Input Shortages in Mixed Economies

Download or read book Input Shortages in Mixed Economies written by Ms.Ratna Sahay and published by International Monetary Fund. This book was released on 1991-06-01 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: Widespread shortages in key inputs are common in mixed economies of developing countries. These shortages appear to occur at the same time that relatively high rates of capacity underutilization in manufacturing industries are observed. This paper develops a simple model which explains the existence of excess capacity when there are quantitative restrictions on key inputs. This model is tested using data for manufacturing industries in India, and the results indicate that shortages in domestic rather than imported inputs imposed binding constraints on capacity utilization rates.