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Extra resources for Current Issues in Development Economics
But in a land scarce economy, yield increasing and land saving inputs such as fertilisers, irrigation and HYVs are substituted for land. More formally, the theory of induced technical change is equally well adapted to explaining both biological innovations which save land, and mechanical innovations which save labour. Although induced innovation theory emphasises the role of producer demand in determining the pace and character of technical change, it does not preclude supply-side forces from playing a contributory role.
Other more recent studies suggest that peasants trade off profit against risk reduction via the application of 'safety margins' in committing resources to production at the intensive margin and the giving of priority to less risky production enterprises over more risky and potentially more profitable ones (Wolgin, 1975; Schluter and Mount, 1974; Roumasset, 1976). The general findings from studies of village economies tend to support the conclusions that farmers are risk-averse and that local customs, although flexible, influence 26 Agriculture: Institutional and Technical Change economic activity (Stern, 1989).
Now - they say - we ought to be labour economists, or industrial, or monetary, or trade, or agricultural economists - people who include developing countries among their countries of study, but not exclusively so. According to this view, our task as professional economists would be to apply advances on the fronties of (say) labour economics - both methodological and substantive - to labour markets in poor countries. If we are not good labour economists - if we regard ourselves as development economists who dabble in labour issues - the research will be shoddy.