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00/6 Surplus analysis in peripheric economies: An application to Turkey

Cem Somel

Some writers have argued that the allocation of the economic surplus in underdeveloped countries between non-essential consumption and investment is determined mainly by the distribution of the surplus among classes with different propensities for investment, and that the drain of the surplus out of underdeveloped countries is of secondary importance. This paper argues that the domestic use of the surplus is determined by the incentives and constraints of the political-economic environment that encouraging consumption and discouraging investment, and that the distribution among classes is of secondary importance. Secondly, it tries to show, with an application to Turkish data for 1980-1996, how domestic misuse of the surplus and the drain of surplus abroad can be estimated simultaneously. The surplus is estimated by subtracting essential consumption from net national product and adding the drain abroad arising from exchange rate distortion in trade.


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