Journal Article Domestic Policies and Foreign Resource Requirements: A Reply Get access M. G. Quibria M. G. Quibria Nuffield College, Oxford, and, University of Dacca, Bangladesh Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 99, Issue 1, February 1984, Pages 207–209, https://doi.org/10.2307/1885729 Published: 01 February 1984

The paper argues that appropriate domestic policies — more particularly, the real wage policy that is stressed here — can reduce the extent of foreign dependence of a country. It shows that foreign aid sufficient to achieve a given level of per capita domestic income is positively related to the real wages in an LDC with unemployment. The paper also links the level of real wages and the rate of technical change to the possibilities for self-sufficiency (from foreign aid) in the long run.

In a recent article A. Y. C. Koo [1973] sought to advance a “more general theory of land tenancy” and draw implications for land reform. While his contention that different models of share-tenancy (with conflicting efficiency properties) have different implications for land reform is correct, unfortunately, his mathematical analysis of oligopoly land market is both misleading and erroneous. It is misleading in the sense that it is not (as a close look at the model would verify) an oligopoly model of share-rental determination, which it purports to be. Thus, on this account, it is not really a critique of either Bardhan and Srinivasan [1971] or of Cheung [1974], which it claims to be.1 Rather it is an oligopoly model of determination of fixed-rental in the landlease market. If so, it loses much of its importance, at least empirically, since the fixed-rental system is of limited empirical significance. And the efficiency arguments for and against the share-rental lease, which he advances in the beginning, and also the land-reform question of reducing the share-rental become irrelevant for the analysis that follows. Second, even if we consider his mathematical argument on land renting on its own grounds, it is unfortunately marred by a mathematical flaw that prevails throughout his analysis and leads him to counterintuitive results. Section I gives a restatement of the Koo model and points to its errors and the resulting counterintuitive results. Section II reformulates the model in correct terms and shows how intuitively and empirically plausible results may be derived therefrom.