Micro-economic Efficiencies and Macro-economic Inefficiencies: Theoretical Reflections on Renewable Resource Policies in Very Poor Countries

Abstract

Economists in developed countries having specific institutional and macroeconomic conditions have been the major contributors to fisheries economics theory and policy. Whereas the theory and the policies may be appropriate in certain circumstances for developing countries, it is not necessarily true that the two major recommendations of fisheries theory, capacity control and rent extraction and concentration, are desirable policies in poor and disorganized countries. We use a standard Keynesian macro-model, coupled with some simple assumptions from fisheries economics to show that leakage outside the country and subsequent economic growth slowdown might be incited by policies that encourage industrial concentration of rents, especially if there is subsequent capital flight. In these cases, policies which promote employment in parts of the fisheries sector that are tied more closely to the local economy may have a proportionally large positive impact on the growth of the economy.Keywords : macroeconomics, developing countries, rent dissipation, growth, fisheries