The new entrepreneurs of the world
Colombo, Sri Lanka — In Pilangsari village on the Indonesian island of Java, an enterprising young man recently bought up a piece of land, built a shed, hooked it up to the nearest power line, hired 30 men, and started making ice, bottled lemonade, and soda water. In other Javanese villages, similar new enterprises have sprouted up to make household "Dragon" water pumps, insect sprayers, tea dryers, and other simple farm and household tools.
In recent visits to rural Mexico, South Korea, Taiwan, and Sri Lanka it was the same story: Unassisted entrepreneurship is starting a wide variety of small workshops and factories in villages where only agriculture existed before. Creative and self-generating if woefully lacking in technical, financial, and managerial skills, such small-scale industries are growing dynamically, catching most governments by surprise.
The need has always been there. At a very rough guess, perhaps 30 to 40 percent of the world's 2.5 billion villagers are essentially unemployed. They work at what daily manual labor they can get, usually for 50 cents or $1 a day, wages that are just enough to keep body and soul together. Traditional cottage industry of the matweaving, hand-loon sort brings in very little.
What seems to be happening is that several forces are combining to create a new capacity for more productive work and an eagerness to get on with it: inflation, the fast spread of TV in the late 1970s, proof of the effectiveness of modern agricultural techniques, improvements in transportation, rural electrification, and better health and education.
Awareness is also growing out of the large numbers of migrant workers abroad; you can scarcely find a village these days where ther isn't someone with a relative working in the Middle East (or in the case of Mexican villages, in the United States). Such workers earn at least $400 a month, in comparison with $30 average monthly wages in Sri Lanka, China, or Indonesia.
At any one time there are about 100,000 South Koreans and 50,000 Sri Lankans in Saudi Arabia and the Gulf states. Other low-wage countries like Thailand, India, Indonesia, Pakistan, and the Philippines have entered the labor export business. There estimated to be 6 to 12 million Mexicans illegally in the United States. Even China has jumped on the bandwagon; the People's Republic is now offering crews of trained workers for monthly wages of $300 to $450.
Almost all these workers are learning skills they want to put to use back home.
At the same time, manufacturing in textiles, steel, shipbuilding, and engineering equipment is moving to the third world countries themselves. Japan now has more than 200 joint ventures in Indonesia, in car and truck assembly, textiles, hotels, plastics, food processing, electrical appliances, and farm machinery, as well as huge investments in oil, timber, copper, aluminum, and other extraction industries. Increasingly, Indonesia insists that the Japanese and other foreign investors hire and train native workers.
Textiles usually come first. In South Korea and Taiwan virtually 1 out of 3 new jobs created between 1960 and 1970 was in textiles. Since 1977, most of the 23 new foreign-financed industries in Sri Lanka's "free trade zone" have been textile plants. Tiny (population 900,000), tropical Mauritius has become the world's eighth-biggest manufacturer of sweaters.
Or take shipbuilding. South Korea, Taiwan, and Brazil didn't start building ships until the late 1960s. In the past three years, they have captured 30 percent of all new orders. As European shipbuilders lay off workers, Mexico is opening up new shipyards.
Engineering is another promising field. Poor countries offer the low wages and fast-expanding markets to assure them a big share of new shops in both heavy -- and light -- equipment building. Increasingly, Multinational customers are turning to the Asians for low-technology bargains in things like car components and industrial fasteners (nuts and bolts).
Tourism also favors the cheaper, warmer south. With international tourist arrivals worldwide forecast to grow from 280 million in 1979 to 380 million 10 years from now, and the world's 7.5 million hotel rooms expected to double in 30 years, this will be another big source of jobs. And the third world's boom in primary education and rural clinics shows no sign of stopping, so that teachers, nurses, and paramedics will all be in big demand. In some villages, the export of teachers ranks just behind the sales of agricultural produce.
While agriculture is still by far the third world's largest employer, its share of total workers is falling as more jobs grow in manufacturing industry and services. This coincides with a rapid rise of its working-age (15 to 64) population just as mortality rates are falling and life expectancy rising.
Women's emancipation also figures in. Though most village women work longer hours than men (and, indeed, Neolithic woman invented agriculture in the first place), few are categorized as formally employed. But participation rates are rising, for example, from 19 percent (1960) to 25 percent (1978) in Mexico. In China, women now do 60 percent of the farming and in South Korea, 45 percent, much of it mechanized. (Last spring I visited several training centers where Korean women were learning how to operate power tillers and rice transplanters.)
Up until now, of course, third world industry has been tiny in terms of the demand for jobs. Most developing countries have invested largely in big capital-intensive manufacturing industries, which rely heavily on foreign capital and experts. Unlike Japan or Taiwan, or South Korea since 1970, they have neglected small-scale engineering shops for subcontracting and outwork to spread jobs to the rural countryside. India, for instance, is now the world's 10th industrial power, but, as former Prime Minister Morarji Desai told me in 1978, "To whom are we going to sell? Who is going to buy?" India lacked the rural small-scale industry to create markets and purchasing power.
Most villagers now seem way ahead of their governments in realizing the time has come to shift investment to rural electrification, credit, and small-scale decentralized industry. There are two main reasons for this: (1) Life spans in most of the third world, except Africa, have gone up 40 to 50 percent in the past 25 years; and (2) villagers now in their early teens are on their way to becoming the best-educated generation the world has ever known.
In the 38 poorest countries, the World Bank estimates that 75 percent of primary-grade-age children are now in school, compared with little more than half in 1960. In middle-income countries (Korea, Egypt), almost all children are in primary school, 40 percent go on to secondary school, and 11 percent of the 20-to-24 age group go to college. The list of countries approaching universal literacy (South Korea, Taiwan, Sri Lanka, much of India and China) is fast growing.
This means, certainly in Asia, that the village work force is growing steadily bigger, better educated, healthier, and less male-dominated, and its rate of growth is starting to slow down. It is more and more evident in villages that there has been a decisive shift among parents to put more value on the quality of their children and less on their numbers. With longer life pans and more schooling, fewer educated children simply become better investments than many illiterate ones.
This human capital -- what people do, their training, what they know -- looks to be growing more important to Asia's economic growth than its physical capital , i.e., dams, roads, and steel plants. Fully 80 percent of America's national income now comes from the skills and ability of its people, not the land, property rights, and other durables of a century ago.
Employment shifts in three stages -- from agriculture to industry to services. The third world is still very much in Stage 1, people coming out of rural poverty to work in industry for the first time. The small farmer still dominates village life: 75 percent of all farms in tropical Asia are smaller than 2 hectares, 69 percent in Central America less than 5 hectares, and the cropland planted each year by the average African is between 1.3 and 3 hectares (a hectare is about 2 1/2 acres). This means a small-scale industry with appropriate technology fitted to the small farmer (power tillers, grain dryers, simple refrigerators, fans, windmills, TV sets, hand pumps, transistor radios, and the like).
It will be a long time before the predominantly agricultural third world gets into the electronics complex around which Western society is reorganizing -- chips, computers, microprocessors, robotics, satellites, and biotechnology.
The new growth of jobs -- creating dynamism in villages is coming just as warning are being raised of a new world food crisis. Former US Agriculture Secretary Orville Freeman was recently quoted as saying there was a strong possibility of world grain prices "doubling or tripling in the next 12 months." For third world nations left behind by change -- much of Africa, Central America , the landless poor in some countries -- there is real danger of hunger and malnutrition.
But for a good part of Asia, a new world food shortage could have an unexpected beneficial effect. Millions of villagers are now chiefly concerned about off-farm employment because the farms, by adopting modern science, have done to well the past 10 years.
Asia is now repeating the same rise in farm yields that America experienced between 1930 and 1970, when corn yields quadrupled in Iowa. This created a big gap with the third world and a huge grain trade in favor of the United States. Now this technology has shifted to Asia. Some of its farmers -- in northwestern India, parts of China, Korea, Taiwan, and elsewhere -- now increase yields faster than Americans or Europeans do. The US agricultural revolution is leveling off as the Asians pull ahead in crop after crop (the Egyptians too), something they will eventually do in livestock and poultry.
Expensive food could speed up this revolution. Too many countries still have cheap food policies at the expense of their farmers, though the gross neglect of agriculture and yearly bailout with surplus American grain are over. If grain prices really do soar as much as predicted, we may see the real test in Asian agriculture of what modern technology can do. This in turn would hasten all rural advance, including jobs-creating small-scale industry.
Do more jobs and more food for poor Asians mean less for us? No, just the reverse: The extra income earned can and does create demand for new products from the industrial countries; the third world now buys more American exports than Europe. Nor do bigger populations have to mean more poverty. The key is to enable people to consume the products of other people's work as well as produce things for themselves. This is what India is trying to do today. Productivity-boosting technology raises incomes and dampens inflationary pressure for everybody.
The earth does not simply have a fixed amount of work to do, to be shared among its 4 billion inhabitants. Instead, the more jobs the villagers get, the more their wants and needs will change, and the bigger the export market they'll become. More jobs for the villagers means, ultimately, more jobs for the industrial world.