Five sector model of agricultural development, industrialization, and food aid in a dual economy

MOST OF THE STUDY IS DEVOTED TO A THEORETICAL ANALYSIS OF THESE INTERSECTORAL RELATIONSHIPS. A FIVE-SECTOR, OPTIMIZING MODEL OF AN UNDERDEVELOPED, DUAL ECONOMY IS FORMULATED AND ANALYZED EXTENSIVELY. THE FIVE SECTORS INCLUDE SUBSISTENCE OR TRADITIONAL AGRICULTURE, COMMERCIAL AGRICULTURE, MANUFACTURING GOODS PRODUCTION, CAPITAL GOODS PRODUCTION, AND A GOVERNMENT SECTOR. THREE PRODUCTS ARE PRODUCED: AGRICULTURAL GOODS, WHICH ONLY CAN BE CONSUMED, MANUFACTURED GOODS WHICH EITHER CAN BE CONSUMED OR USED AS NONDURABLE FACTORS OF PRODUCTION, AND CAPITAL GOODS WHICH ONLY CAN BE USED AS DURABLE FACTORS OF PRODUCTION. A SUMMARY OF THE STUDY"S CONCLUSIONS IS AS FOLLOWS: 1) IN AN ECONOMY WITH A GIVEN RESOURCE BASE, CAPITAL STOCK, LEVEL OF TECHNOLOGY, AND WAGE-PRICE CONFIGURATION, THE PROPORTION OF THE LABOR FORCE ENGAGED IN SUBSISTENCE EMPLOYMENT WILL INCREASE AS THE SIZE OF THE LABOR FORCE INCREASES. 2) IF THE PRODUCTIVITY IN A PARTICULAR SECTOR INCREASES MORE RAPIDLY THAN IN OTHER SECTORS, THE SOCIAL DESIRABILITY OF INVESTING IN THIS SECTOR WILL INCREASE IF THERE ARE NO ADVERSE EFFECTS ON TERMS OF TRADE. 3) THE EFFECTS OF AN INCREASED POPULATION DEPEND ON THE MAGNITUDE OF THE POPULATION GROWTH RATE RELATIVE TO (A) THE SIZE AND GROWTH RATE OF THE CAPITAL STOCK AND (B) THE RATE OF TECHNOLOGICAL IMPROVEMENT. 4) IF RECIPIENTS OF AID GRANTS DIVERT SOME OF THEIR INCOME PREVIOUSLY SPENT ON FOOD TO NON-FOOD COMMODITIES, A DROP IN FOOD PRICE WILL RESULT. WITH FOOD AID SOLD IN THE MARKET PLACE AND THE REVENUE USED TO HIRE SUBSISTENCE LABOR, THE ECONOMY IS AFFECTED IN THE SAME WAY AS WHEN FOOD IS DISTRIBUTED AS WAGES.