Kindleberger, Charles P., Europe and the Dollar, Cambridge, Mass., U.S.A., The M.I.T. Press, 1966, 297 pp., $7.50; Triffin, Robert, The World Money Maze—National Currencies in International Payments, New Haven, Conn., U.S.A., Yale University Press, 1966, 585 pp., $12.50; Aliber, Robert Z., The Future of the Dollar as an International Currency, New York, U.S.A., Frederick A. Praeger, Publishers, 1966, 169 pp., $6.00.
Professor kindleberger has been a vigorous commentator on international economic developments for over two decades. He has invariably shown considerable insight into the working of the international economic system. His frequently unorthodox views have generally been well-argued and based on sound empirical foundations. It is, therefore, a pleasure to read this collection of 17 papers, many of which were unavailable to the general reader.
Most of the papers are concerned with the international monetary system as it has developed over the postwar period. The author has made no attempt to modify them in the light of subsequent developments. Therefore, they throw light as much on the development of the author’s views as on the changing nature of the problems with which he is concerned. Of the 17 papers, 11 have been written since 1958 and thus are concerned with problems connected with the gold outflow from from the United States and the increasing availability of the dollar. These papers will be of special interest to those concerned with the current problems of the international monetary system, since they provide in a sense the background to the views that Kindleberger has recently been expressing on the role of the dollar as an international currency.
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Professor Triffin, like Kindleberger, has made many outstanding contributions to the debate on the working of the international monetary system, and the views of the two have been often opposed to each other. In The World Money Maze, Triffin also has brought together a number of his less accessible writings in this field. The papers, notes, and memoranda included in the volume cover a wide variety of subjects. The recurrent sterling crises, the continuing dollar problem, the discussions on the reform of the international monetary system, and the problems connected with regional monetary cooperation in Europe, Latin America, and Africa figure prominently.
Unlike Kindleberger’s book, which consists primarily of finished papers, The World Money Maze contains a larger number of fragments in addition to longer papers. Although the author has grouped them rather successfully into chapters dealing with different subjects or periods, with the chapters being themselves arranged logically into three parts, this is likely to be found distracting by readers. However, the value of the book lies primarily in the light it throws on the details of various controversies in different fields and on the contributions that Triffin made to them at the relevant time. From that point of view, the inclusion of these fragments in this volume clearly serves a very useful purpose. It follows that the book is likely to be used as a sort of reference work, with particular sections being studied at any one time. The volume includes a useful bibliography of Triffin’s extensive writings since 1935.
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Problems arising from the reserve currency role of the dollar also form the subject of Professor Aliber’s The Future of the Dollar. However, Aliber is explicitly concerned with these problems in terms of their implications for the United States. He focuses attention on the conflicts between the domestic and international objectives, and between different international objectives, of U.S. policy. Changing circumstances tend to change the nature of these conflicts. The author suggests, therefore, that in resolving these conflicts, unilateral approaches may—in some circumstances—do more than the multilateral approach to promote the U.S. interest. An assessment of the costs and benefits of the U.S. role as a reserve currency in Chapter 3 forms the fulcrum of the book. The author’s analysis of different proposals for international monetary reform and his examination of the various measures taken to deal with the U.S. balance of payments are of special interest.
Friedmann, John, Venezuela: From Doctrine to Dialogue, 1965, xiii + 86 pp., $2.95; Ash-ford, Douglas Elliott, Morocco-Tunisia: Politics and Planning, 1965, xx + 65 pp., $2.75; Burke, Fred G., Tanganyika: Preplanning, 1965, xxix + 108 pp., $3.25; Shafer, Robert Jones, Mexico: Mutual Adjustment Planning, 1966, xxiv + 214 pp., $4.25; (National Planning Series: 1-4) Syracuse University Press, Syracuse, N.Y., U.S.A.
These four paperbacks are the first of the National Planning Series put out by the Syracuse University Press. The authors—trained in disciplines other than economics—have produced informative sketches of various national planning processes. Later volumes will explore the complexities of planning for growth and stability in the developed countries.
The first volume in the series, John Fried-mann’s Venezuela: From Doctrine to Dialogue, analyzes the historical evolution of CORDI-PLAN, which is Venezuela’s central planning agency. Planning here, as in many other developing countries, resulted from a crisis—the collapse of the Jimenez regime. From this background Friedmann has developed a concept of planning as a continuous “dialogue” between various conflicting interests. Planning, to him, thus becomes a “summing up of current knowledge, expectations and desirabilities.” Important international implications of Venezuela’s development experience are also stressed, along with an analysis of the dynamics of regional planning—one of the leading political issues.
Douglas Ashford’s Morocco-Tunisia: Politics and Planning is a comparative study of the political and social aspects of economic planning in the two North African countries. Ash-ford’s analysis clearly identifies the importance of political commitment for planning and the leading role government plays in creating a climate for development. Tunisia’s planning experience, in contrast to that of Morocco, has overcome many of the inherent political and administrative obstacles which confront most developing countries. “As a result,” writes Ashford, “the Tunisian Government has accrued distinct material advantages while opening the way for increasingly broad participation in the development process.”
In Tanganyika: Preplanning, Fred Burke describes an entirely different political role for planning, a role common to most sub-Sahara states. Here plans have become symbolic in purpose. They act as unifying agents and provide expression for such emotional themes as national aspiration and identification. Burke points out that what is currently under way in Tanzania “may be precisely termed ‘nation-building’; its development plan may be regarded as state planning for the purposes of constructing a ‘nation’.”
Robert Shafer’s Mexico: Mutual Adjustment Planning is an evaluation of Mexico’s changing development institutions and a detailed analysis of sector and regional planning. Considering that Mexico’s average annual growth of production for 1950-62 was between 5 and 6 per cent, and the fact that Mexico does not have a national development plan, the question arises as to what the rate of growth might have been if the Mexican authorities had prepared a realistic national plan. The extensive “Note on Sources,” found at the end of the text, forms a useful guide to further research, and statistical tables and appendices make the study even more comprehensive.
Although the paperback series is high-priced, students of development politics and public administration will find the volumes of value. Economists and planners, on the other hand, will be somewhat disappointed with the lack of economic theory expressed in these first four books.
Jeffrey H. Dennis
Sovani, N.V., Urbanization and Urban India, New York, N.Y., U.S.A., Asia Publishing House, 1966, 160 pp., $9.50.
N. v. sovani, Professor of Economics at Poona University, has explored in this series of papers some of the issues of urbanization. Chief of these is the “push-pull” debate. Is it the “pull” from the cities in terms of higher wages and better living conditions that results in immigration into the city? Or is it the “push” from the countryside in terms of underemployment and poverty?
Professor Sovani offers some tentative arguments for the “push” side. In the West, urbanization and industrialization generally go together; in Asia this is much less true. Given the Western norm of industrialization, Professor Sovani shows how the available occupational data from the cities support the “push” thesis. Rather than being assimilated into what Professor Sovani calls the autochthonous community, rural immigrants persist, despite the change in their environment, in their rural habits as far as this is possible. They continue their low-productivity handicrafts. They bring with them the class structure of the village and the extended-family way of life. What is perhaps most important of all, there seems to be little evidence to suggest that high rural fertility declines with immigration. Country people, in short, go on being country people for a long time after they have moved into the city.
Foreign Tax Policies and Economic Growth: Report of the National Bureau of Economic Research and the Brookings Institution, New York, N.Y., U.S.A., National Bureau of Economic Research (distributed by Columbia University Press, New York and London), 1966, xii + 482 pp., $10.00.
Anyone interested in the application of the new fiscal theories to economic growth should study the record of fiscal experimentation presented in this conference volume. It grew out of U.S. interest in the possible effects of various tax measures in explaining the more rapid postwar growth of several European countries and Japan, and will serve for many years as a reference work in comparative fiscal analysis.
The conference centered on the postwar experience in France, Italy, Japan, the Netherlands, Sweden, the United Kingdom, and Germany, as interpreted in studies by experts from each of these countries. Each paper presents essential data on the economic and fiscal structure of the country it covers, and this provides a basis for statistical and theoretical analysis of its tax policies and their possible effects on growth. An excellent summary of the conclusions of the conference is included.
The volume is illuminating not only as a record of fiscal control in more advanced countries, but also as evidence of the limited knowledge with which it is practiced. Indeed, it is surprising to learn that some measures with important economic consequences were enacted not in order to achieve these results but for quite different reasons. This is true, for example, of Sweden’s “free depreciation” policy, later repealed, which was intended to eliminate disputes over depreciation allowances. One suspects that France’s tax on value added, now hailed for its incentive effects, was calculated less to promote growth than to eliminate the inequitable features of France’s turnover tax, and to reduce tax evasion.
In general, the attention of most countries was focused on measures to stimulate both new investment and savings. This was accomplished by different means: acceleration of depreciation allowances, including initial allowances, shorter depreciable lives, and investment allowances; tax exemption of earnings in specified industries; and preferential tax rates on reinvested earnings of corporations. There was rather general agreement on the effectiveness of accelerated depreciation in providing the funds for new investment.
Although several countries provide tax benefits to stimulate personal savings (through special deposits, life insurance, and pension contributions), serious doubts were expressed whether the cost in revenues was warranted by any increase in savings realized. Some believed that only the form of savings—not the amount—was altered.
Attention was given to the effect of indirect taxes rather than direct taxes in stimulating savings and investment, but there was no clear evidence of this in the experience of the different countries. The French experts, however, attributed great significance to the adoption in 1954 of its tax on value added (TVA) in stimulating new investment, because it provided for tax rebates on purchases of equipment that could be offset against current tax payments. It also facilitated rebates on exports which gave a 25 per cent cost advantage.
Other matters that came in for some attention were the tax treatment of capital gains and research expenditures, the effects of high tax rates on investment and work incentives, etc. But the economic effects of these measures are no less undeterminable.
This important volume confirms the view that in the extremely complex economies of highly developed countries the relationship between tax policies and economic growth is at best tenuous. It is, of course, impossible to isolate the effects of taxation from other basic government policies and economic conditions of the country, such as incomes policy (the Netherlands), high government investment (Sweden and the Netherlands), government loans (France and Germany), and large unemployed labor reserves (Italy), as well as other factors. This valuable study should stimulate further research into these complex relationships, thus providing answers to some of the challenging questions raised.
George E. Lent
Lieftinck, Pieter, External Debt and Debt-Bearing Capacity of Developing Countries, International Finance Section, Department of Economics, Princeton University, Princeton, N.J., U.S.A., 1966, 28 pp., $0.25.
Dr. lieftinck argues that industrialized countries must take better account of the requirements of the developing countries to ensure sound financing and increased creditworthiness. He is Executive Director for the Netherlands, Yugoslavia, Israel, and Cyprus of both the World Bank and the Fund.
Onslow, Cranley, (Ed.), Asian Economic Development, London, United Kingdom, Weidenfeld and Nicolson, 1965, xiii + 243 pp., 36s.
Six asian economists examine the postwar achievements—and, occasionally, the failures—of the economies of their own countries. U Tun Wai, whose essay on Burma begins the book, is Advisor in the African Department of the International Monetary Fund. The editor, Cranley Onslow, concludes with a comparative analysis of the countries covered (Burma, Ceylon, India, Malaysia, Pakistan, and Thailand).