The Kelley-Williamson representative developing country model is an exten- sion of the KWC model discussed above. In the RDC model, as in the KWC model, output prices, factor prices, and the composition of output are all endogenous and simultaneously determined. There are eight sectors in the RDC model in contrast to the two sectors in the KWC model. The chief difference between the models, however, is not in the number of sectors but in the characteristics of the sectors. The RDC model distinguishes between manu- facturing, agriculture, urban modem services, urban traditional services, rural traditional services, urban high-cost housing, urban low-cost housing, and rural low-cost housing. The first two of these outputs are assumed t o be trad- able both internationally and between urban and rural areas, and the third is assumed t o be internally tradable, but not internationally tradable. In the remaining five sectors, however, outputs are assumed t o be consumed only in the area in which they are produced. Thus, the outputs of a majority of sectors in the RDC model are neither internationally or interregionally trad- able. The inclusion of internally nontradable goods differentiates the RDC model from all the other models reviewed here and permits the RDC model t o capture aspects of the development process that are more difficult or im- possible t o study in the other models.
The production functions used t o represent the two urban modern sectors
(manufacturing and m o d e m services) are two-level CES functions. These functions are consistent with a body of development literature that stresses that skilled labor and physical capital are complementary inputs. The demand for intermediate inputs purchased domestically is assumed t o be derived from a set of fixed coefficients, as is the demand for intermediate inputs purchased from abroad. While the two-level CES production functions allow for factor- augmenting technological progress, for unbalanced technological change across sectors, and for complementarity as well as substitutability between t h e factors o f production, t h e fixed coefficients allow neither for any intermediate input- saving technological change nor for any substitutability o f any sort. The fixed-coefficient assumptions could introduce a substantial bias into t h e output o f long-period simulation runs.
The production function representing agriculture is Cobb-Douglas in form with added fixed-coefficient assumptions concerning intermediate inputs. The outputs o f t h e traditional service sectors are assumed t o depend only o n their levels o f labor inputs, and the outputs of t h e housing sectors are assumed t o depend only o n t h e stocks o f t h e various sorts of housing.
Given that capital stocks and aggregate labor supplies are predetermined in any given year and that all factors of production are paid the value of their marginal product, wage rates and t h e structure of employment are determined conditional o n the following three assumptions: (a) unskilled labor in the rural sectors is perfectly mobile between those sectors; (b) skilled labor in the relative prices. F o r example, the ELES system framework savings rates may be affected by alterations in the price of food. No other model considered here
mention here: migration and the rate of growth of the skilled labor force.
The ~nigration formulation in the RDC model is quite strong. Migrants are motivated t o move froin rural areas t o urban areas because of real income differences. In computing these differences the rural migrants are assumed t o take into account both differences in the cost of living between the parts of t h e country and the income distribution in the urban area and the associated probabilities that they would be able t o obtain specified income levels.
Migration, then, plays a far more important role in the RDC niodel than it does in the other n~odels. Migration in the RDC model affects the level of n o n l i o ~ ~ s i n g capital formation by affecting the demand for housing and housing finance. On the other hand, migration also causes a set of changes in relative costs of living, which, in turn, reduces migration. No other model has been able t o capture the interactions of forces such as these.
In most of the models reviewed here, the rate of growth of the skilled labor force was taken either t o be completely exogenous o r t o depend o n governmental policy with respect t o expenditures on education. The RDC model, however, takes a position, first ~ ~ s e d , t o my knowledge, by Ednionston et a1 (1976), that there is an additional source of skilled laborers. When it becotnes profitable for them t o d o so, firms can also train skilled workers.
This is, I believe, an important feature t o build into any long-run econornic- demographic simulation model.
The chief disadvantage of the RDC model from the point o f view o f a policy maker interested in economic-demographic interactions is that the model in its current state is denlographically underdeveloped. The authors discuss some possible demographic extentions of their model, and these would certainly be useful.
Policy makers interested in the construction of an economic-demographic simulation model for their own country would be well advised t o begin with the franiework of the RDC model and t o add t o it enough relevant detail t o enable it t o address questions o f interest t o them. F o r example, a policy maker rnay wish t o add some material o n income distributions froni the Adelman- Robinson model, material o n family planning and education from the Tempo I1 model, and some material o n marriage rates from the Bachue model. It is crucial, however, that the additions be rnade on a consistent and realistic foundation - and this is exactly what t h e RDC model is.