Institutions, Technology and Development in Africa

Jeffrey James

• Publisher: Routledge
• Year: 2018
• Print ISBN: 9781138545823
• eBook ISBN: 9781351001908
• Edition: 1
• Topic: Commerce
• Subtopic: Commerce Général

An extensive literature has demonstrated that technologies in sub-Saharan Africa are largely inappropriate: that is, that they are typically capital- and import-intensive rather than labour- and local input-intensive. These technologies have created a pattern of development that is highly unequal, with widespread unemployment and under-employment. In this literature, however, relatively little attention has been paid to the institutions that govern the generation, adoption and use of technology.

This book draws on historical analysis and case studies to evaluate how institutions in different countries, including those in Africa itself, generate technologies that vary in their characteristics and suitability for the region. Through these case studies, insight is gained into the characteristics of 'appropriate' institutions that might underlie a more balanced pattern of technology and development than currently exists. The findings of the book clearly confirm a major tenet of institutionalist theory: namely, that institutions developed in one set of circumstances are unlikely to be appropriate to conditions in a markedly different set.

This book will be of interest to economists, social historians and anyone with an interest in modern African development.

1
Introduction

Theories of institutions

This book introduces and applies the idea of appropriate institutions : that is, institutions which enable the benefits of technology to be more widely spread among the less-advantaged groups in African countries.¹ Though there is by now a vast literature on appropriate technology, the analysis of institutions has lagged far behind. That is, while the debate about appropriateness has concerned itself with the desirability of particular technologies, my concern here is more with the appropriateness of the institutions that are concerned to generate, adopt and scale up various technologies. As I see it, the debate up till now has been too heavily focused on the one side – the technologies – and not enough on the other – the institutions. Yet, as Acemoglu and Robinson (2010) have persuasively argued, it is the latter that tend to dominate the reasons for economic growth in a variety of countries. And in the development context, Shirley has argued, symmetrically, that ‘the largest barriers to development arise from a society’s institutions – its norms and rules’ (Shirley, 2010: 1). My approach to this core topic of the book is embedded in certain aspects of institutional economics, as described in the following section. Thereafter, I deal with a summary of the technologies and institutions that comprise the remaining chapters.

Theories of institutions

According to Hodgson (2006: 2), institutions may be defined as ‘systems of established and prevalent social rules that structure social interactions. Language, money, law, systems of weights and measures, table manners, and firms (and other organizations) are thus all institutions’.

Hodgson is also at pains to distinguish between so-called institutionalist theory and neoclassical economics, as is clear from the following quotation. First,

There is a degree of emphasis on institutional and cultural factors that is not found in mainstream economic theory. Second, the analysis is openly interdisciplinary, in recognizing insights from politics, sociology, psychology, and other sciences. Third, there is no recourse to the model of the rational, utility-maximizing agent. Insomuch as a conception of the individual agent is involved, it is one which emphasizes both the prevalence of habit and the possibility of capricious novelty. Fourth, mathematical and statistical techniques are recognized as the servants of, rather than the essence of economic theory. Fifth, the analysis does not start by building mathematical models: it starts from stylized facts and theoretical conjectures concerning causal mechanisms. Sixth, extensive use is made of historical and comparative empirical material concerning socio-economic institutions.

(Hodgson, 2006: 174)

To this list should perhaps be added a major tenet of what is known as the ‘old’ institutional economics, associated with the likes of Veblen, Commons and, more recently, Myrdal – that is, the notion that institutions from one environment are unlikely to fit in easily with conditions in a totally different environment, as has already been amply demonstrated in the transfer of technologies from developed to developing countries.² With respect to the new information technologies that are the subject of the second part of this book, for example, Gough and Grezo observe that:

the ways in which mobiles are used, valued and owned in the developing world are very different from the developed countries. More attention should be paid to the characteristics of how people actually do use phones in the developing world in policy debates on increasing access to Information and Communication Technology (ICT). It is wrong to simply extrapolate our developed world models of needs and usage patterns to poorer nations.

(Gough and Grezo, 2005 : 1)

Institutionalist theory as a framework

The chapters below conform in many ways to these characteristics of institutionalism. For one thing, they focus explicitly not just on technology and institutions, but also on the influence of the latter on the benefits conveyed by the former, to particular income groups in African countries. Another reason is the relatively heavy use that is made of disciplines other than economics. I am referring here, for example, to politics, sociology and anthropology. Often, ‘extensive use is made of historical and comparative empirical material concerning socio-economic institutions’ (Hodgson, 1998 : 173).

Then again, at no point does my analysis follow the neoclassical tradition of taking the individual as given, or as an agent of maximisation. Finally, perhaps the main theme of the chapters that follow is the difference in institutions between rich and poor countries, especially as those institutions bear on the well-being of individuals with relatively low incomes in the latter.

Yet another respect in which the analysis below departs from neoclassical economics is that the benefits of commodities and technologies are not taken to accrue to the user at the point of purchase. Rather, such gains are thought to be dependent on a wide range of factors that emerge after the point of purchase. Much depends, for example, on how the good is actually used.

In the context of medicinal drugs, this might mean whether they are used as directed, or whether, for example, they are misused. Or, in the area of food, welfare depends on more than just nutrition (Sen, 1985). Rather, it depends, among other things, on whether other persons are also present, as opposed to a situation where eating is a solitary process (Sen, 1985). More generally, welfare depends heavily on the context, a theme that re-occurs throughout the book.

That a local institution in a developing country can have a major impact on society is perhaps best illustrated by the Grameen Telecom villages phone project (VPP) in Bangladesh. In each village where it operates, a ‘phone lady’ is appointed and receives a loan from the project to buy a mobile phone and rent it out to villagers. The VPP has undeniably been a great success ‘by bringing IT to the poor and giving telecom access to rural people for whom telephones were a luxury rather than a basic right. By 2007, the program spread to more than 50,000 villages’ (Yusuf and Alam, 2011 : 36). Moreover, it has been estimated that some 30,000 jobs have been created for telephone ladies, who might otherwise have gone unemployed.

Also well known in this regard is the Community Phone Shop in South Africa, which was specifically designed to operate as a local phone booth, containing five to ten phones and located in disused containers and informal ‘spaza’ shops. These institutions operate widely as public mobile phone services in townships and other disadvantaged areas (see below).

National innovation systems

Another aspect of institutionalist theory that bears mention here is the idea of a so-called national innovation system. It has been defined by Freeman as ‘the network of institutions in the public and private sectors whose activities and interactions initiate, import, modify and diffuse new technologies’ (Freeman, 1987 : 1). The idea is especially relevant to the case studies in Chapter 2, which address themselves to the interactions between participating actors, whether they be small or large-scale, public or private, national or international. In most cases, such institutional interactions in Africa tend not to produce the outcomes that were hoped for from them, but in these four case studies, the result of scaling up was largely successful. Using some of the literature on the topic, I pay particular attention to the striking degree of success that was achieved in the scaling up of labour-intensive methods of rural road construction in Kenya, where the outcome of institutional interactions turned out to be highly favourable (see Chapter 2). An important discussion has subsequently addressed itself to the replicability of this and other examples, in different parts of the region.

Chapters 3 and 4

These two chapters remain squarely within the remit of institutionalist theory. Chapter 3 describes how changing international institutions bear on the appropriateness of the technologies that are used in Africa. On the one hand, I show how institutional resources for research on appropriate technology there have declined over the past 20 years or so. On the other hand, there are countervailing forces in the form of a rapidly growing number of Chinese and Indian firms. My hypothesis is that these firms tend to promote more appropriate technologies than either institutions from developed countries, or local firms in comparable industries.

The reasoning here is that techniques in these two large developing countries are generated against a background of socio-economic and institutional factors that are more akin to African than developed-country conditions. And there is already some evidence (as noted in a later chapter) that private Chinese firms tend to be associated with relatively appropriate technologies. Much research, however, remains to be done on this important topic.

Chapter 4 is about capabilities rather than technologies, but it is based nevertheless on the institutionalist notion that institutions from developed countries are often unsuitable for conditions prevailing in much poorer countries, such as those in Africa. In this case, the institutions in question are the components of technological indexes that are designed very much with developed countries in mind. Thus, they include measures such as R&D, patents and high-tech exports, which have very little to do with production structures in most African countries, and as a result are unable to discriminate adequately between them.³ What I propose instead is an index designed specifically for African countries, that is based on more fundamental elements such as literacy, numeracy and vocational training. According to this revised index, several African countries perform much better than the rest of what is admittedly a small sample.

Part II

The chapters in the second part of the book are linked together by the fact that they are all concerned with information technology, and with means of access to this technology, that vary from one group of countries to another. In developed countries, for example, the overwhelming mode of access to the Internet and mobile phones is through ownership. In developing countries, by contrast (particularly with regard to rural areas), ownership is frequently not a viable option, because incomes for many inhabitants are much too low to afford this form of access. Many of the chapters in this part of the book, therefore, are concerned with institutions that enable the benefits of the new technology to be brought by other means to excluded groups. They are also concerned, in other words, with what I referred to above as ‘appropriate institutions’.

Appropriate institutions and information technology

In order to reach the groups which cannot rely on ownership as a means of access to information technology, there are, broadly, two alternative institutional forms available. One allows the use of IT without ownership by the users, while the other permits the benefits of technology to be reaped even without any individual use of it whatsoever:

For reasons that have to do with differences in the user capabilities they require, the first form of change applies best to mobile phones, whereas the second is most obviously suited to extracting the benefits of the Internet in rural areas of developing countries.

(James, 2006 : 6)

To be specific, while mobile phones make virtually no demands on user skills (not even literacy), the Internet requires a host of skills, ranging from computer literacy and linguistic skills to knowledge of the more demanding aspects of computing. Such differences as these are important because they indicate the direction of institutional change that is required in relation to mobile phones, on the one hand, and the Internet, on the other. For whereas with respect to the former type of IT, the need is to extend the limits imposed by ownership using sharing mechanisms of one kind or another, the Internet requires innovations that bring the benefits to the rural majority, without any need for individual use of the technology (given the vast gap between the user capabilities available to this group and those that are actually required) (James, 2006 : 6).

Table 1.1 contains a taxonomy of the previous discussion with commercial and non-commercial modes of institutional change in the case of mobile phones, and face-to-face vs distance intermediation, in the case of the Internet.

Table 1.1 Illustrative cases of institutional change in mobile phones and the Internet

Institutional change to expand users	Institutional change to derive benefits without use
Mobile phones	The Internet
(a) Non-commercial Sharing a mobile phone by the friends and family of owners, (b) Commercial Buying time from vendors situated in villages, small towns, roadside kiosks People who cannot afford a mobile phone use prepaid cards to make calls from a handset belonging to someone else. Renting prepaid ca...

Table of contents

• Cover
• Half Title
• Series Page
• Title
• Copyright
• Contents
• List of figures
• List of tables
• Acknowledgements
• 1 Introduction: theories of institutions
• PART I Non-digital technologies
• PART II Digital technologies
• Index