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<ul><li><p>379 </p><p>SYMPOSIUM ON THE IMPACT OF TECHNICAL CHANGE ON OUTPUT AND INCOME DISTRIBUTION IN LDC AGRICULTURE </p><p>I. TECHNOLOGY CHANGE AS AN INSTRUMENT IN AGRICULTURAL DEVELOPMENT </p><p>John McInerney University of Exeter* </p><p>The introduction of new technology into agriculture is a central feature of development schemes, but is regularly criticised because of its distributive effects. Technology change is unavoidably biased, however, and cannot easily be used to serve specific distribution objectives. Ex post studies do not necessarily guide the appropriate choice of technology as they rarely offer causal explanations. Predicting the consequences of innovation is hampered by the narrowness of established economic models and the conceptual indefiniteness of technology as a variable in those models. f n the absence of a wider system framework, technology for development is selected according to more general guides. These emphasise either the primacy of output objectives or advocate technology forms presumed appropriate to distribution objectives. Neither adequately substitutes f o r a broad framework to guide the choice of technology as an instrument in development. </p><p>Introduction The possibilities for economic growth solely through the more efficient allocation of existing resources is clearly restricted, and attention must turn ultimately towards technological innovation. Following Schumpeter (1934) we now accept this as the engine of economic development, and a technology component lies at the core of most development schemes. Indeed, it is now so taken for granted that contemporary approaches to LDC agriculture frequently treat adoption of new technology as though synonymous with development. </p><p>Most of the standard writings in economics deal with technological change as an endogenous phenomenon occurring within firmshdustries. They explore the question What is the process whereby enterprises generate and adopt new technology?. This framework is not too helpful for the study of an industry like agriculture where new technology is generated almost exclusively externally to the firm and then offered for acquisition through the market. Furthermore, much of agricultural development proceeds by technology being selected and offered to farmers (or its transfer being permitted through the international market) within a context of administered change. Under these </p><p>University of Exeter, Agricultural Economics Unit, St. Germans Road, Exeter EX4 6TL. </p></li><li><p>380 JOHN McINERNEY </p><p>circumstances, agriculturaI innovation is viewed more in terms of a planning decision. If technology is to be treated in this way as an instrument of public, as well as private, choice it becomes imperative that the economists analysis and understanding of the phenomenon is sufficiently sound to justify his influence in the planning process. </p><p>An important point to recognise at the outset is that technology change is unavoidably a biased phenomenon. As generally perceived in economics, it is some alteration in the means or procedures in production (Yudelman, 1971). As such it is an alteration in part of an integrated system of economic (and related) activity, and one would not expect its effects to be completely uniform throughout that whole system. Furthermore, within the production set it will have differential impacts because new technology is almost invariably specific to (or more associated with) particular inputs, or products, or locations, or production structures, etc. Consequently, a differential incidence of costs and benefits within the economic system, and hence a distinct redistributive impact, should never come as a surprise. It is perhaps remarkable that it is still remarked upon. </p><p>If we accept this production-oriented view of technology, by definition all innovation should offer benefits in terms of aggregate output; in this sense it is a good thing. Judgements about the desirability/acceptability of its distributive effects then determine whether any technological change is judged as good or bad. This focus upon the equity, as opposed to the efficiency, aspects is a mark of the contemporary discussions of technology relating to developing countries (and increasingly in industrial economies). To make assessments about technology alternatives for LDC agriculture an appropriate framework for treating distribution aspects is crucial, therefore. This means a framework which identifies the effects as perceived by specific interest groups. Usually this includes those most vulnerable to adverse change, such as landless labourers, small tenant farmers, low income food consumers, subsistence producers, etc. This is clearly an economists definition of relevant interest groups. Only rarely wilI other, equally valid, categorisations of society provide the basis for assessing the distributive impact-women, children, the aged, artisans, civil servants, agricultural merchants, urban employers, village leaders, extension workers. Our available methodology usually makes the decisions for us as to who is important. </p><p>The accumulated experience of the past two decades contains innumerable studies on the impacts of new agricultural technology in LDCs. Mostly they reinforce an impression of an unacceptable or less preferred distribution of the costs and benefits. The main methodologies have been ex post, leaving judgements to be made after the technology change has taken place. Mostly, too, they have focussed on what effects were manifested, not why. </p><p>Difficulties in Concept and Method In principle, using technology as a development instrument implies selecting from some existing shelf of alternative technologies one expected to produce the best outcomes. This in turn requires that: (a) the shelf contains technology alternatives acceptable to the target group of innovating farmers; and (b) the choice of technology to be offered is made by government/development plannerdaid agencies in line with some perception of sectoral output and distribution objectives. As a description of how technological change in LDCs actually takes place this is clearly somewhat stylised, and would be rejected by many (Stewart, 1978). Nevertheless, most micro-economic analysis on technology change in LDC agriculture-and </p></li><li><p>SYMPOSIUM ON THE IMPACT OF TECHNICAL CHANGE ON OUTPUT AND INCOME 381 </p><p>particularly those of the Green Revolution and similar impact studies-have been conducted against a background of such presumptions. </p><p>For this kind of rational choice approach it is clear that an ex ante methodology for predicting the effects of new technology is required. Unfortunately, an adequate explanatory/analytical methodology for this purpose does not exist. Partly this is because, despite detailed examinations (Brown, 1966), there is still no clear conception in economics of what this technology variable is that we are trying to manipulate. Schmookler (1966) refers to technology as the terra incognito of modern economics, and Nordhaus (1969) throws in the towel by saying it is a complex and rich set of formulas and intuitions that defies general analysis. For economists, this lack of a clear characterisation of technology prevents the formulation of robust conceptual and empirical models for explaining the output and distribution effects of new technology in terms of our usual variables. This in turn undermines any real attempt at linking technology issues with the rest of our analytical framework. Since we cannot associate observed good or bad effects of changes with their underlying causes, we have no reliable basis for predicting the likely outcomes of any innovation in the agricultural production system. </p><p>To provide some logic to our treatment of technological change in agriculture we tend to fall back on the conceptually neat structure of neoclassical production economics (see Elster, 1983), fixing technology as some characteristic of the production function. A distinction is made between (a) change in technique, which is simply an alteration in factor combinations in response to relative factor prices, and (b) change in fechnofogy (meaning the whole set of potential techniques) which occurs only if something totally novel becomes available. While this seems consistent with technique change being associated with allocative efficiency and technology change being the true essence of development, it is somewhat contrived. Although working impressively in the classroom, in practice it seems impossible to distinguish empirically between the two. (Is the change from bullocks to power tillers and then to four-wheel tractors a movement around a given capital-labour unit isoquant, or a shift to a different one?). </p><p>More importantly, this representation treats technology change as a quantitative and largely disembodied phenomenon in the production process. It arrives in the form of enhanced resource productivities, new production possibilities and more productive factor combinations. This has two distinct limitations. First it over-emphasises technological change as a production adjustment, characterising its effects in terms of potential increments of output and factor employment ratios. The distributive aspects of new technology then emerge only indirectly via impacts on relative employment levels of broad resource categories and their shares of income. Only if factor prices are competitively determined and the distribution of factor ownership is adequately explained (i.e. almost never) will this approach enable much useful comment to be made on distributive effects amongst policy-relevant interest groups. Second the production model does not capture the essentially qualitative nature of new technology, seen in the appearance of new and quite different physical inputs (seeds, chemicals machines, livestock, labour skills) and outputs (hybrid maize, triticale, broiler chicken). This aspect of innovation emphasises displacement and substitution, with potentially detailed and significant implications for distribution. The gains accrue only to the novel inputs and those farmers able to scrap the old and acquire the new. By the same token, the costs are largely carried by those who are, own, or only have access to the old inputs which lose their competitive position or are displaced. </p></li><li><p>382 JOHN MclNERNEY </p><p>Neoclassical distribution theory is too stylised to offer a realistic framework for tracing the redistributions induced by new technology. We need a model to explain (a) how the benefits generated by agricultural production within a given period under a given technology become shared amongst relevant human groups in society (not resource classes), both within and between rural and urban sectors; (b) how the process of technological change affects, and is affected by, the array of technical, economic, institutional, social and historical elements that make up the main fabric of rural society. This requires a system model of the rural sector based on a recognition that technological change is a process, not a discrete event, with continuing effects over time. In a disciplinary sense it would grow from examining new technology as a disturbance to the whole linked system of human activity embraced by social science. </p><p>Operational Approaches In the absence of reliable procedures for predicting the output and distribution effects of any development scheme with a technology component at its core, two distinct working approaches have emerged. Both explicitly recognise that new technology, as well as being superior in output terms, must also satisfy specific distribution objectives. Their methods of dealing with this problem, however, are entirely different. </p><p>The first approach separates production and distribution objectives and handles them independently. Pinstrup-Anderson (1 982) says, Agricultural research and technology are effective in promoting growth and efficiency, but questions of distribution are more effectively dealt with through public policy measures of various types. In other words, select technology to achieve output objectives and then correct for any maldistributions afterwards when it has become clear what they are. (Much agricultural support policy in industrialised countries is based on the same thinking). As well as de-linking the efficiency and equity effects of technology change, there is a clear suggestion in all this that development goals relating to output and productivity increase really are more important than any others, and so should occupy the main attention-as Clayton (1983) has recently asserted. </p><p>There are a number of problems with this approach-particularly as seen from the standpoint of those adversely affected by innovation. It is not clear what the appropriate corrective policy measures are. Most developing countries do not have the complex array of institutional mechanisms necessary to appropriate and redistribute gains between specific social interest groups. Furthermore, once they have occurred many of the technology-induced redistributions are irreversible (e.g. displacement of tenant farmers). And those adversely affected are frequently too vulnerable to survive some major economic change and then await compensatory assistance, anyway. Added to this, standard welfare economics theory proclaims the logical inconsistency of separating decisions about efficiency from those about equity, since the two are inextricably interdependent. </p><p>The second approach is built upon an almost totally opposing premise. It suggests using distribution objectives as the prime criterion in selecting technology, thereby making available only particular technology forms whose induced effects appear in advance likely to be satisfactory. This so-called appropriate technology (AT) approach, developed from the writings of Schumacher (1973), presumes it is practically possible to predict the relevant effects of any technology change in advance-and therefore to make a </p></li><li><p>SYMPOSIUM ON THE IMPACT OF TECHNICAL CHANGE ON OUTPUT A N D INCOME 383 </p><p>considered ex ante choice between alternative technology packages. In principle, the AT proponents claim that the distribution outcomes of any new way of doing things are an intrinsic characteristic of the technology itself. Apparently, if the technology is cheap, simple, small-scale, uses local inputs, etc. its effects are likely to be socially beneficial. This approach also suffers from important flaws. While frequently it may help as a general prescription, its conceptual framework in economics is shaky, if not nonexistent. Its emphasis on the right choice of technology hardware places heavy responsibility on the engineer/technologist for the direction in which development proceeds. Unfortunately, the AT prescription is far from complete in being able to identify appropriate pieces of hardware or in explaining how to develop them. </p><p>The major weakness of AT is that it, too, is based on an incomplete conception of the process of technological change in society. In essence it...</p></li></ul>


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