This book is concerned with the use of fiscal and monetary policies to
overcome three major obstacles to development commonly faced by less
developed countries: inadequate investment; misallocation of investment
resources; and internal and external imbalances i.e. inflation and
balance of payments deficits. The book is divided into six chapters the
first two of which are devoted to the definition of concepts and to an
explanation of the Keynesian model of income determination and of
Kalecki's model of financing investment, within the framework of which
the role of fiscal and monetary measures and of foreign capital is later
examined. Chapters 3 and 4 discuss the role of fiscal measures and of
foreign capital, respectively, in promoting domestic investment. Chapter
5 examines the use of both fiscal and monetary instruments, including
industrial and agricultural development banks, to influence the pattern
of investment. The last chapter is devoted to the problems of internal
and external imbalances. The author examines policies pursued by a
representative sample of developing countries and concludes that most of
them fail adequately to exploit the potential of fiscal and monetary
instruments and of foreign capital to overcome the three sets of
obstacles to development largely bacause of institutonal
(socio-political) constraints. The approach to inflation and balance of
payments difficulties followed in the book differs significantly from
that of monetarists, notably the Chicago school and the IMF, whose basic
propositions are reviewed and critically examined in some detail in
Chapters 2 and 6. Although the primary focus of the book is on
developing economies, this part of it is also relevant to industrial
countries.
