Once this question of the scope of external effects is raised, it is clear that it
cannot have a single correct answer. Many such effects can be internalized
within small groups of people - firms or families. By dealing with an infinitely-
lived family as a typical agent, I have assumed that such effects are
dealt with at the non-market level and so create no gap between private and
social returns. At the other extreme, basic discoveries that immediately become
common property - the development of a new mathematical result
say - are human capital in the sense that they arise from resources allocated
to such discoveries that could instead have been used to produce current
consumption, but to most countries as well as to most individual agents they
appear 'exogenous' and would be better modelled as A(t) in section 2 than as
h,(t) in section 4.