Technology Choice and Income Distribution

Abstract

Within the context of the agricultural sector one can point to numerous attempts to assess the macro-economic effects of alternative technologies on the distribution of income. One of the most influential early efforts, for example, was undertaken mainly in the Indian context by John Mellor,¹ who was seeking to redefine agriculture’s role in development strategy and policy. In rejecting the then existing capital-intensive and industry-led development model and advocating instead a rural-led, employment-intensive path to development, Mellor was concerned, among other things, with the relationships between increased foodgrain production using alternative technologies and the growth rate of non-agricultural employment, non-agricultural sector capital-labour ratios and the course of per capita incomes of the labour force. More recently, Haggblade and Hazell² have used an input-output based model to examine how differences in the choice of agricultural technology and farm size influence the indirect (or multiplier) effects of increases in agricultural output. They show, for example, that: ‘The input intensity, consumption profile of targeted farms and processing characteristics of the farm output all affect the size and composition of nonfarm spinoffs.’³ The finding that consumption linkages generally dominate the total multiplier confirms Mellor’s emphasis on the importance of this particular type of linkage effect.