This paper attempts to reformulate the Cagan inflation model in order to make it more realistic and suitable for a quantitative analysis of inflation in developing countries. The most distinctive feature of the model is that it incorporates the transmission mechanism of world inflation into the domestic economy in a regime of flexible and more realistically controlled exchange rates. A short-run aggregate supply function is specified to account for the feedback of inflation on the real economy. The monetarist flavour of the Cagan model has been maintained throughout.This modified version is tested with the annual time series data for eight developing ESCAP countries. It works relatively well for Bangladesh, Pakistan, India and Malaysia. But it performs badly for Sri Lanka, Thailand, Korea and Philippines. The major findings of the study are: the nominal money growth variable does not have a significant impact on the rate of inflation in most of the countries, whereas the real cash balances have a lagged effect on it. World inflation is one of the major determinants and the transmission of it is not only quick but more than proportionate in most of the countries. These effects are further accelerated because of their repeated devaluations. However, the increase of real income has a dampening effect on the rate of inflation in most of the countries.

This paper tries to assess the extent and importance of off-farm activities in income and employment of the rural people. On the basis of information collected from a relatively developed Bangladeshi village, the paper shows that off-farm activities constitute a primary source of employment and income of about one-quarter of all households and about one-third of the labour force in the area under study. Male workers were seen to spend a higher proportion of their time on off-farm activities than agricultural activities, while for female workers off-farm activities accounted for only about one-fifth of their total working time. But, both males and females belonging to the landless households spent a higher proportion of their working time on off-farm activities than agricultural activities. Since off-farm activities are seen to be more prevalent during the agricultural slack season these can be expected to contribute to a more equitable income distribution. Based on the findings of the study the paper concludes that for a country like Bangladesh with acute unemployment and underemployment, increased efforts should be made to create off-farm employment opportunities in the rural areas for the landless and near-landless people to check increasing rural-urban migration, ensure a more balanced rural development and to positively influence the welfare of the rural population.

The paper seeks to profile the changes in the levels and structure of wages in Bangladesh’s large-scale industries in the post liberation period. It is found that real wages in large-scale industries essentially stagnated between 1972/73 and 1981/82 according to BBS data. However, real wages in public sector industries are found to have grown, albeit at positive rates. These real wage growth rates for the public sector are very modest, however. Hence, there is no evidence that we found suggesting the presence within public sector industries of a regime of labour aristocracy : while GDP per capita grew at about 1.6% during 1973/74 through 1981/82, the corresponding real wage growth rate has been well less than 1%. A second order of finding was that skill differentials rose before declining again during this period–thus suggesting an inverted-U type of pattern. All in all, skill differentials have been contracted during this period. The wage structure appears therefore to have been compressed. A positive association was noted between industry-wide capital-labour ratio and the premia paid on skills. Inter-industry differentials, too, have been compressed.

This paper formulates a linear programming model in order to determine the industrial priorities for Bangladesh in a general equilibrium framework. The model is then solved on the basis of alternative assumptions about the saving capacity, availability of foreign aid, expected growth of agricultural sector, and possibility of export expansion. An industrial priority list for Bangladesh is derived from these alternative solutions of the model. It is found that the country’s comparative advantage is greater in the agro based industries like sugar, edible oil, tobacco, jute textiles etc. Labour-intensive handloom produced cloth and leather goods also rank high in the present study. Among the capital-goods industries, the present study points to the comparative advantage in domestic production of wood goods, metal products and transport equipments. The domestic production of cotton yarn, paper, fertilizer, cement and so on is found to be less advantageous. In this connection it is pointed out that all of these industries are highly capital intensive, and in a situation of general scarcity of capital, the domestic production in these industries is very likely to prove economical.