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Hence, the issue boils down to how to raise investments in the economy.
1950 to 1980
Public Sector as the preferred vehicle Multilateral Development Banks
1980 to 2000
Bringing Private Sector back in
2000 onwards
Public Private Partnerships
Our focus on post world war II years or the post colonial era
Entail Keynesian Policy prescription- dig holes and fill them up because that boosts aggregate demand. It is immaterial how the Government finances its expenditure.
Market
In case of there being some monopoly industries, the monopoly industries will produce an output which is smaller than that of a like competitive industry, therefore, given total employment less resources would go in monopoly and more in competitive industry that what would be the case if all industries were competitive. However, if all industries are monopolies then this result does not hold, which is what theory of second best is all about. Some competition may conceivably be worse than none and monopolies in all industries may conceivably be better than monopoly in some industries.
Externalities
Externalities arise where there is a difference between private and social costs or private and social benefits. e.g.. A steel plant dumping its waste in the river which affects the catch of the fisherman.
Public Goods
The consumption of Public Goods is characterized by Non-rivalry (no additional cost for use by an additional consumer e.g. highway) Non-exclusion (not possible to exclude anyone from consumption e.g. Law and order) The consequence is free rider problem, whereby one understates the value of the good so that one can enjoy the benefit without having to pay for it.
Convergence is being noticed as Financial Service Providers embrace the Universal Banking Model. Developing Countries did not have deep capital markets. The policy, therefore, was to have a directed regime of priority sector based financing by banks and long term project financing by development financial institutions (DFIs).
1992-93 to 1996-97
1997-98 to 2000-01
Equity
Borrowing 36.2 Debentrs Banks FIs Others 10.3 12.7 8.4 22.5
Public Sector 40 33 12 15