16 1 Import substitution industrialization Krueger Schiand Valdes Kym Anderson

16 1 import substitution industrialization krueger

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1. Import substitution-industrialization (Krueger, Schi/and Valdes, Kym Anderson) Direct Intervention in Ag. Transport subsidies Storage subsidies Milling subsidies Mandated farm-retail prices Credit & other input sub. Foreign trade interventions -taxes & quotas on ag exp. -traiffs & sub on substitute crops in consuumption (wheat for rice) -dual exchange rates on ag State enterprise in ag General Economic Effects Decrease returns to resources in exp.sector Push resources into non-traded gds sector Decrease participation in world markets Increase vulnerability to economic shocks Lower level of GDP and rate (spill-over) Bias flow of investment to urban sector Affect HH; poopulation and savings Induce rent seeking & slow inst develop. Capital flight, infl. Fiscal def, for. Debt Health, Morbidity, Mortality Embodied Effects -Unsanitary water & food -Food residues -Local air polution -Sold and hazardous waste Disembodied -Suspended particulate matter -Atomosphericchanges -Regional solid and hazard. waste Indirect Interventions Capital market controls Over-valued exchange rates Inflation Import quotas, tariffs - rest of econ. Energy subsidies Urban bias in public investment -Education -Infrastructure Foreign exchange rationing Rural-Agricultural Sector Depress value of sector sp. Res. Lock HH in ag, low land/labor Increase res. Degradation (farm at extensive margin) Depress capital deepening Slow adoption of new techn. Land tenure problems Depress returns to education Natural Resource Degradation Decrease incentives to husband natural resources (land, forest) High levels of Cox, Nox, SOx; high emmission to GDP ratios Over extract and under price primary resources (metals, fossil fuels) Amenities Loss of scenic areas, such as forests, Loss of wild life and other bio- diversity Urban Industrial Sector Capital intensive plants/industries Concentrated industries -High unit cost, small scale economies -Oligopsonistic behavior harm to ag -Monopolistic behavior in goods market (Over time, space & form) -Antiquated technology Large urban-rural wage differentials Inward Oriented Policies Include Effects On An Economy Include Effects on Environment & Wellbeing Include T.Roe/AP 8701 ENVIRONMENTAL LINKAGES AND ECONOMIC POLICIES IN AN ECONOMY-WIDE CONTEXT 2. Empirical measures of distortions (see ±le: Kym_notes.pdf for formu- las/methods) 17
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