Labour Markets, Poverty, and Development

By Giorgio Barba Navaretti; Riccardo Faini et al. | Go to book overview

5
Promoting the Strong or Supporting the Weak? Technological Gaps and Segmented Labour Markets in Sub-Sahara African Industry

Giorgio Barba Navaretti


1. INTRODUCTION

The fairly extensive literature on sub-Saharan African enterprises provides incontrovertible evidence of duality and a remarkably low rate of graduation from small-scale, low-productivity activities to those involving larger scale and modern technologies.1

Large numbers of firms with less than five employees survive, in the same industry, along with medium-large firms mostly under foreign or state ownership. While the number of indigenous enterprises has increased rapidly in the 1980s, especially in response to recession, the rate of graduation of firms into larger size has been very low in most African countries. The dynamism of African enterprises in other ways, such as the deepening of local linkages, productivity increase, product or technology diversification, and export performance, has also been low in relation to other industrializing areas. There are few signs that the duality in the industrial structure has been reduced by the modernization of the traditional sector or by diffusion of technology from large to small enterprises.

Intra-industry technological gaps2 are often explained in terms of segmentation and the imperfections of factor markets other than the market for technology. For example, small firms use different technologies

This paper expands previous work carried out by the author for the Regional Programme on Enterprise Development of the Africa Technical Department of the World Bank. Thanks to the programme manager, Tyler Biggs, for granting permission to use the data bank. Most of the ideas developed here emerged during long discussions with Sanjaya Lall and Ganeshan Wignaraja. Comments from participants at the Centro Studi d'Agliano conference, and particularly from Regina Galhardi, Riccardo Faini, and Frances Stewart, are gratefully acknowledged. Andrea Bigano gave very skilful research assistance and Marcella Fantini, useful advise. Financial support was provided by the Centro Studi Luca d'Agliano and by Fondazione Eni Enrico Mattei.

____________________
1
Kilby ( 1988); Liedholm ( 1992); Liedholm and Mead ( 1988); Lall ( 1987b); Lall et al. ( 1994); Levy ( 1990); Pack ( 1993); Page ( 1979); Steel and Evans ( 1984); World Bank ( 1989).
2
Technological gaps refer to differences in the type of technology used (e.g. hand looms v. mechanical looms), which, in turn, reflect in differences in capital-labour ratios.

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