Infrastructure planning in a dual agricultural economy : a search for a policy framework | |
| Author | Xu, Honggang |
| Call Number | AIT Diss. no. HS-99-01 |
| Subject(s) | Infrastructure (Economics) Agriculture--Economic aspects |
| Note | A dissertation submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy, School of Environment, Resources and Development |
| Publisher | Asian Institute of Technology |
| Abstract | Provision of infrastructure has been a major responsibility of the state in many developing countries over the course of their development. However, various case studies indicate that infrastructure policies have not been very effective. Not only has infrastructure become a major bottleneck for economic development, those infrastructure policies attempting at improving income distribution have also failed to achieve their objectives. However, since governments in most developing countries do not have the necessary institutions to implement fiscal policies to influence income redistribution, a appropriately formulated infrastructure policy can be an effective tool to influence income distribution and affect economic growth. In this study, a framework is developed to analyze the efficacy of public provision of infrastructure in the initial economic development phases where agriculture is the dominating sector and the foundation for further development. Irrigation and transportation, which are the major areas for infrastructure investment during the early stages of the development, are identified as the infrastructure services provided by the public sector. Instead of following widely used homogenous socio-economic models for policy design, a more realistic dual economic system consisting of a profit maximizing formal sector and a consumption maximizing peasant sector is selected in this study. Since the formal sector has the greater economic and social power, it is more likely that the formal sector receives more benefit than the peasant sector. Policies ignoring the dynamic interaction between these two sectors may not perform according to expectations. A system dynamics model of public provision of infrastructure within a dualist agricultural economy is developed in this study. This model is an extension of a system dynamics model originally developed by Saeed (1980) to search for fiscal and institutional policy instruments to affect income distribution within the dual economic system pervasively found in developing countries. The formal model offers an opportunity to experiment with the various infrastructure policies proposed and implemented in the past and to understand their performance under controlled conditions. Eighteen widely implemented and proposed policies or policy packages policies have been designed and tested. Experiments with the model show that infrastructure policy can serve as a development tool for economic growth. However, simulation experiments further demonstrate that a directed infrastructure policy attempting to improve the productivity of the peasant sector could not work without income distribution instruments in place. A misdirected infrastructure policy could dilute the effectiveness of rent income tax policy on income distribution since the profit of production in the formal sector is raised to a high level and renting is not major economic activity. |
| Year | 1999 |
| Type | Dissertation |
| School | School of Environment, Resources, and Development |
| Department | Department of Development and Sustainability (DDS) |
| Academic Program/FoS | Human Settlement (HS) |
| Chairperson(s) | YAP, Kioe-Sheng; |
| Examination Committee(s) | SAEED, Khalid ;FUJIWARA, Okitsugu ;AMIN, A.T.M. Nmul;RADZICKI, Michael Joseph; |
| Scholarship Donor(s) | Government of Japan ; |
| Degree | Thesis (Ph.D.) - Asian Institute of Technology, 1999 |