ENGINEERING FOR DEVELOPMENT

(First Draft)

E J Jefferies

March 1969

CONTENTS

PART 1 THE WORLD DEVELOPMENT PROGRAMME

Chapter 1 Introduction
Chapter 2 Closing the Gap
Chapter 3 Resistance to Change
Chapter 4 International Technical Assistance

PART II AN ENGINEERING APPROACH TO A PLAN FOR A COUNTRY

Chapter 5 Outline of the Approach
Chapter 6 Setting the Problem
Chapter 7 Basic, Concepts, Terms and Definitions
Chapter 8 Background Data Available
Chapter 9 The Starting Point for a Case Study
Chapter 10 Preliminary Calculations
Chapter 11 Patterns of Economic Growth
Chapter 12 Development Plan for Year 1
Chapter 13 Development Plan for Year 2
Chapter 14 Development Plan for Year 3
Chapter 15 Review of Changes During the Three Years
Chapter 16 The Control of Development
Chapter 17 Financing the Development

PART III THE IMPLICATIONS OF RAPID GROWTH

Chapter 18 Economic Growth and Technological Changes in Rural Communities
Chapter 19 The Influence of Agriculture on Industrial Development
Chapter 20 The Role of Manufacturing Industry
Chapter 21 The Contribution of Industrial Engineering to a Solution

PART IV DESIGNING FOR BALANCE IN DEVELOPMENT

Chapter 22 The Prediction of New Manufacturing Capacity Requirements by Product Group
Chapter 23 The Productivity of Labour
Chapter 24 The Growth of Productivity
Chapter 25 The Calculation of Appropriate Levels of Productivity in New Plants

CHAPTER 10

PRELIMINARY CALCULATIONS

3.1 Now that we have defined our starting point at YEAR 0 and our immediate target, we can calculate the pattern of the economy as a whole, as it will probable be at the end of YEAR 1, YEAR 2 and YEAR 3. This we will do by reading off the "normal" sectoral increases forecast in Graph 1 for three steps of increase in per capita GDP ($200-252; $252-317; and $317-400) and adding these to the existing sectoral pattern for YEAR 0 given in Table 1. The effect on these increases from the 2% per annum increase of population is negligible. However, the increase in population adds 2% each year to the required total GDP which is not negligible. The results is shown in Table 6.

TABLE 6 Sectoral increases in YEARS 1, 2 and 3

3.2 We can now write Table 7 showing the expected total net product of each sector in YEARS 0, 1, 2, 3 by adding columns 4, 6 and 8 of Table 6 successively to column 1 of Table 1.

TABLE 7 Net Product, by Sectors, YEARS 0, 1, 2 and 3

Note: This figure varies from year to year since the

sector "Miscellaneous" is derived by difference.

Observations

3.3 Looking at Tables 5, 6 and 7, we can observe several things which may help us later in deciding upon a policy for development. Firstly:

3.4 Column 2 of Table 5 shows the total return in YEAR 0 to Labour in each sector, that is the total disposable income in the form of wages and salaries among the people engaged in that sector. The total for all sectors - $462 m - is the amount of money which changes hands in the whole country during the year in payment for consumer goods and services and taxes. Some small amount of this may go into savings (capital formation) but this is probably negligible at this stage of development.

3.5 This figures of $462 m must (at least in the long run) equal: - the total of the net products of all sectors, i.e. wages, salaries, gross profit and the charges on capital employed: depreciation and interest PLUS: the value of goods and services associated with this total net product, i.e. raw materials and intermediates, spares, power, fuels, packages, storage and transportation costs, etc which go to make up the "cost of production" of the goods and services in question; LESS: the sales value of goods and services transferred from one activity to others and consumed in the generation of net product by these other activities. (This is not the same figure as the $60 m worth of inter-sectoral transfers of Value Added shown in paragraph 2.30.)

3.6 This balance between total return to labour and sales values of all goods and services produced will have to be maintained in future years - by deliberate adjustment of total wages, earnings of capital, imports, exports, and inter-sectoral transfers. It cannot be assumed that balance will be automatic. If the total of wages runs ahead of sales values available, inflation will result; if it falls below, then stocks will accumulate which will tie up capital and prevent its proper use in development. Secondly:

3.7 The contribution of labour to Value Added (column 1 of Table 5) is different in different sectors due to: (a) differences in average earnings; and (b) to differences in investment per workers. These two factors together determine the productivity of labour in terms of Value Added. To arrive at output per worker in terms of sales value, we must add in the cost of materials and services consumed during production and this will vary widely from sector to sector, being low in Agriculture, Services, Trade and Government, and Mining, and high in Manufactures and Construction. Thirdly:

3.8 Columns 5, 7 and 9 of Table 6 indicate the changing percentage contribution of certain sectors to the required increases of output between one year and the next. In Agriculture the percentage contribution declines; in Services, Trade and Government and in Mining, it remains constant; in Manufacturing, Transport and Communications and Construction it increases. However columns 4, 6 and 8 show that every sector must show an increase each year in the absolute amount of its additional output. There is never a fall in the output of a sector nor in the annual increase in its output.