East and West Pakistan: A Problem in the Political Economy of Regional Planning by Md. Anisur Rahman. Occasional Papers in International Affairs, Number 20. Harvard University Center for International Affairs, July 1968. pp.38.

A.H.M. Nuruddin Chowdhury

Abstract


In this short essay Professor Rahman attempts two things. One,
he surveys the various facets of the regional disparity existing between
East and West Pakistan and traces the genesis of some of them. In doing
so, he improves upon the analysis of others writing on the issue, yet
essentially the information and the treatment are not new. Two, he
suggests "an approach to a policy for dealing with the problem of
regional disparity in the country, one which would impose the least
sacrifice to the national objective". Here he applies his model for
"Regional Allocation of Investment" which was published in the February
1963 issue of the Quarterly Journal of Economics. This review will
mainly deal with this second part of the essay. The principal argument
of Professor Rahman's model runs as follows: In a short-term plan,
investment should be concentrated in the region where productivity of
capital, as depicted by a lower marginal capital-output ratio (MCOR), is
higher. But in a long-term plan, one should also consider the marginal
reinvestment coefficient (MRC) which is the product of marginal rate of
saving (MRS) and the reciprocal of MCOR. This is because a region with a
higher MCOR may yet have a higher MRC due to a sufficiently higher MRS.
In such a case, earlier investment allocation should be concentrated in
the region with higher MRC, since the immediate loss of output will be
more than offset by the future growth in output from higher
reinvestment. But as the terminal date of the plan horizon draws nearer
investment has to be shifted towards the region with higher
productivity, i.e., lower MCOR, because, after a break-even point, there
will not be enough time left for the higher MRC to recover the loss due
to lower productivity. Other side conditions of the programming model,
such as employment objectives, removal of regional disparity, may
prevent full exploitation of the advantage of higher MRC of a
region.

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DOI: https://doi.org/10.30541/v8i4pp.639-641

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