You are here:

Economics/Building local economy

Advertisement

Expert: Dr.VSR.Subramaniam - 10/13/2009


Question
I live around Buffalo, NY and our economy is constantly suffering. I'm not sure if it can be completely blamed on high New York State taxes, and none of the benefits they have in NYC. lol. For smaller cities is there a set of prerequisites and proportions of each industry that the city should focus on inviting in to try to get other industries in to have a well rounded local economy and diversity as well of course as new jobs? We seem largely to have the bare essentials. Finacial, medical, and some technological industries as being the main ones. I think all other industries seem to be hurting.

Answer

GEOMETRIC MODEL BY
PREFACE

Welcome to “allexperts” forum. I saw your question in the “Question pool” pending to be answered from October 14, 2009. I wish to answer your question. “Buffalo economy is constantly suffering” as stated by you, is because it is not made self reliant. Building industry is not a solution.
---------------------------------------------------------------------------------
01. WHAT IS TRUE DEVELEOPMENT ?

A)  It is building of domestic assets, know-how, an ever-cycling and growing infrastructure to provide food, clothing and shelter in equal proportion to the (population growth + immigrated expatriates). Or  Economic growth rate = Population growth rate + immigration. All other economic growth rate fixing without any relation to this, is theoretical and the state may become statistically developed, but practically with many below the poverty line.

B) This ratio-equalization is achieved  through  limited population growth, as well as their disintegrated family system of every member has to take care of themselves, without the central affinity of a joint family. This generates a large volume of self motivated, innovative and productive labor force, due to the compelled need for independent survival. Immigration   is from imported labor. They drain out the domestic money and add problems to the domestic social infrastructure. (Obama in US is attempting to eradicate this problem by training and employing the “nurses” from domestic population).  
====================================================
02. ANALYSIS

A) Many states attract industries with tax free and money repatriation facilities. The attraction in this method is that there is no capital investment from the domestic sources, and it creates a large employment potential for the domestic experts and labor.

B) The external investor will continue till the project period or till the environment is providing an advantageous financial rate of return. Then, they will close down, without any economic or social rate of return to the country of operation, as they are exempted from direct or indirect local taxes and other payment liabilities.  

C) Borrowed investment, through assistance from World bank, IMF etc. have to be repaid. Unless the assisted state becomes strong enough to domestically generate a sizeable return on such investments, the state becomes a debtor (Every developing and under developed nation today is in such unrecoverable debt trap. Even developed nations are moving towards this). The public may not be  knowing that these loans have some hidden traps and conditions, not palatable by the receiving nation. Also the utilization and implementation of the funded projects remain in the hands of the government, a bureaucrat, slow decision maker and non-productive / non cost-benefit oriented public setup.

D) A good technical rate of return to the country of operation will result by a drastic indoctrination of the latest technical know-how to the domestic people. But these trained technocrats are not entrepreneurs to venture, take risks and start similar projects domestically. They are jobbers and immigrate to places needing their expertise and experiences, without any contribution to their home state.  
====================================================
03. MY  OPINION.

My opinion about blind industrialization will never lead to any development. It will only contribute to the developmental gains of the entrepreneurs. The state will enjoy an artificial and limited development during the period of operation. Soon it will retard back to their prior status of development, when they withdraw. The investing nation too will loose the expected economic gains, if their funds are on wasted efforts (like US spending on war at alien locations)
====================================================
04. MY MATHEMATICAL MODELS.

A) I have Geometrically established the following guidelines for accelerated development, related to the area of investment and implementation.

1.  Domestic investments should be through domestic savings (individual / corporate / government, even though a foreign source to start with).

Exogenous circle. : It implies that the local state government should provide enough incentive to motivate the savings at individual and corporate level, by increased interest rate. Invest domestic savings to develop domestic industries, suitable to the locality.

2.  Domestic human potential should man the domestic technology (latest technology moderated to suit local environments) [Endogenous circle].

3. Synchronize Exogenous and Endogenous circles & optimize their dimensions.

4.  This is universally applicable to all states and nations. See at “SED BY DRVSRS” at  http://drvsrs.com/store/page1.html#9    
----------------------------------------------------------------
B) I have also Algebraically established the following guidelines for accelerated development, related to the area of productivity measurement and Management decisions. (SED = Socio-economic Development units)

1. Productivity = SED goals/input > 1  & SED goals/output  > 1
subject to output/input > 1
2. Social rate of return is important than Quantum rate of  return.
3. Intangible elements are important than  tangible elements. (Psycho-Socio-Inter national-Universal)  
4. Management decisions are optimum when  
SED goals/Input decisions   > 1  &  
SED goals/output  decisions > 1, subject to  
Output decisions/Input decisions > 1
5. This is universally applicable all states and nations. See at “SED BY DRVSRS” at http://drvsrs.com/store/page1.html#9    
====================================================
05. RATE OF RETURNS.

All the nations, guided by the financial experts, believe that the single sided financial returns  indicate  the economic development of the nation. It is a mirage. During my assignments at “Commonwealth   (London)” and “The Caribbean Development .Bank (Barbados, WI), I enunciated and implemented Quadra development rate of  return concept..
A) Financial   B) Economic  C) Social  and D) Technical  valuation standards.  The inputs as well the outputs of any funded project should be established by the ratio of all these 4 units of measure.  All the ratios should be favorable for the project success and national development index.
=================================================
With Regards.
DR.VSRS
Book Store - http://drvsrs.com/store/page1.html  
Website      - http://www.drvsrs.com
=====================================  
    Questioner's Rating
    Rating(1-10)Knowledgeability = 10Clarity of Response = 10Politeness = 10
    CommentThanks for the input. It was a bit too complex for me to understand, but I appreciate it.


  • Add to this Answer
  • Ask a Question

Dr.VSR.Subramaniam

Expertise

Basically a B.Sc (Physics) from the University of Madras, India. Started the career in production engineering under German and Italian experts. MBA in Management from IIM, Ahmedabad (India). Ph.D (Management) from the University of Bomaby (the first ever awarded in this subject). Headed the computer centres of Multi nationals; "Data Processing expert" of the Commonwealth, London (To implement World Bank and UNDP Computer softwares); "Consultant Adviser" to the Caribbean Development Bank (CDB), Barbados. Associated with Nobel Laureate in Economic Science-1979, Arthur Lewis (Past President of CDB) & 4 more on his introduction. Visiting professor to many universities. A Trained ISO 9001:2000 Quality Auditor. Over 40 years of combined experience in Accounts, Computer Software, Economics, Engineering, Management, Science, Technology, Research & Development and Qulaity systems. Author of over 60 Application Research papers. Currently a free-lance consultant in ISO Quality Systems, Socio-Economic development acceleration, Innovative software designs. Can answer any question in Theoritical/Applied-economics with an in-depth and innovative dimension. I DO NOT ANSWER : 1. STATISTICAL data & analysis. 2. PRIVATE questions, as they do not appear for PUBLIC view & search 3. Examination & Project report oriented questions. Website http://www.drvsrs.com

Experience

Experience in the area Over 40 years in Industrial, Service and Economic development sectors. Socio-economic development oriented expertise (1982-86). With Commonwealth Fund for Technical Cooperation, London as a "Data Processing Expert". With Caribbean Development Bank, Barbados (UNDP,World bank set up) as a "Cnsultant Adviser". See "http://www.drvsrs.com/drvsrs.htm" and "http://www.drvsrs.com/publication.htm". National & International awards. R & D Author at http://ideas.repec.org/e/psu50.html and http://www.ssrn.com/author=360079

Organizations
Intellectual Consultants. A proprietory Research and Development unit under the theme "Innovation. Information & New Concepts"

Publications
See at http://www.drvsrs.com/publication.htm & http://dvsrs.com/store/page2.html

Education/Credentials
See full details at http://www.drvsrs.com/drvsrs.htm (1) D.Litt in Computer Science - 1983. World University, USA. (2) Ph.D - 1975. First management doctorate awarded by the University of Bombay, India, after the inception of the subject. (3) MBA – 1966. IIM, Ahmedabad. India. First batch. 4) B.Sc - 1959. Physics. University of Madras, India

Awards and Honors
Biography is listed in International Who is Who of Intellectuals (UK), Men of Achievement ( UK ), Men of Distinguished Contributions (USA). National and International awards and Citations.

Past/Present Clients
See at http://www.drvsrs.com/software.htm

©2012 About.com, a part of The New York Times Company. All rights reserved.