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Created 2/21/1996
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1We owe our interpretation of India to Charles Jones. See Jones [1991] for a more complete discussion. Given the high relative prices of capital goods in India, and the fears that Indian trade policy has become little more than a mechanism for rent-extraction, we find it puzzling that slow Indian growth is at times attributed to the acceptance of development economists' advice to increase investment. It seems to us that slow growth in India over the post-World War II period probably has much to do with policies that have kept a substantial investment effort from generating a healthy rate of investment.

[2]This removes Botswana, Burma, Burundi, Ethiopia, Gambia, Guinea, Lesotho, Malawi, Nepal, Niger, Rwanda, Tanzania, Togo, Uganda, and Zaire from the sample.

[3]Corresponding to an equipment capital share of five and a structures capital share of thirty percent in the production function.

[4]Corresponding to an equipment capital share of 7.5 and a structures capital share of fifty-five percent in the production function.

[5]Similar results are found under the polar opposite assumption that capital-output ratios in 1960 were perfectly correlated with and equal to 1985 capital-output ratios. The difference in the equipment investment coefficient is less than one-sixth of the coefficient's magnitude.

Econ Articles

Created 2/21/1996
This is
Brad De Long's Home Page


Professor of Economics J. Bradford DeLong, 601 Evans
University of California at Berkeley
Berkeley, CA 94720-3880
(510) 643-4027 phone (510) 642-6615 fax
delong@econ.berkeley.edu
http://www.j-bradford-delong.net/