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The International Economic Association, Delhi, India THE BALANCE BETWEEN INDUSTRY AND AGRICULTURE IN ECONOMIC DEVELOPMENT Volume 1: BASIC ISSUES This volume is lEA conference volume no. 86 THE BALANCE BETWEEN INDUSTRY AND AGRICULTURE IN ECONOMIC DEVELOPMENT Volume 1 BASIC ISSUES Kenneth J. Arrow (editor) Volume 2 SECTOR PROPORTIONS Jeffrey G. Williamson and Vadiraj R. Panchamukhi (editors) Volume 3 MANPOWER AND TRANSFERS Sukhamoy Chakravarty (editor) Volume 4 SOCIAL EFFECTS Irma Adelman and Sylvia Lane (editors) Volume 5 FACTORS INFLUENCING CHANGE Nurul Islam (editor) These volume are, respectively, nos. 86-90 in the lEA/Macmillan series lEA conference volume series Series Standing Order If you would like to receive future titles in this series as they are published, you can make use of our standing order facility. To place a standing order please contact your bookseller or, in case of difficulty, write to us at the address below with your name and address and the name of the series. Please state with which title you wish to begin your standing order. (If you live outside the United. Kingdom we may not have the rights for your area, in which case we will forward your order to the publisher concerned.) Customer Services Department, Macmillan Distribution Ltd, Houndmills, Basingstoke, Hampshire, RG21 2XS, England. The Balance between Industry and Agriculture in Econo01ic Development Proceedings of the Eighth World Congress of the International Economic Association, Delhi, India Volume 1 BASIC ISSUES Edited by Kenneth J. Arrow M in association with the MACMILLAN PALGRAVE MACMILLAN PRESS © International Economic Association 1988 Softcover reprint of the hardcover 1st edition 1988 978-0-333-46713-8 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright Act 1956 (as amended), or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 33-4 Alfred Place, London WC1E 7DP. Any person who do..:s any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. First published 1988 Published by THE MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 2XS and London Companies and representatives throughout the world British Library Cataloguing in Publication Data International Economic Association, World Congress: 8th : Delhi, India The balance between industry and agriculture in economic development: proceedings of the Eighth World congress of the International Economic Association, Delhi, India.- (Macmillan!International Economic Association). Vol. 1 : Basic issues 1. Economic development I. Title II. Arrow, Kenneth J. (Kenneth Joseph), 1921- III. International Economic Association 330.9 ISBN 978-1-349-10273-0 ISBN 978-1-349-10271-6 (eBook) DOI 10.1007/978-1-349-10271-6 Contents Preface vii The International Economic Association vm Acknowledgements x lEA Programme Committee xii Indian Steering Committee xiii List of the Contributors and Rapporteurs xiv Abbreviations and Acronyms xv1 Introduction Kenneth J. Arrow xvii PART I PLENARY PAPERS 1 1 Inaugural Address V.K.R.V. Rao 3 2 Presidential Address: General Economic Theory and the Emergence of Theories of Economic Development Kenneth J. Arrow 22 3 Dealing with Economic Imbalances between Industry and Agriculture Theodore W. Schultz 33 4 The Balance between Industry and Agriculture in Economic Development: The Indian Experience D. T. Lakdawala 49 5 Relationship between Rural and Industrial Development Oleg T. Bogomolov 76 6 Problems of Late Industrialisation: an Asian Perspective Shigeru Ishikawa 85 7 Africa and India: what do we have to learn from each other? Amartya K. Sen 105 v vi 8 Valedictory Address Manmohan Singh 138 PART II THE HISTORICAL PERSPECTIVE 151 Introduction to Part II Paolo Sylos-Labini 153 9 William Petty and the Conceptual Framework for the Analysis of Economic Development Alessandro Roncaglia 157 10 The Role of Industry in Economic Development: The Contrasting Theories of Fran~ois Quesnay and Adam Smith Walter Eltis 175 11 The Analytics of the Agriculture-Industry Relation Krishna Bharadwaj 198 12 Market, Non-market, Quasi-market and 'Real' Economy Ignacy Sachs 218 13 Small-scale Industry in Rural Areas: The Spanish Experience since the Beginning of this Century Antonio Vazquez-Barquero 232 14 Small-scale Industry in Rural Areas: The Italian Experience Giorgio Fua 259 Discussion on Part II 280 Name Index 285 Subject Index 290 Preface The Eighth World Congress of the International Economic Associa­ tion was held in Delhi from 1 to 5 December 1986, presided over by Professor Kenneth J. Arrow, President of the lEA from 1983 to 1986. The subject of the Congress was 'The Balance between Indus­ try and Agriculture in Economic Development.' It was organised by the Indian Economic Association. Participation in the Congress was broadly based in terms both of geography and of the types of economy from which participants came; market-orientated and centrally-planned; developed and de­ veloping; mainly agricultural and predomantly industrial. The Congress included a number of plenary sessions, but much of the work of the Congress was undertaken in eighteen specialised meetings. The volume of papers was too large for them all to be published, but the five volumes in this group, together with a volume on the Indian economy being published separately in India, represent the major viewpoints expressed. The volumes generally contain reports on the discussions which took place during the specialised sessions. The volumes are: 1. Basic Issues, edited by Kenneth J. Arrow 2. Sector Proportions, edited by Jeffrey G. Williamson and Vadiraj R. Panchamukhi 3. Manpower and Transfers, edited by Sukhamoy Chakravarty 4. Social Effects, edited by Irma Adelman and Sylvia Lane 5. Factors Influencing Change, edited by Nurul Islam The Indian volume is edited by Dr P. R. Brahmananda and Dr S. Chakravarty under the title The Indian Economy: Balance between Industry and Agriculture and will be published by Macmillan India. This volume contains papers from the Plenary Session and selected papers from Session 16 on Agriculture, Industry and Economic Development in a Historical Perspective organised by Professor Paolo Sylos-Labini. vii The International Economic Association A non-profit organisation with purely scientific aims, the Inter­ national Economic Association (lEA) was founded in 1950. It is in fact a federation of national economic associations and presently includes fifty eight such professional organisations from all parts of the world. Its basic purpose is the development of economics as an intellectual discipline. Its approach recognises a diversity of prob­ lems, systems and values in the world and also takes note of metho­ dological diversities. The lEA has, since its creation, tried to fulfil that purpose by promoting mutual understanding of economists from the West and the East as well as from the North and the South through the organisation of scientific meetings and common research programmes and by means of publications on problems of current importance. During its thirty-seven years of existence, it has organised seventy­ nine round-table conferences for specialists on topics ranging from fundamental theories to methods and tools of analysis and major problems of the present-day world. Eight triennal World Congresses have also been held, and these have regularly attracted the participa­ tion of a great many economists from all over the world. The proceedings of all these meetings are published by Macmillan. The Association is governed by a Council, composed of represen­ tatives of all member associations, and by a fifteen-member Execu­ tive Committee which is elected by the Council. The present Executive Committee (1986-9) is composed as follows: President: Professor Amartya Sen, India Vice-President: Professor Bela Csik6s-Nagy, Hungary Treasurer: Professor Luis Angel Rojo, Spain Past-President: Professor Kenneth J. Arrow, USA Other members: Professor Edmar Lisboa Bacha, Brazil Professor Ragnar Bentzel, Sweden Professor Oleg T. Bogomolov, USSR Professor Silvio Borner, Switzerland Professor P. R. Brahmananda, India viii The International Economic Association ix Professor Phyllis Deane, United Kingdom Professor Luo Yuanzheng, China Professor Edmond Malinvaud, France Professor Luigi Pasinetti, Italy Professor Don Patinkin, Israel Professor Takashi Shiraishi, Japan Adviser: Professor Tigran S. Khachaturov, USSR Secretary-General: Professor Jean-Paul Fitoussi, France General Editor: Mr Michael Kaser, United Kingdom Adviser to General Editor: Professor Sir Austin Robinson, United Kingdom Conference Editor: Dr Patricia M. Hillebrandt, United Kingdom The Association has also been fortunate in having secured the following outstanding economists to serve as President: Gottfried Haberler (1950-3), HowardS. Ellis (1953-6), Erik Lindahl (1956-9), E. A. G. Robinson (1959-62), G. Ugo Papi (1962-5), Paul A. Samuelson (1965-8), Erik Lundberg (1968-71), Fritz Machlup (1971-4), Edmond Malinvaud (1974-7), Shigeto Tsuru (1977-80), Victor L. Urquidi (1980-3), Kenneth J. Arrow (1983-<i). The activities of the Association are mainly funded from the subscriptions of members and grants from a number of organisations, including continuing support from UNESCO. Acknowledgements The host for the Eighth World Congress of the International
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