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Wellbeing Economics and Export Prosperity Paul Dalziel, AERU at Lincoln University Wellbeing Economics and Export Prosperity Paul Dalziel Deputy Director, AERU Presentation to NZARES Conference, Wellington, 30-31 August 2018. Introduction

  1. Wellbeing Economics and Export Prosperity Paul Dalziel, AERU at Lincoln University Wellbeing Economics and Export Prosperity Paul Dalziel Deputy Director, AERU Presentation to NZARES Conference, Wellington, 30-31 August 2018. Introduction The purpose of this presentation is to explain two research programmes of the Agribusiness and Economics Research Unit at Lincoln University. • A new book on Wellbeing Economics • A new research programme on Unlocking Export Prosperity NZARES 2018 Page 1

  2. Wellbeing Economics and Export Prosperity Paul Dalziel, AERU at Lincoln University Agribusiness and Economics Research Unit The AERU was founded by decision of Cabinet in 1962. Our mission statement since 2009 is “to exercise leadership in research for sustainable wellbeing”. Annex C Wellbeing Economics Wellbeing Economics: The Capabilities Approach to Prosperity will be published as an Open Access E-Book by Palgrave Macmillan next week. NZARES 2018 Page 2

  3. Wellbeing Economics and Export Prosperity Paul Dalziel, AERU at Lincoln University National Wellbeing Frameworks Many countries have introduced national wellbeing frameworks to monitor a range of indicators. The German process: • Parliamentary Expert Group • Scientific Advisory Board • 6 month National Dialogue • Heterogeneous, not representative • Report and website The framework is organised around 12 dimensions, supported by 46 indicators of wellbeing (carefully chosen), plus 2 placeholders for indicators that the National Dialogue revealed are important but without available measures (Global corporate responsibility, and Quality of Care). NZARES 2018 Page 3

  4. Wellbeing Economics and Export Prosperity Paul Dalziel, AERU at Lincoln University In preparation for the wellbeing budget 2019, the Treasury has commissioned a report on creating a Treasury Living Standards Dashboard, which could be used to monitor intergenerational wellbeing in New Zealand. NZARES 2018 Page 4

  5. Wellbeing Economics and Export Prosperity Paul Dalziel, AERU at Lincoln University The Implications for Economic Policy So far, countries have had more success in creating sets of indicators that measure changes in wellbeing broadly defined than success in creating economic policies that impact on those indicators directly. Wellbeing Economics: The Capabilities Approach to Prosperity We have written our book to address what implications a wellbeing economics framework might have for economic policy , based on the capabilities approach . NZARES 2018 Page 5

  6. Wellbeing Economics and Export Prosperity Paul Dalziel, AERU at Lincoln University Amartya Sen, Development as Freedom The capabilities approach to personal wellbeing was original introduced by Amartya Sen. Sen emphasises the agency of people creating lives that they value, and have reason to value, which he argues depends on capabilities . Amartya Sen, Development as Freedom “ The analysis of development presented in this book treats the freedoms of individuals as the basic building blocks. Attention is thus paid particularly to the expansion of the ‘ capabilities ’ of persons to lead the kinds of lives they value – and have reason to value.” NZARES 2018 Page 6

  7. Wellbeing Economics and Export Prosperity Paul Dalziel, AERU at Lincoln University The Capability Theory of Firms Our approach is influenced also by the capability theory of firms, introduced by NZ economist, David Teece. Teece builds on Ronald Coase, Oliver Williamson and Oliver Hart to argue that firms create and sustain specialist capabilities . The Capability Theory of Firms “The capabilities view of the firm … looks beyond ‘factors of production ’ and production functions to recognize the importance of how firms learn and orchestrate assets in ways that markets cannot replicate. This functionality enables firms to … both create and capture value from innovation .” NZARES 2018 Page 7

  8. Wellbeing Economics and Export Prosperity Paul Dalziel, AERU at Lincoln University Place-based Policies and Local Capabilities Authors like Fabrizio Barca, Philip McCann and Andrés Rodríguez-Pose have argued that successful place-based policies must build on local or regional capabilities . Place-based Policies and Local Capabilities “The place -based argument suggests that development strategies should thus focus on mechanisms which build on local capabilities and promote innovative ideas through the interaction of local and general knowledge and of endogenous and exogenous actors in the design and delivery of public policies .” NZARES 2018 Page 8

  9. Wellbeing Economics and Export Prosperity Paul Dalziel, AERU at Lincoln University The Capabilities Approach to Prosperity These examples explain our subtitle: The capabilities approach to prosperity . Personal capabilities expand with specialist capabilities of firms, which expand with the local capabilities of regions. The Propositions in Chapter 1 Proposition 1 : The primary purpose of economics is to contribute to enhanced wellbeing of persons. Proposition 2 : Wellbeing can be enhanced by expanding the capabilities of persons to lead the kinds of lives they value, and have reason to value. Proposition 3 : The capabilities of persons can be expanded by different types of capital investment at different levels of human choice. NZARES 2018 Page 9

  10. Wellbeing Economics and Export Prosperity Paul Dalziel, AERU at Lincoln University The Propositions in Chapter 1 Proposition 1 : The primary purpose of economics is to contribute to enhanced wellbeing of persons. Proposition 2 : Wellbeing can be enhanced by expanding the capabilities of persons to lead the kinds of lives they value, and have reason to value. Proposition 3 : The capabilities of persons can be expanded by different types of capital investment at different levels of human choice. Seven Different Levels of Human Choices Persons Focus: Turning personal abilities into capabilities… NZARES 2018 Page 10

  11. Wellbeing Economics and Export Prosperity Paul Dalziel, AERU at Lincoln University Seven Different Levels of Human Choices Households Persons & Families Focus: Passing on and transforming cultural capabilities… Seven Different Levels of Human Choices Households Civil Persons & Families Society Focus: Increased capabilities through collective action… NZARES 2018 Page 11

  12. Wellbeing Economics and Export Prosperity Paul Dalziel, AERU at Lincoln University Seven Different Levels of Human Choices Households Civil Market Persons & Families Society Participants Focus: David Teece’s capability theory of the firm… Seven Different Levels of Human Choices Households Civil Market Local Persons & Families Society Participants Government Focus: Place- based policies building on local capabilities… NZARES 2018 Page 12

  13. Wellbeing Economics and Export Prosperity Paul Dalziel, AERU at Lincoln University Seven Different Levels of Human Choices Households Civil Market Local Nation Persons & Families Society Participants Government State Focus: Knowledge- based capabilities of the civil service… Seven Different Levels of Human Choices Households Civil Market Local Nation Global Persons & Families Society Participants Government State Community Focus: Capabilities for promoting the global common good… NZARES 2018 Page 13

  14. Wellbeing Economics and Export Prosperity Paul Dalziel, AERU at Lincoln University These are the middle chapters of the book Households Civil Market Local Nation Global Persons & Families Society Participants Government State Community But, of course, they influence each other Households Civil Market Local Nation Global Persons & Families Society Participants Government State Community NZARES 2018 Page 14

  15. Wellbeing Economics and Export Prosperity Paul Dalziel, AERU at Lincoln University The Propositions in Chapter 1 Proposition 1 : The primary purpose of economics is to contribute to enhanced wellbeing of persons. Proposition 2 : Wellbeing can be enhanced by expanding the capabilities of persons to lead the kinds of lives they value, and have reason to value. Proposition 3 : The capabilities of persons can be expanded by different types of capital investment at different levels of human choice. Each chapter focuses on a capital stock Households Civil Market Local Nation Global Persons & Families Society Participants Government State Community NZARES 2018 Page 15

  16. Wellbeing Economics and Export Prosperity Paul Dalziel, AERU at Lincoln University Again, these all influence each other Human Cultural Social Economic Natural Knowledge Diplomatic Capital Capital Capital Capital Capital Capital Capital Wellbeing Economics Proposition 3 : The capabilities of persons can be expanded by different types of capital investment at different levels of human choice. The book describes how Proposition 3 can be put into practice, within an integrated wellbeing economics framework. The rest is detail… NZARES 2018 Page 16

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