frustrated freedom the effects of agency and wealth on wellbeing in rural mozambique in sen s capability view of poverty wellbeing is threatened by both deficits of wealth and deficits of individual agency sen further predicts that unfreedom or low levels of agency will suppress the wellbeing effects of higher levels of wealth the current paper extends sen s view to include a condition labeled frustrated freedom in which relatively higher levels of agency can heighten the poverty effects of relatively low levels of material wealth applying data from a large scale population study of female heads of household in rural mozambique the paper empirically tests sen s view and the proposed extension as predicted agency is found to moderate the relationship between agency wealth and wellbeing uncovering evidence of both unfreedom and frustrated freedom in the population further research into the complex dynamics of wellbeing and poverty are called for by the authors

the transition to market economies in an endogenous growth model with altruistic agents this paper considers an endogenous transition from a self sufficient traditional economy to a market economy and its consequences on fertility and growth the transition can occur if private intergenerational transfers are unable to secure old age consumption as adequately as savings on capital markets otherwise individuals stay in the traditional economy unless the mass production technology in the market economy is sufficiently more advanced than individually accessible technologies markets emerge only if per capita output exceeds a certain level given a fixed cost of forming markets the transition reduces fertility and promotes growth under plausible restrictions jel classification e20 j13 o10

marriage and divorce changes and their driving forces the family is not a static institution in recent decades marriage rates have fallen divorce rates have risen and the defining characteristics of marriage have changed the economic approach to the family seeks to explain these trends by reference to models that can also explain how and why families form gary becker s 1981 treatise on the family proposed a theory based on production complementarities in which husband and wife specialize in the market and domestic spheres respectively production complementarities also arise in the production and rearing of one s own children however production complementarities at least as initially described are decreasingly central to modern family life increased longevity and declining fertility mean that most of one s adult life is spent without one s own children in the household also the rise in marital formation at older ages including remarriage means that many families form with no intention of producing children moreover increases in female labor force participation suggest that household specialization has either declined or at least taken on a different meaning these changes have come about as what is produced in the home has been dramatically altered both by the emergence of labor saving technology in the home and by the development of service industries that allow much of what was once provided by specialized homemakers to be purchased in the market the availabil

the distribution sector and the development process are there patterns yes roger r betancourt i introduction in this article we bring together three separate strands of literature that have a bearing on the issue of whether or not there are patterns in the role of the distribution sector during the course of economic development the first strand of literature extends the kuznets 1966 tradition by searching for empirical regularities in the evolution of the share of services in gross domestic product gdp during the process of development both chenery and syrquin 1975 176 and syrquin and chenery 1989 21 26 use time series data for a cross section of countries to conclude that the share of services rises during the course of economic development measured by per capita income kravis et al 1983 corroborate this finding for a given year 1975 when per capita gdp expenditures are converted into a common unit using exchange rates but they find the share of services to be constant across per capita income levels when per capita gdp expenditures are converted at purchasing power parity rates panagariya 1 988 develops a general equilibrium three sector model that explains how economies of scale in the industrial sector and constant returns in agriculture and services can generate both of these results because services represent a rather heterogeneous category including telecommunications and domestic service within its fold the question immediately arises as to whether any of the services subcategories exhibit the same or a different pattern as the aggregate category the distribution sector defined as retail plus wholesale trade is a well established subcategory of services that accounts for a substantial portion of gdp in most countries 13 5 is the average share over the 74 countries and time period 1950 1983 in our data set should we expect the share of the distribution sector in gdp to exhibit the same rising pattern with the level of development as the share of services by juxtaposing two strands of recent literature we shall argue that on the contrary one should expect an inverted u pattern instead of a rising pattern for the share of the distribution sector as development proceeds one thread of recent literature focuses on the economic function of the distribution sector in this second subsection of literature betancourt and gautschi 1988 relying on earlier work by bucklin 1973 argue that the economic function of the retail sector is to provide consumers with a set of distribution services or implicit outputs together with the explicit items bought at retail betancourt 1993 adapts the analysis to encompass the wholesale sector a key finding in this literature is the existence of economies of scale with respect to the provision of distribution services ofer 1973 oi 1992 and betancourt and malanoski 1999 this finding contradicts directly one of the basic assumptions on which panagariya 1988 based his explanation of the pattern for services another area of recent literature focuses on development as specialization and stresses the increasing returns associated with specialization ray 1998 chs 4 5 provides an overview of various aspects of this literature romer 1987 is an early contributor to this thread of literature in the context of endogenous growth models locay 1990 stresses that the association of development with specialization leads to an increase in the variety of products available this increasing variety implies higher levels of assortment need to be provided by the distribution sector and it provides the link between the two recent strands of literature that allows us to explain how the inverted u pattern emerges the production of assortment is subject to increasing returns and by embedding this production in a simple economy wide model we generate a share for the distribution sector that increases in the early stages of development but eventually declines the arguments are elaborated in detail in the next section

specialization household production and the measurement of economic growth our concern in this paper is with the measurement of economic growth or more precisely the mismeasurement of growth that may occur from ignoring household production as an economy develops production shifts from households to markets traditional measures of economic growth which ignore most household production may therefore be biased upward the existence of household production also complicates international comparisons of real gnp as there are significant differences in the relative size of the household sector across developed and developing economies there is an extensive empirical literature on the size of the household sector most estimates place the value of household production in the united states for recent years at 30 40 percent of gnp 2 previous studies have found that the relative size of the household sector has remained fairly constant over time implying that measured growth rates provide a reasonable proxy for overall growth rates existing estimates of household production however have little theoretical grounding for the most part they also ignore the use of capital in the household sector in addition most estimates relate to a single point in time 3 finally existing studies relate to time periods after which the large movements out of the household and into the market may have taken place in this paper we provide new estimates of the value added in household production for selected years from 1930 to 1985 we find that the relative size of the household sector in recent times is smaller than is commonly estimated we also find contrary to the results of others that the relative size of the household sector has fallen continuously since 1930 we conclude that real per capita output has grown from 1930 to 1985 at a rate that is significantly below the rate implied by conventional measures of output we develop in the next section a formal model of household production which we hope will help us to clear up such issues as the appropriate value to impute to household labor how to treat time spent transacting and how to deflate household production in order to obtain real output the model is not a general equilibrium model its role is not to derive implications for growth but rather to guide us in our accounting exercise

r d and technology policy in nics as learning processes abstract this paper presents a dynamic learning perspective to research and development activity and to policies promoting these activities and technological development more generally the basic idea is that successful penetration of research and development rd multidisciplinary learning both technoeconomic and managerial organizational and learning which is cumulative through time this is especially so at an early infant phase of diffusion of this process through the economy a dynamic view of externalities and market failures is presented one that provides the basis for a catalytic perspective of technological policy this perspective is based on the distinction between an infant and a mature phase of policy where massive flexible search oriented support in the early phase sets the base for endogenization routinization of r d in the economy and for the possibility of drastic reductions in government support for traditional forms of r d in the later phase

distinguishing the effect of overconfidence from rational best response on information aggregation this article studies the causal effect of individuals overconfidence and bounded rationality on information aggregation by using a new multiperiod game in which agents are rewarded for submitting accurate estimates of an unknown asset s value based on i their private information and ii others past estimates by carrying out laboratory sessions of this game in which subjects overconfidence is a treatment variable i find that overconfidence affects the information aggregation process by increasing the dispersion of estimates and decreasing the rate of estimates convergence however even when subjects are not overconfident qualitatively similar deviations from the fully rational model predictions are observed i show that this can be explained by subjects strategic response to errors the author 2008 published by oxford university press on behalf of the society for financial studies all rights reserved for permissions please email journals permissions oxfordjournals org oxford university press

economic development and the division of production between households and markets a model is presented in which scale economies give market production a cost advantage over household production but in which market production is limited by the extent of the market the production process is viewed as a series of stages each further refining and specializing the product of the previous stage as processing proceeds the number of intermediate goods increases and markets thin out firms specialize in the early stages of production and house holds in the later stages as an economy grows production shifts out of households and into the market several other changes associated with economic development are also accounted for

innovation policy in an open economy a normative framework for strategic and tactical issues abstract in this paper we present a normative analysis of innovation policy grounded in traditional economic principles which responds to the schumpeterian critique of previous efforts in the neoclassical vein focusing directly on specific policy issues we pursue our analysis in two main directions investigating the role of government in developing an infrastructure for innovation and the optimal design of support schemes for r d projects the analysis suggests that while the structural and developmental issues stressed by the schumpeterian school are of fundamental importance identification of disparities between social and private gains the market failure approach provides an invaluable tool for understanding and formulating innovation policy focusing our attention on such factors as economics of scale the incidence of externalities and the supranormal profits offered by imperfectly competitive markets it provides a rational and realistic basis for anticipating where and how government intervention on behalf of industrial innovation is likely to be most effective we view our contribution as a step towards bridging the gap between the neoclassical mainstream of economic analysis and the practice of innovation policy

the dynamics of smithian growth this paper analyzes the evolution of an economy where growth is driven by increased specialization caused by the geographical expansion of markets it proves that such smithian growth exhibits generic threshold behavior below a critical density of transport linkages the economy is split into isolated local markets with limited specialization above the critical density these markets begin to fuse into a large economywide market causing growth to accelerate this allows an explicit test of the consensus among historians of sung dynasty china that the economic revolution during that period was a result of commercialization caused by the creation of a national waterway network

sources procedures and microeconomic effects of innovation fabio arcangeli paul david frank engelman christopher freeman massimo moggi richard nelson luigi orsenigo nathan rosenberg michele salvati g n von tunzelman two anonymous referees and the participants at the meeting of the committee on distribution growth and technical progress of the italian national research council cnr rome november 16 1985 have helped with various redraftings a particularly grateful acknowledgment is for the insightful and patient help of moses abramovitz this work has been undertaken at the science policy research unit spru university of sussex as part of the research program of the designated research centre sponsored by the economic and social research council esrc earlier support to the research that led to this paper by the italian national research council cnr is also gratefully acknowledged the statistical research has been undertaken with the assistance of stephano brioschi ilaria fornari and giovannu prennushi

the role of technological learning in the exports of manufactured goods the case of selected capital goods in brazil abstract the object of this study is to explain the evolution of brazilian capital goods exports in terms of technological learning within the sector and government policy but emphasizing the former the study identifies relevant learning processes for eventual introduction into export behaviour equations or as a basis for theoretical models it starts from a series of eight microeconomic case studies of technologically sophisticated firms in brazil among the specific issues addressed in the case studies are 1 the nature of technological learning are there recognizable sequences does it generally lead to products of increased technological complexity 2 how if at all technological learning has benefited exports 3 other endogenous firm spin offs principally from reputation effects which were important for increased efficiency and for the emergence of exports 4 the economic value of the firm s accumulated experience and the factors determining it

technological accumulation diversification and organisation in uk companies 1945 1983 a survey of more than 4 000 significant innovations and innovating firms in the uk from 1945 1983 shows that the scope and organisation of technological activities vary greatly as functions of firms principal activities and size 1 technological opportunities and threats are greatest in firms in chemicals and engineering opportunities in such science based and specialist supplier firms in general emerge horizontally in related product markets and downstream in user sectors in scale intensive e g steel vehicles and supplier dominated e g printing construction firms opportunities tend to be upstream in related production technologies breakthrough innovations in science based firms also induce clusters of technological opportunities upstream for suppliers horizontally for partners and downstream for users their effective exploitation requires diversity of firms technological activities greater than that strictly required for current output 2 the nature of technological opportunities and of organisation for their exploitation also varies with firm size firms with fewer than 1 000 employees have major opportunities with specialised strategies in mechanical engineering and instruments the prevalence of broad front technological strategies and of divisionalisation increases sharply with firm size together with dependence on formal r and d activities the size of innovating divisions has diminished sharply over the period divisionalisation improves the goodness of fit between the core business of innovating divisions and the innovations themselves but 40 have remained consistently outside the core business of divisions 3 these findings help identify the key tasks of technological strategy in firms in different industries and of different sizes thus in large firms divisionalisation can create the small size of unit conducive to effective implementation but it cannot absolve central management from the continuous task of matching technological opportunities with organisational forms and boundaries

measuring poverty using qualitative perceptions of consumption adequacy we show that subjective poverty lines can be derived using simple qualitative assessments of perceived consumption adequacy based on a household survey we implement the method using survey data for jamaica and nepal respondents were asked whether their consumptions of food housing and clothing were adequate for their family s needs the implied poverty lines are robust to alternative methods of dealing with other components of expenditure the aggregate poverty rates accord quite closely with those based on independent objective poverty lines however there are notable differences in the geographic and demographic poverty profiles

homework in development economics household production and the wealth of nations we introduce home production into the neoclassical growth model and examine its consequences for development economics in particular we study the extent to which one can account for international income differences with differences in policies that distort capital accumulation in models with home production such policies not only reduce capital accumulation but also change the mix of market and nonmarket activity hence these models can generate larger differences in output than standard models for a given policy differential we also show how the welfare implications change when we incorporate home production

do the economies of specialization justify the work ethics an examination of buchanan s hypothesis buchanan 1991 1994 proposes an interesting hypothesis explaining the prevalence of an ethic encouraging more work economies of specialization mean that more division of labour may increase productivity if everyone works more it increases the extent of the market which enables higher degree of division of labour and hence higher productivity individual choice between leisure and work thus results in a sub optimal level of work one way to counteract this is to maintain a work ethic this chapter examines the validity and significance of this hypothesis in the yang ng framework of inframarginal analysis a simultaneous artificial decrease in preference for leisure by all individuals decreases intrinsic utility evaluated at the original preference however using a more realistic model allowing for both home and firm market production developed by ng and zhang 2005 and discussed in chapter 9 a strong support is provided for buchanan s hypothesis as a shift in preference by everyone from leisure to market goods produced under increasing returns average cost pricing increases utility even if evaluated in accordance with the original preference buchanan s thesis probably has more relevance in ancient times when the work ethics originated but is less significant in the current world of global trade where the billions of individuals involved is sufficient to sustain specialization without artificial encouragement of additional work effort on the contrary the competition for relative standing the materialistic bias caused by our accumulation instinct and advertising and the environmental disruption of material production and consumption suggest that the discouragement of long working week may be more conducive to welfare

the r d performance through time of young high technology firms methodology and an illustration abstract this paper summarizes the pilot stage of a microeconomic study of the innovation performance through time of young high technology israeli firms it reports some results for a successful firm designing producing and selling electronic instruments and systems the paper begins by surveying some of the difficulties surrounding the collection and organization of data on r d projects one of them concerns the definition of the unit for analysis the r d project three criteria are suggested for dividing the stream for innovative activities into r d projects and these are applied to group the tens of products accessories and systems included in the analysis into nine projects the paper subsequently defines a measure of direct project performance or profitability estimate discounted operating profits per unit of fixed costs and provides estimates based on r d and sales data for the products of each project the final sections analyze the variation of project profitability through time the increasing profitability observed across generations of a product class is attributed to the adaptability of the firm to changes in the environment particularly to the availability of new technology which requires the swift design and sale of more complex products the qualitative history of the various projects suggests that this adaptability is due to a large extent to the skills infrastructure and reputation of the firm accumulated from prior projects i e that the indirect profitability of the latter is high some estimates of the indirect profitability of early projects are presented a comparison of the spin off mechanisms observed in the firm analyzed with those observed in firms of other industries is also undertaken

the division of labor coordination costs and knowledge this paper considers specialization and the division of labor a more extensive division of labor raises productivity because returns to the time spent on tasks are usually greater to workers who concentrate on a narrower range of skills the traditional discussion of the division of labor emphasizes the limitations to specialization imposed by the extent of the market we claim that the degree of specialization is more often determined by other considerations especially emphasized are various costs of coordinating specialized workers who perform complementary tasks and the amount of general knowledge available