I focus upon estimates of elasticit

I focus upon estimates of elasticities of substitution between capital and
labor for a 1967-73 cross section of seventy countries with up to twentyseven
two-digit manufacturing sectors for each country. The reasons the
elasticities of substitution are of interest are well known. (1) As is
mentioned above, these elasticities relate to the degree of flexibility in
responding to changing domestic and international contexts, whether
such changes are due to conscious policies or to other shocks to the
system.' (2) They also relate to the distribution of income between capital
and labor and to changes in this distribution over time, given labor supply
and other critical developments, if there are pressures for real payments
to such factors to be approximately proportional to their marginal products. (3) Their relative magnitudes across sectors enter critically into the
determination under neoclassical assumptions of the effects of varying
primary factor endowments on the patterns of trade and of relative factor
prices. (4) They affect the stability or instability of certain growth paths
implied by some aggregate formal models, such as the Harrod-Domar
case. ( 5 ) In market economies they play a crucial role in determining the
extent to which unemployment can occur owing to inappropriate relative
factor prices, with one extreme being the well-known Eckaus (1955) case
of large unemployment in some developing countries owing to no such
substitution possibilities and an incompatible factor mix for given technologies.
(6) The appropriateness of many linear planning models, finally,
depends on the accuracy of the assumption that such elasticities are
close to zero, though this is in part a question of aggregation, since most
such models allow substitution among activities, though not within them
(see Blitzer, Clark, and Taylor 1975 for a recent review of these models).