The aim of this book is to provide a rigorous framework within which the fundamental question of who should bear the burden of economic development in less developed countries (LDCs) can be addressed in a systematic way. The two main aspects of this analysis are: (1) identifying the critical institutional features of the economy, and the critical parameters (for instance, the magnitudes of demand and supply responses) that determine the consequences of changes in taxes, prices, and other policies; and (2) ascertaining conditions under which certain reforms in pricing and taxation would increase welfare, while showing explicitly the role played by value judgements about how the welfare of various groups, both today and in the future, should be weighed. This introductory chapter addresses various methodological issues: normative versus positive analysis; analysis under limited data availability; analysis of policy and political economy; and general-equilibrium analysis. It also presents an outline of the book, discusses some of the results obtained, and briefly discusses the role of theory.
Keywords: economic development, economic policy, general-equilibrium analysis, institutions, LDCs, less developed countries, normative analysis, political economy, positive analysis, prices, taxation, taxes, value judgements, welfare
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