Journal Issue

Recent staff studies

International Monetary Fund. External Relations Dept.
Published Date:
September 1983
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A. Premchand

Government Budgeting and Expenditure Controls: Theory and Practice

International Monetary Fund, Washington, DC, 1983, approximately 600 pages, $24 (cloth), $18 (paper)

Budgetary woes have long bedeviled governments. These days, however, it is often not simple profligacy but the more worrisome complexity and intractability of institutional expenditures that thwart efforts to “manage” the budget. As government operations grow more extensive and as the number, size, and intricacy of its programs increase, demands upon the budget escalate. Public finance is left running an increasingly poor second to public administration.

In this comprehensive survey of fiscal policies and their implications for budgeting and expenditure control, the author draws on the experiences of both developed and developing countries for a detailed discussion of budgeting techniques, procedures, and processes. Premchand notes the reforms that have been attempted, and in some cases implemented, but he is clear about their effectiveness—few, if any, have been striking successes. The growing complexity of budget management will, indeed, leave more—not fewer—areas vulnerable in the future.

Several weak spots are flagged and greater scrutiny urged for policy control, personnel management, entitlement programs, and public works operations. In bridging the gap between public finance and public administration, the author points to the urgent need for enhanced coordination among the frequently myriad government offices and departments. Coordination is often the missing link between development planning and budgeting, and its absence has frequently hampered the realization of stabilization goals.

James Riedel

Trade as the Engine of Growth in Developing Countries: A Reappraisal

World Bank Staff Working Paper No. 555, US$3.

Alternative interpretations of the “trade as the engine of growth” theory—some optimistic, some pessimistic—have much influenced economic policymaking over the past three decades. In 1980 Nobel Laureate W. Arthur Lewis added a major statement to the debate, surveying the slowdown in industrial economies and the adverse consequences that this would have for developing countries, and urged developing countries to increase trade among themselves as a substitute “fuel” for the growth engine.

In this theoretical and empirical reassessment of the engine of growth thesis, Riedel challenges Lewis’ basic assumptions. He argues against Lewis’ use of primary (noncompeting) goods as a proxy for developing country trade and assesses the determination of developing country trade by industrial country demand. In fact, he finds that the composition of goods exported by developing countries has changed dramatically in recent years, and manufactures now represent a significant component. Their export success in the 1970s had come at a time of stagnation in industrial country markets—it was not prosperity in the developed countries but the price competitiveness of their own goods, Riedel asserts, that underwrote the success of developing country exports.

Riedel’s study urges a less mechanical view of the relationship between trade and growth, finding the two complementary and interdependent and noting the importance of export diversification.

Milton J. Esman

Paraprofessionals in Rural Development: Issues in Field-Level Staffing for Agricultural Projects

World Bank Staff Working Paper No. 573, US$3.

Small-scale agriculture has attracted increased project lending in recent years. Its potential is impressive but the projects are complex and implementation has not been without problems. Breakdowns do occur and they are most likely to arise in the extension of services to farmers at the field level. The civil servants who customarily form the critical link between the government and the small farmer are often too few and too expensive to be cost-effective.

Esman’s study, commissioned by the Bank as one of a series of sociological studies of project experience, suggests another, more promising intermediary: the local paraprofessional. Paraprofessionals have been used in Bank-supported projects in agricultural extention, irrigation, livestock, and social forestry development. The evidence to date suggests that if chosen and paid by (and therefore accountable to) local organizations and farmers’ associations, paraprofessionals can improve the relevance and cost effectiveness of projects, while increasing local self-reliance.

In addition to urging greater attention to the complex needs of field-level implementation at the planning stage, Esman suggests that the civil servants now employed at the field level be retrained as supervisors, with paraprofessionals taking their place in the field. This paraprofessional system could be more effective if greater use were made of female paraprofessionals to provide services to women farmers and if training and support services were provided locally.

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