Language Production (Part 1)

INTERNATIONAL JOURNAL OF RESEARCH & METHODOLOGY IN SOCIAL SCIENCE VOL. 3, NO. 4 OCT.- DEC, 2017 QUARTERLY JOURNAL ISSN 2415-0371

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TABLE OF CONTENT Language production – First part Salatino, D. R.

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5-21

Decision Making: The Complexity of Choice Processes …………………………..

Monte-Serrat, D.M., Belgacem, F.B.M., and Maldonato, M.

22-31

Barriers and solution for better investment climate in Nepal ………………………….

Paudel, Ramesh

31-47

Millennials age group and income levels among domestic tourists ………………….

Mkwizu, K. and Matama, R.

48 – 54

Revised Human Development Index Louangrath, P.I.

55–70

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Language Production Part 1 of 2 Parts Series Dante Roberto Salatino

About the author Dante Roberto Salatino is a researcher of the Institute of Philosophy and of the Institute of Linguistics - Lecturer in the General Psychology Department – Lecturer in the Philosophical Aspects of Physical-Mathematical Science Department - Faculty of Philosophy and Letters Teacher and Researcher in Artificial Intelligence in the Mechatronics Career - Faculty of Engineering - National University of Cuyo - Email for correspondence: dantesalatino@gmail.com

ABSTRACT There are two parts to this work. In this Part I, we will analyze various aspects that condition the production of conventional language. For this purpose, we will describe the biological elements that intervene the production of the word and then stop at the psychological aspects of production, something that we will do through an approach to one of the most critical pragma-linguistic manifestations: ‘(dis)politeness.’ Finally, in a Part II, we will analyze one of the most known production models of those proposed by Psycholinguistics, which, that considers the processes involved in the production of language are of the psychological/cognitive type, something that also supports Cognitive Psychology. We will conclude this study with the proposal of a model of conventional language production from their ‘junction’ with natural language, that is, how one ‘transforms’ into the other; a transformation that is possible given series of bio-psychic processes and mechanisms.

Keyword: Conventional language, natural Psycholinguistics, Transcurssive Logic.

language,

models

of

language

production,

CITATION: Salatino, D. R. (2017). “Language production – First part” Inter. J. Res. Methodol. Soc. Sci., Vol., 3, No. 4: pp. 5-21. (Oct. – Dec. 2017); ISSN: 2415-0371.

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1.0 INTRODUCTION In this work, we will unravel aspects that deal with the production of ‘conventional language.’ We do not include here the ‘natural language’ (See Appendix) since there is no production of, but only acquisition and understanding, aspects that will be the object of study in another work. The above has a tremendous importance since it is suggesting that all methods of production that are currently used to try to elucidate how our language has no basis.

The lack of fundamentals is not synonymous with uselessness. It is more than proven that there are many practical methods to correct and improve the use of our everyday language and that the speculations made on the mechanisms of linguistic production, are useful for evaluating the progress made.

It can be questionable, about the meaning of trying to investigate the possible biological and psychic mechanisms involved in the production, when in practice and this is what production is about, what we have is enough.

This article would not make any sense if both psycholinguistics and neurolinguistics and even neurosciences in general, will not pose the language as the engine of brain change. Try from this perspective, achieve the location of brain functions that affect the mechanisms of speech or specify the biological aspects of the communicative process and not projected to the acquisition of language and even beyond, trying to explain the aphasia. But as it is not what happens, on the contrary, we are authorized to propose a different and fundamental vision, which although it does not change anything achieved so far. It would give the scientific aspect that is proclaimed so much today, but not shown on these issues.

2.0 BIOLOGY AND THE PRODUCTION OF THE WORD The phonic apparatus will not be treated here, because strictly speaking, it is not part of the human sensory system; I mean, that is not why we differ from the rest of the animals, but by the fact of being able to emit words and not just screams, grunts or moans.

Having discarded the instrument of phonation from the analysis, we should also dispense with phonological aspects because they do not provide elements that allow us to know how the word is produce, which, without hesitation, is not only because we can skillfully move our tongue.

Once cleared the field of study of the physiological part of the speech process, we will begin to consider how and where is the generation of the connection with the ‘natural language,’ which is the basis of projection from which the ‘conventional language’ that allows communication as a social phenomenon.

In a previous work where we talked about the acquisition of ‘natural language’ (Salatino, 2012, p.127). We reviewed some aspects that told us about the mechanism that explains the suggestive acquisition speed of language, and we also said that the ‘conventional language’ arose when it began to ‘fill in’ this bio-psychic disposition acquired during the first 18 months of life.

With the above, it gives the impression that we have relegated the ‘conventional language’ to a mere epiphenomenon, as some cognitivists do with thinking concerning brain activity. Here ‘fill’ does not refer to a passive or secondary process whereby the words are thrown into a box so that they ‘fit’ into some predetermined ‘cell.’ But to an active process that allows that the ‘psychic word’ (Salatino, 2014, p. 182) acquired in the initial phases of early childhood and connected with the everyday word, the ‘code.’

The previous process is similar to what happens with protein in biology. The protein is a chain of amino acids manufactured according to what the DNA dictates, and which in our case corresponds to the ‘psychic word.’ However this newly produced protein does not fulfill any practical function for the organism, that is, it is a structure without evident purpose, although this feature is implicit in its construction. The use of this protein depends on of its folding. A particular spatial arrangement allows it to perform the function for which it was manufactured (to be an active part of a muscle, to be an enzyme, to be a hormone, etc.).

In our case, the ‘ordinary word’ fulfills the ‘enabling function,’ the folding that makes manifest the phenotypic of the language, for calling it consistently. That is, how the words that the 6

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child is acquiring by imitation are seen and used, which gives him the definitive characteristics that linguists observe in each ‘conventional mother tongue,’ which is what we learn from our parents.

The ‘subjectivon’ (See Appendix) psychically inherited from the mother dictates which functions will be fulfilled by each kind of word, for example, that the nouns of Spanish, are verbs in Hopi, or that there are only verbs or words that can fulfill any function according to the context.

That is to say, what constituted the three groups of languages defined by Hengeveld (1992, p. 68): flexible, specialized and rigid, as a product of a conjunction of the hereditary derived from tradition and the acquired culture. They conform to socio-cultural norms causing the establishment of the everyday language.

So far the ‘biological’ that derives from the psychic. Now we will see the biological that derives from the brain. Because of the limitation imposed by us from the beginning, we will not deal here with the cortical areas assigned to the production of language, but with the configuration of PAFs that make speech possible.

The ‘fixed action patterns’ (FAP) are the automated routines that give foundation to the habits and the fundamental stones that structure the ‘operative memory.’ (Salatino, 2014, p. 114) This type of specialized reflexes originate in the same moment in which the child suckles for the first time, and they are formed and differentiated one by one in response to each stimulus that reaches the baby and constitutes the first operational psycho-biological structure.

The automation that manages to make the processes independent of biological needs is the key to life because it is the way in which the brain prepares in advance responses to different stimuli. This sort of ‘prediction of the future,’ far from being an esoteric rhetorical contraption, is what allows the bio-psycho-social development and adaptation shown by man.

The first FAP is a psychic structure projected to the biological and arises from the conjunction between a desire and a need. Which from here are linked by a complicated relationship; they are opposite since the first by the memory of a satisfying or pleasurable experience and the second due to dissatisfaction. They are complementary since the first one contributes the noninherited voluntary imposition that moves to live and the latter represented the instinct or involuntary impulse and inherited to preserve life, and in short, they are concurrent or simultaneous.

In Figure 1, we can see the conjugation of the different aspects that arise from the evolution of the ‘germinal change’ since, in subjective reality, everything begins with a change (Salatino, 2009, p. 96). These manifestations appear when an ‘undifferentiated change’ becomes irreducible in some aspects, such as a ‘somatic change’ that generates a vital urgency perceived as dissatisfaction (V1). An ‘external change’ that contributes to correct the previous imbalance (V2).

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Figure 1: PRIMITIVE FAP References: V0: Irreducible change - V1: Unpleased / Pleasure - V2: External change V3: Specific action (response)

The two previous changes are interrelated by a specific action such as the activation of the suction reflex, crying and later, more complex acts (V3). All the changes characterized so far are readily observable in appearance; they are superficial or obvious. Their interrelations are only possible due to the rest of the primordial change that underlies the mere presence and that far from becoming irreducible in some sense, it remains intact, hidden and active without loss, completely conserving its entity even though the whole has changed, struggling between oppositions and complementarities. We will characterize this particular change, not because we can put it directly in evidence, but because of its apparent manifestations, those that determine on the surface, the alternation between the other changes or the predominance of one over another.

In this way, emerge a ‘dialectical universe’ (In the Hegelian sense) that is affected by the permanent change that represents the transformation that leads each of the superficial aspects to become its opposite, without ceasing to be him. The mutation that is mediated by some aspects of the same change and supported by the change that remains unchanged (V0), the only constant and responsible for maintaining the vitality of this primitive system. It should be clear that the fundamental thing, from the structural point of view, is the relationships and not the related elements, which are nothing more than the results of the relational confluence. In this nascent system and henceforth, ‘things’ are not represented, but ‘functions’ and in this way, have structured the psyche and the ‘natural language simultaneously.’ (Salatino, 2012) Once completed the previous process, the biological FAP arises at the level of the neuronal circuits of the cortex, the one that it will execute and from there on it will automate the responses.

This process is the same for any behavior that man manifests as behavior. The learning process includes everything you need to do to pronounce from an isolated letter to a whole word, that is, coordinate the different muscle groups, both those that govern the vocal cords and those that handle the oral cavity, to associate it with the word that the child hears from his elders. When it succeeds in imitating the word in question more or less correctly it is fixed in the entire coordinated mechanism in the ‘operative memory.’ Which will trigger when a future stimulus is structured as a fact with apparently the same characteristics as the one that gave rise to FAP, and require the pronunciation of this word. As said, then, the speech that conveys everyday language, derived from the common mother tongue, arises from a behavior that triggers a specific conduct. In other words, an unconscious process, such as the generation of FAP derives into a conscious activity, such as talking, whose substrate is not in consciousness.

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The child, imitating his elders, begins after 18 months to link his natural language, already acquired, and what will be in the future, his everyday maternal language. If everything goes well, at approximately four years of age, he will have learned enough to be able to express correctly organized what is dictated by the ‘universal language’ that his mother gave him. From 5 years on, he only has to acquire more vocabulary to express with ease what he thinks, his guesses and the products of his imagination.

3.0 PSYCHIC ASPECTS OF PRODUCTION Production relates to the word. This obvious statement, expressed in this study, is more than it seems. Since the ‘everyday word’ with which related the production is possible thanks to the ‘psychic word.’ That is that the origin of what we are talking about is in the psyche, but the final product is not there, nor is it directly related to any psychological process. The language in use is the place of confluence of the three subjective elements of natural language: the biological, by behavior; the psychological by the knowledge and the social, by the tradition.

3.1 Psychic characterization of the word The thought is the evidence of the interrelationship between sense and facts, something real that is impossible to retain in the conventional language; the unsayable, precisely because its origin is the experience or something that integrates complexly, desire and belief through an idea.

To think is to make transparent the ambiguity of the meaning conveyed by the everyday language; thinking is to make sense of reality; think is ultimately display the flag of our truth when it has fulfilled a desire own; that is, when in our feeling a belief arises.

As a counterpart the conventional language is not a direct transmission of our thoughts or our experiences, that is strictly subjective; instead, it is one of the several possibilities to make credible to others the presumed true that this contains.

The principle of identity operating in everyday life depends on both the linguistic subject, as the ontological subject, going on through the psychic subject. The linguistic subject tied to a predicate, the psychic subject to the specific actions, and the ontological subject to the object properties. Thus, the appearance invades this reality.

For operating socio-culturally, or what is the same, the subject to become an individual (or social subject) and then in person (or social actor), necessarily must be cleaved in an objective subject and a subjective subject and distributed at different levels or contextures in their subjective reality. No regular expression can transmit the subjective so constituted. In other words, the truth so understood gives meaning to the facts, only if the achieved knowledge that will lead to their interpretation and thence to comprehension. That validates a lifetime experience, something that mere linguistic description can’t convey, as it responds to an outright convention that is not related to the origin of what is transmitted.

Talking, in where reigns the urgency to recount our experiences, constructs the need for our explanations must be credible; what transforms us into accomplices of the intentions, of our own affective life which only appears from time to time when we allow ourselves to be ironic, or we relate a dream. We usually, studied the word from different approaches: phonological, formal or morphological, functional, semantic. In any case it is always a linguistic approach, which although complex and extensive is limited by superficial.

The limitation from the linguistic perspective is given mainly because the word is considered a symbol with the extra-linguistic referent, acquires the status of a particular type of ‘cognitive representation’ of such reference. Thus, in the relationship between a word (phonological form) and the external world are traditionally involved three aspects: 1) the expression, 2) the concept with which it is associated or meaning, and 3) the thing to which it refers or referent.

With multiple references and unique but ambiguous meanings, the word, for the language determines the ‘mental representation’ that we have of an infinity of referents. It works, through the meaning as a composite conceptual entity, that is, indicates the concept that has the word and tells us about their properties.

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There are different semantic theories, and, therefore there are different definitions of meaning. Ranging from a kind of abstraction, a set of referents evoked by a word, to those that included in a set, where it is possible to observe a gradation of semantic features, aggregates to a prototypical central meaning.

The meaning of a word, for being a complexity a unified that participates as much in the ‘mental process’ as in a social exchange, is seen as a privileged element to address the study of thought and language in full. Because, it allows a real analysis of causal-genetic relationships between the growth of the child’s thinking ability and their subsequent social development.

The linguistic limitation, arises when considering the word embodied in the meaning whether in semantic form (literal) or pragmatic (of the speaker), that is, in the superficial of language. Therefore, there is no possibility to provide, from its focus, anything of value that is used to characterize any cognitive process.

The reader will undoubtedly be thinking that I have not been exhaustive in my views as to what ‘cognitive,’ as there are others proposals. Such as neural theory of language of Feldman (2006) and the Neurocognitive Linguistics of Lamb (2011). That supposedly, to invoke the brain as a substrate of language (its point of ‘biolinguistic’ view, rejecting by something hard cognitivist), as somehow, that of Chomsky (2007) or that of Givón (2005), attempting to be more than wishful, constitutes a possible explanation of mental phenomena. These, now, from this cognitive stance and whimsical way are evidenced by language as the word instead of being regarded as a symbol that depends on a conventional meaning. Merges with the brain and thought becomes ‘physical,’ that is, the ideas and concepts contained in it are physically ‘calculated ‘ by brain structures. The reasoning now, in this approach, it becomes a game of activation/inhibition of specific neuronal groups which can form right networks where the word, in the best case, is scattered in a myriad of nodes that in itself does not represent anything.

What do we mean when we talk about characterizing the word psychically? Human experience communicated as a foundational aspect of subjectivity through language being in the use of the word where some fundamental elements of subjectivity are evident.

Since the language shows superficially, through their meanings, the socio-cultural aspects of man, the apparent constancy of some expressive categories, beyond any cultural or social setting, makes us fall into the error of considering that all subjective experience is posed and locates in and for the common word.

We will discuss only two of these expressive categories that we usually handle when we talk and say but, not in our thinking. They are the person and the time, because in them lies the livelihood of all subjective: the self as subject and time as the motor of psychic functioning.

It is essential to see how language addresses these two elements when interpreting the speech and communication. I’m not referring to the ‘meaning’ of which addresses the semantics, nor the ‘intention’ or what is assumed pragmatically through argumentation, but the ‘meaning’ as emergent which is what should be addressed by Psychology and the Psycholinguistics.

From the perspective of language relating to individuality in every subject, as the evocation of the Ego, in an instinctive way, explicitly or not, the pronoun You together to oppose to He, which determines the very possibility of discourse, being all this independent of culture. Furthermore, this way of transmitting the individual experience is inherent in the way that generates and transmits the person in discourse, as an individual who speaks. This Ego, in the communication, alternately switches status; who that hears links it to another, that it is he, and when this speaks assumes the Ego by own account. From the Linguistic of discourse, this dialectic is considered one of the mainsprings of subjectivity and the substrate on which is built a poorly understood intersubjectivity.

We should note that the above presents an unclear picture and as such, a misinterpretation inductor. Such confusion is between subject and individual that under any point of view are the same. Individuality is not the same as subjectivity. An individual is that which maintains a life in relation to the other; regulated by rules and that which gives meaning to the existence of conventional language and, therefore, speech occurs. In this situation, all pronouns (I, you, he, etc.) is nothing more than empty forms, who wear the ‘conceptual fancy dress’ that lends the discursive 10

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activity. All this tells us very little about the subject that underlying, and much less, of the origin and sense of these exteriorizations. Subjectivity is not made manifest of nor in the structure nor the functions of conventional language.

Among the linguistic forms that reveal the individual experience, and not the subjective one, perhaps the most notable are those which express time. The conventional language operates over time in a very different way to the psyche. A vulgarized conception of the relationship between the temporal and the word assigns to the verb exclusive ownership of time management, which leads to the general belief that some languages do not have items for time management, by not having verbs.

The above is an error because the expression of time is compatible with any linguistic structure since it is the substrate, which when emerging to the surface, allows from our thought, the act of talking.

Another common mistake is to consider that a language reproduces the ‘objective time’ (Krónos) and, therefore, what happens in reality. The above occurs primarily in the languages belonging to the Indo-European family, those who speak about 50% of the world’s, and from where it derives the temporal conception that has Western Science.

Is necessary to distinguish at least three different notions of time to comprehend how it manifests in the language, which are those that deal with the previously characterized subjects: (a) External or chronological time (Krónos) (b) Linguistic time (c) Internal or psychical time (Aión) (Salatino, 2009) The external time (Krónos), physical, objective, chronological or date of an event, is the addressed by science, and has following main features: (1) Discrete (2) Quantitative (3) Linear (4) Unidirectional: because it goes from a “before” to an “after,” and therefore is ...

(5) Irreversible, and (6) Superficial The linguistic time is one that is organically linked to the common word and, thus, constitutes a function of discourse, centered in the ‘present.’ By the latter resembles the previous one, since apparently, our life does not flow, but develops into an ‘eternal present,’ implied in everyday language. This present is ‘reinvented’ whenever someone speaks, something similar to what the science does with differential equations that invent or create a new world every time you evaluate a given period by highlighting about what has just passed, but without saying nothing while everything happens.

The other two temporal references that handle language: the past and the future, show the present as a line that separates what is gone, of what will be, but without representing any time, but a kind of temporal projection, going backward or forwards from the present time. While there are three times, all three are present, as Plotinus said: the present when I speak, the present of the past that is called memory, and the present of hope, which is called future. It is important not to confuse the name of a verb tense, with the way we use it to talk about time, nor with the time.

The shape of the past is not missing in any language, and sometimes is double or triple.

However, a specific form for the future can often be absent, replaced in these cases by a combination of the shape of the present with some other grammatical particle.

The verb is the only lexical category (Word with its meaning and reference.) that besides of the time’s morpheme (Minimal fragment of a word that can express a meaning.), has the modality and the aspect; the latter being a temporary complement so to speak because it tells us whether is finished or not the action.

The psychic or internal time (Aión) is the subjective time and is characterized by being: (1) Continuous; (2) Qualitative; 11

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(3) Periodic; (4) Recurrent: going by the past, present, and future, and (5) Deep The importance of management of temporality in language lies in how this affects the communication process.

The speech act is necessarily individual, and if I count today, something happened to me yesterday the past is referred; in this regard, to this speech act, so this ‘time’ relates only to my personal experience. However, in all this, something curious happens and seemingly impossible: the interlocutor assumed my temporality as their own. The same will happen to me, when he talks to me.

This ‘synchronization’ is nothing but a practical manifestation of resonance in which enter the internal times, something that promotes Kairós. That is a detail that can guide the interpretation of the ‘cognitive’ in the use of the word, that is, a firm foundation of the phenomenon of comprehension of the language, a mechanism that operates as a factor of intersubjectivity. When the unipersonal it becomes omnipresent and is establishes the difficulty of working from the psychic function, we will face the ghost that haunts linguistics in all its cognitive branches. For this reason, acquires various names: meaning, intentionality, conceptualization, epistemic modality, argumentation, category, prototype, etc. This last condition is the only one that allows communication when considered as strictly linguistic, that is, which results in dialogue. The psyche does not have dialogue! Therefore, it cannot be approached from the conventional language.

The proper linguistic articulation, the necessary interpretation apprehended from the discourse, the sensitive, memory itself, should not be considered as part of the higher mental processes, but instead, as its minor aspect which is possible by the merely volitional. All these dependent lower forms of knowledge are born with the external time and for this reason have become virtually autonomous patterns, and end as we have seen, mere operational processes.

Language annihilates the intuitive, in its logical spatiotemporal analysis of utterances and inferences contained therein, that to be equated with thought. That is, degrading it, falsifying it, and corrupting it, stepping between the psyche and the intuition which by definition is ineffable.

As we see, characterize the word from the psychic point of view requires consideration of the subject and not of the individual. To the internal time that giving it the dynamic that distinguishes his psyche, and not to the time of allocution; and also, to a series of different impressions that are subjective. Originating from the visual, the auditory and the kinesthetic, that is, in the three sources of the apprehend and of the learning.

The linguistic consideration of the word, assigned it a meaning derived from association with the ‘idea’ or ‘concept’ of the object to which it refers. For example, when we use a word that is a noun, and in this case, such ‘concept’ in turn a complex associative visual impression, auditory, tactile, kinesthetic, etc. So, the ‘idea’ of an object contains nothing other than the appearance and a series of ‘properties’ that cannot be transmitted by our senses.

Linguistics teaches us what the language is, but it does so from a pragmatic, that is, from its use and from there extrapolates their findings indiscriminately to alleged ‘mental structures and functions,’ to finish telling us how to acquire, understand and produce our language.

Acquire the natural language presumes an underlying universal language that unifies all subjective estates (biological, psychical and social) to enable learning, on the surface, of conventional lexical categories that are related with the only ones linguistic universals, the substantive and time (Salatino, 2012, pp. 222-244).

Through Transcurssive Logic, in the same work mentioned above, we show the place occupied in the subjective reality, natural language, and its relation to the acquisition of code of everyday speech.

The logic which supports the acquisition of the conventional mother tongue represents the constant and automatic use of its Aristotelian-Kantian categories to create perceptual habits, which divide the apparent reality differently according to different populations. The above is something 12

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that which then is expressed in the grammar of their everyday languages. As defined by Chomsky (1992, p. 278), grammar is a system of rules that generate an infinite class of ‘potential percepts,’ each with phonetic, semantic and syntactic aspects. It’s the kind of structures that constitute an everyday language in question; and we would add, facilitated by social inheritance supported in the tradition of the people.

The reproductive thought governs the final stage of language acquisition, which allows impact on the socio-cultural real system through the selection of appropriate PAFs, according to the setting made since the universal language, by the semiotic unit. (Salatino, 2014, p. 173) These PAFs put into operation the activity that serves to respond to a perceived fact, triggering operative processes or specific actions (speak, read, write) that serve as communicative vehicles and of influence on the socio-cultural environment.

3.2 The (dis)politieness as an evolutionary strategy We propose a somewhat different view for the study of the everyday language. An eminently practical aspect is analyzed, as is (dis)politeness and through its research, it is intended to reaffirm the already elaborated on the critical relationship that “natural language” keeps with behavior and with the behavioral aspect. It attempts to consolidate the previously suggested concept that, just as behavior is, language also constitutes an evolutionary achievement that reveals in all its manifestations, among them, (dis)courtesy.

Beyond the implications that biology has in the origin of natural human language, something that we have already analyzed (Salatino, 2009), its daily use in any place on earth makes evident its profound social and cultural roots. Such extension makes difficult any attempt at analysis of particular aspects that, being strongly tied to the cultural context, are diluted in the social plot in spite of being the emergence of a universal phenomenon. We could clarify this discrepancy if we recognized the ‘conventional language’ in use as a superficial manifestation.

What should we understand as superficial? We take as a comparison some physical phenomenon that, like culture, has a regional distribution without precise limits and whose behavior is not predictable with accuracy, for example, climate. In it, we locate something, which like language, serves as an intra and intercultural communicative element, for example, the ocean.

Finally, we specify an item that, as the society, serves as the primary substrate for its action and conditioning, for example, the continental land.

Accepting for a moment the metaphorical license and maybe analyzing the climatic conditions very briefly, we can glimpse why we characterize the language in use, as a superficial phenomenon of the culture.

Climate is a complex system that is difficult to determine with only two variables as we have proposed. For the sake of simplicity, we will consider just two relevant and apparent factors, which have a marked influence on the climate.

Water interconnects all places in the world. Therefore, the ocean currents move water throughout our planet. Since the ocean absorbs heat and releases it more slowly than the earth, it can heat or cool the environment thanks to the circulation of sea breezes. The differential heating of the earth’s surface and the oceanic masses with the corresponding pressure variations cause winds.

In the continent, these winds condition the appearance of precipitations, with necessary changes of temperature and humidity. In the ocean, among other things, they form waves that initiate surface traction currents that travel great distances, from the warmer to the colder regions of the globe and vice versa.

With such a modest description, we have tried to record most of the perceptions we have of climatic phenomena, depending on where we are, with a very crude explanation of the physical foundations of these events but that is enough to understand reasonably, the vital role played by the ocean.

We are in the same situation regarding the critical role played by ‘conventional language’ in culture. We have come to establish a gross similarity and in both cases, observing only the ‘obvious’ aspects of each element.

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We would be wrong if we concluded that by the mere fact of observing the surface of the ocean, with its irregularities and displacements, we could ‘understand’ the climate of other regions and even that of our place. If this were all about the weather, the equatorial regions would burst into flames, and the regions near the poles would freeze. None of this happens, yet, so there must be something else. Effectively, the mass of surface water mobilized represents only 10% of the total oceanic water. The remaining 90% also moves but does so in the depths; a phenomenon not observable at a glance. This deep activity is essential to maintain the balance that allows life on earth. With all this, we try to show that in the ‘everyday language,’ as well as in the ocean, there must be an important ‘deep activity’ that explains its characteristics. This underlying activity, because it is not obvious, allows the analysis of the ‘visible’ to account for its importance as a communicative medium and its socio-cultural impact. A the same time, it also generates great chasms when it is intended to explain how a phenomenon of a universal nature sometimes differs so much even in relatively close regions. The superficial 10% of language is represented by ‘conventional language’ of verbal nature, while the underlying 90% is represented by ‘natural language’ (Mehrabian, 1971, p. 44).

Having made a slight approximation to what we propose as a possible real framework in which human ‘conventional language’ could assume its leading role, we will try to sketch a model that allows some explanation from (dis) politeness.

As a guide for the analysis, we will make of the (un) courtesy we have taken the excellent book by Richard J. Watts “Politeness” (2003), where, besides making a detail and criticism of the different existing models to explain this phenomenon, it presents, his model in particular.

According to the author, we can say that both the behavior and the polite language, which as we propose to have their origin in the same behavior, are acquired. It is not something we are born with, but it must be learned and socialized. Going even further, we will consider these elements as part of a strategy that must be learned to coexist or survive socially, and that is in tune with the behaviors that are also the subject of an education required to maintain life or psychic equilibrium.

As Watts (2003, p. 23) says, and reaffirming the inappropriateness of the investigation of the courtesy based exclusively on the ‘superficial,’ there are four major problems faced by the attempt to locate the (un) courtesy that occurs in natural discourse: “1. It is impossible to evaluate (im)polite behavior out of the context of real, ongoing verbal interaction. Often the amount of contextual information needed can be considerable. 2. A theory of (im)polite behavior needs to take the perspectives of the speakers and the hearers adequately into consideration, firstly, because speakers are also hearers, and vice versa, and secondly, because social interaction is negotiated online.

This latter point implies that what may have been originally interpreted as ‘(im)polite’ behavior is always open to evaluative remodification as the interaction progresses. 3. As a direct corollary of the previous two points, it will never [Underlining is own] be possible to develop a predictive model of linguistic (im)politeness. 4. Consequently, there can be no [Underlining is own] idealized, universal scientific concept of (im)politeness (i.e. (im)politeness) which can be applied to instances of social interaction across cultures, subcultures, and languages.”

Beyond the cutting academic discourtesy shown by these denials, they give support to some of the difficulties, quite evident by the way, which implies the approach of (dis) politeness from the ‘appearance’ of social interaction where, in fact, it is unlikely that can be found a universal pattern.

The model proposed by Watts promises to provide some solutions to these problems, but ultimately ends up being a proposal conditioned by the relativism inherent in the language considered. In other words, in each language, in each culture, in each social situation, the (un) courtesy has different faces. Now, given the exclusionary sociological approach it carries out, using the same terms as Bourdieu’s sociological theory, it is not possible to fulfill the promise. Watts cannot take off, for example, through the concept of ‘habitus,’ its subjectivity as a researcher of the 14

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formal or polite characteristic of the statements analyzed in the abundant cases that it gives us and this to consider only one of among many other aspects.

The author tells us (op.cit., p. 49): “Firstly, if we wanted to set up a theoretical model of (im)politeness, the first thing we would have to do is to find ways of isolating across cultures all those strategies, verbal as well as nonverbal, that construct, regulate and reproduce forms of cooperative social interaction -- an obviously impossible task. [- and useless, I would add, since he part of a prejudice: the cooperative social attitude -] Secondly, a theory of (im)politeness, or linguistic politeness, would be one in which it could be explained [- here’s the detail, otherwise it’s not a theory!-] as a universal facet of human social interaction across cultures. It would be one in which forms of human interaction could be interpreted and described as instances of politeness and in which forms of linguistic usage in any language community could be observed and analyzed as helping to construct and reproduce politeness. No theory of this kind at present.”

The reason why there is not yet a theory like that suggested by Watts may be found in that all the theoretical proposals made belong to the same superficial aspect: social interaction. Therefore they are transformed in an attempt to explain the courtesy as a universal facet of this interaction.

Of the many definitions of courtesy that Watts gives in his book (op.cit., pp. 50-53), we will only extract details of those that contribute to our vision, with some element of value: - Brown and Levinson (1978, p. 61): a complex system to buffer the FTA or acts that threaten the image. From which we rescue the concept of THREAT. - Kasper (1990): based on the previous one, he sees communication as a fundamentally dangerous and antagonistic effort. Therefore, courtesy is a term to refer to the strategies that the interlocutors have available to ‘dilute’ the danger and minimize the antagonism. We extract from here the concept of STRATEGY. - Fraser and Nolen (1981): see the courtesy as a ‘property associated with a voluntary action.’

If by voluntary we can understand INTENTIONAL we agree, and we take it.

Only by way of advance, we try an approximation saying that courtesy represents by a series of intentional behaviors and ‘linguistic expressions’ that capitalize such behaviors manifesting with the sole purpose of maintaining one’s ‘steady state’ or the state of ‘stable imbalance’ that allows the social life. That is, coexisting or surviving in society. With all this we try to establish that the courtesy, in our understanding, has nothing to do with the consideration, nor with the business, nor with the balance of the relationships, but it would be the manifestation of the real sociocultural system (Salatino, 2009 ) of what the individual does, as a living being, to stay alive.

This position, although it seems tinged with evolutionism, has no relation to the ‘fittest,’ but rather to adaptation, development, and growth. There is no struggle for power in this dynamic. The struggle for power occurs when the individual in question realizes that with more power it is easier to survive, at least temporarily. With what unleashes a stark and cruel struggle to climb the supposed ‘top and thus reach ‘eternity,’ misinterpreting the innate drive to keep ‘the head out of the water.’ A detail to help so that the courtesy is used, for example, as a lie or a simulation. Here, evidently, there is no cooperation whatsoever but quite the opposite, a pathological selfishness very common of these times that nevertheless can seem an excessive courtesy.

There is no doubt that courtesy always has as a practical goal to survive. In other words: “Is the ability to adapt to the context achieved by acquired strategies transformed into habits that are expressed linguistically to obtain a specific effect.” There is pragmatic that justifies the actions suggested by Austin (2003) for the ‘acts of speech’ and not the equality of meanings between 15

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logical and linguistic connectives as proposed by Grice (1989, p. 24), which made them dependent on the conditions in which given a conversation.

In a general way, we could say that the courtesy is equated to the ‘sense,’ so it is possible to assimilate it to a set of measures that I take for the ‘other’ to find meaning to what I express, which is a form to impose an intention: to survive. An attempt of imposition from which I can emerge dominating, subdued (dominated), or remain indifferent to demonstrate an equivalent ‘persuasive power’.

Since we consider courtesy as a strategy, a paragraph of the book by Escandell Vidal, “Introduction to Pragmatics” (1993), which in chapter 8 says: “Therefore, the explanation of the operation of strategic comity presupposes, on the one hand, a classification of the types of discourse and the acts that can be performed. On the other, a description of the types of social relationships that are relevant; and, finally, a detailed characterization of the different strategies (especially in their linguistic repercussions) and of the conditions that govern their adaptation to the context and situation. This task has been approached from somewhat different perspectives, but all have in common to consider that the fundamental role of courtesy is to serve social relations.”

By the last quoted statement, one can guess why a large part of the models and practically all the analyses of them are ‘separated’ from their main actors: speaker/listener, subject/object; as alternating roles. The analysis is addressed by the inadequate part, from the appearance, from the purely phenomenological and we already know that not everything is what it seems to be. For that reason, the supposed utilitarian purpose of the courtesy of ‘serving social relations,’ does not tell us anything if we do not know what these relationships are. These relationships have a single purpose: to coexist; ergo, courtesy can be proposed as a strategy, yes, but as a strategy to ‘stay alive socially.’

We will risk a somewhat more precise definition that we will try to ground later: (Dis) politeness is a set of psycho-bio-socio-cultural, adaptive-evolutionary strategies, whose sole purpose is survival.

3.3 Social courtesy and social tact This title, which refers directly to the work in which Janney and Arndt (1992) it provides a different approach, will serve as a guide to pose the basis of our definition of (dis) politeness.

The authors speak of tact as well as courtesy and discuss some psychological and biological roots of tact. Highlighting that, while conflicts are similarly in all large animals by innate ‘feelings’ of aggression, attraction, commitment, etc., tact is only human and represents a possible solution, not instinctive, but culturally acquired to face the problem of the rejection of a conflict. A conflict that, as we have stated, is represented by the fact of survival.

Refusing outright the definition of courtesy as ‘proper behavior,’ authors suggest that we pay more attention to how people express their feelings to each other, in everyday conversation.

They suggest that the change should be made from a logical approach to a sociopsychological approach. Something that we share, although for us the approach that is psycho-biosocio-cultural has a strictly logical basis, of course not that of the binary logic that the authors reject, but that of a polycontextural logic, the transcurssive logic (Salatino, 2017 ). They add that, from the socio-psychological point of view, courtesy is not a static logical concept - hence the relevance of our tetravalent logical approach - but an interpersonal activity that can be observed, described and explained regarding a functional interaction.

Within a culture, they point out, any average adult can be ‘courteous in a discourteous manner’ or be ‘discourteous in a courteous manner.’ The first situation would configure the social courtesy and the second the interpersonal courtesy. They also specify that both are culturally acquired and are interrelated with discourse.

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They define below the social courtesy as based on the need of people to maintain a flexible and manageable interaction with other members of their group, a requirement that we have focused on the use of strategies to be ‘polite,’ to be able to coexist.

The interpersonal courtesy, which they call tact, defines it as the need that individuals have to maintain the image; a demand that oscillates between the fear of losing it and the reluctance to deprive the other of it. They emphasize that, as partners in social interaction, people are more or less dependent on each other to cooperate to maintain the fragile balance of respect and consideration necessary for the preservation of the image, something that we do not share at all.

Our position is clear and based on the handling of hypocrisy, rather than courtesy; Or does this not come out of the definition that the authors give tact? Tacto for us is a hypocritical strategy to defend not the image but the psycho-bio-socio-cultural ‘life, ‘ and it is bio-psychic.

Next (op.cit., p. 24) the authors show a comparative table between social courtesy and tact, on which we have taken the license to project our approach.

Table 1: Social Courtesy and Tact SOCIAL COURTESY OBJECTIVE Group FRAMEWORK International FUNCTION Define Social Role

TACT Individual Interpersonal Define Personal Role

The table above shows that courtesy should be distinguished from social tact because it has another objective, another frame of reference and another function, that is, courtesy point to the group. While tact does it to the individual and fundamentally, to the subject who underlying social courtesy is a projected expression of social tact for participatory purposes, the only way to belong or be accepted within a specific group. The social tact instead regulates contact with the other, face to face, so that the psychic aspects that sustain it become relevant.

3.4 Psychical bases of social tact Continuing with some titles proposed by the authors mentioned above, we now comment on what they say regarding the psychological basis of touch. Although the notions of tact vary from culture to culture - they point out - the impulse to seek a confrontation or to avoid it is based on human biology. In biology without more, we would add. From the evolutionary point of view, they point out, tact is as an adaptive (mainly human) response to specific biologically pre-programmed universal conflicts that arise when members of the same species interact.

We have to clarify some concepts of the previous paragraph that do not conform to the biological and evolutionary reality, and that will also serve as a solid basis for our point of view.

Rodolfo Llinás in his book "I of the vortex" (2001), where he proposes his vision on the role of neurons in human thinking and behavior, makes a detailed analysis of behavior patterns in animals and the man. It elaborates the concept of FAP (fixed action patterns), (2001, p.133) and defines it as an automatic module of discrete motor function. In short, it would be a more elaborate reflex, by integrating lower reflexes in certain synergies or a group of reflexes capable of more complex behavior. This FAP would be driven by the so-called central generators of specific patterns or neural networks that determine stereotyped, rhythmic and relatively fixed movements. This relative fixity occurs not only on an individual level but in a whole species.

The FAPS are modules of motor activity that frees the individual from unnecessary time and attention. They reside in different areas of the brain, but there is significant evidence that the basal ganglia (nuclei of gray matter located at the base of the brain) represent the neuronal circuits of these motor sequences. Llinás tells us that the FAPS has two main components: (1) Strategic: (e.g.)

Move away from danger; and (2) Tactical: (e.g.) Run as fast as possible.

Where the strategy is automatic, and the tactic is voluntary. The FAP as a whole is a dependent context. Is this the biological basis of the social courtesy and tact proposed by Janney and Arndt? In our opinion, indeed, here are the bio-psychic bases of the language in use, which we 17

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are analyzing through courtesy. In other words, the automatic strategy, represented by social tact, configures the bio-psychic solution to anticipate, as much as possible, the response to any stimulus, for example, the emission of a sentence as a verbal action, and voluntary tactics represented by the courtesy is the product of the previous action. These concepts will be more precise in the second part of this article when we analyze the production model proposed in this study.

Another important aspect of a FAP is that it can be modified, learned, remembered and perfected; in a word, it can condition the appearance of a habit.

Finally, and no less significant, it is the possibility of seeing emotions as FAP. Llinás proposes to us saying that in this case, the execution would not be motor but pre-motor. In this way, just as muscle tone is the essential platform for executing movements, emotions represent the premotor platform that drives or restrains most of our actions. It is the hypothalamus (Set of nuclei of gray substance located below the thalamus, at the base of the brain.) the neurological center of vegetative and emotional events.

Returning to the psychological bases of touch, the authors try to make a distinction between two alternatives of communication of emotions to justify the bio-psychological basis of tact.

Unfortunately, they are based on a naive idea of evolution. Stating that ‘before,’ as Darwin (1872) said, emotions represented a visible manifestation of the actions of the autonomic nervous system (ANS) through muscular, visible and audible actions, what, as the ANS was the same in all people, emotions were the same in all cultures. Today, in a way that is not clear, people make strategic use of these affective samples, so that not always the visible signs of emotion represent an internal state.

Frequently, the authors say, they are produced intentionally to project a particular definition of the situation and thus influence the behavior of others. In all honesty, it has to be said that nothing has changed since Darwin described the mechanism and even from a long time before. The emotional aspect was used, is used and will continue to be used for acquisitive purposes, intentionally. It is one of the primary tools for the struggle for survival.

Based on the previous (ambiguous) definition, the authors distinguish two distinct but interrelated communicative phenomena: a) Emotional Communication and b) Emotional Communication. Following the idea but setting aside a bit, we are going to say that in reality, we can distinguish three types of affective communication: (a) Instinctive: manifested in primitive and specific trends whose purpose is the conservation and immediate protection of life and the continuity of the species. Its biological support would be a pure FAP. (Simple beings and plants.); (b) Emotional: shows the internal affective states, unconscious and without elaboration.

Its biological support would be a FAP modifiable by experience. (Animals with central nervous system.); and (c) Emotive: unlike the previous one, it is not always a manifestation of internal states.

It conforms to a socio-cultural convention and is conscious and elaborate. Your biological support would be an acquired FAP. (Man) When talking about types of communication, we necessarily involve a language, and in this specific case, we are referring to natural language, based on a universal language, which handles each of the three types of living beings already characterized. As shown in another work (Salatino, 2009), these languages are: (1) Taxic: managed by simple animals and plants, which can only ‘perceive’ the change (V). They approach what enables them to feed, and they move away from what hurts them;

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(2) Signic: driven by animals that can perceive a relationship between two objects (O) through a change (V). Although it presupposes the existence of a proto-psyche, it does not require any elaboration; and (3) Symbolic: handled by the man who can perceive the relationship between a subject (S) and an object (O) through a change (V). It presupposes the existence of a psyche that allows the elaboration, interpretation, and understanding. It has two aspects: a deep one that lies in thought and a superficial one that manifests itself in the misnamed (for this reason) natural language. The external manifestation appears as arbitrary and subject to conventional norms, and for that reason, the correct denomination is traditional language.

Man, as we suggested in the same work mentioned above, integrates all biological levels (FAP) and, therefore, the different languages that derive from them. This does not mean anything else that man shows signs of all levels of language and thus of communication.

4. PARTIAL CONCLUSION If all the above is accepted, we can conclude that the framework in which is given the communication and in which we applied the strategies, is psycho-bio-socio-cultural. In this sense, the communicative strategies are universal, and adaptive-evolutionary and their sole purpose is to preserve life in the different dimensions within said framework. In the second part of this article, we will present a model of language production that incorporates all the concepts expressed in this first part.

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APPENDIX GLOSSARY Conventional Maternal Tongue (CMT): is the socio-cultural support of the language that is acquired by imitation, after 18 months of life (everyday language). Represents ‘how is the subjective reality’ from the social point of view.

Natural Maternal Tongue (NMT): is the biological support of language acquired in the first 18 months of life (natural human language). Represents ‘how is seen the subjective reality’ from the biological point of view.

Subjectivon (universal linguistic pattern): is in each of the domains in which is structured the subjective reality and represents the basis of the different ways of ‘seeing reality.’ His biological equivalent is in the mitochondria, and like it, has as we saw a circular double-stranded DNA structure on two complementary strands or chains, a heavy or external (the nucleoid) and one lightweight or internal (the gamete). It also has some organelles that are designed to ‘sustain’ aspects of the universal language, and of the future natural language, screened in the conventional language, once acquired. The possible nucleoids of a subjectivon are just 6, and represent all combinations without repetition of the subject (S), the object (O), and the change (V). That is dextrorotatory variants: SVO, OSV, VOS; and the levorotatory variants: OVS, VSO, SOV. Universal Maternal Tongue (UMT): is the mode of behavior of a given subjectivon. The tendency to externalize a specific form becomes manifest in the order of the elements in its nucleus.

Represents ‘how is seen the subjective reality’ from the psychical point of view.

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REFERENCES Austin, J. L. (2003). Como hacer cosas con palabras: Palabras y acciones - Buenos Aires, Paidós.

Bourdieu, P. (1988). La distinción – Madrid, Taurus.

Brown, P.; Levinson, S. C. (1987). Politeness. Some universals in language usage. New York, Cambridge University Press.

Chomsky, N. (2007). Of Minds and Language - Biolinguistics, 1, pp. 9 - 27.

Darwin, C. R. (1872). The expression of the emotions in man and animals. London, John Murray Escandell Vidal, M. V. (1993). Introducción a la pragmática – Barcelona, Anthropos.

Feldman, J. A. (2006). From Molecule to Metaphor. A Neural Theory of Language. Cambridge, Massachusetts, The MIT Press.

Fraser, B.; Nolen, W. (1981). The association of deference with linguistic form. International Journal of the Sociology of Language, Vol. 1981, Issue 27, pp. 93-109.

Givón, T. (2005). Context as Other Minds. The Pragmatics of Sociality, Cognition, and Communication - Philadelphia, John Benjamins Publishing Company.

Grice, P. (1989). Studies in the Way of Words – Massachusetts, Harvard University Press.

Hengeveld, K. (1992). Non-verbal Predication: Theory, Typology, Diachrony – Berlin, Mouton de Gruyter.

Janney, R. W.; Arndt, H. (1992). Intracultural tact versus intercultural tact. En Politeness in Language (pp. 21-41). Watts, R. J. et al. (Ed.). Berlin, Mouton de Gruyter.

Kasper, G. (1990). Linguistic politeness. Current research issues. Journal of Pragmatics, Vol. 14, Issue 2, pp. 193-218.

Lamb, S. M. (2011). Senderos del cerebro. La base Neurocognitiva del lenguaje - Trad. J. M. Gil y A. M. García - Mar del Plata (Argentina), Eudem.

Llinás, R. R. (2001). I of the Vortex. From Neurons to Self – Cambridge, MA, The MIT Press.

Mehrabian, A. (1971). Silent Messages. Belmont, California, Wadsworth Publishing Company, Inc. Salatino, D. R. (2008). Realidad, lenguaje natural y una lógica alternativa - Anales de Lingüística – UNCuyo, Facultad de Filosofía y Letras – Instituto de Lingüística – Centro de Estudios Lingüísticos (Tomo XXVII-XXVIII-XXIX: 2005-2006-2007), pp. 75-106. Mendoza, Ed. FFL. Salatino, D. R. (2009). Semiótica de los sistemas reales – Tesis Doctoral en Letras – Facultad de Filosofía y Letras – Universidad Nacional de Cuyo.

Salatino, D. R. (2012). Aspectos Psico-Bio-Socioculturales del Lenguaje Natural Humano.

Mendoza, Argentina, Primera Autoedición. ISBN: 978-987-33-2379-9.

Salatino, D. R. (2014). Psyche – Structure, and Function. Mendoza, Argentina, First Desktop Publishing. ISBN: 978-987-33-5702-2.

Salatino, D. R. (2017). Tratado de Lógica Transcursiva. El origen evolutivo del sentido en la realidad subjetiva. Mendoza, Argentina, Primera autoedición. ISBN: 978-987-42-5099-5.

Watts, R. J. (2003). Politeness. Key Topics in Sociolinguistics – Cambridge, Cambridge University Press.

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Decision Making: The Complexity of Choice Processes Dionéia Motta Monte-Serrat, Fethi Bin Muhammad Belgacem, and Mauro Maldonato About the authors Collaborating Researcher at IEL-UNCAMP, Lecturer at the Master’s Program in Health and Education at UNAERP, Brazil. E-mail address: di_motta61@yahoo.com.br Department of Mathematics, Faculty of Basic Education. PAAET, Al-Ardhiya, Kuwait.

E-mail address: fbmbelgacem@gmail.com General Psychology, Università degli Studi della Basilicata, Potenza, Italy. E-mail address: m.maldonato@gmail.com ABSTRACT This article is part of a project in Mathematical and Linguistic Foundations for Intuitive Decisions.

It explores decision-making processes in different realities: virtual and real. Linguistic foundations are bases to distinguish these realities, explained through the Discourse Analysis (DA) theory, which takes language effects as caused by ideology, on a virtual plane, and takes evidentiary information as a way to understand the historical record, in the real socio-historical context. The discursive theory studies language production conditions to give rise to meaning oriented by presupposed conditions. We identified this discursive as an early interpretation which gives a meaning in advance and decontaminates other meaning possibilities. We compare such discursive functioning to a mathematical structure of logical reasoning (classical logic), which puts beforehand a “perceived truth” (“speaking intersubjectivity”) to eliminate supposed ambiguities, without reference to a particular meaning or context. However, as subjectivity is not crystallized, it can be understood as a place with a dual role: that of disclosing subjection and that of disclosing its subversion, thus breaking the vicious circle of idealism. This means dealing with incomplete, fragmentary and unpredictable information which will re-work meaning and interfere in the subject’s choice. We differentiate this situation from classical logic, and we choose polyvalent logic (Neutrosophy) to exemplify it. Instead of interpretation’s assigning False or True values, polyvalent logic works with possibilities (the propositions assume different values in each possibility) and admits more than two truth values, thus rejecting the principle of bivalence: In addition to the False (F) and True (T) values, polyvalent logic works with a third value, the Indetermined (I), it treats information under uncertainty. We combined the Discourse Analysis theory with Neutrosophy in order to observe meanings/ideas that will draw the paths of decision-making in the field of the Indetermined (I). The comparison of these decision-making mechanisms makes us aware of the fact that we are not be able to claim that this is the definite understanding of the decision-making phenomenon, but it gives us the hope of shedding light on mastering the complexity of choice processes.

Key words: Discourse Analysis; Mathematics; Decision-Making; Classical Logic; Polyvalent Logic.

CITATION: Monte-Serrat, D.M., Belgacem, F.B.M., and Maldonato, M. “Decision Making: The Complexity of Choice Processes.” Inter. J. Res. Methodol. Soc. Sci., Vol., 3, No. 4: pp. 22-30. (Oct. – Dec. 2017); ISSN: 2415-0371.

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1.0 INTRODUCTION This discussion emerged out of the project on Mathematical and Linguistic Foundations for Intuitive Decisions (Monte-Serrat; Belgacem; Maldonato, 2017). This article takes a brief approach to the abovementioned project by exploring the differences between virtual reality and real reality relating them to the subject’s process of choice. On one hand, we can observe the subject who is being put at risk of a strong force that “chooses” for him, on the other, he feels constrained to choose himself and, at this time, we can analyze another functioning process that gives him headlines for decision. However, we intend to provide a near-comprehensive ability to distinguish choice processes in decision-making. In this article, we aim to highlight the intuitive process, since the rational decision-making process has already been addressed in the article “Subject and time in the virtual reality” (Monte-Serrat & Belgacem, 2017).

Linguistic foundations are the basis to distinguish virtual and real reality, which we believe is the first step to understand the decision-making process. We explain this issue through the Discourse Analysis (DA) theory (Pêcheux, 1982, 1988a, 1988b; Pêcheux&Gadet, 1983) to apprehend that the human being has no direct access to reality, but he needs a method or a criterion to relate thought to reality, and he uses language to interpret the world. The DA theory explains that effects of language meaning are caused by ideology (Adorno 1999, Zizek, 1999), differently from other scientific approaches which reduce the meanings of language, understanding the latter as a supposedly neutral instrument to express reality. Mathematical foundations are used to represent some decision-making functions, always differentiating these functions in virtual reality and real reality (different realities involve different processes).

2.0 LITERATURE REVIEW 2.1 Discourse analysis as a linguistic foundation to understand decision-making Language carries a semantic function. According to the DA theory, this function deconstructs the understanding of language neutrality and transparency. When we use language, we depart from an established place based on the understanding that such language is transparent, or better saying, which makes meanings homogeneous and ignores the subjective character of understanding. This reasoning presents discourse as “neutral” ideological conjuncture.

The theoretical perspective of Discourse Analysis by Michel Pêcheux (1988) helps us to analyze the constitution of the subject under the effect of meanings between socio-historical determinations and interpellation by ideology. There is the tragicity (Monte-Serrat & Tfouni, 2017, p. 37) of the subject of discourse under the discursive perspective: he/she can be conceived in the paradox of the functioning of the interpellation mechanism, which gives rise to the subject who, while believed as autonomous and free, has his/her freedom entangled in economic or social determinations.

As symbolic beings, we must be aware of the functioning of ideology through language. We must be attentive to an imposed meaning production in discourse. We (Monte-Serrat, 2013) work with a constitutive division of meaning: the meaning of knowledge (place of logical and “neutral” discourse) and the subject’s meaning as a place of subjectivity. When we observe language production conditions, we have to take into account a theory of meaning as an effect of metaphoric relations. Pêcheux, in the DA theory (op. cit.), introduced the Saussurean theory of value, which explains the meaning of words by their relations to all other words in the language and by applying it to discourse production conditions (Helsloot&Hak, 2007). As discourse production conditions are important, the DA method works with evidentiary information (Ginzburg, 1989), cognitive practices which allow us to understand how clues and traces, embedded in the historical record, reveal hidden information for observing what cannot be observed at first sight (Herlihy, 2016) and influences the subject’s choices.

2.2 Historical context of the 17th century: logical reasoning as a mathematical structure in discourse 23

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In the history of humankind, every single decision has been made by choosing among possibilities under environmental pressures, but we are not conscious that these decisions have grown with a cost in terms of energy in such a way that human beings’ ability to choose must have presented itself as a chaotic mass of data devoid of clear structures and regularity. We may consider the fact that adaptation to the socio-historical context must have imposed to human beings fragmentary information with limited cognitive capacities and restricted time limits. This process provokes an individual to be the first of all and quick. In short, this process, on one hand, has inevitably influenced the level of satisfaction to which a human being could aspire in addition to the speed with which a solution could be looked for. On the other hand, it has decreased the capacity to perform operations that are essential to survival, such as measuring quantities, distances and it has affected the individual’s functioning of the cognitive economy (Maldonato & Dell’orco, 2010).

Aristotle’s formal logic, which allows us to make inferences from premises and, therefore, draw conclusions, has been considered to be at the basis of reasoning, interfering in decisionmaking in order to make them follow logical canons (Maldonato & Dell’orco, 2010). The contribution of this research is to clarify decision-making processes through the discursive theory, in which language production conditions play an important role. Under the Discourse Analysis method, we can question the change that occurred in the 17th century: a knowledge procedure consisting of systematic observation was adopted by testing and modifying hypotheses. It was a kind of knowledge in which discourses are oriented by a presupposed condition (conditions of discourse production). Pêcheux introduced a true innovation in the theory of discourse: his theory of interdiscourse, defined as the “‘complex whole in dominance’ of discourse production conditions” (Pêcheux, 1988, p. 146-153).

This systematic reasoning depends on a body of techniques. It involves making conjectures and predictions, enhancing a certain perspective to develop more sophisticated knowledge (Peirce, 1877, 1908). The way reasoning develops itself through hypothesis, as a conjecture based on preconceived knowledge and through controlled conditions when possible, determines and anticipates logical consequences. The discursive functioning under hypothesis as early interpretation gives a meaning in advance and decontaminates other meaning possibilities. This is a mathematical structure in discourse which puts a “perceived truth” beforehand to eliminate supposed ambiguities. This is how logical reasoning imposes general patterns to thinking, without reference to a particular meaning or context. This kind of discursive functioning works as a shift of the orientation of knowledge and establishes self-evident truths that are considered to be obvious.

There is a “right order” of thinking which starts from a true statement “known” to be true to reach a true truth. Criteria of rationality are coherence between thought and action and between means and end.

These anticipated propositions understood as true are detached from a context and work as an idealization of reality (Mortari, 2016, pp. 162-163). They act according to the principle of bivalence of classical logic: every proposition is True or False (op. cit., p. 439). There is a “sanitation” of other possibilities of conclusion; there is a way that prevents ambiguities and places precise meanings.

2.3 Language ideological interpellation Language functioning is not neutral. It is crucial for the construction of meaning because it constructs a consensus and brings the illusion of a “semantically balanced world” (Pêcheux, 2002).

This functioning comes with another process as a consequence of ideological effects, while subjects have nothing to say that is their own (Legendre, 1976, as cited in Haroche, 1992, p. 190). In this case, subjects take their subject-position (Pêcheux, 1988) which dictates “what to say” for the sake of a logically balanced universe: There is a strong force that chooses for him.

Pêcheux (1988, p. 163; 183) explains this process with his “subject-form” along the discursive chain: he/she does not acknowledge his/her subjection to ideology because he/she is constituted under the effects of meaning given beforehand in the context they belong to, which dictates what must and what must not be done. Pêcheux (1988) refers to this process as “speaking 24

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intersubjectivity” which appears as an effect of language. He/she does not realize that there are other possible meanings. There is an incompatibility between what the subject “has to say” due to his/her “subject-form” influenced by ideology and the subjectivity process that occurs in discursive materiality: they co-exist under the appearance of a paradox (Monte-Serrat&Tfouni, 2013).

Interpellation provokes a superposition of meanings in the discursive chain (ideological and unconscious, the latter embedded in subjectivity) working out of a kind of fetishism that surrounds its mode of operation. We state that (Monte-Serrat&Tfouni, 2013, p. 347) subjectivity is not crystallized as ideology suggests and tries to cover up, but it is a place with a dual role: “that of disclosing subjection and that of disclosing its subversion, thus breaking the vicious circle of idealism and interrupting the tragic fate of the subject that is captured by ideological interpellation”.

That’s why the inaccessibility to the sum of information required, the impossibility of predicting the consequences of each hypothetical action and the unavoidable cognitivecomputational limits of individuals put the very concept of rationality back into question, with the consequent shift from the criterion of optimization to that of satisfaction (satisficing) in the choice among alternatives (Simon 1987). It is in with this regard that we state that the real world is composed of a sum of chaotic and ambiguous data that are irreducible to logical-deductive inferences (Maldonato & Dell’orco, 2010). Therefore, taking action means dealing with incomplete, fragmentary information and explicit time constraints that will re-work meaning and interfere in the subject’s choice.

3.0 ANAYLYSIS AND DISCUSSION 3.1 Fundamentals of Mathematics to understand Intuitive Decision Based on the assumption that subjectivity in language is not crystallized and can subvert its ideological effects, we will try to put this reasoning in an algebraic structure. Regarding Mathematics, we choose logic - as a set of principles and methods of inference or valid reasoning -, to address the differences between logical reasoning and intuitive reasoning (Mortari, 2016, p.

435).

Logic is concerned with whether the premises are a good reason to support the conclusion.

There are several systems of logic. In this study, we associate logical reasoning to classical logic and intuitive reasoning to polyvalent logic.

3.1.1 Classical Logic Classical logic starts from statements we know to be true and, if each statement is true, we can reach a true conclusion. In this process, we are interested in the form rather than in the content of an “implication”, of an “assertion that if one particular statement is true, then another particular statement is true” (Eccles, 2007, p. 10). These conditional propositions start from explicit or implicit hypotheses to demonstrate an outcome: if the hypothesis is valid, then, so is the thesis.

There is a right order of mathematical language that provides a kind of necessary certainty, anticipating a systematic mathematical interpretation. The principle of bivalence governs classical logic, which is: every proposition is True or False.

In order to understand classical logic, the first concept of Mathematics that we need is the concept of “proposition”: “A proposition is a sentence which is either true or false (but not both)” (Eccles, 2007, p. 3). A statement or a proposition is “the key [...] that there must be no ambiguity.

To be a statement, a sentence must be true or false, and it cannot be both” (Sundstrom, 2017, p. 1).

In order to establish that a statement is true, we often write a mathematical proof and, to “establish that a statement is false, we often find a so-called counterexample” (Sundstrom, 2017, p. 3). There is a need to focus on “what happens before we start a proof”, as for example: “to make a conjecture beforehand as to whether the statement is true or false”, and “this is often done through exploration” (Sundstrom, 2017, p. 3). The difficulty of this task is due to “not to find a specific answer, but simply to investigate” through some techniques (Sundstrom, 2017, p. 3-4), such as guesswork and conjectures (when we make a guess in mathematics, we usually call it a conjecture); constructing 25

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appropriate examples to gather information that provides evidence that a statement is true or false, or we can only say that the conjecture appears to be true; or using prior knowledge.

Logical reasoning in Mathematics is concerned with establishing the truth of statements and “this is achieved by giving a proof of the statement. The key idea in most proofs is that of implication” (Eccles, 2007, p. 10), and there are some strategies to solve a problem, such as trying a number, looking for patterns, guessing and testing, drawing a diagram, working backwards, acting it out (Mathematical Reasoning, 2017). Eccles (2007, p. 10) defines proofs as: “[A] sequence of statements starting from statements we know to be true and finishing with the statement to be proved. Each statement is true because the earlier statements are true. The justification for such steps usually makes use of the idea of ‘implication’; an implication is the assertion that if one particular statement is true then another particular statement is true.”

There are statements which lead “to a true proposition whatever values are assigned to the free variable n – this is called a universal statement” (Eccles, 2007, p. 13). Mathematical logic has as an essential point that formal language has used: “We take implication → and the universal quantifier  as basic […]. The additional connectives , ,  and  are defined via axiom schemes. These axiom schemes will later be seen as special cases of introduction and elimination rules for inductive definitions” (Schwichtenberg, 2003-2004, p. 1). The symbols are called propositional connectives and build “propositions” (they can be understood as something we can obtain “by applying the following rules”) (Dries, 2016, p. 14) in their role of applying a truth value which depends on the truth values of the constituent sentences: “Propositional logic is the fragment of logic where new statements are built from given statements using so-called connectives, such as “not”, “or” and “and”. The truth value of such a new statement is then completely determined by the truth values of the given statements. Thus, given any statements p and q, we can form the three statements ¬p (the negation of p, pronounced as “not p”), p ∨ q (the disjunction of p and q, pronounced as “p or q”), p ∧ q (the conjunction of p and q, pronounced as “p and q”).”

This leads to more complicated combinations, such as  p  ( q ) . We shall regard ¬p as true if and only if p is not true; also, p  q is defined to be true if and only if p is true or q is true (including the possibility that both are true), and p  q is deemed to be true if and only if p is true and q is true. Instead of “not true” we also say “false” (Dries, 2016, p. 13).

3.1.2 Polyvalent Logic Polyvalent logic, with which we associate intuitive reasoning, instead of interpretation’s assigning False or True values, works with possibilities (the propositions assume different values in each possibility). Polyvalent logic admits more than two truth values and rejects the principle of bivalence: if the principle of bivalence implies determinism, it implies the non-existence of free will (Mortari, 2016, p. 463). In addition to the False (F) and True (T) values, polyvalent logic works with a third value, the Indetermined (I). It treats information under uncertainty conditions (op. cit. p.

467). The fact that we consider the overlapping of reasoning processes in the interpretation of meaning makes us think of the possibility that, during the decision process, there may be more than two options, constituted outside the legal logic. The displacement of the rigid structure of the proposition “If P then Q” makes us think of another order of reasoning that takes into account a third option: that of indeterminacy, as something that brings up what has been discarded in order to decontaminate the possibilities between False and True.

In classical logic, the hypothesis (Wikipedia, 2017) denotes the antecedent of a proposition, thus if we have the proposition “If P, then Q”, P denotes the hypothesis (or antecedent); Q denotes 26

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the conclusion (or consequent). To prove an implication, we must assume the hypothesis as a provisional idea which requires an evaluation. In this deductive reasoning there is determinism which predicts observations, confirms the predictions and states a law.

Neutrosophy (formed by neutre/neuter/neutral and Sophia - skill/wisdom - meaning knowledge of neutral thought) is a new branch of Philosophy introduced by Florentin Smarandache (2017) and studies neutralities and their interactions with different ideational spectra.

This theory considers every notion or idea <A> together with its opposite or negation <AntiA> and the spectrum of “neutralities” <Neut-A> (i.e. notions or ideas located between the two extremes, supporting neither <A> nor <Anti-A>). The <Neut-A> and <Anti-A> ideas together are referred to as <Non-A>. According to this theory every idea <A> tends to be neutralized and balanced by <Anti-A> and <Non-A> ideas - as a state of equilibrium. As a consequence, he generalized the triad thesis-antithesis-synthesis to the tetrad thesis-antithesis-neutrothesisneutrosynthesis (Smarandache, 2017 a).

The Neutrosophic Algebraic Structures are “based on sets of Neutrosophic Numbers [i.e. numbers of the form a+bI, where a, b are real or complex numbers, and I = Indeterminacy, with I^n = I for n positive non-null integer, 0I = I, I/I = undefined, and nI+mI = (n+m)I ]” (Smarandache, 2017). The indeterminacy “I”, within this structure, can appear in different types, “such as I1, I2, , Ip with integer p ≥ 1, and obtain the refined neutrosophic numbers of the form Np = a+b1I1+b2I2+ +bpIp where a, b1, b2, , bp are real or complex numbers, and a is called the determinate part of Np, while for each k in {1, 2, , p} Ik is called the k-th indeterminate part of Np (Smarandache, 2017). The author explains that elements of Neutrosophic Structures (T, I, F) are composed of two parts: a space and a set of axioms (or laws) acting on (governing) it. If the space, or at least one of its axioms (laws), has some indeterminacy, that structure is a (T, I, F)-Neutrosophic Structure. He extended them to the (T, I, F)-Neutrosophic I-Algebraic Structures [2015], i.e. algebraic structures based on neutrosophic numbers of the form a+bI, but also having indeterminacy related to the structure space (elements which only partially belong to the space, or elements we know nothing about whether they belong to the space or not) or indeterminacy related to at least an axiom (or law) acting on the structure space. Then, he extended them to Refined (T, I, F)-Neutrosophic Refined IAlgebraic Structures.

As we are working with intuitive decisions, we choose the polyvalent logic which moves us away from determinism and considers the probabilism of inductive inferences. In place of a hypothesis, we need a model of reasoning to pose a scientific explanation in a structure which emphasizes the maximal relevance of a set of conditions and axioms stated, such as a law which “axiomatizes an unrestricted generalization from antecedent A to consequent B by a conditional proposition – If A, then B” (Montuschi, 2003, p. 61-62).

The term “causalities” in a scientific explanation was questioned in its role of a mathematical idealization, “with no immediate basis on experience and with no evident connection to the ultimate causes of the natural world” and “with a claim about what would happen in a situation that never exists” (Bolotin, 1998, pp 33-34). Upon the fall of logical empiricism in which the role of logic and mathematics was important to find an understanding as part of a scientific enterprise (Stanford Encyclopedia of Philosophy, 2017), causality rises from scientific explanation began to emphasize maximal specificity for conditions and axioms (Hempel’s inductive-statistical model). In this way of reasoning, modern science “cannot claim, and it will never be able to claim, that it has the definite understanding of any natural phenomenon” (Einstein & Infeld, [1938]2017).

Albeit this condition of science, we choose Neutrosophy to try to demonstrate how indeterminacy can interfere with meaning and with decision-making.

5.0 CONCLUSION We explained the role of algebraic structures on the functioning of logical reasoning systems in virtual and real realities. This study showed that decision-making may occur in different ways, depending on whether reality is virtual or real. As we associate virtual reality with logical reasoning, a truth is anticipated and the subject decides on the ambivalence between True and False 27

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choices. In real reality, it is necessary to work with the polyvalent logic, which brings, besides the options between False (F) and True (T), the Indeterminate (I). The DA Theory explains that a bivalent choice is ideological; it is not on the materiality of the discursive chain (Monte-Serrat, 2013). Bechtel (2006, pp. 24-25), states that humans observe a sequence of sensory events and not causal relations (cause and effect), which are unobservable. The polyvalent logic, in turn, works with an indeterminacy degree, and the intuitionistic probability is appropriate to observe the discursive chain, since the meaning is not previously given, but constitutes itself in the enunciation (Pêcheux, 1988). We discuss this functioning through the Neutrosophic Theory as a polyvalent logic system based on different assumptions that help to predict observable events.

When we study the formation of meaning, we have to take into account that we are using language to interpret reality, since we do not have direct access to the real things: theories of interpretation are essential in this quest to construct procedures that expose the interpreter's gaze to the opaque levels of meaning-forming strategies at the levels of something that has not been previously determined. When we combine Discourse Analysis, the DA theory (Pêcheux, 1988), with Neutrosophy (Smarandache, 2017), we can observe meanings/ideas that will draw the paths of decision-making in the field of the Indetermined (I).

The DA theory (Pêcheux, 1988) calls into question the transparency of language and breaks the idea of evidence of meaning by giving relevance to the ambiguity, misunderstanding and polysemy of language. This phenomenon cannot be forgotten in scientific research on decisionmaking, since uncertainty is an element of the emergence of meaning (Pêcheux, 1988). We then think of comparing the scope of the Indeterminacy (I) of the Neutrosophy Theory to a field where there is a network, and it is exactly in such network that a node will happen, which will provoke the emergence of a particular meaning, not given, not predicted: an indeterminate meaning.

Pêcheux (1983) states that the subject cannot be thought of as a conscious, rational, and logical-operative strategist. The author (op. cit. p. 12) states that this concept is a myth and that, in reality, there are symbolic and unconscious interactions which affect the subject’s activity. It is with this regard that we compare two algebraic structures as starting points for decision-making: the structure of logical reasoning, with its hypothesis (as a virtual truth given beforehand in logical reasoning), and the Neutrosophic structure with a set of axioms (that exists between T and F) as a space of Indeterminacy (I). Algebraic structures - as sets of one or more defined finitary operations that satisfy a list of axioms (Cohn, 1981, p. 41) - can coexist with non-algebraic structures, as in topology, and this makes us consider time as an important element that interferes with the interpretation of meaning. These mixed structures can explain the functioning of decisions in situations of uncertainty: creativity and time lapse intervene in decision-making, and topology can describe both of them. The relationship between time and the subject in the constitution of meaning depends on the logical movement in which they are inserted, or mathematically speaking, depends on the standards or structures where this relationship is born. The mathematical paradigm is taken to bring a clarification on the subject’s constitution in connection with time and helps to clarify the decision-making process. For this task we use intuitionism as a philosophy of Mathematics: “This philosophy, poorly understood at first, stated that in order for a mathematical statement to be true to a mathematician, that person must be able to intuit the statement, to not only believe its truth but understand the reason for its truth” (Brower, 2017, p. 490-492): “Intuitionistic Logic substitutes constructability for abstract truth and is associated with a transition from the proof of model theory to abstract truth in modern mathematics [and] is more rigorous than conventionally founded mathematics, where, ironically, the foundational elements which Intuitionism attempts to construct/refute/refound are taken as intuitively given” (Brower, 2017a).

We emphasize that it is not a question of describing what really happens, but of comparing with the mechanism of the possibility of emergence of meaning. We are aware that we will not be able to claim this is the definite understanding of the decision-making phenomenon. We describe, 28

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through Mathematics, that while intuitive perception presents itself as sudden illuminations; it takes the place of something that was uncertain, unpredictable and appears in a mixed perception between emotion and reason: instead of an alternation (or...or) of the logical reasoning of virtual reality, we have a simultaneous emersion of both, emotion and reason, mixed in the field of the indeterminate (I). This understanding of underlying brain mechanisms clarified by Mathematics may help us master the complexity of choice processes.

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Schwichtenberg, H., (2003-2004). Mathematical Logic, Mathematisches Institut der Universität München Wintersemester. Acess on 21st October, 2017. Retrieved from http://www.mathematik.uni-muenchen.de/~schwicht/lectures/logic/ws03/ml.pdf Smarandache, F., Neutrosophy. Acces on 21st October, 2017. Retrieved from http://fs.gallup.unm.edu/FlorentinSmarandache.htm Smarandache, F., Neutrosophy, Access on 21st October, 2017a. Retrieved from http://fs.gallup.unm.edu/neutrosophy.htm Stanford Encyclopedia of Philosophy (2017). Logical Empiricism, Apr. 5, 2017. Retrieved from https://plato.stanford.edu/entries/logical-empiricism/ Sundstrom, T.,(2017). “Mathematical Reasoning.” Writing and Proof, Version 2.1, Grand Valley State University, California, USA, 2017. Access on April 10th, 2017. Retrieved from http://scholarworks.gvsu.edu/cgi/viewcontent.cgi?article=1009&context=books Wikipedia, Hypothesis.

Acces on 12nd October, 2017.

Retrieved from https://en.wikipedia.org/wiki/Hypothesis Zizek, S., (1999). O espectro da ideologia, In Adorno, W., Um mapa da ideologia, Slavoj Zizek(org.), Rios de Janeiro: Contraponto, p. 7-38.

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Barriers and solution for better investment climate in Nepal Paudel, R.

About the author Ramesh Paudel is a visiting Fellow at Arndt Corden Department of Economics, Crawford School of Public Policy, Australian National University, Canberra, Australia. Email: ramesh.paudel@anu.edu.au

ABSTRACT The main objective of this paper is to assess the current investment climate in Nepal and to demonstrate the rationale for a competitive business environment. In this process, we document the details of the key features of the investment barriers considering the policy contexts and proposed legal changes in the relevant sector. Further, we present a brief discussion of Nepal's institutional readiness to implement and enforce the emerging improved legal framework including the institutional set up, human resource to facilitate timely labor disputes resolutions, issues surrounding operational for businesses, and foreign investment. We, in this paper, urge to build a wider Buddha Lumbini circuit as a strategic development path that would contribute to improve the investment scenario with collaboration of many countries that have a substantial impact of Buddhism. This would be helpful to attract many tourists, and it would also help to build heavy infrastructure focusing on connectivity issue connecting with the potential industrial hubs in the country.

Keywords: Business environment, investment, institutional reforms JEL Code:

M29, E22, P11

CITATION: Paudel, Ramesh (2017). “Barriers and solution for better investment climate in Nepal.” Inter. J. Res. Methodol. Soc. Sci., Vol., 3, No. 2: pp. 31-47. (Oct. – Dec. 2017); ISSN: 2415-0371.

1.0 INTRODUCTION Creating a favorable business environment is a crucial issue as Nepal is transforming its economy to achieve higher, more inclusive and sustainable growth. Nepal aims to graduate to developing countries by 2022 and a middle-income country by 2030. This ambition seems difficult without gaining the business confidence in the economy. As discussed widely in the literature, progress toward political stability and continuing effort to bridge infrastructure deficiency in the country are two pre-requisites (Alesina, et. al., 1996). Building a dynamic market-based economy to propel growth also requires a competitive private sector, which in turn calls for an improved business and 31

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investment climate (Shelby, 2008). In recent days, Nepal has made some progress especially with legal changes and elections for the long term political settlement, but much more remain to be done.

Nepal stands at the crossroads with a highly expected vibrant private sector amidst increased globalization drive and competition going on (Ramady, 2010). Even in this era of the globalization, unlike in the advanced economies, private sector is losing its confidence in the least developed countries like Nepal (Paudel, 2014). The culpability for this goes to its unavoidable political bickering, insecure labor relations and provisions, weakening bureaucracy, poor access to finance and lack of reform initiatives to spur entrepreneurship development. Innovative approach to create an enabling investment environment is still missing. Moreover, the most cumbersome part is that the policies are hanging in a balance and not fully implemented, resulting in a sense of skepticisms for investors due to procedural delays. With these visible indications, daunting challenges in the investment front remain (Sahoo, 2006).

Investment climate is composed of many dimensions that help in creating opportunities for investment, growth of firms, employment in the product market and, infrastructure services (Gabi, et. al. 2012). Legal and regulatory framework including institutional issues matter greatly in creating investment environment. There is still a gap in trust and understanding between the public and private sectors in Nepal for which public-private dialogue (PPD) would be an effective mechanism to prioritize and promote reforms that will ultimately boost investment environment through institutional reforms and trust building (Bettcher, et al -2015).

According to the global competitiveness index framework, 12 pillars are taken for measuring the competitiveness of 140 countries â&#x20AC;&#x201C; in terms of investment and economic growth. Of the 12 pillars, four pillars sub-indexed such as institutions, infrastructure, macroeconomic environment, health and primary education are taken as factor driven basic requirements in the economy (five pillars are mentioned here). Other five pillars namely efficiency enhancers are higher education and training, goods market efficiency, labor market efficiency, financial market development, technological readiness and market size. Similarly, the remaining two pillars focused on - innovation and sophistication factors which include business sophistication and innovation.

Based on such pillars, competitiveness of economies is measured.

Figure. 1: Global Competitiveness Index

Source: (WEF, 2016).

In South Asia, heavyweight economies are India, Pakistan and Bangladesh surrounded by three smaller economies namely Bhutan (97th), Nepal (98th) and Sri Lanka (68th). According to the Global Competitiveness Index (GCI) 2017 published by the World Economic Forum, the quality of infrastructure has improved substantially in India (55th), Bangladesh (106th) and Sri Lanka (68th).

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However, the infrastructure quality deteriorated in Nepal and Pakistan (WEF, 2016). The report also mentioned that Pakistan is the only economy in South Asia failing to improve macroeconomic environment, and health and primary education level. Furthermore, financial market development remains poor in all South Asian countries, according to GCI 2017. Sri Lanka overtook India to become the best performer in technological readiness in the entire region (Figure 1).

If we examine the indicators, India leads in South Asia as it climbed to 39th rank - in the year 2016/17 with improvement across the board. Nepal (98th) and Bhutan (97th) need to improve infrastructure development and connectivity. However, Bhutan, due to heavy investments in hydroelectric power, can rely on electricity supply that helps in investment generation. Pakistan was regularly affected by the climate of instability - expediting economic development (WEF, 2016).

Nepal shows worst performance in South Asia in terms of business sophistication, innovation, technological readiness, and infrastructure development.

In Nepal, common phenomena like bandh (blockades), strikes, shortage of raw materials, labor issues, short supply of electricity and energies, and difficulties to ensure access to external market due to geographical barrier, have posed challenge to run industries to their full capacities.

This has produced negative impact to investors at home and abroad. Study shows that average direct cost of general strikes stood at NRs. 1.8 billion per strike per day and NRs. 27 billion per year as per the research conducted during 2008-2013. The loss from strikes has decelerated annual GDP growth rate in Nepal ranging between 0.6 to 2.2 percent point between 2008-2013 (Shrestha and Chaudhary, 2013) As India is the largest trade and foreign investment partner of Nepal, signing a bilateral Investment promotion and protection agreement (BIPPA) in 2011 is likely to start a new trend for resolving investment disputes in an innovative way. BIPPA is important to international investment law and helps to instill confidence in foreign investors for Nepal. This trend guarantees the rights and security of foreign investors. Both countries are obliged under the treaty to treat foreign investments the same as a domestic and third-party foreign investments, and to accord nondiscriminatory compensation in case of nationalization or expropriation of investment (Subedi, 2013).

This paper is organized. In second section, we discuss on current scenario of Nepalâ&#x20AC;&#x2122;s investment and trend. Then, we move to review current policies context that directly impact to the investment in section three. Section four covers barriers for doing businesses and section five concludes.

2.0 TRENDS IN PATTERNS OF INVESTMENT Various problems related to starting a business, entry and exist hurdles, repatriation of income, the lack of progress in attracting foreign direct investment (FDI) to Nepal. The growth of FDI did not meet has been unable to meet the investment needs of the country. However, there are potentials in manufacturing, services and infrastructures sectors.

Figure 2: Foreign direct investment % of GDP

Source: (UNCTAD, 2017) .

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The overall trend of FDI inflows in the country for the past 10 years seem to be in a fluctuating trend. The inflow in 2006 was registered negative that stood at 0.07 percentage of GDP, while it was high in 2010 which was 0.55 percentages, but it seems still very negligible compared to its neighbors. In the year 2015, the contribution of net FDI inflows to GDP went down to 0.24 percentages. This has substantially attributed to the deteriorating investment climate of the country.

Figure 3: The trend of foreign direct investment in value

Source: (UNCTAD, 2017) .

In figure 3 above, the value of FDI net inflows in US dollar in the year 2015 stands at $51.44 million, however, in the year 2011 it was quite up. There is a fluctuating trend in FDI net inflows. In the year 2011, the FDI inflows reached to US $95.49 million. The reasons for downward trend of FDI net inflows has been attributed to various reasons associated with investors' confidence, facilitation, security, environment and procedural difficulties. In the figure 2, it shows that during 2006 there was a huge capital flight amounting to US $6.65 million. In the year 2011, there was euphoria in the country and foreign investment was in its peak, as all the major political parties reached an agreement to draft the constitution. This shows that political development makes an impact on economy.

Landlockedness––the geographical situation without direct access to sea is one of the deterring factors for economic growth, as this constraint imposes exogenous costs on Nepal’s international trade (Paudel, 2014). Nepal is no exception; in such a context, attracting investment is a challenge, especially, the issue of transportation should be a priority. Access to seaport seems critical when it comes to finding bigger export markets for the produced goods. Addressing these concerns will help investors to invest here and do business on a sustainable basis.

Over the last 5 years, the agriculture and forestry sector show an increasing trend in the contribution of GDP in the form of capital formation (see table 1). The sector components where investment is made, under the agriculture and forestry, are irrigation, land improvement, equipment and other required items. The manufacturing sector (as the investments are made in the components such as construction equipment, software development, etc.) had higher capital formation more than agriculture from FY 2010/11 to 2012/13 and had an increasing trend until 2014/15. However, starting from 2014/15, its gross fixed capital formation of the total GDP seems to be less than that of agriculture and is on a declining trend. Similar trend is reflected by hotels and restaurants, as it had an increasing trend till 2014/15 and then declined in 2015/16.

Table 1: Contribution of key sectors as a percentage of GDP in capital formation Sector 2010 2011 2012 2013 2014

2015

Agriculture and forestry

2.21

2.13

2.35

2.64

3.13

3.2

Manufacturing

2.53

2.41

2.4

2.27

2.51

1.54

Electricity gas and water

1.9

1.87

1.76

1.85

2.05

2.00

Transport, storage and 2.8 communications Hotels and restaurants 1.5

2.73

3.22

3.69

4.48

4.4

1.43

1.59

1.53

1.76

1.24

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Source: (Nepal, 2017).

There is a slight up in the year 2015/16 which stands at 3.2 percent of the GDP compared to 2.21 percent in 2010/11. When it comes to investment in manufacturing sector of the total GDP, it has gone down to 1.54 percent of GDP in the year 2015/16 compared to 2.53 percent back in 2010/11. This trend of investment shows that investment environment is being deteriorated day by day in the manufacturing sector. Nepal's manufacturing sector is suffering from weak infrastructure, especially roads and electricity and protracted political transition that has affected for policy stability. There is an increasing growth in investment in the transport, storage and communication sectors that stand at 4.4 percent in 2015/16 compared to 2.8 percent in 2010/11.

The lack of basic infrastructure, such as, electricity, smooth transportation facilities and access to finance are major deterring factors for sound investment climate. In addition, different enterprises are getting affected by the lack of comprehensive approach to address legal, regulatory, procedural and institutional barriers which have eroded the environment for investment. Due to weak investment environment, investors – both local and foreign took least interest in the country.

It also affected the business sector’s leadership in promoting the country’s economy. The concept of venture capital is yet to take shape in Nepal's business sector.

3.0 POLCY CONTEXT 3.1 Economic Reform Though there are policies that were designed to boost the investment climate with the firstgeneration reforms, but unfortunately, the implementation has been utterly poor, and outcomes are really frustrating. Anomalies in policies are also major constraints that have affected businesses by converting provisions/laws/acts in one's favor and had been misinterpreted. Implementation of policies has been a key constraint for attracting and increasing investments. Politically, the country seems to be moving fast but many things need to be done for the economic development. The bureaucracy is yet to be mobilized in a businesslike manner, according to the private sector stakeholders. Investors see that economic agendas are not being discussed at the political and bureaucratic levels which affected private sector interests.

If the State wants to create confidence among investors, there is a need to reform the legal requirements of the country. The issues relating to the protection of investors' rights, market access of the products, institutional set up to facilitate investors and administrative mechanisms play a critical role in sending good message to investors. Strong legal provisions are required when it comes to encouraging investments.

The causes for deteriorating investment climate in the country are legal, institutional and policy-related overlapping and often contradictory laws and institutional arrangements, differing priorities of various agencies of the government including with serious gaps between policies and their actual implementation on the ground (Adhikari, 2012).

3.2 Foreign Investment and Technology Transfer Act, 2073 The Foreign Investment Act 2017 (being proposed to table at the parliament) has some provisions for discretionary powers given in the name of 'competent officer'. This has been greatly opposed by the business sector as it creates an environment where the official can take decisions to serve their interests. It should be institutionalized, and institution/ministry should be responsible not the individual for disseminating good messages to investors. Even for the exit, if government officers discretionary authority it is an indication for the investors that the government does not want to create certainty in the investment front.

The incentives provisions mentioned under the 'One Stop Service center' are not clearly defined; they need additional clarification as to how investors will receive their financial incentives.

Additionally, giving incentives only to foreign investors won't be fair vis-à-vis domestic investors.

Moreover, what is worrisome is the weak monitoring mechanism by the government in the implementation of laws related to FDI. Industrial Enterprises Act does not differentiate between the 35

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local and foreign investors. For example, according to the labor act, implementation of housing provision and central welfare fund are not properly monitored by the authorities as they are applicable for both the domestic and foreign investors. In the case of safety rules in the organizations, there are no safety inspectors to carry out such inspections, as shared by entrepreneurs. Inspections from the Department of Industry (DoI) need to be carried out more effectively.

The issue of investors' rights is critical to attract foreign direct investment. Repatriation of earnings, equal treatment, most favored nation treatment and provision against nationalization hold no lesser significance as these directly to foreign investments. Every new business needs time to generate profits, if the company established under the parent organization is generating profit, then the profits should be allowed to be transferred to the new sister organization as it incurs losses during the initial years. This provision should be materialized effectively, which is now difficult to change. Despite a provision in the law, due to its wrong interpretation, existing provisions are not implemented properly, according to foreign investors associated with MNCs. Even other countries have this provision but in Nepal it is not practiced. Thus, foreign investors who are interested to increase and diversify investments under the existing enterprise are not able to do so due to misinterpretation of laws. This is going to discourage investors to increase their business ventures.

FDI policy of 2015 has some restrictions on few business sectors, such as micro enterprises and traditional cottage industries, arms and ammunition, gunpowder and explosive production; currencies and minting industries, security printing; real estate business; retail business with multibrands investment less than five hundred million rupees in fixed assets in Nepal; tourist guide, trekking and mountaineering guide; poultry farming, fisheries, bee-keeping, and priority products of agriculture sector; industries relating to radio-active materials; and broadcasting media of mass communications (newspapers, radio, television). Outside these exempted sectors, the law is flexible and liberal policy approach on FDI inflow including the smooth implementation of bilateral and multilateral agreements.

3.3 Labor law and its status The labor market is a critical area for improving business environment in any country. The labour market regulation/simplification is also one of the indicators for maintaining sound relations between workers and employers. Nepali business sector also concludes that labor and employers' relation was not as bitter until two decades ago, according to MNCs. It seems to be maintaining well. Portugal, Netherlands and Myanmar improved their labor market regulations, according to Doing Business Report 2017 of the World Bank. That has further helped in improving environment for doing businesses, and also helped in sustaining industrial relations.

Capital and labor both move hand in hand and boost for more productive firms in different sectors that ultimately create more jobs. It is noted that reforming barriers to entry can spur the creation of new formal firms and enable exiting informal firms to join formal sector and more jobs will be created.

The proposed Nepal's Labor Act 2017 which is under discussion in the Parliament talks about making the business environment better as it has been clearly mentioned in the preamble that sound industrial relations is very important to develop by ending labor exploitation of all sorts to enhance productivity, protect the rights and benefits of laborers and employers. Employers cannot discriminate workers based on gender, religion, origin and language. There should not be discrimination between male and female workers (recognize equal value of work) when it comes to incentives. Workers are also given rights to form trade unions, operate and take membership as per the proposed Act. Implementation of existing labor act is a big problem for creating industrial relations in the country. Even the new one, if implemented, would help in improving investment climate, according to trade union representatives. According to workers, even minimum wage is also not implemented completely, in such a context, there are skepticisms for implementing new Labor Act as well which is being debated in the parliament. The Social Security Fund Regulations which is now in 36

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parliament will address some issues concerning workers' benefits such as Welfare Fund, Bonus Fund, holidays and gratuity. Even in the existing provision at the Social Security Fund Regulations, workers are contributing one percent of their total salary for more than six years but employers are not contributing. Of the total profits of enterprises, 10 percent should be earmarked in Bonus Fund but that is not implemented even today.

Workers who work with more than one employer as a part time staff, can also be availed gratuity, provident fund and social security benefits for which employers need to contribute accordingly. The Labor Act has clearly stated that workers would not be forced to work more than office hours, and if needed, additional incentives to be given. As per the new proposed Labour Act, the worker gets contract letter from the day one. If employers are not satisfied with the performance of the employees, they can fire the employees, and the provision of making employees permanent after 240 days work has been scrapped. The proposed Labor Act has also made a provision to raise issues and file a case at the court related to benefits, security, health-benefits, employment related issues, in case of disputes and not resolved through negotiations.

3.4 Other investment related acts/legislations Patent Design and Trademark Act is important for the country like Nepal to attract foreign direct investment. It should be implemented effectively. Large international investor would want to see the implementation of intellectual property rights. Trademark is important for any investors because well-known brands must be protected locally for foreign investors.

Foreign entities established in the Special Economic Zones (SEZ) are entitled to repatriate their shares/dividends/interest income in US dollar as per the SEZ Act, which has also been mentioned that enterprises/companies that produce goods/raw materials in the premises of SEZ can avail benefits equal to the benefits received by exporters. One Window system has also been envisaged in the SEZ from which all services/benefits required for the investors will be made available. Issues related to benefits, infrastructure related services, industry registration, renewal and visa, are dealt by the SEZ management from under one room that aims at encouraging investors.

The country has been applauded for producing good laws/regulations, but it fails at interpretation. Foreign investors want proper interpretation and the simplest query of profit repatriation is unclear. Thus, many time, investors face problems through Department of Industries (DoI) and Nepal Rastra Bank (NRB) (lengthy procedures) in repatriating profits and such news and facts pushes away potential investors. Addressing these concerns call for an immediate remedy.

According to the report on "Stakeholder Perception Survey" done by the IFC back in 2012, 34 percent of businesses had decided not to make a major investment because of unnecessary problems relating to complying with government regulations. Therefore, even today, investors are skeptical to invest freely. Adoption of key legal and regulatory reforms measures for creating enabling environment for trade and investment has been found slow thanks to the political transition.

4.0 INSTITUTIONAL MECHANISMS PREVALENT IN INVESTMENT PROMOTION Institutional mechanisms are a critical part of facilitating investments in Nepal. Role of Investment Board Nepal (IBN), Department of Industries and Nepal Rastra Bank are critical. Once the processing related to investment is done on the part of DoI or IBN, the institution like Central Bank of Nepal authorized institution for repatriation of foreign currency make delays in giving approvals.

Even DoI and IBN are government institutions, and they do everything required for foreign investment. The involvement of central bank is unnecessary here that creates additional barriers for foreign investors, foreign associated with MNCs complained (Francois, Joseph; MAanchin, Miriam; Norberg, Hanna; Pindyuk, Olga; Tomberger, 2015). IBN is an authorized government agency mandated for foreign investments approval in the areas such as fast track roads, hydropower, tunnels, railway line, ropeways, trolley buses as precribed by the government of Nepal.

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Investors depend on state mechanisms to protect and increase their investments. The government agencies, like the Department of Industry, Ministry of Industry, Office of the Company Registrar, Investment Board Nepal, Nepal Rastra Bank, are responsible for investment related matters. However, when it comes to facilitating investments local and foreign investors, the names of these institutions are ignored by investors. Moreover, every change in the government affects each government office. Whoever comes as a new minister or secretary takes several months to understand the functioning of the office and its agencies. The change is so frequent that the investment decision for new or additional investment are affected, because investors get distracted with unstable government (Malesky, 2007). Economic agenda not getting priority in the government adds fuel to the fire.

The issues that impact at the macro level for investment are poor political governance and negative mindset of the bureaucratic staff. It might be surprising that the research conducted by the International Finance Corporation (IFC) back in 2013 has termed Nepali government as an obstacle itself to doing business (Gabi G. Afram, 2012). Governmentâ&#x20AC;&#x2122;s support is considered only less than 39 percent of the firms surveyed in facilitating businesses for starting a business, access to finance and removing regulatory barriers (Shrestha, 2013).

One of the facilitating bodies and strong institutions to see investment related issues is the Department of Industry (DoI). According to the new Industrial Enterprises Act, one-stop shop to be set up at DoI needs to be operated effectively. There are complaints from earlier One Window Service and even the small issues are not resolved such as 'duty drawback'. Investors even used to face different kinds of problems.

Investors raised the issues of non-functional one-window service (OWS) established at the Department of Industry, weak coordination between government agencies like DoI, Nepal Rastra Bank (NRB) and other agencies for repatriation of dividends, weak institutional set up encouraging discretionary powers to government officials, policy instability, unnecessary roving around ministries for documentation for approval of FDI projects, according to a multinational company established in Nepal.

Another agency is the Office of the Company Register (OCR) which has already gone online, but it is not being properly operated. Even if the online system is active, investors should carry the photocopy and submit the documents physically at the time of registration which has been named as burdensome mechanisms for registering a company and is an implementation failure on the part of government.

Initially, OCR does not inform to investors/entrepreneurs regarding submission of audit report to the company registrar office but later, OCR office asks for submitting the same that seems illogical, which the business sector people complained. When the time is over, it recalls and asks for fines, which itself seems unnecessary discretionary given to the OCR officials that creates unhealthy practices. In such an environment, it is a question of who takes interests to register a company and invest. Companies have now and then voiced that OCR should be a facilitator (encouraging investments) and not a regulator (collecting and monitoring fines).

5.0 BARRIERS FOR DOING BUSINESS 5.1 Manufacturing Sector The manufacturing sector is critical component of the country's economy, particularly for the employment for low skilled and unskilled manpower. Manufacturing industries include jute, sugar, cigarettes, beer, matches, shoes, chemicals, cement, and bricks. Textiles, wearing apparel; fur, and leather & leather products & footwear stand out as export-oriented manufacturers with more than 50 percent of their outputs exported. Others include rubber and plastic product and basic metals. The sector contributes about six percent to the total GDP of Nepal. However, this is in declining trend due to various factors such as weak infrastructure, power shortage and lack of facilitation from the government (Canning and Bennathan, 2000). Industrialists are suffering from the lack of skilled and productive human resource, lack of new labour law and increased cheaper imports. This has been a serious issue among the manufacturing units in Nepal.

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Manufacturing industry cannot sustain in Nepal as the cost of production and transportation cost is high unless specific strategies are followed to boost this sector. For example, if the raw materials required for manufacturing sector are imported, it costs higher than the finished products, and it seems that the government has all faulty policies when it comes to promoting and boosting infrastructure sector.

Other major issues are power shortage (not regular), open border with India, cheap products imported from India and China which is hard hitting local products to compete in terms of cost.

According to the economic survey report for the fiscal year 2015/2016, the share of manufacturing sector in Gross Domestic Product (GDP) stands at a declining from 9 percent in 2000/01 to only 5.53 percent in 2015/16. The share of manufacturing sector in GDP during 2006/2007 was 7.5 percent as per the figures made available by the Ministry of Finance.

Figure 4: Contribution of Manufacturing Industry in country's GDP

Source: Economic Survey, 2015-16.

Even in the South Asia region, Nepal's manufacturing sector's contribution stands only 6.5 percent of GDP, according to 2012 World Development Indicators.

The record at the Department of Industry shows that in the fiscal year FY 2015/16 about 2,442 manufacturing industries got registered that alone represents 37% of the total industries, with an optimistic note of creating 0.27 million jobs covering 52% of potential employment. This figure cannot be considered real as it is just commitment/expectations of the government.

Figure 5: Trend of Manufacturing Industries Registered Over the Last 10 Years

Source: Economic Survey 2015/16.

Registration of manufacturing industries at DoI has been. The figures in figure 5 shows that in the year 2016, there is a highest number of manufacturing units registered over the last 10 years and average growth rate stood at 1.18 percent. However, the performance of manufacturing is found dismal in the last ten years, all due to unfavorable investment climate in the industry sector, lack of reliable and regular electricity supply, fragile political situation, weakening industrial infrastructures, resulting from lack of sound labor relations and inability to create additional investments by established enterprises.

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The contribution of the tourism sector to the GDP stands at 2.1 percent in the fiscal year 2015/16 which seems similar performance in the year 2007/08 (2.3 percent). Its contribution in 2006/07 was 1.4 percent. The highest contribution, according to Economic Survey 2015-16, the GDP from the tourism sector stood at 2.8 percent during 2008/09. (See Figure 5).

The statistics show that Nepal's tourism sector still does not seem to be moving as fast as the country's requirements in terms of revenue generation. Even investment in the tourism sector during the fiscal year 2015-16 has gone down to Rs. 12,124.9 million from earlier Rs 27,215.37 million in 2014-15.

Investors who are engaged in the sector voiced serious concerns on poor infrastructure like small international airport of Nepal/roadways for the downward performance of tourism sector in Nepal. Inefficient implementation of policies, lack of policy continuity, power shortage, and poor access in finance have hit the tourism sector. However, business sector is yet to be convinced for permanent removal of load-shedding being realized now and are found to be in a wait and see situation.

Figure 6: Contribution of Tourism Industry in GDP

Source: Economic Survey 2015-16.

The records of the DoI reveals that fiscal year 2015/16 about 1,302 tourism related industries got registered representing 20% of the total industries, promising to generate about 53 thousand million jobs covering 10% of potential employment. Compared to 2007 the number of tourism-based industries registered at the DOI has increased but with fluctuation. Fiscal year 2015 saw the highest number i.e. 147 of tourism based industry registered over the last 10 years.

Figure 7: Trend of tourism based industries registered over the last 10 years

Source: Departent of Industries, 2016.

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Figure 8: Capital Investment in Tourism Sector

Source: Dpartment of Industires, 2016.

The infrastructure should be strengthened as 28 hotels of 4-5 star hotels are under construction currently, and additional 4000 rooms are being added in the existing 38,000 rooms in total currently in the country, according to Hotel Association of Nepal. Airport expansion, quality enhancement with effective monitoring and supervision encouraging the investors would definitely boost our tourism and generate huge revenues to the national coffer.

The Government announced that 2018 will be observed as Visit Nepal Year. Amidst all these rosy pictures, there are still some urgent issues that need to be resolved and it primarily boils down to our clogged airport, our national carrier’s status, similarly packaged products and services, and poor implementation of policies, according to tourism entrepreneurs associated with Hotel Association Nepal (HAN).

Nepal lacks updated technology and system resulting in security and safety concerns, with limited hangers and parking resulting in increased air traffic and longer waiting time on air – basically resulting in upfront bad impression.

Tourists have different choices. Some are for culture; some prefer adventure and some for leisure, etc. Wherever they visit, they need to be welcomed with smile, hygienic food, sound environment, comfortable accommodation and so on. They should be kept away from anxiety, irritability, anger, lack of motivation and focus, restlessness, sadness or depression because tourists have become conscious of health tourism.

Hotel Association of Nepal states that civil servants in India are getting extra money to promote domestic tourism. In Nepal as well, such initiatives may be one way of boosting domestic tourism. In the year 2016, 4.3 million domestic tourists visited different districts which might further increase if new and innovative packages are announced, according to the Hotel Association of Nepal.

The key issues that need urgent attention to promote tourism are as follows. Infrastructure development – expansion of airports, maintenance; branding Nepal at the global level; promote Lumbini as a world's pilgrimage tourism destination, promote heritage development with additional budgets; enhancing the capacity of local travel and tourism sector to go global; upgrading quality of hotels, restaurants, local transport; developing hygiene codes for health and safety, making consistency of electricity and water supplies; focusing on wellness tourism, meditation that support healthy living.

Lumbini, one of the many attractions of Nepal, as a pilgrimage site can attract millions of tourists from across the world. It can be considered as a major tourism site for socio-economic reforms in Nepal as it carries a name popularly known in the world as Siddhartha Gautam was born in Lumbini some 2500 years ago. The concept and devotion that people have over Lumbini are – peace, harmony, meditation, a pilgrimage site for the global citizens. If the Lumbini could be promoted in line with Buddhist circuit via India and Sri Lanka – it can help in country's socio41

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economic development and regional economic integration of South Asia. The Buddhist Circuit is an important pilgrimage destination, in the whole of South Asia, for 450 million practicing Buddhists as well as travelers interested in history, culture or religion. Buddhism is practiced in China, South Korea, Japan, Taiwan, Singapore, Vietnam, Cambodia, Thailand, Laos, Sri Lanka, Myanmar, India, Bhutan, and Nepal (International Finance Corporation, 2014). Nepal's potential in linking with Lumbini holds high for which investors from around the world can come to develop infrastructure through Buddhist Circuit for which environment is highly required.

5.3 Agro-business Sector Agriculture sector of Nepal is the mainstay of the economy. According to economic survey for the year 2016, it contributed 32.2 percent of GDP in the fiscal year 2014/015. Agriculture being the central livelihood of the people, it is inevitable to ensure food security, enhancing economic growth and reducing poverty by resolving the barriers faced by the sector. It is estimated, that growth of agriculture is going to remain at 1.14 percent.

The Department of Industries (DoI), an agency under the Ministry of Industry (MoI) shows that in the fiscal year 2015/16, about 395 agriculture related industries have been registered representing 6 percent of the total industries, promising to generate about 33 million jobs covering 6 percent of potential employment.

DoI states that over the last 10 years, the lowest number of industry registered is only one (one in 2007 and one in 2010) and the highest number is 54 in 2013. It reflects the poor environment we have even for registering a company based on agriculture. In the year 2016, the number of agro and forest based industries registered were 28.

Fig. 9: Trend of Agro and Forestry Based Industries Registered Over Last 10 Years

Source: DOI, Database 2016.

Nepal has potential for agriculture sector development. To materialize this scope, proper environment for the growth of sector is inevitable. However, Nepal does not have accredited laboratory approved by India which is a major hurdle when it comes to exporting agriculture products and government needs to support in this regard. People do engage in agriculture without government support at the local level. In the year 2007, only an agro-based industry got registered as there was a big political change and parliament approved the abolition of monarchy as part of the peace deal with Maoists. In the year 2010, only an agro enterprise got established as the Constituent Assembly (CA) voted to extend the deadline for drafting the constitution.

Table 2: Sectoral investment as percentage of GDP Year 2010 2011 2012 2013 2014 2015

Agriculture 11 11 11 11 12 13

Manufacturing 12 11 11 10 9 6 42

Services 77 78 78 79 79 81

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Source: Central Bureau of Statistics, National Planning Commission, 2016 According to the statistics of the Central Bureau of Statistics (CBS), National Planning Commission (NPC), 2016 though the agriculture sector is recognized as a potential sector for growth and poverty reduction, insufficient inputs like fertilizers, developed seeds, research and extension services and, weak infrastructure (like roads and electricity) are found major obstacles for agriculture sector growth. This has affected to increase the economies of scale. The investment in the agriculture sector, as per the above table 2, stands at 13 percent of the total investment, little higher than manufacturing. However, the sector is weak due to deteriorating management skills, and shortage of manpower due to out-migration. This has further hampered in enhancing exports of agricultural products. There is an increased trend of service sector investment that stands about 81 percent compared to the other sectors of the economy.

Investors engaged in the local manufacturing units are getting worried that 'imported' goods are cheaper than the locally produced goods. Raw materials required for agro industry are costlier.

In such an environment, how can investors do business in a commercialized way under such policy arrangement? The oil manufacturer which imports crude for producing soybean oil says, "There is no difference to import finished items, and the raw materials." It shows that there is serious policy error which needs immediate correction, if investment climate is to improve and for local agrobased industries to survive.

Nepal's top agricultural exports products are tea, cardamom, lentils, ginger, essential oils, coffee and natural honey, fruit juices, among others. Provided below are the major exported items from Nepal to various countries over the three years period starting from 2012/13 to 2014/15.

Table 3: Quantity of agro products' export F.Y. 2012/13 (2069/70)

Qty in Kg alue 000 Rs.

Cardamom Lentils Tea Ginger Natural Honey

F.Y. 2013/14 (2070/71)

Qty in Kg Value 000 Rs.

5,102,811 3,849,995 4,913,890 21,961,195 2,677,319 17,341,147 10,708,598 2,043,220 11,395,744 62,843,364 1,332,453 20,415,666 38 21 1,100

F.Y. 2014/15 (2071/72)

Qty in Kg Value 000 Rs.

4,270,372 2,930,339 2,047,632 9,881,288 2,029,439 11,142,480 449,901 24,548,657 176 3,800

3,839,811 1,257,962 2,006,877 464,921 726

Annual Change % compared to previous year (in terms of value) F.Y. 2013/ 14 F.Y. 2014/15 10.9 -10.1 -23.5 -38.6 -0.7 -1.1 -66.2 3.3 754.4 312.4

Source: Trade export and Promotion Center (TEPC), Nepal Government.

Nepal has not been able to focus its export market due to insufficient production capacity and inability to produce quality products. It also increases standards requirements as per the WTOSPS provisions, exporters are in a difficult situation which can only be resolved through collaboration between the public and private sector with sufficient resources in place in agriculture sector, according to exporters/producers involved in export trade of Nepal. Complying with the international SPS measures is critical for exporters of agricultural products.

Making arrangements for technology and equipment are required for increasing agriculture production and productivity, skilled human resource, improved seeds and fertilizers, agriculture extension, marketing of products, and maintaining quality and modernizing and commercializing agriculture sector through adequate arrangements of means and resources for irrigation have been challenging tasks (Ministry of Finance, 2015).

5.4 Agriculture business Agro-entrepreneurs face the shortage of raw materials which have affected their productivity, and technology still sees a far cry for them due to high investment. It has direct impact on the price 43

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competitiveness of the products due to high customs duties (almost up to 50 percent customs duties). The imported products are also cheaper compared to locally manufactured ones, such as soyabean oil. The quality issue in the global market has hit agro-entrepreneurs as there is lack of internationally accredited lab in Nepal coupled with other problems, such as lack of electricity and agro-processing centers.

Thus, the sector needs to establish national level accredited laboratories for quarantine checks; develop quality and trained manpower; strengthened database of the WTO related information, products, market; availability of sufficient financial and technical support; serious efforts by Ministry of Commerce to take initiatives in improving quality infrastructure; branding at the local and international level; and simplification of processes for exporting to other countries.

For example, Pashmina product, one of the major exportable items of Nepal, has gained momentum after the introduction of collective trademark and its registration in 45 countries such as USA, Japan, Singapore, Hongkong, China and other European countries. The export of Pashmina increased by over 70 percent in 2015 compared to 2010, and importers are taking more interest to buy pashmina manufactured using Changrya Pashmina wool of Nepal. This sector's employment stands around 30,000, according to Nepal Pashmina Industries Association. The product has other strengths such as traditional manufacturing methods, quality, and designs which are found unique in Nepalese products in the niche market. It can handle small high-value orders, has low labor costs and employment opportunities.

5.5 Small and medium enterprises (SMEs) - local and foreign Small and Medium Enterprises form a large part of the private sector in many countries including Nepal. SMEs are constrained financially with formal access compared to larger firms. SMEs are considered as an engine of growth; however, market imperfections and institutional weakness hamper their growth (Beck and Demirguc-Kunt, 2006) .

In Nepal, Small and Medium Enterprises (SMEs) share in the total industrial's contribution in the totdal GDP reportedly stands over 90 percent, according to Federation of Small and Cottage Industries (FNCSI).

The Industrial Enterprises Act, 2016 defined small scale industries as industries having fixed assets up to NRs 100 million whereas medium scaled industries are characterized as enterprises having fixed assets of between NRs 100 million to NRs 250 million. These SMEs are limited in resources, capacity, technology and credibility. The table below categorizes the no. of industries registered in Nepal scale-wise and the employment opportunities they have created as of fiscal year 2016/17.

Table 4: Number of registered small, medium and large-scale industries Scale No of companies No of employment Large 856 126,974 Medium 1,482 140,873 Small 4,186 253,966 Total 6,524 521,813 Source: Department of Industries, 2017.

Table 4 shows that out of total 6524 companies registered in Nepal, 5668 happens to be the SME which is 86 percentage of the total industries. Moving forward to the employment aspect, SME provides a total of 394839 employments which comes out to be 75% of the total employment provided by the SMEs of Nepal. Hence, the fact that SMEs plays a major role in Nepalese economy and the value chain they create cannot be ignored.

5.5.1 Major constraints SMEs face various problems from registering a business in the Office of the Company register to marketing the products to the customers. It has been very much cumbersome for the interested 44

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entrepreneurs to start a business. For example, if a foreign investor is interested to start a business, he/she has to pay the US $3,000 to $5,000 as registration charge which is high and time-consuming (takes 3 to 6 months). It takes from 3 to 6 months, to register a foreign investment company at the Department of Industries (DoI), reports an official associated with Biruwa Ventures Pvt Ltd. Technical support is found very much lacking for SMEs that has made difficulties to really build their businesses on a sustainable basis. SMEs gives employment to over 800 thousand people but facilitation from the state to sustain this sector seems nothing, as there are various provisions/regulations being implemented to Nepal as a member of WTO and this sector, is not aware of new issues.

SMEs cannot access loans and start a business and operate successfully is a major hinderance followed by other quantity, quality, and standards issues when it comes to producing competitive products. Cost of production of SMEs products is high due to costly imported materials. Giving technical support to SMEs would facilitate the import, export and minimize the document requirements, reduce the cost of raw materials and transport cost along with technical know-how (Dibrova, 2015). Professional enhancement tools like training on group purchase, transport bound logistics, documental procedures, registration procedures, tax-related training packages should be customized and targeted according to the needs and nature of the enterprise like microenterprise, agro-enterprise, etc. Nepalese SMEs feel that the private sector people do not share the knowledge, ideas and technical know-how among each other due to the fear of competition and the chance of their business being hampered (Shrestha, 2011).

5.5.2 Operational Difficulties of SMEs Access to finance is one of the major problems that SMEs face. Even if they get loans, they need to pay high-interest rates as these entrepreneurs have limited access to finance. Inadequate infrastructure to SMEs like transport, electricity and skill manpower have affected their sustainability and productive capacity. Access to the market is another major concern for SMEs products in the competitive markets which has been aggravated due to lack of market network/distribution, market survey, low volume of the products, weak branding and weak support from the government agencies.

The bureaucratic hurdles in the case of SMEs promotion still exist. A lot of coordination is required when it comes to the facilitation of SME business in Nepal through various government agencies as there involve complex procedures. Not only that, SMEs lack of technical and professional skills such as experience, exposure, skilled manpower, IT skills have hampered them for efficiently operating their businesses.

6.0 CONCLUSION The overall economic development of Nepal is not satisfactory mainly due to lack of investment climate. Nepal's private sector faces various hurdles compared to other countries and the facilitation/support from the authorized government bodies seem utterly lacking as per the literature and consultation with many business sector people engaged in small, medium and large enterprises.

Poor infrastructure is a key problem in Nepal to boost private sector development and investment.

This has been hampered at a greater length due to frequent changes in the political sector and bureaucracy. There is sufficient budget for spending on airport upgrade, roads and improving IT infrastructure but the lacking side is to manage them with appropriate policy. Therefore, stability in government and improving the capacity of bureaucrats through training, orientation and engaging them into consultations would help improving the country.

Implementation of policies and laws is a major hurdle. There are good provisions in the laws/acts, but implementation is found very weak. Therefore, coordination between ministries and effective institutional framework is critical sound investment (Gwartney, Holcombe and Lawson, 2006). Implementation of laws/policies can only support the private sector and give a sense of security and confidence to do businesses (Basnett et al., 2014).

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Private Equity (PE), as an organized institutional investment vehicle, is not recognized under the legal framework of Nepal. Access to finance is a problem for Nepalese entrepreneurs.

Even the budding entrepreneurs with great ideas are not allowed to get loans from the bank. The concept of equity financing and venture capital are yet to be materialized for which the government and interested players should work effectively to boost entrepreneurship development. Amendment in the proposed Foreign Investment and Technology Transfer Act (FITTA) is critical as the current provisions gives discretionary power to the government officials for entry and exit of the investors.

This provision may lead to discourage investors and won't start business which will send another wrong message to potential investors. It further invites unhealthy environment for the investors. As the implementation of laws is very much lacking, inter-ministerial coordination is urgently needed to be set up jointly as per the circular of the Chief Secretary from the Office of the Prime Minister and Council of Ministers.

We argue that building a greater Lumbini –– Buddha circuit within Nepal and covering India, Bhutan, Sri Lanka and China would attract a substantial investment for infrastructure and boost the tourism sector.

REFERENCES Adhikari, R. (2012). “Foreign Direct Investment in Nepal - Current Status, Prospects and Challenges.” Working Paper No. 01/13. SAWTEE, Kathmandu.

Alesina, Alberto, Sule Ozler, Nouriel Roubini, and Phillip Swagel (1996). “Political instability and economic growth.” Journal of Economic Growth, 1(2): 189-211.

Basnett, Y. et al. (2014). Structural Economic Transformation in Nepal. Nepal.

Beck, T. and Demirguc-Kunt, A. (2006). “Small and medium-size enterprises: Access to finance as a growth constraint.” Journal of Banking and Finance, 30(11), pp. 2931–2943.

Bettcher, K. E., Herzberg, B. and Nadgrodkiewicz, A. (2015). “Public-Private Dialogue: The Key to Good Governance and Development.” Washington: Center for International Private Enterprise.

Canning, D. and Bennathan, E. (2000). “The Social Rate of Return on Infrastructure Investments.”

World Bank Policy Research Working Paper, 44(4), pp. 348–361. doi: 10.1596/1813-94502390.

Dibrova, A. (2015). “Business Angel Investments: Risks and Opportunities.” Procedia - Social and Behavioral Sciences, pp. 280–289. doi: 10.1016/j.sbspro.2015.10.097.

Francois, Joseph; Manchin, Miriam; Norberg, Hanna; Pindyuk, Olga; Tomberger, P. (2015).

“Reducing Transatlantic Barriers to Trade and Investment.” Working Paper No. 1503. Austria.

Available at: www.econstor.eu.

Gabi G. Afram and Angelica Salvi Del Pero (2012). “Nepal's Investment Climate.” The World Bank, Washington D.C. Gwartney, J. D., Holcombe, R. G. and Lawson, R. A. (2006). “Institutions and the Impact of Investment on Growth.” Kyklos. Wiley Online Library, 59(2), pp. 255–273.

International Finance Corporation (2014). Investing in The Buddhist Circuit. India.

Malesky, E. (2007). “Provincial Governance and Foreign Direct Investment in Vietnam.” Saigon Economic Times, pp. 1–17.

Ministry of Finance (2015) Economic Survey, Ministry of Finance, Government of Nepal. Nepal, G. of (2017) Economic Survey. Kathmandu.

Paudel, R. C. (2014). “Economic Growth in Developing Countries: Is Landlockedness Destiny?”

Economic Papers: A journal of applied economics and policy. Wiley Online Library, 33(4), pp.

339–361.

Sahoo, P. (2006). “Foreign Direct Investment in South Asia : Policy , Trends , Impact and Determinants.” South Asia, (56), pp. 1–76.

Shelby D. Hunt, (2007). “Economic growth: should policy focus on investment or dynamic competition?" European Business Review, Vol. 19 Issue: 4, pp.274-291.

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Shrestha, M. B. and Chaudhary, S. K. (2013). The Economic Cost of General Strikes in Nepal, NRB Working Paper. NRB Working Paper No 20. Kathmandu.

Shrestha, R. (2011). ‘Input Problems in SMEs: Policy Issues and Challenges’.

Shrestha Ashish (2013). Stakeholder Perception Survey. Kathmandu: The World Bank Group.

Subedi, S. P. (2013). “India’s New Bilateral Investment Promotion and Protection Treaty with Nepal: A New Trend in State Practice.” Foreign Investment Law Journal, 28(2), pp. 384–404.

UNCTAD (2017). World Investment Report 2017 - Investment and the Digital Economy. Geneva.

WEF (2016). The Global Competitiveness Report 2016–2017, World Economic Forum. Geneva: World Economic Forum.

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Millennials Age Group and Income Levels among Domestic Tourists in Tanzania Kezia Herman Mkwizu & Rogers Matama

About the Authors Kezia Herman Mkwizu is a Ph.D. candidate at the Open University of Tanzania. P.O Box 23409, Tanzania. Email: kmkwizu@hotmail.com Co-Author Dr. Rogers Matama is a Senior Lecturer at Makerere University Business School, P.O Box 1337, Tanzania. Email: luckyfb@gmail.com

ABSTRACT The aim of this paper is to analyze millennials age group and income levels among domestic tourists in Tanzania. This study analyzes the relationship between millennials age group and income levels among domestic tourists. Quantitative design with survey questionnaires was used to obtain data from a sample size of 210 respondents in Mikumi and Kitulo National Parks in Southern Tanzania. Results revealed that the relationship between millennials age group and income levels among domestic tourists is statistically significant (p = 0.000). This study adds knowledge of statistically significant relationship between millennials age group and income levels among domestic tourists who visit Mikumi and Kitulo National Parks in Tanzania.

Keyword: millennials age group, income levels, domestic tourists JEL Code: [M39] Mkwizu, K. and Matama, R. (2017). “Millennials age group and income levels among domestic tourists.” Journal of Research and Methodology in Social Science, Vol., 1, No. 1: pp. 48 – 54. (Jan – Apr 2016); ISSN: 2415-0371.

1.0 INTRODUCTION Millennials are those born between 1980 and 2000s in countries such as Brazil, India and the USA (Hole, Zhong, & Schwartz, 2010). Millennials can also be those who are born in 1979 to 2000 (Garikapati, Pendyala, Morris, Mokhtarian, & McDonald, 2016). Various studies have researched millennials on attitudes, training, misperception, tourism growth, advanced technologies, activity patterns, time use, gender, social transformation, travel, and tourism planning (Morrissey, 2011; Langan, 2012; Zopiatis, Karambia-Karadis, & Varnavas, 2012; Singapore Tourism Board and 48

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Company, & Visa Worldwide, 2013; O’Connell, 2015; Yusop, Zin, Kurniawan, & Girinsah, 2015; Ferguson, 2016; Arcinue & Grata, 2016; Garikapati et al., 2016; Myers, 2016; Mzembi, 2017).

Africa business and development are evident in Tourism. Although there is research on millennials in other countries, there is limited knowledge about millennials in Tanzania.

More knowledge about millennials is crucial for the tourism sector since these are also consumers of tourism products such as visits to national parks. Singapore Tourism Board et al.

(2013) mentioned that millennials provide opportunities for the travel industry since they are the drivers of consumption and tourism growth. Bright, Vanneste and Rompaey (2014) did research in tourism with the focus on income distribution in terms of accommodation sector around Kibale National Park in Western Uganda. Findings showed that tourism is the main source of income for over 80% of households (Bright et al., 2014). This study is also in tourism but with interest on income levels of domestic tourists visiting Mikumi and Kitulo National Parks in Southern Tanzania.

In Tanzania, tourism is one of the major contributors to the gross domestic product (Mkwizu, 2016). According to the World Travel and Tourism Council (WTTC) the total travel and tourism contribution to Gross Domestic Product (GDP) in 2016 was USD 5.9 billion which is equivalent to 13.3% of GDP and this is expected to increase by 4.1% in 2017 (WTTC, 2017). The tourism industry in Tanzania had employment contribution of 1.3 million jobs in 2016, and this is forecast to rise by 4.6% in 2017 (WTTC, 2017). A recent report in 2016 on International Visitors’ Exit Survey Report recorded 1, 284, 279 tourists arrivals in Tanzania (National Bureau of Statistics & Bank of Tanzania, 2017). Domestic tourists contribute 40.5% of total visitors to national parks in Tanzania (Mkwizu, 2017). Despite the growth in tourism statistics and the contribution to the economy, little is known about millennials in the tourism industry in Tanzania. To fill the knowledge gap, this paper analyzes millennials age group and income levels among domestic tourists in Tanzania. The specific objective is to analyze the relationship between millennials age group and income levels among domestic tourists.

2.0 LITERATURE REVIEW 2.1 Theoretical framework and hypothesis development The Resource Based View theory developed by Barney (1991) is used in this study to guide the analysis of millennials age group and income levels among domestic tourists. The Resource Based View (RBV) theory assumes that firms have competitive advantage due to available resources (Barney, 1991). Other studies (Ngoma, Abaho, & Nkambwe, 2015; Matama, 2016; Elly, 2016; Mkwizu, Wilbard, Mbilinyi, & Maliva, 2017) have applied RBV theory in research. For instance, Ngoma et al. (2015) used RBV theory to guide in the investigation of the role of resources in the internalization of Small and Medium Enterprises (SMEs). Matama (2016) used RBV theory in analyzing small business and education levels. Elly (2016) also used the RBV theory and was keen to determine the adoption of standards and certification among Tanzania agribusiness firms.

Mkwizu et al. (2017) adopted the RBV theory to analyze factors that influence convenience shopping of industrial products.

More research on millennials reveal that tourism trends for millennials in Poland are similar to those of other millennials around the world in terms of preferences and behaviour (KowalczykAniol, 2012). Although the RBV theory is concerned with how firms achieve a competitive advantage with available resources, this study uses the article by Kowalczyk-Aniol (2012) to argue that millennials are “a group” and similar to “firms”. Therefore this link makes the RBV theory applicable for this study. By adopting the RBV theory, this study analyzes how significant the relationship between millennials age group and income levels is among domestic tourists. While RBV theory assumes how firms achieve advantages with available resources, this study assumes individuals who are millennials achieve advantages in relation to income as a resource in visiting national parks.

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Therefore, the use of individuals who are millennials in this study as opposed to firms contextualizes RBV theory from a tourism perspective. The hypothesis developed in this study argues that there is a statistically significant relationship between millennials age group and income levels among domestic tourists.

2.2 Empirical Literature Review In recent studies, millennials are known as “go-nowhere” (Buchholz & Buchholz, 2012). Other researchers were keen to study millennials in the USA by reviewing their relationships and performance in organizations (Myers & Sadaghiani, 2010; White, 2011). Myers and Sadaghiani (2010) concluded that there is a positive relationship between leadership socialization and altruistic leadership values as well as extrinsic values. While Myers and Sadaghiani (2010) were interested on millennials in terms of organizational relationship and performance, Langan (2012) concentrated on research about training for millennials. Langan (2012) did a study in the USA and looked at training of millennials students using a sample chat reference approach, and findings indicated that the trainers need to consider millennials’ attitudes in the training sessions. Additional findings reveal that the training of millennials should be based on theory to allow students to learn (Langan, 2012).

Another study in tourism conducted in Poland noted that there are similarities in millennials world wide in relation to their preferences and behaviour (Kowalczyk-Aniol, 2012). The findings indicated that the preferences by millennials in Poland were comfort and entertainment while their behaviour involved internet couch surfing portals (Kowalczyk-Aniol, 2012). Another empirical study concentrated on millennials and technology (Yusop et al., 2015). Furthermore Yusop et al.

(2015) mentioned that millennials of Malaysia and Indonesia use 96% of search engine to plan their travels. Similarly (Mzembi, 2017) conducted a study in Zimbabwe by applying the exploratory approach and found that millennials make up 54.7% of the workforce.

A recent study in tourism by Ramsay et al. (2017) was carried out in Canada. Ramsay et al.

(2017) examined the barriers for millennials to visit Rouge Urban National Park in Toronto, Canada. The study used a quantitative survey approach of 280 millennials and found that distance, transportation and awareness were the three barriers for millennials to visit Rouge Urban National Park (Ramsay et al., 2017). Other findings using frequency, cross-tabulation and Chi-square test analyses of the sampled respondents in Canada showed that 38.6% of millennials earned income below USD 49,999, and the relationship between barriers and millennials willing to visit Rouge Urban National Park was not significant (Ramsay et al., 2017). While barriers to visit Rouge Urban National Park were revealed by the respondents, the study also found that there were motivations to visit urban national parks expressed by millennials which were appreciation of nature, animals and scenery (Ramsay et al., 2017). Therefore it is clear the study by Ramsay et al. (2017) focused on barriers and motivations by millennials to visit national parks.

The mentioned studies (Myers & Sadaghiani, 2010; Buchholz & Buchholz, 2012; Langan, 2012; Kowalczyk-Aniol, 2012; Yusop et al., 2015; Mzembi, 2017; Ramsay et al., 2017) did not focus on the relationship between millennials age group and income. Most of the research concentrated on millennials in organizations and even those studies that have linked millennials with tourism, it was limited to tourism in terms of the workforce, motivations and barriers. Age and income were used as demographics characteristics only. There are also scant studies on millennials in Tanzania. Hence this paper analyzes millennials age group and income levels among domestic tourists in Tanzania.

The conceptual framework for this study is guided by RBV theory and empirical literature review (Figure 1). The independent variable is millennials age group and the dependent variable is income levels among domestic tourists.

3.0 DATA & METHODOLOGY The research design for this paper is quantitative for purposes of testing the hypothesis which stated that there is a statistically significant relationship between millennials age group and income levels 50

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among domestic tourists. The respondents in this study are domestic tourists visiting Mikumi and Kitulo National Parks in Southern Tanzania. Mikumi National Park is located in Morogoro region while Kitulo National Park is in Mbeya region. The sources of data for this study were primary and secondary. The primary data was sourced using survey questionnaires that were distributed to 210 domestic tourists during the months of December 2014 and January 2015. The secondary data was to gather literature reviewed for this study that was sourced using reports, conference proceedings and journals. The sampling technique deployed in this study is stratified random sampling to accommodate heterogeneous and cover the two different regions (Morogoro and Mbeya). The 210 questionnaires handed to respondents were collected with 10 defects and therefore this study used 200 as the sample size n = 200 for data analysis.

The variables for age group and income levels were adopted and customized from (Mungai, 2011; Mkwizu, 2017). In this study, millennials age group is those born between 1980 and 2000s and this is adopted from Hole et al. (2010). In this study the income levels are below Tanzania Shillings (TZS) 300,000 and above TZS 300,000 per month. For reliability, the Cronbach’s alpha value for age and income variables in this study shows (0.784) which is acceptable according to Field (2014). The collected nominal data which is discrete for the variables of age group and income levels in this study was analyzed using descriptive statistics, Chi-Square test and Phi and Cramer’s V test supported by SPSS Version 20.

4.0 FINDINGS & DISCUSSION The descriptive statistics for the basic profile of the sampled respondents shows that those of 35 years and below (90.5%), males (58.5%), earn monthly income of below and above TZS 300,000 (42.5%), and have a secondary education (64.5%). Further descriptive statistics results for income levels among domestic tourists show that the 42.5% is distributed as follows for the 2 levels of below TZS 300,000 (21.5%), and above TZS 300,000 (21%). This suggests that those of 35 years and below are males, earn income and have a secondary education.

Table 1 shows Chi-Square statistics findings for millennials age group and income levels among domestic tourists which is significant at (p=.000). This indicates that there is a statistically significant relationship between millennials age group and income levels among domestic tourists.

Therefore the hypothesis is accepted. Furthermore, the statistical significant result means that the income levels among domestic tourists is not independent from millennials age group but it is dependent on millennials age group.

Table 1: Chi-Square Test: Millennials age group and income levels among domestic tourists Value Asymp. Sig. (2-sided) Pearson Chi-Square 134.479a .000 Likelihood Ratio 152.924 .000 Source: Field Data (2017) This study deployed further data analysis using Phi and Cramer’s V in order to test the strength of the relationship between millennials age group and income levels among domestic tourists. The findings in Table 2 show the Phi value (.820) and Cramer’s V value (.580) with significant value (p=.000). The strength rate of .10 to .29 is regarded as small to moderate effect between two variables (Pallant, 2011). The result of this study show that this relationship between millennials age group and income levels among domestic tourists is above small to moderate effect and significant. This suggests that the effect of millennials age group is above small to moderate on income levels among domestic tourists.

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Table 2: Phi and Cramer’s V analysis: Millennials age group and income levels among domestic tourists Variable Value Asymp. Sig. (2-sided) Millennials Age Group Phi 0.820 0.000 Cramer’s V 0.580 0.000 Source: Field Data (2017).

These results in Table 1 and Table 2 show that there is a statistically significant relationship between millennials age group and income levels among domestic tourists, and above small to moderate effect. This statistical significance is explained by millennials who are mostly 35 years and below, earn income that enables them to visit national parks, and in this particular study the millennials visited Mikumi and Kitulo National Parks. This finding differs from Buchholz and Buchholz (2012) that millennials “go-nowhere”. In addition, the statistically significant result of this study confirms the application of RBV theory in the context of Tanzania by showing that millennials who earn income visit national parks and this is positive for tourism growth. The reason for the variations between the study by Buchholz and Buchholz (2012) and this study is that the research was conducted in different settings. The findings of this study are also in line with Singapore Tourism Board et al. (2013) that millennials can provide opportunity for the travel industry.

5.0 CONCLUSION The main objective of this paper was on analysis of millennials age group and income levels among domestic tourists in Tanzania. The specific objective was to analyze the relationship between millennials age group and income levels among domestic tourists. Results indicated that there is a statistically significant relationship between millennials age group and income levels among domestic tourists. In addition, the strength of the relationship between millennials age group and income levels among domestic tourists is above small to moderate effect which means that millennials age group has effect on income levels among domestic tourists. The outcome of this study has factual findings regarding statistical significant relationship of millennials age group and income as a resource among domestic tourists. Findings differ from a previous study stating that millennials go nowhere while this study implies that millennials who earn income go places and in this particular study the visits were to Mikumi and Kitulo National Parks. Future researchers can explore similar relationships in other countries.

REFERENCES Arcinue, P.C., & Grata, A. (2016). The narrative of Millennials and their platform for social transformation. Proceedings of the International Conference on Education and Social Integration ’16. Ho Chi Minh City, Vietnam. http://khxhnv.tdtu.edu.vn/en/attachments/article/191/THE%20NARRATIVES%20OF%20THE %20MILLENNIALS%20AND%20THEIR%20PLATFORM%20FOR%20SOCIAL%20TRAN SFORMAT~.pdf Barney, J.B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17 (1), 99-120.

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http://www.nytimes.com/2012/03/11/opinion/sunday/the-go-nowhere-generation.html Elly, T. (2016). Adoption of standards and certification among Tanzanian agribusiness firms for export: Demystifying gaps in internationalization theory. Business Management Review, 19 (1), 79-104.

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Hole, D., Zhong, L., & Schwartz, J. (2010). Talking about whose generation? Why western generational models can’t account for a global workforce. https://dupress.deloitte.com/dup-usen/deloitte-review/issue-6/talking-about-whose-generation-ages-and-attitudes-among-theglobal-workforce.html Kowalczyk-Aniol, J. (2012). Tourism trends among generation Y in Poland. http://yadda.icm.edu.pl/yadda/element/bwmeta1.element.hdl_11089_11463/c/v10106-0120007-y.pdf Langan, K. (2012). Training Millennials: A practical and theoretical approach. http://scholarworks.wmich.edu/cgi/viewcontent.cgi?article=1030&content =library_pubs Matama, R. (2016). Analysis of educational levels and small business financial worth in Uganda.

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Proceedings of the 25th Annual ATLAS Conference, ’16. Canterbury, UK. http://www.atlaseuro.org/LinkClick.aspx?fileticket=q6iiKmLMg8Q%3d&tabid=248&language =en-US Mkwizu, K.H. (2017). Influence of Media and Income on Domestic Tourists visiting Udzungwa National Park, Tanzania. Proceedings of the 10th ATLAS Africa Conference’17. Eldoret, Kenya. http://www.atlas-euro.org/LinkClick.aspx?fileticket=B43IBWOAdc%3d&tabid=261&language=en-US Mkwizu, K.H., Wilbard, J.G., Mbilinyi, D.B., and Maliva, N.S. (2017). Factors influencing conusmers’ convenience shopping of industrial products: A study of Kinondoni District.

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Mzembi, W. (2017). Using a Market Share Approach towards Tourism Planning for Millennial Travellers: Implications for Evidence Based Practice. The International Journal of Business & Management, 5(2), 199-205.

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http://eunacal.org/metodakerkimi/wp‐ content/uploads/spss/SPSS_Survival_Manual_4th_Edition.pdf National Bureau of Statistics., & Bank of Tanzania. (2017). Tanzania Tourism Sector Survey: Tanzania Visitors’ Exist Survey Report. www.nbs.go.tz/nbs/.../The2016_International%20_Visitors'_Exit_Survey_Report.pdf Ngoma, M., Abaho, E., & Nkambwe, I. (2015). The role of resources in the internationalization of Small and Medium Enterprises (SMEs). Business Management Review, 18(1), 1-23.

O’Connell, C. (2015). How millennials define frugality differently. Retrieved from http://www.money.usnews.com/money/the-frugal-shopper/2015/06/05/how-millennials-definefrugality-differently Ramsay, G., Dodds, R., Furtado, D., Mykhayletska, Y., Kirichenko, A., & Majedian, M. (2017).

The barriers to millennials visiting Rouge Urban National Park. Sustainability, (9), 1-14.

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Revised Human Development Index Louangrath, P.I.

About the author Louangrath, P.I. is an Assistant Professor in Business Administration at Bangkok University, Bangkok, Thailand. He could be reached by email at: Lecturepedia@gmail.com

ABSTRACT This paper is a case study of HDI where the ASEAN countries were used as the subject of analysis and the OECD countries were used as a comparison group. We propose to revise the current human development index. HDI employs three components to measure human development, namely life expectancy, education and the standard of living. Each component is accorded equal weight of 0.33.

In light of the current UNDP’s sustainable development goals (SDG) detailing 17 factors, HDI becomes out of date and in need of revision. We mapped the current HDI to SDG and found that social governance emerges as the fourth factor in assessing human development. The data used consists of the HDI and SGD reading of 35 countries from the OECD and 10 ASEAN countries.

The 17 factors of SDG were scored as binary data (1,0) in order to obtain the probability of the factors fallen into each category of development component. We found that our recalculation of HDI components and their weight to be: life expectancy (0.23), literacy (0.23), per capita GDP (0.25), and social governance (0.29). This finding is an evidence to support the attempt to improve existing literature in HDI studies.

Keywords: Development, HDI, Social governance, sustainable development JEL Code:

B12, B13, C10, F63

CITATION: Louangrath, P.I. (2017). “Revised Human Development Index.” Inter. J. Res. Methodol. Soc. Sci., Vol., 3, No. 2: pp. 55–71. (Oct. – Dec. 2017); ISSN: 2415-0371.

1.0 INTRODUCTION As a case study, two data sets are presented for analysis, namely HDI data of the ASEAN and OECD countries. The ASEAN data set on HDI was used as the main data set for in-sample hypothesis testing. The OECD data set was used as a comparison group. After having examined the HDI data for both groups, we proposed to re-model HDI in two ways: (i) remodeling HDI under logistic growth function in order for the model to be more reflective of development as a growth process, and (ii) modifying the HDI calculation by incorporating sustainability factors; this modification resulted in the reweighing of the HDI components.

Human Development Index (HDI) is used as the indication for human development.

Although commonly used as an indicator for development (Noorbakhsh, 1998), HDI does not completely reflect the current requirement for human development. For instance, the current 55

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practice in assessing human development takes into consideration the idea of sustainability. This is a gap in HDI measurement as evidence by the literature calling for alternative indices: Borda Composite index (Dasgupta and Weale, 1992), Modified HDI (Noorbakhsh, 1996) and Principal Component Analysis (Desai, 1991; and Srinivasan, 1994). Despite many proposed changes to the HDI formulation, the UNDP still use its three components of equal weight (life expectancy, education, and per capita GPD).

This paper addresses HDI problems by addressing HDI in a different context than those discussed by the literature. We urge that HDI be read in the context of the current UNDP’s sustainable development goals (SDG). We propose to reclassify human development into two main categories of achievement: individual achievement, (ii) macroeconomic structure conducive to development, and (iii) social governance. The current HDI represents the individual achievement; SDG contributes two additional macro-level factors, namely economy and social governance.

2.0 LITERATURE REVIEW Human Development Index (HDI) had long been criticized as inadequate indicator for human development. The problem of HDI comes from poor data, wrong indicators, wrong specifications, and redundancy (Kelly, 1991). The problem of poor data may result from data unreliability (Srinivasan, 1994, and Ogwang, 1994) and measurement errors (Aturupane et al., 1994).

The problem of wrong indicators may come from the fact that HDI has only three components as indicators for human development, namely life expectancy, education and per capita income. Other factors that are critical to human development are left out. These factors include (i) civil and political liberties (Hopkins, 1991, Dasgupta, 1993, Atkinson et al., 1997, and Dar, 2004), (ii) inequality (Chowdhury, 1991, Hicks, 1997, and Chatterjee, 2005), (iii) the environment (Paul, 1996, Atkinson et al., 1997, Sager and Najam, 1998, and Dar, 2004), and (iv) education (Kelley 1991).

The problem of wrong specification may have come from arbitrariness (Chowdhury, 1991; Hopkins, 1991; Kelley, 1991; Ogwang, 1994; and Sager and Najam 1998), and unfixed goal or moving goal post (Kelley, 1991; Rao, 1991; Tabold-Nübler, 1991; Dasgupta, 1993; McGillivray and White, 1993; Aturupane et al., 1994; Doessel and Gounder, 1994; UNDP, 1994; Paul, 1996; Noorbakhsh, 1998a). The use of equal weights for the three components of HDI also had been criticized as a wrong specification.

This paper addresses these problems by using SDG as additional factors in the measurement of human development. The current HDI emphasizes individual achievement in development without adequate attention paid to the economic and social infrastructures that also contributed to the growth and development of the people. This paper proposes an additional class of indicators, namely social governance. Under SDG, social governance factors include: reduced inequalities, sustainable cities and communities, responsible consumption and production, climate action, life below water, life on land, peace, justice and strong institutions, and partnerships for the goals. By adding these two classes of indicators: macroeconomic and social governance to the human development equation, the revised HDI would be more inclusive and complete.

2.1 HDI components and their weight HDI is an index calculation. Index is the means to quantify trend (Kennedy and Keeping, 1962). In general, an index uses the value of a base-year to track the changes over time. However, in HDI calculation, instead of referencing the current observation to the past value fixed at a referenced period, the target value is used. Thus, HDI is a measure of the present value referenced to an ideal condition by using three indicating values: maximum, minimum and observed value at a given period. The basis for the HDI calculation comes from an index formula:

X index 

X a ba

(1)

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where X = variable whose index is to be determined, a = minimum value and b = maximum value.

This method allows the result to be 0  X  1 . HDI components are uniformly weighed at 0.33 among life expectancy, education and per capita GDP. The use of equal weight had been criticized as illogical because the three components of HDI may exert different effect intensity on the over all development (Kelly, 1991). The HDI general equation is written as: HDI  0.33( LEI  EI  GDPI )

(2)

Life expectancy index is given by: LEI  ( LE  25) / (85  25) where LE = life expectancy at birth.

The education index is given by: EI  0.66 ALI  0.33GEI where ALI is the adult literacy rate determined by ALI  ( ALI  0) / (100  0) and GEI is the gross enrollment index determine by GEI  (CGER  0) / (100  0) . The GDP component of HDI is obtained through:

 





GDP  log GDPpc  log 100    log(40,000)  log(100) 

Prior literature claimed that there had been data error in HDI. As the result, HDI calculation and classification of countries had been faulty; researchers had recalculated and reclassified countries for their development indication (Wolff et al., 2011). The UNDP responded to criticism of the interpretation and use of its HDI classification by reclassifying the level of development labels as: low, medium, and high (Wolf et al., 2011: 843-870). However, this reclassification does not solve the problem since the formula for calculating HDI did not change. Other suggestion includes the argument that the measurement should focus on the development of the individual instead of macro-factor, such as the GDP (Monni and Speventa, 2013: 227-231). This suggestion is also faulty because the development of the individual cannot be divorced from the macro-environment. An individual is a member of a society; changes in that society affects the individual’s development.

Therefore, a suggestion that HDI should focus on individual development only is faulty.

Despite the correction attempt, the HDI equation remains the same, i.e. consisting of three components of equal weight. Thus, correction attempt had only been superficial. This paper attempts to expand this correction by adding social governance as an additional index component and redistributed the weight for each component.

2.2 UNDP’s sustainable development goals (SDG) Sustainable development means that economic growth must involve “maximizing the net benefits of economic development, subject to maintaining the services and quality of natural resources over time” (Pearce and Turner 1990:24). Writers disagree on what should be included in sustainable development (Redclift, 1993; Sachs, 1999:25; Satterthwaite, 1996:32). The term may be ambiguous (Redclift 1992; Daly 1996; Payne and Raiborn 2001). This ambiguity is reduced into two questions “What should be sustained?” and “What should be developed?” (Kates et al. 2008). Sustainability includes economic prosperity, social equity and environmental protection. Under sustainability standard, the current HDI becomes inadequate because life expectancy, education and income look at only individual achievements. Social factors are left out. Under SDG, these social factors may be categorized into a separate category called “social governance.” In Table 1, social governance is identified with “1” in column 4.

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Table 1: Mapping HDI to SDG factors

*Categories: 1 = life expectancy; 2 = literacy; 3 = per capita GDP; and 4 =social governance.

Social governance factors are identified as: affordable and clean energy; reduced inequalities; sustainable cities and communities; responsible; consumption and production; climate action; life below water; life on land; peace, justice and strong institutions, and partnerships for the goals. These items must be separated from the original three factors used by the UNDP: life expectance, literacy, and per capita income. The proposed revised HDI now has four components including social governance factor. Using the Laplace Rule of Success, the probability of success is calculated by: p  ( s  1) / ( n  2) where each factor that matches its corresponding category is counted as a “success” and scored as 1, else 0. The probability for each factor in Table 1 is calculated by: w  pi /  pi or life expectancy (0.20), literacy (0.20), per capita GDP (0.27), and social governance (0.33). The DeMoivre-Laplace Theorem was used to obtain the weight probability for each factor in the following steps: (i) find the standard score Z, (ii) obtain the probability F(Z) for each factor, and (iii) multiply F(Z) by the weighted probability (w) where:  X  np  Zi  lim  n  nk  npq 

(3)

where i are the factors: life expectance, literacy, per capita GDP, and social governance. The factor weight is obtained by:

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WF ( z ) 

F ( zi )  F ( zi )

(4)

Using discrete probability to assign the new weight to each component, weighted factors are: life expectancy (0.23), literacy (0.23), per capita GDP (0.25), and social governance (0.29).

3.0 DATA We tracked the HDI performance along with its components of two groups of countries over a period of 10 years. Secondary data were obtained from Asian Development Bank, UNDP and IMF websites. Although these international organizations are considered trustworthy, some countries have missing data. For instance, literacy rates for many OECD countries are not reported. Thus, when analyzing the OECD countries, the missing literacy rate had been substituted with the group mean. There were 13 OECD countries reported their literacy rates; the mean value for the group is:     97.13  2.06 . The missing data was replaced with   97.13 . Countries not reporting their literacy rate are considered advanced in economic development; therefore, by replacing the missing data with the group mean is reasonable option. For the ASEAN countries, all HDI and its components were available.

Linear regression was used to verify the relationship between HDI and its components. One basic requirement of linear regression is that the residuals must be normally distributed (Stevens, 2009; Tabachnick and Fidell, 2006). Non-normal distributions exists when these data are positively or negatively skewed, contain large kurtosis, or have extreme outliers can distort the obtained significance levels of the analysis, resulting in the standard errors becoming biased (Osborne and Waters, 2002). Kurtosis is the measure of lightness or heaviness of the tail of the distribution curve.

A data with heavy tail or high kurtosis contains many outliers and vice versa for lighter tail (Joanes and Gills, 1998). Skewness is the measure of the lack of symmetry (NIST, 2013). A normally distributed data has zero skew. This paper tested the data for skewness and kurtosis because normality is a requirement for linear regression modeling.

Skewness is the measure of the degree of asymmetry of a distribution (Abramowitz and Stegun, 1972; Kenny and Keeping, 1962; and Press et al., 1992). This measure is given by:

n  Xi  X  Skew   ( n  1)( n  2)  S 

3

(5)

Kurtosis is the measure of fourth central moment of the data distribution (Moors, 1986; Press et al., 1992; Ruppert, 1987; and Westfall, 2014); it is given by:

 n( n  1)  Xi  X KURT     ( n  1)( n  2)( n  3)  S 

  

4

b( n  1)2   ( n  2)( n  3) 

(6)

Skewness and kurtosis help to put the data distribution into perspective. The ASEAN country has positive skew for HDI, it means that many countries are lagging behind the expected HDI target. In contrast, OECD countries have negative skew for HDI, it means that OCED countries had predominantly achieving its HDI goal.

For kurtosis analysis, positive kurtosis means that the data distribution has sharper peak (leptokurtic) and higher tails. For HDI analysis, positive kurtosis means that the countries are welldeveloped or have higher level of HDI. This is true for the OECD countries. In contrast, the ASEAN countries have negative kurtosis or platykurtic signifying a flattened shape of the data distribution.

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4.0 METHODOLOGY For each component of the HDI of the OECD and ASEAN, we subjected it to statistical significance testing by using Pearson 2x2 table (Pearson, 1904: 21). The rationale for this test is to verify the significance of the contribution of each component to the HDI measure.

4.1 Statistical test of HDI component in 2x2 table According to UNESCO’s literacy rate report, the global mean is 86.10. This number is used as the threshold value. For remaining two components, life expectancy and GDP, we use the group’s average as the threshold. The 2x2 table is used for frequency analysis and tested under chi squared for significance level (Kanji, 2006:85; and Pearson, 1904:21). In this case, we are counting the frequency of corresponding two factors using the mean value as the threshold to categorize success and failure. The chi square test for 2x2 table is given by:

2 

( n  1)( ad  bc )2 ( a  b)( a  c )(b  d )( c  d )

(7)

Among the 10 countries in ASEAN, there are two countries that show the correspondence of high per capita income to longevity; no country shows the correspondence of short life expectancy with high per capita GDP. There were three countries that have low per capita income, but high life expectancy. As developing economies, the ASEAN countries have predominantly low per capita income and have shorter life expectancy. Five countries fit this low-low description for life expectancy and per capita income.

Table. 1: Chi Square test under 2 x 2 table for life expectancy and per capita GDP High per capita GDP Low per capita GDP  2 (obs )  0.36

Long life expectancy Short life expectancy

2 0

3 5

In the comparison of per capita income to literacy rate, we found that only two countries with high per capita GDP have a corresponding high rate of literacy. No country with high income has a corresponding low literacy. In the low-low matching, there are two countries that have low per capita GDP and low literacy rate.

Table. 2: Chi Square test under 2 x 2 table for per capita GDP and life expectancy High per capita GDP Low per capita GDP  2 (obs )  0.56

Literacy Illiteracy

2 0

6 2

The observed chi square for ASEAN literacy rate and per capita GDP is  2  0.56 compared to the theoretical value of  2  3.80 . There is no significant correlation between adult literacy and per capita GDP in the ASEAN countries. The argument that high literacy rate contributes to higher level of per capita GDP is not true in the ASEAN countries. The effect may be secondary, but not direct.

There are five countries in the ASEAN that shows long life expectancy and high literacy rate. Three countries show long life expectancy with low literacy rate. The result of the chi square test from the 2x2 table shows that there is no statistical significance in the incidence of literacy and life expectancy:  2 (obs )  0.00

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Table. 3: Chi Square test under 2 x 2 table for life expectancy and literacy Long life expectancy Short life expectancy  2 (obs )  0.00

Literacy Illiteracy

5 3

0 0

4.2 Social governance factor under SDG The UNDP listed 17 factors for sustainable development. In this paper, we propose to incorporate these factors into the HDI equation. The current HDI has already incorporate 8 of 17 sustainability factors. We proposed to treat the remaining nine factors by using discrete probability as adjusting coefficient. Using the Laplace rule of success, the 8 factors that are now in the current HDI has a probability of success by: p  ( s  1) / (n  2) where n  17 and s  7 ; the probability of success p  0.47 is and failure q  0.53 . In the modification in section 4.3, we will incorporate p and q into the logistic function.

4.3 Revised development index model The current HDI measurement is an index. As an index, it allows us to read the developmental level as a point in space. It could not allow is to forecast; in order to forecast, we need series of observations from past years and fit the data into a prediction model. In this paper, we proposed to use 10 years of prior HDI data and fit the data into the logistic function. We opt for a logistic function because development should be seen as growth and, thus, must obey growth path as provided by a sigmoid function. This approach is consistent with the tracking of the index over time and the value moves asymptotically to 1. For this reason, linear regression would not be an appropriate model. The general logistic function is given as:

Y

1

(8)

1  e( a  bX )

where the term a  bX is the linear equation for the HDI values for the country over a period of 10 years (see Table 10).

If equation (8) represents the growth function for the HDI series, we would adjust the proposed model by incorporated the remaining 9 factors that are absent from HDI calculation.

These 9 factors are: affordable and clean energy, reduced inequalities, sustainable cities and communities, responsible consumption and production, climate action, life below water, life on land, peace, justice and strong institutions, and partnerships for the goals.

5.0 FINDINGS AND DISCUSSION There are some differences in the development pattern between the ASEAN countries and the OECD. Whether this difference is a result of policy design or emphasis we could not speculate.

However, the difference between these two groups allows us to see where group country benefits most from development.

Table 4. Basic data testing of HDI variable components 2017 OECD Component Variables: HDI Skewness Kurtosis Skewness Life expectancy (1.02) (0.16) 0.54 Literacy rate (2.47) 5.44 (1.68) Per capita GDP 0.93 1.12 2.10 HDI (1.35) 2.05 0.45

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ASEAN Kurtosis 4.10 1.37 (0.13) (0.67)

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Table 4 shows the difference in developmental tendency between the ASEAN and the OECD. Under kurtosis analysis, ASEAN countries shows excess kurtosis in life expectancy ( Kurt  4.10 ) compared to the OECD with excess kurtosis in literacy rate ( Kurt  5.44 ). This difference in kurtosis indicates where the two groups benefited most from development. The overall data distribution for the OECD is beta as indicated by negative skewness. Beta distribution means that the longer tail of the distribution curve is dragging in the left quadrant; this signifies that the majority of the population has accumulated to the right of the curve, as indicated by higher developmental stage of the OECD countries. This fact is contrasted with the ASEAN’s skewness of 0.45 indicating that the majority of the data is located to the left of the curve and a small number of data is slanted to the right of the distribution curve. This positive skew indicates that the ASEAN countries are still improving.

We provide an overall picture of HDI for the OECD and ASEAN countries by testing the intra-group significance. This intra-group significance test allows us to see which countries are significantly low and high in each variable: life expectancy, literacy rate, per capita GDP and HDI. Table 5: HDI for OECD and ASEAN countries, 2017.

Country Life Adult Per capita Group Expectancy Literacy GDP

HDI

OECD ASEAN

0.89 0.71

79.11 72.04

97.13 91.94

38,171.60 11,709.20

Use OECD as the standard, by employing the Z equation to see difference between ASEAN and OECD, the significant difference between the OECD and ASEAN could be tested.

Table 6: OECD and ASEAN comparison Life Literacy OECD 79.11 98.78 S 2.62 91.94 72.04 1.30 ASEAN Z (2.70) (5.25) Z* 1.65 1.65 Conclude Significant Significant

GDP 38,171.60 11,709.20 21,741.66 (1.22) 1.65 Not significant

HDI 0.89 0.71 0.04 (4.08) 1.65 Significant

For the OECD countries, the significant high and low had been tested for intra-group studies. Among 35 countries in the OECD, four countries have significantly low life expectancy (Estonia, Hungary, Latvia and Slovakia Republic). There are three countries showing significantly low literacy rate in the group; these countries were Mexico, Portugal, and Turkey. For per capita income, one country has significantly high (Louxembourg). Finally, two countries show a significant low HDI (Mexico and Turkey). The actual values of life expectancy, per capita GDP and GDI appear in Appendix 1. Note that adult literacy rate is not available for the OECD countries.

Table 7: OECD intra-group significance test under standard score method; n  35 OECD Life Literacy Per capita HDI Country Expectancy Rate GDP 2017 1.18 0.62 0.32 Australia 0.91 * 0.13 0.45 0.32 Austria 0.53 0.20 0.15 0.32 Belgium 0.26 0.74 0.10 0.32 Canada 0.61 (0.91) (0.62) (1.13) Chile (0.12) (0.21) (0.90) 0.32 Czech Republic (0.69) 0.86 0.69 0.32 Denmark (0.12)

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(0.51) 0.79 (0.93) Estonia (1.99) 0.18 0.32 0.30 0.16 Finland 0.22 0.32 0.80 0.14 France 0.88 0.32 0.42 0.14 Germany (0.48) (0.83) 0.34 (0.93) Greece (1.16) 0.25 (1.17) Hungary (2.02) 0.77 0.32 1.14 0.84 Iceland 0.81 0.32 1.28 0.30 Ireland 0.27 0.32 0.04 0.76 Israël (0.01) 0.33 (0.35) 0.91 Italy 0.36 0.32 0.01 1.37 Japan 0.31 0.32 (0.42) 0.30 Korea (1.30) 0.86 (1.10) Latvia (1.88) 0.24 0.32 0.57 Luxembourg 3.04 (1.45) (1.39) Mexico (3.36) (2.85) 0.46 0.30 0.32 0.83 Netherlands 0.49 (0.09) 0.32 0.63 New Zealand 0.57 1.62 0.32 1.40 Norway (1.34) (1.17) 0.79 (0.73) Poland 0.07 (0.85) (1.01) Portugal (2.60) (1.00) (0.96) Slovak Republic 0.63 (1.64) (0.79) 0.06 Slovenia 0.71 (0.12) (0.53) (0.07) Spain (0.52) 0.80 0.62 0.58 Sweden 0.32 0.88 1.84 1.18 Switzerland 0.32 1.18 (1.25) Turkey (2.10) (2.90) (2.87) 0.26 United Kingdom 0.23 0.32 0.49 0.88 United States (0.46) 0.32 0.74 Mean 79.11 98.78 38,171.60 0.89 S 2.62 1.30 21,741.66 0.04 *Reported as Z  ( xi  x ) / S for year ending 2017; the theoretical value is Z *  1.65 . The observed values may be found in Index 1. **For OECD countries without literacy rate data, the group mean of 97.13 was used as a substitute.

In general, the standard score test for the ASEAN countries show that there is one country (Singapore) with significantly high life expectancy; two countries with significantly low literacy rate (Cambodia and Laos); one country (Singapore) has significantly high per capita GDP; and one country (Singapore) has significantly high HDI. Table 8: ASEAN intra-group significance test under standard score method;* n  10 ASEAN Life Literacy Per capita HDI Country: Expectancy Rate GDP 2017 0.96 1.08 Brunei 0.62 1.26 (0.98) (0.59) Cambodia (1.16) (2.05) (0.35) (0.44) Indonesia (0.15) 0.27 (1.20) (0.54) Laos (0.98) (1.67) 0.51 (0.05) Malaysia 0.65 0.37 (1.16) (0.58) Myanmar (1.22) 0.16 (0.30) (0.48) Philippines (0.21) 0.61 Singapore 0.68 1.92 2.46 1.74 Thailand 0.66 0.37 (0.33) 0.26

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Vietnam Mean S * Z  ( xi  x ) / S

0.21 0.36 (0.53) (0.20) 72.04 91.94 11,709.20 0.71 5.56 7.20 17,728.13 0.12 for year ending 2017; the theoretical value is Z *  1.65 .

The HDI intra-group analysis tells us that among the OECD countries, the dispersion is only 0.04. The small dispersion implies that there is a greater degree of uniformity among group members. In development analysis, this small dispersion measurement evidenced that the level of development the OECD members is quite uniform. In contrast, table 8 shows greater diversity of development among the ASEAN member countries. Where the standard deviation for the over all HDI in the OECD is 0.04, the ASEAN shows three times that much.

5.1 HDI modeling in OECD and ASEAN countries As a group, the HDI data for the OECD was subjected to multiple regression testing. The literacy rate was removed due to missing data. The regression of HDI against life expectancy and per capita GDP shows that HDI  0.80  0.27 X life  0.05 X gdp and ANOVA F test shows

F (34,34)  55.85 compared to the theoretical value of F *  1.85 . The coefficient of determination of R 2  0.7773 where R 2  1  ( SSE / SST ) .

Among the ASEAN countries, multiple regression of HDI against its three components: life expectancy, literacy and per capita income, shows that the relationship is Yhdi  2.83  0.58 X life  0.12 X lit  0.06 gdp . The significance of the model was tested under

ANOVA. The ANOVA F test shows F  386.20 compared to the theoretical value at (9,9) degrees of freedom F *  3.18 . Under the conventional model evaluation tool, HDI is a significant model.

The coefficient of determination is R 2  0.99 .

5.2 Revised HDI by incorporating social governance as the fourth component The current HDI index models development as a linear function. We argue that development is nonlinear. At some point development would starts to marginalize similar to the behavior of marginalization under utility function. Human development is akin to “growth.” As such, we proposed a sigmoid function as a model for human development. This proposed sigmoid function uses the HDI as the variable x in the sigmoid function:

Dˆ 

1

(9)

1  e x

where x  HDI * or revised HDI to accommodate sustainability factors. The modified HDI is obtained by: HDI *  HDI  1 X1   2 X 2  . The terms 1 and  2 are coefficient for macroeconomic conditions conducive to growth ( X1 ) and good governance factor ( X 2 ). Both X1 and X 2 are necessary for sustainability.

Since development is a continuous process with asymptotic effect when the development reaches a saturation point ( 0  x  1 ), the probability and distribution functions are given as: P( X ) 

e ( x  m )/ s

(10)

2 s 1  e ( x  m )/ s 





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D( X ) 

1

(11)

1  e ( x  m )/ s





where the mean:   m , variance: s 2  0.33 s 2 2 , skewness:  1  0 and kurtosis:  1  1.20 .

By tracking the HDI values for each country in the ASEAN over a period of 10 years, we are able to present the developmental pattern under the sustainable development index: Dˆ . With its corresponding PDF and CDF, we are able to assess each country’s human development under the sigmoid function. This finding is the first of its kind and we assert this is a contribution to the field.

Table 9. Sustainable HDI under Dˆ method for ASEAN in 2017 ASEAN HDI 2017 PDFDˆ CDFDˆ Dˆ Country: Brunei 0.865 0.41 0.98 0.85 Cambodia 0.563 0.41 1.76 0.36 Indonesia 0.689 0.41 1.86 0.59 Laos 0.586 0.41 1.84 0.40 Malaysia 0.789 0.41 1.41 0.76 Myanmar 0.556 0.41 1.74 0.34 Philippines 0.682 0.41 1.87 0.58 Singapore 0.925 0.41 0.70 0.90 Thailand 0.740 0.41 1.66 0.68 Vietnam 0.683 0.41 1.87 0.58 Mean 0.71 0.60 S 0.12 0.20

HDI  CDFDˆ

0.02 0.20 0.10 0.19 0.03 0.22 0.12 0.03 0.06 0.10 T = 4.44

In Table 9, the HDI for all ASEAN ranges from 0.556 (Myanmar) to 0.925 (Singapore).

This number is based on the UNDP calculation. The calculation is based on the tracking of year-toyear HDI index. Under our proposed new HDI calculation under the logistic growth function, the inflated HDI in Table 9 is adjusted and presented in Table 10. Under the logistic function modeling, each country had been tracked over a period of 10 years and each country’s HDI trend line HDI1988 2017 is represented by the linear equation: Yhdi  a  bX . This linear equation is then used to calculate Dˆ and CDF ˆ for each country. The expected value for each country’s HDI is the D

mean of ten years of Dˆ or D  1 / n  Dˆ i and the achieved HDI under logistic function is given as the mean CDF or CDFDˆ . Although this new calculation does not change the country’s HDI ranking, the revised HDI is more reflective of reality in each country. The new reading for development index is CDFDˆ , The original HDI is inflated. The adjusted HDI is 0.11 points lower.

We tested the significance of the difference between the old and new HDI and found that the difference between the two columns ( HDI  CDFDˆ ) are significant: T  4.44 .

Table 10. Sustainable HDI in ASEAN under logistic growth model ASEAN HDI1988 2017 D PDFDˆ CDFDˆ Country: x  0.15  0.03 X Brunei 0.50 0.98 0.83 x  0.64  0.12 X Cambodia 0.49 1.76 0.30 Indonesia 0.49 1.86 0.53 x  0.39  0.07 X Laos 0.49 1.84 0.33 x  0.56  0.10 X Malaysia 0.49 1.41 0.72 x  0.25  0.05 X

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Above/below Mean ± S Above Below Within Below Within

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Myanmar Philippines Singapore Thailand Vietnam

x  0.61  0.12 X x  0.39  0.04 X x  0.09  0.06 X x  0.31  0.06 X x  0.40  0.09 X Mean S Mean + S Mean - S

0.49 0.49 0.50 0.49 0.49 0.49 0.004 0.494 0.486

1.74 1.87 0.70 1.66 1.87

0.29 0.54 0.86 0.63 0.51 0.55 0.21 0.76 0.34

Below Within Above Within Within

Table 10 provides a clearer picture for the ASEAN countries through the average CDF as a measure of sustainable development; the range of CDF Dˆ  S is 0.34  CDF Dˆ  0.76 . If a country’s mean CDF is below 0.34, it means that the country’s HDI performs less than the group’s acceptable range. If the country’s mean HDI’s CDF is larger than 0.76, it means that the country outperforms the group’s mean. For the ASEAN group, Brunei and Singapore are two countries with probability for high HDI above the group mean. Three countries had been identified as below acceptable range of development; these countries are Cambodia, Laos, and Myanmar. The remaining countries: Indonesia, Malaysia, Philippines, Thailand, and Vietnam fall within the range of expected HDI. Thus, by using the range 0.34  CDF Dˆ  0.76 , the ASEAN could be identified into three HDI groups: below, within, and above the range.

6.0 CONCLUSION The goal of this paper is to present a modified HDI by incorporating the UNDP’s sustainability factors into the existing HDI equation. Ten ASEAN countries were used as a subject group in a case study. Thirty-five OECD countries were used as a comparison group. We proposed to modify the calculation of HDI to include sustainability factors. As the result the weight for each component for the modified equation is recalculated. The recalculation of HDI components and their weight tare: life expectancy (0.23), literacy (0.23), per capita GDP (0.25), and social governance (0.29). An additional finding made in this paper is the reclassification of the ASEAN countries on the basis of sustainable HDI through the use of CDF after incorporating sustainability factors. Three countries had been identified as not meeting sustainability goal when sustainability factors are incorporated into HDI equation. These three countries are Cambodia, Laos, and Myanmar. Two countries had exceeded sustainability goal, namely Brunei and Singapore. The remaining five countries: Indonesia, Malaysia, Philippines, Thailand, and Vietnam are within sustainable HDI target.

In light for the UNDP’s drive towards achieving Sustainable Development Goals (SDG), it is recommended that the current HDI formula be revised to include sustainable development factors; these factors are taken from SDGs announced by the UNDP: reduced inequalities, sustainable cities and communities, responsible consumption and production, climate action, life below water, life on land, peace, justice and strong institutions, and partnerships for the goals. In this paper, we categorized these SDG factors as “social governance.” We proposed that the revised HDI equation to consist of: (i) life expectancy, (ii) literacy, (iii) per capita GDP, and (iv) social governance.

Additionally, we recommend that where countries are grouped into an economic region, such as the OECD or ASEAN, intra-group and inter-group benchmarking could also be made in order to affect comparison study. To illustrate the benefit of this intra-group benchmarking, this paper uses ASEAN as a case study where the 10 ASEAN countries are reclassified into three groups according to their sustainable HDI performance based on the past 10 years data. By so doing, we discovered that there are three categories: (i) below the range, within the range, and above the range of sustainable HDI. This type of information may be beneficial to stakeholders in development policy implementation and assessment.

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APPENDIX Appendix 1: HDI and its three components in OECD countries as a group in 2017 OECD Life Literacy Per capita HDI Country Expectancy Rate GDP 2017 Australia 81.50 Not report* 51,593 0.939 Austria 80.50 Not report 47,856 0.893 Belgium 79.80 Not report 41,491 0.896 Canada 80.70 Not report 40,409 0.920 Chile 78.80 97.3 24,797 0.847 Czech Republic 77.30 Not report 18,534 0.878 Denmark 78.80 Not report 53,242 0.925 Estonia 73.90 99.8 17,891 0.865 Finland 79.90 Not report 41,690 0.895 France 81.20 Not report 41,181 0.897 Germany 80.20 Not report 41,267 0.926 Greece 80.00 97.7 17,901 0.866 Hungary 73.80 99.1 12,767 0.836 Iceland 81.30 Not report 63,000 0.921 Ireland 79.90 Not report 66,000 0.923 IsraĂŤl 81.10 Not report 39,125 0.899 Italy 81.50 99.2 30,507 0.887 Japan 82.70 Not report 38,281 0.903 Korea 79.90 Not report 29,114 0.901 Latvia 74.19 99.9 14,187 0.830 Luxembourg 80.60 Not report 104,359 0.898 Mexico 75.30 94.4 7,993 0.762 Netherlands 80.30 Not report 44,654 0.924 New Zealand 80.40 Not report 36,254 0.915 Norway 80.60 Not report 73,450 0.949 Poland 75.60 99.8 12,722 0.855 Portugal 79.30 95.4 19,707 0.843 Slovak Republic 74.80 99.6 16,412 0.845 Slovenia 78.80 99.7 21,061 0.890 Spain 81.20 98.1 26,643 0.884 Sweden 81.40 Not report 51,603 0.913 Switzerland 82.20 Not report 78,179 0.939 Turkey 73.60 95 11,014 0.761 United Kingdom 79.70 Not report 43,902 0.909 United States 77.90 Not report 57,220 0.920 *Literacy rate is obtained from UNESCO compilation. Many of OECD countries does not report literacy rate.

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Appendix 2: HDI and its components for ASEAN as a group in 2017 ASEAN Life Literacy Per capita Country Expectancy Rate GDP Brunei 77.40 96.40 30,933 Cambodia 66.60 77.20 1,308 Indonesia 70.10 93.90 3,895 Laos 65.40 79.90 2,051 Malaysia 74.90 94.60 10,756 Myanmar 65.60 93.10 1,374 Philippines 70.40 96.30 3,280 Singapore 82.70 96.80 55,252 Thailand 74.10 96.70 5,938 Vietnam 73.20 94.50 2,305

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HDI 2017 0.865 0.563 0.689 0.586 0.789 0.556 0.682 0.925 0.740 0.683

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International Journal of Research & Methodology in Social Science Vol. 3, No. 4, p.73 (Oct. – Dec. 2017). ISSN 2415-0371

INTERNATIONAL JOURNAL OF RESEARCH & METHODOLOGY IN SOCIAL SCIENCE VOL. 3, NO. 4 OCT. – DEC., 2017 QUARTERLY JOURNAL ISSN 2415-0371

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