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Distribution and Growth with an Infrastructure Constraint

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  • Rao, J Mohan

Abstract

This paper develops a two-sector Kaleckian model with growth constrained by agricultural (infrastructure) supply and industrial investment demand. The agricultural price is demand-determined while the industrial price is set as a markup on costs. The distribution of investable surplus between the private and government sectors is a key influence on growth and distribution. Insufficient public savings limits infrastructure supply, which helps keep agricultural rents high. Changes in industrial markup or tax rates cannot satisfy conflicting demands of renters, wage stability, and growth. If fiscal or agrarian reforms become feasible, simultaneous increases in employment, real wages, and growth become attainable. (c) 1993 Academic Press, Inc. Copyright 1993 by Oxford University Press.

Suggested Citation

  • Rao, J Mohan, 1993. "Distribution and Growth with an Infrastructure Constraint," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 17(4), pages 369-389, December.
    • Handle: RePEc:oup:cambje:v:17:y:1993:i:4:p:369-89
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    Cited by:

    1. Rabindra Nath Chakraborty, 2003. "Short‐ and Long‐Run Effects of Environmental Degradation: A Structuralist Approach," Metroeconomica, Wiley Blackwell, vol. 54(2‐3), pages 263-300, May.
    2. de Souza, Joao Paulo A., 2015. "Evidence of growth complementarity between agriculture and industry in developing countries," Structural Change and Economic Dynamics, Elsevier, vol. 34(C), pages 1-18.
    3. de Souza, Joao Paulo A., 2014. "Growth Complementarity Between Agriculture and Industry: Evidence from a Panel of Developing Countries," UMASS Amherst Economics Working Papers 2014-11, University of Massachusetts Amherst, Department of Economics.
    4. Leonardo V. Vera, 2005. "Macroeconomic Adjustment Under An External And Fiscal Constraint: A Fix‐Price/Flex‐Price Approach," Metroeconomica, Wiley Blackwell, vol. 56(1), pages 126-156, February.
    5. Murat Arsel & Servaas Storm, 2015. "Forum 2015," Development and Change, International Institute of Social Studies, vol. 46(4), pages 666-699, July.
    6. Joao Paulo A. de Souza, 2017. "Biased Technical Change in Agriculture and Industrial Growth," Metroeconomica, Wiley Blackwell, vol. 68(3), pages 549-583, July.
    7. Deb, Surajit, 2004. "Terms of Trade and Investment Behaviour in Indian Agriculture: A Cointegration Analysis," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 59(2), pages 1-22.

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