A MODEL OF EMPLOYMENT CREATION IN AN OPEN DEVELOPING ECONOMY: I. Introduction

THE traditional remedy for unemployment in industrialized countries is to expand aggregate demand; but the conventional income-expenditure model used to justify such policies is widely felt to be inappropriate for developing countries. In this paper we attempt to build a macroeconomic model for developing countries which does not suffer from the defects of the incomeexpenditure model, and we use it to analyze employment creation policies.