BUSINESS
26th

REPORT
ANNUAL

g4sSVTE'KOeeg"'tsti,,[[iilili../mi""'v-t

RESEARCH INSTITUTE FOR ECONOMICSAND BUSINESS ADMINISTRATIONKOBE UNIVERSITY
1980

KOBE
ECONOMIC & BUSINESSREVIEW
26th

ANNUAL REPORT

ses"giE'Koe

ipa..,,3

RESEARCH INSTITUTE FOR ECONOMICSAND BUSINESS ADMINISTRATIONKOBE UNIVERSITY

1980

CONTENTS
Page
Economic Policies under the Flexible Exchange

Rate System: a Stock Approach and a Long-run
Government Budget Constraint ..........................

.......KazuhiroIGAwA 1

Estructura de las ventajas comparativas ypolitica comercial-El caso de las exportaciones deproductos industriales en el Brasil ................... .

Technological Progress and Capital Accumulation . . . . . . . . . . .

.........ShojiNisH}JIMA 15....KazuoSHiMoMuRA 29

ECONOMIC POLICIES UNDER THE FLEXIBLEEXCHANGE RATE SYSTEM: A STOCK APPROACH AND
A LONG-RUN GOVERNMENT BUDGET CONSTRAINT
Kazuhiro IGAwA

1. Introduction

There are two approaches to determinate foreign exchange rates under the flexible
exchange rate system. One is the traditional fiow approach, where foreign exchange
rates are determained so as to equilibrate the balance of payments, that is, the total of

the balance of current account, long-term capital and short-term capital. The other isthe monetary or stock approach where the foreign exchange rate is viewed as one of theprices which equilibrates the international financial asset marketsi).

It is obvious that both approaches should be consistent internally and t'urthermore,that they should be consistent in relation to each other. However, we are still in searchof an approach which combines the just mentioned approaches2) . Efforts to investigate
this problem are apparent in the papers by Foley [5], Turnovsky & Burmeister [14] andKarni [6], etc3> . These papers specifically focus on the distinction and conjunction of the"beginning-of-period" equilibrium, which corresponds to stock equilibrium, and the"end-of-period" equilibrium, which corresponds to fiow equili.brium.

In this paper, we would like to set up a macroeconomic open model using a beginning ofperiod equilibrium type ofspecification. The model is constructed to operate
if the stock equilibrium at the beginning-of-period js satjsfied (no matter which thechanges in asset balances are within the period which the flow approach regards as imPortant)4) .

We do not intend to show the superiority ofthe stock approach but rather wish to
separate the role of the two approaches. Therefore, if we add to this model the specifi-

cation to determine flow equilibriums in asset balances, we will get a complete model
where stock and flow are consistently determined. One way to determine the flow vari-ables may be to consider the transaction costs in financial markets, as suggested by
Kouri [7]s).

The property that only the stock equilibrium at the beginning-of-period matters,with the assumption about real wealth, facilitates the analysis of dynamics under theflexible exchange rate system, as we will explain in the following sections, We will findthat the analysis of long-run effects of monetary and fiscal policies, considering govern-

ment budget constraints, becomes easier. Analysis of those problem is usually limited
to a very special case, where, to avoid the complexities in more general cases, perfectcapital mobility and private citizens in some countries hold only one type of foreign

KAZUHIRO IGAWA

2

assets; see for example Turnovsky [12]6). However, using our proposed model, thetreatment of the problem in a more general case becomes easier.

In the following section, we set up our model, and we will obtain short-run policy
effects in section 3. The dynamic policy effects will be investigated in section 4 and in thelast concluding section, we will mention possible extensions ofthe model.

2. Model setting
We assume two types of countries, the home country and the rest of the world (foreign countries) and furthermore we aggregate the financial assets and commodities into

four assets, home bonds, foreign bonds, home money and foreign money, and two
goods, home goods and foreign goods. The residents in each country can hold all kindsof assets and both types of goods and we can get a market clearing condition for each
asset and goods, ifdemand and supply functions are specified for them in either country.

However, we use the usual assumption that the home country is very small and the markets of foreign goods and foreign assets are not affected by the behavior of the homeresidents. This assumption makes the market equilibrium conditions very simple, as will

be shown later, and the assumption is not restrictive for the main conclusions of thispaper.
Firstly for the home goods market, we assume the Keynesian type (fixed price andelastic) supply conditions and the output level is determined to satisfy the demand forhome goods. That is,(1) Y=E(Yd, i, PV)+X(E, r)+G
where, Yis the domestic output level, E is the expenditure by home private citizens, M
is home wealth, i is the interest rate for home bonds, Xis the trade balance, r is the for-eign exchange rate, which is the price of foreign money in terms of home money, and G

is home government expenditure. Yd is the home disposable income as follows,

Yd= Y+ iBd+i*B*lr-T
where, Bd is the home demand for home bonds, B* is the home demand for foreign
bonds, i* is the interest rate for foreign bonds and Tis the home income tax. The second

and third term in the right hand side of the above equation is the income by holding
bonds. The income tax is assumed to be

T==a Yd+Z
where, a is the proportional rate of income tax and Z is a fixed part.

In equation (1), expenditure function Eis the one usually used in many text books
and wealth is explicit for the long-run analysis and we assume the following properties:

O<E,=OEIOYd<1
E, !iii OEIOi+ (OEIO Y,)•(O Y,lai) <O

O<E.=OEIOWIn trade balances, the Meade type import functions are assumed and in this case X is af-

ECONOMICPOLICIESUNDERTHEFLEXIBLEEXCHANGERATESYSTEM:A 3

STOCK APPROACH AND A LONG-RUN GOVERNMENT BUDGET CONSTRAINT
fected by the change in foreign expenditure through the change in i. But this effect isneglected as being small. Furthermore, as we are mainly interested in the long-run properties, we only consider the case of elasticity optimism as

O< X. iii axlOr+ (OXIaE)•(OEIO Yd)•(O YdlOr)

and marginal propensity to import m is assumed aso<m=--axloE<1
Government expenditure is assumed to be confined to home goods.
It is also assumed that the price Ieyel of goods is fixed at unity in each country andis not explicit in the equation. Therefore, some variables can be interpreted both in real

and money terms, using home goods and home money.
Next, as home bonds and home money can be held by foreigner, their equilibrium
conditions can be expressed as shown below. For home bonds,(2) Bd(Y, i, re-r, W)+rBf(i, re-r)==Bli
where, Bd is the demand for home bonds by home residents and Bf is that of foreigners
in terms of goods (or money) in the respective countries. B is the supply of home bonds

and we assume that we can get one unit of home money as interest by holding one unit
ofhome bonds and thus the price of home bonds is 11i. re is the expected long-run foreign exchange rate and (re-r) is introduced to indicate the expected capital gains byholding foreign assets. Here, we are assuming that the people expect the foreign exchange rate for the next period to be expressed by (re-r). As the interest rate of foreign
bonds i" is fixed, it is not shown, for the sake simplification, in the demand function.

For home money,(3) Ld (Y, i, re-r, PV)+rLf (i, re-r) = L
where, Ld is the demand for home money by home residents and Lf is that by foreigners in terms of goods (or money) in the respective countries. L is the supply of homemoney. We also have the demand for foreign money and foreign bonds by home residents as

L" = L" (Y, i, re-r, W)
B* = B* (Y, i, re-r, PV)
where, both L" and B* are expressed in terms of home goods (or money). Here, as before, i* is neglected.

The properties of the asset demand functions are assumed as follows. For incomechangeOLdlO Y .-. Ld, >O, aBdlO Y Eii Bd,<O, OL*!O Y iii L*, >O,

OB"10YIEiB"y<O, Ldv+Bdy+L"y+B", =O
This shows that the increase in Y increases the transaction demand for home and for-eign money (because of an increase in the import demand) which is attained throughdecreases in demand for both home and foreign bonds, because of wealth constraint as

W==Ld+L*+Bd+B*

KAZUHIRO IGAWA

4

For the interest rate change in home bonds, it is assumed that the substitution effects are

dominant and
aBdlOi -== Bdi >O, OB*10i -== B*,<O, OLdlOi k= : Ld, <O,

OL*faiiL*i<O, Bdi+B*i+Ldi+L*i=O
For the change in the expected capital gains for foreign assets, the demand will shift be-

tween home and foreign assets and thus

OBdlO(re-r)iEiBd.<O, OLdlO(re-r)-=Ld.<O,
OB*10(re-r)EiiB'.>O, OL"10(re-r)iEL".>O

Bdr+B*r+Ldr+L*r =O
For the wealth change, it will be natural to assume

OBdlOMEilBd.>O, OB*10WlilB*.>O, OLdlOverELd.>O,
OL"10 ur =': L"w>O, Bdw+B*w+Ldw+L"w= 1
For the foreign country, we assume thatOBf!ai -.. Bf, >O, aBfla(re-r) i!i Bf.<O,

OLf!Oi-==Lfi<O, OLf!O(re-r)i!!Lf.<O
So far, we have not explicitly mentioned the time point of the asset equilibrium.
However, a beginning-of-period equilibrium is implicit in the above asset demand functions. This is because, income, interest rate, expected capital gain and wealth in thefunctions are variables ofthis period (ifthe expected value ofthose variables in the fol-

Iowing period are used, the end ofperiod equilibrium is assumed).

Now we are in the position to demonstrate the important concept or assumption of

wealth in our model. The wealth which enters in the asset demand functions and expenditure functions is assumed as (at time point t),

Mt -- j: S,-, dt

and
St== Yd,-Et
where, S is the accumulation of financial assets and subscript t of M, S, Yd, E indicates

the time point or period. S is defined as the part of disposable income not spent on
goods, which is the current account plus the new issue of financial assets by the homegovernment.
Our definition of wealth is different from the usual one, based on capital gains or
Iosses. As or or S is held in the form of financial assets, the value of the same portfolio

may be different at different time points and the portfoIio itselfcan be reshuMed throughthe time. Therefore, wealth including capital gains can not be defined as the summationof past S (which is the increment of wealth). Our definition of wealth is rather similar tothe concept of "permanent income" in a certain sense.
People are mainly concerned with increasing their wealth by S and capital gains orlosses are considered as transitory, even jf the portfolio behavior depends on them. We
assume that portfolio investors divide the permanent part of wealth into different kinds

ECONOMIC POLICIES UNDER THE FLEXIBLE EXCHANGE RATE SYSTEM : A 5
STOCK APPROACH AND A LONG-RUN GOVERNMENT BUDGET CONSTRAINT
ofassets and the transitory part of wealth is kept by a precautionary motive in the form
ofan asset which is outside our model.

We can determine at time t the value of Y, i and r from three market clearing equations (1), (2) and (3), given vaT, B, L, re, cr, Z, 6 and i*. The intuitive explanation of ourmodel is as follows. At the beginning of the time period t, Mis reshuMed into L{i, L*• , Ba

and B*, considering i, i" and r, which are determined to equilibrate the asset markets.
The output level is determined by the effective demand. Dynamic changes in all variables
are determined ifthe change of va' (which is saving), B, L, r", cr, Z, 6 and i'i` (which is

given at time t) are specified. We can disregard the components of saving (fiow ofassets) as mentioned before.

3. Short•-run analysis
In this section, we investigate the short-run (one period) policy effects on the domestic products, for a certain time period. From equations (1)-(3), using definitions of
Yd and T, we can get the following relations.

rl-E,(1+iBd,+i"B",)(1-m)1(1+cr) (m-1)Ei -X. YdY>

tBdy Bd'i+rBfi Bdr+rBfr+Bf lt dil

kLd, Lai+rLfi La,+rLf.+Lf Jkdr7-- (g) d6+ (Ey(m-si )1(i+cr)) dZ+ (iOol,) dB+ (1) dL+ ((iiLBM,d)..EW) dM

where, subscript t, indicating the time period, is neglected for all variables. The ele-ments ofthe left hand side matrix are assumed to have the signs:(ll)and the determinant of this matrix a is positive from a stability condition.

Comparative statics of this system give us the following relations, for domestic
output leye17) :1 Bdi+rBfi Bd.+rBf.--Bf(dYldG)=t2i- Ld,+rLf, Ld.+rLfr+Lf >O(d Y!dZ) =- {E,(m - 1 )1(1 + cr)} (d Y/dG) <O(dyldB)== -(2/i) (LMd,-+ir)LIII -LdX,[I-rLf.+Lf

This is positive when expenditure is not elastic for interest rate changes and we assume
this situation.

(dYldL)=="li XMd;141)SZf, B-dlYILrBf.+Bf 'O

KAZUHIRO IGAWA

6

Using the above relations, we can investigate the short-run policy effects. All policy

parameters can not be determined independently as the non-private sector also has its

own budget constraint

B+G- T- ]B!i+AL
where aB and AL are new issues of home bonds and home money by the home government or the central bank. Therefore, one of the policy variables G, Z, AB, AL is notindependent, assuming a is fixed.
In this paper, assuming that initially,

B+G-T =O
we only consider the following four cases:

policy (1) dG -- dZ

policy (2) dG-dBli
policy (3) dG-dL
policy (4) -dBli-dL
Policy (l) is the tax financed government expenditure and the effects are8) :(d YldG), =- (d YldG)+(d YfdZ) =- {1 -E,(1 -m)!(1 +a)} (d YldG)>O
The effects of bond financed government expenditure, policy (2), are9) :(dYldG),-(dYldG)+i(dYldB)>O
Policy (3) is the money financed government expoenditure and the effects areiO) :(dYldG),-(dYldG)+(dYldL)>O
Policy (4) is an open market purchasing operation and the effects of it areii) :(dYldL),-(dYldL)-i(dYldB)

h-L (M-1)Ei -Xr"a Bd,+rBfi+Ld,+rLfiBd.+rBf.+Bf+Ld.+rLfr+Lf
This is positive as (Bdi+rBfi+Ldi+rLfi) is normally positive and (Bd.+rBf.+Bf+
Ld.+rLf.+Lf) is normally negative.
The above policy effects are limited to the short-run. This is because in the above
four policies the government budget constraint is imposed only for the period concerned.
The constraint may not be satisfied in the following periods as tax receipts and interest
payments change. If we put the constraint for all periods, the policy effects wiil be dif-ferent. In the next section we will take this point into account, fo11owing Turnovsky[12]i2).

4. Long-run analysis
The analysis in the previous section concerns the sort-run in the sense that variables
W, B, L, re, a, G and Z are assumed to be given or determined as policy variables. How-ever, PV is changing over the time and B andlor L (cr, G, Z) must change over the time

ECONOMICPOLICIESUNDERTHEFLEXIBLEEXCHANGERATESYSTEM:A 7

STOCK APPROACH AND A LONG-RUN GOVERNMENT BUDGET CONSTRAINT
so as to maintain the government budget constrainti3). A long-run equilibrium is attained when those variables stay constant and thus we will get the following conditions,in addition to the short-run market equilibrium conditions (1)-(3).

(4) S= Yd -E ( Yd, i, PV)-O(5) B+G-(cr Yd+Z)--O
It rnust be noted here that in our long-run analysis, real capital accumulation is neglected and this is a strong limitation of our model in the application for actual purposes.

Specifying the policy rules to finance the government budget constraint, we only
investigate the following four Jong-run policies, policy (I), (II), (III) and (IV), which
seem to correspond to policy (1), (2), (3) and (4), respectively.

Policy (I) dG =dZ: L is fixed and B is an endogenous variable.

The effect on the output level is expressed as (dYldG)Bi
Policy (II) dG: L and Z are fixed and B is an endogenous variable; (dYldG)Bu

dG=dB: L is fixed and Z is an endogenous yariable; (dYldG)Zii
Policy (III) dG: B and Z are fixed and L is an endogenous variable; (dYldG)LuJ
dG== dL : B is fixed and Z is an endogenous variable; (dYldG)Zlli
Policy (IV) dL: G and Z are fixed and B is an endogenous variable; (dY!dL)Biv

dL=-dB: G is fixed and Zis an endogenous variable; (dY!dL)ZJv
From the equations (1)-(5), we will get the following relations when PV and B are
also endogenous variables.
(6)

1 -E,J(1 + iBd,+i*B",) (1 'ni)1(l + cr)(m-1)Ei -Xr

Bdy
Ldy

Bdi+rBfi Bd.ri+rBf.+Bf(Ey - 1) (1 + iBdy)1(1 + cr)

Ldi+rLfi Ld.+rLf.+Lf

Ei (Eyml) Yr(1 + iBdy) cr1(1 +cr)

cr Yi aYr(m-1) (E.+E, Y.) O dY = 1

dG+ E,(m-1)1(1+cr) dZoo(E,-1)f(1+a)

Bd. -11i di O

Ld. O dr O

E.-(1-E,)Y. O d"i O

aYw+O dL -1 dB 1-1+al(1+a)

o
1

o
o
. (with Y, i, W and
B are constant),
where, Y.:=OYdlO}'r.=OYdfO.
(vvith Y, i,randBi (with Y, r, Mand Bare constant).
are constant), Yi :==OYdlO

Let us investigate the stability of the dynamic adjustment system in the case where

the home bond supply changes to keep the government budget constraint and is an
endogenous variablei4). Combined with the accumulation of wealth, the system canbe formulated as:

KAZUHIRO IGAWA

8J)V= Yd-E(Y,, i, pp')

B-=.(B+G-T) i
We know that Yd, i and Tdepend on PVand B, using static equilibrium relations, whenL, re, a, G and Z are given. Here, we rnust note that without the assumptions for wealthin section 2, dynamic adjustrnent equations for the components of Mare required. Linearizing around the equilibrium value, we get the following characteristic equation:(1-E,)OYdfOPV-E,ailaW-E.-R (1-E,)aYdleB-EiOilaB ==O-icr0 Y,10M (- cra Yd!eB+1) i-R
Where, OYdlO W, OifO PV, 6YdlOB and 6ilOB are determined from the comparative statics
in the short-run model. For stability, the real part of the roots R must be negative andwe get the following two conditions:(i) {(1 -E,)O Ya la rv- EiO ilO PV- E.} +i {1 -aO YdfaB} <O(ii) (1-E,)6Yd/OW'-EiOileor-.E7,,. (1-E,)OYdlOB-Ei.0ilOB >O

rf crO YdlOW IraO Ya/OB
As for condition (i), the first term will be negative because it is reasonable to assume
that the effects of E. outweigh those of O YdlO rv (which is positive) and OilO W is negative.

However, usually crOYd/OBis not larger than 1 and the second term is positive and, possibly, the stability condition is not satisfied.

For condition (ii), if cr is not large enough, this stability condition is not satisfied
and even if cr is large, there is a strong destabilizing factor:{(l - E,)a Ydla ur- EiailO va"- E.} {1 - crO Y,10B}

Therefore, the adjustment of the above case seems unstable, except in some special
cases. These are fully investigated in Christ [3]i5).

Asg.uming a special stable case, let us investigate the policy effects. Intuitively we
can see as follows. As cr is positive, tax receipt has increased if Y has increased by thepolicies in the short-run. In this case, B must be decreased to maintain the government
budget constraint, in the long-run. Therefore, the incease in output leyel in the longrun will be smaller than that in the short-run as (dYldB) is assumed to be positive'6).
That is,(dY!dG)B, < (dYldG),(dYldG)B,, < (dYldG),(dyldL)Bi. < (dYldL),
When Z is an exdogenous variable, instead ofB, we will get the following relations

from equations (1)-(5),(7)

mEy(m-1)1(1+cr)oo-(Ey-1)1(1+cr)

---

-----

.

1-a!(1+cr)

dY

1

di

o
o

dr

dW
dZ

+dG o dB+ o dL
11 i

o
1

o

o
o

o

l

1

o

ECONOMIC POLICIES UNDER THE FLEXIBLE EXCHANGE RATE SYSTEM : A 9
STOCK APPROACH AND A LONG-RUN GOVERNMENT BUDGET CONSTRAINT
Where, the elements ofthe first, second, third and fourth columns ofthe matrix are thesame as those in equation (6).

The dynamic adjustment system in this case can be formulated as :rv== Yd-E(Yd, i, PV)

Z==B+G-(aYd+Z)
The local stabiljty conditions are:(iii) {(1-E,)OYdfOva-EiailOlf}-(1+crOY,10Z)<O(iv) (1-E,)OYdlava'-EiailOW-E. (1-E,)OYd16Z-EiailOZ >O-crO YdlOM -1-aO YdlaZ
Where, OilOZ and aYdlOZ are determined by the comparative statics in the short-run
model. We can easily find the stable cases for the reasonable vaiues of the parameters.
This js because the minus Z in the right hand sjde ofthe adj ustment equatjons of Z.

As we know that (dYldG)2, (dYldG)3 and (dYldL), are all positive, Z must be decreased to keep the government budget constraint, when cr is positive, and thus an increase in Y in the long-run will be larger for policy (II), (III) and (iV), than the corresponding onesi7) .

That is:(dYldG)Z,, > (dYldG),(dYldG)Z,,J > (dYfdG),(dYldL)ZJ7 > (dYldL),
When we have investigated the bond financed fiscal or monetary policies in the
Iong-run in the previous chapters in Part Three, we have implicitly assumed that Z is an
endogenous variable and a is zero. That is, the short-run policy effect on the domestic

output level does not change the tax receipt and thus the government budget
constraint, importantly, in the long-run.

When L is an endogenous variable, instead ofB or Z, we will get the following rela-tions for comparative statics:(8)--------t----t--

o
o
-1

dY

1

di

o
o

dW

o
o
o

dr

dL

dG

1

where, the elements of the only fifth column of the matrix are different from the previ-ous one.

The dynamic adjustments where the home money supply is endogenous to maintain the government budget constraint can be formulated as:

PV= Yd-E(Yd, i, PV)' L=B+G-T

KAZUHIROIGAWA

10

The local stability conditions are :(v) {(1-E,)ayd!ova-Etoilow-E.}-aaydloL<o(Vi) (1-E,)OYdlOW-EiOilOW-E. (1-E,)6YdlOL-EiOilaL >O-crO Y,10M -crO Y,10L
where, aYdlOL and OilOL are determined by the comparative statics in the short-run
model. It is reasonable that these conditions are satisfied and the system is stable. And
in this case, the policy effects derived from comparative statics have their meaningsi8).

We now find that the stability of the dynamic system mostly depends on how thegovernment budget constraint is maintained. Therefore, we must be carefu1 about theconclusions obtained in the short-run analysis, if we want to infer the long-run.

5, Some remarks
Although, in this paper, we have restricted the analysis to the pure flexible exchange rate system, it is not diMcult to extend our model to the fixed or managed float

exchange rate system in which, however, the asset demand functions will be modified,because the foreign exchange risk will be reduced and government interventions must
be taken into account.

Our analysis of policy effects in this paper is rather formal, because our maininterest is not in those effects but in model setting which provides simple macroecono-

mic relations. We can investigate more fu11y the policy effects and include different
kinds of policies.

We have used the stock approach in this paper, but the stock approach is not sufficient for a fu11 economic analysis. This is because the determinations of the fiow offinancial assets are also important, particularly in the adjustment processes. We haveshown in this paper that the stock approach alone can explain most of the dynamic
effects ofeconomic policies, with some assumptions about wealth. However, we admitthat these assumptions are rather strong and the flow approach can help our model
much. We need the adjustment behavior ofasset balances, which are flow of assets. As
already mentioned in the introductory section, we need a model to combine stock andfiow approaches.
Our assumption, which ignores the capital gains and losses in financial wealth, ismeant mainly to facilitate the analysis of dynamic adjustment. This may be permitted

as, without this assumption, the adjustment process becomes too complicated andmeaningfu1 conclusions diMcult to obtain. The other assumption of neglecting realcapital accumulation had better be removed to make the model realistic. However,including real capital in wealth does not seem to be very diMcult.

Note :
1) The most extream view of this has been expressed by Mussa [8]. He has applied the eMcient mar-

11
ECONOMIC POLICIES UNDER THE FLEwtBLE EXCHANGE RATE SYSTEM:ASTOCK APPROACH AND A LONG-RUN GOVERNMENT BUDGET CONSTRAINT
ket theory of the determination of asset prjces.

2) Ethier [4] has a same intention, see pp. 276-280.
3) We are not very interested in their mathematical treatment, but their ideas.
4) It is useful to see Alien & Kenen [1], pp. 34-40.

5) Kouri [7], p. 281.
6) Turnovsky [12]. pp. 251-262.
7) For domestic interest rates and foreign exchange rates, we will get the follows.

-1 Bder Bdr+rBfr+Bf >O(di/d(]) =a Ldg Ldr+rLfr+V(dr/dol1=Bdy Bdi+rBfi

d Ldv Ldi+rL4

This is negative as normally(Bdi+rBfi) Ldy is larger than (Ldi+rLfi)Bdv and we assume this situation(dildZ) - {Ev(m - 1)1(1 + cr)} (di/dG) <O(drfdZ)-- {Ey(m-1)f(1+a)} (drfdG)>O(difdB)-1 1-Ey(1+iBely+i'B"y)(1-m)1(1+a) -Xr >O

id Ldy Ldr+rLfr+Lf-1 l-Ey(l+iBdy+i"B"v)(1-m)1(1+a) (m-1)Ei >O(dr/dB) -=id Ldy Ldi+rLfi
d Bdy Bdr+rBfr+Bf-1 1-Ev(1+iBdv+i"B"y)(1-m)1(1+a) -Xr(dildL) --This is negative, assuming {1 -Ey(1 +iBdy+i'B"y) (1-m)1(1+a)} (Bdr+rBfr+Bf) is larger than
Bdr Xr-1 1-Ey(1+iBdy+i"B'v)(1-m)/(1+cr) (m-1)Ei >O(drldL)=-n Bdy Bdi+rBfi

The effects of a change of PV are as fo11ows and they wjJ] be used for the long-run analysis.

(dYldur)-(1-m)Ew(dYldG)-iBdw(dYldB)-Ldw(dYldL)(difd PV) - (1 -m) Ew (difdG) - iBdw (difdB) -Ldw(dildL)(drldW) == (1 - m) Ew (dr/dG) - iBdw(drldB)-Ldw(drldL)8) We also get the follows.

(dildG>i-(dildG)+(dildZ)- {1 -Ey(1 -m)1(l +a)} (di/dG)>O(dr/dG)i == (drldG) + (dr/dZ) - {1 - E,(1 - m)/(1 + a)} (dr/dG) <O
The following is an intuitive explanation of the relations (dY/dG)i, (dildG)i and (dYldG)i; when G isincreased through the increase in Z by the same value, the initial increase in effective demand is {1 -Ey(1-m)!(1+cr)} dG. This increase in effective demand increases Y and this, in turn, decreases Bd andi will increase to equibriate the home bond market. The increase in Y jncreases Ld and r will decrease

to reduce the demand for home money.
9) We also get the follows.
(di/dG)2 =- (dildG) + i (dildB) > O(dr/dG)2 - (dr/dG) + i (drldB).. 1 Bdy+Ey(1+iBdy+i'B'v)(1-m)1(1+cr)-1 Bdi+rBfi+(1-m)Ei

d Ldv Ldi+rLfi

The sign (drldG)2 is ambiguous.

The intujtive explanation of policy (2) is as follows. The increase in G increases Y, i and decreases r as

in policy (1). We now have additional effects through the increase in B for policy (2). When the supplyof home bonds B is increased, i will increase to increase demand for home bonds and r will increase tooffset the reduction of the demand for home money through the increase in i. Increases iniandrhave
opposite effects on Y, but from our assumption that Ei is small, Ywill increase. Therefore, the total effects

of poljcy (2) are jncreases jn Yand i. The change in r is ambiguous.

10) We also get the follows.
(di/dG)3 -- (di/dG) + (dildL).. 1Ldv+Ev(1+iBelv+i'B"y)(1-m)!(1+cr)'1 Ldr+rLfr+Lf+Xra

Bdv Bdr+rBfr+Bf

KAZUHIRO IGAWA

12

The sign (di/dG)3 is ambiguous.
(drldG)3 -= (dr!dG) + (drldL)= 1 1-Ev(1+iBdv+i'B*y)(1-m)!(1-i-cr)-Ldy (m-1) Ei-Ldi-rLft id Bdy Bdi+rBfi

This is positive as {1 -Ey(1 +iBdy+i"B"y) (1 -m)1(1+cr)-Ldy} is normally positive. The intuitive explanation of policy (3) is as follows. 'IThe increase in G increases Y, i and decreases r and the increase in L

increases Y, r and decreases i. The effects on r through L is direct and strong and assumed to outweighthe effects through G, and r will increase.

11) We also get the follows.
(dildL)4 == (di!dL)-i (dildB)-1 IHEv(1+iBdy+i"B"y)(1-m)f(1+cr) -Xr== ri Ldy+Bdy Ldr+rLfr+Lf+Bdr+rBfr+Bf

this is negative, assuming that Ldy+Bdy is positive.
(dr/dL)4 == (drldL) - i (drldL).,. 1 INEv(1+iBdy+i"B"y)(1ilm)/(1+cr) LXr

d Ldy+Bdy Ldi+rLfi+Bdi+rBfi

The sign of this is ambiguous. The intuitive explanation of policy (4) is as follows. The decrease in B
decreases Y, iand rand increase in L increases Y, r and decreases iand thus, idecreases definitely. The
effects on Y through L is normally stronger than those through B because by the increase in i a decreasein the home money demand is normally smaller than an increase in the home bond demand. Therefore
Y will increase.

12) He wrote many related papers on this point. See Turnovsky [11] and [13].
13) The changes in the compositions of PV and the prices of assets are also important, but they are
not explicit in our analysis.

14) This problem becomes famous by the paper Blinder & Solow [2].
15) Christ [3], pp. 68-69. See also Scarth [9], pp. 17-19 and {10], p. 150.

16) The long-run comparative statics in the case of B is endogenous gives us rather complicatedresults as follows. Wejust show them and do not investigate them fu11y, because they are not important
cases.

(m-1)Et

1 == d. [(1+Ey(,n-1)1(1+cr))dB,ii -(1-Ey)1(1+cr) Bdi+rBft(dY/dG)Bi
Ldi+rLfi-Xr (m-1) (Ew+Ey }lw)
Bdr+rBfr+Br Bdw
Ldr+rLfr+V Ldw-(11i) (m-1)Ei LXr (m-1)(Ew+EyYw) ]Ldi+rLfi Lelr+Lfr+Lf Ldw((1-Ey) Yi+Ei) cr1(1+cr) O Ewcr1(1+a)(dyldG)Bii-,'.[.B,d//.',',B,1` 2:.r.',r2.'.'i'.B,d.w -6fi

Ei (Ey-1)Yr Ew-(1-Ev)Yw O

aYi cr Yr aYw -1+ (m-1)Ei -Xr (m-1)(Ew+EvYw) O
Bdal+rBfi Bdr+rBfr+Bf Bdw -1/i
Ldi+rLft Ldr+rLfr+Lf Ldw O
Ei (Ey-1)Yr Ew-(1-Ey)Yw O(dY/dL)Biv=1 (m-1)Ei -Xr . (m-1)(Ew+EvYw) O]

aB Bdi+rBfi Bdr+rBfr+Bf Bdw-11i

Et (Ey-1) Yr E]w -(1 +Ev) Y/w O

cr Yt aYr aYw -1

Where, dB is the determinant of the left hand side square matrix of equation (6) and dB

is assumed toECONOMIC POLIClliS UNDER THE FLEXIBLE EXCHANGE RATE SYSTEM : A 13

STOCK APPROACH AND A LONG-RUN GOVERNMENT BUDGET CONSTR.AINT
be positive from stabiljty condtions. AB,n js a determinant of the same matrix without the first row andthe first column, and is positive from stability conditions.

17) We use Az for the determinant ofthe matrix of the Ieft hand side of equation (7) and use dz,nfor the determinant of the same matrix without first row and the first colurnn. Both dz and Az,n are assumed to be positive from stability conditions. The long-run comparative statics are as follows.

I 1 =(m-1)Ei. -Xr (m-1)(Ew+EyYw) -Ey(m-1)1(1+a)(dY/dG)Zu

dz 1/i Bdi+rBftBdr+rBfr+Bf Bdw O
O Ldi+rLfi Ldr+rLfr+Lf Ldw O

O Ei (Ey'1)Yr Ew-(1-Ey)Yw -(Ey"1)1(1+cr)

2 aYi ct Yr cr Yw 1/(1+a)(m'1)Ei Ldi+rLftLd.+rLfr+Lf-Xr (m-1)(Ew+EvYw)Ldw'Ev(m-1)1(1+cr)
1 dz {nZ'ii-1!i==O
Ei (Ey-1)Yr Ew-(1-Ey)Yw -(Ev-1)1(1+cr)

aYi cr Yr aYw 1/(1+cr)(m-1)Et -Xr (m-1)(Ew+EyYw) -Ev(m-1)(1+cr) }+2 Bdi+rBfi Bdr+rBfr+Bf Bdw 'O
Ldi+rLfi Ldr+rLfr+Lf Ldw O
Ei (Ey-1)Yr Ew-(1-Ey)Yw -(Ey-1)/(1+a)

Here, the first term of the right hand side corresponds to (dYldG) and the second term corresponds to(dY/dB) in the short-run analysis. The last term is the efferts of government budget constraints in thelong-run analysis.

1{tiZ,11+(m-1)Ei -rr (m-1)(EwÅÄEyYw)(d YldolZui-=

Az Bdi+rBfi Bdr+rBfr+Bf Bdw
Ei (Ey-1)}'Tr Ew'(1-Ev)}rw

aYi cr }rr aYw-Ey(m-1)1(1+a) +Azm}

o-(Ev-1)!(1+a)
1/(1+cr)The Iast term dz,si expresses the determinant of the last term of (dYldG)Z" and is the effects of government budget constraints. The second term corresponds to (dYldL) in the short-run analysis.

(dYldL)Ziv 1== zt. {(1/i) ztz,2i+Az,3i -Az,si}
Where, dz,2i expresses the second term determinant of the right hand side of (dYfdG)Zll and dz,3i expresses the second term determinant of the right hand side of (dYldG)ZJll.
18) We use dL for the determinant of the matrix in the left hand side of equation (8), then the comparatlve statlcs glves us,(dY!dolLui=ldL
1 (m-1)Ei -.Xlr (m-1)(Ew+Ey)YwO

O Bdt+rBfi Bdr+rBfr+Bf Bdw O
O Ldi+rVi Ldr+rLfr-l-Lf Ldw -1

O Ei (Ey-1)Yr Ew-(1-Ey)Yw O

1cr Yt aYr aYw O

References[1] Allen, P. R. & P. B. Kenen, "Portfolio Adjustment in Open Economics : A Companson ofAlternative Specifications," Meltwirtschaftliches Archiv, Band 112, Heft

1 1976.
'[2] Blinder, A. S. & R. M. Solow, "Does Fiscal Policy Matter?" Journal of Political

Economy, Vol. 81, No. 2, Mar.!Apr. 1973.

KAZUHIRO IGAWA

14[3] Christ, C. F. "On Fiscal and Monetary Policies and the Government Budget Restraint," Ameriean Economic Review, Vol. 69, No. 4, September 1979.
[4] Ethier, W., "Expectations and the Asset-Market Approach to the Exchange Rate,"
JournalofMonetary Economics, Vol. 5, No. 2, Apr. 1979.
[5] Foley, D. "On Two Specifications of Asset Equilibrium in Macroeconomic Models," lournal ofPolitical Economy, 83, No. 2, April 1975.
[6] Karni, E. "On the Specification of Asset Equilibrium in Macroeconomic Models:A Note," Journai ofPoiiticai Economy, 87, No. 1, February 1979.
[7] Kouri, P. J. K. "The Exchange Rate and the Balance of Payments in the Short

Run and in the Long Run: A Monetary Approach," Scandinavian Journal of Economics 78, No. 2, 1976.
[81 Mussa, M., "Empirical Regularities in the Behavior of Exchange Rates and Theo-ries of the Foreign Exchange Market," in K. Brunner & A. H. Meltzer, eds.,
Carnegie-Rochester Conference Series on Public Policy, Vol. 2, North-Holland,

Amsterdam, 1979.
[9] Scarth, W. M., "Fiscal Policy and Government Budget Constraint under Alternative Exchange-Rate Systerm," 0xford Economic Papers, Vol. 27, No. 1, Mar. 1975.

[10] Scarth, W. M., "The Government Budget Constraint in an Open Economy: A
Further Comment," 0xford Economic Papers, Vol. 29, No. 1, Mar. 1977.
[11] Turnovsky, S. J., "The Dynamics of Fiscal Policy in an Open Economy," lournal
oflnternational Economics, Vol. 6, 1976.
[12] Turnovsky, S. J. Macroeconomic Analysis and Stabilization Policy, Cambridge, 1977.

[13] Turnovsky, S. J. "The Dynamics of an Open Economy with Endogenous Monetary and Fiscal Policies," PVeltwirtschaftliches Archiv, Band 115, Heft 2, 1979.

[14] Turnovsky, S. J. & E. Burmeister, "Perfect Foresight, Expectational Consistency,

and Macroeconomic Equilibrium," Journal ofPolitical Economy, Vol. 85 No. 2,
April 1977.

ESTRUCTURA DE LAS VENTAJAS COMPARATIVASY POLITICA COMERCIAL-EL CASO DE LASEXPORTACIONES DE PRODUCTOS INDUSTRIALES
EN EL BRASIL
Shoji Nishijima

1. introducci6n
La politica de sustituci6n de importaciones que lidero la industrializaci6n delBrasil de la posguerra permiti6 una rapida industrializaci6n del sector industrial y su
diversificaci6n, 11egando a su pico en los primeros afios de la decada del sesenta paraluego estancarse hasta 1967, El cambio de gobierno en 1964 produjo un consecuentecambio en la politica econ6mica. La estabilidad politica y la consistencia de las medidas

econ6micas aplicadas en este Ultimo periodo permiti6 alcanzar un alto ritmo de crecimiento en el periodo 1 968-73. La tasa promedio de crecimiento del P.I.B. fue del 10.2 O/,,el de la producci6n industrial del l2.5 O/., y el de las exportaciones industriales super6
al 30 0/..

Basicamente, al aumento de las exportaciones estuyo basado en el crecimiento dela producci6n industrial en general, pero es posible afirmar que la causa directa delmismo radic6 en Ia politica de promoci6n de exportaciones. Los trabajos de Tyler [7] yNishirnukai [5] analizan el peso de estas medidas de promoci6n sobre las exportaciones
de productos industriales.
Una de las caracteristicas fundamentales de la estructura de las exportaciones deeste periodo es el cambio en su composici6n por productos y en la distribuci6n por regiones. Tal como se ve en el cuadro l, la participaci6n de los productos alimenticios yproductos de la industrja ljviana dentro de las exportaciones hacia el resto del mundo,
aument6 desde el 64.3 O/. en 1968 al 71.8 O/. en 1973. Es necesario sin embargo notar que

mientras los productos alirnenticios disminuyeron desde el 47.4% al 38.1 %, los productos de la industria liviana aumentaron del 16.9O/. al 33,7O/., siendo esta tendencia

mucho mas fuerte para el caso de los paises desarrollados. Por otro lado, los productos de la industria pesada y quimica han disminuido del 35.6% en 1968 al 28.1 O/, en

1973, aunque dentro de dicho sector los productos quimicos y metalUrgicos han dis-minuido y las maquinarias y equipos han aumentado un poco. En cambjo al analizar
las exportaciones en el marco de la ALALC se observa que la participaci6n de los productos de la industria pesada y quimica han aumentado del 63.7 O/, al 69.7 % mostrando
con ello la competividad de los productos de la industria brasilefia dentro del area, en
especial en lo que se refiere a maquinaria y equipos, los cuales aumentaron del 35.9 O/, al44.9 Y.•SHOJI NISHIJIMA

16

Cuadro 1 Composicci6n de las exportaciones industriales

(%)

Mundo

AIimentos elabdrados
Productos de la industria

PaisesPaisesdesarrollados

subdesarrollados

ALALC

1968

1973

1968

1973

1968

1973

1968

47.4
16.9

38.1

61.0

32.0
44,2

38.7
20.8

5.2

14.7

22.2
20.4

12.3

33.7

24.0

25.1

9.3

5.5
7.3

6.1
7.0

7.9
18.8

5.5
9.1

10.7

30.7
100.0

26.0

35.9

44.9

100.0

1oo.O

1oo.O

1oo.O

1973

Iiviana
Productos quimicos
Productos metalUrgicos
Maquinarias y equipos

12.2
14.1

15.3

9,8
8,9
5.6

Total

100.0

100.0

100,O

5.0

7.7

22.8

17.1

Fuente: U.N., Commodity Trade Statistics 1968, 1973
Notas: Para Ia clasificaci6n de este cuadro se reclasificaron los puntos de SITC de la siguente manera:
Alimentos elaborados: O13, 032, 046, 047, 048, 053, 055, 061, 062, 091, 111, 112, 122

Productos de Ia industria liviana: 61-66, 68

Productos qufmicos: 5
Productos metalUrgicos: 67, 68, 69

Maquinaria y equipos: 7

Estos hechos reflejan el cambio en la estructura de las ventajas comparativas de los

productos industriales brasilefios en este periodo de crecimiento acelerado. Entre lascausas que hicieron posible este cambio, se encuentran las condiciones de oferta interna,las condiciones de demanda de los mercados de exportaci6n, etc., pero resultara muchomas productivo realizar el analisis a la luz de las politicas comerciales. En este trabajo

se tratara de explicar la estructura de las ventajas comparativas de los productos industriales brasilefios desde la perspectiva de la "teoria del labor skills" y ademas sacar aluz la relaci6n entre la estructura de las ventajas comparativas y la politica de comercio
exterlor.

2. Estructura de Ias yentajas comparativas de los productos
industriales brasilefios: Metodologia de cilculo

En este trabajo el metodo de calculo de la estructura de las ventajas comparativas
se basara en la teoria del labor skills de Keesing, etci). A partir de la "Paradoja deLeontief" han surgido muchos trabajos para perfeccionar la teoria de Heckscher-Ohliny uno de estos intentos fue la teoria del labor skills. Se considera que el factor productivo

trabajo se encuentra dividido en "trabajo especializado" (skilled labor) y "no especializado" (unskilled labor) y en funci6n de la dotaci6n relativa de estos factores se determi-

na la estructura de Ias ventajas comparativas. Partiendo de los supuestos de que no hay

movimientos internacionales del factor trabajo y de que las diferencias de ingreso per1). Para el calculo de la estructura de las ventajas comparativas existen un gran numero de m6todos: proporci6n de capital-trabajo, valor agregado per capita, etc, pero en este trabajo debido a las
restricciones de materiales se ha usado la proporci6n de skilled labor-unskilled labor.

ESTRUCTURADELASVENTAJASCOMPARATIVASYPOLITICACOMERCIAL- 1

EL CASO DE LAS EXPORTACIONES DE PRODUCTOS INDUSTRIALES EN EL BRASIL
capita reflejan diferencias en el grado de desarrollo del capital humano existente, seconcluye que los paises desarrollados tendran ventajas comparativas en los bienes con
alto contnido de skilled labor(skilled labor intensitive), mientras los paises subdesarrolla-

dos lo tendran en bienes con alto contenido de unskilled labor (unskilled labor intensitive).

La mayoria de los trabajos empiricos han sido realizados con referencia a los EE.
UU. y el primer trabajo que encontramos para el Brasil es el de Tyler [6]. Tyler utiliz6
dos skill index, (i) el skill index de Keesing para 46 sectores industriales de los EE.UU.

y el otro (ii) calculado por el propio Tyler2) en base a los datos del censo industrial
brasilefio (del IBGE) del afio 1960, esta clasificado en 21 sectores. Con estos indices
Tyler calcul6 el contenido de skilled labor (skill eontent) de las exportaciones e importaciones del Brasil en 1968. Los resultados basados en estos dos indices son los siguientes.
skill content deskill eontent delas exportaciones

las importaciones

O.340

O.663

7.85

8.87

skill index de Keesing
skill index de Tyler

Los resultados indican que el skill content de las importaciones es mayor que el de lasexportaciones. En consecuencia los resultados empiricos comprueban que el Brasil
exporta bienes unskilled labor intensive mientras importa bienes skilled labor intensive.

Sin embargo este trabajo de Tyler presenta varios puntos cuestionables con respecto a la metodologia empleada.
(1) Para calcular el skill content de las exportaciones e improtaciones brasilefias
se ha utilizado el skill index de Keesing, es decir, el indice correspondiente a 46 sectoresindustriales de los EE. UU. para el afio 1960. Como es natural, existen diferencias enlas tecnicas productivas y en los precios relativos de los factores productivos entre EE.
UU. y Brasil, y tal vez ello exagere las deferencias en las intensidades skilled labor entre

los sectores industriales de ambos paises. Posiblemente tambien existan diferencias enla composici6n de productos(product mix) entre ambos paises. En reaiidad de acuerdo al
resultado de los dos indices es posible observar que el 6rden de magnitud (relaci6n demayor, menor o igual) entre los skill content de las exportaciones e importaciones coincide en ambos indices, pero que de cualquier forma, las relaciones entre las magnitudes
difieren considerablemente. Mientras con el indice de Keesing la relaci6n (skill content
de las importacioneslskill content de las exportaciones) es de 1.95, con el de Tyler larelaci6n es de 1.13. Sin embargo, con respecto a este problema, por mas que difiera2). El skill index de cada una de las industrias es obtenido por:(3 xl+IDfa+II+III+IV)
para I: tecnicosgraduadosuniversitario
II: operarioespecializado
III: operarionoespecializado

IV: otros
Estos indices estan representados en Tyler [7], p. 320.

SHOJI NISHNIMA

18

la intensidad de skilled labor utilizado en ambos paises, si las intensidades de los respec-

tivos sectores en cada pais estan ordenados de la misma forma, es decir que no existe
reversibilidad en la intensidad entre los dos paises, este tipo de aproximaci6n sera ra-

cional. Sin embargo la investigaci6n de Tyler no realiz6 la comparaci6n entre los6rdenes de intensidad. El skill index de Tyler corresponde a 21 sectores y el de Keesing
a 46, lo que implica que,mientras no se efectue una reclasificaci6ncon la misma cantidad
de divisiones sectoriales, es imposible efectuar este tipo de comparaci6n. En sintesis Ia
legitimidad de utilizar el indice de Keesing no ha sido completamente justificada en el

trabajo de Tyler.
(2) Tal como se vi6 anteriormente Tyler calcu16 el skill index a partir del censodel Brasil del afio 1960, complementando de ese modo el indice de Keesing. Sin embargo este indice tambi6n tiene puntos cuestionables. Debido a que en Brasil estos censos
se efectuan cada tantos afios, Tyler tuvo que utilizar el censo de 1960 para aplicarlo a lasexportaciones de 1968. Tal como se analiz6 en la secci6n 1, el Brasil experiment6 en
ese intervalo un considerable cambio de politica econ6mica y despues de 1968 la producci6n industrial se expandi6 a pasos agigantados. En sintesis lo mas razonable es
pensar que durante el periodo 1960-68 se produjo un cambio en el grado de desarrollodel capital humano, en la tecnologia, en la proporci6n capital-trabajo y en la de skilledlabor-unskilled labor. Esto significa que es necesario un skill index que refleje en formamas precisa el skill content correspondiente a este periodo.

Considerando los problemas mencionados anteriormente, y en base al metodo que
se indica a continuaci6n, se calcul6 la estructura de las ventajas comparativas de los
productos manufacturados en el Brasil. En primer lugar se calcu16 el skill index en basea los datos del censo 1970 del IBGE (este indice se 11ama Indice de Brasil). Como Ia
divisi6n sectorial de este censo tiene 21 sectores menos que la divisi6n de Keesing (46sectores), la posibilidad de que exista desviaci6n debida a las diferencias del productmix es alta. En este trabajo, para cubrir estas posibles desviaciones se utiliz6 el indice deHufbauer [1]. Este indice esta confeccionado para 47 sectores y es mejor que los indicesde Keesing y Brasil para eliminar las desviaciones debidas a las diferencias del productmix. Ademas, el indice de Hufbauer tiene una gran desagregaci6n en el sector alimentos elaborados, que tiene una alta participacion en Ias exportaciones brasilefias. Por estas
razones es un buen indice para el calculo de Ia estructura de las ventajas comparativas.

Mas afin, una de las causas principales para la utilizaci6n del indice de Hufbauer
es que la reversibilidad en la intensidad de skilled labor es pequefia. Para la compara-

ci6n de los 6rdenes de intensidad entre Ios respectivos sectores de ambos indices, enprimer lugar fue necesario igualar el numero de sectores, efectuandose para ello una
reclaseficaci6n en base a la decisi6n sectorial del SITC (21 sectores). Luego se obtuvo
la correlaci6n por rango (en funci6n de la intensidad de skilled labor) entre los indicesrespectivos, lo que di6 una correlacion de O.84, relativamente alta, lo que significa quela reversi6n de la intensidad es extremadamente pequefia, con lo cual queda probada lalegitimitad del indice de Hufbauer para calcular la estructura de las ventajas comparativas de Brasil.

ESTRUerURA DE LAS VENTAJAS COMPARATIVAS Y POLITICA COMERCIAL- 19
EL CASO DE LAS EXPORTACIONES DE PRODUerOS INDUSTRIALES EN EL BRASIL
En resumen, estos dos indices, se han de usar de forma complementaria y si losresultados obtenidos fueran consistentes, podriamos decir que el calculo de la estructura de las ventajas comparativas ha sido racional. En base a la metodologia indicada
se ha calculado el contenido de labor skills (skill content) en las exprotaciones e impor-taciones por regiones: Resto del mundo, Pafses desarrollados, Paises subdesarrolladosy ALALC para los afios 1968 y 1973. En el cuadro 2 estan representados los indices deHufbauer y Brasil segUn sectores; y el indice de skill content para las exportaciones eimportaciones esta consignado en el cuadro 3.

Cuadro 2 La conexi6n de dos indices
Indice de BrasilCi)

SITC

Indice de HufbauerC2)

1. Minerales no met61icos
2. Productos metalargicos

O.O095
O.0245

66
67
68
69

3. Maquinarias y equipos

O.048671

O.0501864
72

o.osooO.0502
O.0735
O.0966
O.0913
O.1622
O.1523

4. Equipos electricos y decomunlcaciones
5. Equipos de transporte
6. Productos de madera

O.0334
O.oo63

7. Muebles

O.oo83
O.O129

8. Papel y pulpa

73
63
242
82

64
251

9. Goma y caucho
10. Productos de cuero
11. Productos quimicos

12. Productos farmaceuticos
13. Perfumes

O.026562

O.O149O.0513

231.2
61
51

15. Textiles

O.0652
O.0363
O.O166
O.oo85

16. Vestidos

O.oo55

17. Alimentos

O.OI08

14. Plasticos

52
53
56
57
59
332
54
55
58
65
266
84
85
O13
032
046
047
048
053
055

O.1218
O.O149
O.O122
O.O197
O.0390O.0620O.0604
O.1564
O.O171
O.1564
O.1564
O.1075
O.1564
O.1564
O.1564
O.1468
O.1926
O,1564
O.1564O.0208
O.1124O.OI02
O.oo66
O.O179O.0330O.O180O.O180O.O180O.0330O.0330

20

SHOJI NISHIJIMA
Cuadro 2 (continuado)

061
062
091

O.O156
O.O156
O.0452
O.0532
O.0452
O.0277421
18. Bebidas
19.

111
112
122
892

O.O166

TabacoO.oo71

20. Imprenta y libros

O.0431

21. Miscelaneas

O.0250O.0221
O.0730O.0730O.0455
O.O138
O.162289 (-892)
81
83
86 (-864)(1) IBGE, Censo Industrial Brasil, 1970
(2) G. C. Hufbauer [1], Tabla A-2, A-3(a) Como en la clasificaci6n de Hufbauer no existen los items 864 y 892 se han utilizado losFuents :Notas :

skill index de 86 y 89 respectivamente.
(b) El indice de Brasil fue confeccionado considerando la proporci6n de los t(Scnicos sobre el

total de los empreados para empresas con mayor de 5 personas.
(c) En el indice de Hufbauer se tom6 la proporci6n de los profesionales, tecnicos, personales
cientificos sobre el total de trabajadores.

Se bas6 en el censo de poblaci6n de EEUU de 1960.

Cuadro 3 Skill content(i) de las exportaciones e importacionesC2)
Indice de Hufbauer

Indice de Brasil

las exportaciones

Ias exportaciones

Resto del mundo
Paises desarrollados

Paises subdesarrollados

ALALC

1968

1973

1968

1973

O.0210O.O173
O.0280O.0294

O.O188
O.O171
O.0228

O.0491
O.0397
O.0668
O.0697

O.0460O.0423
O.0575

O.0317

Resto del mundo
Paises desarrollados
Paises subdesarrollados

ALALC
notas:

O.08"

las importaciones

las importaciones

1968

1973

O.0389O.0396
O.0320O.0308

O.0394
O.0400O.0331
O.02941968

1973

O.11ooO.1116
O.0947
O.0914

O.1091
O.11ooO.1055
O.0837(1) El skill content se caicu16 del skill index de cada sector multiplicado por la participaci6n deese sector en el total de las exportaciones y/o importaciones.

(2) Se calcul6 en base al U. N., Commodity Trade Statistics (edici6n anual)

De acuerdo a los datos resumidos en el cuadro 3 vemos que existe una consistencia
razonable en el uso complementario de arnbos indices. Por ejemplo calculando la relaci6n entre el skill content de las importaciones con respecto a ias exportaciones (skill
content de las importacioneslskill content de Ias exportaciones) con respecto al resto delmundo para los afios 1968 y 1973, podemos observar que dicha relaci6n es de aproxi-

ESTRUcrURA DE LAS VENTAJAS COMPARATIVAS Y POLITICA COMERCIAL-- 21
EL CASO DE LAS EXPORTACIONES DE PRODUCTOS INDUSTRIALES EN EL BRASIL
madamente 2:1 para ambos indices.
1968

1973

Indice de Brasil

1.8523

Indice de Hufbauer

2.24032.09572.3717

Como consecuencia podemos decir que el uso de estos indices en forma complementaria, ha permitido el calculo de la estructura de ias ventajas comparativas de los pro-

ductos manufactureros brasilefios con un alto grado de aproximaci6n.

3. Interpretaci6n de los resultados
Volviendo nuevamente al cuadro 3 se ven claramente los siguientes resultados:(1) Si comparamos el skill content de Ias importaciones con el de las exportaciones
brasilefios referidas a cada una de las demas areas, para el afio 1968, se observa que elcorrespondiente a las importaciones es mayor que el de las exportaciones. Haciendo lo
propio para el afio 1973 se observa que el indice de las importaciones es mayor para el

resto del mundo, para Ios paises desarrollados, para los paises subdesarrollados y es

menor s61o para el area de ALALC. Estos resultados coinciden con el resultado esperado al basarse en Ia teoria de la dotaci6n relativa de los factores, por la cual Brasil
importaria bienes skilled labor intensive y exportaria bienes unskilled labor intensive.

(2) Si obsevamos el orden del skill eontent por regiones para los dos afios dereferencia resulta que el* Skill content de las exportacjones:

ALALC>Paises subdesarrollados>Resto del mundo>Paises desarrollados* Skill content de las importaciones:

Paises desarrollados>Resto del mundo>Paises subdesarrollados>ALALC
Este resultado tambien apoya los postulados de la teoria de las ventajas comparativas
para el caso del Brasil.

(3) El hecho que mas llama la atenci6n es el cambio ocurrido en la estructura delas ventajas comparativas desde 1968 a l973. Como aqui se ha utilizado el mismo
skill index para dos afios, Ias diferencias en el skill content no reflejan los cambios en las

caracteristicas de la industria. Por lo tanto Io que aqui mencionamos como cambios enla estructura de las ventajas comparativas reflejan solamente cambios en la intensidad

de skilled labor originados en cambios en la composici6n del comercio exterior. De
acuerdo al skill content de las exportaciones hacia el resto del mundo, podemos interpretar que Brasil ha intensificado ventajas comparativas en los bienes unskilled labormtenslvo.
1968

Indice de Brasil O.0210
Indice de Hufbauer O.0491

1973
O.O188O.0460SHOJI NISHIJIMA

22

Por otro lado con respecto a las exportaciones hacia ALALC ha intensificado sus ventajas comparativas en los bienes skilled labor intensivo.
1968

Indice de Brasil O.0294
Indioe de Hufbauer O.0697

1973
O.0317
O.0844

Este hecho tambi6n puede observarse en la evoluci6n de la participaci6n porcentual
de las exportaciones de la industria pesada quimica por regiones, pues estas exportaciones tienen un alto skill content (ver cuadro 1). Esta participaci6n ha aumentado con

respecto a la ALALC, especialmente en las exportaciones de maquinarias y equipos.

El punto en cuesti6n es determinar cuales fueron las causas que produjeron estos
cambios. Esto es lo que haremos en la pr6xima secci6n, en la que analizaremos la relaci6n entre el cambio de la estructura de las ventajas comparativas desde 1968 a 1973 y
las medidas de politica comercial que han incentivado la promoci6n de las exportaciones

desde 1964.

4. Estructura de las yentajas comparatiyas y politica comercial
Como vimos en la secci6n anterior, en el periodo 1968-73 el skill content de las exportaciones brasilefias hacia el resto del mundo ha disminuido, mientras que el fen6meno
contrario se observ6 en el caso de Ias exportaciones a la ALALC. Existen varios factores
que hicieron posible este cambio, pero aqui se tratara de analizar el punto referido a la
Cuadro 4 Las mis importantes medidas de promoci6n de las exportaciones industriales depu6s de 1964
Incentivos Impositivos

1964 Devoluci6n de impuestos aduaneros para las materias importadas utilizadas en la
producci6n para la exportaci6n1965 Exenci6n a Ios sellos
1965 Exenci6n de los impuestos sobre los productos industrializados aPD
i966 Exenci6n a los impuestos a los operaciones financieras

1967 Exenci6n de los impuestosala renta
1967 Exenci6n de los impuestos sobre la circulaci6n de mercancias aCM)
1968 Credito impositivo del IPI
Creditos a la Exportaci6n

1967 Creditos concedidos por la CACEX a la producci6n para la exportaci6n
1968 Creditos especiales a la exportaci6n concedidas por la FINEX
Politica de Cambios
1964 Unificaci6n de las tasas de cambio

1968 Apertura de crawlingpeg
Politica Arancelaria

1965-66 Abolici6n del surcharge de la importacion

1967 Rebaja de los aranceles
Otros medidas
1964 Simplificaci6n de los tramites para la exportaci6n

1966 EstablecimientodelCONCEX
1972 EstablecimientodelBEFIEXESTRUCTURADELASVENTAJASCOMPARATIVASYPOLITICACOMERCIAF

EL CASO DE LAS EXPORTACIONES DE PRODUCTOS INDUSTRIALES EN EL BRASIL
politica comercial.

Despues de 1964, en Brasil se produjoun cambio en la politica comercial tomandose
medidas de promoci6n de las exportaciones, de las cuales las mas importantes se consignan en el cuadro 4. Por ejemplo si consideramos las exenciones, los creditos impositivos, Ios rebates, etc, en conjunto IIegaron a representar un valor equivalente a un 40 O/,

de los precios internos de venta para el afio 19733) . Por otro lado, tambien los impues-

tos a la importaci6n han disminuido bastante desde 1964 aunque todavia se mantienena altos niveles; asi la tasa promedio de los impuestos nominales en 1973 fue del 40 0/.
para los bienes de capital, 36 O/. para Ios bienes intermedios, 67 O/. para los bienes deconsumo; y debido al efecto cascada esta estructura es bastante ventajosa para la pro-ducci6n nacional de bienes de consumo. Tambien se tomaron otras medidas tales comola politica de cambios, creditos a la exportaci6n, simplificaci6n de la tramitaci6n, servi-

cios de comercializaci6n ofrecidos por el gobierno, como asi tambien diferentes tipos
de medidas que sirvieron para la promoci6n de las exportaciones.

Dentro de todas estas medidas, las que fueron aplicadas de una manera discriminatoria fueron los impuestos a la importaci6n y los incentivos impositivos a la exportaci6n. Para clarificar la relaci6n existente entre estas politicas comerciales aplicados de

una manera discriminatoria con la intensidad de skilled tabor por sector y la distribu-

ci6n de las exportaciones segin regiones, se ha realizado un analisis de correlaci6n,
para el cual se han empleado Ios siguientes indices :BSI: Intensidad de skilled labor basado en el indice de Brasil,

HSI: Intensidad de skilled labor basado en el indice de Hufbauer,
ETP: Tasa de protecci6n efectiva (12/1973),

NTP: Tasa de protecci6n nominal (1211973),
IPI: Tasa de impuesto a los productos industriales (1211973),

ICM: Tasa de impuesto sobre la circulaci6n de mercancias (1211973),
P: Indice general de las medidas impositivas (1211973). En este indice estan
incluidas las exenciones a IPI e ICM, los impuestos a la renta y los impuestos a los operaciones financieras, y la devoluci6n del pago a los derechos aduaneros, los creditos basados en la resoluci6n 71, etc. (Este indicefue calculado por Tyler [7]),LAR: La participaci6n de las exportaciones hacia la ALALC sobre el total de lasexportaciones por sector (1973),
DCR: Idem para los paises desarrollados,
EE: La tasa del crecimiento de las exportaciones por sector desde 1968 a 1973,
EX: La participaci6n de las exportaciones sobre el total de la producci6n por

sector (1973),
Cada uno de los indices mencionados anteriormente se ordenaron de mayor a menor
por sector y se aplic6 la correlaci6n por rango de Spearman obteniendose los resultados

consignados en el cuadro 5.
3). Ver Tyler [7], p. 221.

SHOJI NISHIJIMA

24

Cuadro 5 Las correlaciones por rango de Spearman por los 21 sectores

BSIi HSIi
HSI

O.84

ETP

-O.78 -O.80-O.79 -O.77-O.23 -O.21-O.26 -O.16

NTP
IPI

ICM
P

LAR

DCR
EE

EX

O.33 O.32
O.44 O.52-O.33 -O.37-O.21 -O.25-O.06 -O.29

ETP2 NTP2 IPI2
O.98
O.37
O.35
-O.50
-O.45

028
O.14

ICM2 P2

LAR3

DCR3 EE3

O.41

O.34 O.63-O.46 -O.76 -O.89-O.34 -O.Ol -O.06 O.27
O.18 O.06 O.14 -O.31 -O.08

O.ll O.30 O.56 -O.38 O.08

OA1 -O.02 -O.38 -O.23 O.07 -O.58

O.39

O.56

Notas: Valor del coeficiente para un nivel de significaci6n del 5% es de O.438

Fuentes: (1) Cuadro 2(2) Tyler [7], p. 239, p. 244, p. 225(3) U.N., Commodity Trade Statistics, 1973, 1968

De acuerdo a estos resultados podemos observar los siguientes puntos :(1) Existe una relaci6n inversa entre la intensidad de skilled labor (BSI, HSI)y la tasa de protecci6n, es decir, a medida que la intensidad de skilled labor es mayor,
menor es la protecci6n aduanera recibida. Por lo tanto, la politica aduanera es discriminatoria contra las industrias skilled labor intensive, mientras protege a las industrias
unskilled labor intensive. Desde el punto de vista de la teoria del labor skills Brasil tiene

ventajas comparativas en las industrias unskilled labor intensive, por eso, las politicas
arancelarias brasilefias tendieron a reforzar aan rnas dichas ventajas.

(2) Aqui IPI e ICM presentan la tasa de impuestos que deberian pagar los produdtos en caso de que su destino fuera el mercado interno. En cambio si su destino es
la exportaci6n, existira una exenci6n de dichos impuestos. En sintesis al analizar losbeneficios que reciben las industrias de exportaci6n es posible afirmar que a mayor tasa

impositiva, mayor sera el beneficio producido por la exenci6n. Tendiendo en cuenta
estas consideraciones y en base a los datos del cuadro 5, podemos decir que no existe
una correiaci6n significativa entre la intensidad de skilled labor (BSI, HSI) y las cargas

impositivas (IPI, ICM, P) ; pero si solamente cosideramos el signo del coeficiente pode-mos afirmar que a mayor intensidad de skilled Iabor menor es la suma exenta. Es decir,
los incentivos impositivos estuvieron dirigidos a estimular la exportaci6n de las indust-

rias unskilled labor intensive. Respecto al indice P encontramos el mismo fen6meno;
cuanto menor es el P, mayores son los beneficios impositivos.
En sintesis, tal como virnos, las politicas arancelaria e impositiva han beneficiadoa las industrias unskilled labor intensive, siendo esta una de las causas de la caida delskill content de las exportaciones del Brasil al resto del mundo en el periodo 1968-73.

En otras palabras podemos interpretar que las politicas comerciales e impositivas
acentuaron aUn mas las ventajas comparativas de las industrias unskilled labor intensive.
Tambi6n el hecho de que las industrias unskilled labor intensive son las que mas crecieron en las exportaciones, confirma esta hip6tesis.

O.23

ESTRUerURADELASVENTAJASCOMPARATIVASYPOLITICACOMERCIAL- 25

EL CASO DE LAS EXPORTACIONES DE PRODUCTOS INDUSTRIALES EN EL BRASIL(3) Sin embargo, ccual es la cause de que el skill content de las exportaciones a lospaises de ALALC se haya elevado? La correlaci6n entre la participaci6n de Ias exporta-

ciones Por sector a los paises de la ALALC (LAR) y BSI, HSI es significativa y designo positivo, es decir que a mayor intensidad de skilled labor, mayor el porcentaje deexportaciones a los paises de ALALC. La correlaci6n con respecto a la politica arancelaria es de signo negativo, lo que significa que las exportaciones a la ALALC fueron lasque recibieron menos protecci6n. Con respecto a la politica impositiva no existe una
correlaci6n significativa. Las industrias que tienen una alta participaci6n de lasexportaciones hacia Ia ALALC (LAR) son aquellas justamente cuya tasa de especializaci6n en las exportaciones (EX) es baja. Por el contrario las industrias que exportan alos paises desarrollados (DCR) son aquellas cuyo grado de especializaci6n en los exportacjones (EX) es alta.
En resumen, las industrias que tienen una alta participaci6n de sus exportaciones
a la ALALC son las industrias menos beneficiados por las politicas arancelarias e im-positivas, y que ademas su grado de especializaci6n en las exportaciones es baja, es
decir son las industrias que todavia no han Iogrado desarrollarse lo suficientemente,
como para 11amarlas industrias de exportaci6n, y a pesar de ello en el transcurso delperiodo 1968-73 han incrementado sus exportaciones al area.
6A que causas responde este hecho? Es posible pensar en otras causas no relacionados con las politicas arancelarias e impositivas. Es probable que las dos mas importantes sean:(1) El Brasil es uno de los paises mas desarrollados dentro de Ia ALALC y tiene
las industrias mas complejas del industrialmix. Mas aUn durante el periodo 1968-73
experiment6 una alta tasa de crecimiento econ6mico, lo cual elev6 su posici6n econ6mica dentro del area y reforz6 sus ventajas competitivas con respecto al area.

(2) Tambien debemos mencionar el rol mas importante jugado por las empresas
multinacionales en la exportaci6n de productos industriales. Gracias al Acuerdo deComplementaci6n Industrial, el comercio y la producci6n dentro del area se ha extendido a los productos quimicos, derivados del petr61eo, autom6viles, equipos de oficina,
etc ; Pero es bien sabido que en la practica, este tipo de transacciones, por su naturaleza,se basan en acuerdos de producci6n y ventas entre subsidiarias dentro de las empresas
multinacionales que operan en el area. En sintesis, el Brasil es para las multinacionales
la base de sus actividades productivas, es decir, las subsidiarias alli ubicadas exportan en

gran escala a las subsidiarias de otros paises dentro•de la ALALC. SegUn un estudio de
MUIer y Morgenstern [4] para el afio 1969, el 73.3 O/. de las exportaciones de 94 empresasde capital extranjero radicadas en latinoamerica, cuya exportaci6n superaba los US$1oo.OOO anuales correspondian a transacciones entre subsidiarias de Ia misma empresa.

Por otro lado tqmbien UNCTAD I8] estim6 que del total de exportaciones industriales
dentro de la ALALC, el 40 O/. correspondi6 a empresas americanas.
Para analizar la relaci6n entre las exportaciones industriales de Brasil y las empresas multinacionales, se ha calculado la correlaci6n existente entre la participaci6n

en el mercado interno de las empresas multinacionales en cada uno de los 21 sectores

SHOJI NISHMMA

26

metodo de laen el cuadro(MSS) y algunas de las variables vistas anteriormente. Se ha utilizado elcorrelaci6n por rango de Spearman. Los resultados estan consignados
slgulente.

MSS

BSI

HSI

ETP

P

LAR

DCR

O.39

O.50

-O.20

O.20

O.60

-O.43

Notas:(1) El valor del coeficiente para un nivel de significaci6n del 5% es de O.438.

(2) Fuente de MSS es Tyler [7] p. 52. Los otros indices son los mismos que los del cuadro 5.

De acuerdo a estos resultados es posible observar que Ias industrias en donde la partici-

paci6n de las multinacionales en el mercado es mas alta corresponden a industrias
skilled labor intensive, por otro Iado corresponden a industrias cuya exportaci6n a la

ALALC es alta y que en cambio son bajas con respecto a los paises desarrollados. Y
por altimo no son tan beneficiadas por los incentivos arancelarios e impositivos. En
sintesis el aumento del skill content de las exportaciones a la ALALC tiene una estrecha

relaci6n con la expansi6n de las inversiones extranjeras del periodo considerado, como
asi tambien con el caracter de las empresas multinacionales que transaccionan sus productos entre las propias subsidiarias radicadas en la ALALC.

5. Conclusiones

Entre 1968 y 1973 el Brasil experiment6 un acelerado ritmo de crecimiento
econ6mico aumentando tambi6n sus exportaciones industriales. El interes de este
trabajo fue el de analizar los cambios en Ia estructura de las ventajas comparativas
ocurridas en este periodo. Para ello en primer lugar se ha calculado la estructura de lasventajas comparativas de los productos industriales para el afio 1968 y 1973. Para dicho
calculo se usaron los indices de Hufbauer y de Brasil (obtenido del censo 1970 de Brasil)
en forma complementaria, 11egando a confirmar la teoria del labor skills para el caso deBrasil. Es decir, se 11eg6 a confirmar empiricamente que Brasil tiene las ventajas com-parativas en las exportaciones de los bienes unskilled labor intensive. Mas aUn en elperiodo considerado se elevaron las ventajas comparativas en la exportaci6n de losbienes unskilled labor intensive hacia el resto del mundo, mientras que, con respecto a la

ALALC, aumentaron las ventajas comparativas en los bienes skilled labor intensive.

Una de las causas para explicar estos cambios con respecto a las exportaciones
al resto del mundo fue atribuido a la politica arancelaria y impositiva que promovi6
las exportaciones de los bienes unskilled labor intensive, mientras que para el caso de lasexportaciones hacia la ALALC las empresas multinacionalesjugaron un rol sumamente
importante. Y como Ultima conclusi6n es posible afirmar lo siguiente.

(1) La politica comercial brasilefia fue encaminada a promover la exportaci6nde los bienes que gozaban de las ventajas comparativas.

(2) El rol de las empresas multinacionales es importante para que la estructurade las ventajas comparativas cambie de los bienes unskilled labor intensive a los bienes

ESTRUCTURADELASVENTAJASCOMPARATIVASYPOLITICACOMERCIAL- 2

EL CASO DE LAS EXPORTACIONES DE PRODUCTOS INDUSTRIALES EN EL BRASIL
skilled labor intensive.

Refereneias[1] Hufbauer, G. C., "The Impact of National Characteristics and Technology on the

Commodity Composition of Trade in Manufactured Good," The Technology Factor in International Trade, compliado por R. Vernon, Columbia University Press

for National Bureau of Economic Research 1970.
,[2] Keesing, D. C., "Labor Skills and Comparative Advantage," American Economic

Review, mayo de 1966.
[3] Keesing, D. C., "labor Skills and the Structure of Trade in Manufactures," The

Open Economy, compliado por P. B. Kenen and R. Lawrence, 1968.
[4] MUIer, R. and Morgenstern, R. D., "Multinational Corporations and Balanceof Payments Impacts in LDCs: An Econometric Analysis of Export Pricing
Behavior," Kyklos, Vol. XXVII-1974-Fasc. 2.
[5] Nishimukai, Y., "Burazilu no Keizaiseicho to Kogyoseihinyusyutsu," Kokumin
Keizai Zassi, febrero de 1975, (en Japones).

[6] Tyler, W. G., "Trade in Manufactures and Labor Skill Content: The BrazilianCase," Economia Internazionale, Vol. XXV. No. 2, mayo de 1972.
[7] Tyler, W. G., ManufacturedExport Expansion andlndustrialization in Brazil, 1976.

[8] UNCTAD, "Restrictive Business Practices," TD/122/suppl. 1, Santiago, Chile, 7,

enero de 1972.

TECHNOLOGICAL PROGRESS AND
CAPITAL ACCUMULATION
Kazuo Shimomura
1. Introduction
In this paper we extend Hicks' Neo-Austrian Growth Modeli) to the case in which.echnological progress is constant, and examine how the long-term movements of thereal wage rate, labour productivity and employment of each productive process are influenced by the relation between the pattern of technological progress and the rate ofcapital accumulation.
This paper consists ofthree main parts. The first shows that real wage and labour
productivity grow at the same rate and the proportion of labour input used at each stageof production remains constant jfand only if technological progress is "neutral" andthe rate oftechnological progress is equal to the rate ofcapital acccumulation.

The second shows where our model economy, constructed at Section 2, converges
in the long-run when technical progress is neutral and the rate oftechnical progress is notequal to the rate of capital accumulation.

The third analizes the impact of the "orice-for-all" change of the type of technological progress on the short-term working of our model economy. Here we have thecase which corresponds to the "forward-biased" case in Hicks' "Capital and Time."2)2. Model2.1 TheProductiveProcess
The productive process in our model is similar to that in "Capital and Time." Sup-

pose the scale of production and the technique of production are independent ofeach other (constant returns to scale). There is a construction period T which is fixed
henceforth, where labour is applied at a constant rate (Ai) for building a factory. It isfollowed by an utilization period m-T, in which labour is applied at a constant rate(A,) for producing final outputs at a constant rate (X) of the factory.

DenoteA,A,(1) x =- ai and x =- a2
By the assumption ofconstant returns to scale, ai, i -- 1, 2, is independent ofX.

There is a difference between our model and Hicks'. Technological progress oc1) Hicks, [1] and [2].
2) See [1] chapter 8.

KAZUO SHIMOMURA

30

curs constantly in our model. That is to say, the newest technique of production at thecalender time t is,(2) ai(t)=a,(O)e"-aita2(t) =a2(O)e-a2t ai >O; constant
Let us call cri the saving rate of constructional Iabour and a2 the saving rate of operat-

ing labour.

2.2 The Rate of Capital Accumulation and the Profit Rate
We suppose I expands at a constant rate of growth, g.

(3) X=X,egt
g is, henceforth, called the rate of capital accumulation, though this term is inappropriate. The level of the rate of capital accumulation reflects both the states of short-term and long-term expectations ofthe entrepreneur. But we suppose in this paper thatshort-terrn expectation hardly has any effect on g. That is to say, our entrepreneur does
not quickly respond to the change of his economic situation. But if the latter lasts fora sufiiciently long time, he comes to see his situation in a new light.

As the representative index which expresses his economic surroundings we use theprofit rate, r, defined as the solution ofthe fo11owing equation,(4) -I,T aie-aitwe(T,t)e-rrdT+i le(t) {1-a,e-a2twe(r,t)}e-rrdT=o

where
ai i ai(O), a2 =- a2 (O)we(T, t); the real wage rate which at the calender time t, our entrepreneur expects to be realized for a date t+r in the future.

me(t)-T; planned Iifetime of the factory which embodies the newest
technology (aie-ait, a2e'a2t) at time t.

2.3 Constructional Labour (Ni), Utilizational Labour (N2), and Final Output (Y)On the assumptions (2) and (3), total constructional labour input (Ni), total utilizational labour input (N2), and final output ( Y) can be written respectively,(5) Ni(t)-igX(t-r)ai(t-T)dT== saiXoT (g= ai)
1 ga.iMaOi {1-e-'(g-"ai)T}e(g-ai)t(g \ai)(6) N2(t)=Ilit X(t-T)a2(t-T)dr==(a2Xo(m-T) (g=a2)
1 ga.2Ma02 {e-(g-a2)T-e-(g-a2)7n}e<g-a2)t (gsFa2)

31
TECHNOLOGICAL PROGRESS AND CAPITAL ACCUMULATION(7) Y(t)==i:=Io

X(t-T)dT{e-gT-e-gm} egt

2.4 FullEmploymentEquilibrium
The economic lifetime ofthe oldest factory, m-T and the real wage rate are deter-

mined by a fu11 employment condition.
Demand for labour depends on the real wage rate. For any level of the real wage,
all factories are divided jnto two sets. The factories jn one set can earn positive quasi-

rents, but the ones in the other cannot. Let us suppose only the factories of the former
set can be operating. At time t, the quasi-rent from the factory which our entrepreneur

started constructing at time t-T(T>T) isn =- 1 - w(t)e-cr2 (t-r)

For given w(t), t and cr2, the relation between z and T is illustrated in Fig. 1. 0bviously

only the factories whose operating period is below m-Tcan earn positive quasi-rents•
Treating t as constant, the higher w(t) is, the lower the location of the curve 11' will be•

So that, m-T is shortend and it means that the demand for labour input decreases,
considering (6). And we get

1-w(t)a2e-a2(t-M)=O foreachtor1(8) W(t)== a2 ea2(t-M)
We assume the supply of labour is constant through time. Therefore, the demand
and the supply curves of labour input are illustrated in Fig. 2. Let the momentary
equilibrium in the labour market be realized at each time t owing to the adjustment of
the real wage rate. Then the labour market clearing wage and the economic lifetime ofthe oldest factory are determined simultaneously.
Fig. 1

Fig. 2

n

W

l
j

12
s
1
t

Tl

curve

m -T
demand

1

curve

l
j

:

N: supplygN

KAZUO SHIMOMURA

32

But in the final output market the equality between demand and supply is notnecessarily realized. Therefore, we assume that there are fiscal expenditures enoughto realize the fu11 employment equilibrium at each time t. Let e(t) be the net compensa-

tory fiscal expenditures of the government, measured by the unit of final output. The
equilibrium condition of the final market is(9) Y(t)-e(t)+w(t)(IV,(t)+N,(t))=2(t)+w(t)IV IV;constantwhere N; the supply of labour

and
we assume no labourer never saves his wage and the entrepreneur never consumes his

mcome.
Needless to say, the above assumption is unrealistic. But as we said at the begin-ning ofthis paper, our main concern is mutual relationship among technological progress, the rate of capital accumulation, the real wage and Iabour productivity, and not,for example, the determinant ofthe level of effectjve demand. This is why we adopt suchan artificial assumption.

2.5 The Type of Technological Progress
Hicks classifies the types of technological progress, according to whether the saving oflabour input is partial to the early stage or the late stage of the productive process.3)

Our classjfication is based on Hicks'. Henceforth we call technological progressof the neutral, capital-saving, or capital-using type according to cri== cr2, cri>cr2 orai<a2, respectively.

3. SteadyState
Definition ; Our model economy is said to be in a steady state ifm never changes throughtime for a given g.

We can prove that our model economy is in a steady state, if and only if g=ai== a2

Proof of SuMciency; There are two kinds of factories in our model economy, that is,
the factories under construction and those in operation. At each time t, the factory
which is being constructed at time t absorbs the additional amounts oflabour,

ale-alt Xoegt
and there are some releases of labour,aie-ai(t-T)• Ieeg(t-T)
from the factory which is brought to completion at time t. Therefore the net releases

3) See[11.

33
TECHNOLOGICAL PROGRESS AND CAPITAL ACCUMULATIONof labour inputs from the factories under construction are,(10) aiXoe(g"ai)t• [e-(g-ai)T-1]
In the same way, net releases oflabour inputs from the ones in operation are,(11) a2Xoe<g'a2)t. [e-(g-a2)m-e-{g--a2)T]
If the sum of these two net released labour inputs is not zero, m must change in order tokeep a fu11 employment equilibrium. That is to say, if the sum is positive (negative), m islengthened (shortend). But as g== cri=a2, both (IO) and (1 1) are zero. Q.E.D.
'The proof of necessity is easy, too. But as Section 4 in this paper itself turns to be

the proof, we describe some properties of a steady state here.
A steady state is the state where there is a balance between two powers which workin the opposite direction. One of the powers consists in capital accumulation, which
has the function ofincreasing employment. The other consists in technological progress,

which has the function of decreasing employment.
Let us find the steady state solutions (m", w", .Ni N2", Y"). From (5), (6), theequivalent condition that g== ai=cr2 ia and(12) IV-N,+N2,
we get1-(IV-aiXoT)(13) M*==T+a,XoThus, in a steady state it is possible to produce final output (m">T), if and only if(14) jV>aiXoT
The right hand side of(14) expresses total constructional labour. With regard toother solutions, from (5), (6), (7), (8) and (13), we have(15) Ni"==aiXoT(16) IV2"==IV-aiXoT1(17) w*=: a2 e-"gM* egt

Xoegt(1 8) Y* [e-gT-e-gm*]==gTherefore,

A )" == t" == W" ==g -ai -cr2 -= d"(i 9) ( i-U
where the mark A expresses the logarithmic derivative ofeach variable with time t.

The last equality is derivedAfrom (9) and Y"=w". Let us see briefly how thesteady state solutions respond to the changes in the parameters; the supply of labour,the constructional period T, and the rate of capital accumulation g.

The supply ofIabour IV;(13) shows that m" is lengthened or shortened, according to ahigher or lower N. A higher N results in a lower ratio Ni*!IV2* and vice versa•

KAZUO SHIMOMURA

34

The constructional period T; (13) shows that the effects ofchanges in Ton m" depend on
the ratio aila2; that is, when T is lengthened, m" is lengthened, unchanged or shortened, according as aila2<1, == 1, or 1.

The rate of captial accumulation; (19) shows that each growth rate of labour
productivity, final output, and the real wage rate is equal to g.

4. The Rate of Capital Accumulation, Technological

Progress and the Profit Rate

- long-term trend It is shown in the previous section that our model economy is in a steady state if
g =ai==a2. In this section we examine the cases where the rate ofcapital accumulation
is different from the rates of technological progress.

Arranging g, cri and cr2 in order of height, we have ten cases as in Table 1. In thistable the movement of m, the principal variable of our model, is shown in each case.
We examine case (l) and (2) here. The other cases except for case (8) are similar though
not exactly to (l) or (2). Case (8) is examined in the Appendix.

Case (1); g> ai=cr2 =- cr
Tab]e 1the movemet of m

caseg>cri==a2 (1)in<O, m.Twithin a finite periodg<ai==a2 (2)th>O, in-1, m-oe (t.oe)g<ai<a2 (3)th.1 within a finite period, m-ÅÄooai==g<a2 (4)rk.1, m.oo (t-"hoo)for suMciently large t, fii<O, m.T

cr1<g<cr2 (5)cri<cr2Sg (6)ih <O, m--> T within a finite period

in>O, rk.1, m.cx) (t-oo)g<cr2<al (7)cr2=g<ai (8)cr2<g<ai (9)th>O, rk-.O, m.m'<oo (t.oo)a2<g=ai (10)in<O, m.Twithin a finite period

in<O, m-T(t.oo)(rk means (d/dt)m.)(1 O) and (1 1) show that in this case the net releases oflabour input from the factories

under construction and those in operation are negative. Thus the real wage rises andsome "marginal" factories cease to operate because they cannot earn a positive quasirent. Therefore from these factories some labourers are released. They amount to-ih a2Xoe-(a-g) (t-m), riz<odwhere rk means dt M•
Considering full employment condition, we have(20) rka2Xoe-(a-g)(t-7n)=aiXoe-(a-g)t{e(a-g)T-1}+a2Xoe-(a-'g)t

Å~ {e(a-g)M-e(a-a)T}TECHNOLOGICAL PROGRESS AND CAPITAL ACCUMULATION 35
or.ala2 e"(a-g)M {e(a'-g)T-1}+{1-e-(a-g)(on-T)} Ei!Åë(m)(21) m=whereal{1 -e- (a-g> T} <O(22) ip(T):=a2(23) ddmÅë ==(cr-g)[Zl {1-e{a-g)T}e-(a-g)m+e'{cr-g)(m-T)]<o(24) ald.2Åë, =--(cr-g) dd.Åë <oConsidering these properties, Åë(m) can be illustrated as in Fig. 3. Starting from any
initial value m, (> T),m is shortened monotonically, and reaches Twithin a finite period.

Fig 3
Åë (m)
1
1
1
l

l
I

T

l

m

l

1
1
1
l
1
l

1
l
l

(5) shows that Ni increases at constant growth rate

because N==Ni+N2 and N is constant.
With regard to Y( YIAi) and w, we see from (7) and (8),A iU )-gli+ ,(.-lll)g-i l(2s) ?'==((26) fo-cr•(1-in)
Noting the movement of m, mentioned above, we see

Y==(AIkl )>g for each time t

AY. -oo when m -> T,

a-g. Thus N2 decreases

KAZUO SHIMOMURA

36

andfo>cr for each time

W. cr, when m.T
As a matter of fact, that m = Tmay not be realized. Before m reaches T, our model

economy may have one ofthe following two kinds of experiences or both.

(A) rmay be getting to be zero. In order to know the movement ofr, we must specify
the way in which our entrepreneur forms his expectation with regard to we(T) and me in(4). The question is what kind of expectation is "optimal" in a non-steady state. This
question is diMcult to answer. But the following inference may be sufficiently appropriate. In case (1), the real wage rises at the growth rate more than a and m is shortened

monotonically. Thus our entrepreneur, ifhis expectation is strongly affected by present
and past facts, may expect the real wage to continue rising and the economic lifetime of
future factories to be shorter than now. If so, the expectation that the future real wage

is equal to the present one and that me=+oo is more "bullish" than any reasonable
expectation. That is to say, it is thought that the profit rate, calculated on such expecta-tion, is higher than the profit rate caluclated on the "optimal" expectation. Therefore,
ifit continues to decline, the profit rate calculated on the "optimal" expectation cannot but decline, at least after the lapse of a suMciently long time.

Substituting me and we(T) in (4) with + oo and w(t) respectively,

we see(27) -w(t)aie-a` S,T e-r' dT+ {1-w(t)a, e-at} ii! e-rr dT==O
Since

je-r'dT==- l e-rr,
it follows that(28) 1==w(t)e-a` [ai{e'T-1}+a2]where a possitive r exists if and only if

1 - w(t )a2e-at >O
Taking the logarithmic derivatives of both hand sides of (28), we get,erT- 1(29) P - T. (l -A) {a-W}
where

a2 ,O<A<1ai(erT-1)+a2

Aiii!

Obviously if a<W, i<O. Thus the "optimal" r may decline, too. If the rate of capital
accumulation g responds elastically to the change of r, g may approach a from above.

(B) But ifg does not respond so elastically, Ycomes to decrease and wN to increase.
Thus to keep the equality between demand and supply in the final market, e must de-

37
TECHNOLOGICAL PROGRESS AND CAPITAL ACCUMULATION

crease. But if feasible e is bounded (e.i. f{; e sg e...), after the lapse of a suMciently

long time,Y<emin+wlVThat is, our model economy may experience demand pull inflation.

Case(2); g<cri==a2=cr
In case (2) both (10) and (11) are positive. Namely there is Iabour surplus at eachtime. Contrary to case(1), the real wage falls and labour surplus is absorbed by postpon-

ing the abandonment of the oldest factory.
Owing to this postponement, the amountofIabour input equal to ina2 Xoe- (a-g) (t-m)(rk>O) can be absorbed. In this case, with regard to the function, defined by (21), we

have(30) Åë(T)>O,(31) lim ip(m)-1
M-oe

and
dip
(32) dm lO, aecordingas mbi1

in > 1 means that the factories which once stopped operating because they could not earn
positive quasi-rents begin operating again. But considering their physical and technicallifetime, the economy where in>1 is not able to endure. Therefore henceforth, weconcentrate on the case rit<1. From (31) and (32), it is obvious that

lim rk=1
t-ee

andlim m=::+oot-eeAOn the other hand, Ni (N2) decreases(increases). Y and D converge to g and zero fromabove respectively.4) In this case the following two kinds of situations may happen.
(A) m cannot be lengthened infinitely because of the physical and/or technical lifetimeof the oldest factory. So, at last it is getting impossible to absorb the labour surplus byfurther prolongation of the economic lifetime, and "technological unemployment" mayoccur as a final result.

A Y>g and wN converges to a certain constant value. Therefore the(B) In this case,A be higher than Y to keep an equilibrium in the final
growth rate of e= Y-wN must
market. So that, e amounts for almost 100 O/. of the total demand after the lapse ofa
suMciently long time. If 9 is bounded, ultimately

Y>emax+WN
and "Keynesian unemployment" may occur as a final result.
It is not clear whether g may rise or not. The profit rate, defined by (4), is, as it4) Soe (25) and (26).

KAZUO SHIMOMURA

38

were, the maximal rate and that this profit rate rises is one thing and that the "optimal"

rate rises is another.
An encouraging factor to the rise ofg is that O converges to zero. If the decline offo brings out that ofexpected fu, the "optimal" profit rate may rise.

There are two kinds of situations where our model economy may arrive after thelapse of a sufliciently long time; one is characterized by labour deficiency and otherby labour surplus. In the former the rate of capital accumulation is higher than the rateof technological progress, so that, as it were, the factories under construction and one
in operation begin to compete with each other for labour. It follows that the real wage
rises and that old factories as they can not earn positive quasi-rents stop operating; mAA

is shortened. As the result of the shortening of m, Y declines, though (wlV) rises. Afterthe lapse of a sufficiently long time, excess demand may happen in the final output
market and demand-pull inflation may occur.
The latter is contrary to the former. Owing to the fast saving of labour, the real
wage rate never rises fast, so that mAis lengthened and Y rises. After the lapse of a suf-

ficiently Iong time, excess-supply may happen in the final output market and Keynesianor technological unemployment may occur.
We have examined the cases of the neutral technological progress in this section.
As shown in Table 1, jn the cases of the other bjased technological progress the long-term movement of our model economy depends on whether g is higher than the lower
value of cri and cr2, denoted by min (ai, cr2) henceforth.

5. The change of the rate of technological progress-short-term effectWhether the type of technological progress is neutral or not, our model economy
reaches one of two states which are quite different from each other, according towhether the rate ofcapital accumulation g or min (cri, cr2) is higher.

If the rate of capital accumulation responds e}astically to the change of the profit
rate, the rate of capital accumulation may fluctuate arround min (cri, a2) in the long-run. These are the main conclusions of section 4.
In this section we examine how the once-for-all change of the rate of technologicalprogress affects several variables, the real wage, Jabour productivity, employment,
etc., particularly in the short-run.

Our model economy may be adapted to the once-for-all change through the following three phases.

(i) Preparatory Phase: We suppose this change occurs at time zero. The Preparatory Phase lasts for Tperiods from time zero. All the factories which embody the
new type of technology are under construction and never produce any final output.

(ii) Early Phase: In the Early Phase the factories which embody the new type
technology begin to operate and the factories whose constructional period contains

39
TECHNOLOGICAL PROGRESS AND CAPITAL ACCUMULATION.
tlme
zero operate, too.

(iii) Late Phase: In the Late Phase all the factories which embody the old type
technology cases to operate.

Obviously we examined in the previous section the working of our model economy
in L.P. Therefore P.P. and E.P. are the main objects of our consideration in this section.

Here we concentrate on the case where

lneutraltechnological N . Icapital-usingtechnological N
kprogress, cri=cr2 7 - Lprogress, cri+acri<a2+dcr2 7
and that before time zero, our model economy is in a steady state (g== cri =cr2E cr)•Let g not change between before and after time zero. Namely we assume thechange from (cr:-=ai=a2=g) to (cr+dcri<g<a+dcr2, dai<O, Aa2>O) occurs at time
zero. This change corresponds to Hicks' "strongly forward-biased" change of technolOgy.5)

P.P.; O=<tST
Since Aai<O and our model economy is in a steady state before time zero, in P.P.
Iabour deficiency occurs and m is shortened. The net releases of labour input fromthe factories under construction is aiX,-aiXoe-"ait. On the other hand, the net
releases from one in operation is zero because all factories in operation in P.P. embody

the old type technology (cri=cr2=cr). Owing to the shortening of m, -ina2X, units oflabour are supplied. Therefore we get -a2X,rk=aiXo [e-`ait- 1], or(33) th =a-{1-e'dait} iiip(t)<owhere(34) ip(O)-O
dip ai(35) dt =-a-, aaie-"ait<od2Åë dÅë
(36)dt2 ==-dai' dt <O
With regard toAA
W and Y(Y!N), since(25) i' = ( AIi: ) ==g ' [1 + ,g(mt'T)-1 ] ,and(26) fi-a(1-rk)>cr

AA(35), Y=(Y/N) declines and W rises monotonically from g reconsidering (33) andspectively (See Fig. 4).

E.P.; T=< tSt, where to is the solution ofthe equation,5) See [1] chapter 8.

KAZUO SHIMOMURA

40

t== m(t).
In E.P. the net release oflabour jnput from the factories under construction is

aiXoe'aait • [edaiT.1]<oon the other hand, from the factories in operation the net releases,

a2Xo [1-e-aa2(t--T)]>ooccur. In order to keep the full employment equilibrium, it is necessary that

a2Xork=a2Xo [l-e-d"2(t-T)] -aiXoe-aait . [1-edaiT]or(37) ril=:{1-e-da2(t-r)}+ Zi e-dai(t-T).(1-e-daiT)!!!H(t)Whether rk is posjtive or negative is ambiguous. It may be possjble that at least withina certain time interval in E.P. in>O, contrary in L.P. and in P.P. We examine what
condition can make rk positive within a certain time interval in E.P.

With regard to the properties of function H(T), we getal(1-e-daiT)<O(38) H(T)==a,(39) •IimH(t)==-oot-eo(40) dtdH=aa2e-""2(t-T)-Z,' da,{1-e--daiT}e"dai(t-T)''(41) dt,d2H<O ''From (39) and (41), if the maximal value of H(t) exists for t l T,

dH(42) dt ,..>O
That is, the derivatives of H, evaluted at T, are positive (see Fig. 5). Obviously, if there

Fig.4 Fig.5
H

1

W

l
l
1

t

Tl
g

o

t

i
1

f"'

,

Y
H(T)

1
I
t
1

1
l

41
TECHNOLOGICAL PROGRESS AND CAPITAL ACCUMULATION

is a time interval in E.P. where rk>O, from the right hand side of(40),aidai(43)a2dcr2
1> (1-e-daiT)>O
Let us obtain the maximal value of H(t) for t l T. Solving the equation, dHldt=O, withregard to t, we get,(44) t" == T+ dcr,l a., log [ ZIS:I (1 -e-aaiT)] <T
as the solution. Substituting this t* with H7(t), we have the maximal value of in,(45) H(t")=1-(1- S:,2)i :S:,i (1-e-da,T)l""2iAcr2'-`at
Therefore, there is a certain time interval in E.P. if and only if(46) 1>(1- i:i )I aai,S:II (1-e-d.,T)lda2/zia2-daiThis inequality can hold if, for example, T is sufiiciently short. Thus contrary to P.P.
and L.P., it is possible that in>O in E.P. Then, if m is already suMciently long before
time zero, in E.P., m may be beyond the physical or technological lifetime of the factory.

If so, technological unemployment may occur.
This corresponds to the effect of mechanization on employment (or the real wage)
which Hicks indicates at chaper 8 of "Capital and Time", using his own model.

References[1]

Hicks, J. R., Capital and Time: A Neo-Austrian theory. New York and London:
Oxford University Press, 1973.

[2]

Hicks, J. R., "A Neo-Austrian Theory," Economic Journal, 1970.

Appendix; Case (8)Substituting (5) and (6) into (12) and taking the logarithmic
hand sides of (12), we get,al{e-(g'aa)T-1}e(g-ai)t(a) rk==a2

Since g-ai<O in case (8), e-(a-"i)T-1>O. Therefore,(b) rk>Oand(c) rkt.O (t.oo)

derivativesof both42 KAZUO SHIMOMURA
becausee(g-a)t.O (t--.boo).
This means m converges to a certain finite value. Let us get this value.

(a), we have(d) Irkdt= : {e- (g-ai) T- 1} S e(g-ai)t dt+e

where
C is an unknown constant.
Solving (d),ai e- (g-ai)T-1(e) M= a, '' g-crie(g-ai)t+C
Let mo be an initial value. Thenai 1-e-(g-ai)T(f) C= Mo+ a, ' g- criand we have(g) lim m=c- ai . 1-e-(g-ai)Tt-oo a2 g-a

Integrating

REVIEW&
KOBEECONOMICBUSINESSCONTENTS
NO. 19 (1972)
Patterns of Export Trade of Argentina and Brazil:
AComparativeStudy ............................................................JFukuoKawata
Entrepreneurship in America ......................,...,..........................................Tadakatsu Inoue

Generalization of Two-Gap Theory ............,....,.............................................Hikoji Katano

Accountjng Measurement and Homomorphism ................................................Isao Nakano

An Interpretation of Two Stage Least Squares
Estimators as Indirect Least Squares
Estimators in the Overidentified Case ....................................Hiroshi Sadamichi
A Note on the One-dimensional Random Search ..........................................Komayuki Itow

Exchange Rate Systems and Distribution of
Seigniorage ....,...................................................................Kazuhiro Igawa

NO. 20 (1973)
An Analysis of the Brazilian
Balance ofPayments: 1960-1972 .............................................Fukuo Kawata

International Money Flow and
the Multinational Corporations .,...........................................Masahiro FuJ'ita

Estimation of Investment Allocation
RatiosofJapaneseEconomy: 1960--1969 .................................HikojiKatano

Available Jobs and Employment inJapanese Forejgn-gojng Shjpping .......................................Hiromasa Yamamoto
Homomorphism and Business Income Measurement ..........................................Isao Nakano
Assets Choice and Optimal International Reserves.................................,........Kazuhiro Igawa

NO. 21 (1975)
Regional Development Policies of Japan in Recent Quarterof the Twentieth Century .,.......................................................Minoru Beika

National Income and Expenditure
at Factor Cost in Japan 1955-1970:
AMacro-AccountingforGrowingEconomy ..,...........................NobukoNosse
EMciency and Acceptability in Optimal Growth Path ,...................................Hikoji Katano

An Equitable Distribution of the Costs and Benefits of Economic
Integration.....................................................................YoshiakiNishimukai

Japanese Business Abroad: Past, Present and Future ....................................Hideki Yoshihara

Pioneering in Australian Direct Trade
Life of F. Kanematsu,1845-1913 .,...........................................Tadakatsu Inoue

Productivity Bargaining and the Change of Labour
Management Relations in the Japanese Foreign-going
Shipping: 1965-1973 ......................................,...............Hiromasa Yamamoto
On an Interpretable Depreciation Method ............,.........................................Isao Nakano

A New Type of Data Banking System-BEICA System- .........................................................HiroshiSadamichi
Expectation in the Shipping Exchange .........................................................Tetsal'i ShimoJ'oInternational Capital Movements andReal Capital Accumulation......................................................Kazuhiro Igawa

Legal System of the Free Movement of Workers and Migration
Trends in the European Economic Community .................................Kunio Soh

NO. 23 (1977)
Alternative Approaches to the
Accounting for Education .........................................................IVobuko IVosse

Personnel Management of Japanese Companies
in Thailand: A Field Paper ................................................Hideki Yoshihara

Evaluation of Performance Using
Multiple Criteria ..................................................................Komayuki Itow

Some Bargaining Process Models in
the Shipping Exchange............................................................Tetsuji ShimoJ'oAsset Diversification under the Flexible
Exchange Rate System .........................................................Kazuhiro Igawa

NO. 24 (1978)
The Demand for International
Currencies and Reserves.........................................................Masahiro Ful'ita

Nobuo Miyata
Studies for the Prediction of Shipping Markets-A Survey and their Applications- .......................................Tetsul'i Shimojo

A Note on the International Transrnission of
Policy Effects under Flexible Exchange Rates ..............................Kazuhiro Igawa

A Control Estimation Approach toTime-varying Parameter Models ................................................Yukio Uchida

NO. 25 (1979)
Redundancy of Seafarers and the PracticeofPermanentEmployment .............................................Hiromasa Yamamoto
Japanese Multinational Enterprises:
AView from Outside .........................................................Hideki Yoshihara
A Comment on the Bayaraa's Algorithm ......................................................Komayuki Itow

Effects of Ship's Size and Cargo Lotson the Ocean Freight Rates ...................................................Tetsuii Shimol'o

Direct Foreign Investments and Foreign Exchange Rate:
A Model of Specific Factors and Non-tradable Goods..................Kazuhiro Igawa

KOBE UNIVERSITY ECONOMIC REVIEW 25, 1979
Edited by Faculty of Economics, 'Kobe University, Kobe, JapanCONTENTS
Exchange Factors and Non-exchange Factors

Determining Income Distribution-A Consideration, from the Point of Viewof a Class Theory-................................................
Japanese Multinational Companies in Singapore ..................................

............Toshimasa Mukai.... ......Atsushi Murakami

A Re-examination of the Fertility Model by Age and Maniage Duration :UsingEstimatedJapaneseData ...............................

...........Shiniehi Takahashi

Price Competition and Technical Choice.............................................

............ Takeshi Naka tanie,fl-,,itl,111Mn,.1-iq-llMnl,"mll-nlltll"k-,t,+tlellUI,t"uil,,11tll[tl+lh-it,ltllll"d,"Liilvltllllsl,",,,+1"ltlMll,tl-,lflllllPIJdl,,d,ll,IIIIIIt:"1,,t,1"IMIIti,lthitl,lllMtl

OF
THE ANNALS OF THE SCHOOL
BUSINESS ADMINISTRATIONKOBE UNIVERSITY 1980
Editcd by the School of Business Administration,

Kobe University, Kobe, JapanCONTENTS
Grundlagen der Reproduktion desArbeitsverm6gens im Sozialismus . . . . . . . . . . . . . . . . . .Hanna Grabley and Ekkehard Sachse

The Principles of Wage-Payment under Socialism...................................................Susumu Kaido

Flexible Exchange Rates and Macroeconomic Management:
A Study of the Japanese Experience, 1973-78 ..............................Akihiro Amano
A Test of the "Bigger Fool" Thought of Conglomerate Valuation . . . . . . . . . . . ,. . . . . . . . . Shigeki Sakakibara,ihttlf.ltlllltp.lltllvtlHllllbthlludllSIMtt,th"v.1:IIHIII.l",,LI,ttTMtp,I,,,,1"ttlllPt,"th,t,,ttllllp,ek,ul"tlHl","1,4,Å}l,tllllltpllh"li,1:EIHIIdltdhii,"11I[11tdlh,,,1,ttlMIL,I

KOBE UNIVERSITY LAW REVIEWInternational Edition No. 13, 1979
Edited by Faculty of Law
Kobe University, Kobe, JapanCONTENTS
Pressure Groups in the Diet Elections of Postwar Japan-The Role of Trade Unions and Business Groups- ........................Kaiuo Indo
Legislation concerning Security of Some Business

Areas for Small and Medium-Sized
Enterprise and Antimonopoly Act .............................................Akira Negishi

RESEARCH INSTITUTE FOR ECONOMICS AND
BUSINESS ADMINISTRATION, KOBE UNIVERSITYHISTORICAL SKETCH
In 1919, a research organization named the Institute for Commerce was foundedin Kobe Higher Commercial School, one of the chief predecessors of Kobe University,with a gift made by F. Kanematsu & Company, a leading mercantile firm in Kobe. The
organization was designed to carry on and facilitate integrated research on business andcommerce and to formulate and publish the results of these studies and investigations
in such form as to make them available to the business community.

With the founding of Kobe University of Commerce, successor of Kobe Higher
Commercial School, in 1929, the Institute extended its research activities by adding

several divisions. One was the famous Latin-American Library, which soon became thecenter of research in this field in Japan. A room for statistics equipped with various

computing machines was established and began publication of Jdyo- To-kei Keizai
monthly and Sekai Bo-eki To'kei annually. A filing room was prepared to deposit press
clipping files systematically arranged by topics and dates. Another room was designed
to become the center of all possible original records and data having to do with the be-ginning and progress ofJapanese business.

On the campus of Kobe University of Commerce, another organization named theInstitute for Business Mechanization was founded in 1941 utilizing business machines
donated by the IBM Corporation and others. With Professor Yasutaro Hirai as its heada broad and forward-looking plan for business mechanization in Japan was developed.

In 1944, Kobe University of Commerce changed its name to Kobe University ofEconomics. After the War, however, the University was consolidated with three othercolleges in Hyogo Prefecture to become Kobe University. With this development, thetwo Institutes were also amalgamated into the Research Institute for Economics andBusiness Administration, Kobe University, At present, the Institute, with its twenty
four full-time professional staff members, carries on studies and investigations in inter-natjonal economy, business administration, and jnformation systems in Japan,

LOCATION AND BUILDINGSThe Research Institute for Economics and Business Administration is Iocated on
the campus of Kobe University, Rokko, Kobe. It consists oftwo three-storied buildings.

One is named the Kanematsu Kinenkan and has a floor space of about 2,9oo square
meters, which includes a president's room, forty•-one oMces, six rooms used as a library,a room for statistics, etc. Another is built in 1964. It has a fioor space of about 1,900
square meters, which is chiefly used as the Documentation Center for Business Analysis,

a library and a conference room.

ORGANIZATION
Under the directorship of the president, the Institute operates with two researchgroups. Each research group and its sections are as follows:

A GroupoflnternationalEconomy(1) InternationalTrade(2) International Finance(3) MaritimeEconomy(4) Latin-AmericanEconomy(5) OceanianEconomy(6) International Labour Relations

B GroupofBusinessAdministration(1) InternationalManagement(2) Business Administration and Information Systems(3) Accounting(4) Business Statistics
Besides the regular work of the Institute, research committees may be created tocarry on any special work requjring thejojnt study of academic and business circles. At

present, there are five standing research committees, as follows: Experts Group on theWorld Trade Structure, Committee of International Finance, Committee of Information Systems, Committee of Oceanian Economy and Committee ofMaritime Labour.
For convenience and greater eMciency in carrying out its research activities, theInstitute has a general oMce which is responsible for 1) the collection and preservationof a comprehensive collection of books, periodicals, pamphlets, and original records
and data of finance, trade, commerce, industry and business generally; 2) the classifica-

tion, cataloguing, indexing arranging, annotation and compilation of these researchmaterials; and 3) the formulation and publication of the results of the investigations andstudies accomplished by the professional staff members of the Institute.

As an affiliated institute, the Documentation Center for Business Analysis has been
established in 1964. It is the first systematic information facilities in the field of businessadministration in Japan that has been recognized and authorized by the Ministry of
Education. The purpose is to collect and to make jntensive control of all kinds of materials on business administration and to make them available to scholars, universities,

governments, and business world with the aid of modern documentation techniques.

i

I
I
I
f
i
i

RESEARCH INSTITUTEFOR lECONOMJCS&BuS!NEss
ADMINisTRATIoNli
KOBE UNIVERSITY:
lt

Direetor: Masahiro TARuMoTo
FuJITA i' lSeeretary:Jisaburo

i
l
1
i
i
i

l
l
i
i
i
i
f

i

ttTttttt-t+-ttttLtttt-ttttLtttttttttttttt-ttLt-tttttttt-t--ttut-tttttttttt--------e

GROUP OF INTERNATIONALl
ECONOMIC RESEARCH I'
Seiji sAsAK[
Professor of Marit{me Minor

Dr. of Econornics

i
l
l
l
i
l
l
i

Akira NEG{sHi Professor of EconorniclEconomyDrl of Economics

IT

i Masahlro FuJrTA Profcssor of lnternational
i
i
i
i
i
i
l
l
1
I
i

i
i
l
i
i
l
i
i
i
l
i
i
:-

i
i
l
i
l
i
i
i
i
i

Finance

Law
Hikoji KATp,No Professor of lnternational

Trade
Dr. of Economics
Ph. D. in Statistics

i
l
l
1
i
i
i
:

Tadakatsu lNouE Professor of lnternational

Managemcnt
Akio MoRl Professor of Business

Financc
Dr. of Business Admini-

tratlonof Business
Nobuko Professor
NossE

Statistics 'Dr. ef Business Adminis.

tratlonilLabour Rclations
Kojiro Nl{Ne Profcssor of Politicali

Ecenomyt]

Administration

Study on Latin

International Management
Hirosh{ SADAMIcHi Associate Professor of

Business Statistics

Ph. D. in Econometrics

li

Komayuki TTow Assoclate Professor oflBusiness Administration
and InforTnation Systcms
i

America
Tetsuji SHIMoJo Associatc Professor oflt

Maritime Economy
Kazuhivo lGAwA Assoc{ate Professor ofInternational Tradc

ii

Hidetothi YAMAJJ Research Associatc ef

4•

l
i
i
l
l
i
i
i
l
l

Kenichi lsHIGAKr Associate Profcssor ofOccanian Economy
Shoji NlsHtJIMA Research Associate ofRegional Study on
Latin America

Accounting:iKazuo SHIMoMuRA Research Associate ofOccanian Economy

lt

l
i

Off{cc : The Kartematsu MÅëmorial Hall

KOBE
ROKKO,

l
l
i
i
l
l
1
i
l
l
i
i
l
i
i
i
i
it

Hideki YosHIHARA Associate Professor ofll

Yoshiaki NIsHIMuKAI Professor of Regional

l
l

lt

Isao NAKANo Professor of Accounting
Dr. of Business

Hirornasa YAMAMoTo Professor of lnternational

:T

l
i
i
i
i

i
l
l
l
I
l
l
l

1e
l1
14

l
GROUP OF BUSINESSADMINISTRATION RESEARCHl

UNIVERSJTY

KOBE JAPAN

l
i
i
1
i
1
l
l
i
I
i
i
i
I
1
i
i
i
i
l
l
l
l
I
l
1
i
i
i
i
l
i
l
i
i