Economics ETDs

Publication Date

2-9-1973

Abstract

The methods of foretelling, planning for future, range from the mythological to the mathematical and now many are confident that some methods developed by economics are sufficiently established to predict future economic events in the course of economic development. In spite of well known fiascos associated with planning mistakes and economic predictions, the need for forecasts and plans has been increas­ing. One reason for this need is that individual and collective living requires considerable amount of planning over a wide range of activi­ties.

The aim of this study is to examine a well known practice of economic planning, namely, to use the main characteristics of input-output tables of selected economies in a comparatively advanced stage of development to direct a lesser developed economy on a given path of economic growth.

The general tenor of the present literature claims that detailed development targets can be safely selected from the patterns of other nations. We feel, however, that such a practice implies the tacit acceptance of historical materialism, namely, that history has a course is governed by iron laws, and for various nations, main events and development stages can be foreseen by consulting the input-output coefficients of nations in a more developed stage.

The study takes the examination of this issue as its central theme and it concludes that to select viable targets and execute realistic plans the general laws ought to be substituted by special purpose theories which are not separated from reality and instead of a set of drastic assumptions they are based on specific regional conditions which include economic as well as behavioral factors.

For the demonstration of this point, we selected various states in the most developed nation in the world, the United States. This country is characterized by relatively free movement of the factors of production. Prices, taxes, and subsidies in these states if not totally similar, are certainly more comparable than those used by various countries. The selected states have also the advantage of representing different stages of economic development and this fact enables us to test the proposed hypothesis; moreover, to our knowledge, input-output tables of these states have never been analyzed and compared in any systematic way.

We aggregated the input-output tables of the states into ten sectors for meaningful comparison. Two success indicators were chosen to measure the level of development: total and per capita income. Input vectors to individual sectors from each different sector of states were then regressed against these two measures of development. It is supposed that way the existence of any pattern or tendency could be revealed.

In addition a so-called Gedankenexperiment was performed to test whether the results of the regression give base for predictability.

The results, based on the table of coefficients of Missouri and California, show, that by using conventional methods, accurate predictions were not possible.

Therefore, we propose that policy-makers have no justification planning the future structure of their economies on the basis of models of other places and regions. In short, we reject the proposition that economic development has specific predictable patterns and stages since the process of development has no unique optimum optimorum path but shows significantly different patterns which could all be optima.

On the basis of our findings we conclude that there are no identical patterns in the process of development even in regions where the institutional frameworks are stable and comparable.

Degree Name

Economics

Level of Degree

Doctoral

Department Name

Department of Economics

First Committee Member (Chair)

Paul Jonas

Second Committee Member

Illegible

Third Committee Member

Donald G. Tailby

Language

English

Document Type

Dissertation

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