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Part IV: Conclusions and recommendations
11 Policy recommendations
A summary of the conclusions
Fluctuations in local government expenditures on the pursuit of science and technology
Increases in total expenditures on the pursuit of science and technology
The effects upon different areas of science and technology have been widely different
The areas of science and technologies most vigorously pursued are increasingly determined by foreigners
The choice of the areas of science and technology to be pursued is based primarily upon the effects of such choice on the developed countries
Changes in decision-making for science and technology
Our objective in this study has been to try to determine the effects of the IMF/World Bank's Structural Adjustment Programmes on the pursuit of science and technology in four Sub-Saharan African countries. Given the near-ubiquity of such programmes in this part of the world, our findings may well have a relevance that transcends Ghana, Kenya, Tanzania and Uganda: we rather hope not, for the findings, which we will summarize in the next section, are not optimistic for the countries in our sample.
After the summary, we shall return to the findings one by one, in order to supply the evidence in support of each. Would that the evidence were more persuasive; but science and technology are complex subjects, defying precise measurement, and even in the best of circumstances evidence can be interpreted differently by different individuals. At the outset we should confess that our evidence, the bulk of which we collected ourselves, is sufficient in our minds to support our conclusions; but may not be sufficient in the minds of those already committed to the rectitude of the IMF/World Bank's programmes. To convert those with opposing beliefs would require the incontrovertible evidence that we cannot provide.
After supplying the evidence to the effects of Structural Adjustment Programmes on the pursuit of science and technology in the following chapter, we shall draw the implications, both for the countries we studied and for the international financial institutions and the development assistance bodies. Chapter 11 will be concerned with policy, i.e. with how the pursuit of science and technology can be accelerated and how its potential benefits can be appropriated by the developing countries.
A summary of the conclusions
We will state our conclusions baldly as five propositions:
We shall now expand upon these five propositions, presenting for each, in turn, embellishments and summaries of evidence.
Fluctuations in local government expenditures on the pursuit of science and technology
Of the five propositions, the first is the most difficult to explain. In principle, since almost all Sub-Saharan African countries run substantial deficits in their government budgets. The IMF and World Bank, feeling strongly that these deficits should be eliminated, require efforts towards elimination, as one of the standard conditions for the awarding of loans. In attempting to fulfil this condition, the borrowing country generally finds it easier to reduce government expenditures than to increase government revenues. And of government expenditures, the least difficult to reduce is investment. Investment takes many forms, one of which is in advancing science and technology. Therefore, in principle expenditures on science and technology should be among those most likely to be curtailed.
The argument is plausible, but of our five propositions, it turns out that it is the one for which the evidence is contradictory. The reason seems not to be that pursuing science and technology is given higher priority than some current activities, but rather that some of the countries find it impossible, or undesirable, to reduce government expenditures at all. Moreover, the loans and grants that are made to the country adopting a Structural Adjustment Programme may reduce the immediate pressure on its budget, enabling it to expand government expenditures in the year of their receipt. There is evidence, both in our sample of four countries, and in the larger universe of Sub-Saharan African countries undergoing structural adjustment (see World Bank, 1990; and Harrigan and Mosley, 1991) that government expenditures, and even the budget deficit, may, in the first years of a Structural Adjustment Programme, rise rather than fall. In all our four countries it seems as if that is what has happened.
In Table 10.3 (based on the data in Tables 10.1 and 10.2), we summarize the experience of the four countries under the conditions of budgetary restraint urged from outside; the first column in the table gives the period over which Structural Adjustment is taking place, from the year it was initiated to the present. The second column reports average rates of change in total government expenditures, in terms of constant prices, over the years following the adoption of the Structural Adjustment Programme. All are positive. Enumerating our countries, Ghana's expenditures changed on the average, 22 per cent each year; Kenya's 9 per cent; Tanzania's 4 per cent; and Uganda's 61 per cent.
The chief reason for Ghana's budgetary expansion lies in the reduction in the government's obligation to service overseas debt: this is in turn a consequence of the reduction in the total, achieved in the debt renegotiations that took place after the design of the Structural Adjustment Programme was agreed upon. With less of the Ghanaian government's revenues going abroad, more could be used at home. The other countries' debts, not yet having been renegotiated, place everincreasing demands upon their budgets; however in Uganda's case (see Table 6.7), funds are flowing into the country at an increasing rate, in order to finance its recovery programme.
From local government expenditures we move to that portion allocated to advancing science and technology. Of our various measures of the advance, it is only for inputs that we have data consistent across countries; and of these, it is only for monetary inputs to government R&D institutes that the data are sufficiently accurate to give us confidence in the figures. We have estimated the fluctuations in public funds expended by the R&D institutes in the four countries, since undertaking Structural Adjustment. The averages of these fluctuations in expenditures by public R&D institutes are presented in the third column of Table 10.3, where they can be compared with those in the second column. The comparisons indicate that the averages across countries are positively correlated; if total government expenditures change, so do expenditures on R&D, and by greater percentages for Ghana, Kenya and Tanzania. The elasticity of expenditure on R&D is greater than unity for these three countries; for Uganda the elasticity, with respect to increases in total government expenditures, is less than unity.
Table 10.1 Government Ghana, Kenya, Tanzania and Uganda 1982/3-1991/2 (billions of units of national currency, at constant prices of 1987)
(1) 1982/3-1988/9, Table 3.8 (total government expenditures, current plus capital, at 1987 pieces).
(2) 1986/7-1991/2; Table 3.8 (government consumption plus government gross investment, at current pieces; converted by GDP deflator)
Table 4.8 (total government expenditures, current plus capital, converted by GDP deflator)
1982/3-1991/2, Table 5.5 (government consumption plus total gross domestic investment, at current prices, converted by GDP deflator)
Table 6.4 (1982/3-1986/7 and 1990/1-1991/2, government current expenditure plus capital payments; 1987/8-1989/90, government current expenditures plus 20% of total gross domestic investment: all converted by GDP deflator)
Table 10.2 Annual fluctuations in government expenditures and in public financing of R&D institutes, Ghana, Kenya, Tanzania and Uganda 1982/3-1991/2 (at constant prices of 1987)
|Year||Annual change in government expenditures (as % of the previous year's figure)||Annual change in R&D institutes' public funding (as % of the previous year's figure)|
Government Expenditures: Table 10.1
Public Finance of R&D Institutes: Table 7.4
Table 10.3 Averages of fluctuations in government expenditures and in local funds available to public R&D institutes during periods of structural adjustment, Ghana, Kenya, Tanzania and Uganda, various years to 1991/2
|Country||Period of structural adjustment||Trend in real government expenditures (average annual rate of change, %)||Trend in government funds allocated to public R&D institutes (average annual rate of change, %)|
Column 1: Table 7.6
Column 2: Table 10.2
Would that we had a measure of the output of public R&D. Since we do not, all we can do is draw the implications from some of the data we collected and some of the observations we made. The data are those on that fraction of the total monies received by public R&D institutes allocated to wages and salaries of employees. For Ghana, we have earlier figures for all public R&D institutes; for the other countries observations from only those institutes we studied ourselves. The trends in the fractions of public R&D institutes expended on wages and salaries, during the years in which the Structural Adjustment Programmes have been in force, suggest an increasing portion of the R&D institutes' revenues from public funds has been spent on wages and salaries.
We believe that the same result holds for the R&D institutes in the para-statal sector of the countries' economies. Here the evidence is drawn from just two para-statal firms in two countries, but our impressions of the experience in other para-statal firms in the same two countries, and in the other two countries, is consistent with the result. So what is the implication of an increasing portion of the R&D institutes' local funds being expended on wages and salaries? By subtraction, the portion going to other items must be falling. To what purposes are funds put, that do not go to wages and salaries? The answer is to such items as laboratory equipment and supplies; to books, journals and reports describing accomplishments elsewhere; to study and attendance at conferences abroad; and to the other impedimenta of R&D. It is difficult to imagine R&D being carried out successfully when these functions are not performed. How can a scientist pursue science without equipment, without supplies, without knowledge of what other scientists accomplished? All an institute can do, if its funds are consumed in paying its staff, is to maintain its establishment. In terms of progress, it is stationary; its scientific engine is merely ticking over.
Such seems to be the experience of the R&D institutes in Ghana, Kenya, Tanzania and Uganda; but it must also be asked if an increasing portion of their local funds need to be devoted to the wages and salaries of a stable number of employees. Why not reduce the number of scientists and technicians employed in the institutes, or pay the same number less, allocating the amount saved on wages and salaries to the other items? The answers seem to be two-fold, the first being contemporaneous, the second being political. The temporal answer is that foreign donations are currently so generous that they cover much of the non-wage expenditures of the institutes.
The political answer is the one common to so much of government activities in all countries, regardless of their stage of development, namely that it is very difficult to reduce public employment. Public sector employees are among the best organized groups in the country, adept at recognizing and promoting their own interests. Moreover, they are the very ones who administer reductions in their own employment, and can use the institutions of government to resist the proposals. It comes as no surprise that the civil servants in the countries we studied have succeeded in maintaining their numbers undiminished, or have even succeeded in increasing them. Politicians, keen to reward their supporters, and under great pressure from an expanding population to provide more jobs, reinforce the tendency to expansion of public employment. The same reason does not seem to hold where the level of individual wages and salaries is concerned. In all the countries in our sample, the real wage of scientists and technicians has fallen, not risen, over the period we covered, in line with the general fall in real government wages and salaries. The same or, more frequently, an increased number of employees has, each one, received less from their own employment.
We should like to be able to draw some conclusion on the effects of the adoption of Structural Adjustment Programmes on the pursuit of science and technology in the private sector. Our impression, consistent throughout the four countries of our sample, is that private firms have curtailed their already meagre expenditures on R&D, but the evidence is scanty and based chiefly upon the collapse of private R&D in Kenya. When we expand our focus beyond R&D to the mundane but very important activities of technical training, technical servicing, engineering and business consulting etc., even our impressions of changes in the amounts carried out by private firms become vague. Newspaper reports speak of retrenchment, of sacking, of bankruptcies, particularly by industrial firms; although they do not speak in equal terms of the establishment of new firms. But to the extent that most of the advances in science and technology occur in larger industrial firms, and that the firms that have been retrenching are the larger firms (and newly established firms are smaller in size) we would expect that the pace of advance in the private sector has slowed. Possible changes in the speed of advance of science and technology in the private sector would be an interesting topic for further research; to be sure, there have recently been many studies of industrial activity in the four countries in our sample, particularly in Ghana but, with one exception (see Lall et al. 1994), these studies have concentrated more on the establishment and growth, or decline, of private firms, not on the technology they employ and the improvements they secure in that technology.
Increases in total expenditures on the pursuit of science and technology
The second of our conclusions is that total expenditures on the pursuit of science and technology in Ghana, Kenya, Tanzania and Uganda have increased substantially since these countries embarked upon Structural Adjustment Programmes. The increase has come about chiefly as a result of the substantial increase in the receipt of foreign donations.
The chain of reasoning is as follows: it commences with the need on the part of Sub-Saharan countries to borrow abroad to stabilize their economies. Given their poor performance over the early years of the 1980s, they find that banks and other institutions in the private sector of the developed countries are unwilling to increase their lending, and so they turn for funds to the international financial institutions, primarily the IMF and World Bank. These latter impose conditions upon the loans, to most of which the borrowers agree. Their agreement indicates to all other potential lenders, both government and private, that the recipients are determined to act according to principles of fiscal prudence and economic rectitude, which action will assure that loans will be repaid. Given this commitment on agreements sealed by the IMF and World Bank, the assistance agencies of the developed countries look more favourably upon the agreeable developing countries' requests for help. To their assistance agencies, faced with appeals from more than a hundred poor countries, it is very convenient to be able to separate appeals from countries that have the IMF and World Bank's 'seal of approval' from those that do not, giving more favourable treatment to the former. For the individual developing country which has just accepted the bulk of the conditions attached to the IMF/World Bank's loans, the probability of receiving additional assistance, from the developed countries, has increased markedly, and is applied for with greater vigour and confidence. So additional funds flow in.
Moreover, since the assistance agencies in the developed countries are very aware of the fragility of Sub-Saharan African economies and of the difficulty faced in conforming to the conditions attached to the IMF/World Bank's loans, they are reluctant to grant funds in the form of (additional) loans, requiring regular servicing and ultimate repayment. They therefore make their contributions available primarily in the form of grants. In choosing the sorts of projects which should be supported by grants, assistance agencies are drawn to those whose pay-off is incalculable, or distant in the future, or both. Projects designed to advance science and technology are of this sort. So foreign funds flow in to those local institutions engaged in advancing science and technology.
Table 10.4 National and total expenditures on the advance of science and technology, as percentages of GDP, Ghana, Kenya, Tanzania and Uganda 1982/3-1991/2
|Year||National expenditures on S&T, as % of GDP||Total expenditures (national plus foreign) on S&T, as % of GDP|
National expenditures: Table 7.7, columns 9-12, divided by GDP (Tables 3.1, 4.1, 5.1 and 6.1)
Total expenditures: Table 7.2
In order to record this inflow of foreign funds in support of advancing science and technology we should have had accurate data by donor, by recipient, and by project; but such detailed data are only available for Kenya and Tanzania for a few recent years. The number of donating countries and organizations is large, as is the number of recipients in each country; the number of projects receiving, or failing to receive foreign funds is greater still by an order of magnitude. In some countries, Kenya for example, directors of public R&D institutes have been able to approach foreign donors directly; in others, Uganda for example, appeals have been negotiated by the Ministry of Finance. Sometimes foreign donations are identified by the recipient separately, other times they are lumped into total receipts; sometimes donations are recorded at the time of commitment; others at the time of receipt; still others at the time of expenditure. For these reasons, our accounting is faulty; since we compiled most of our data from two different sources - the internal records of a sample of the scientific and technological organizations and published accounts in the national budgets - the data are not even internally consistent. Some expenditures have been omitted from reports submitted to government by public R&D institutes and the universities: expenditures in the form of e.g. supplements to the salaries of scientists and engineers in favoured activities. As a consequence, there is bias, almost certainly towards an understatement of foreign donations actually spent in Ghana, Kenya and Tanzania in early years and in Ghana in recent years.
There is a third source of data in foreign donations that is not subject to such criticism, namely the compilations made by UNDP in Kenya and Tanzania (UNDP, 1991, 1992,1993). By means of an exhaustive inquiry into the grants of donors, rather than receipts of beneficiaries, UNDP has obtained an accurate account of the volume of inflows. It is these figures that we shall rely upon in what follows. (For Ghana and Uganda our data should be read with caution.) Nonetheless, for all they do reveal that total expenditures of public R&D institutes and of university science and engineering departments have increased since the countries have committed themselves to Structural Adjustment Programmes.
The data on foreign donations, together with those on local expenditures and the totals of the two, are depicted in Figures 10.1-10.4 (the annual percentages are compiled in Table 10.4). The first, Figure 10.1 for Ghana, displays only the last of the three statistical series, total expenditures on the pursuit of science and technology, since neither foreign donors nor Ghanaian recipients provide sufficient data on donations for us to be able to separate them from local financing. It is almost certain that foreign donations have increased in the recent years, so the plot in Figure 10.1 is almost certainly biased downwards, particular in the most recent years. Whether the actual upturn since the mid-1980s has been enough to restore Ghana's expenditures on science and technology to the levels of the late 1970s, when they were of the order of 1 per cent of GDP, is a moot point.
Figure 10.1 Ghana: Expenditures on advancing science and technology, as a percentage of GDP, 1978/9 -1991/2
Figure 10.2 Kenya: Expenditures on advancing science and technology, as a percentage of GDP, 1986/7 -1990/1
Figure 10.3 Tanzania: Expenditures on advancing science and technology, as a percentage of GDP, 1982/3 -1991/2
Figure 10.4 Uganda: Expenditures on advancing science and technology, as a percentage of GDP, 1982/3 -1991/2
For Kenya the data are more comprehensive, and more reliable. Figure 10.2 displays all three statistical series, local expenditures on science and technology, foreign donations (the difference between the two plots) and the sum of the two. The second and third series have discontinuities at 1989, the year when UNDP's compilations start; the previous years' figures must be considered slight underestimates. Given that the number of yearly observations is few, at five, and that the first three may be understated, our conclusion - that total expenditures on pursuing science and technology in Kenya have increased since the undertaking of Structural Adjustment programmes - must be tentative in nature.
No such qualification need be placed on the conclusion governing total expenditures on advancing science and technology in Tanzania and Uganda Figures 10.3 and 10.4 show vividly how foreign donations have raised expenditures to new heights. Again discontinuities in the series appear, in the case of Tanzania because foreign donations were not fully acknowledged before 1989, in the case of Uganda because foreign donations did not arrive on a large scale until the country had been pacified in 1988.
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