This paper aims at disentangling the correlation between LDC debt and investment in the 1980's. I show that a large debt was not an unconditional predictor of low investment in the 1980's, nor was investment abnormally low, when compared to a "financial-autarky" rate, calculated in the text. I do find, however, that the actual service of the debt crowded out investment. For the rescheduling countries I show that 1 percent of GDP paid abroad reduced domestic investment by 0.3 percent of GDP. This is identical to the correlation between investment and foreign finance observed in the 1960's.

Research joint ventures (RJV's) between private firms and government bureaus play a central position in the Clinton Administration's R&D strategy to promote productivity and of American firms. The government's role in the programs varies from subsidizing private projects to providing the expertise and facilities of the federal research laboratories. A substantial literature now exists that investigates the economic efficiency of private RJV's. The purpose of this paper is to expand the debate to consider the conditions under which the government will choose to subsidize RJV's and whether these conditions are likely to yield desirable economic results. It is useful to characterize the government as a consortium member who differs from the private venturers in several critical ways. First, these programs are based on the presumption that private firms are far better than government at choosing projects with commercial merit. Even in those programs where the government contributes scientists and facilities, industry partners usually have primary responsibility for initiating projects. Second, the objective function of the government differs from industry members. Indeed, it is in part because government actors have goals other than competitiveness that these programs are intended to keep government bureaucrats at arm's length from technical choices. Finally, the financial contribution of the government is usually a set share of the total bill. Introducing this form of subsidy changes the research investment strategies employed by a joint venture, and the incentives facing firms either to participate in a consortium or to oppose its establishment. The basic premise of this analysis is that a subsidized joint venture will persist only when all members, including the government, are satisfied. A viable policy depends on economic consequences to member firms, and to the extent that they have access to policy-making, to nonmember firms and consumers. Furthermore, some of the relevant consequences follow predictably from market and technology characteristics.

This paper analyzes the workings and potentials of French planning as a prototype model of modern capitalist planning. Its principal concern is methodological. How can we analyze, categorize, compare, and criticize planning processes? The French planning process is not a streamlined design of smoothly fitting parts. Its formal structure tells little about its functional structure. Its explicit targets do not define its operational role. The plan is a collection of activities which have never been integrated into a single, coherent process. That is perhaps why there has been so much confusion about the way it operates; it operates in several ways at once. The French plan has two principal components. Each is a complex system possessing a powerful logic of its own. Each is based on a different planning model and each model implies a radically different conception of the political function of planning. Each pulls the plan in a different direction. The first component is a complex institution of daily, pragmatic state intervention in the activities of the major industries. The second is a formally coherent set of output targets-the general resource allocation plan.

We propose an extensive-form solution concept, with players who neglect information from hypothetical events but make inferences from observed events. Our concept modifies cursed equilibrium (Eyster and Rabin 2005) and allows that players can be cursed about endogenous information. (JEL C73, D44, D71, D81, D83, D91)

Using firm data disaggregated by industry, the authors establish a set of regularities in the distribution of firm R&D intensities within manufacturing industries. The authors show how a simple probabilistic process, in which change influences a key unobserved determinant of R&D and firm size conditions the returns to R&D, can account for these regularities and other features of the distributions. The model provides a unified, noncausal explanation of a series of long-observed relationships across mean R&D intensity, market concentration, and the coefficient of variation. It also offers a novel explanation for the inverse relationship between R&D productivity and firm size. Copyright 1992 by American Economic Association.