FRANCISCO, Ma. Francesca DL2ASN2

CHAPTER 6 : NATIONAL OUTPUT AND STRUCTURE ECONOMY

The central role in discussing unemployment and underemployment in South Asia is : “what a country produces and how much its people earn.”

The development of underemployment and unemployment in South Asia is hindered by the poor quality of statistics.

Problems encountered in the accounting of South Asian economies :1. sometimes we tend to relate the national income directly to

the net geographical outputo NATIONAL INCOME – a very crude indicator of the

degree of development / underdevelopment - difficulties involved in the way such

an aggregate is defined and the data are compiled - viewed as the main indicator of

success or failure of development plans2. actual valuation of output

o economy is often linked to markets which has a bartered output which implies that tasted and preferences in the monetized and the bartered market are identical and that the prices would be similar if the bartered goods were sold for money

o frailty of data extends to the extent that planning in South Asia relies on the data available

o REASONS WHY WE HAVE HAZARDED USING STATISTICAL FIGURES :

Figures on national income play an important role in economic planning in the region

Such comments as we have already made lay bare the overwhelming importance of clarifying the concepts and perhaps changing the entire focus of the discussion of development of South Asia

application of Western concepts may be unsuitable for most or some of the South Asian countries

A possibility that evidence presented here may have some rough relationship to reality

The comparison of income per person indicates a wide disparity between the poorest country in the region

1. exchange rate varies For this data to be comparable, this implies that the relationships

between gross national product, gross domestic product, national

income and similar aggregates at either market prices or factor cost of some particular year, are stable for each country.

The general picture for South Asian countries whose data seem somewhat more reliable appears to be roughly as follows : Pakistan, Thailand and Ceylon were relatively stagnant in terms of output per person.

To get the broad picture of the structure of the economy in the South Asian countries : break up the aggregate figure for national income into its component parts and relate the income originating in each main sector to the number of persons employed in, or earning their livelihood from, that sector.

The statistics on occupational distribution are especially UNRELIABLE

The definitions of “AGRICULTURAL” and “NON-AGRICULTURAL” vary from country to country and the statistics coupled with these definitions are questionable.

Half the income in South Asia originates from the agricultural and some two-thirds to three-quarters of the people gain their livelihood form AGRICULTURE.

Agricultural output per person remained relatively stagnant in the region as a whole during the 1950’s and the early 1960’s.

Non-agricultural sector in South Asia is a mixed bag of occupational groups, retail trade, domestic service and the government positions.

The proliferation of retail outlets and petty traders and the growing number of middlemen can easily be seen

The growth of petty trading has been a response to a trend toward URBANIZATION

Public expenditures for government activity have risen in response for the needs of development.

One explanation for the increasing waste in the public sector is the pressure exerted by the so-called “educated” unemployed who seek clerical positions.

Plantations in South Asia should be considered as industrialized agriculture. These plantations play a big role in the export programs.

2 MAIN AVENUES OF GROWTH OPEN TO THE POORER COUNTRIES :1. to rationalize agricultural techniques2. to reduce the relative significance of traditional

agriculture BOTH AVENUES REQUIRE / IMPLY INDUSTRIALIZATION South Asian countries look to industrialization outside the

agricultural sector MANUFACTURING – importing of raw materials – levels of wages and

labor productivity – investment as well

A combination of capital scarcity with low levels of labor skills, work discipline and efficiency results in low productivity and wages in South Asian economies

3 INDUSTRIAL ESTABLISHMENTS WITHIN THE BRANCHES OF MANUFACTURING:

1. COTTAGE INDUSTRY – small in scale and frequently confined to a single dwelling unit

2. SMALL - SCALE INDUSTRY – using modern techniques ; LABOR SAVING WITH HIGH CAPITAL INVESTMENT

3. LARGE – SCALE INDUSTRY – using large capital investments

and raw materials ; LABOR SAVING WITH HIGH CAPITAL INVESTMENT