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Mobility between sectors
The two issues to be considered in this section are the mobility and employment of labour. We recall that the assumptions underlying Fung and Ishikawa's model of a growing economy, as well as almost all mathematical models of economic growth, are that workers move effortlessly and speedily between sectors of the economy in response to inducements, and that all workers are fully employed. The economies represented are perfectly flexible and responsive.
Since the same assumptions underlie those economic models espoused by the IMF and World Bank, models to which we will refer in the penultimate chapter, we would find it wise to ask if the economies of Ghana, Kenya, Tanzania and Uganda, particularly their scientific and technological portions, exhibit perfect flexibility and responsiveness.
For employment overall, there are some data to which we can refer. These data do not cover unemployment, for which statistics from countries like those of Sub-Saharan Africa are either unavailable or unreliable, but rather employment in different activities in the urban or modern sector. Table 8.3 provides a few easily obtainable figures on employment in manufacturing industry. What we can observe is that employment in manufacturing industry is highly unstable in Ghana, less so in Kenya and Tanzania. The differences between Ghana, on the one hand, and Kenya and Tanzania on the other, are probably the result of two factors: overall fluctuations in economic activity and the proportion of industry in private hands. Ghana, with severe economic fluctuations and with a high proportion of total industrial employment in the private sector, suffers wide variations; Kenya with a relatively stable growth rate, and Tanzania, with a high degree of concentration of the public sector (in which output, rather than employment, swings), suffer less. What can we infer from these figures? We would like to ask: is it likely that the fluctuations in employment in manufacturing arose either by chance, or through transitional unemployment, or through both? Since there is no precise answer to such questions, we ask rather: are we content with statistical or transitory explanations for the phenomenon we observe? We think that the answer is no: it strains belief to attribute fluctuations of the magnitude observed in Ghana, and perhaps Kenya and Tanzania, to chance or transition. That manufacturing employment in Ghana should rise by 91.5 per cent between 1982 and 1983, or fall by 45 per cent between 1987 and 1988 in a country whose workforce is fully employed, is implausible. Unfortunately, the statistics on employment in manufacturing industry summarized in Table 8.3 cease at just the time that most interests us, namely when import liberalization programmes were beginning to be instituted. We have no official data on employment in manufacturing since then, but the anecdotal evidence cited in the country chapters indicates that employment in manufacturing may have fallen, except in Uganda. As of the time of writing, the assumption of full employment is not tenable.
Yet, we may be pushing this argument too far, for we have not come across any claims that employment is full in Sub-Saharan economies. Rather we have come across statements in the development of theory such as 'We shall assume full employment of resources' (without any discussion of its alternative 'We shall assume that a substantial portion of the total resources are unemployed'). Nonetheless, the impression that we received from our inquiry, an impression not inconsistent with employment statistics from three of the four countries, leads us to prefer the antithetic assumption.
We must also ask if one portion of total employment, that portion representing employment in scientific and technological activities, is full, and if those workers are mobile. To answer the questions about this specific group we have to rely upon our scattered observations of employment, and of shifting employment, in scientific and technological institutions. This is difficult to do, because when one visits an institution one encounters the employed and the stable. The unemployed, the mobile, are absent. Scattered surveys of turnover in the institutions, however, indicate that scientists and engineers, particularly the younger ones, are quite mobile within their professions, not only between institutions within their country, but abroad. In Ghana and Tanzania, departures were as often to foreign countries, chiefly African countries with higher wage scales, as they were to competing Ghanaian or Tanzanian institutions.
Table 8.3 Fluctuations in manufacturing employment, and in its components in Ghana, Kenya, and Tanzania 1980-1991
|Year||Employment by activity (1987 = 100)||Annual change in index of manufacturing employment (% of previous year's figures)|
ILO, Yearbook of Labour Statistics, 1992
Of greater frequency than changes from one full-time job to another are entry into additional, part-time occupations, in order to supplement incomes. The individual remains 'fully employed' in his/her institution, in the sense that his/her status is unaltered, but an appreciable amount of time is devoted to the second career. The second career may be closely allied to the first - e.g. a mathematician working as a consultant in accountancy - or it may be quite different - e.g. a chemist growing tomatoes for market - but it seems to be becoming increasingly common, as wages and salaries in scientific and technical institutions fall in real terms. What foreign donors' subsidies to workers in favoured organizations achieve is to permit them to devote themselves full-time to their normal duties. The subsidization of salaries of scientists and engineers and administrators will not show up in statistics on employment, but it will presumably have a beneficial effect on productivity in R&D, teaching and training.
Although there does appear to be close to perfect mobility of scientists and engineers institutionally and geographically, there may not be perfect mobility professionally. By this, we mean that they do not shift readily from one field to another. Agricultural scientists do not change to industrial scientists, nor do industrial scientists to agricultural. Some progression does seem to take place from the pure sciences to the applied, but not in the opposite direction. To redirect the country's scientific and technological effort from one field to another would be difficult and time-consuming where personnel are concerned. If confronted with radical changes in occupations, narrowly defined, the population of scientists and engineers would be anything but mobile.
Transfer of resources and institutions from the public to the private sector
One of the major structural changes sought by the IMF/World Bank relates to the proportion of all economic activity carried out in the public sector: the aim is that this proportion be substantially reduced. We must ask: is this change taking place in the realm of science and technology? What appear to be the consequences? In the last two chapters we shall also ask if the changes seem desirable; or, if not, how should the policies of the international bodies be altered so as to bring about better results. But the issues to be addressed now are what are the likely effects of a shift in scientific and technological activities from the public to the private sector; and what are the likely effects on the pursuit of science and technology of a shift in other activities from the public to the private sector. Both the narrower and the broader issues are of consequence.
So far as the first, narrow type of shift - from R&D carried out by institutions within the public sector to R&D carried out by similar institutions in the private sector- is concerned, we can conclude quickly that no such shift has taken, or is likely to take place. Government financed, government administered R&D institutes do not lend themselves to privatization. To stagnation perhaps, to dissolution possibly, but once established within the public sector, public organizations promoting science and technology remain there. The reason is obvious: the benefits accruing to the nation from the dissemination of general advances in science and technology are so diffuse and pervasive that they cannot be fully appropriated by any private firm. They are of the nature of a public good, from which potential users cannot be excluded and rents cannot be collected.
So far as the second, broader type of shift - a transfer of the resources allocated to R&D from public sector to private sector, as a consequence of the larger exercise in privatization - is concerned, we can come to no quick conclusion. Nonetheless, that such a shift is already happening, is apparent; that it is of considerable importance for the pursuit of science and technology in Sub-Saharan Africa is, to us at least, also apparent.
Let us approach this issue of reassignment of resources from public to private sector by means of an example from one of the four countries in our sample, namely Ghana. The IMF/World Bank are putting emphasis on this shift, with one prime target being the Ghana's Cocoa Marketing Board: fulfilment of the condition will only be met when its activities have been transferred to private citizens or firms. Our question is what will then happen to the pursuit of science and technology in cocoa? Previously a para-statal firm, the Cocoa Marketing Board had been granted by the legislature a monopoly in the export of cocoa, enabling it to appropriate all the revenues from the sale of the commodity. Each year a stated percentage of these revenues was allocated by the Finance Ministry to R&D in cocoa; this allocation is the chief source of finance for the Cocoa Research Institute of Ghana. The funds available for R&D in cocoa provided a relatively stable base for Recurrent expenditures, (wages and salaries of the Institute's employees), and an unstable base for Development expenditures (other expenses) which vary with export revenues. With these funds the Institute maintained a relatively steady and sizeable programme of R&D.
Not only was the Institute's programme relatively soundly financed, it was also substantial in terms of its size, and outstanding in terms of its accomplishments. Year after year the Institute's expenditures have accounted for those of approximately half of the total of Ghana's public R&D institutes (compare Tables 3.13 and 3.15); year after year, since its foundation in the 1920s, it has offered a model of how R&D in Ghana should be conducted and how, through its extension programme, results should be disseminated.
With privatization, the Cocoa Marketing Board will no longer monopolize exports: private firms will sell the commodity abroad and draw the revenues. There will be no mechanism by which R&D can be automatically financed. Even if a levy is set, each firm, acting in its self-interest, will have an incentive to avoid payment; it will prefer to be a 'freerider'.
What is likely to happen? Most likely is that the Ghanaian Government will take over the funding of R&D in cocoa, but on a reduced scale, in line with its other, competing commitments for public R&D. If one assumes that R&D in cocoa continues to receive half the financial support of all public R&D institutes, and that total funds available for R&D are reduced by half (the other half being the former levy on the Cocoa Marketing Board's revenues, now unavailable), all public R&D, including that in cocoa, will only proceed with half its former funds. The likely outcome would be a collapse of R&D not only in cocoa, but also in most other areas.
In our final chapter on policy we shall consider other sources of finance for R&D, but' anticipating our deliberations, we can state here that none seems to have the same potential for raising revenue as the conventional levy on the sales of the public monopoly. Our conclusion here is that the privatization of the Cocoa Marketing Board will deal a serious, perhaps a death blow, to the financing of R&D in cocoa; and, by extension, and because of the importance of cocoa in Ghana's overall scheme of R&D, to many other institutes engaged in the pursuit of science and technology.
Our example comes from Ghana; is Ghana unique in the vulnerability of its programmes of R&D to the structural adjustment of its public sector? The answer is clearly No: we could equally well have chosen Kenya's Coffee Marketing Board, whose revenues provide the financial resources for the Coffee Research Foundation, or Kenya's Tea Marketing Board, or Tanzania's Coffee Marketing Board, or Tea Marketing Board, or Sisal Marketing Board. The conditions defining privatization are uniform across Structural Adjustment loans; the consequences for the financing of R&D in the major export crops are likely to be uniform too.
In this chapter we have addressed those issues that bear chiefly upon the sectors of the economy, rather than upon the economy as a whole or upon its individual agents. In order, these issues were the changes, by sector, in economic activity brought about by the adoption of Structural Adjustment Programmes, the parallel changes in R&D, the transferability of resources within scientific and technological activities, and the provision of these resources. Our impressions, supported imperfectly by what statistical evidence is available, are that overall sectoral shifts have been minor in Ghana and Kenya, have resulted in a reallocation away from industry in Tanzania, and a reallocation towards (the recovery of) industry in Uganda.
More marked, and of more consequence for the future, have been shifts in the sectoral allocation of funds for advancing science and technology. Based on the measure of expenditures by public R&D institutes, there has been a reallocation of funds during the periods of Structural Adjustment into agriculture, substantial in the case of Kenya and less so in the cases of Ghana and Tanzania. Only Uganda has been able to buck the trend, thanks to foreign assistance. Expanding the measure to allow for private expenditures is not possible statistically, but our observations within the four countries reinforce the negative portion of the above conclusion, namely that there has been a marked loss of resources from the industrial sector. The impression is strongest in the two countries with the largest industrial sectors - Ghana and Kenya- whose private and para-statal firms, now open to competition from abroad, have practically ceased their formal attempts to advance science and technology.
The third issue we addressed was that of the intensity of use of labour, and of its mobility, within sectors. On the basis of a few statistics, and some argument, we concluded that full employment does not reign in our sample of Sub-Saharan African countries, and that the skilled labour employed in advancing science and technology is not mobile across sectors. These conclusions, of both theoretical and practical importance, are tentative, given the lack of empirical evidence for their support (or rejection), and controversial, penetrating to the heart of the ideas buttressing programmes of Structural Adjustment.
The final issue raised in this chapter was that of the probable disappearance of monies financing R&D, in those commodities currently exported by public monopolies, in the event of privatization. Transferring to diversified private ownership bodies like the Cocoa Marketing Board of Ghana or the Coffee Marketing Boards of Kenya and Tanzania is a prime aim of the IMF/World Bank; such transference will choke off that flow of funds which supports their R&D. With governments of these countries unable to replenish the flow out of their general revenues, and unlikely to tap alternative sources, the financing of R&D in exportable commodities is therefore increasingly in the hands of foreign agencies.
9 Effects within organizations
Distinguishing between goods of greater and lesser economic potential for sub-Saharan African countries
The maintenance of firms' capital equipment
The effectiveness of R&D efforts
A counterfactual experiment
In our attempt to evaluate the effects of Structural Adjustment Programmes on the pursuit of science and technology we now descend to the individual organization, particularly those organizations whose primary duty is that pursuit. How have the R&D institutes, the productive firms, the universities been affected?
In these questions we shall draw chiefly upon our inquiries into specific organizations, in each country at least one agricultural research institute, one industrial research institute, one group attempting to develop appropriate technologies, and one university. The country samples are small, but so are the universes of scientific and technological organizations, so that our data are probably representative of the whole.
Theory suggests that the distinction between those goods with greater future potential and those with lesser is very important, particularly where the assignment of resources for R&D is concerned. We approached this issue in the last chapter, where we considered the sectors of the economy within which goods are produced; but we recognize that the issue is not so broad as to enable it to be resolved merely by offsetting one sector against another. It is not that agricultural goods have higher potential than industrial, nor that industrial have a higher potential than agricultural: the distinction is not so simple. In the long run, some agricultural goods face deteriorating terms of trade. Commodities like coffee, whose income and price elasticities of demand are low and whose total supply seems destined to increase substantially, have poor potential; but there are other agricultural commodities which do not meet these conditions. We must narrow our focus to the individual commodity, to the individual organization, if we are to address this issue adequately. In this chapter therefore, we will adopt the microscopic approach.
Theory also suggests that we should be aware of the efficiency with which resources devoted to advancing science and technology are utilized, and of the elasticity of substitution of resources devoted to producing goods with future potential. We have said little about these matters in the two previous chapters; it is now time to address them more fully. Finally, the theory which we, and those who promote Structural Adjustment, use is based upon assumptions that there are single decision-makers, making decisions with objectives clearly stated, with perfect knowledge of how these objectives can best be secured, and with the ability fully to implement these decisions. Such assumptions may be unrealistic, for there may be more than several decision-makers, each with conflicting objectives, inadequate knowledge, and limited power. The assumptions of perfect knowledge and single motives should be checked against reality in our sample of Sub-Saharan African countries; if they are not fulfilled some allowance should be made, both in principle and in practice.
Theory is not the only source of questions to be asked in a study such as ours, but those posed are sufficient in number and scope to cover our area of micro-economic analysis. We shall address them in the order listed above, starting with the very difficult matter of discriminating between different commodities according to their economic potential.
Distinguishing between goods of greater and lesser economic potential for sub-Saharan African countries
Theory is of itself little help when it comes to distinguishing between goods of greater and lesser economic potential: all it does is suggest certain phenomena that will tend to determine the outcome. Two such phenomena have already been mentioned - elasticities of demand and supply. A third should be mentioned, for it has interesting ramifications: it is in whose interest the distinction is made. This is a matter all too often left vague, but we had better state our preference, which is that the choice should be in the interests of the countries of Sub-Saharan Africa. We do not believe in over-arching harmony in international economic relations. We do not believe that what is best for, say, the consumer in a developed country, is also best for the producer in the developing country. Sometimes their interests run in parallel, but at least as often they will be in conflict What may be best for the consumer in a developed country may even be worst for the producer in the developing country. What may be best for the producer in the developed country may even be worst for the producer, or the consumer, or both, in the developing country. We believe that the world does not, in its economic relationships, offer opportunities for Pareto improvements, in which a reallocation of resources makes at least one person better off, without making anyone else worse off. Nor does it resemble, and never will it resemble, a Walrasian economy. The Walrasian economy may have splendid properties (although Pareto improvements are not one of them), but the accurate representation of the reality of Sub-Saharan Africa, internally and vis-à-vis the rest of the world, is not one of them.
Our criterion for judgement will be the interest of Ghana, Kenya, Tanzania, and Uganda. And if the interest of the country is not congruent with the interests of all its citizens, our criterion will be the interest of those directly involved since it is their activities that we have observed and their interests that we can identify. There is danger that we will be too parochial, that we will neglect the interests of all citizens. The presumption of those urging Structural Adjustment is that the sacrifices made by the persons who must 'adjust' today are more than compensated for by the benefits that will accrue to the rest of the population, perhaps even to those 'adjusting', in the future. We do not believe in the generality of this argument: our belief is that some sacrifices are never compensated for, and others inadequately. As a consequence, we argue that each sacrifice should be considered individually, and the balance totted up.
So, elasticities of demand and supply, interests of local producers and consumers: these are two considerations in distinguishing between goods with greater potential and goods with lesser. What else matters in making the distinction? The third factor we shall try to include is the extent to which advances in science and technology will promote still further the attractiveness of goods with potential. In other words, we shall try to determine the extent to which the production of goods responds favourably to additional R&D: we shall attempt to determine for what attractive products R&D is most effective.
Given the brevity of our inquiry we will not be able to consider more than a few products within the above framework; after all we have spent no more time on this entire project than is often spent on a single project appraisal. Nonetheless, we believe that distinguishing between products of differing potential is an important exercise, worth carrying out. Perhaps it can serve as a model for further application. The ingredients for the exercise are five-fold: commencing with the choice of a particular commodity, one makes an estimate of the productive potential of the country; a guess as to how this potential will be improved if R&D is directed towards it; a similar guess as to how the potential of other competing countries will improve over the same time horizon; an estimate of changes in the terms of trade, again over the same horizon; and an identification of special interest groups that will tend to encourage or thwart the commodity's development.
As illustrations of the exercise let us take four general types of commodities, two primary commodities (one an exportable and the other produced for domestic consumption), and two manufactures (one competing with more highly processed imports, the other with technologically more sophisticated imports). Summaries of the elements of the exercises are tabulated in Table 9.1: taking the first (traditional exportable primary commodities with intense foreign competition and unfavourable supply and demand elasticities) as an example, the results of the exercise appear in the cells in the first row of the table. Coffee, tea, cocoa and sisal are typical commodities, in which various Sub-Saharan African countries have a comparative advantage. Provided that they reduce their costs steadily, through advancing science and technology in growing, harvesting, processing, transporting etc., they should remain competitive suppliers in world markets (columns 4 and 5 of row 1). It is the factors determining shifts in the terms of trade over the long run, (columns 6 8) that militate against the prospects for these commodities, at least as far as the exporting countries are concerned. For these commodities the price elasticity of demand is low, as is the income elasticity, whereas the supply elasticities are high, the worst possible combination for the sellers (and, symmetrically, the best for the buyers, which are the developed countries). Since the producers of these primary commodities are, individually, encouraged or even compelled to expand production, collectively their output can be expected to increase, exaggerating the unfavourable aspects of the elasticities. Consequently (in the last column) we deduce that the prospects for this type of deteriorating-terms-of trade commodities are not encouraging. Hence R&D should not be concentrated in these, but rather in more favourable product types e.g. in types two, three and four in Table 9.1. (We shall have more to say in our final chapter on policy, about the preferred direction of R&D, and the factors that make it difficult to redirect R&D away from the traditional, exportable primary commodities.)
The exercise carried out in Table 9.1 was superficial: in practice a considerable amount of time and energy should be invested in deciding the best direction for R&D. Those resources which yield advances in science and technology are so scarce, and the effects over the long run of effecting R&D so profound, that the choice of direction should be made with as much care as possible, and by the developing country. It is all too easy to allocate scarce resources in the future as they have been in the past, or as international agencies and foreign donors urge that they should be; but neither of these criteria ensures that the allocation will be the best for the developing country. They must take their future in their own hands, and plan for the future systematically.
Table 9.1 Evaluation of the prospects for different types of products
|Product type||Examples||Current production potential||R&D's contribution to productive potential||Future terms of trade||Factors influencing potential|
|in Sub-Saharan country||Elsewhere||Demand elasticity||Supply elasticity||Trend over long term||Positive||Negative||Conclusion|
|Traditional exportable primary commodity||Coffee, tea, cocoa, sisal||Excellent||Moderate||Moderate to substantial||Low||High||Deteriorating||Consuming countries encourage R&D||Opposition by consuming countries to further processing World over- supply at current prices||Unfavourable|
|Traditional, locally consumed primary commodity||Bananas, plantains, peanuts, soya beans, cotton||Excellent||Moderate to substantial with sufficient R&D||Moderate to substantial||Medium||High||Stable||Large local (domestic) demand by distributors in||Opposition by composing exporters, (bananas by Lomé countries) and developed countries (bananas in EC). Opposition by composing producers in developed countries (peanuts, USA)||Exports: unfavourable, domestic markets: favourable|
|Locally processed, perishable consumer goods||Soap (manufacture) flour (milling) cooking oils (refining)||Good||Moderate, only if R&D directed towards appropriate technology||Moderate to substantial||Medium||High||Stable||Large potential, domestically||Consumers prefer more highly processed (imported) goods||Potentially favourable, domestically|
|Simple, traditional capital goods||Agricultural mechanical||Fair||Substantial, only if R&D directed correctly||Moderate to substantial||Medium||High||Stable||Large potential domestically||Severe composition from imports||Potentially favourable, domestically|
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