‘Technological Choice, Industrialisation and Development Experience in Tanzania.‘ by F.C. Perkins: Journal of Development Studies, Vol.19 No.2 January 1983
The Arusha Declaration identified the emphasis on industry inevitably dependent on foreign loans and expertise 2.S one of the mistakes of Tanzania’s early development plans. The new objectives of self-reliance and development based on agriculture were expected to be reinforced by a form of industrial development emphasising the use of labour rather than capital, providing a market for local raw materials and closely integrated with the rural economy. The Chinese-funded Friendship Textile Mill using technically outdated, but easily maintained, machinery and the establishment of SIDO (Small Industries Development Organisation) were regarded as demonstrations of the new strategy.
The place of industry in Tanzania’s development was set out in more detail in the 1977 Long-term Industrial Strategy, which defined prime objectives to be greater economic self-reliance and self-sustaining economic growth. This was to be achieved by creating links between sectors of the economy with a first priority for new public investment in basic consumer, intermediate and capita] goods industries and a stress on the importance of export-oriented industry and small-scale village enterprises.
Major investment decisions which did not conform with these policies, such as the Dar es Salaam Bakery and the Tanga Fertiliser Factory, both very expensive and embarrassing to the Government (see Coulson: ‘African Socialism in Practice’ and the Journal of Modern African Studies Vol.XX no.X 1977), were generally regarded as aberrations. This assumption is challenged by Perkins in his study of 300 industrial units in 10 industries, which suggests that Tanzania has had little success in maintaining its industrial investment policies against the pressures of foreign aid donors and international corporations.
Parkins compares the capital intensive techniques with the less technically advanced but more labour intensive methods (which he terms appropriate) actually in use in each of the ten industries. Using economists’ measures of efficiency, he calculates that appropriate techniques create more employment, produce more output for the capital invested, have either the same or higher labour productivity and use no more raw materials than the capital intensive methods. Yet despite firm political direction and economic justification, Tanzania’s industrial parastatals have avoided appropriate technology and shown a marked bias towards capital intensive and advanced methods. As a consequence, industry is still highly dependent on imported raw materials and there are few links within and between industries.
These characteristics are especially marked in the new parastatals, which choose to use more capital intensive methods than the organisations created by the nationalisation of existing private firms. Of all the parastatals studied, only 22% are calculated to be technically efficient; ‘all the rest used both more capital and more labour to produce a unit of output than did the other firms in their industries.’
Perkins concludes from the first part of his study that ‘…despite the rhetoric, Tanzania’s industrialisation programme has in general promoted the establishment of enterprises using large-scale, capital intensive, often technically and almost invariably economically inefficient techniques. Its technological choice policy in industry has in most instances failed to promote the achievement of major national development objectives …’.
Tanzania’s experience in this field is similar to that observed in other developing countries and Perkins examines the possible explanations. The orthodox economic criticism of developing countries is that their economies are distorted by regulations making labour artificially expensive and investment incentives making capital artificially cheap. These distortions exist in Tanzania, but this does not explain why high cost methods were chosen when lower cost systems were available. Nor do other possible constraints- the scarcity of skilled workers, the quality of product, or information on possible alternatives, explain the choice of methods which were not the most economically efficient.
The divorce of industrial investment decisions from clear national policy commented on by missions from both the World Bank and the ILO has probably been due to the nature of the decision-making process and the management of foreign aid. Studies in other developing countries have noted a tendency for the appraisal of investment schemes to be dominated by engineers, who are concerned to maximise output, often assuming unrealistic levels of utilisation, than by economists, who should select on the basis of cost efficiency. This factor may be present within the Tanzanian bureaucracy and a general absence of adequate staff to assess projects may have led Ministries to tend to approve projects on the oo.sis of having identified a source of funding, the usual funding agent being a foreign government, or a transnational corporation. Parastatal managers ha.ve tended to judge their success in terms of expanding output by starting new projects. Hence their preference has been for projects that can be started quickly. Their protected position means that parastatals have been little concerned with profitability and hence they have accepted the technology offered by the source of finance rather than search for the most economic or appropriate.
The existence of SIDO may even have acted as a justification for other parastatals to ignore small-scale industry ~s not being their responsibility. There are certainly examples of new large-scale investment being planned to meet total national needs even when SIDO has had plans and programmes to expand small-scale production of the product. Loom-weaving, hand-made paper. hand-tool making by blacksmiths, grain-milling, saw-milling, oil-milling. shoe-making and open pan sugar milling are in this category.
Perkins concludes that Tanzania’s rate of industrial growth and the growth of the national income would have been faster if the declared national policy had been followed. His research has given further insight into the power of the industrialised nations to influence to their own advantage the development of the economies of the Third World countries and the importance of examining with considerable care what aid, technical assistance and private investment are actually achieving for the economies of both donor and receiver.