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Published online by Cambridge University Press: 11 November 2008
Many less-developed countries are richly endowed with natural resources but, due to their lack of domestic savings, must depend on foreign capital for the exploitation of these resources. The industries which are established usually produce primary products and are geared to export markets, since the host countries, particularly the ‘small’ ones, lack a broad domestic market. Thus for many L.D.C.s the relevant question is how the export-oriented primary products can make the maximum contribution to broadly-based economic development.1 Countries which fail to produce domestic capital goods are said to have incomplete economic systems, but the export industry, by making available foreign exchange for capital goods imports, can be regarded as a quasi-capital goods sector. The same argument holds more generally for manufactures or, indeed, for goods in which a country has a comparative disadvantage. As Henry Wallich puts it in his study of sugar in the Cuban economy, exports and imports may assume the roles played by investment and saving in developed countries, with exports being the main generating force in national income.2
Page 589 note 1 For a comprehensive discussion of this issue, see Mikesell, Raymond F., ‘The Contribution of Petroleum and Mineral Resources to Economic Development’, in Mikesell, (ed.), Foreign Investment in the Petroleum and Mineral Industries (Baltimore, 1971), pp. 3–28.Google Scholar
Page 589 note 2 See Wallich, Henry C., Monetary Problems of an Export Economy: the Cuban experience, 1914–1947 (Cambridge, Mass., 1950), p. 16.CrossRefGoogle Scholar
Page 589 note 3 Cf Myrdal, Gunnar, Rich Lands and Poor (New York, 1957);Google ScholarSinger, W. H., ‘The Distribution of Gains between Investing and Borrowing Countries’, in American Economic Review (Providence, R. I.), 40, 05 1950, pp. 473–85;Google Scholar and Prebisch, Raul, Towards a New Trade Policy for Development (New York, 1964).Google Scholar
Page 590 note 1 Cf. Markos J. Mamalakis, ‘Contribution of Copper to Chilean Economic Development’, in Mikesell, Op. Cit. pp. 387–420; and Reynolds, Clark W., ‘Development Problems of an Export Economy’, in Mamalakis and Reynolds (eds.), Essays on the Chilean Economy (Homewood, Ill., 1965), pp. 203–357, especially pp. 273–8.Google Scholar
Page 591 note 1 If adequate data are available, an input-output model may be used in a programming framework to identify the binding factor constraint(s). The marginal output associated with a marginal unit of the binding factor is its opportunity cost, while the non-binding factors may be said to have a zero opportunity cost.
Page 591 note 2 See Pearson, Scott R., Petroleum and the Nigerian Economy (Stanford, 1970), pp. 205–7.Google Scholar
Page 592 note 1 If part of the industry were owned or financed by nationals, part of the profits and interest would also figure in the returned-value.
Page 593 note 1 The rest of the rubber produced in the Liberian sector is marketed through a firm engaged only in processing.
Page 594 note 1 Sources: Firestone Plantations Company, B. F. Goodrich, Inc., Liberian Agricultural Company, Salala Rubber Corporation, African Fruit Company, and the Liberia Company – data submitted to the Ministry of Planning and Economic Affairs, Monrovia.
Page 594 note 2 Sources: Table I; Quarterly Statistical Bulletin of Liberia (Monrovia), 03 1972;Google Scholar and Liberia. Journal of Commerce, Industrj and Transportion (Monrovia), 12 1971.Google Scholar
Page 594 note 3 Profits of a foreign-owned industry are often regarded as lost to the domestic economy. However, if gross returns on investment are significantly higher than the marginal cost of investible funds, the surplus above the normal yield on investment in the world market – plus a reasonable premium for risk – can be taxed, and is thus a potential contributor returned-value.
Page 595 note 1 Sources: Table 2; Pearson, op. cit. and ‘Notes on the Contribution of Exports to Economic Development’, Washington, D.C., 1973.Google Scholar
Page 595 note 2 Cf. McCourtie, W. D., ‘Traditional Agriculture in Liberia’, University of Liberia, Monrovia, 1971.Google Scholar
Page 595 note 3 Linkages do not necessarily imply benefits if there are negative externalities.
Page 596 note 1 See Pearson, op. cit. pp. 46–7.
Page 596 note 2 The treatment of wages and salaries to non-Liberians causes problems. In Liberian national income estimates for 2964–68, all expatriate salaries were included in factor payments abroad and considered as outflows. In 1969, this approach was changed and it was assumed, on the basis of limited interviews, that 15 per cent of expatriate salaries were spent in Liberia. Equations (8) and (9) could easily be modified to take this into account.
Page 597 note 1 Sources: Economic Survey of Liberia (Monrovia), 1970;Google Scholar and Quarterly Statistical Bulletin of Liberia, March 1972.
Page 597 note 2 Sources: Concessions in Liberia.
Page 598 note 1 The Monrovia consumer price index may not be very relevant for plantation workers, since the ‘basket’ of goods is likely to be quite different. However, it is the only index available. It might be more useful to look at the food price index rather than the overall index; this rose by 12 per cent in the period considered.
Page 599 note 1 Jonathan Levin presents such an example in the case of the guano industry in Peru; The Export Economies (Cambridge, Mass., 1960), pp. 27–123.Google Scholar
Page 599 note 2 Hunt, Shane, ‘Comments on Resource Transfer and Allocation’, in Rannis, Gustav (ed.), Government and Economic Development (New Haven, 1971), pp. 252–53.Google Scholar