World Development Report 1984
World Development Report 1984
World Development Report 1984
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labor force in most of today's low-income coun- ture-absorbed more than 80 percent of the<br />
tries will go on increasing well into the twenty-first increase in the labor force.<br />
century. Agricultural output and jobs must continue to<br />
In western Europe and Japan, by contrast, the grow rapidly in Kenya: the effective demand for<br />
number of farm workers began to fall when the food is rising at about 4 percent a year, so that<br />
labor force was still largely agrarian, so there were domestic production-or other agricultural exports<br />
never any significant increases in the size of the to pay for food imports-must grow at least at the<br />
agricultural labor force. In Japan, for example, the same pace to avoid draining foreign exchange from<br />
share of agriculture in the labor force in the mid- other sectors (if constant terms of trade are<br />
1880s was about 75 percent-much the same as in assumed). And the rest of the economy has only a<br />
today's low-income countries, and nonagricultural limited capacity to absorb labor. The public sector<br />
- employment grew at between 2 and 3.5 percent a accounted for about two-thirds of the growth in<br />
year in the late 1800s and early 1900s. In these two wage employment during 1972-80-the number of<br />
respects Japan was similar to many low-income schoolteachers rose by more than the increase in<br />
countries today. But the total labor force was grow- manufacturing workers-but its growth is coning<br />
at less than 1 percent a year, much slower than strained by fiscal limits. Industry is relatively small<br />
in developing countries today (see Figure 5.2). So and capital intensive, so its work force is unlikely<br />
only modest rises in nonagricultural employment to expand much.<br />
were necessary to absorb the rise in the rural work These constraints are highlighted by the projecforce.<br />
Between 1883-87 and 1913-17, the share of tions in Table 5.5. In the "worst" case-essentially<br />
the labor force in agriculture fell by twenty per- a continuation of recent trends, with the labor<br />
centage points and the absolute number of farm force growing at 3.5 percent a year and nonagriculworkers<br />
fell by some 1 million. tural employment at 4 percent-Kenya's agricul-<br />
Kenya provides a dramatic contrast with the Jap- tural work force would still be increasing in absoanese<br />
case. Only about 14 percent of the Kenyan lute size even 100 years from now (see also Figure<br />
labor force is in wage employment in the "mod- 5.2). In the "best" case, which assumes the same<br />
ern" economy and about half of them are in the growth in nonagricultural employment but slower<br />
public sector. Between 1972 and 1980 employment growth in the labor force after 2000 (implying a<br />
in the modern sector grew at 4.3 percent a year, decline in fertility starting in the mid-1980s), struchigher<br />
than in Japan in the late nineteenth century tural transformation proceeds at a faster pace.<br />
but somewhat slower than the growth of GDP (4.9 Even so, agriculture must absorb more than 70 perpercent).<br />
But the rate of growth of the total labor cent of the growth in the labor force for the rest of<br />
force was very rapid-3.5 percent. There was some this century. It is only after 2025 that the number of<br />
shift of the labor force into the modern economy, workers in agriculture starts to decline. In the<br />
since growth in modern sector employment was meantime, how to absorb these extra farm workers<br />
faster than in the total labor force. But the shift was productively is a critical issue in Kenya and in<br />
small. Nonwage employment-mainly in agricul- many other countries in sub-Saharan Africa and<br />
South Asia.<br />
TABLE 5.5<br />
Kenya: projections of employment by sector,<br />
Efficiency: allocating limited capital<br />
under two scenarios, 1976-2050 Capital deepening (and associated absorption of<br />
(nmillions of7oorkers) labor into the modern sector) is not the only con-<br />
Einployment<br />
sector' 1976 2000 2025 2050 tributor to economic growth. Last year's <strong>World</strong><br />
<strong>Development</strong> <strong>Report</strong> highlighted the importance of<br />
Nonagricultural employmentb<br />
Agricultural employment<br />
1.2 3.0 8.0 21.8 making better use of existing resources, as well as<br />
of innovation and entrepreneurship. Promoting<br />
"Worst" casec 3.8 9.9 24.1 56.9<br />
"Best" cased 3.8 9.9 12.4 4.5<br />
a. Unemployment held constant in all years and in both cases<br />
(about 1.2 million workers).<br />
b. Increases at 4 percent a year in both scenarios.<br />
c. Labor force grows at a constant 3.5 percent a year.<br />
efficiency often requires policy reform. For example,<br />
many developing countries have a history of<br />
subsdizng capitl subsiies have discourage<br />
subsidizig capital; subsidies have discouraged<br />
labor-intensive production and led to inefficient<br />
use of scarce capital. Even with reform, efficiency<br />
d. Growth of labor force slows from 3.5 percent a year in<br />
1976-2000, to 2.5 percent a year in 2001-10, to 1.5 percent a year<br />
in 2011-25, and to 1 percent a year in 2026-50.<br />
may not come easily; many technological innova-<br />
tions available to developing countries are labor-<br />
89