The Challenge of Development

Theory and Practice in Human Resource Management

Jean-Pierre Changeux

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351485371
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

A wide-ranging survey of the theoretical and practical problems of economic development, The Challenge of Development demonstrates how effective development theory, planning and programming derive from and are tested in firsthand field experience. Covering all aspects of development, Richard J. Ward presents chapters by leading authorities who have combined academic teaching and research with years of effort in underdeveloped countries or in the administration of foreign aid programs.

The materials in The Challenge of Development are divided into six sections, providing logical, coherent coverage of each major segment of development programs: methodology, strategy and decision-making criteria in development; manpower needs and projections; the intrinsic value of land, including its agricultural potential; promoting the industrial sector; the development of infrastructure power, transportation and communications; and the social problems created by modern growth trends. In this way, it provides a balanced, practical approach to studying development problems and to working successfully in development programs.

Encompassing a broad spectrum of material and illustrating the need for an interdisciplinary approach to the problems of development, The Challenge of Development is essential reading for all students of development at every level, is a useful sourcebook for the practitioner's library and an excellent handbook for business and political officials concerned with development.

PART ONE
The Challenge in Development Planning

MUCH of the practice of economic development these days evolves out of the planner’s blueprint. At the same time, many of today’s theories about development have been formulated out of past experience. These essays reflect some of the methodology and practice that make up the challenge of modern development. The first five articles are concerned with techniques of development planning, while the second four are concerned with international aspects of development planning.

The role of the public versus the private sector in development is always a lively subject. Colm and Geiger describe tasks the government might well undertake more effectively and those where the private sector could more efficiently spur the development process.

Model building has not been neglected in development economics, as the next three articles demonstrate. Holland opts for simulation techniques, which he believes can have more realism and flexibility than mathematical or econometric models. On the other hand, Chenery, who has figured importantly in the programming techniques used in the Agency for International Development, shows how econometric models can be used to experiment with alternative policies and programs, with a view to promoting consistency in the overall development program.

Without the use of basic theoretical concepts, planning could be frustrated in a confusing day-to-day reaction to immediate pressures. The planner needs theoretical anchors to keep him from drifting. Accounting prices represent one such anchor, used to gauge the divergence of prevailing privately determined market prices from those that would reflect actual scarcities, marginal productivities, or social values of goods or services. Papanek and Qureshi describe how accounting prices may help, divert resources into activities more beneficial to development.

The growing role of development banks, especially created to cater to the special needs of development rather than to strict commercial criteria, is the subject of Checchi’s article.

In the next series of four articles, various problems, multinational in character, are discussed. The advantages of regional economic planning, already proven in western experience, are applied to underdeveloped regions in the Ellis essay. Similar efforts to avoid duplication and to promote regional strength in the Alliance for Progress are ably covered by Perloff and Saez. Aubrey reviews the problem of the limited commodity markets, to which so many underdeveloped countries have been bound, and proposes means for breaking away from this dependency.

Finally, P. N. Rosenstein-Rodan provides a veritable treasure of useful maxims for the economic developer in his treatment of the volume of aid required from the few who are rich to the many who are poor, if the latter are to have some hope of achieving, not comparable living standards—for that is out of the question for most—but at least steady economic growth.

A. PLANNING TECHNIQUES

Public Planning and Private Decision-Making in Economic and Social Development

GERHARD COLM

Chief Economist, National Planning Association, Washington, D.C.

THEODORE GEIGER

Chief of International Studies, National Planning Association, Washington, D.C,

Regardless of its name, every modern form of economic system combines some measure of public planning with some latitude for private decision-making. Even in the freest of market economies, the government’s own expenditures are planned in accordance with annual requirements and with the anticipated longer-range needs for those services considered appropriate for it to provide, and many large private enterprises plan their investment and market development programs for five or ten years ahead. Even in the most centralized socialist economies, the planning and administering authorities must take into account the probable responses of individuals and of local institutions to central government directives regarding production, consumption, saving, and investment. Hence, the task of harmonizing public and private decision-making confronts every modern economic system, though in different forms and in different degrees.

The less developed countries of Latin America, Asia, and Africa are in the process of working out reconciliations of public and private decision-making which are relevant to the character of their economies, consistent with their social values, and more or less effective in achieving their chosen goals. The variation is very wide, ranging from such countries as Mexico, Brazil, and Argentina, in which private decision-making in the free market plays the major role, to countries like Niger and Chad, in which the modern sector of the economy consists of a few government-owned or foreign-owned enterprises of various kinds. In consequence, it is impossible to discuss public and private decision-making in a way which is equally valid for all less developed countries. While our aim is to present some guidelines and suggestions, the analysis which follows is necessarily cast in the form of a generalized discussion of the subject and is not to be construed as descriptive of any particular country.

Functions of Government Planning and Private Decision-Making in Less Developed Countries

To a greater or lesser degree, the countries of Latin America, Asia and Africa are faced with common difficulties in seeking to accelerate their economic and social advancement. Among the problems relevant to the subject of this paper are: (a) the inadequacy of the existing infrastructure (transportation and communication, energy, and power facilities, etc.) and social capital (education, health, and housing facilities, etc.), (b) the shortage of investment capital, (c) the limited supply of managerial and technical skills, (d) the inadequate incentives and institutions for stimulating productive investment and increasing productivity, and (e) the heavy dependence upon foreign trade and external aid for obtaining the capital funds and the capital goods required for economic and social development. In such circumstances, governments have had to assume responsibility for discharging three types of functions in order to insure that economic and social development would actually occur in their countries.

The first function is that of national development planning. Broadly speaking, this function consists of defining the goals of the national development effort, estimating and mobilizing the necessary domestic and foreign resources of money and skills, and allocating or guiding them to those specific uses which seem likely to make the greatest contributions to achieving the national goals. This function may be carried out by explicit preparation of a long-range national development plan, as has been done in India and Pakistan, and is now beginning in several Latin American countries. Or, it may be done implicitly and unsystematically, as was customary in many less developed countries until recendy. Today, most countries have recognized that, to be effective, national development planning must be carried on in a deliberate and systematic way.

The second function of government in economic and social development is to initiate those investments and manage those activities which comprise the public sector of the economy. In every economic system, there are certain essential services which only governments can perform (national defense, maintenance of law and order, etc.). In addition, there are certain types of investments which are so large or so pervasive in their importance to the economy as a whole that it is necessary or desirable for the government to undertake them. These generally include certain kinds of infra-structural and social overhead capital.

However, the public sector may cover a much broader range of economic activities either by deliberate preference, as in socialist countries, or because there are no practical or acceptable alternative ways of conducting them. For example, in some less developed countries, significant accumulations of capital exist in private hands, but these are often not invested in ways which direcdy and immediately contribute to economic growth. Traditional habits or present uncertainties may cause such private funds to flow into real estate, commodity transactions, money-lending, and other activities promising quick or large returns, which may eventually result in luxury consumption or investment abroad, usually in Western Europe or the United States. In other countries, there is no private capital or private sector of the economy in the modern sense of the term. In default of government initiative, too few private entrepreneurs would come forward to take advantage of such economic opportunities as may exist. Hence, for a variety of different reasons, the governments of many less-developed countries not only invest in essential services and infrastructure but also establish and operate, at least initially, some or all of the new economic activities that are envisaged under the national development plan.

The third function of government in economic and social development is to stimulate, guide, and assist private initiative and activities so that they contribute to achievement of the national development goals. Virtually all the less-developed countries are explicitly or implicitly committed to a significant measure of private economic decision-making as an essential complement to the economic functions of the central government. This results not only from deliberate choosing of the social values served by decentralized, nongovernmental decision-making in economic life. Paradoxically, it is necessitated by the same scarcities of capital and skills as have impelled governments to assume the national development planning function and the entrepreneurial and managerial functions comprised in the public sector of the economy. In most less developed countries, neither the governments nor the ruling political parties possess the trained supervisory personnel, the technical skills, and the funds necessary to replace all significant privately conducted activities by central planning and government operation of the economy. Determination of the output and consumption of certain types of activities and products— especially those in services and consumer-goods industries—seems to defy the detailed directives of central planners. Moreover, there are always potential sources of capital, talents, and initiative that are unavailable to governments, particularly when they operate by compulsion, but which can be stimulated to manifest themselves voluntarily by appropriate incentives and encouragements. The less developed a country, the less it can afford to neglect the potential resources that could be activated only voluntarily and in decentralized, nongovernmental forms.

In addition, the more numerous and detailed the entrepreneurial and managerial decisions that have to be made by the central government authorities, the slower, more cumbersome, and less flexible the operation of the economy becomes. Most less developed countries have found that the market mechanism is a much less wasteful way of making many kinds of economic decisions and for getting many kinds of economic tasks accomplished. A system of centralized direction of production, investment, and consumption is also susceptible to political pressures and the ponderous inflexibility of bureaucratic control. Some of the socialist countries have recognized this deficiency of a large, centralized public sector, and have tried to solve their problems by decentralizing many economic decisions and activities, and providing market-type incentives and pressures for guiding them. Yugoslavia is the leading example of such a country.

Also, many less developed countries have concluded that there are substantial benefits to be derived from attracting responsible private investment from the more developed countries. Continuing, well-conducted enterprises established by foreign companies and businessmen in less developed countries significantly increase the amount of capital available for productive investment; disseminate much needed managerial and technical skills among the local population; and create opportunities for—and often provide financial and technical assistance to— indigenous enterprises to get started as suppliers of the materials, components, and services required for their own operations.

There is a wide variety of different ways by which the government carries out its third function of stimulating and channelling private economic initiative and activity. Thus, it is able to select the particular combination of policy measures that seems best adapted to achieving national development goals in socially acceptable ways.

The question, then, which each less-developed country must answer for itself is which economic decisions and activities can best be undertaken by the government and which by private institutions and individuals. This choice is sometimes deliberate, but more often it grows out of the historical background and existing socio-political structure of the country.

The Participants in Public Planning and Private Decision-Making

In order to clarify the interplay between public planning and private decision-making, the actors or participants have to be defined.

In the Public Sector. Though we usually speak of the government, it must be remembered that the term covers a multitude of ministries, departments, and agencies, each engaged in planning its own activities. These include not only the several ministries or departments of the central government, but also those of provincial and local governments, as well as quasi-governmental agencies, such as social security funds, central banks, development banks and corporations, port authorities, railroad administrations, public utilities, highway commissions, government-owned and managed manufacturing enterprises, and so on. The planning of each of these governmental institutions has a greater or lesser effect on consumers, workers, and private enterprises. Each of these units of government is interested in specific policies and often subject to pressures from various groups in the population.

The multitude of activities and effects of the various parts and levels of government can themselves be planned only if there is some central planning agency which coordinates and directs planning for the government as a whole. Such a body is, in effect, responsible for the national development plan, as distinct from the different sectoral, functional, and regional programs, which deal in greater detail with the separable parts of the national economy.

The central planning agency has different locations in various countries. In some, it is located under the jurisdiction of one of the ministries (economics or finance); in others, it is organized as a ministry of its own; and in still others, it is an agency under the jurisdiction of a planning council in the office of the country’s Chief Executive. National development planning is not a separate activity isolated from the other functions of government. Like budget-making, it is intimately related to all functions. Therefore, it can be effectively carried out only if, regardless of the location of the planning agency, it has the full backing of the country’s Chief Executive, who is responsible for all official policies. This dependence on the highest governmental authority is best symbolized when the national development planning function is performed by an agency in the office of the Chief Executive, or the Prime Minister, and when he is direcdy involved in the planning process as head of a planning council.

Generally, the sectoral and functional programs contained in the national development plan can best be prepared and implemented...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• PART ONE: The Challenge in Development Planning
• PART TWO: The Challenge in Developing Human Resources
• PART THREE: The Challenge in Developing Natural Resources
• PART FOUR: The Challenge in Developing Industry
• PART FIVE: The Challenge in Developing Infrastructure
• PART SIX: Social and Cultural Challenges in Development