REP xcnucric l/03e -co - Development planning the arithmetic of planning

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The products of secondary schools are the officers and non-commissioned officers of an economie and s~cial system. Secondari schools supply t~e persans who', with one. or hr~ inore years' of training (in ü1.sti tut ions or "on

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the j~b) , become technologiests, secretaries, nurses, sahool ~nd teachers,

~opk-~eep~rs! clerks, c~v~l ~er~ants, agric~ltur~l assistants a~d supervisory workers of various kinds. The middle a~d upper ranks of b~sineès bonsist ô:lmost entirely of secondary school products, · and these produc·ts are also the backbone of public administra t'ion. .'\. country can ·manage wi th very' few university graduates, because its better secondary schàol graduates tan perform adequately most of the administrative tasks which university

,gradua tes, ' otherwise do; an"d the few remaining gaps can be filled by imports. But one eannot meet the need for secondary school graduates by ·importing

them; the numbers are tao great, ~nd the c'o.sf 'too high. If' seconQary

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school graduates are in short sùpply ¹many 'desi:table dévelopGJents will be held up, and the cast of ·any scherhe which relies ·an their skills will. be·

excessiveo

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. \n adequated output from the secondary schools is dlso a JLB.G.~·sg,_q.,r_y

foundation for institutions which give specialized training (far~ schools fo~ agricultural assistants, teacher training c~!leges, nur~~sr trcining

sthoola~ and sa· on). If the secondary facilities are.inadequnte, the specialized facili ties ar~ inisused. Young pe{)ple then train as t,e~cl1ers

or agricultural assistants ·not because they wish to work ~n th~~e capacities, but be cause this is ^ll sub's'ti tu te !or secondary education. To<~cl~er training,

especially, th en cornes an avenue tro higher-paid occupp.tions, . .:md the turnover is excessive. The soundest educational policy is to have an adequate output from the secondary schools; given this, shortJges of moro

·• specialized · skills will not .:last longo

Technicians are here defined as persans who, after recoiving a basic education to age fifteen or ~ixteen, have received the equivalont of two years of full-time technical training - whetter in a full-time institution, or whether _. over sorne lo.nger per.iod in sorne combination of on-thu-job

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training and part-time study.

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REPRCDUCTION/038-8.0 Par;e 105

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Most attempts to increase ~ro~uctivity involve either machinery or the application of scientifi~ kno~le~~e~ they th~refore i~volve technicians.

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At the pr~sent tim~ the shortage bf techniciane ié ~orld-wide , but is ~ost acute in underdeveloped countries. One reason is·a high tu~ficver; go~d

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technicians get scholarships to go on to uni ver si ty; or olse · thej'' stud.y for university degre~s in ev~~ing 6lass~s. H~rtce ~ t~lent~d man tends to use the teclihicïan:, s training ·me rely as a substi bite for secon·d,. ry education, on :his way . to highe; achieverri'ents.

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It is impossible

:ta

have a . surplus of .techn.ician,s ⁰ ;lS mor o a pp~ ar on the ma,rket, employers. upgr<;td~ th_·: e qualifications :a,f p.ersons.whom t;hey hire

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for technical jobs, so all that happens is that trained technicians displ~ce

untrained ones, and in the process raise the level of productivity. :Besides, even if there were more teshnicians than technical jobs, the surplus

technicians could compete in non-technical areas with ether ~roduateé of secondary education, and would perform equally well iri such jobs. Renee a Development Plan should give priority to multiplying the number of

technicians as the surest way of raising productivity.

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Some~ c6untries have diffidulty in rècruiting =youngsters for technical training, in competition with the attractions 6f.university cbursos. High schools studerits prefer to go on to an institu~ion w~ich wi~l rive th~m a Bachelor's degree, especially if a Bac~elor's degree will ear" a higher salary than a technician's Diploma. Faculties of Law, Arts ~nd Social S.cience are therefore flooded, while the technical ,•alleges h·J.ve empty places. The remedies are inherent in the problem: u~grade 'the pay bf

technicians, restri.ct entry i.nto F~aeu.l ti es of' Law, Arts and Social S,cience, and offer more generous scholarships and bursaries tci stucle·nts in technical colleges than to students in overcrowed Faculties. It is easy to have a surplus of Ârts graduDte.s", .-but,.-impo,s.si bl.e_._:t.Q __ fl;~ye a surplus of tecl:nicians •

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REPRODU CT! CfJ/038 -80 Fage· 106

It is equally impossible to have too many engineers and scientistso Man_y ~ountries hÇJ.ve

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s~rplus. of uni v~rsi ty _gradua tes in the hun.J.ni ti es, .. lÇ~w and commerce, but no country ,i;t ;the world ha_s: a surplus o{ .. er15ine~rs •

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. Most p_f the .jo_bs whicJ\ graduate? in .the humani ti es fi+l-in administra_ticn, commer9c or te a ching - .could be done equally _ well by engi necr,-s o:c sci.entists;

put what enginee.rs ;and s.cientists d.o ç:annot be ~.one equally Wf?ll by

h~manitie$ graduates. Renee,. in fr~ming higher education polici~s th~re

.. is no point in count;i,ng how many engineers o-r. scient:ists, ._the. e_consmy nçcds, with a view to keeping their numbers dawn; financi_. al s_.tringency _. ropy - for. . ce

strict control over the numbers admi tted into facul ti es _of humani ti es, ·l aw or commerce; but maximura emc·ouragement · shéùld b~'r.gi vE:n

·.t a

st.udents who desire to

~nter faculties of·science, engineering, agriculture or medicineo

~>.ry

1. A ~hortage ~f unskilled 1a~our is improbable; if it exi~tn the rc~cdy is to adopt mcasures tc step

Up ..

the. output ·of agriiculture whi.l'-- ::'cJ.ucing its làbour force.

2. In countries . .which s~ffer from pressure of population in the .count,ry -side, the annual incraase in the productivity of sectorc. ether than .•? 0gricultura should be kept, in the interest of ~~ployment, dawn to the

leve~ which would maximize .total .output.

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Require~en~~;for' è~ill~d m~npower of various categories should be projected sevè·ral years nhead, ·and measures ·adopted to ensure adequate suppliese

4.

Secondary educ:tion 'has priority over primary and university riducation.

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From the economie point of vie~, it is impossible to train too ~any

technicinns, engineers or scientistso

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9.

THE GOVERNMENT BUDGET

Finally, we come to the Government budget (including ccntrnl,

provincial and local authorities). Capital expenditures are alreudy nccounted for in Table XXXVI. Here we deal with reonr:i::ent incarne and expcnà.iture.

Planners began by planning capital expenditure only, ·~~ caritJl plus

R~PP.ODtlCT ICl !/038 -8C

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:-{ZP!IOm,J_C'.L'If-.N/0~8-80.

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loans, it can avoid putting up much money of its own); and the fnct ~~at it

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may wish to participate in exploiting what may turn out to be very profit able

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o'pportuni t:ies ( though ·here a. sui tàble system of royal ti es ancl taxes ,is _3.go.in is sribttitute for inv~stm~n~). l f , in· addi t îon ta· the fin^.. ^.., ancing of the public utili t i es, and cii·à.nneling :Ùnan~e .ta pr.i ~a te·. ac ti v·i ti.es through

; ·f-inÇJ.ncial corporations;: the Governmeht wirshes a.lso to set up i ts own opera ting

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agricul tural ; ·indus-trial .. or• housing· ·corporations;' i t. may· easily happ~n that half-t he. net investme~t in ihe ~conomy is. ii~an~ed by th~ Gove~nment, even though the number ·of .peoplè· ~directly ' ^employe·d by the Governmen t may -~till

be rel atively smallo

Other economie services may h.ot be·tied so closely to the private ,.sector!s prpjections,·but ar~ ~att ·of· the general frame~ork. Ger:l·:)· idü nnd

other surveys are frequentl-y undermanhed.-- The agric.ultur,al serv;i ces ·

-research, training· and. extension-- have ·a· maj.oi" burden ta· benr - sih.ce they

play a major role .in getting the increase in agrii:::ultural output on vJhich .the projections are based. Community De~elopment is to' help incrcaèe capital

fprm~tion at law cost; .and the Ministry of Labour is. to ensure an inco~e~

pqlicy · which do es not, ·resu-l t in -conFint.wlly mounting unempl oyment; the needs of the se departmcnts should ·have high pri·ori ty.

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The social services· also hove the ir lïnk wi th outputo The sott l ing of new lands may require public health measures •. 'The manpower surve~f ·yi dl cl.s s sorne minimum targets for educationo The need for welfare services i s ~ by -. product of expansion of the- modern sector. · Unemployment relief aot mcrely

impraves the-social atmosphere (and therefore the willingness to invest):but, if it-t akes the form of emplayment on useful ·works,· may contribùte signific~ntly

to agricultural potential~

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Fa.~·e 111

·Most Goverpmcnt dcpartinents rec.ognize the need to coordinate their services with the private sector. Surprisingly, · coordination with one

another is less frequent. It is not usual to find that the water authorities have chosen villages A to G for development, the electricity authorities

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villages H to L, the medical authorities villages M to R, and so ono In discussing regional balance we saw

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·desir-abl e to choose .. a .. limi t.e:d. mumber of locations ·ta· which Iiew industries would: be attracted, .qnd. thn.t these should be equippeà with the complete range, of public services • . :~'he

settlemeri.t of new a'gricul tural lands a-lso requires integrated planning .of roads, water supplies, schools and so on. Apart from these special areas,

<:o-or:lination is not al ways ne'cessary, or the best tac tic; when i t is not possit le :· to gi ve everythi-ng to every village, i t may be poli tico.lly \•ri se to distribute what is available fairly widely. However, whatcvcr the .·.· correc..t ___ pr>.li.cy _ _rr1_ay be ₁ i t is ~ilot likely to re ache cl, hapr ... nznrdly; tho se who

0 - · •• - •• • • ' ' · • • -••••• • - •• ·~ ^{' '}⁰^• ^{' '}••••~•-^• ^• " ' ' · • ' •,..- -• , , ' , , . . r , • • • •••1-o• 0 0 0 " ' '• 14ooo •••~o,...-~ ...

. plan the location of services should exchange and discuss their plan.

The link on the side of output is relatively easy, but it does not go far in determing how much to invest in the various services. For over and above what is produced as intermediate goods, is what is prcduced for the consumer. The real problem with water or el ectricity or telephones is not how rouch industry wants, but how many villages to add to the system, when all want to be included and the money suffices only to financP a few., Similarly the problem in education may not be how many people to train to

fill the jobs which development is expectcd to create, but how fast to continue expanding the system \..,rhen there is alre~dy eericus_uner:rrlc.;yment among school l e avers ^o We considered these problems in Chapt er II, :md

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saw that there is no economi~ reason why . the public shouid not ·have as much of these services as it ts,prepared to pay for.. Thus the rrJte at -...,.Illich it is feasible to increase. taxation.is the only economie limit to the r~te

at which the social services should be exapandedo

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RB.FRODU CT I d l/0:-18-80 Page 1~.2

Fiscal Proposals

The budget p~6jected for Yea~ 1b is shawn in Table XLV, which is an

Table XLV ^o ^· Consolida.te.d Budget

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Exp·e·ndLture Yearo Year10· Revenue . Ye.r:r . · :. Ye.:n: 10

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c ····- · --. .

-~-"\dministrati v è 25 40 :rmport Duties 35

Gî

Economie

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25 42 Excise 11 23

Educati'on

1? 38

^Go^vt·. ^Profits ^-1 ⁵

Real th 10 23 Corporaté Tax 2o 39

... 8 18 Personal 1;:J ^{1 :}

Welfare I.T. 30

Defence 3

8

^Soci' ^{al Ins·.} 3 9

Debt Charges 2 13 Loc.al Taxes 15 30

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Savings .. 25 45 ^... Mise. Fees 20

--

^.._' 30

115 227 115 227

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On the expen,di tur~. si de, .not~b11 fe?tur,es are the more than dcubling of Education, Henlth -an~ i.Je1fare Ct.o 3.5,. 1 .• 5 .and 1.2 per .cent of G~P

respectively), and .the ~ven larger increa~es in ,~efence,and. Debt· chargeE~

.rt.is ver1 h~rd in these days to keep t~e recurrent budget ~nder cgntrol~

since the public's demand .for social .services·is unlimited.

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:?n-ge ~-13

On the revenue side, the Governmcnt plans to turn the loss on state -,~~~~d ~nierp~is~i i~to 'a prof{~; this may be a pious h6pe. Import duties

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are shawn as a residual~ ·because thei are the most flexible itemo ~owever,

this rate of increase will not be èasy to achieve, especi lly ns import substitution ~iii bé r~~iraining fhe impdrté ~f consumer g6ods. .~s·we have alreadj nbted, t~e G6;ernmen~;is straining the economy··by seeking simulta -neously a large incrense in investment and a large increase in l'ublic services. In absolute terms this is a modest budget, t~tking only 15 por cent of GDP; i t is the rate

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-e-xpansion -·thRt causes concern. \ihother tb e tax revenue can be doupled (at constant priees) over te~ years will depenè as. much on the quality of political leader~hip as on.anything olF@.

D~velopment Plans do not always publish a detailed forecnst of future revenue, and whether t~ey should

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so is open to .argument. À Government do es not ann.ounce tax changes several months in advance, sinco this permi ts evasive actione .But there is.no harm in.showing.what tax chang~s will become necessary over the next ten years. On the contr,a:r.y, this ha;; .some political advantage. There is the negative advantage thut it is harq for

the Op osition to make __ political capital out of a calculaticn showing that increc:1qes in Government expeJil-di ture v;tll require inc:reases ~I?-

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^t^a,7~,~~~q^v^e^rthe . years. And there is also the positive advanta.ge of giving the pu1üiç tir1e .ta accustom itself to the inevitable.

Summa:ry

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1. The Plan must includc a foreèast of Government revenue and oxrunditure on~ current account.

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The cast of existing commitments will increase even if no hcw policies adopte ct;

for ecas.ti~g shou~ d

begi·n'· wi th. the cost of the se cchmmi tn1·ents. 3. Many parts of the Plan have implications for public cxpenditure; th.ese interr-elationships should. be worked outo

4.

There is public

.pres• s~re t~

^e^x^pand ^t^h-e social services beyond levcls justifiable by their

~ohtributio~ \~

^raisin^g productivity. These

~re

^valied

claims; the only econo~ic 'limit to meeting them is the fe3sibiliti of raising the necessary taxes.

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It is ver~ diffi.cult to ~eep r,ecurrent expenditure ·unùe~ control, but the ~i;tempt should 'be made, s~nce the finanei:t(g ÇJf ·the Plan pred.icates a.

_ cer~ain lev~~ ,of Go~ernment saving~

6.. Detailed _tax proposals. need not be ·published, but the Governmon·t should have detailed ideas as tq how .it will _. _{• ,·} _.fin_jd _. the necessary money ..

10.. RET:ROS.PECT

We have come ·a long way. As a result we now have a compre~ensivc

frârrîew·ork,· in 'which the tables iri'terlock~ and all the figures are consistent with one another. No Development Plan has ever been made with such a high degree of consistency, if only because no underdeveloped coùntry has all the stafi' sfics which this kind of framework would require.

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The readcr who is unfamiliar with these technique~ should nef allow himself to ;b~ carried away by the arithmetic. I~ effect, we have m.de ^' a Plan out of thin A.ir.. In p_ractic __

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^{i t}^is^~ot^possib.^l^e ^to make a good Plan

w without having detailed knowledge of the country which is being plannedo Iunumerable decisions have to ba made ·at every point; how much can be raised in taxes; whether the farmers are likely to inc'rease the ir pro duc ti vi ty;

what new natural resources or technologicai opportunitiés await exploitation; what can be exported and what cannat; how urgent the housing situation is; whether current employment is more important than future incarne; ... r..md ·sa e;no Such decisions require not onl) ·.4n~imate knowledge, but ~lso polit~oal

authorityo What wc have made here is not any sens~ a ¹mqdel 'Plan', since decisions we made as we went along .were appropriate only to the circumstances which we assu~ed to exist in this partieular place.

Moreover, as we have often reit~rated, .ultimately what matters .are the individual projects chosen, and i;he eeonomie policies adoptec:lo One can make a _good Plan without a macroeconomie framework, if the projccts .a. e chosen B!ld ~J~e- .po?-icy m.e.asures well de.signed. .Equally a Plan may bE: v.er.y bad, even though it meets all the tests of consistencyo

Fac;e ·: i5

Looking ^bad:: on this mass of tables one may wcll ns!;- ^ho"V! much cf t:.ic would really be !JJOrth do ·ng, if the statistics could be prociuced. i.ct·J!e,l]_y, the only controversial part is the fixing of targets for infivi?unl i~~uc~~ieo.

No ody -: isrutec that planning adds orner to Governroent ex .en rU ture, thé't Government procram~es ~hould be based on a careful projection fin~ ci •. :

res0urces, or that manpolter requirements shoulf1 be examincc1. It is tte é'·:~-:;~;-èT)t

to forecast or contrrl pro~uction in the nrivate sector thnt rnises Cio~~teo

':.Je ~1ave already r.liscussed this subject in Char-ter I. 'o',vever, ,.._otr that ^\'ie have seen tt~hat ferecasting involves, a further judger.ent cnn be oJl..~ea.

The core of tl.1e argument is the usefulness or otherwise of the input-out:::-ut matrix.. This rn trix enables the statisticians to bring tcgether all u~e

influences on the demand for a commodity, including the inter er1inte deD~~~c.

' How usef 1 this is depends on where the engine of growth i~ oc. ~ej in t~e

1 rarticular econooy. If the economy is propelled by the rnte of exnansion

Dans le document Development planning the arithmetic of planning (Page 105-117)