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The Choice of Techniques

  • A. P. Thirlwall
Chapter

Abstract

If labour is more abundant and capital is scarcer in developing countries than in developed countries, we might expect to observe the use of more labour-intensive techniques of production in the industrial sector of developing countries, reflecting a lower price of labour relative to capital. Figure 9.1 shows this. Assuming the same production function in the two sets of countries, labelled ‘1’, and holding everything else constant, the lower relative price of labour in the developing country, given by the price line (or isocost curve) cb, gives a more labour-intensive choice of technique than in the developed country, where the relative price of labour is given by the steeper line ad.

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References and Further Reading

  1. A. BHALLA, ‘Investment Allocation and Technological Choice — A Case of Cotton Spinning Techniques’, Economic Journal, September 1964.Google Scholar
  2. C. BLISS and N. STERN, ‘Productivity, Wages and Nutrition, Parts 1 and 11, Journal of Development Economics, vol. 5, 1978.Google Scholar
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  18. A. P. THIRLWALL, ‘Reconciling the Conflict Between Employment and Saving and Employment and Output in the Choice of Techniques in Developing Countries’, Rivista Internazionale di Scienze Economiche e Commerciali, February 1978.Google Scholar
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Copyright information

© A. P. Thirlwall 1983

Authors and Affiliations

  • A. P. Thirlwall
    • 1
  1. 1.University of KentCanterburyNew Zealand

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