I need to process this first. I agree it is not K or L intensity that matters but sustained accumulation with appropriate redistributive mechanisms for wage growth. But given the K bias of tech thee days, employment is a real problem. Historical experience suggests that labor absorbing tech were key to growth and employment in exporting East Asia at an earlier phase. Bangladesh today has a harder time with this approach in part because of critical institutional voids such as a competent state.
Incidentally LDCs were not least but less, the terminology has changed. There is no reason why India and Brazil should be under least category. Anthony DCosta Professor of Indian Studies Asia Research Centre Copenhagen Business School Sent from my iPhone On Dec 17, 2012, at 12:17 PM, Hinrich Kuhls <[email protected]> wrote: > Paul Krugman: >> Catherine Rampell and Nick Wingfield write about the growing >> evidence for "reshoring" of manufacturing to the United >> States... Robots mean that labor costs don't matter much, so you >> might as well locate in advanced countries with large markets and >> good infrastructure... >> This is an old concern in economics; it's "capital-biased >> technological change", which tends to shift the distribution of >> income away from workers to the owners of capital... >> I think our eyes have been averted from the capital/labor dimension >> of inequality. > > Eugene Coyle: >> Krugman is clearly making a transition from a single focus on the >> stimulus... and the stimulus won't restore full employment, ... then >> cutting working hours must be in the policy mix. > > Anthony D'Costa: >> This dynamic is operating even in places like India, where labor is >> abundant. Hence, at low per capita incomes machines doing the work >> of labor is very much part of the equation and thus induces capital >> bias in employment. No wonder India's employment stands at over 85% >> in the unorganized sector (with indecent jobs using the ILO >> definition and a low road to accumulation too). With massive >> involuntary underemployment there is already work rationing in effect. > > Jim Devine, changing the focus of this thread to "capital intensity > in LDCs" (Least Developd Countries): > >> I remember ... a book by the UN on project evaluation, seemed to >> encourage the use of capital-intensive technologies despite low >> wages and unemployed labor. > > Anthony D'Costa: >> Use of K intensive technology is a capitalist imperative, if >> businesses want to remain somewhere near the tech frontier and >> compete with other big firms from elsewhere in an international >> market. This kind of production regime fulfills at least two >> conditions, catering to middle class demand, that is growing and >> meeting international quality standards. In and of themselves this >> is not a bad thing (after all these technologies allow economies of >> scale) and firm competitiveness. Think of Mao's backyard steel mills >> versus the Korea's POSCO. Where the difficulty is growing employment >> in these sectors in the absence of a dynamic growing formal sector >> from the unorganized sector. Surely aggregate demand (lack thereof) >> must have some role to play not to mention the complexities of an >> underdeveloped agricultural sector. > > Jim Devine: >> right, but should the UN encourage this trend? [toward >> capital-intensity in poor countries] > > HK: >> Any suggestions which trend or which mode of accumulation the UN >> should encourage in LDCs? >> "A somewhat comprehensive socialisation of investment will prove the >> only means of securing an approximation to full employment; though >> this need not exclude all manner of compromises and of devices by >> which public authority will co-operate with private initiative." >> [Keynes 1936] This proposal was submitted to advanced economies. >> Does it also apply for emerging economies? [And for poor countries?] > > Jim Devine: >> I'd focus on more labor-intensive (and less import-intensive) >> technology, but the people of the country should be the ones to >> decide this kind of thing. My main point was that the UN was going >> in the wrong direction to create jobs in a situation where jobs are >> sorely needed. Maybe the UN should just leave them alone on this issue. >> Some city in Brazil (I believe) pays its citizens to pick up >> garbage, etc. There's one way to go. And kids should be paid to go >> to school (for the elementary grades, at least). --- > > It is not a question of labor-intensive versus capital-intensive > technologies in Least Developed Countries (LDC), but it is the broad > focus on "stimulus" of accumulation what is at stake: A regulated > expansion of the productive basis in agriculture, manufacture, and > services in LDCs (economies of scarcity), supported by the economies > of affluence, whose "capital-biased technological change" affects > both the distribution of income and employment of LDCs. Within a > world market dominated by capitalistic metropoles and without > external assistance LDCs are not able to produce a capital stock > which is efficient enough to set in motion a self-sustaining > development. Hence the "leave-them-alone-on-this-issue"-argument > doesn't help. I do not understand what's behind the argument in > refusing the UN's policy concerning LDCs. What is the better viable > alternative? > > Coincidentally, the UNCTAD has just published its Least Developed > Countries Report 2012 "Harnessing Remittances and Diaspora Knowledge > to Build Productive Capacities." (by the way, neither Brazil nor > India are among the LDCs) > http://www.unohrlls.org/en/ldc/25/ > http://unctad.org/en/pages/PublicationWebflyer.aspx?publicationid=249 > > Perhaps some paragraphs from the report will illustrate the problem. > > UNCTAD's LDC Report 2012: > full report: http://unctad.org/en/PublicationsLibrary/ldc2012_en.pdf > overview: http://unctad.org/en/PublicationsLibrary/ldc2012overview_en.pdf > > "The uncertain global economic recovery and the worsening Eurozone > crisis continue to undermine those factors that enabled the least > developed countries (LDCs) as a group to attain higher growth rates > between 2002 and 2008. Despite seeing real gross domestic product > (GDP) grow slightly faster in 2010, the group as a whole performed > less favourably in 2011, signalling challenges ahead. Indeed, with > the world's attention focused on Europe, there is a danger that the > international community may lose sight of the fact that in recent > years, LDCs have been most affected by financial crises caused by > other countries. With less diversified economies, LDCs have neither > the reserves nor the resources needed to cushion their economies and > adjust easily to negative shocks. Furthermore, if another global > downturn hurts the growth prospects of emerging economies, LDCs, as > major commodity exporters, will be directly affected. Therefore, LDCs > require increased external assistance to better protect their > economies against external shocks and help them manage volatility." > (Overview, p. 1) > > "Gross fixed capital formation increased slightly from 20.7 per cent > of GDP in 2005-2007 to 21.6 per cent in 2008-2010. Throughout the > first decade of the 21st century, it has increased slowly but surely > (by three GDP percentage points). While this is positive, it compares > less favourably with other developing countries (ODCs), whose gross > fixed capital formation reached 30.1 per cent of GDP in 2010. If > current investment trends continue, it is unlikely that LDCs will be > able to catch up with ODCs in the near future." (p. 4) > > "Regarding foreign investment, UNCTAD recently revised the data on > inflows of foreign direct investment (FDI) to LDCs, which show that > in the last decade, FDI inflows have been smaller than remittances. > Unlike FDI, remittances kept increasing even during the crisis and > are forecasted to grow in the medium term. In 2011, remittances to > LDCs reached $26 billion. The decline in FDI inflows to LDCs for > three consecutive years (from a little less than $19 billion in 2008 > to $15 billion in 2011) has been largely due to disinvestment trends > in Angola, tied to the oil investment cycle in that country. In the > rest of the LDCs, FDI has remained relatively stable." (p. 5) > > "Improved export performance by many LDCs in 2010 and 2011 was > largely due to higher international commodity prices. After slumping > in 2009, prices recovered rapidly, in some cases to levels higher > than before the crisis. For example, food prices started to rise > again in 2010 and 2011, topping pre-crisis levels. In the summer of > 2012, food prices, in particular for maize and wheat, were once again > on the rise due to drought in major producing countries. This will > affect many poor people in LDCs, who generally spend 50 to 80 per > cent of their income on food. The situation in some parts of Africa > is critical, as food insecurity threatens the lives of hundreds of > thousands. Governments in LDCs and their development partners must > act urgently to prevent rising food prices from spiralling out of > control, risking the sort of crisis experienced in 2008. In the long > term, the root causes of food price increases and the issue of > agricultural production in LDCs must be tackled by increasing > investment in the sector and designing policies to improve > productivity, in particular among small-scale farmers." (p. 5) > > "In 2000 (the year for which data are available for LDCs), > high-skilled migrants accounted for one-fourth of total emigration > from LDCs. This is 11 times higher than their share in the total > labour force of these countries, namely, 2.3 per cent. International > migration is selective (i.e. it favours high-skilled over low-skilled > people), which explains this huge discrepancy. An estimated 1.3 > million persons with university-level education had emigrated from > LDCs by 2000, and this figure has continued to grow since then. > Almost two-thirds of all LDC high-skilled emigrants live in developed > countries (especially the United States), while one-third moved to > other developing countries (mainly oil-exporting and neighbouring > countries). The major regional source of highskilled LDC emigrants is > Asia, home to 45.9 per cent of tertiary educated migrants from LDCs, > followed by African LDCs, which account for 40.4 per cent of LDC > brain drain." (p. 14) > > "In recent years, UNCTAD has repeatedly argued that progressive > transformation in economic structure is a prerequisite for LDCs to > achieve accelerated and sustained economic growth and poverty > reduction. The policies and strategies needed to attain structural > transformation will involve, inter alia, (a) the development of a new > industrial policy based on a strategic approach that reflects the > specific needs and conditions of LDCs; (b) a catalytic developmental > State to compensate for the incipient and weak private sector in > LDCs; (c) measures to encourage private investment in productive > activities and public investment in basic infrastructure, including > the development of skills and support institutions; and (d) the > promotion of domestic technological learning and innovation and > improvements in productivity in both agricultural and manufacturing > sectors." (p. 20) > > "Yet given the reluctance of financial institutions to extend credit > to small and medium-sized enterprises (SMEs), a national development > bank with special lines of credit for return migrants might be > needed. In addition, return migrants might have accumulated some but > not necessarily all of the requisite skills for successful > entrepreneurial activity. In this case, they would need technical > assistance to upgrade their managerial, technical, financial or other > skills required for successfully managing an SME. Governments could > provide this type of technical assistance and/or education. They > could also extend support to these entrepreneurs by lowering tariffs > on imports of machinery and equipment and raw materials to help them > start up their businesses." (p. 19) > > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
