Structuralist macroeconomics has emerged recently as the only viable theoretical alternative for economists and practitioners in developing countries. Lance Taylor's innovative work represents a landmark in this field. It codifies a new generation of structuralist macroeconomic models that incorporate the economic power relationships of key institutions and groups, integrates both finance and real macroeconomics, and covers a diverse range of experience in the developing world over the past three decades.
In an introduction Taylor explains his methodology, describes assumptions underlying the models used, and reviews theories that relate economic growth and the role of financial assets. He then takes up basic structuralist models of a closed economy and moves on to consider the open economy cases. He incorporates the latest developments in the field (inflation, financial crisis, exchange rate management, increasing returns, and the like) in a treatment that departs substantially from economic orthodoxy.
Taylor first addresses the question of how to specify .closure" or define the causal structure of macro models. He also considers how income redistribution influences growth and output and how income redistribution interacts with inflation. Next, an investment-driven non-full employment growth model draws on ideas introduced earlier to illustrate how different sorts of macroeconomic policies affect short-run adjustment and growth prospects over time. Taylor then turns to the problems proposed by economic openness in a stylized semi-industrialized country, starting with international trade. A fix-price/flex-price model is developed, and additional models demonstrate cases of policy relevance as well as interactions between class conflict and growth.
These case studies by an international roster of development economists provide valuable insights into the difficulty of establishing answers to the fundamental question of why nations grow at different rates, with inequitable patterns of wealth and income distribution.The case studies of Colombia, Chile, Thailand, Malaysia, Sri Lanka, Tanzania, Uganda, the Philippines, Mexico, Nigeria, Zimbabwe, Argentina, Brazil, Nicaragua, Zambia, and Senegal look at each country from the perspective of its own history and institutions, bringing to light factors that condition observed performances.The country studies are framed by introductory chapters by Lance Taylor. Taylor discusses the ideas underlying the cases and summarizes their implications. He sets current policy in a broader context surrounded by initial and boundary conditions on economic reform relevant for the 1990s: prior debates in development economics; the theory of the state; currently popular options for economic stabilization and adjustment; and trade, industrial, and agricultural strategies. Drawing on results of the country studies, Taylor also sets up a novel "3-gap" macroeconomic model to calculate foreign resource requirements for growth.Lance Taylor is Professor of Economics at the Massachusetts Institute of Technology.
Economist Lance Taylor is an advocate of aggressive government management of developing economies. The models described in this book are are easy to set up and manipulate on microcomputers and should dominate the development debate. Taylor's detailed discussion of structuralist COE models is followed by contributions that take up their application in specific countries.This collection of work reviews the results of using CGE models since the early 1970s, with an emphasis on models that encompass broad structural factors such as distribution of income and wealth, land tenancy relationships, foreign trade, production, markets, and control of the means of production that are fundamental to the behavior of developing economies.Chapters explain the macro constraints on India's economic growth and describe Plan Austral and other heterodox shocks, describe the application of a structuralist model to Nicaragua, to Mexican food consumption policies, and to the food market in Colombia. They discuss a model with portfolio choice for Thailand, resource mobilization through administered prices, and conflicting claims and dynamic inflationary mechanisms in India, short-run energyeconomy interactions in Egypt, policy options for growth and the alleviation of poverty in Sri Lanka, currency devaluation in Mexico, and medium-term growth projections for Kuwait. The book concludes with a manual for a structuralist macro model program.Lance Taylor is Professor of Economics at MIT.