Suppose a developing country has the choice of importing cars (I), or producing them at home in a subsidiary (S) of a transnational company, or in a domestic firm under a licensing (L) contract from a transnational which ties the import of components from the latter. If the criterion of national benefit is given by consumer surplus under I or S and by consumer surplus plus the profits of the domestic firm under L, we compare the benefits from the alternative regimes I, S, or L under different market structure assumptions. In most cases the regime S seems to dominate. The conclusions are then modified by pointing to factors excluded from the basic model.

In much of the theoretical literature on development the standard assumption is that of a constant wage in agriculture. In this paper we cite some evidence, obtained in our detailed analysis of a recent large-scale survey of rural labor households by the National Sample Survey in India, of how the existing theories of wage determination by biological or institutional factors leave much to be explained in terms of the observed data. We then proceed to construct a modified theoretical framework which generate comparative-static hypotheses which seem to be consistent with many of the stylized facts.

This essay tries to bring out some of the complexities that are overlooked in the usual treatment of the state in the institutional economics literature and supplement the latter with a discussion of some alternative approaches to looking at the possible developmental role of the state. It refers to a broader range of development goals (including the structural transformation of the economy) and focuses on problems like the resolution of coordination failures and collective-action problems, the conflicting issues of commitment and accountability and the need for balancing the trade-offs they generate, some ingredients of state capacity and political coalition building usually missed in the literature, the possible importance of rent sharing in a political equilibrium, the advantages and problems of political centralization and decentralization, and the multidimensionality of state functions that may not be addressed by markets or private firms.

I. Introduction, 312. — II. The model and uniqueness of equilibrium, 313. — III. Comparative dynamics, 319.

The analytical literature on employment, unemployment, and wage determination in poor agrarian economies is large, albeit inconclusive. Empirical work in this area is comparatively scanty. For the most part it relates either to the question of surplus labor in peasant agriculture (and other unorganized activities) or to that of labor use and productivity in studies of production functions fitted to farm management data. There have been few systematic empirical studies of labor supply and labor market participation behavior of peasant households. The usual farm management data are not good enough for this purpose, particularly because they exclude the substantial class of landless laborers who do not have a farm. In this paper I have used detailed data collected from nearly 4,900 rural households (including landless laborers, farmers, and nonagricultural workers) in West Bengal in what may be among the first econometric attempts to estimate labor supply functions' in peasant agriculture. The data set is part of a very large-scale employment and unemployment survey of households carried out by the National Sample Survey Organization in India for the oneyear period of October 1972--September 1973. In Section I the nature of the data is described and the results presented on labor supply behavior. My evidence seems to be against the standard horizontal supply curve of labor assumed in a large part of the development literature. In Section II the factors influencing labor participation rates for rural women are analyzed. Section III contains an analysis of the wage rates quoted as acceptable by different groups of respondents. Such answers came in response to hypothetical questions on wage employment to give us some idea of the supply prices of labor.

The theoretical literature on terms of foreign borrowing is rather narrow in the range of issues analyzed. Much of the recent literature is on an elaboration of the standard tariff argument to the case where services of capital are internationally purchased.' It is now well-known that a borrowing country, if it is an important borrower in the international capital market, may gain by restricting its international borrowing; depending on the relevant elasticities, one can easily work out the optimum terms (or the interest rate) at which borrowing should be done so that the monopoly power (strictly, monopsony power in the purchase of capital services) in the international capital market is fully utilized. For many borrowing countries, particularly in the underdeveloped world, the relevance of this analysis is, however, limited. These countries, taken individually, are often small borrowers in the international capital market and the task of setting on the national level the optimum terms of borrowing on the basis of their monopsony or oligopsony power is not particularly relevant. But a more significant limitation is that the whole analysis is static and ignores important time dimensions involved in problems of capital borrowing. The present paper concentrates on one such dimension. The terms of a foreign loan involve not merely the interest rate but also a maturity period by which time the loan is to be paid back. In the real world a borrowing country is often confronted with a choice among alternative loan packages with varying rates of interest and lengths -of maturity period. From the point of view of the long-run benefits of the borrowing country, how should one choose between a loan with, say, 5 percent rate of interest and a maturity period of 20 years and another loan with a higher, say, 7 percent rate of interest but a longer maturity period of, say, 30 years? Or, to put it in other words, in the long run is a rise in the interest rate on the foreign loan by a certain percentage costlier than a given shortening of the maturity period? This is an important practical problem in loan negotiations, and the existing theoretical literature on foreign borrowing does not throw much light on it.2 The present paper tries to answer the problem in terms of a verv simple dynamic model. I take a Harrod-Domar growth model with its drastically simplifying assumptions of a constant capital-output ratio and the ratio of savings to national income. There is only one commodity, and problems of trade with incomplete specialization are ignored. The for ign loan under consideration is a oncefor-all addition to the capital stock of the country. For simplification again, all capital is assumed to last forever, but the foreign loan has to be amortized in equal annual installments. I also ignore the gestation lag between availability of capital and its yield of output. National income, Y, is given by

In this paper we show how tied labor, contrary to its common characterization as a feudal relic and as a symptom of economic stagnation, may actually be strengthened by capitalist agricultural development. We construct a simple two-period theoretical model of a two-tiered labor market to show how the proportional importance of voluntary labor-tying contracts may increase with yield-increasing improvements and with a tightening of the labor market. We then provide in support of these hypotheses some general historical as well as more detailed econometric evidence from a variety of cross-sectional data in rural India.

[Different policies regarding allocation of foreign exchange to sectors producing grains, tractors, and machine tools give rise to different time profiles of consumption on account of irreversibility of investment. In this paper we try to find the best way this allocation may be done in order to optimize a social objective function over a finite and infinite planning horizon.]