Is the Kaldorian model on industrial and General productivity in an economy applicable in understanding economic development in LDC's like Zambia?I don't know anything about Zambia.
As I understand it, Kaldor developed that model for the world as a whole. Thirlwall applied that model to a Less Developed Country in a 1986 paper.
In the model, labor is originally not scarce - there is disguised unemployment in agriculture. Industrial production, unlike in agriculture, experiences increasing returns. If wages are low in agriculture, there would be more savings to finance expansion of industry. But there might not be the demand for industrial products. Demand for industrial products is increased by a relatively low price of industrial products, as compared to the price of agricultural products. Demand for industrial commodities might also be for exports. A dynamic equilibirum arises in the model in which a steady state of growth is achieved and the terms of trade between agriculture and industry are specified. The model is supposed to capture certain stylized facts and exhibit a certain complementarity between agriculture and industry. It is also supposed suggest different possibilities, such as the possibility of economic development from favorable terms of trade for agriculture at an initial stage and export-oriented growth at a later stage.
Later essays in Thirlwall's book in which his essays was reprinted treat Africa, particularly the Sudan. This empirical work treats some other considerations than those included in the mathematical outlined verbally above. I don't know current thinking about these issues, although I question the thinking that had been dominant in the Internation Monetary Fund, that is, the "Washington consensus".
- A. P. Thirlwall (1986) "A General Model of Growth and Development on Kaldorian Lines", Oxford Economic Papers (July) (Reprinted in The Economics of Growth and Development: Selected Essays of A. P. Thirlwall, Edward Elgar (1995))
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