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Policy implications of providing additional resources
Implications for the developing countries
An eight-fold expansion of R&D in those fields with favourable prospects, and an equivalent expansion of technical education and training, are daunting tasks. Where could the necessary resources come from? Briefly, the resources that must be provided more abundantly are institutions, personnel, administration and finance. Elsewhere we have covered the first three of these matters (see Enos, 1991), so we shall not go into any detail here, other than to state that the implications of such an expansion and redirection of R&D, and such an increase in education are formidable undertakings for any Sub-Saharan African country, involving as they will a substantial increase in technical and managerial education at the tertiary level, an even more substantial increase in vocational education, and an equally substantial increase in entrepreneurial and administrative capability in central government.
These - greatly expanding the human resources needed for R&D - are the immediate implications for the developing countries, but they are not the only ones. Many foreign observers of Sub-Saharan African countries have noted common failings in their governments (a lack of formalization of the country's goals, insufficient power to be able to influence the behaviour of individual economic agents and to implement changes, etc.). These deficiencies have been most frequently aired where the choice of technique has been at stake (e.g. James 1989), but we believe that they are appropriate to the choice of direction and subsequent administration of R&D. What the objectives of economic development are, and how and in what direction advancing science and technology can best contribute to achieving these objectives, are worthy of much more attention than they are currently given. Even when so much of the nation's scarce political and administrative talent has to be devoted to carrying out the ordinary activities of government, and to conforming to the rigours of Structural Adjustment, time and energy should still be invested in planning for the future, and in advancing the future's instrument, science and technology.
In particular, the Sub-Saharan African countries should put more effort into choosing, in detail and for the future, the direction of R&D - on what products, what processes, into what markets. There are two reasons for putting more effort into specifying what are likely to be and what are not, fruitful ventures. The negative reason is that if the Sub-Saharan African country does not specify, foreign donors will; the positive reason is that the knowledge and experience acquired in choosing the right direction for R&D can be valuable in carrying out the subsequent stages of product/ process/market design, production and distribution. R&D is only the first link in a long chain of activities that connects the present with a prosperous future.
If we are brief in the implications we draw for the developing countries from a long-term programme of greatly expanded R&D, it is because we believe that the developing countries will see that it is in their interest to devote attention to choosing the proper direction of, and resources to the conduct of, future R&D. Difficulties will arise, of course, in committing their country to a sustained programme of R&D, in the face of competing claims for scarce resources, and in branching out in new, unproven areas of research. Yet we do have faith in their abilities to recognize what is in their best interest and to persevere in seizing the opportunities that arise.
Implications for foreign donors
Our faith does not extend the actions of foreign donors, however, to whom we devote the next section. What are the implications to foreign donors, actual or potential, of a greatly expanded programme for advancing science and technology, often in novel directions, in Sub-Saharan Africa? Why do we believe that the implications are more contentious for foreign donors than they are for the developing countries themselves, or even for the IMF/World Bank? In summary, we believe that both the expansion of assistance, and its redirection, will encounter more opposition among the foreign countries currently granting assistance than it will in either of the two other groups.
There are three areas in which opposition will arise, the first bureaucratic, in the administration of foreign assistance; the second political, in the purposes to which it is put; and the third financial, in the size and duration of the developing countries' needs. Let us consider these in turn. Previously, we argued that a misallocation of R&D occurs when efforts are directed towards raising the productivity of resources engaged in producing a commodity specialized by other developing countries and facing inelastic demand in a slowly growing world market. We called this collective belief the 'Kaffee Klatsch', after that predominant commodity. Chapter 9, Case III illustrated the future course for a developing country which persists in concentrating its R&D in such deteriorating-terms-of-trade commodities; it is our task now to explain how it comes about that those developed countries which contribute aid to Sub-Saharan Africa reinforce the misallocation of R&D, and how this behaviour might be altered, in the interests of the recipients.
The explanation involves examining the organization and staffing of the foreign assistance agencies where the decisions as to the size and direction of R&D are made, and the background of the advisors on whom the agencies rely. Foreign donors are faced with more appeals for aid than they can possibly satisfy; in such a circumstance they tend to screen out appeals that are novel (because evaluation is outside their experience), of long duration (because their resources are usually dependent on authorizations year-by-year), and of uncertain outcome (because they wish to avoid outright and conspicuous failures). Yet a reallocation of R&D in the developing countries away from those activities that are familiar, that do not involve long commitments, and that have had, in the past, successful outcomes and so have less uncertainty attached to future outcomes, is difficult for the foreign donors to contemplate.
To this typically bureaucratic conservatism should be added the vested interests of those who provide technical advice on the choice of projects. The advisors may be individuals, they may be organizations, but their own backgrounds have considerable influence on the advice they give. Experience dictates choice, as can be seen if we look at those organizations found among the former colonial powers. Their original purpose was to supervise the research initiated in their colonies on those primary products cultivated for the home country's behalf - coffee, tea, cocoa, rubber, copra, palm oil, etc. When, one after another, their colonies gained independence, the expatriate scientists and administrators returned home. They brought back with them their experience in R&D covering the same primary products. Many were employed in what became research groups attached to their home countries' aid agencies. In these positions, and with these backgrounds, what would be more natural than to recommend that R&D be continued to be carried out on the traditional crops, whether at home, or, via foreign aid, in the former colonies?
Political opposition is likely to arise among foreign donors if the developing countries attempt to shift the direction of R&D into novel areas, areas that is that are novel to the developing countries. Many of the novel areas will already be occupied by firms domiciled in the donor countries, which will not appreciate foreign aid being used to engender competition. The growing of crops competing with temperate foodstuffs; the processing of primary commodities; the manufacture of relatively simple consumer non-durables (often distributed in the developing countries by the affiliates of multi-national firms); the perfecting of 'appropriate' machines that substitute for sophisticated capital goods; brokerage, insurance and other financial services; armaments; these and other areas will be considered to be the preserve of the developed countries. In each donor country there will be lobbies, well-staffed and with excellent contacts, whose objective will be to make certain that funds are not allocated to the area they represent. To them, a little competitive R&D, in the developing country, is a dangerous thing.
The third objective that will be raised in the donor countries is the magnitude and duration of the developing countries' needs for funds for R&D (Helleiner, 1992). In Sub-Saharan Africa, assistance will be needed for a very, very long time. The developing countries themselves cannot afford sums such as we estimated will be required (rapidly to advance science and technology in the proper directions) and the World Bank and other international financial agencies, and private firms in the developed countries, are not currently prepared to lend money for such speculative, unappropriable R&D, so donations from the developed countries are the only possible source. Yet substantial, long-term commitments of untied aid for uncertain purposes are not popular either in the countries themselves or in their aid agencies. Harmless these donations, whose purpose is to advance science and technology in the developing countries, may seem to the populace at large; but harmful each single donation is sure to seem to at least one vested interest.
Implications for the World Bank and other international financial institutions
The IMF the World Bank and the regional development banks are first and foremost banks, institutions lending money against securities or sureties for undertakings that generate the income from which repayment can be made. Unlike foreign aid agencies, they are not in the business of extending loans unsecured in the borrowing countries or of making gifts. A bank (we shall use this as short-hand for all the international financial institutions) develops a set of rules which apply to all loans, and a set of administrative procedures and standards which apply to all borrowers. Borrowers may differ in their size, in their political system, in their culture and in their financial prospects, but they tend to be treated by a bank as identical (see, in the context of education, [ones, 1992). General rules, procedures and standards are easier to formulate, agree upon, implement and evaluate than particular ones unique to each borrower for each loan.
The existence of general rules, procedures and standards may facilitate lending, but it does not necessarily assure that loans are well designed and that the funds are productively used. To do so would require that each loan take notice of the specific needs of the borrower, in the light of his unique characteristics. This in turn would require a flexibility on the part of the bank that it lacks. There needs to be a flexibility of mind, an admission that developing countries are different; there needs to be a flexibility in the design of loans, a willingness to consider the particular nature of the borrower's requirements and capabilities; there needs to be a flexibility in the administration of loans, an adaptability to changing circumstances, so likely to occur in such long-lived projects as education or R&D; and there needs to be a flexibility in the evaluation of the success of loans, a cost-benefit analysis, not just an audit.
These are recommendations that one encounters frequently in volumes addressed to the policy issues confronting the international financial institutions (ibid.), and so we shall say no more about them. What we should like to terminate with is a specific recommendation directed both at banks and at foreign donors, namely that they, too, devote some attention to discovering the 'proper' direction for R&D. Recall that 'proper' signifies in the best interests of the developing countries, and that, so far as advancing science and technology is concerned, it signifies focusing on those products/processes/markets that have favourable prospects for producers in the developing countries.
Generally these are products/processes/markets with stable or improving terms-of-trade and/or satisfying domestic consumption; but we have not attempted to identify them in more than a general sense. To do so, we would need to conduct product/process/market research. To do so, the banks and the foreign donors would also have to conduct product/process/ market research. Product/process/market research is not our province, nor has it ever been the province of banks and foreign donors. Choice of product, design of project, has generally been done without systematic enquiry as to what is best for the developing country, what is feasible in that country, and what that country can or cannot contribute to the task. To the extent that product/process/market research is undertaken by the banks or the foreign donors it is usually with their own interests in mind; more frequently none is undertaken at all. Choice is based upon past decisions, which in turn were greatly influenced by the interests of the former colonial powers and their accumulated scientific and technical expertise.
If banks and foreign donors are to base their loans and grants on evidence systematically obtained from product/process/market research, how can they go about doing so? The difficult answer - all answers are difficult - is to invest in these facilities themselves. Let them establish product/process/market research departments within their institutions. Private companies of equivalent size have such departments; they would never consider engaging in a new activity without thoroughly investigating the products that would be produced, the processes that would be utilized, the markets that would be served. In today's world of ideas, private profit-seeking enterprises are our models of economic rectitude: here is one area in which they should be imitated. The huge multinational firms producing and distributing branded consumer goods - the tobacco and soap and cosmetics and soft-drink firms - should be the models. They are profitable at least in part because they 'know' their products and their processes and their markets; and they 'know' their products and processes and markets because they have studied them systematically. Even commercial and merchant banks, and private philanthropists - the nearest equivalents in the private sector banks and foreign donors - study their 'markets' carefully before committing funds: it should not be too much to recommend that public institutions do the same.
To recommend that banks and foreign donors conduct product/process/market research, before lending or giving, is straightforward, based as it is on the need to identify the proper direction for advancing science and technology; but to expect banks and foreign assistance agencies to establish, operate, and take the advice emerging from product/process/market research departments would be overly optimistic. Think of the administrative changes necessary: allocating part of the institution's budget to a new department; absorbing members of a vulgar profession (market researchers) within an austere community of bankers, economists and auditors; breaking links with previous advisors and contending with vested interests; recognizing the great diversity among products, processes and markets; and, finally and most difficult, admitting that a particular product/process/market necessitates a loan or gift, and a set of rules procedures and standards, that is just as particular as the product itself
In other words, what is needed from banks and foreign assistance agencies are 'bespoke' programmes, tailored for each country at each instant. According to the dictionary, the word 'bespoke' means to speak about; to discuss, advise upon, determine; to stipulate; to auger for the future. Thus what are needed are programmes that are carefully determined, that stipulate where science and technology are to be advanced; and that are devised with the long-term always in mind.
Summary of policy recommendations
We will commence our summary with what we believe to be our most important recommendation, the one from which all the others stem. It is that the main task in advancing science and technology in the developing countries, and specifically in Sub-Saharan Africa, is to identify the most attractive direction in which to proceed. We have argued that this proper direction is that which best represents the interests of the developing countries, and that this interest is not congruent with the interests of banks or foreign donors.
Identifying the best interests of the developing countries will be no easy task, for there is much current advice and some assistance directed towards advancing science and technology in the opposite direction. To specify the proper direction will involve discovering favourable products/processes/markets, which in turn will require establishing product/process/market research organizations both in the developing countries and, more importantly, in the developing countries' servants the banks and the foreign assistance agencies. Only with advice emerging from systematic studies of the potential, well into the future, of generally new products, processes and markets, and with that advice being taken, can science and technology be harnessed to pull the developing countries along the road to development. Only then can 'bespoke' programmes be designed and carried out.
These may be the major policy implications of providing additional resources for, and altering the direction of, future R&D, but they are not the only ones. Where the conditions applying to Structural Adjustment loans are concerned, we have cautioned against the severe application of the conditions of reducing government expenditures, because of their depressing affect on R&D, almost all of which is financed by government; and of privatizing the commodity marketing boards, which out of their own revenues support the most effective R&D institutes formed in Sub-Saharan Africa Moreover, an overall shift of activities from the public to the private sector, a course of action so enamoured by the banks, will reduce the intensity with which science and technology are pursued; even in the rich countries the external economies so abundant in the output of R&D are secured chiefly through public sponsorship.
There are implications for the developing countries as well as banks and foreign donors. Implications primarily for policy in the developing countries alone are that any additional resources available for R&D should be channelled into the (new) areas indicated by product/process/market research as having favourable prospects (while maintaining steady R&D in traditional areas), and that all R&D institutes should attempt to devote a larger fraction of their expenditures to those items complementary to personnel - supplies, books and journals, equipment, extension services etc. (i.e. devote a smaller fraction of their expenditures to wages and salaries of core staff). Finally we recommend that the developing countries resist the usurping of choice of direction of R&D by banks and foreign donors. Resistance will come partly instrumentally, through the creation of their own, local product/process/market research organizations, partly intellectually through awareness that foreign bodies are currently not likely, and may continue to be unlikely, to propel advances in science and technology in the directions beneficial to the developing countries.
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