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The sub-Saharan economies in 2023
How can the economies of Ghana, of Kenya, of Tanzania, of Uganda, of all the other Sub-Saharan African countries, be portrayed in the year 2023? In proceeding to make our portrayal under the current set of policies we shall make two assumptions: first that the current set of policies persist, and secondly, that progress towards their attainment continues.
As to the second of these two assumptions, the progress we should expect the economies to have made by 2023, we shall guess at this by extrapolating the progress made so far. Thus, in those areas in which progress has been rapid, we shall assume that the conditions underlying the Structural Adjustment loans have been fulfilled; and in those in which progress has been slow, we shall assume that the conditions have been only partially fulfilled. The difficult areas are those in which no substantial progress has yet been made; what assumption would be most appropriate for them? To assume that no progress will be made in the future is plausible, for any of three reasons: the conditions may be too stringent, or too difficult to bring about, given the resources available for their fulfilment; the conditions may be politically unpalatable, and the developing countries willing to jeopardize relations with the IMF and World Bank in resisting them; or finally, the conditions may be abandoned by the international financial agencies as infeasible, or no longer necessary, or undesirable. At the other extreme, to assume that the conditions, unfulfilled till now, will be fulfilled between now and 2023 is not plausible. The intermediate assumption - that the conditions will begin to be fulfilled- is plausible, for these conditions currently rank large in the eyes of the development agencies and do, so they presumably feel, warrant continued attention. Since, to take one example of a condition that ranks large in the Fund's and Bank's eyes, government expenditures so need to be curbed that pressure to reduce them will be unrelenting, ultimately with effect. It would be quite unrealistic, therefore, to assume that there will not have been some curtailment of government expenditures by 2023.
It is this last, modest, assumption - of partial fulfilment of currently frustrated conditions - that we shall adopt. So far as the economies of 2023 are concerned, therefore, our assumptions of progress towards fulfilment of conditions are summarized as complete for those towards which major progress has already been made and partial for all the remainder. How then will the economies shape up?
It would be well to recognize how numerous and radical are the changes sought for the Sub-Saharan African countries. The average number of conditions imposed upon them in the course of borrowing from the IMF/ World Bank is 28 (World Bank, 1990), with such multiple objectives as 'fiscal austerity, monetary tightness, currency devaluation, liberalization in various forms, and wage restraint.' (Taylor, 1988: 9) Achieving, even partially, these objectives will, as it is supposed to do, alter substantially the Sub-Saharan African economies.
Alter towards what? In brief, the economies of the Sub-Saharan African countries will approach more closely the canons of laissez faire. Their economies will be more nearly 'liberalized' than those of the developed countries. This may seem an extraordinary statement, but the developed countries are under no compulsion to 'adjust' their economies: there is no body equivalent to the IMF/World Bank forcing the European Community to eliminate income supports to its farmers, and tariffs and quotas on imports of temperate foodstuffs; there is no equivalent body forcing Japan to open its domestic distribution system to imported goods; there is no equivalent body standing guard over the USA preventing it from subsidizing its exporters. Laissez faire is presumed to be good for all, but only the developing countries are to be obliged to follow its dictates.
The Sub-Saharan populations in 2023
Between 1962 and 1992, the population of Ghana doubled; the population of Kenya increased to nearly two-and-a-half times its early figure; the population of Tanzania more than doubled; and that of Uganda nearly doubled. It would be folly to assume anything other than a continued growth of the countries' populations at approximately the same rate. Efforts to raise public health, aided by foreign donations, will persist; the scourge of AIDs will have been contained; while efforts to reduce birth rates, both locally and foreign inspired, are unlikely to increase. By 2023, we would expect the population of Ghana to double again; similarly those of Kenya, Tanzania and Uganda. In 2023 the population of the Ghanaian economy would approach 30 million, of the Kenyan 50 million, of the Tanzanian 55 million, and of the Ugandan 30 million. Together these four countries would contain 165 million people, as against a little less than 40 million at independence.
Of the other resources with which these people will be combined in producing goods and services no such increase can be expected. The state of the arts - the consequence of advances in science and technology - will be discussed later, but the other resources at the economies' command will either have remained static - land, rainfall, etc. - or have declined - forests, fertility of the soil. Debatable are the direction of change of capital and skills, including entrepreneurship and technological capability. Capital may well increase in volume, as foreign firms invest in the natural resources the countries contain, but skills could fail to keep pace. The last item, technical skills, is also a part of the topic of science and technology, and so will be considered separately later.
On a per capita basis, the economies of 2023 can therefore be assumed to have less land but possibly more capital, all applied with an efficiency which may be greater or lesser on the average than that currently observed. What would be most likely would be substantial variations in the efficiency with which resources were combined: enclaves of high efficiency in large tracts of low efficiency, rather like Latin America today.
In what sorts of activities will the extra people be engaged? It would seem unlikely that agriculture could employ more people than it does today, at the level of productivity that must be attained for successful production of exportable crops. The existing work may, of course, be spread over more people, all residing in the countryside; but more likely, in countries in which government is less involved than today in regulating the lives of its people, is a migration of population to the towns and cities. The phenomenon which has been observed in other developing countries but has been largely absent in Sub-Saharan Africa to the present - a burgeoning of the population of the cities - is almost sure to appear. Given current rates of immigration and internal population growth the capital city of Nairobi could have a population in excess of four million people, Dar es Salaam in excess of three million, Accra in excess of two million and Kampala/Entebbe in excess of one-and-a-half million.
Given the prominence of such huge urban clusters, the question reduces to what sorts of activities will their residents engage in? History provides probably the best answer to this question: it is that some will be engaged in highly productive jobs, yielding relatively high incomes, but that the vast majority will be in marginal activities, earning relatively low incomes. Bombay, Calcutta, Rio de Janeiro, Lima and Mexico City are the models; 'informal' is the term used to describe the economic activities of the bulk of their residents, and pitiful the word to describe their prospects.
The rest of the world in 2023
Structural changes, population growth: what else will most affect the state of the economies of Sub-Saharan Africa in 2023? The final factor will be the state of the economies of the rest of the world, within which the Sub-Saharan economies, via their increased trade, will be more embedded. So far as the demands which the rest of the world places on the commodity exports of Sub-Saharan Africa are concerned, we have argued throughout this study that they will not have increased proportionately to the increases in the economies' exportable output. Relative prices, that is prices of Sub-Saharan African commodity exports relative to prices of the goods and services they import, will almost certainly fall. With worsening terms of trade, the contribution of commodity exports to the national incomes of the Sub-Saharan African countries will also fall. What of other export earning activities? Revenues from tourism, even now so important to the balance of payments of Kenya and Tanzania, can be expected to increase, although under a regime of laissez faire much of these revenues will accrue to foreign investors in the necessary facilities - hotels, travel agencies, transport, banking. Other export categories seem absent, at least in the magnitude needed to generate the additional earnings for the increased population.
What will be needed to fill the gaps, both in urban employment for the expanded population of the cities, and output available for consumption by the population, can only be obtained through a greatly increased domestic production of domestically consumed goods and services. It is towards attaining increase that a major portion of the advances in science and technology must be directed.
The preceding sections have provided an indication of the direction in which science and technology should advance in the countries of our sample, and in Sub-Saharan Africa in general. Some advance is desirable in improving the production and distribution of exportable commodities, although less than is currently being sought. Greater advance should be sought in those activities which provide employment for a rapidly expanding population and which generate the production of goods and services for domestic consumption. In the countryside, generous advances will be needed to enable more food and fibre to be grown for countries as a whole; in the cities great advances will be required to make possible huge increases in employment and production of goods produced in competition with imports. It will not be enough that employment alone increase, if domestic markets have been seized by foreign producers able to undercut domestic firms; it will not be enough if a few domestic firms are able to reduce their costs sufficiently to survive foreign competition: what must happen is that a very large number of domestic firms, employing a very large number of people, must be able to produce at world market prices. Laissez faire will demand that domestic firms produce at low cost; the welfare of the populations of the countries will require that there be enough firms, all producing at low costs, to provide incomes for all.
So, the aims of advancing science and technology are modest gains in the area of export commodities, and immodest gains in the areas of non-traded goods and of activities, like tourism, which use relatively abundant resources to earn foreign exchange. Let us call the last area 'stable-terms-of-trade goods', in order to distinguish them from exportable commodities like coffee, whose terms of trade will continue to deteriorate in the future. Summarizing, the aims of policy in science and technology in the countries of Sub-Saharan Africa are to make reasonable advances in the area of exportable commodities and extraordinary advances in the areas of goods for domestic consumption and 'stable-terms-of-trade' goods.
The redirection of education and R&D
At present, the pursuit of science and technology in Ghana, Kenya, Tanzania and Uganda can hardly be said to be in the directions indicated by the above aims, nor can foreign donors be said to be assisting in the necessary redirection. In fact, as we have argued, foreign advisors and donors seem to be moving the pursuit away from, rather than in, the proper direction. Hence, our policy prescriptions will impinge as much upon the foreign as they will upon the domestic community; they will devote as much attention to how foreign agencies should change their ways as to how domestic agencies should change theirs.
Prescribing policy is no simple task. There is no theory of policy prescription to guide us, nor are there a common set of procedures or rules of thumb. What is often done by policy-makers is to establish a list of priorities, commencing with that policy towards which most attention should be directed and terminating with that towards which least need be directed. A list of priorities has the advantage that it is clear and precise for those who are responsible for the execution of policy; they know that their performance will be judged on their enforcement of the first policy on the list, then on the second, and so forth. A list of priorities has the disadvantage that it provides little guidance when trade-offs are involved between different items. If, for example, the first item in the list, assigned the highest priority, is to reduce government expenditures, and the second, assigned the next-to-highest priority, is to increase government expenditures on the pursuit of science and technology, the first cannot be achieved in practice without sacrifice of the second, nor the second without sacrifice of the first. Some compromise, some judicious mixture of the two, is needed; and a mere list does not indicate where the balance lies.
Nonetheless, we shall attempt to construct such a list of priorities; but we shall also attempt to give some indication of where trade-offs exist, and where the balance between conflicting policies might best be set. Our list of priorities will be relatively short, in part because it will be enough at odds with the list underlying the Structural Adjustment programmes of the IMF/World Bank and in part because no long list of priorities could possibly be carried out within the context of countries, like Ghana, Kenya, Tanzania and Uganda, so poor and so improvident.
The pursuit of science and technology will not be at the top of our list of priorities, although it will, naturally enough, receive the most attention, that being the raison d'être of this study. To place the pursuit of science and technology first would be to put undue emphasis on it, and to risk rejection of the whole list: important as we believe the pursuit of science and technology to be, even we will admit that it could not possibly carry the weight, and command the support, that several other items do.
Above the pursuit of science and technology as an objective of policy we place domestic expansion - the expansion of employment and of the output of goods and services that satisfy local demands or add to export revenues. Within the latter category we include both commodity exports, chiefly primary commodities whose terms of trade can be expected further to deteriorate, and stable-terms-of-trade goods, chiefly tourism. Also above the pursuit of science and technology we place the dissemination of methods of birth control, so as to encourage a reduction in family size. If domestic expansion is sufficient to reduce the deficit in the balance of payments this need not be a separate objective, but it is conceivable that additional measures may be necessary, such as seeking additional loans or grants from the developed countries.
The last of these priorities - reducing the rate of growth of the population - is a complement to the swifter pursuit of science and technology. The faster the rate of growth of the population, the larger the share of total public expenditures that must be devoted to providing social overhead capital - primary schools, health care, urban facilities (land, housing, roads, water, sanitation, etc.). If spent on social overhead capital, the funds are not available to advancing science and technology, since both sorts of expenditure come almost entirely from public funds.
Devoting more resources to advancing science and technology
The next in our list of priorities for policy is expanding the volume of resources devoted to the pursuit of science and technology. We have placed it high on our list for two chief reasons, having to do with future benefits and current costs. Neither reason is obscure: the returns to advances in science and technology, provided that the advances are in areas appropriate to the countries involved, are great and long-lasting; and the costs of pursuing science and technology in Sub-Saharan countries, given current wage and salary scales for their nationals and the generosity of foreign donors, are low. The benefit/cost ratio appears to be high.
The conclusion that we come to is that the quantity of resources devoted to the pursuit of science and technology in Sub-Saharan African countries should be increased substantially. In previous chapters we estimated the present proportion of GDP allocated to R&D, and found the figures to vary over the four countries in our sample from a high of about 1 per cent to a low of about 0.5 per cent. We estimated the expenditures per capita and found them to be no more than a few US dollars per year. If these figures were to double they would still not exceed the proportions in the rapidly growing Asian countries, countries which starting from similar levels of GDP per capita, have reached levels of output and consumption far in advance of those in the countries in our sample. If the Sub-Saharan African countries are to grow at equal rates, let alone begin to catch up with their Asian counterparts, they may well have to exceed the Asian countries' expenditures on R&D, as well as those on technical education and training.
We shall attempt an estimate of the additional resources needed in the countries in our sample, if science and technology are to be sufficiently stimulated, but we prefer to postpone this task until after we have discussed the direction which should be pursued, the next topic in this chapter.
The direction in which R&D should move
No one will deny that science and technology should be pursued more actively in Sub-Saharan Africa, and few will deny the need to allocate more resources to the pursuit: the arguments will arise over the direction in which science and technology should move. We are therefore approaching the most controversial part of our policy statement.
Our thesis has been that the Sub-Saharan African countries should not count on the export of those primary commodities on whose production they are currently concentrating for their economic salvation. These primary commodities in which they currently have a comparative advantage, primarily non-alcoholic beverages, face deteriorating terms of trade. Increasing still further their production will only serve to worsen the Sub-Saharan African countries' economic position vis-à-vis the developed world; and allocating scarce R&D to their improvement will merely accelerate the deterioration. R&D, and the activities which back them up, should be directed elsewhere.
The questions then arises: 'Where else?' and 'Should R&D currently allocated to export commodities such as, say, coffee, be redirected?' Let us try to answer these questions in reverse order. First what should be the policy towards those activities, currently commanding the bulk of the resources, which attempt to advance science and technology in the production and export of primary commodities with deteriorating terms-of-trade? Our recommendation is that they continue to be allocated to their current activities, in their current amounts. We would be content to see advances continue at their present pace for two reasons, one negative and the other positive. The negative reason is that we do not believe, from what we have observed, that reallocation of resources devoted to the pursuit of science and technology in developing countries at the low level of expertise of Sub-Saharan Africa can be carried out with much chance of success. It may be possible to shift slightly the direction of R&D within a single institution; for example some scientists working in a R&D institution whose primary focus is coffee might be reassigned to improving the production of crops grown in conjunction with coffee; but their institution as a whole could not be expected to survive with any effectiveness if its entire focus were to shift to, say, maize. The mobility of resources, particularly resources long organized and directed towards the carrying out of one activity, is very low.
The positive reason for not attempting to reallocate scientific and technological resources currently assigned to improving the production of export crops is their demonstration effect upon the pursuit of science and technology in general. The R&D institutes assigned to improving the production of export crops with deteriorating terms-of-trade are those of greatest longevity and greatest prestige in the Sub-Saharan African countries. The Tropical Pesticides Research Institute in Tanzania, the Coffee Research Foundation in Kenya, the Coffee Research Group of the Agriculture Ministry in Uganda, and the Cocoa Research Foundation in Ghana are the pre-eminent R&D institutes in their countries, not only accomplishing admirable things, but also serving as a model for newer bodies. To try to convert them to other activities, under different authorities and with, undeniably, different personnel, would be to remove the most effective institutions advancing science and technology in these countries. Competence takes many years, even decades, to create; but it can be destroyed in a flash.
Leaving in place those resources already devoted to the improvement of export crops with deteriorating-terms-of-trade does not mean that R&D should not be concentrated in other directions. If the total volume of resources to be allocated to R&D were to increase substantially, and if the entire increment were to be devoted to activities other than stimulating the production of deteriorating-terms-of-trade goods, there would be a relative reallocation. Instead of nearly all the country's scientists and technicians being assigned to R&D in coffee and tea and cocoa only a decreasing portion would be; the growing remainder would be assigned to R&D in new stable-terms-of-trade earners of foreign exchange and in improving the performance of producers for the domestic market.
We have illustrated, at the close of Chapter 9, the effect of the growth of resources devoted to advancing science and technology in the latter directions by extending the international trade model laid out in Chapter 2. In Chapter 9 we merely reproduced the model, showing the likely consequence, over the long run, of undertaking R&D in the proper direction, 'proper' signifying the direction in which the terms of trade are expected to improve. We also compared the outcomes, for production, international trade and domestic consumption, with the likely consequences of increasing, alternatively, R&D in the improper direction, namely toward increasing the productivity of resources devoted to the production of deteriorating-terms-of-trade goods.
In Figures 9.1 - 9.4 we displayed both alternatives. The growth paths, or trajectories, were shown as heavy, solid lines, capped with arrow heads. The dashed lines of increasingly steep slope, from the origin, represented the changing terms-of-trade between the goods labelled Y (primary commodities whose terms-of-trade were deteriorating) and goods labelled X (the combination of new, 'stable-terms-of-trade' exports and goods for domestic expansion). Comparison of the two cases (Case I, in which R&D was concentrated in good X, the good with favourable prospects in its terms of trade; and Case III, in which R&D was concentrated in good Y. the good with deteriorating terms of trade) revealed that at some arbitrary date in the future the economy following Case I would have a production regime devoted more heavily to good X; a similar, balanced pattern of trade (continuing to export good Y and import good X) but in lower volume; and a substantially higher standard of living for its population. Case I embodies our policy recommendations.
Additional resources needed to increase the advance of science and technology
We shall now make a quick estimate of the additional resources needed in each Sub-Saharan African country, if it is to propel science and technology in the proper direction and at a rapid rate. Let us start by assuming that between now and 2023 their economies grow at a rate sufficient to maintain GDP per capita constant, i.e. at a rate of somewhat over 3 per cent per annum. For 2023, total GDPs, in real terms, should be roughly twice what they are today.
Let us continue by assuming that resources allocated to advancing science and technology need to be provided in the same proportion to GDP as they are currently in those East Asian countries that are developing so swiftly (South Korea, Taiwan and Singapore) say 2 per cent of GDP. Currently the Sub-Saharan countries invest roughly 0.5-1 per cent of GDP on R&D, and an equivalent percentage on technical education and training. Two per cent of a GDP roughly twice the current value, would entail at least a four-fold increase (from 1 per cent of today's GDP to 2 per cent of the next generation's GDP).
Let us carry on by adopting our recommendation that R&D in those activities producing deteriorating-terms-of-trade goods should remain constant in real terms. Currently this R&D consumes, on average over the four countries in our sample, about one-half of each country's total. If this part of all R&D remains constant in amount, and if the total increases fourfold, the amount directed towards R&D in stable-terms-of-trade goods and goods for domestic consumption would have to increase eight-fold over the next 20 years. In addition, the amounts invested in technical education and training would also have to increase by an equal multiple. To achieve these expansions, the country would have to increase its allocation of resources devoted to advancing science and technology by at least 10 per cent per year (compounded). This we believe to be the size of the task facing the Sub-Saharan African countries, if they are to achieve substantial advances of science and technology in the proper directions.