The aim of this work is to determine the best response of investment to shocks and crisis situations. The problems that arise during crises vary depending on each country's peculiarities. However, there are some things that are common in almost all situations. In very many cases, we find that from the household level where children are pulled out of school and put to work to support family income to the government decision on education funding, one thing is common - investment tends to be cut. In standard optimal growth models consumption and investment generally turn out to be a fixed fraction of output. When a crisis occurs, this fixed fraction of a lower output means a lower level of investment. In an optimal growth framework with Cobb-Douglas production function and logarithmic utility function, I present a model that adds a feature called 'the gap' that describe the domestic situation. Developing countries are often plagued by sociopolitical and economic factors that constrain their productivity and/or capacity utilisation. When weakened in this way, an exogenous shock that causes a loss of capital could have devastating effects. In such a situation depreciation could conceivable exceed its natural rate and it is this difference between the actual rate experienced and the natural rate that I call 'the gap'. I argue that when 'the gap' exists, there are additional benefits to be reaped from investment. The model I present demonstrates that under certain conditions, rather than investing a fixed fraction, the rate of investment should actually increase such that investment is maintained at itspre-crisis level. This is opti~al and desirable because in the long run, the welfare path of economies that follow this strategy is superior. This result is empirically tested using a simple regression model. First, I determine the investment strategy followed by a sample of countries worst hit by the debt crisis of the mid-eighties, then I examine the income and consumption paths. The results show that the majority of the sample countries followed the implied optimal strategy, and these countries followed a superior income and welfare path in the post-crisis years. This result therefore lends support to the model presented, and also raises an important question. Why is it that countries that followed the optimal path only seem to be marginally better off than those that did not? To answer this question, I examine the issue of financing the investment decision. For many countries in crisis, the availability of credit was a crucial factor. Many faced the dilemma of needing funds, yet being unable to attract it because creditors considered them too risky. In an extended version of the basic model, I show that more debt was not optimal for funding the investment choice. Although following the optimal path would result in higher output, as long as funding was through debt, consumption and welfare would only be marginally better because of the future burden of debt service. On the other hand, selffinancing would require severe cuts in consumption that may not be justifiable in terms of long run gains. The solution - aid and financial support for export oriented adjustment programs should be given by international financial organisations to countries that choose to follow the optimal investment strategy. This would preserve and improve the qualityof such organisations' investment, and ensure an even better welfare path for debtor countries in the long run

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In this thesis the relationship between the spread of technology and the extent of economic development is analysed. The quantitative dimension of the spread of technology is usually analysed in studies on the speed and extent of diffusion across countries and industries. The qualitative dimension concerns the adoption and use of technology which is usually studied in the literature on technology adoption and adaptation by firms. A process technology in two countries that differ considerably in their level of development, viz. UK and India, is considered. This controls for the technological and industrial specificity of the spread process allowing the influence of the development factor to be seen more clearly. The study is conducted at the industry/economy level, as well as the firm level. In this way the effects of the studying the different levels of aggregation together, and the relation between adoption and diffusion are clarified. The study indicates a wide diversity of patterns in the spread of technology across countries. Differences in both the coefficients of the diffusion curve and in the underlying functional form are identified. A deeper analysis of the patterns of spread in India and Britain reveals the greater influence of supply and infrastructure constraints in India, while in Britain the entire process was largely consumption constrained. If it can be assumed that capacity and production side constraints are more likely in industrialising economies, these dynamics could be inferred as more typical in influencing the spread of technology in developing countries. A study of the use and adoption of the technology by firms shows the importance of existing market structures, defined broadly to include the structure and organisation of production and consumption. In fact the composition of consumption in terms of users and user sectors was vital in defining rules of competition and in what way technology was harnessed as a competitive force. In the purely technological sense of operational efficiency it is shown that Indian firms performed more poorly than British firms. Furthermore this poor performance could be traced back to diversification strategies of Indian firms which in turn were a response to poorer levels of market formation in the economy.

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The thesis explores policy relevant issues within poverty debates with reference to Bangladesh. The core questions addressed include: what are the determinants of (income) poverty and income levels? Do these determinants vary according to the degree of poverty? Why is poverty reduced at different rates in different areas? What are the determinants of income inequality? What role has inequality had in the decline of poverty? These are addressedu sing a 1995 census survey in two sets of villages. These villages have experienced drastic declines in (income) poverty, but to very different degrees. The thesis aims to understand the underlying reasons and dynamics behind this difference. These villages are not representative of the country as a whole, but the conclusions are of interest in that they highlight issues pertinent to poverty reduction strategies in Bangladesh. Outcomes of the various analyses undertaken consistently point to certain conclusions as to why these sets of villages have evolved so differently. For the first, richer group, non-agricultural opportunities have boosted the economy and reduced poverty, despite widespread landlessness. The development of the agricultural sector (through irrigation and the use of High Yielding Varieties) has stimulated the emergence of a vibrant non-agricultural sector. Lower levels of irrigated land and High Yielding Varieties adoption and the resulting lower agricultural productivity in part explain the less impressive performance on poverty reduction of the second group of villages. The thesis also makes a contribution to poverty analysis by applying a very diverse range of techniques, the outcomes of which together provide a fuller picture of the processes at work.

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The Economic community of West African States (ECOWAS) is an economic organisation among 16 countries of Africa south of the Sahara. One of the main objectives of ECOWAS is to join the member countries in a complete monetary union with a single currency and a single central banle A major disadvantage to a country of being a member of this form of monetary cooperation is the loss of independence in carrying out monetary policy. This study is an examination of the degree to which Nigeria is likely to lose independent monetary policy by participating in the ECOW AS monetary union. Since the monetary union is still at the proposal stage, the issue is addressed by examining the following question: Can Nigeria conduct an effective independent monetary policy by changing the quantity of the money stock in the economy? According to the money multiplier theory of the money stock determination, successfully changing the money stock requires the following: Firstly the money multiplier should be stable and predictable, and secondly, the monetary base should be exogenously controllable. Although the money multiplier and its determinants in Nigeria are found to be stable and predictable, both closed and opened economy analyses seem to suggest that the monetary base is endogenous. Specifically, it is found to be determined by the demand for money. This implies that the monetary base and therefore, the money stock can only be changed by changing the money demand. In this case the successful conduct of monetary policy will require a stable money demand function which is significantly linked to a control variable. Various specifications showed that the Nigerian money demand function is stable. However, the only control variable - the interest rate is not significant, suggesting that it cannot be used to affect the money demand in a significant way. These findings suggest that the Nigerian Monetary Authorities have a very limited independent monetary policy, and therefore there may be little to lose by participating in the ECOW AS monetary union.

Government, in Saudi Arabia, has been the dominant sector in the economy. Funded by high revenues from oil and pressed by the need for economic development at a time when a vigorous indigenous private sector was virtually nonexistent, the government found itself, willingly or unwillingly, at the center of the development process, as a planner and implementer. The government's interest in achieving a diversified economy, which does not depend solely on the oil sector, has led to the introduction of many types of incentives such as, procurement, subsidies, concessionary loans, and awarding of infrastructure contracts. The aim of these incentives has been to stimulate and improve private sector investment. It can be said that the private sector in Saudi Arabia has developed much more after the provision of the incentives, particularly in the agriculture sector. Nonetheless, no study has been made to evaluate these incentives and find out their role in the development of the private sector. Thus, this study aims to provide a comprehensive survey of the incentives policy in Saudi Arabia and to evaluate its impact on the development of the private sector, which is the target sector. The methodology adopted in this study has involved three aspects of research : a) Theoretical aspect: this involves reviewing the theoretical side of the relationship between the incentives policy and the desired economic objectives. b) Field research aspect: this involves designing a questionnaire and an interview directed to the private sector's establishments and businessmen, respectively. c) Regression aspect: a time-series regression analysis concerning the impact of government expenditures, in general, and the incentives, in particular, on the private sector investment and output, has been carried out.

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