Romesh Diwan

Research Report: Increasing Returns to Information Technology

This work analyzes firm-level investment in information technology and corresponding productivity through the use of a production function over the period from 1995-1997. The results are then compared to previous studies that utilized similar data and methodologies to compare productivity estimates over time. The analysis indicates that investment in IT enhances productivity over the period in question and has illustrated increasing returns over time. These findings are supported by the corresponding empirical analysis which yielded IT capital coefficients in a production function of (0.12, 0.16, 0.18) and IT flow coefficients in a similar function of (0.17, 0.24, 0.22) for the years 1995, 1996, and 1997, respectively. These results reflect the change in firm output given a one-percent change in the natural log of dollars invested in IT capital and flow, and are statistically significant.

Relational wealth and the quality of life

Abstract This article introduces a new concept, relational wealth, which is derived from and deeply rooted in family and community values. The concept offers: (a) a mechanism for consciousness raising, (b) a basis for dialogue, and (c) a foundation for policy making. The basic thesis of this article is based on three propositions: 1) our human and national welfare depends on both material and relational wealth. Material wealth, made up of commodities, provides us physical comforts and defines our standard of living. Relational wealth emanates from our interconnections with other human beings. It gives us inner strength and emotional security and defines our quality of life. 2) There is a tension between material and relational wealth. As material wealth increases beyond a certain level, it impinges on relational wealth. 3) Our current economic practices and policies concentrate on the maximization of material wealth only with minimal concern for its negative effects. Yet the objective of a meaningful economic practice and policy is to maximize material and relational wealth jointly. The article provides suggestive economic policies and ideas regarding family, community and overconsumption.

The impact of information technology on US industry

Abstract This work analyzes firm-level investment in information technology and corresponding productivity through the use of a production function over the period from 1995 to 1997. The results are then compared to previous studies that utilized similar data and methodologies to compare productivity estimates over time. The analysis indicates that investment in IT enhances productivity over the period in question and has illustrated increasing returns over time. It cites such factors as advanced computer processing, software applications and Internet related technology, that facilitate communication of information, as potential drivers of productivity. This work then ranks US industries according to IT intensity and categorizes industry groups as either high, normal or low IT intensity. Once again, through the use of economic theory, we estimate productivity of investment in IT according to industry grouping and find that the higher IT intensive group experienced greater returns from investment in information technology.

Small business and the economics of flexible manufacturing

The impact that flexible manufacturing has had on the structure of international trade is examined. By introducing an analysis of the economics of flexible manufacturing, it is concluded that flexible technology is more conducive to small rather than large firms. This shift in the size distribution of firms is the result of a new emerging techno-economic paradigm.

Alternative development strategies and appropriate technology : science policy for an equitable world order

Focus is on the world and its development. The books 1st part describes international world order as it exists at this time the international actors international relations and international resource constraints. The existing typology of the world is described in terms of development. The 2nd part of the book considers the development path that has been followed in both developed and developing countries. After independence and during the 1950s and 1960s most of the developing countries opted for what may be termed the Conventional Development Strategy (CDS). Although CDS has created a general awareness and some pockets of development on the whole the goal of development has been eluive. Attention in the books 3rd part is directed to Alternative Development Strategies (ADS). Basic objectives of ADS are reductions in and eventual elimination of poverty unemployment underemployment and income inequalities. Emphases are on the production of goods for basic needs of the poor by the people themselves; and on local initiatives resources and self-reliance rather than on gross national product growth. There are many variants of ADS. The science and technology most closely associated with ADS are best described as appropriate technology (AT). AT is by the people themselves; location specific holistic and future oriented. In the final part of the book policies consistent with ADS are derived and some policies for developed countries and international agencies are outlined.

Biological technology and land productivity: Fertilizers and food production in India

Abstract This paper attempts to develop for the first time a rigorous and innovative definition of Biological Technical Change (BTC). BTC (for which fertilizers are used as proxy), and land-labor substitution are quantified by the method of Indirect Least Squares, from aggregate time-series data on wheat and rice production in India. The conclusion that emerges from this analysis is that the contribution of BTC, more specifically fertilizers, to foodgrain production in India, is quite low. This raises important policy questions related to finding alternatives to widely held beliefs on how to increase food production and alleviate world hunger.

Perestroika and Gandhian Economics

Perestroika is defined and the type of economic change it implies is considered. Its potential for realising its objectives is assessed by evaluating various principles of Gandhian economics. Perestroika relates well to swadeshi equality, non‐exploitation and bread labour. It has some elements of aprigraha but completely lacks trusteeship. It is this lack of the principle of trusteeship that may be its undoing.

Bias in the Measurement of Technical Change

Professor Solows article, “Technical Change and the Aggregate Production Function,†now virtually classic, has made a great impact on economists generally and in the last few years the subject has received unprecedented attention in economic literature. The reason for this extraordinary emphasis on “Technical Change†has been the conclusion—in Solows above-mentioned article—based on statistical evidence, that gross output per man-hour in the United States nonfarm economy doubled over the period 1909–1949, “with 87.5 percent of the increase attributable to technical change and the remaining 12.5 percent to increased use of capital.â€

Gandhian economics: An empirical perspective

This paper empirically tests underlying assumptions of Gandhian Economics in its relationship with mainstream Economics. It looks at, and questions, the scarcity idea that lies at the root of materialist and utilitarian functions in the neo‐classical economic theory. In the context of American dream based on material goods the scarcity idea has little relevance. To explain abundance of material goods and general malaise a second affluence concept is proposed. One is affluent not only when one possesses material goods but also when surrounded by caring relations. Affluence defined by “caring” leads to a Gandhian welfare function based on service to others, ecology and time. The paper explains this function in detail and articulates an alternative economics of well being. It outlines, and explains, basic principles of Gandhian Economics, namely: swadeshi, aprigrah, trusteeship, bread labor, non exploitation and equality. It compares and contrasts some Gandhian Economics concepts with those in mainstream economics. The paper further develops caring relations into a new concept of “relational wealth.” It formulates a functional relationship between material and relational wealth and tests it empirically. The tests confirm the coexistence of economic progress with general malaise and find that GDP growth eventually leads to a decline in “relational wealth.” At some point, further addition to GDP growth result into less, not more, welfare.

Input substitution and technical change in U.S. high tech industries

Abstract The paper shows that in U.S. high-tech industry sector, capital and non-production worker are complementary to each other. Capital and production worker, however, are substitutes. Also, technical change in the sector concerned is material using and capital and labor saving. The major saving is in production worker.