Finance & Development, December 1989

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    The adaptive economy; adjustment policies in low-income countries

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    Javed Ansari.

    China's Reform in the Next Ten Years. Yilin Press. Macro Federalism And Local Finance. A lot of wisdom transpires in this chapter. I was particularly intrigued with the argument that there has been a high correlation between the level of wages of tax inspectors and tax evasion in India. It was also interesting to see the argument presented by Kaldor in favor of a tax on property.

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    He argued that rent-seeking that is, the opportunity of deriving personal advantage from certain government policies has made some people rich. Therefore, property tax can be seen as a tax on accumulated rents. Chapters 10 and 11 deal with two specific fiscal proposals: a marginal employment subsidy for India, and a case for the abolition of the individual income tax.

    In both cases, the author presents solid arguments, but this reviewer was still left somewhat unconvinced by these proposals. The final section deals specifically with Indian budgets. This series of 14 papers represents the first book-length effort to assess critically the design and impact of adjustment programs in agriculture. Such programs are difficult to design and implement because they require a combination of pricing and public investment reforms, and a willingness on the part of governments to sustain the adjustment effort over several years.

    As a result, as the book shows, the track record of agricultural adjustment policies during the s has been mixed. A growing body of evidence now available on government intervention in developing countries proves that the agricultural sector has been taxed by price and investment policies, both at the sectoral and at the macroeconomic level. The main objectives of adjustment programs are to correct this bias, by shifting resources into tradable agriculture, and to reduce poverty in rural areas where the vast majority of the poor are concentrated.

    The interaction of price and investment policies, which is at the heart of adjustment programs, is brilliantly analyzed in a paper by Ajay Chhibber. Adjustment programs must therefore, until the improved policy environment yields long-run benefits, include measures to compensate specific farmers for short-term losses of incomes stemming from higher input prices and higher food prices.

    Achieving multiple objectives and simultaneously redefining the instruments of government intervention is the challenge of these agricultural adjustment programs. Simon Commander argues convincingly in his review of the African experience that the mixed results obtained by these programs are due to the fact that donors have mostly concentrated on reforming price and trade policies—which were heavily distorted—but that they have failed to address the more complex economic and political issues of sequencing of reforms and underplayed the role of investment. The book is equally divided into articles by distinguished economists such as Omotunde Johnson, Paul Streeten, and Per Pinstrup-Andersen reviewing the main theoretical and empirical issues and country studies Ghana, Zambia, Senegal, Morocco, Colombia, and Brazil.

    One regret is that the Asian agricultural adjustment experience is not reviewed. Its coverage would have enabled the reader to compare the performance of agriculture in Sub-Saharan Africa and Latin America with that of a continent where rapid technological change and outward-oriented trade policies have induced major structural changes in the recent past.

    Aside from that omission, this book provides a thorough and balanced discussion of complex issues. It is strongly recommended to all scholars and practitioners of agricultural development. User Account. IMF eLibrary. Advanced search Help. Kitts and Nevis St. Lucia St. Public Health Health Policy.

    Nordic Council of Ministers. Print Cite Citation Alert off. Get Code Buy. External Relations Dept. This lively quarterly magazine brings you in-depth analyses of these and other subjects by the IMF's own staff as well as by prominent international experts. Articles are written for lay readers who want to enrich their understanding of the workings of the global economy and the policies and activities of the IMF. Tobias Asser W. Crisis and Reform. Rohinton P. Spence Michael; Leipziger Danny.

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    Economics: An A-Z Guide. Matthew Bishop. Fiscal Federalism. George Anderson. Bernardin Akitoby. Politics of Public Money, Second Edition. David A. Catriona Miss Purfield.