French academic and private research on economic development problems

This paper is prepared for staff. use-and is. not for SW P12 V V I'' Ipublication. The viewe are those of the author and not necessarily those of the Bank. INTrNATIONLL BA FOR RECONSrRIJCTION AND DEVM P)M Economics Departmeat Working Paper No. 12 FRENCH ACADEMIC AND PRIVATE RESEARCH ON ECONCMIC DEVECP1MENT PROBLEM February 21, 1968 This paper.has benefitted from comments received from Messrs. Michael Hoffman, Bela Balassa, Hugh Latimer, Herman van der Tak and staff members from the Earope- an Office of the IBRD. Industrianlization Division Prepared by: Alexander G. Nowicki  TAELE OF CON;TENTS CHAPTERS PARAGRAPHS I. Introduction 1-11 II. Organizations Active in Development Research 12-32 III General Ideas on Economic Development 33-59 1. Structures 33-43 2. Growth and development -hDaJl economy 44-49 3. Poles of grouth - Large international firms 50-51 4. Demography and human development 52-53 5. Monetary transfers and the TPreasury .54-58 6. Solutions 59 IV. Economic Research on Specific Problem Areas 60 1. Foreign trade and aid 60-53 International commodity market organization 60-69 Forecasting models 70-77 Foreign aid 78-83 2. Growth models 84-94 Transfcrmed Bruno-Chenery model 85 Global models 86-90 Growth distribution models 91-94 3, Industrialization 95-112 Production: 95-104 Global model 95-96 Industrialization of Cameroon 97-99 Industrialization of Senegal 100 Industrialization of the Ivory Coast 10140l2 Industrialization manual 103-104 Market research: 105-109 Phosphatic fertilizers 105-106 Hydrocarbons 107 Textiles 108 Industrial i :oducts 109 Import substitution: 110--12 Latin America ill Africa 112  PARAGRAPHS 4. Regional and inter-regional cooperation 113-126 Regional developngmen: 113-118 Venezuela and Lebanon (the rating 3ystem) 1ls-U16 TLnisia (the induction effect) 117 Ivory Coast (the field survey) 118 Inter-regional inteSration: 119-126 Reasons for failure 119-122 Joint field research 123-124 Institutional arrangements 125 Problems to explore 126 5. Transportation 127-139 Effects of investment 128-129 Depreciation 130 Time savings 131 Classification of costs 132 Pricing 133-134 Public transport 135-'36 S1nilation model 138 Equilibrium model 139 6. Mlscellaneous 140-149 Agriculture 1h0-142 Ed&cation 143-144 Public services (pricing system) 145-146 Operations research 147-148 Statistical methods 109 ANNEXES A. List of Organizations Active in the Field of Development B. List of Persons Active in the Field of Development  "MIy fourth rule was to r2ake enumerations so complete, and reviews so general, that I should be certain to havs omitted nothing;;' Descartes, Discourse on I!ethod I INrRODUCTION lo This paper has been written primarily for the benefit of the Bankt-s economists, to acquaint them with what we may call a French econcwdc development schooi. It does not attempt to be a cocplete survey of current French economic thought. It does not cover the ideas and methods that are commonly used in analyzing economic problems of France, or other developed ccuntries, but have found little acceptance in economic analysis of develop- ing countries. There is considerable skepticism in France about the use- fulness of rigid macro-economic models and quantitative analysis, which are widely used in France itself, for the problems of developing countries, particularly in Africa where French economists have been most active. To ccpe %ith the special behavioral, social and political problems in this area, considerable emphasis has been placed on sociology, anthropology. and political science in the analysis of economic problems. 2. This survey ccucentrates on academic and semi-academic research institut-s and consulting firms. The growing research activity of govern- ment derelooing service has not been reviewed. Thi iLS a serious limitation, but it was thought that the activities off government institutions were relatively well-known in the Bank. Until recently these government services were mainly involved in operational activities and relied for analytical work largely on academic and semi-public consulting organizations. This has not changed and the pullic services are expected more and more to carry out their own analysis. A brief survey of this research may be of interest in the near future.  -2- 3. This is not a critical survey of French economic development thinking. This would hardly have been possible in the short time devoted to the papero its aim is a much more modest one of simply reporting - as objectively as possible - on the major aspects and features of French thinking and research on economic development problems and the major institutions active in this field. I should add one warning here. There is not one school of economics even in a small country, let alone in France, and I have tried to introduce different, and often conficting, points of view. It should be well understood that such expressions as "French economists think" cJi / mean that a significant or influential number of economiets rmore or less adhere to a particular point of view. It does not mean that they are unanimous or even that it is a majority view, th. To the be3t of our knowrledge, neither French modern economic thought nor its application in the field of economic development has ever been reviewed-/. This has set a formidable task to the present reviewer. The coverage of this survey is rather uneven. Its coverage is reasonably comprehensive on general ideas of economdc development, foreign aid, growth models and on industrial problems and transportation. Only a few comments are made on work going on in such fields as agriculture, education, quantitative analysis, etc. 1/ Tith one exception, devoted exclusively to the French marginalist school (see J. Dreze, American Economic Review, "Some Postwar Contributions of French Economists to Theory and Public Policy", June 196h).  -3- 5. The survey is divided into several parts: iL) Ssanizations Active in Research-oa.Econac D evelopment This gives a brief swmmary of the principal organizations doing research on economic development problems. I have tried to indicate their main fields of interest, staff resources, general outlook, etc. Annex A lists the organizations revievad, (ii) General Ideas on Econoic Development Problems I have tried here to extract whatever is new and specific in French economic thought, for a number of reasons. First, as orn of my British friends, an economist living in France, has aptly put it, French economists often ask questions which have never been asked before and focus on development oroblems which, ales, no one has ever bothered about before. Secondly, France being a highly intellectual country, it is not smprising to find that methods of applied research and of practical econacic analysis are firmly set within the broader frame of economic thought. A circular movement of economic thought, economic analysis, and economic policy can be very clearly seen. Th-rdly, in line with the purpose of this study it was necessary to eliminate from the discussion everythirg which had been intercepted from economic theories originating outside France, or which did not apply to underdevelopment. This general part of the survey is based on numerous talks with university professors and cn a reading of a vast, but highly dispersed economic literature devoted to development. For the sake of clarity, it has oeen divided into a number of basic topics.  (iii) Economic Research on Specific Problem Areas Here again our survey focuses on analysis of developing countries. In order to derive the main lines of research, I have chosen fram the major development research centers a number of papers and oroject analyses which were outstanding and representative examples of work in the major fields of development econct.cs. Subject coverage of these research papers is uneven, Some fields, such as industry or transportation are widely covered here, while such subjects as agriculture or education are only lightly touched upon. This disproportion does not only reflect the abundance of research papers in some specific fields of development econanics as opposed to others, but results also froa a certain difficulty to synthetise papers in which the economic approach is not always evident or possible. 6. While survzying research papers, I have also tried to build up an image of the economic philosophy underlying the work of each research center. This seemed to be important for two reasons. First, the broad lines of thinking of the research centers reflect, usually, the ideas of a particular professional fraction of the intellectual community Which influences the center of decision and, consequently, econormc policy. Thus, if we went to learn more about the econaoic development of various African countries, one way is to know which research center contriblted the most in laying down the foundations far its long-term economic plan. Secondly, in any future allocation of research contracts the Bark may wish to take accoant of the particular research interests and capabilities of the centers surveyed here.  7., Historical influences. What may be called a French approach to problems of economic development is fundamentally different from economic thir~Ing and research methods practiced elsewhere. These differences have practical inportance since all public servants in North and West French- speaking Africa, and also a sizeable fraction of the economic elite in the I1iddle Eastern countries, have been either educated in France or molded by French patterns of thinking. The historical origins of differences betweert French and English scientific methods go back to Rerne Descartes and Sir Francis Bacon. But while the nature of the exact sciences itself inposes a unique approach, given esDecially the possibility of verification through experinents, a variety of analytical approaches are still possible in the social sciences. 8. Two main factors played a determining role in the orie&tation of French economic thought. First, since the time of Napoleon Bonaparte, if not before, France has been a country with well-defined, power2ul, and more or less unchanging public institutions, l4arket fluctuations were fewer and less severe because of the strong influence of public institutions and the almost closed character of the French economy with only slight interference fran external flows. This, among other reasons, explains why Keynesian ideas found a largely delayed response in France and has shaped ths content of econcmic thought in France as a mixture of law, economics and 1/ sociology-. Secondly, the more specialized field of economic development, 1/ With a few notable exceptions, such as Leon Walras.  -6- heavily influenced trom above by the weight of the institutiona2 pproach in overall economic thinking, was also determined fram below by the fact that the inmediate source of inspiration was almost exclusively French- speaking Africa. 9. GeoLrsDhical influence. The economic analysis of Freneh-speaking Africa has to tac!cle some very specific 1eatiires: (i) 'he role of institutions in shaping econcmic life in French- speaking Africa is as strong, if not stronger, as in France. (ii) There is mainly a scarcity of manpower, rather than of capital. In France the scarcity of imanpower was a result of slout demo- graphic growth, and the relative abundance of investible capital, until very recently, of high profit rates and a high propensity to save. In Africa the first is a result of low population density, and the second, of the free flow of private capital and sizeable public aid from France. Thus, the main interest of economics is focussed on the human rather than material (fixed) elements of growth. (iii) Sociological factors are important. Given the conservative force of human habits, Frernch economists realized early that sociology should play a considerable, if not a predominant role in the economic theory of development. Social and religious motivations, archaic mental- ities, and other factors are intricately woven into the economic p attern. 10l Oraanization and extent of research. It s'.ould be stressed here that the academic and research circles are very fractionalized and compartmentalized. There is very little university research ir. the 4teld of development economics. Thus, the broad economic ideas born at uni- versities are not always the result of an accumulated knowledge of facts  -7- (which might have been suppLied by researchers) but are rather often the result of intuition or, occasionally, of brilliant intellectual specu- lation and deduction. On the other hand, the research centers not connected with unive.sities have little or no time for generalization of their practical experience. Moreover, the secrecy imposed on the circulation of nl