ON THE CONSUMPTION RATE IN THE LESS DEVELOPED COUNTRIES

Date

1992

Author

ZIND, Richard G.

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The consumption rate (CR), defined as the ratio of consumption to national income, tends to decrease with increases in income and, as a result, to assume negative growth rates. Yet, of 83 LDCs located in Africa, Asia and America (Central and South), 24 averaged over the 1960-80 period positive CR growth rates. Given that they also averaged lower (saving plus taxes) and government spending growth rates, a downsizing of public sector activity can possibly be inferred. The likely concomitant decline in taxes may account for the positive CR growth rates. The latter also pointed to the possibility of a "catching-upH by these countries with the rest of the group. Statistical estimates provide evidence of a tendency for the consumption, government spending and investment rates to converge among the LDCs. The data also suggest that, on average, the consumption and government spending rates will tend to decrease and the investment rate to increase.

URI

https://hdl.handle.net/11511/110499

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Department of Economics, Article