Raghbendra Jha

A matter of connections: OECD telecommunications sector productivity and the role of cellular technology diffusion

Abstract This article examines the impact of cellular technology diffusion on the competitiveness of the telecommunications sector for 23 OECD countries for the period 1980–1995. Cellular technology diffusion has proceeded rapidly in several OECD countries, providing substantial inter-connectivities with the fixed line telephone network, but there is substantial cross-sectional variation. Thus, consequences of cellular telephony on sector competitiveness, measured as relative productive efficiency, can be assessed. The results show that, controlling for a variety of other factors that can affect telecommunication sector productivity performance, cellular technology diffusion has a positive and significant impact on the competitiveness of the telecommunication sector. In addition, among the control items considered in our analysis, we find that liberalization of the competitive environment and privatizing the monopoly operator are factors positively enhancing productive efficiency. These are important findings highlighting the importance of micro-economic reforms in the telecommunications industry.

The provision of public services by government funded decentralized agencies

Public services are often provided by lower level agencies that are funded by higher level government. Since markets for such services do not exist, normal pressures to minimize costs do not operate; indeed, usually these costs are unobservable. We study a principal-agent model which emphasizes the distinction between the financing and provision of public services. Two broad situations are analyzed: (i) the agencies are induced to reveal true costs; and (ii) in addition, to minimize costs, agencies must be induced to exert effort. The characteristics of the optimal funding contract and the marginal cost of public funds are derived in each case.

Tax efficiency in selected Indian states

This paper attempts to measure pure tax efficiency of fifteen major Indian states (Andhra Pradesh, Assam, Bihar, Haryana, Gujarat, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Orissa, Punjab, Rajasthan, Tamilnadu, Uttar Pradesh and West Bengal) for the period 1980-81 to 1992-93 in a manner that allows this efficiency to vary both across time as well as across states. It is discovered that there is a moral hazard problem in the design of central grants in that higher grants by the central government to the state governments reduce efficiency of tax collection by these states. The less poor states are more efficient in tax collection. The rankings of states by tax efficiency for the various years do not converge. An index of aggregate tax efficiency is calculated and it appears that this index has been stagnating. It is argued that the weight placed on tax effort in the formula determining central grants to state governments should be increased to improve tax efficiency of state governments.

Information, Access and Targeting: The National Rural Employment Guarantee Scheme in India

In this paper, the relationship is assessed between possessing information on, gaining access to and the efficacy of delivery of Indias national rural employment guarantee scheme (NREGA) in three states. The results suggest that the link between information, access and the delivery of the scheme is not straightforward. Information can increase the propensity for the programme to be accessed by those who are not its primary target population, and can enhance efficacy of delivery to such beneficiaries. Lack of information, on the other hand, decreases the ability of citizens, particularly the acutely poor, to benefit from the scheme.

Macroeconomics for Developing Countries

Negotiations and the GATT agreement have highlighted the different economic concerns between developed and developing countries. This has revived the debate about whether developing countries should apply Western policies to macroeconomic problems or develop a specific framework to suit their needs. Macroeconomics for Developing Countries brings this discussion into the economic mainstream. It provides a rigorous and comprehensive study of the standard macroeconomic theory necessary to understand this debate. The book falls into four parts. The first two present received macroeconomic theory in its closed and open economy versions. These are supported by a wide range of illustrations and examples from developing countries. The final two parts of the book are devoted entirely to the macroeconomic problems of developing countries. This includes a discussion of alternative macroeconomic models for developing countries in Part Three and a study of special policy problems facing developing countries in Part Four. Macroeconomics for Developing Countries presents a valuable analysis of current debate in development economics and provides the intermediate macroeconomic theory necessary to understand it. Raghbendra Jha is Visiting Associate Professor of Economics at Queens University, Kingston, Canada. He is on leave from Delhi School of Economics. He has extensive research experience and has published widely on aspects of development economics.

A Critique of the Environmental Sustainability Index

The Environmental Sustainability Index (ESI) has been proposed by collaboration of the World Economic Forum, Geneva, Center for International Earth Science Information Network, Columbia University, and Yale Center for Environmental Law and Policy, New Haven as a measure of the overall state of the environment. This paper argues that the basic design of the ESI leaves much to be desired. It has conceptual problems in its visualization of environmental degradation and sustainability. The choice of variables as well as the statistical methodology of compiling the index is also found to be wanting. The paper then proposes an alternative methodology using Principal Components Analysis and argues that this is an improvement upon the ESI methodology. Given the likely use of aggregate environmental indexes in future environmental management, the critique advanced in this paper is of considerable significance.

Structural Breaks, Unit Roots, and Cointegration: A Further Test of the Sustainability of the Indian Fiscal Deficit

If public expenditure and public revenue are I (0), public debt is sustainable, but if these are I (1) and not cointegrated or have a cointegrating vector different from [1, -1], the public debt is said to be unsustainable. Extant work indicates that India’s public debt is unsustainable. The authors reinvestigate this issue by allowing for endogenous structural breaks for two data sets—the British period from 1871-1921 and the postindependence period from 1950-1997. Revenue and expenditure series are I (1) and cointegrated with regime shifts. Hence, Indian public debt may not be unsustainable.

Inflation targeting in India: issues and prospects

This paper evaluates the case for inflation targeting (IT) in India. It states the objectives of monetary policy in India and argues that, with widespread poverty still present, inflation control cannot be an exclusive concern of monetary policy. The rationale for IT is spelt out and found to be incomplete. The paper provides some evidence on the effects of IT in developed and transition economies and argues that although IT may have been responsible for maintaining a low inflation regime, it has not brought down the inflation rate itself substantially and or changed the volatility of the exchange rate. Output movements in transition countries adopting IT have been higher than in developed market economies. I discuss India’s experience with using nominal targets for monetary policy and why India is not ready for IT. Further, even if India’s central bank wanted to, it could not pursue IT because the short‐term interest rate does not have a significant effect on inflation. The paper concludes by listing monetary policy options for India.

Market Integration in Wholesale Rice Markets in India

This paper tests for market integration in 55 wholesale rice markets in India using monthly data over the period January 1970 - December 1999. The technique of Gonzalez-Rivera and Helfand (2001) is used to identify common factors across various markets. It is discovered that market integration is far from complete in India and a major reason for this is the excessive interference in rice markets by government agencies. As a result it is hard for scarcity conditions in isolated markets to be picked up by markets with abundance in supply. A number of policy implications are also considered.

An Analysis of Technological Change, Factor Substitution and Economies of Scale in Manufacturing Industries in India

The biases of technological change, factor substitution and economies of scale in four major manufacturing industries (viz. Cement, electricity and gas, cotton textiles and iron and steel) in India are examined. The translog cost functions are estimated using annual time series data covering the period 1960-61 to 1982-83. The study reveals that technical change has been biased towards the use of labour and materials and against the use of capital and energy in electricity and gas industries. In cotton textiles, the technological change has shown the opposity biases. Significant economies of sclae exist in the production of electricity and gas. Enough evidence of substitution possibilities among factors of production in all the four industries was also found.