Development is as an expansion of personal choices, at least according to one of the United Nations' Development Programme definitions of development. These choices include access to income, to live a long and healthy life, to be educated, to have access to resources needed for a decent standard of living, political freedom, guaranteed human rights, and personal self-respect. An environment conducive for people to develop to their full potential and exercise their right to these choices should be created by the development process. Development, therefore, should be concerned with all people. 

Other organizations that work with developing countries will define development in terms similar to those of the United Nations Development Programme. A majority of organizations use traditional economic analyses and the statistics produced by those analyses as the basis for determining all types of aid. These analyses do not incorporate what has been traditionally labeled "nonproductive" activity nor do they include the people performing such activity. Exclusion of this activity and the people performing it has drastically affected development aid, policy, plans, and programs. It has caused the work people do everyday to survive to be ignored. 

The inclusion of "nonproductive" labor could change the way development programs are structured and the need for aid determined. The inclusion of "nonproductive" work could shape policies and educational programs. A more realistic view of the status of the people would be produced. The development process would drastically improve because all people would benefit from development programs, not just those people considered productive.

In economics, the terms labor, work, and economic activity are often used interchangeably. These terms usually mean an activity or activities that produce surplus value or profit in the marketplace. Work is any activity or expenditure of energy, that produces services and products of value to other people. Although work can be performed without wages, salaries, or income, economically speaking, labor market work is strictly work performed for pay. These terms are then tied to the term production. Work is productive if and only if profits are produced. 

To get a clearer understanding of the "productive" versus "nonproductive" distinction, some real-life examples collected by Marilyn Waring (1988) can be examined.

Tendai is a young girl in the Lowveld, Zimbabwe. Her day starts at 4 A.M. when she carries a thirty-liter tin to a borehole about eleven kilometers from her home to fetch water. When she returns about five hours later, she eats a little and then gathers firewood until midday. She does the breakfast dishes and then prepares lunch for the family. After lunch, she again does the dishes, and then wanders in the hot sun until early evening, gathering wild vegetables for supper before making the evening trip for water. Her day ends at 9 P.M., after she has prepared supper and put her younger brothers and sisters to sleep. According to the international economic system, Tendai is considered "nonproductive," unoccupied, and economically inactive.

Cathy, a young, middle-class North American housewife spends her days preparing food, setting the table, serving meals, washing dishes, dressing and diapering her children, disciplining children, taking the children to school, dusting, doing the laundry, going to the gas station and the supermarket, repairing household items, ironing, keeping an eye on or playing with the children, making beds, paying bills, putting away toys, books, and clothes, sewing or mending or knitting, answering the telephone, vacuuming, sweeping, washing floors, cutting the grass, weeding, shoveling snow, cleaning the bathroom and the kitchen, and putting the children to bed. Just like Tendai, Cathy is considered "nonproductive," unoccupied, and economically inactive.

Ben is a highly trained member of the U.S. military. His job requires him to just wait in an underground facility with a colleague, for hours at a time, for an order to fire a nuclear missile. Ben is so skilled and effective that if his colleague were to attempt to subvert an order to fire, Ben would be expected to kill him to ensure a successful missile launch. Ben is paid to sit and wait all day. Thus, he is economically active.

Mario is a pimp and a heroin addict in Rome. He regularly pays graft. While Mario's services, consumption, and production are illegal, they are marketed. Money changes hands. Mario's activities are part of Italy's hidden economy. When there is more money in circulation than has been reported in legitimate business activities, some nations regularly impute a minimal value for the hidden economy in their national accounts. So part of Mario's illegal services, production, and consumption will be recognized and recorded. Mario is economically active.

By using the standard economic definitions of "productive" and "nonproductive," the activities of Tendai and Cathy are not work. They receive no wages, salaries, or (monetary) benefits for their activities. They are economically inactive. Yet both women are performing activities that are necessary to survival, to the production and reproduction of a labor force which has a very definite economic value. Why then, are these women viewed as "nonproductive"? Most feminists will answer that question very simply - because they are women. Women have been the traditional household producers and the traditional subsistence farmers and receive no pay for their work. It was quite simple for economists to leave them out of any economic analysis. Currently, economists claim that "nonproductive" work is excluded from economic analysis due to its lack of economic contribution, its invisibility, the difficulty in measuring it, and the difficulty in assigning value to it. However, these claims are not true.

The lack of an economic contribution by "nonproductive" work is no longer considered a valid argument. A large amount of research has been conducted showing that "nonproductive" and domestic work not only make a contribution to, but are a very necessary part of any nation's economy. It has been estimated that if unpaid household work and subsistence agriculture were incorporated into an economic analysis, the amount of global production would increase by a third (United Nations Development Programme 1990, 32). 

Because this work does make a valuable contribution to the economy, it is only invisible to those who want it to be. The amount and type of work done can be discovered by simply spending a day with Tendai, Cathy, or any other "nonproductive" person. Researchers currently have many methods to document "nonproductive" work. A variety of time-use surveys, time-use questionnaires, direct observations, detailed time-use diaries, and the random hour method are just a few techniques that have been used to gather data on "nonproductive" work in the household sector. Obviously if a researcher can gather data on such work, the work is not invisible.

The "difficulty" in measuring the work and assigning it value is a result of the definition of economic activity. The question of what entails economic activity revolves around the question of value. Goods and services on which no one could put a market price because their values are spiritual, psychological, social, or political are the ones that are often excluded from an economic analysis. They are excluded because they have no market price. Yet nonprofit organizations such as churches and clubs are included as productive services in national accounts; so are therapists and voluntary agencies where the cost of production is met by members and benefactors. Agents of social reproduction are included, as are political campaigners, and government administrative services on the grounds that the services have an economic price in terms of the cost of labor, capital, and materials to produce them. Thus the definition of economic activity and the process of determining a market price can be changed as desired by the economist. 

The valuation of government is a prime example of the malleability of the process of determining market value. Most general government activity does not have a market price. With a few exceptions, "government" is not sold on the market. Despite the lack of market price, a value is attached to these activities and thus, the activities become productive. The measure of the services that a government provides is taken to be the cost of producing them. With the adjusted valuation process, economists are able to attach a positive value to government activities. The argument then that the "nonproductive" work cannot be valued because it does not have a market price is invalid.

The incorporation of "nonproductive" work into an economic analysis is especially important to developing countries. The aid to these countries is usually based on a traditional analysis of the economy that leaves out household production, subsistence agriculture, and other forms of "nonproductive" work. The statistics produced by these traditional analyses and used to determine aid are inaccurate and do not reflect or predict the reality that exists. The problem with using these statistics becomes clearer when one realizes that the two institutions responsible for the largest amount of development funding have, until recently, relied almost exclusively on these statistics. The World Bank and the United Nations Development Programme have based their development programming and funding decisions on the statistics produced by the United Nations System of National Accounts.

One of the largest financiers of international development programs is the World Bank. Its main goal is to help raise the standards of living in developing countries by channeling financial resources into the developing world. It, and each of the institutions it encompasses, follows a few guidelines in this channeling: 1) a loan can only be for productive purposes and must stimulate economic growth; 2) it must pay due regard to the prospects of repayment; 3) each loan is made to a government or must be guaranteed by the government concerned; and 4) the decision to lend must be based on economic considerations (Kardam 1991, 47). 

The Bank operates on many different levels. On one level, its goal is to be a leading institution in development theory and practice. The annual addresses of the president, the sector policy papers on development issues, the annual World Development Report, and its general research program are important documents on development. At another level, the Bank produces country dialogues. Best known of these dialogues, are the economic reports on individual borrowing countries, which analyze macroeconomic performance and provide a frame of reference for subsequent Bank operations in the country. The third level of the Bank's work involves the actual funding of development projects. Due to the constant activity on each of these levels, the World Bank is considered the largest and most influential source of development finance, research, and policy advice.

The World Bank may be considered to be the largest source of development finance, research, and policy advice, but it is far from being the only one. Another almost equally important organization is the United Nations Development Programme.

In 1966, the United Nations Development Program (UNDP) was created by the convergence of two organizations, the Expanded Programme of Technical Assistance for Economic Development of Underdeveloped Countries (EPTA) and the United Nations Special Fund. The UNDP was designed to coordinate and administer UN resources for technical cooperation within a trilateral system made up of the UNDP, specialized UN agencies contracted by the UNDP to execute projects, and recipient governments.

The UNDP provides assistance in the form of grants; however, recipient governments must make allocations from their domestic budgets to meet certain project needs. These needs frequently include local infrastructure, salaries of national personnel, and recurrent expenditures. Grants and resources are disbursed based on the indicative planning figure (IPF), which is the amount projected to be available for program activities in a country over a five-year period. The IPF, which is an internationally agreed upon formula, is based on a country's population and per capita gross national product level. The idea behind this formula is that it ensures that the largest amounts of assistance go to the poorest and most populous countries.

Both the World Bank and the UNDP are centered around providing aid for developing countries. One of the most difficult jobs these two organizations have is determining which countries receive aid and how much aid they will receive. Both rely heavily on the analysis and statistics produced by the United Nations System of National Accounts (UNSNA) to determine needed aid. The UNSNA is used as an international system of economic measurement. The World Bank, the International Monetary Fund, all United Nations agencies, and most national governments use this system of accounting. It is this national accounting system that excludes "nonproductive" work.

First published in 1953 in A System of National Accounts and Supporting Tables, the United Nations System of National Accounts (UNSNA) presented a set of six accounts for recording the main flows in the economy in relation to production, consumption, accumulation, and external trade. The report was prepared by a group of experts trained in classical Western economics and appointed by the secretary general. The report was to provide a uniform system of accounting so that the statistics produced could be compared between countries, could be used to provide a complete picture of economic structure, and could be used to fulfill the need for information about the working of the economic system as a whole and the way in which its various parts are related to each other.

The UNSNA is really only concerned with measuring the value of goods and services that actually enter the market. Very few non-marketed goods and services, such as those provided by government and nonprofit organizations, are included in this analysis. Their inclusion is accomplished by using the adjusted process of determining market prices previously discussed. The UNSNA relies on the gross national product and the gross domestic product figures to help measure the economy in terms of market value and production.

The gross national product (GNP) is the total value of a nation's annual output of goods and services. The GNP equals consumer expenditures plus gross investment outlays plus government expenditures on goods and services. The GNP supposedly measures the production that generates income for a nation's residents. A similar statistic, the gross domestic product (GDP), measures production that generates income in a nation's economy, whether the resources are owned by that country's residents or not. Thus interests, profit, and other forms of transfer of income generated in a country's economy, but accruing to nonresidents are part of the GDP but not part of the GNP.

Based on the guidelines for figuring GNP and GDP, the UNSNA defined expenditure as economically important, and thus included it in the analysis if the goods were purchased in the market or if the goods were being consumed by a productive worker. If the goods were produced by a "nonproductive" worker or no money changed hands during the consumption, the expenditure was not considered an economic activity. Based on this definition, the UNSNA devised a list of the main items of consumption expenditure to be included in analysis. This list includes:

1. All food, including purchases in restaurants or boarding houses, consumption of own products by producers, and food provided to employees

2. Beverages, including soft drinks and all alcoholic beverages

3. Tobacco

4. Clothing and other personal effects

5. Rent, rates, water charges, and indoor repairs and upkeep paid for by tenants

6. Fuel and light, including purchases of coal, gas, electricity, firewood, etc.

7. Furniture, furnishings, and household equipment

8. Household operation, including wages paid to domestic servants; purchases of nondurable household goods; and all repair, insurance, and similar services 

9. Personal care and health expenses

10. Transportation and communication 11. Recreation, including expenditures on entertainment, hotels, restaurants, hobbies, and purchase of books and other printed materials

12. Miscellaneous services, including actual and imputed bank charges; operating expenses of life insurance companies; administrative charges of private pension schemes; household finance companies, and other financial institutions rendering services to households; education and research

13. Expenditure abroad of residents, including all expenditure on foreign travel, except those which is charged to business expenses (Waring 1988, 61-62).

The key criteria for any product to be included on this list of expenditures is that the product must have been obtained on the market or that the consumer is a producer. Looking at the list, one can see that in developing countries, many of these goods and services are not obtained on the market but are produced by work done within a home. Food is often grown or gathered rather than being purchased. Clothes, personal effects, and furniture are frequently made by someone within the household. Fuel is gathered not bought. Although these products are still produced, the people producing them are considered neither producers nor productive because the products are not sold on the market. Thus the work is labeled "nonproductive" and is excluded from analysis. 

The people and work are labeled "nonproductive" because the UNSNA decided that certain areas of human activity lie outside what it calls the production boundary. These areas are excluded from the national account. Services of housewives and other family members, household maintenance and production, illegal transactions, and products which are seldom or never marketed lay outside the boundary. Due to this boundary, many of the daily activities of people in developing countries, like the activities of Tendai, are not included in the national accounts. In spite of their importance to survival, development, and even the economy, the UNSNA chose not to acknowledge their existence within the production boundary. 

This production boundary is based on the UN experts' definition of producer:

As a first approximation it may be supposed that the transactors, that is the producing and consuming entities in the economy, can be exhaustively and exclusively classified as either enterprises or households and that producers can be identified with the former category (Waring 1988, 75).

By using this definition, it is quite easy to see how the daily work done by many people within developing countries is not considered an economic activity. Because the work is done by household members and not by an enterprise, the work is "nonproductive". From the start, households cannot be producers and the work done within them cannot be productive. However, the experts did acknowledge that under certain circumstances households could be considered producers. To expand their definition of producer they wrote the following:

The distinction between enterprises and households is not in all cases sufficient to draw a satisfactory production boundary. In the simplest case, households may buy direct services, such as domestic services, from other households and it seems reasonable to regard these services as part of production. This can be done by recognizing a limited amount of production within households. The household that buys the direct services rendered by other households is thought of as buying at cost, in its capacity as a consumer, the direct services from a production account to which is debited the cost of services. This production account, like any other, lies within the production boundary and what flows out of it is part of the final product (Waring 1988, 76). 

This expanded definition allows for households to be considered producers; however, their production is limited + their goods or services have to be purchased to be considered production. Once again much of the work done in developing countries (and in households in developed countries) is excluded. 

By using the guidelines of another paragraph on the boundary of production, one might initially think that although "nonproductive" work has thus far been excluded, it could now be included. The paragraph deals with the productive quality of farm households:

Farm households are not only households from a consuming point of view, but also enterprises which engage in agricultural production. These two aspects of their activity must be separated and this may be done by setting up a production account to which purchases and sales in respect of their productive activity are debited and credited and a consumption account to which is credited their income and to which is debited their consumption expenditure (Waring 1988, 76).

Since many of the people in developing nations gain at least of a portion of their food from agriculture, the households could arguably be considered farm households. With the classification of farm household, a portion of the work done would now be considered productive and taken into account in economic statistics. Unfortunately this argument does not meet the guidelines of the UNSNA. Households are only considered farm households if the head of the house declares himself or herself a farmer. Production is only imputed for these households on crop or livestock that is sold at the market. Households in developing countries usually practice subsistence agriculture and do not qualify as farm households because they do not produce cash crops or livestock. Their products are privately consumed. 

The UNSNA only recognizes private consumption as production in analysis if the product consumed is the main product sold on the market by a farmer. In this situation, the UNSNA suggests that one impute a sale at the cost of stock or produce found in local market to account for private consumption. For example, if the head of the household who is classified as a cattle farmer kills a cow for family consumption, a sale is imputed. If someone not classified as a farmer grows food and this food is consumed, no sale is imputed. The logic behind this imputation process of private consumption is based on the following statement:

In practice no other imputations of this kind are made since primary production and the consumption of their own produce by non-primary producers is of little or no importance (Waring 1988, 78).

In other words, the households that are not farm households yet grow their own food are non-primary producers and are unimportant. The UNSNA managed not only to classify the daily work of millions of people as "nonproductive", but also to consider it unimportant. 

In an effort to improve the system, the System of National Accounts was revised in 1968. This revision was constructed in terms of the economic systems of the developed countries, but with appropriate modifications it could also be applied to developing nations. The revisions included a broadening of the definition of productive activity to include some nonmonetary activities. It was suggested that the following activities be added to the list:

1. Production of primary products, that is, the characteristic products of agriculture, fishing, forestry, mining, and quarrying

2. Imputed rental incomes of owner-occupiers

3. Building and construction

4. Processing of primary commodities by the producers of these items in order to make such goods as butter, cheese, flour, wine, oil, cloth, or furniture for their own use, whether or not any of these manufactures are offered for sale

5. Production of other commodities that producers  consume in their households and that they also produce for the market (Waring 1988, 80).

Although the UNSNA suggested that these activities be added to the analysis, statisticians are under no obligation to include them in their calculations. The prices applied to these items are to be based on the price one would receive if the product were sold in local or neighboring communities. The problem with this imputation process is the fact that often in developing nations no market exists for many of these products. If the product has never been sold or the transaction has been one of barter, there is no market price to assign. Because of the difficulties encountered in placing a value on these products, they are still frequently excluded. Millions of people remain "nonproductive."

With its reliance on the GNP and GDP and its definitions of producer and production, the System of National Accounts is almost solely based on cash generating activities. One major reason for this cash basis is directly connected to some of the development programs. Only cash generating activities are taken into account so that countries can determine the balance of payments and loan requirements. Those who lend money now impose this system on those who borrow money. Lenders are only interested in seeing the cash generating capacity of the debtor countries so they can be assured that a loan will be repaid. 

This cash generating basis of economic analysis has caused misleading and incorrect statistics. The goal of the UNSNA was to provide an accurate picture of the economic reality; however, the picture produced has frequently been very distorted. In 1984, the United Nations acknowledged this distortion in a review of the social indicators which highlights the inaccuracy of the UNSNA statistics. This inaccuracy is mainly caused by the lack of inclusion of "nonproductive" work. The UN focused on the exclusion of the work of women because they are the vast majority of workers labeled "nonproductive." According to the UN, conventional statistics often fail to capture the differentials in the socio-economic situation of men and women or to indicate the extent of any inequality in a given society. The statistics also do not reflect the real productive roles of women in the economy, the significance of these roles, and the interaction between changing family situations and economic responsibilities (Bakker 1988, 18). 

The review also pointed out that the unemployment statistics many countries use in their economic analysis are inaccurate. The inaccuracies exist for the same reason the UN found many other conventional statistics inaccurate: they do not take into account "nonproductive" labor and the economic situation of women. Unemployment statistics only include those actively looking for work. In some countries, married women are not taken into account when figuring unemployment statistics. Married women are left out of the statistics for a variety reasons. One reason is the fact that in many countries, unemployment and related benefits are restricted by marital status. A married woman is ineligible to receive such benefits. Another reason is that in many countries, a woman's income is seen as supplemental, unnecessary for the survival of the family. Thus her unemployment is unimportant and not a true indicator of the employment situation. A third reason for leaving women out of the unemployment statistics is the fact that in many developing countries, women are not expected (or sometimes not allowed) to work. If they are never part of the work force, they can never be unemployed (Bakker 1988, 24).

The statistics produced by an economic analysis based on cash generating activities which excludes "nonproductive" work are inaccurate and thus have a negative affect on any policies based upon these statistics. The original UNSNA report stated that one of the outstanding uses of the accounts is in connection with public policy. Organizations, governments, and businesses use these statistics to plan development, to guide policy creation, and to measure growth. Programs which use the UNSNA statistics often only benefit the people who are included in the statistics, that is, only economically active people. The inaccuracy of statistics can lead to and has led to poor development planning, misguided policies, and incorrect measures of growth. 

The GNP and the GDP have been used to evaluate the rates and patterns of growth, to set priorities in policy making, to measure the success of policies, and to measure economic welfare. The GDP has become the favored statistic over the GNP as an indicator of growth in developing countries. This change happened during the UN's development decade when the GNP was used as the indicator and little or no growth had occurred in developing countries after five years. GDP statistics showed growth. By using the GDP numbers, leaders of the developing countries were able to show businesses interested in foreign investment that their countries were worthy of investment. This use of the GDP may entice foreign investment, but it does not accurately portray the status of the nation's residents. 

The shift to GDP gives priority to economic growth and investment (of which a nation's people may never reap the benefits) and obscures the needs of a people. In some countries that have experienced rapid economic growth, little human development has occurred. Because the GDP shows growth, development programs for these countries may be decreased or cut altogether. The needs of the people are no longer known or fulfilled. 

Many governments are guided by the inaccurate statistics while creating new policy. Legislation, programs, and policy are often centered on those activities and people who are viewed as productive. This bias is a direct result of the statistics' exclusion of "nonproductive" work. If "non-productive" activities are left out of the evaluation of growth and the economy, it is then very easy to leave them out of policy considerations altogether.

At times it is quite easy to see some of the problems caused by statistics based on cash generating activity. When these inaccurate figures are used to determine aid recipients or create policy, the effects can be very obvious. But some of the problems are not quite so visible. Although much of the aid a country will receive is either monetary or in the form of supplies, some development programs focus on training and education. These programs are based on the idea that it is more beneficial for people to learn to take care of themselves and improve their lives than to just receive money. Unfortunately, these programs also use the analysis based on cash generating activity to aid in planning and structuring. Agricultural training is a prime example. Extension programs are designed to meet the needs of the farmers and thus improve the economy. Farmers who raise crops or livestock to be sold are often trained in new technology and techniques and given better tools to improve the quality and quantity of their crop or herd. Not invited to these training sessions are the "farmers" who do not appear in any UNSNA analysis because they only practice subsistence farming. Yet in many developing countries, subsistence agriculture is the only food source a family may have. Thus, these educational programs which have a good idea to start with - teaching people how to improve their lives - are actually only teaching economically valuable people how to improve the economy, and thus, their lives. If the new technology and better tools could be used to improve the crops of the subsistence farmer, then perhaps the subsistence farmer eventually may be able to produce a surplus for sale. In this situation, not only is the economy improved, but the lives of many people, not just those economically active, are also improved. Educational programs should not be limited to economic ideals. When the lives of all people are improved, the improvement of the economy will naturally follow. 

Problems arise when using UNSNA statistics to plan development, to guide policy creation, and to measure growth. An area that can serve as one last example of the injustice the use of these statistics can cause is reproduction.¹ Reviewing many of the laws and court cases dealing with compensation for the loss of a child here in the United States and worldwide, one can clearly see that a market value has been placed upon children. Various economic theories deal with this value of children. Some claim that the value is derived from the contribution the child can make to the economy of the family. Others claim that a child's value is equal to the amount invested in the child by the parents. Still others claim that a child's value is due to the fact that he or she is a part of the future labor force. All of these theories agree that children do have a value. Following the logic of economics, if children have a market value, they must be a good or service. Goods and services are produced by work. It then follows: if children are goods, and goods are produced by work, and children are the goods produced by reproduction, then reproduction must be work. However, economists do not follow this logic. Reproduction is only considered work under certain circumstances. If the reproductive activities are completed by someone who is paid (nanny, teacher, health care worker, etc.) then reproduction is work. If these activities are completed by a mother, father, or other unpaid person, reproduction becomes a "nonproductive" activity with no economic value. 

The "nonproductive" nature of reproduction causes a problem when looking at the economy of any nation, but these problems are devastating when looking at the economy of developing countries. As previously discussed, UNSNA statistics and figures are used to determine the amount of aid a country is eligible to receive. In spite of advances in equal rights, most of the reproductive activities are still carried out by women, especially in developing nations where women may not hold a job outside the home. When reproduction is not viewed as an economic activity, then women, half of the population, are automatically viewed as "nonproductive". Half of the population has no economic value. When the amount of aid a country will receive is based on the productivity of the country, this devaluing of reproduction has obvious effects. 

The labeling of reproductive activities as "nonproductive" has not only affected the amount of aid a country will receive, but development programs and research. The World Bank has argued and done significantly more on behalf of women as mothers than as workers. There is a consensus within the institution on the importance of addressing gender in population, health, and education programs - "nonproductive" areas. Gender is not addressed in productive programs. Research on women has largely been centered on their reproductive roles rather than on their other "nonproductive" labor. Women's reproductive roles have been more easily dealt with due to the vast amount of empirically derived research on reproduction and the historical concern with population growth. Research on women's economically productive roles is often at odds with the prevailing views of donor and recipient countries about what women's roles are and should be.

Along with the amount of aid a country will receive, development programs, and research, foreign investment is also affected by the devaluation of reproduction. A company may view a country where only half of the population is productive as a risk and not invest. On the other hand, a company may see this "nonproductive" population as a golden opportunity. If half of the population has no economic value to begin with, then a company can come in and hire people from that half of the population to work for just pennies a day. Because a company turns these "nonproductive" people into productive workers, the company is viewed as being socially responsible - at least until the truth is discovered. All too often, the working conditions are horrific. Companies are making millions by exploiting the workers. The workers have little ground to stand on when demanding higher wages or better conditions because they had no economic value before they started working. They are told that they are receiving more than they had in the past and should be happy. It is very difficult to argue against such logic when a company can use the economic system and its classification of reproductive work as "nonproductive" in support of its position. 

Many of the development organizations have begun to recognize the problems created by using an economic analysis that excludes "nonproductive" work. The World Bank is one of these organizations and its investment in agriculture has recently undergone change. The Bank has begun to pay attention to work that usually does not appear in any UNSNA statistics, subsistence agriculture (Buvinic, Gwin, and Bates 1996, 47). No longer is this agricultural work seen as "gardening." One of the Bank's main approaches to agricultural investment is farm extension services. Previously these programs were the ones that targeted the cash-crop farmer and ignored the subsistence farmer. Now the Bank is making efforts to include subsistence farmers in these agricultural extension services as well.

The United Nations Development Programme is another organization that has recognized the problems. The UNDP began to closely examine its policies in the mid 1980s. Out of this examination came the annual Human Development Reports starting in 1990. These reports challenge the traditional conceptions and measures of economic development that are based on income and employment levels and economic growth rates that are reflected in GNP and GDP. In these reports, the UNDP questions the traditional measures and claim that they are insufficient for determining the human development of all societies. The UNDP now calls for the restructuring of national budgets and foreign aid so national and international financial systems do not impede human development. 

The Human Development Report shows that while growth in national production (GDP) is absolutely necessary to meet all essential human needs, economic growth may not translate into human development. In some countries with modest levels of per capita income, high levels of human development have been achieved. Conversely, some societies with high levels of per capita income have failed to achieve much human development. Based on these ideas, the report tries to make a contribution to the definition, measurement, and policy analysis of human development. 

In addition to showing that GDP growth may not translate into human development, the UNDP's Human Development Report also claims that the use of the statistics measuring national income and its growth have often obscured the fact that the primary objective of development is to benefit people. The report then supplies two reasons for this obscurity. First, national income figures do not reveal the composition of income or the real beneficiaries. Second, people often value achievements that do not show up at all, or not immediately, in higher measured income or growth figures: better nutrition and health services, greater access to knowledge, more secure livelihoods, better working conditions, security against crime and physical violence, satisfying leisure hours, and a sense of participating in the economic, cultural and political activities of their communities (United Nations Development Programme 1990, 9). Most people want higher incomes of course, but income is not the total of human life.

The idea that income is not the total of human life and that development can be measured in terms other than wealth and accumulation is not a new idea in history. Aristotle warned against judging societies merely by income and wealth. Societies should also be judged by the extent to which they promote "human good." These same ideas exist in the writings of early leaders in economics Ñ William Petty, Gregory King, Francois Quesnay, Antoine Lavoisier, and Joseph Lagrange, the grandparents of GNP and GDP. Adam Smith, David Ricardo, Robert Malthus, Karl Marx, and John Stuart Mill also wrote of ideas concerning the common good (United Nations Development Programme 1990, 9). Unfortunately, the preoccupation with GNP and national accounts became the dominant paradigm. In response to this dominant paradigm, the Human Development Report provides reasons for changing the perspective on human development:

· Many countries have discovered that high GNP growth rates have failed to reduce the socioeconomic deprivation of substantial sections of their population

· Industrial nations are realizing that high income is no protection against the rapid spread of such problems as drugs, alcoholism, AIDS, homelessness, violence, and the breakdown of family

· Some low income countries have shown that high levels of human development are achievable if the available means have been skillfully used to expand basic human capabilities

· Human development efforts in many developing countries have been severely squeezed by the economic crisis of the 1980s and the ensuing adjustment programs (United Nations Development Programme 1990, 10).

These recent experiences in development show that expansion of output and wealth is only a means, not the end.

The UNDP has also developed a new measure of development called the human development index (HDI). These indicators assemble all available social and human data for each country in a comparable form. Increasing levels of HDI are actually superior to increasing levels of GNP or GDP. This superiority is partially caused by the HDIs dependence on new and changing political strategies. It reflects life expectancy, literacy, and command over the resources to enjoy a decent standard of living. It incorporates human choices rather than income. Human development indices put people at the center of development theory. All development issues are viewed from a human perspective. The HDI is not concerned with how much a nation produces, but how its people are faring. By using HDIs, the UNDP hopes to compile missing country data and to improve existing statistics so that these human development indices will eventually be used as a standard of reference for country and global analysis.

The initial HDI in 1990 focused on longevity, knowledge, and decent living standards. Life expectancy at birth and literacy figures are the statistics used to measure the first two focus points. Although each of these statistics has its shortcomings as a comprehensive measurement of longevity and education, they were the best statistics available at the time. The third focus area is a little more difficult to measure in simple terms. It requires data on access to land, credit, income, and other resources. Unfortunately readily available statistics on these variables did not exist for most developing countries. The UNDP thus decided to use an income indicator as the measure. A logarithm of the purchasing-power-adjusted real GDP per capita figures was used.

To construct the composite human development index, a minimum value (the maximum deprivation set equal to one) and a desirable or adequate value (no deprivation set equal to zero) had to be specified for each of the three indicators. The minimum values were chosen by taking the lowest 1987 national value for each indicator. For life expectancy at birth, the minimum value was forty-two years, in Afghanistan, Ethiopia, and Sierra Leone. For adult literacy, the minimum value was twelve percent in Somalia. For the purchasing-power-adjusted GDP per capita, the minimum value was $20 (log value 2.34) in Zaire. The values of desirable or adequate achievement were Japan's 1987 life expectancy at birth of seventy-eight years, an adult literacy rate of one hundred percent, and the average official "poverty line" income in nine industrial countries, adjusted by purchasing power parities, of $4,861. The nine countries were Australia, Canada, the Federal Republic of Germany, the Netherlands, Norway, Sweden, Switzerland, the United Kingdom, and the United States. 

The minimum and desirable or adequate values are the end-points of a scale indexed from zero to one for each measure of deprivation. Placing a country at the appropriate point on each scale and averaging the three scales gives its average human deprivation index, which when subtracted from 1 gives the human development index (United Nations Development Programme 1990, 13).

The HDI is not perfect. It tries to quantify human freedom. Its national averages conceal regional and local distribution. Averages also conceal the large discrepancies between urban and rural areas, between men and women, and between rich and poor. A strong case then exists for making distribution corrections in one form or another. However, reliable and comparable estimates of inequality are hard to come by. The Gini coefficient, which is probably the most widely used measure of income inequality, is only available for a limited number of developing countries. This coefficient and many others are also far from dependable. In spite of these flaws, the UNDP feels that the HDI produces a much truer view of reality and is thus a better measurement of development than any of the UNSNA statistics. 

The HDI is also much more flexible than the UNSNA statistics. In the second annual report, the HDI had already been changed to accommodate a changing world. Years of schooling was added to the literacy rate in the measurement of knowledge. HDIs were prepared separately for men and women for the thirty countries having enough information. The idea of diminishing returns to income was better captured by giving a progressively lower weight to income beyond the poverty cut-off point, rather than the zero weight previously given. A Human Freedom Index was created (United Nations Development Programme 1991, 2-4). The HDI has continued to undergo changes as needed to obtain a more accurate reflection of reality.²

Like the World Bank and the United Nations Development Programme, the United Nations Statistical Commission has also responded to problems of using an economic analysis that excludes "nonproductive" labor in reference to developing nations. During 1990 a series of regional expert meetings took place in the developing countries on the revision of the UNSNA. At these meetings, it was generally agreed that the System of National Accounts should be applicable to developing nations without the modifications that were still used since the 1968 revision. Three key areas were identified as problematic in the relation of the UNSNA to developing countries: 1) the classification of formal and informal production activities; 2) the definition of market and non-market production; and 3) the sub-sectoring of the household sector (Ruggles 1994, 79-80). Although the experts felt that it was necessary to distinguish between formal and informal production, no satisfactory solution to the problem was found. It was just assumed that all corporate and quasi-corporate enterprises would be in the formal sector and that all informal enterprises would be classified in the household sector. The experts were reluctant to accept this delineation, but with no other classifications offered, it was added to the revision.

The distinction between market and non-market production was based on whether or not the market receipts of the producer in question were equal to 50% or more of his production costs. The experts felt this definition was to rigid and agreed to use the recommendations of the Inter-Secretariat Working Group on National Accounts (ISWGNA). The ISWGNA has defined market output as output that is sold at economically significant prices. Non-market output consists of services provided by government and non-profit institutions and subsistence output. The category of non-market output has been further divided into non-market output for own use and other non-market output. 

The final area of sub-sectoring the household sector remained problematic. The revision calls for the household to be divided into employers, own account workers, employees, and recipients of property or transfer income. Although this revision is the final outcome of the meeting, it was not agreed upon by all experts. No consensus was reached on what appropriate sub-sectoring might be. The revision was agreed upon for its flexibility, but that flexibility may actually be the reflection of the UNSNA's inability to provide developing nations with accurate economic analysis.

The World Bank, the United Nations Development Programme, and the UN Statistical Commission have changed some of their ideas, goals, and programs. But these changes have not affected the economic analysis that is still used internationally. This analysis still excludes "nonproductive" work. Viable alternative analyses do exist. 

Some alternatives merely consist of changing the definitions and identifications used in traditional economic analysis. One alternative simply calls for productive work to be defined as any activity culminating in a service or product which one can buy or hire someone else to do even if pay is not involved. This definition dates all the way back to Margaret Reid (1934). Another alternative calls for identifying the household as a productive unit and not restricting it to a consuming unit. This new identification is based on the idea that within the household, labor, capital goods, and intermediate goods are constantly being combined to produce what is required to satisfy needs. Both of these alternatives incorporate "nonproductive" work into the analysis by simply changing the definition of productive.

Other alternatives broaden the definition of productive to include unpaid production. One such alternative suggests methods to accomplish this inclusion. It is based on two new methods of estimating value of home production. The first is an input method based on imputations of the value of labor time spent on housework. The second is an output method requiring some list and evaluation of different produced outputs. Based on this alternative, many institutions including the UN Statistical Commission have begun to develop satellite accounts to provide estimates of the contributions for unpaid domestic work to national income (Bener'a 1995, 1843).

A change in the definition or a broadening of the definition of production is not necessary to produce a viable alternative. Some economists believe that current existing models just need slight alteration to incorporate "nonproductive" work. The monetarist model of economics is one that can lend itself to these alterations. 

Monetarists view money as a veil. For these economists, money and money accumulations simply reflect underlying real productive issues. Monetarists tend to look at the economic system as a basic barter model. This basic barter model can be very useful in economic analysis when carefully applied. For example, Becker's microeconomics models actually place a value on non-cash generating activities by treating all transactions as barter thus obscuring the distinction between paid and unpaid labor (Jennings 1994, 557-59). However, these models ignore the hierarchy within the economy and other social factors that can affect economic activity. Although the ignoring of an economic hierarchy is seen as a flaw of such models by many, these models still have value: they have made a step in the right direction in incorporating "nonproductive" activity. Certain economists believe that these models just need to be further refined to truly bring "nonproductive" activity into the analysis.

Another step in the right direction based on existing models occurs in some progressive countries in relation to reproduction. A few countries are beginning to recognize the fact that reproduction is work. Maternity leave with protection of employment exists in all of the European OECD member countries. Some of these countries are also recognizing fathers' involvement in child care. Sweden, Germany, and France all have various programs for parental leave. The Federal Republic of Germany actually created a mother's wage for mothers who choose to stay home to raise children under three.³ France has an official policy supporting the right of women to either stay in the labor force or to stay home with minimum economic hardship. This policy includes subsidized family care centers, state child care centers, and aid to lower income families (Bakker 1988, 37). Although these programs tie reproduction to work and reproduction by itself is not an economic activity, the fact that any value at all is placed on reproductive activities is a step in the right direction. Using the Federal Republic of Germany as an example, perhaps countries could set up a parent's wage for parents who choose to stay home and raise children for a period of time. A parent's wage would do two things to economic analysis: 1) reproduction would become a cash generating activity and thus have to be included in any economic analysis; and 2) the half of the population that was formerly viewed as "nonproductive" would now be seen as productive. These two changes would have drastic effects on any analysis used to determine aid or foreign investment.

One last alternative that draws on already existing economic ideas to incorporate "nonproductive" work is actually based on methods to improve the accuracy of the UNSNA statistics. Economists have always recognized three main problems with the UNSNA. These three areas are: the hidden economy, the measurement of leisure time, and the integration of environmental pollution costs into accounting. Hidden economy and measurement of leisure time are two areas that have a direct impact on incorporating "nonproductive" work into an economic analysis. 

A country's hidden economy can vary. It can include undeclared legal production of goods and services, production of illegal goods and services, illegal import and export of goods and services, concealed income, gambling, and employee theft. The table below shows the size of the hidden economy as a percentage of the GNP for 1978 as estimated by the OECD (Waring 1988, 154).

Country % GNP 

Sweden 13.2 

Belgium 12.1 

Denmark 11.8 

Italy 11.4 

Canada 8.7 

Germany 8.6 

USA 8.3 

UK 8.0 

Finland 7.6 

Spain 6.5 

Japan 4.1 

Each of these percentages were projected to grow between ten and forty percent a year in nominal terms. It is estimated that in developing countries the hidden sector is an even larger percentage of the GNP. The problem that a large hidden sector causes is one of inaccuracy. Most economists agree that if hidden activities are omitted from the calculations of national accounts, the statistics produced would be irrelevant as an overall measure of economic activity and misleading for the purpose of economic analysis. To combat this problem, economists have developed various ways of estimating the value of the hidden economy and to add that value into any calculations.

Economists also view the measurement of leisure time as a problem in the UNSNA. To them, leisure time is important because it is necessary for the consumption of certain goods and services; however, it is difficult to measure because there is not a universal definition of leisure time. What may be work for one, may be a leisure activity for another. Because of its necessity though, many economists have spent long hours trying to develop a method to measure and assign value to leisure time. For those who have found a satisfactory method, the value of leisure time is then also added into an economic analysis. 

How are these two problems important to the inclusion of non-productive work in an economic analysis? In short, the solutions that economists develop to solve these two problems show that the inclusion can be accomplished. Many of the arguments against including "nonproductive" work in an analysis refer to the difficulty in viewing it, the difficulty of defining it, and the difficulty in assigning it a value. Economists have developed methods of making the hidden sector visible for economic analysis. Much of the "nonproductive" work is often more visible than any of the activities in the hidden sector of the economy. Economists have also developed methods of valuing leisure time, which is difficult to define and difficult to assign a value to. If methods can be developed to measure the hidden economy and leisure time and thus incorporate them into an analysis, then the same can be done for "nonproductive" work.

The next three viable alternatives to the traditional economic analysis use new ideas, strategies, and methods to incorporate "nonproductive" work. The first alternative is a response to the economists who say "nonproductive" work cannot be incorporated because imputing a value to it is extremely difficult if not impossible. This alternative is simply a list of six methods of imputing the value of "nonproductive" work:

1. wages of substitute workers who could be hired for performing household activities

2. wages of workers performing functions equivalent to the household production functions

3. wages of workers performing tasks requiring qualifications similar to those required in households tasks

4. wages forgone in the market by those engaged in unpaid household work

5. averages wages of market works

6. wages in kind - value of noncash benefits (housing, food, clothing, etc.) (Waring 1988, 279-280).

Once value has been imputed, economists should have little difficulty adding these values to their formulas.

The next alternative is considered a "feminist" alternative because it uses the term women's work rather than "nonproductive" work. It uses this terminology because the majority of the "nonproductive" work which is left out of economic analysis is the work done by women. 

Diane Elson (1995) describes three strategies for including the work done by women. The most obvious way to introduce gender into an economic analysis is to simply desegregate at least one of the variables by gender to emphasize the discontinuities of gender. Looking at the economy from women's point(s) of view and identifying and bringing in missing variables which have a particular gender significance is another strategy. Within this strategy, a nonmonetized social reproduction sector could be added to a market based economy. A third strategy deals with the recognition that the economy is a gendered structure, its policies and institutions are bearers of gender and support the gender hierarchy. By acknowledging that the economy is a gendered structure and due to this gendering economics has ignored certain economic activity, some economists will begin to examine and include previously ignored activities. The economic analysis of the changes in the health care sector is a good example of this phenomenon. In the beginning, economists viewed the changes in health care sectors which lead to shorter hospital stays by patients to have a greater output per unit of investment. Upon closer examination it was revealed that shorter stays are matched to longer periods of convalescence at home and greater expenditure of nonmonetized resources in patient care. This at home patient care falls under the auspices of the nonmonetized reproductive sector of the economy. Since it is not a cash generating activity it is "nonproductive" and left out of analysis. When economists began to note that the patients and quite frequently the patient's caretaker remained home from work for longer periods of time (loss of money) then others who had longer hospital stays, they began to re-evaluate the situation. Some economists admitted that the care required of the reproductive sector after discharge was originally left out of the analysis because it was nonmonetized. Some further begrudgingly admitted that the exclusion was partially due to that fact that it was viewed as domestic work, which traditionally has no economic value.

The third alternative based on new ideas, strategies, and methods is actually a completely new view of the economy. Hilkka Pietil+ developed a new economic model to show the true structure of the economy. She believes that the economy is divided into three parts: free economy, protected sector, and the fettered economy. The free economy is the nonmonetary part of the economy. It consists of the work and production people do without pay. The protected sector consists of production and work for the home market as well as public services such as food production, construction of houses and infrastructure, administration, schools, health, transport, and communication. This sector is usually protected and somewhat guided by legislation and official means. It exists somewhat independent of the world economy. The fettered economy includes large scale production, imports, exports, any product that is influenced by the world market (thus fettered). The terms of this sector, the prices, competitiveness, and demand are determined by the international market. Although this fettered section is the one that receives most of the attention, it usually accounts for a quite modest proportion of the total production of any one nation. Pietil+ also believes that money payment is not the sole criterion for the assessment of work. Work can be assessed in volume of labor (the number of laborers) or work time absorbed (number of hours). Based on these divisions of the economy, Pietil+ constructed a graph to help economists visualize the realities of the economy (Waring 1988, 300-302).

Proportions in Finland 1980:

Time Money

The free economy 54% 35%

The protected sector 36% 46%

The fettered economy 10% 19%

This model is a conceptual one that allows the assessing of data either quantitatively or qualitatively, by way of hours or money. It allows the use of advanced statistics and the consideration of interactions. The propaganda that has often filled in the voids left by lack of knowledge is exposed by the model. In toady's global economy, it has even more value because it can be applied to either a regional or global picture.

"Nonproductive" work needs to be incorporated into economic analysis in order to produce a truer picture of reality. This incorporation is especially important to developing countries because it will affect the amount and type of aid they may receive. Alternative methods of economic analysis that incorporate "nonproductive" work do exist. The economists, statisticians, governments, international organizations, and development agencies merely need to start using these alternatives. If these alternatives permanently replace the traditional methods of analysis, perhaps both development and economics will once again be based on the idea of the common good.

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2 Although these new statistical indices produce a more accurate reflection of reality and do attempt to put people at the center of development theory, until people's daily experiences and needs are taken into account, people will never be at the center of development theory. Daily experiences are best gathered through qualitative methods and thus any statistical analysis should be done in combination with a qualitative analysis.

3This policy has been criticized by women because it not only reinforces women's primary role in child care, it also weakens their market position because they lose seniority and work experience.