International Trade and Economic Activity in a Labour Surplus Economy A Comment Ranjit Sau IN a highly interesting paper1 M K Rakshit has set up a theoretical model to answer the following three questions. What are the determinants of the level of economic activity in a labour-surplus primarily agricultural economy? Is a rise in export demand or an improvement in the terms of trade a boon to the primary producing countries? What were the economic causes of the phenomenon popularly known as "de-industrialisation"? Here we shall argue that his model does not sit well with the historical facts, in respect or last question. Should his model be valid, the underdeveloped countries, we shall demonstrate, would have enjoyed ''re-industrialisation" so to speak, instead of suffering from "de- industrialisation" as they did.
