Internal Sources of Development Finance: Concepts, Issues, and Strategies

Internal Sources of Development Finance: Concepts, Issues, and Strategies

Internal Sources of Development Finance: Concepts, Issues, and Strategies

Internal Sources of Development Finance: Concepts, Issues, and Strategies

Synopsis

The 1980s have witnessed the mass migration of developing countries and the erstwhile socialist nations to market-based economic systems. The reality is that limited finance has been a formidable barrier to these countries' growth and development. Moreover, they need to rely on their internal sources as external funds are not easily forthcoming. This book identifies four sources of internal finance--tax policies, capital markets, specialized financial institutions (such as development banks), and privatization of the public sector. It examines the conceptual foundations, operating and theoretical issues as well as strategic considerations relating to these sources. Efficient financial intermediation is seen as the key to the growth and development of these nations.

Excerpt

Global economic development has engaged the attention of policy makers and social scientists in the past four decades more than any other topic. Every nation has perceived a vested interest in the associated dialogue in the context of its own development and from geopolitical considerations. The developing countries have been motivated by the need to meet the aspirations of their peoples and to improve their living standards and quality of life. The developed nations of the western world have perceived global development as a means of meeting the need for ever-expanding markets for their products and factors of production. Doubtless, strategic considerations weigh heavily as well. Global development is one of those rare topics that is characterized by unqualified consensus, even though there may be disagreement on the means to reach the end.

In strictly economic terms, development includes, inter alia, the capacity of a national economy to embark upon and sustain a steady growth in its gross national product (GNP). A related measure is the rate of growth of per-capita GNP, implicit in which is the capacity to expand national output faster than the growth of population. A measure that adjusts the per-capita GNP for inflation, the growth in real GNP, is an indicator of goods and services available for consumption and investment to the average individual. An implication of planned or directed development is the alteration of the structure of production and employment among the various sectors of the economy. More recently, the accepted economic measures of development have been supplemented by noneconomic social indicators, such as education, housing, medical care, etc.

Given the widespead interest in economic development, it has spawned a variety of theories. Single-variable theories emphasize low level of investment, limited human resources and capital, or the intrinsic nature of societies replete with rigidities as the principal factors inhibiting their development. Multi-variable theories emphasize several simultaneous factors, such as the appropriate political . . .

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