Full text: Study week on the econometric approach to development planning

year; let x denote the capacity added in the year as a result 
of new plant coming into operation; and let s denote the ca- 
pacity subtracted through the scrapping of old plant. Then 
(IV. 14) 
Correspondingly, let Al denote the increase in employment; 
let » denote the labour added to man the new plants; and let # 
denote the reduction in employment due to plant retirements. 
(IV. 15) 
Finally, let p denote the net output price, which is equal to 
the cost of labour and capital per unit of output, and let w 
denote the wage rate. Then if we multiply (IV. 14) by b and 
(IV. 15), by w and subtract, we obtain 
(IV. 16) pAy—wÂl =(px—wn)—(ps—wr) 
= (px —wn) 
if plant is scrapped when it ceases to earn a return, that is 
when ps=wr. | 
Now let us define the initial rate of return, #*, as the gross 
rate of return to capital embodied in new plant in the first year 
of its operation. Then, denoting gross investment in new plant 
by v¥, 
(IV. 1 
= (px - wn)/u* 
(pÂv - wAÂl)/v 
from (IV. 16), on the assumption that plant is scrapped when it 
ceases to earn a return. Equation (IV. 17) can be rewritten 
either as 
dV. 15) 
oF 3 gdh Le 
'1] Stone - pag. 48

Note to user

Dear user,

In response to current developments in the web technology used by the Goobi viewer, the software no longer supports your browser.

Please use one of the following browsers to display this page correctly.

Thank you.