Movement of production factors among sectors and economic welfare in developing countries

Does economic aid make developing countries develop?  – Explore the ultimate purpose of economics –

Today, the field of economics is wide ranging, from financial engineering to the global environment, and its applications are versatile.  However, I believe economics is essentially “a study for governing a nation and providing relief to the people”.  In this case, “providing relief to the people” means to keep the people from starving.  In the history of man, was there a period in which people did not starve?

And when the people starve, children who are socially vulnerable will become victims first.  Children do not ask too much.  If they live with their parents, and have enough food and clothing and are in good health, they are satisfied.  I believe that realizing a world in which as many as children as possible can live in laughter is the ultimate purpose of economics.

These days, the words “poverty” and “working poor” are often being heard in Japan.  J.M. Keynes developed Keynesian economics to save the unemployed who did not have a job and could not feed their families during the worldwide depression of the 1930s.  If Keynes were still alive today, I wonder what kind of economics he would develop to save children from “poverty”.  Keynes said, “economics is essentially a moral science and not a natural science”.

Research Process

Todaro’s paradox

When urban-centered social infrastructure (road, port, water and sewerage, airport, industrial estate, market) is developing, employment is generated in urban areas.  As a result, laborers move from rural areas to urban areas to seek employment.  These laborers are partially employed, and the remaining laborers become either irregularly employed or unemployed.  Then, the urban informal sector including slums expands, and consequently per capita income in the urban area decreases.

Profile

Masaharu Nagashima

Professor of the Faculty of Economics

Born on January 10, 1963, Capricorn, Blood type: O

Hobbies: Spending time with family, eating delicious food and drinking good sake

Biography

• 1990: Completed doctoral program in the Department of Economic Engineering, Graduate School of Economics, Kyushu University
• 1990-1991: Assistant in the Faculty of Economics, Kyushu University
• 1992-1995: Assistant Professor in the Faculty of Economics, Kyushu University
• 1996-2006: Associate Professor in the Faculty of Economics, Saitama University
• 1998-2000: Visiting Associate Professor in the Faculty of Economics, Chulalongkorn University in Thailand (Dispatched by the Policy Research Institute, originally the Institute of Fiscal and Monetary Policy, Ministry of Finance, Japan)
• 2007- Present: Professor in the Faculty of Economics, Saitama University
• 2010 – Present: Vice-chairman of Overseas Investment and Loan Committee, Japan International Cooperation Agency (JICA)

Publication

• “Development economic analysis of migration – A theoretical genealogy of Harris-Todaro Model” Keisoshobo, 2010

Past research

P. Neary (1981)

“Capital accumulation of the urban manufacturing sector has an ambiguous impact on urban unemployment (informal sector)”

Problem consciousness

• Is there any way to avoid expansion of the informal sector by capital accumulation in the urban sectors including manufacturing?
• There might be conditions that reduce the urban informal sector.

NAGASHIMA, Masaharu (2006)

w₂ and w₁ respectively indicate legal minimum wage in urban areas, and wage in rural areas.  In addition, Lu expresses laborers in the informal sector, and L₁ and L₂ indicate total laborers in rural areas and urban areas respectively.

When we look at the meaning of the conditional equation on the right figure, if slope a is steeper than slope b, that is a>b, it means improvement of the urban social infrastructure decreases the urban informal sector.  To put it another way, if the urban minimum wage is set high in defiance of agricultural productivity in rural areas (slope b is steeper), it will lead to the outcome that urban capital accumulation expands the urban informal sector.