Journal Issue

Book Notices

International Monetary Fund. External Relations Dept.
Published Date:
December 1966
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Book Notices

Joan robinson has referred to economics as a branch of ethics striving to become a science. In striving to become scientific, economists often concern themselves primarily with what is measurable mathematically, an approach which may or may not be consistent with the ethical component of the subject: human welfare. Because of conceptual and statistical difficulties which cannot be resolved, at least for the time being, few economic problems lend themselves to quantification and reliable conclusions. In searching for more dependable data and more refined techniques with which to operate, economists have sometimes left the main highways of economic concern to explore byways with fascinating and alluring vistas which frequently lead nowhere or even to a place in an opposite direction from the one they started for.

Some forget forever that the original purpose of their journey was to seek the headwaters that will provide the greatest good for the greatest number. These “technical economists,” as Galbraith has called them, appear content to spend their professional lives refining technique and applying it to relatively trivial economic problems or to fragments of problems of greater import. Alternatively, at the risk of deviating greatly from reality, they may define economic problems in ways which allow them to apply simplified, static, or linear techniques (for, alas! the state of the art is still primitive) to highly complex, dynamic, and curvilinear relationships. And since the purposes of economists very according to their lights, their approach to the problems of economic development vary greatly.

Until recently, at least, most authors of textbooks available in the field of economic development and development planning opted for the “scientific” rather than the “welfare” approach, although many uneasily attempted to equate the two. But, if one may judge some recent publications, a reaction seems to be setting in. For example, Hans W. Singer, in a collection of papers, mostly published before, which range from development theory, financing, and prospects in general to a consideration of development problems in Africa and in northeast Brazil in particular, correctly points out that

“With each passing day, economic planners have become increasingly aware that the ingredients of economic growth are more than mere physical quantities of labor, domestic capital, foreign exchange, and so on. A host of intangible elements affect the psychological and social climate of a nation, and these are of decisive importance.& It is the absence of these elements in the poorer nations which makes the process of economic growth so difficult.”

This point of view is also to be found in Mr. Jagdish Bhagwati’s paperback, The Economics of Underdeveloped Countries. He discusses the economics of the less developed countries in simple, understandable terms that provide an introduction to the subject for students and intelligent general readers, and also an account of the “psychological and social climate” that retards development in traditional societies. Planning and Growth in Rich and Poor Countries, comprising a series of essays on development problems in the United Kingdom, New Zealand, India, Ghana, and Sierra Leone, traces development problems in advanced as well as in less developed countries. Although the choice of countries may appear haphazard, it was dictated by the interests of participants in an economic development course at Leicester University, England. The essays, therefore, have a common frame of reference, which is supported by a theoretical section, the mathematical and analytical components of which have been kept fairly simple.

Irving Louis Horowitz has chosen to approach development problems from a new direction. His book “describes and explains the interaction and interpenetration of the three main sources of economic, political, and social power in the world today: the First World of the United States and its Western Allies, the Second World of the Soviet Union and its Eastern Bloc Allies, and the Third World of nonaligned but variously committed nations of Latin America, Asia, and Africa,” and their differing impact on the development process, in the “overdeveloped” societies no less than in the underdeveloped ones. Although he considers his book to be a sociological study, it discusses development from a variety of aspects—political, economic, military, and psychological, as well as social.

The variety of possible approaches to economic development is again illustrated in D. W. Fryer’s view of development problems from the vantage point of an economic geographer. In a well-illustrated text, he ranges over the various occupations of man and their relationship to the development of nations.

The most novel approach of all, however, is that described in Andrew M. Scott’s Simulation and National Development. The author and his associates created a prototype country, Simuland, and with players chosen from graduate students at the University of North Carolina, U.S.A., constructed a game which was acted out under certain express assumptions and rules. The same technique was also applied to development problems in Brazil and Chile, as well as to the city of Durham in North Carolina. “Simulation,” say the authors, “in a sense is a solution looking for a problem. The study of developing areas, on the other hand, represents a problem looking for a solution. We decided to join the problem and the new investigative technique in what we hoped would be a marriage both pragmatic and congenial.”

It is very clear from these six books how much room there still is for different approaches to the vast subject of economic development; if they do no more than suggest interesting new possibilities, that is—at this stage—still an achievement.

Albert Waterston

Shannon, Ian, International Liquidity: A Study in the Functions of Gold, Chicago, U.S.A., Henry Regnery Company, 1966, 143 pp., $5.00.

The aim of this short book (a revised version of his The Economic Functions of Gold, published in 1962) is to demonstrate a shortage of international liquidity and to argue a case for increasing it. Mr. Shannon would increase the price of gold, thereby facilitating a greatly increased flow of development aid from the rich to the less developed countries.

His emphasis is largely on the monetary aspects of increasing the volume of aid to the poorer countries. The author believes this ought to amount to at least $15 billion annually. He argues that raising the price of gold would provide the world with “sufficient liquidity to maintain the required capital flows without too much regard for immediate reserve losses and total reserve holdings vis-ê-vis other countries.” He claims there is a shortage of liquidity in the key currency countries, and that any large rise in their aid programs would worsen their net liquidity position because “the returning expenditure [from aid] may be only a small proportion of total aid outlay.” Other countries are also reluctant to increase aid because of the balance of payments effects. Foreign aid is consequently being restricted and the income gap between rich and poor countries continues to widen.

In the course of his argument, Shannon makes many interesting and provocative points regarding the development of the international monetary system and what he calls the “dilemmas” of the present gold exchange standard. He points out three particularly affecting the key currency countries: the creation of reserves is largely dependent on a key currency country running a deficit in its balance of payments; secondly, the dilemma whereby domestic and foreign considerations regarding the appropriate exchange rate of a key currency can conflict; and, thirdly, the problem of national interest rates being used to switch funds internationally.

Shannon’s book is an interesting variant of, say, the Stamp Plan for increasing both international liquidity and foreign aid. In the last resort, however, most economists think the volume of aid to the less developed countries will be determined by the amount of real (not monetary) resources the rich countries are willing to transfer to the poorer countries. The “money,” irrespective of the gold price, will then be forthcoming.

David Williams

Bain, Joe S., International Differences in Industrial Structure: Eight Nations in the 1950’s, New Haven, Conn., U.S.A., and London, England, Yale University Press, 1966, xiv + 209 pp., $5.00 or 37s. 6d.

Professor bain has undertaken a painstaking comparison of the size of plants in various industries, the degree to which employment is concentrated in the larger and more efficient plants, and the extent to which the concentration of production by plant is reinforced by control of several plants by the larger companies. He has examined manufacturing in eight countries: Canada, France, India, Italy, Japan, Sweden, the United Kingdom, and the United States. Professor Bain found that there was a great scarcity of firm statistical data in most countries and great opportunities for fruitful new research. Only in India, among developing countries, did the author find enough certain information to warrant its inclusion in the study, and in many of the other countries included, the statistics are too fragile to justify firm conclusions.

However, several interesting facts emerged from his sample, one being that plants in the United States are larger than those in the seven other countries. He also discovered—perhaps unexpectedly—that industry in most of the other countries studied is more heavily concentrated in a few plants and firms than in the United States. But the tendency for the large company to own several similar plants (typically three or four) seems remarkably uniform everywhere. Finally, he observed that there is a large body of workers, particularly outside the United States, employed in plants too small to gain maximum efficiency. This last point opens up a most interesting avenue for further examination which those concerned with industrial growth will want to follow closely.

Robert F. Skillings

Huh, Kyung-Mo, Japan’s Trade in Asia: Developments Since 1926—Prospects for 1970, New York, N.Y., U.S.A., Frederick A. Praeger, 1966, xx + 282 pp., $15.

Mr. huh’s book investigates the development of Japan’s trade with ten major Asian countries since the middle 1920’s and explores the prospects for the expansion of this trade by 1970.

Mr. Huh is an economist in the Exchange and Trade Relations Department of the Fund. Born in Korea, he received a Ph. D. in economics from the University of Michigan in 1965. The book was completed before he joined the Fund staff.

MemberMonth($ million)
Costa RicaAugust4.75**
El SalvadorAugust10.00
HaitiAugust, September2.44**
TurkeyJuly, August16.50
United StatesJuly, August, September387.25
Total drawings in the third quarter of 1966493.09
Total net drawings at the end of the third quarter of 19665,037.90
MemberMonth($ million)
In addition the Executive Board during August approved that Bolivia’s stand-by arrangement for $14 million originally agreed on August 30, 1965, be extended until November 30, 1966.


(As at September 30, 1966)

Citation: 3, 4; 10.5089/9781616352844.022.A010


(As at September 30, 1966)

Citation: 3, 4; 10.5089/9781616352844.022.A010

CountryPurpose($ million)
IcelandElectric Power18.00
IranDevelopment Finance Company25.00
MalaysiaElectric Power37.00
PeruElectric Power10.00
PhilippinesDevelopment Finance Company25.00
South AfricaElectric Power20.00
TurkeyDevelopment Finance Company10.00
Loans made during the third quarter of 1966$344.80
Loans made during the first half of 1966274.40
Total amount lent during the nine months
ended September 30, 1966$619.20
CountryPurpose($ million)
IndiaIndustrial Imports150.00
Malagasy RepublicRoads10.00
MalawiRoad Engineering Services0.49
PakistanHighway Engineering Services1.00
TurkeyDevelopment Finance Company15.00
Credits extended during the third quarter of 1966$214.59
Credits extended during the first half of 1966173.10
Total for nine months ended September 30, 1966$387.69
CountryType of Project($ million)
ColombiaSynthetic Fiber937,500
PhilippinesElectric Power12,000,000
SpainElectrical Equipment150,119
TurkeyNylon Yarn1,368,889
Investments announced during third quarter of 1966$19,526,464
Investments announced during first half of 196621,807,303
Total investments announced during nine months
ended September 30, 1966$41,333,767


The World Bank has launched a new series of paperback books in which some of the results of economic research carried out by the Bank staff are being made available to a wider audience. The first two are the following:

  • The Economic Choice Between Hydroelectric and Thermal Power Developments, by Herman G. van der Tak The Bank is often faced with the task of advising countries on the relative advantages of thermal and hydro power development. This paper sets forth a method of economic cost analysis for the two power sources. It pays special attention to the sensitivity of the conclusions to possible changes in the underlying estimates of cost and demand which experience has proven to be uncertain. A note on joint costs discusses what comparisons are necessary when a hydroelectric dam has other benefits besides power production, for instance, for irrigation.

  • Quantification of Road User Savings, by Jan de Weille

  • Increasing attention has been paid in recent years to the quantification of benefits resulting from road investments. Attempts are continuously being made to overcome conceptual and data problems. This volume provides a basis for estimates of the “road user savings” resulting from road improvements. It presents quantitative standards which should improve and facilitate the actual calculations of costs and savings.

  • These two books cost US$1 each and may be ordered from The Johns Hopkins Press, Baltimore, Maryland, 22218, U.S.A., or Oxford University Press, London.


The International Monetary Fund publishes from time to time pamphlets relevant to its work. Now available are:

1. Introduction to the Fund, by J. Keith Horsefield (first edition in English, 1964; in French and Spanish, 1965). Second edition in English, 1965; in French and Spanish, 1966; (German, in preparation).

2. The International Monetary Fund: Its Form and Functions, by J. Marcus Fleming, in English, 1964; (French and Spanish, in preparation).

3. The International Monetary Fund and Private Business Transactions: Some Legal Effects of the Articles of Agreement, by Joseph Gold, in English and Spanish, 1965; in French, 1966.

4. The International Monetary Fund and International Law: An Introduction, by Joseph Gold, in English, 1965; in French, 1966; (Spanish, in preparation).

5. The Financial Structure of the Fund, by Rudolf Kroc, in English, French, and Spanish, 1965.

6. Maintenance of the Gold Value of the Fund’s Assets, by Joseph Gold, in English, 1965; (French and Spanish, in preparation).

7. The Fund and Non-Member States: Some Legal Effects, by Joseph Gold, in English, 1966; (French and Spanish, in preparation).

These pamphlets are available without charge from:

The Secretary

International Monetary Fund

19th and H Streets, N.W. Washington, D.C. 20431


The great expansion in world trade in recent years has emphasized the importance of current information on the developments and shifts in trade patterns of the industrial and less developed countries. Direction of Trade has been designed to meet this need.

This publication assembles and makes rapidly available detailed trade-by-country information for almost all countries of the world, arranged in a uniform pattern of partner countries and expressed in U.S. dollars.

Monthly issues provide the latest data for the current year and comparative data for the preceding year on each country’s trade with all other countries. Totals are shown for the major geographic and economic areas. An annual issue gives detailed country data for several years and includes world totals and a number of summary and analytical tables for major areas.

Direction of Trade is published jointly by the International Monetary Fund and the International Bank for Reconstruction and Development.

The subscription for the monthly issues and the annual issue is $10.00 a year. Single copies of any monthly issue will be sent for $1.00, and copies of the annual issue may be purchased at $3.00 each. Write to:

The Secretary

International Monetary Fund

19th and H Streets, N.W. Washington, D.C. 20431, U.S.A.

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