Technology,productivity, and industry structure

This paper examines the controversy as to the particular firm size or industry structure that is most conducive to innovation. Four major conclusions emerge from the considerations advanced here. First, contrary to the focus of the controversy, the relevant issue is not one of the economic statics. Rather, it is one of technological dynamism. Second, variety is an essential ingredient of innovative activity, which can be sustained only through equivalent variety in firm size and industry structure. Thus, there is no one single optimum firm size or industry structure. Third, the origin of interindustry differences in innovation and productivity growth lies in certain processes of cumulative causation involving a multiplicity of variables rather than any one single factor at the exclusion of all others. In consequence, we find that productivity does not advance in a uniform manner across various industries. Rather, it is characterized by an inherently uneven pattern of growth. Fourth, it is pointless to strive for a balanced growth between various sectors of the economy. Rather, an effective policy is one of deliberately lopsided growth whereby fuller development of progressive industries makes it possible to generate the additional resources required for investment in the backward industries. Finally, while the policy to stimulate technical progress and productivity growth must be formulated in a broader socioeconomic context, its focus ought to be on the internal dynamics of technical change processes.     

Models of technological development and their relevance to advances in transportation

This study presents a general theory of technological development. In essence, two factors play an important role in the process of innovation. One is “learning” or acquisition of relevant production skills; the other is scale of operations of technology. The theory is applied to a variety of cases of innovation in the locomotive, tank ship, and aircraft technology over the course of time. It is suggested that the role of learning is far more important than hitherto recognized. In particular, development of new techniques is based on the rules of thumb rather than on the search for an objective optimum. The empirical results of the study further indicate that the process of learning in the development of transportation technology appears to have taken place largely in the capital-producing rather than in the capital-using sector. This confirms a conjecture of long-standing: at least in some sectors of the economy, all investment has the character of investment in R&D. Further, the role of learning is found to have been comparable to growth of scale. Thus, acquisition of production skills may well be an important alternative to large-scale technology. It is concluded that the process of technological change is appropriately viewed from the inside out rather than exclusively from the outside in.     

Household Food Demand Analysis in India

Price and expenditure elasticities and estimates of the effect of household demographic variables on Indian food items are estimated using a recent household survey data in rural and urban areas. Using a linear approximate almost ideal demand system (LA/AIDS), the results indicate that for commodity groups (milk and milk products; cereals and pulses; edible oils; meat, fish, and eggs; vegetables and fruits; other foods) demand is elastic only for milk and milk products in both rural and urban areas of India. The impact of demographic variables such as region, household size, education level of household head, and seasonality, was generally significant.     

Joint decision of procurement lot-size,supplier selection,and carrier selection

The joint decision making of procurement lot-size, supplier selection, and carrier selection has potential to reduce buyer's purchasing expenditures. Furthermore, the total logistics cost can also come down through economies of scale in the purchasing and transportation costs, and reduction in supply chain disruptions such as rejections and late deliveries. We study a procurement setting in which a buyer needs to purchase a single product from a set of suppliers over finite discrete time periods to satisfy service level requirements. The suppliers offer all-unit quantity discounts, and transportation cost depends on carrier capacity as well as geographical location of suppliers. This paper proposes an integer linear programming model to simultaneously determine the timings of procurement, lot-sizes, suppliers and carriers to be chosen so as to incur the least total cost over the planning horizon. A numerical example is included to demonstrate the effectiveness of the proposed model in establishing tradeoffs among purchasing cost, transaction cost, and inventory holding cost. Sensitivity analysis has been carried out to understand the effects of the model parameters on the purchasing decisions and total cost. Managerial insights of this study serve as a reference for decision makers to develop effective procurement strategies.     

Invention, innovation, and economic evolution

This paper provides a synopsis of logic and adventure in the process of fundamental innovation. The contemporary viewpoint of R&D management would have us believe that innovation is a rational process subject to prediction, regulation, and control. The alternative viewpoint is advanced here that innovation is neither merely a mechanical nor solely a goal-driven process. In reality, innovative systems are inherently untidy systems. The most important clue to any possible uniformity in the behavior of such systems is to be found in their very multiformity. Thus, the process of innovation is first and foremost a self-organizing process. This theory, based on the author's work of the past several years in this area, has led to identification and explanation of several lawlike relationships in the origin of fundamental technical breakthroughs, transfer of technical knowledge, and long-term economic evolution. There are a number of important implications of these regularities for technology and science policy during 1980s and beyond. First, success in innovation critically depends upon pursuing several small-scale experimental projects at the same time. Thus popular attempts to avoid duplication in R&D activity constitute what is really a penny-wise but pound-foolish policy. Second, nothing is more important in the future than to promote greater decentralization in the conduct of R&D enterprise. Third, one way out of the current worldwide economic stagnation is to be found in the development of a few, already available, fundamental innovations such as those in the microelectronics, solar energy, and biotechnology fields rather than in the eternal search for more technical breakthroughs. Thus the need in the future is not so much for disproportionate increase in basic research in relation to technological development effort as it is for striking a congruence between various components of R&D activity.     

A generalized logistic model for technological forecasting

Resulting from a predominantly forward-looking behavior of the producers, a generalized logistic model is developed and tested here as an approximation of engineering-design process.     

The Regulation of the United Kingdom Electricity Industry: An Event Study of Price-Capping Measures

The privatization of United Kingdom utilities after 1979 established a regulatory regime based around price capping rather than return capping. This innovation was intended to provide a predictable framework that encouraged efficiency. An event methodology was used to examine stock market reaction to the main regulatory announcements affecting 12 Regional Electric Companies from flotation to 1995. The results indicate that the regulatory announcements were only a minor contributor to the persistent abnormal returns observed. The low connection between regulatory events, efficiency changes and abnormal returns at company level lead to a conclusion that the initial structural and control frameworks dominated the regulatory framework.     

A reformulation of the technological progress function

In its actual construction, the ordinary technological progress function is concluded to be theoretically defective, because, among other things, (1) it is not in keeping with the dynamic perspective in which technological change occurs, (2) it leaves unaccounted the nonlinearities involved in the learning process, and what is even more important, (3) it is not stochastically specified. Furthermore, it is unsuitable for long-term prediction from time-series data because it ignores a “limit of learning”, which is approached if not reached. Empirically also it is found to be grossly inadequate. A reformulation of the technological progress function is developed here by way of a solution to some of these problems and it is applied to a variety of cases. The role of availability of knowledge and complexity in engineering design process is also investigated in a preliminary way by means of two a priori hypotheses developed in the main body of the paper. Directions of further research are indicated.