ENGINEERING FOR DEVELOPMENT

(First Draft)

 

E J Jefferies

 

March 1969

CONTENTS

PART 1 THE WORLD DEVELOPMENT PROGRAMME

Chapter 1 Introduction
Chapter 2 Closing the Gap
Chapter 3 Resistance to Change
Chapter 4 International Technical Assistance

PART II AN ENGINEERING APPROACH TO A PLAN FOR A COUNTRY

Chapter 5 Outline of the Approach
Chapter 6 Setting the Problem
Chapter 7 Basic, Concepts, Terms and Definitions
Chapter 8 Background Data Available
Chapter 9 The Starting Point for a Case Study
Chapter 10 Preliminary Calculations
Chapter 11 Patterns of Economic Growth
Chapter 12 Development Plan for Year 1
Chapter 13 Development Plan for Year 2
Chapter 14 Development Plan for Year 3
Chapter 15 Review of Changes During the Three Years
Chapter 16 The Control of Development
Chapter 17 Financing the Development

 

 

PART III THE IMPLICATIONS OF RAPID GROWTH

Chapter 18 Economic Growth and Technological Changes in Rural Communities
Chapter 19 The Influence of Agriculture on Industrial Development
Chapter 20 The Role of Manufacturing Industry
Chapter 21 The Contribution of Industrial Engineering to a Solution

 

PART IV DESIGNING FOR BALANCE IN DEVELOPMENT


Chapter 22 The Prediction of New Manufacturing Capacity Requirements by Product Group
Chapter 23 The Productivity of Labour
Chapter 24 The Growth of Productivity
Chapter 25 The Calculation of Appropriate Levels of Productivity in New Plants

 

CHAPTER 18

 

ECONOMIC GROWTH AND TECHNOLOGICAL

CHANGE IN RURAL COMMUNITIES

 

9.1 The sub-sector of an economy operating at a low level of industrialisation which offers the greatest resistance to economic and technological development is subsistence and small-scale primary production. In this we include crop cultivation, animal husbandry, forestry, fishing, hunting etc whether settled or nomadic, which is carried on by families, extended families, tribal or feudal groups, where the reward for an individual’s labour is a share in the produce or the right to share in a common pool of food, clothing and shelter, rather than a money wage. The right to carry on these activities may derive in a wide variety of ways: traditional, legal, financial, or force of arms. It may involve the payment of a fixed "rent" in money or produce or in tithes (a proportion of the actual produce); and taxes to a central or local government or to a "protector". The precise mechanism is not important to our present enquiry, though it may be very important to the individuals concerned and may lead to injustice and economic stagnation of the sub-sector. However, quite apart from these "overhead" effects there are internal limitations on the growth of activity in this sub-sector. These limitations are of great importance in any programme of economic development since, for our assumed country in YEAR 0, we may expect the sub-sector to account for 80% or 90% of employment in primary production and 60% or 70% of output. The individuals engaged in subsistence activities may also on occasion, e.g. at harvest times, provide labour to "industrial" type activities including plantation agriculture, on a part-time or intermittent basis, for which they receive a money wage. This may soften or modify the limitations on the growth of their individual subsistence activities but will not eliminate them until the individuals concerned transfer completely into the industrialised sectors as full time wage earners.

 

9.2 The economic activities of the individual units of rural communities include non-farm operations such as manufacturing, processing, storage, transportation and trade. These should logically be reported separately from true primary producing activity but this is not of any real importance since they all contribute to the Net Output of the unit and hence to the GDP of the country. Mis-allocation of such activities in the national accounts is of less importance than mis-valuation or the complete omission or duplication of individual items.

 

The Initial Condition: Subsistence Production

 

9.3 As in all economic activity the valuation of the output of a subsistence unit is made up by: capital charges (rent, tithes, land tax etc) plus cost of supplies and services purchased plus assessed value of labour used equals Gross Output; OR assessed value of produce (ex-farm basis, including produce consumed or surrendered in lieu of rent) less cost of supplies and services purchased (including the assessed value of supplies issued free by the State such as irrigation water, seed, fertiliser etc, but not including rent and wages paid in cash) equals Net Output.

 

The productivity of Labour in the activity can be expressed either by dividing the net output by the actual number of individuals taking part or by some (smaller) number assessed as the equivalent of full-time adult labour. In the second case the difference between the actual and assessed numbers would be reported as unemployment.

 

9.4 There are two economic viewpoints on the operation of subsistence production:

 

(a) Macro-economic: the overall value of the economy as a whole.

(b) Micro-economic: the viewpoint of the subsistence worker and his dependents.

 

Since subsistence production is normally carried on wholly or partly outside the money economy and since the macro-economic viewpoint can only be expressed in money terms, we have here a difficult problem of reconciliation. However, an adequate evaluation at the micro-economic level is very necessary since the aggregate of an assumed value for all of the individual subsistence activities is included in the Net Output of the country as a whole (it’s GDP), and the basis of the individual evaluations will have a large effect on the figure claimed for the GDP of the country.

 

9.5 In the remainder of this chapter we shall limit our examination to subsistence farming, since this is the largest of the subsistence activities and shall ignore the effects of casual wage-earnings outside the subsistence activity. From the conclusions of this examination, we shall be able to see what external actions may be necessary to force the pace of economic growth in this sub-sector to prevent it from blocking the attainment of our main objective of accelerated growth of the whole country.

 

The Static Micro-Economic Viewpoint of Subsistence Farming

 

9.6 Let us examine first the situation where there is no technological change and no change in standards of living in this sector. From the subsistence farmer’s point of view, the objectives of his operation can be visualised:

 

 

9.7 The required amount of consumption goods will include products directly and immediately consumed by the family: food and drink, fuel for cooking (and heating where necessary), fibres, furs, leather etc for clothing. It will also include a small surplus of items which can be exchanged - with or without the use of money - for items needed which cannot be produced by the family. Further it may have to include an additional surplus which will go to pay for rents, supplies and taxes - head tax, land tax, cattle tax, tithes, irrigation water - which are unavoidable.

 

9.8 The capital goods which must be produced (or obtained through some trading system against some form of production by the family) will include firstly those connected with the farming operations and needed for next year; the improvements needed to bring more land under cultivation and the increase of flocks and herds; the replacement of worn out tools, crop processing equipment and draught animals; the maintenance of equipment, irrigation works and access roads in usable condition. Secondly it will include additions to and maintenance of living accommodation, furniture and household equipment.

 

9.9. The production of capital goods may also include preparations for the hiving off of children as they grow up, into separate economically active units; the opening up and improvement of new land or the accumulation of savings to acquire land or tenancies; the construction of new living accommodation, tools and equipment; or the setting aside of money or goods as a dowry for daughters.

 

9.10 The above is a very brief summary of the purely static minimum activity needed to maintain a line of subsistence farming without any change in the standard of living. It includes a sizable element of what would be classified as "capital formation" in an industrial activity, which will have some minimum level when the subsistence farming population is not increasing - e.g. when the "average" subsistence farmer is succeeded by one son and one daughter - but will be proportionally higher when population is increasing - when capital provision has to be made for more than one son and one daughter in succession.

 

The Static Macro-Economic Viewpoint

 

9.11 Corresponding to the above static micro-economic outline, the macro-economic result will depend on two factors: (a) the growth of population in the subsistence farming section; (b) the availability and quality of new farming land.

 

9.12 If the subsistence farming population is not growing, both the total and per capita contribution to the GDP will continue unchanged. With an increasing population, the per capita net output for consumption will remain unchanged but the "capital formation" element will increase, by virtue of the "investment" in opening up new land as long as this is available. The amount of this new "investment" per new economic unit will depend on the quality of the land available, i.e. on the amount of work needed to prepare unit areas of it for cultivation and on its subsequent productivity per unit area, which in turn determines how much land must be improved to support each new farmer.

 

9.13 If the available agricultural land is already fully occupied, then an increase in the subsistence farming population without some technological change will not be able to generate any extra net output and the result will be that the total contribution of the sector to GDP will remain unchanged but the per capita contribution to GDP and the standard of living in the sector will both fall. This will lead to rural unemployment (or to an unnoticed underemployment) and a drift of population away from the land into towns where the presence of unemployed persons is both obvious and politically undesirable. This situation can only be avoided by the introduction of some technological change in the rural economy which will permit a given area of land to absorb more labour and produce proportionately more. Possible types of technological change, their economic effects, and means of generating them will be explored later.

 

The "Developing" Micro-Economic Viewpoint

 

9.14 Suppose now that a climate of opinion is formed among a significant proportion of subsistence farmers in an area favouring an (as yet undefined) increase in standard of living. Suppose they have no access to information, supplies and equipment which would enable them to change their farming methods and no innate inventiveness to develop improved methods for themselves. What actions can such farmers take, in the absence of a change in their farming technology, to achieve a higher standard of living? The major reserve resource which they have available is labour. They may or may not have also unused reserves of land which can be brought into production.

 

9.15 With unused reserves of land, increased production can be obtained without change of cultivation techniques, solely by opening up new land, i.e. by capital investment in the form of a "once-for-all" application of labour additional to the hours already being worked, followed by a continuing application of extra hours of labour in cultivating and harvesting the new land. This process of expansion is obviously limited by the seasonal nature of farming. Each successive operation has to be performed within a limited period of time for each crop so that the amount of land one man can cultivate by his existing techniques is proportional to the number of hours a day he is willing and able to work at times of peak activity, with a ceiling of twelve, fourteen or sixteen hours a day depending on the length of daylight available etc. Bringing additional individuals into the working group does not provide an answer since this automatically reduces the per capita production again and cancels out any possible rise in standard of living.

 

9.16 Without unused reserves of land, the possibility of increasing production will depend on whether their existing land is already being worked to the capacity of its fertility and water supply, e.g. whether unnecessary fallows are left; and whether competing growths - weeds - are permitted. Assuming that yields per unit area are already at a maximum for the existing cultivation techniques, what more can be done?

 

9.17 Under either of these conditions - full effective utilisation of either the available land or the available labour - and without a change in cultivation techniques, the only avenue open to the subsistence farmer to increase his standard of living is through the (usually small and fixed) fraction of his produce which he can spare for trade. He may be able to bargain in the open market for a better price (or barter value) for this, but his scope here is strictly limited by general economic conditions in the country. If, as indicated earlier, farm market prices are rising by some 3% per annum and assuming that one-third of his produce goes into trade, the overall increase in his productivity will be only 1% per annum. Any further increase above this figure must come either from improved cultivation techniques (or change in farming technology) or from some processing operation by which he can apply additional labour to his salable surplus to add extra value to it. The latter is of course an activity which should no longer be classified as "farming" but as "manufacturing"; a part-time cottage industry has appeared.

 

9.18 If we still rule out any change in cultivation technology, the development of the subsistence farmer’s cottage industry will also be limited by the availability of working time in those off-peak seasons when full-time occupation in cultivation is not required. When his cottage industry activities have been extended to take up fully all his free time not required on the land - seasonal unemployment and underemployment - the subsistence farmer again reaches a deadlock in his search for means of raising his standard of living. This ceiling applies equally at the micro-economic level - the individual farmer’s viewpoint - and at the macro-economic level - the total contribution of the subsistence farming sector to the country’s economic development.

 

9.19 We can therefore conclude that in the absence of technological change in farming methods, there is always a limit on the increase of productivity in the farming community whether new land is available or not and whether cottage industries are introduced or not. This is not the ambiance demanded by our target of rapid overall economic growth and unless appropriate changes are introduced, the absence of growth potential in the farming sector will inhibit the achievement of self-sustained growth.

 

9.20 This rapid survey of the problems of rural development demonstrates that without technological change there are basic limitations to growth in this sector and that the advice so often received from well meaning industrialised countries - "They should work harder" - is no real solution.

 

Kinds of Technological Change Needed Under Difference Circumstances

 

9.21 The various alternative decisions which are open to a subsistence farming unit at different stages can be shown in a Decision Diagram, assuming first of all that there is no capacity for introducing technical change. The key points at which the introduction of technical change will be necessary to generate sustained growth can be pinpointed on this diagram. The different objectives applicable at each key point can be used to characterise the type of technical change needed. Such a diagram is shown in Figure.

 

9.22 In the diagram there are three points at which the need for technological change is indicated, two in agriculture and one in cottage industry. These are:

 

 

Case 1 Solutions

 

The objective in this case is to increase physical production in farming without an increase in the peak input of labour (daily hours worked during periods of peak activity).

 

Solution A

Introduce higher yielding strains of crop, stock etc; or double cropping; or crop varieties capable of phased harvesting. This may need a once-for-all or a continuous programme of seed (stock) raising and distribution. Limitation: such crops may increase the demand on the fertility of the land and induce Case 2.

 

Solution B

If unused land is available, introduce improved equipment and methods of tillage, cultivation and harvesting, so that the area worked can be increased with the same labour. Limitation 1: this may involve cash expenditure of capital beyond the immediate resources of the unit. Limitation 2: this may involve additional recurrent cash expenditure on fuel for tractors or food for working animals, either of which must be paid for out of the increase in produce.

 

Case 2 Solutions

 

The objectives in this case is to increase either the fertility of the land; or the value of crop obtainable at a given level of fertility, by changing the cropping programme.

 

Solution C

Supply fertilisers and feeds from an external source, with better water application and control if needed. Limitation: this will involve additional recurrent cash expenditure which must be paid for out of the increase in produce.

 

Solution D

Change the crop (or part of it). Limitation 1: this will apply mainly to the "cash" part of the crop. Limitation 2: permanent crops (trees, vines etc) and animal stocks cannot be changed in one year. In this case both extra capital expenditure and temporary loss of produce may be involved. Limitation 3: new varieties of planting material and stock may not be available in sufficient quantities. Establishment of nurseries and multiplication programmes may be required.

 

Case 3 Solutions

 

The objective in this case is to increase either the physical output of manufacturing operations or the quality and market value of the product, without the use of extra hours of labour.

 

Solution E

Increase the manual skill of the operatives. Limitation 1: this will involve some form of demonstration or training supplied from an outside source. Limitation 2: during training there will be a temporary loss of output.

 

Solution F

Improve the design, market acceptability and market value of each item produced, and possibly introduce new products. Improve the material efficient in manufacture (amount of product per unit of raw material). Limitation 1: this will involve the introduction of ideas from outside sources and the conversion of these ideas into usable new product designs and production techniques. Limitation 2: it may also involve the introduction of new processing materials - dyes, bleaches, surface finishes, adhesives etc - which will have to be paid for by increased sales either of farm produce or manufactures. Limitation 3: the necessary market study will probably be beyond the capacity of the individual producing unit.

 

Solution G

Introduce improved manufacturing equipment, mechanisation, power drives etc. Limitation 1: this will involve relatively large case capital expenditures. Limitation 2: solution E will almost certain be needed as well, with its limitations. Limitation 3: the non-availability of electricity or water power may limit the degree of mechanisation which can be applied.

 

9.22 The solutions indicated above are the action points upon which some external agency can operate when appropriate conditions exist. From them it will be possible to derive the elements needed in a system which will induce and control growth. The seven types of possible action may be restated:

 

Farming Technology

 

Cottage Industries

 

None of these is likely to take place except very gradually by the unaided efforts of the individuals concerned without help from outside the sub-sector. For accelerated growth a number of forms of rural development aid will be unavoidably needed and can be reclassified:

 

Educational

Training in the efficient use of old and new equipment.

 

Technological

Identification of appropriate and assimilable new technologies.

 

Financial

Provision of loans for fixed investments and working capital; advance purchase of growing crops; investment appraisal; hire or hire purchase of equipment; mortgage or real estate.

 

Commercial and Industrial

Provision and sale of fertilisers, insecticides, equipment etc; purchase of farm surpluses; marketing and export of produce; identification of markets for new crops and handicraft products including qualities and quantities required and price levels.

 

Governmental

Subsidies, levies, taxation and price control; labour laws, safety and health services; roads, communications, power supplies and water control; formation and regulation of cooperatives; provision and operation of village markets; collection of production data; crop forecasts; publicity and information services.