
cases, negative. It is concluded
that real consumption per capita by
2015 would be lower in all four
countries
than what is required to attain
MDG1.
The author is at the Australia South
Asia Research Centre, Division of
Economics, RSPAS, Australian
National University, Australia.
Email:
r.jha@anu.edu.au
ARTICLES
/ 5
Sources of Growth in the Indian Food
Processing Sector
A Frontier Production Function
Analysis
Kaliappa Kalirajan and Shashanka
Bhide
Food processing sector is seen as a
key to catalysing agricultural
growth because of its inherent
backward linkages and the potential
for growth not only because of the
dynamic domestic market but also
because of the large external
markets. Sustained growth of the
sector is possible in a competitive
market environment only when the
firms operate at high levels of
technical efficiency and adopt best
technologies. This paper provides an
assessment of the technical
efficiency of the firms in the food
processing sector and shows that
there are large levels of
inefficiency and that catching-up
with the best performance has been
slow.
Kaliappa Kalirajan, Foundation for
Advanced Studies in International
Development and National Graduate
Institute for Policy Studies, Tokyo.
Email:
kalirajan@grips.ac.jp
Shashanka Bhide, National Council of
Applied Economic Research, New
Delhi.
Email:
sbhide@ncaer.org
ARTICLES
/ 6
Economic Freedom, Inequality and
Poverty
Re-examining the Role of Government
Simrit Kaur
The basic objective of the paper is
to focus on the role of economic
freedom, and inequality in education
and land assets as determinants of
growth, inequality, poverty and
malnutrition. The econometric
results confirm that for the
countries studied, the aggregate
measure of economic freedom neither
has a significant effect on the GDP
growth rate nor on inequality,
poverty and malnutrition. However,
results indicate that a higher
economic freedom, as measured by one
of its sub-components i.e., a lower
size of the government affects
equality, poverty and malnutrition
adversely. In light of this
relationship, and taking note of the
existence of the
poverty-nutrition-trap, the paper
questions the commonly held belief
that government intervention is
necessarily less productive.
Emphasising that government
investment in providing nutrition
security is necessary, the paper
argues that the role of the
government, in an era of
liberalisation and privatisation,
needs to be redefined rather than
reduced.
The author is Reader, Faculty of
Management Studies, University of
Delhi, India.
Email:
kaur.simrit@gmail.com
ARTICLES
/ 7
India’s Monetary Integration with
East and South-East Asia
A Desirability Study
Sweta Chaman Saxena
This paper attempts to include India
with east and South-East Asia to
study the existence of the economic
criteria for a common currency. The
analysis in this paper shows that
significant complementarities in
trade exist among these countries
and most of them experience similar
shocks. These results point to the
fact that the cost of adopting a
single currency may be minimal,
while huge benefits could accrue
from enhanced trade.
The author is an economist at the
Bank for International Settlements,
Basel, Switzerland. Email:
sweta.saxena@bis.org
ARTICLES
/ 8
Risk-Sharing in the Labour Market
Evidence From Some Industries in
India
Saibal Kar and Poonam Mehra
Theoretically, and more often
empirically, the co-movements
between a firm’s profit and the
salaries/wages paid to its employees
can be explained by the argument of
either rent sharing or risk sharing
between the two parties. Using a
thirteen-year panel data for a
number of firms under various
industrial categories in India, we
show, that the phenomenon of risk
sharing in fact accounts for a
substantial portion of the positive
correlation between profits and
wages when the firms are exposed to
economic shocks. This study is
important not only for its potential
influence on firm-level policies
especially at a time when industrial
protections in India have been
significantly removed thus leaving
the firms exposed to internal and
external shocks, but also because it
initiates the use of Indian
industrial data, albeit in a limited
sense, to explore risk/rent sharing
characteristics.
Saibal Kar, Centre for Studies in
Social Sciences, Calcutta and HWWI,
Hamburg, Germany. E-Mail: saibal@cssscal.org
Poonam Mehra, IGIDR, Mumbai, and
University of Hamburg, Germany.
E-Mail:
poonam_mehra@rediffmail.com
COMMUNICATIONS FOR DEBATE AND
RESEARCH / 1
The Limit Pricing Theory and
Capacity Precommitment
A Note Kazuhiro Ohnishi
The limit pricing theory is a famous
one on entry deterrence. A single
established firm or a coordinated
cartel competes against a single
potential entrant. The limit pricing
theory
assumes that the established firm
can continue to produce at its
pre-entry output level
regardless of the potential
entrant’s actions. However, the
theory is flawed because this
assumption is unrealistic and only
an empty threat. That is, it is
possible to judge the success of the
established firm’s strategic
behaviour only if the decisions that
the established firm made prior to
entry cause changes in the
post-entry competing environment. It
is well known that the theory
becomes a credible threat with the
introduction of a commitment to
capacity. Therefore, this note shows
clearly that a commitment to
capacity compensates for the defects
in the theory with the precise
figure.
Kazuhiro Ohnishi is at the Osaka
University and Institute for Basic
Economic Science. Email:
ohnishi@e.people.or.jp
COMMUNICATIONS FOR DEBATE AND
RESEARCH / 2
Testing Weak Form Efficiency
Firm Level Analysis at the National
Stock Exchange Khan Masood Ahmad, Shahid Ashraf
and Shahid Ahmed
This paper attempts to seek evidence
for the weak form of efficient
market hypotheses using the daily
data on returns for stock prices of
24 listed firms on the Indian stock
market during the period 2000-2004.
These 24 firms have a major presence
in terms of weights in the indices,
trading volumes and market
capitalisation. The Jarque-Bera
test, unit root test,
autocorrelation function, Ljung-Box
(Q) statistics and Kolmogorov-Smirnov
(K-S) test have been used for the
analysis. The distributions of the
underlying variables are not normal
for all the firms through the
Jarque-Bera test and for most of the
firms through the K-S test. The Q
statistics which tests the joint
null hypothesis of zero
autocorrelation, shows that the
number of firms, which are
inefficient, comes down from 13
firms in the first period to 6 firms
in the second period. The results
vary across tests and sub periods
indicating that stock prices for
most of the firms do not support the
hypothesis of independence and
randomness. The important firms,
which have significant
autocorrelation in both periods, are
ONGC, Infosys, SAIL and Grasim. The
existence of informational
inefficiency is an incentive for
investors to pick up under valued
stocks on the Indian stock market.
Khan Masood Ahmad, Professor,
Department of Economics, Jamia
Millia Islamia (Central University),
New Delhi, India. Email:
mkhan_jmi@yahoo.com
Shahid Ashraf, Professor, Department
of Economics, Jamia Millia Islamia
(Central University), New Delhi,
India. Email:
sashraf2@rediffmail.com.
Shahid Ahmed, an Economist with the
UNCTAD India Programme, New Delhi,
India. Email:
shah_ec_jmi@yahoo.co.in.
BOOK REVIEW
/1
Allocative Efficiency of Rice
Farmers: Study of West Bengal
Nursadh Ali
(Concept Publishing Company, New
Delhi, 2007 ,pp.209)
Reviewed by M.S. Kullur, Professor
Economics, Gulbarga University,
Gulbarga, Karanataka
BOOK
REVIEW/2
Economics in Arthasatra
Rajkumar Sen and Ratan Lal Basu
(Deep and Deep Publication Pvt Ltd,
New Delhi, 2006, Price: Rs.650, pp x
+ 310)
Reviewed by Dr V.R. Panchamukhi,
Former Chairman, Indian Council of
Social Science Research, New Delhi
