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789 East Eisenhower Parkway P.O. Box 1346
Ann Arbor, Ml 4 8 1 0 6 - 1346
1900-1940
A THESIS PRESENTED TO
THE UNIVERSITY OF LONDON (SOAS) IN FULFILLMENT OF THE REQUIREMENTS FOR THE
DEGREE DOCTOR OF PHILOSOPHY IN ECONOMICS
By
W illiam Paul Kinney A p r i l , 1975
ABSTRACT
This study o f Malaya po sits the establishment o f export in d u s trie s as the s t a r t in g p o in t in i n i t i a t i n g the growth process.
The export commodities developed were those h ig h ly using o f u n s k ille d labour or o f a p a r t ic u la r natural resource. Tin' and rubber v/ere the main exports o f Malaya in the period under c o n s id e ra tio n -- the la te nineteenth century up to World War I I . Also important in i n i t i a t i n g development and, more im p o rta n tly in shaping the contours o f growth once i n i t i a t e d , v/ere government p o lic y in regard to in f r a s t r u c t u r e (m aterial and i n s t i t u t i o n a l in f r a s t r u c t u r e ) and the technological nature o f the production fu n c tio n . This a n a ly tic a l framework regards i n f r a s t r u c t u r a l p o lic y and the technological nature o f the production fu n c tio n as
complementary ra th e r than mutually exclusive causative fa c to rs . By 1920, Malaya's export in d u s trie s had reached r e l a t i v e m a tu rity . U t i l i z i n g extensive in d u s t r ia l and occupational data o f the
1921 census, Malaya's economic p r o f i l e is sketched. The now c a p i t a l - in te n s iv e t i n in d u s try was shared by Chinese and B r i t i s h producers. The la b o u r-in te n s iv e rubber in d u s try v/as shared by estates and sm allholders.
Coexisting w ith the export in d u s trie s v/as a subsistence s e c to r and some secondary and t e r t i a r y in d u s try . Malaya represented a ty p ic a l case o f dualism as defined in t h is study and in the l i t e r a t u r e . Subsequent census reports reveal the continuing r i g i d i t y o f "segregative" dualism.
Several other important conclusions emerge. The considerable p o te n tia l o f sm allholder rubber was re a liz e d only to a lim it e d extent.
Governmental retrenchment and the exigencies o f the Depression forced the peasants in to an " in v o lu tio n a l" adaptation. I n f r a s t r u c t u r a l p o lic y co n trib u te d im p o rta n tly to these outcomes.
Although the l i m i t s o f s t a t i s t i c a l expression are considerable, i t may be concluded t h a t per capita r ic e a v a i l a b i l i t y was w ell-m a in ta in e d during the Depression. The experience o f Malaya's communities varied w ith regard to o ther aspects o f w e lfa re0 In d ic e s , constructed from
raw data, support these co n te n tion s9
ACKNOWLEDGMENT
I would l ik e to express my appreciation to Mr0 P0C .I.
Ayre and Dr. J0AoMo Caldwell who supervised the w r it in g o f th is thesiSo I would also l ik e to express my appreciation to Jacqueline Kinney, Alan Thompson, Robert Maddox, Caroline Maddox and Dorothy Gundy who helped in various ways during the preparation o f th is th e s is .
The National Science Foundation, Washington, D0C0 and F o o th ill College, Los A ltos H i l l s , C a lifo r n ia provided fin a n c ia l assistance during the period o f study and t h e i r generous help is hereby acknowledged. The assistance o f other i n s t i t u t i o n s is also acknowledged: The Hoover I n s t i t u t e L ib ra ry o f Stanford U n iv e rs ity , Yale U n iv e rs ity L ib r a r ie s , The Foreign and Commonwealth O ffic e L ib ra ry ( p a r t i c u l a r l y Catherine B azell) in London, Hubert H0 Semans L ib ra ry o f F o o th ill College ( p a r t i c u l a r l y Jorge Bruguera).
Chapter I . I I . I I I . IV.
V.
■VI.
V I I .
V I I I . IXo
X.
XI.
PART I
Page
ANALYTICAL FRAMEWORK ' 1
TIN: THE DEVELOPMENT OF AN EXPORT INDUSTRYo . . . 28
RUBBER: THE DEVELOPMENT OF AN EXPORT INDUSTRY . . 54
IMPORTATION OF LABOUR. . . . ... 103
INDUCED CREATION OF MATERIAL INFRASTRUCTURE. . . . 122
PART I I MALAYAN DUALISM IN THE 1920’ s AND 1930's . . . 144
SMALLHOLDER RUBBER AND THE INSTITUTIONAL INFRA STRUCTURE. ... 189
RETRENCHMENT . . . 225
INVOLUTION . . . ... . . . 249
WELFARE. . . . ... 282
CONCLUSIONS. ...317
BIBLIOGRAPHY
L IS T OF TABLES' AND GRAPHS
Page
Export o f Tin From Perak, 1874-93 32
Export o f Tin from the Malay States o f Perak,
Selangor, Negri Sembilan and Pahang, 1890-99 33
Horse-Power o f the Plant in Mining, 1911-22 45
Number o f Labourers per Ton o f Tin Output, 1912-22 49 Horse-Power/Output (o f Tin) in Tons, Selected
Years from 1909 to 1922 50
Volume o f Ground Treated: Cubic Yards (Tin M ining),
1913-40 51
Exports o f Tin (1905 to 1930) and Production
(1931 to 1938) 52
Price o f Tin (per Ton), 1905-38 53
World Production, P lantation and Wild Rubber,
1905-22 62
Cost o f Bringing One Acre (o f Rubber) in to Bearing,
1922 and 1929 Estimate f o r Heavy Jungle 73
Estimated Cost o f Production on a European Estate (Rubber), Chinese Estate, Malay Estate, etc.
Yielding 440 Kilograms per hectare, 600 Kilograms
per Hectare, etc. 86-90
Rubber Company S t a t is t ic s (on Cost) 91-93
Average Cost o f Production o f Rubber Companies
(1929-33) 94
London Yearly Average Natural Rubber P rices, 1900-40 95 Malayan Rubber Estate and Smallholding Acreage and
Production, 1906-38 96
Dividend Record o f S te rlin g Rubber Companies in
Malaya, 1910-22 97
Issued.::,., Capital (Tin Mining) 1900-20 99 Number o f Labourers Engaged in Mining, Selected
Years (1907-22) 99
Planted Acreage (Rubber) in Malaya, 1922-30 101
F.M.S. Estate Labour Force, 1907-38 102
Statement o f A r r iv a ls Between Madras Presidency
and Malaya, 1900-16 119
Statement o f Departures Between Malaya and Madras
Presidency, 1900-16 119
Labour Force on Estates Over 100 Acres in Size (1915) 120 F.M.S. Total Revenue and Export Duty from Tin
and Rubber, 1898-0938 128
Statement o f Gross Earnings (F.M.S. Railways)
1894-1934 and Net Cash Surplus/Deficiency 1885-1934 137-138 Number o f Persons Employed in T in , etc. Compared to
Total Population (F.M.S.) in 1921, 1931 and 1947 148 Number o f Persons Employed in Transport and Communications,
etc. Compared to Total Population (S.S.) in 1921 and 1931 149 F.M.S.--General Return o f Revenue, Expenditure, Trade 150 Employment Changes Suggestive o f a Growing "Money Economy" 188 Output o f Certain Classes o f Producer (Rubber),
January-May, 1934 214
Internal D is tr ib u tio n o f the Malayan T e r r i t o r i a l
Quota (Rubber), 1934-40 215
Quotas o f Malayan Estates and Smallholdings
(Expressed in Lb, per Acre) 1934-40 215
Annual Output o f Rubber per Mature Acre o f Malayan Estate
and Smallholdings, 1929-40 216
Share o f Estates and Smallholdings in Malayan Rubber
Production, 1929-40 217
Page
Comparison o f Previous Output o f Malayan Estates and
Smallholdings w ith Their 1934 Quotas 217
Changes in Areas Under Rubber, 1925-40 [ i n Malaya, Ceylon
and Netherlands East In d ie s ), Table I 222
Changes in Areas Under Rubber, 1925-40, Table I I 223 National Income f o r 1931 (Estimate by 1932 Retrenchment
Commission) 228
National Income o f Malaya (Estimates f o r 1931-37) 230
Import Duties (Various Items) 234
Schedule o f Recurrent Expenditure f o r F.M.S. (A ctual, 1922;
Estimated, 1932 and Retrenchment Commission
Recommendations f o r 1932) 238-240
Revenue, Expenditure f o r F.M.S., 1923-37 (graph) 242
F.M.S. Revenue, 1932-37 243
F.M.S. Revenue and Expenditure, 1932-37 244
Expenditure on Public Works, 1932-37
( f o r selected States) 245
Expenditure on Drainage and I r r i g a t i o n , 1932-37
( fo r selected States) 247
Amount o f Land Planted w ith Padi, 1930-40 274
Number o f People Employed in Various Pursuits in 1931 and 1947 275
Rice Production, 1929-40 276
Price o f Rice, Price Index (1924 and 1928-40) 285
Price Index—Cotton Piece Goods (1924 and 1928-38) 286
Price Index-M eat (1924 and 1928-39) 287
Price Index—Tea (1924 and 1928-39) 288
Cost o f L ivin g Index (Weighted A rith m etic Mean),
1924 and 1928 289-290
Wages (on Rubber Estates) and Wage Index
1922-37 294
Wages Index Compared to Cost o f L iving Index
(W.A.M.) 1924 and 1928-38 295
Population o f Malaya (1922-40)
Based on the assumption o f population growth rates
ranging from minus one to plus three per c e n t.) 306 Rice A v a i l a b i l i t y , Rice A v a ila b ility /P o p u la tio n
1921-40 308
Rice Production and Net Imports, 1920-39 309
Cost o f Livin g Index w ith C a lculations, 1928-38 313-315 Number and Type o f Complaints Registered with
Labour Department, F.M.S., 1925-33; Malaya, 1934-38 316
Chapter 1 A n a ly tic a l Framework
1
The s t a r t in g p o in t f o r .th is study is the establishment o f an a n a ly tic a l framework w ith in which both the fa c to rs i n i t i a t i n g export growth in an underdeveloped economy, Malaya and the fa c to rs determining the contours o f t h a t growth once i n i t i a t e d may be examinedJ
The establishment o f export in d u s trie s is suggested as a s t a r t in g p o in t in i n i t i a t i n g the growth process. Such an in te rn a tio n a l trade approach has a long and respectable h is t o r y going back a t le a s t to Adam Smith's Wealth o f Nations. Two o f Smith's im portant and re la te d ideas, t h a t in t e r n a tio n a l trade overcomes the narrowness o f the home market and t h a t i t provides an o u t l e t f o r the surplus product above domestic requirements, have been developed in to the "ve nt f o r surplus"
theory o f in t e r n a t io n a l trade. 2 Myint notes the "considerable amount o f p rejud ice among economists against the vent f o r surplus theory" which he says derives from i t s m e r c a n t ilis t associations and te ch n ica l crude- ness. 3 Vet in s p ite o f i t s weaknesses, the vent f o r surplus seems a
The term Malaya is here used i n t e n t i o n a l l y as the study covers the e a rly p a rt o f t h is century before the establishment o f the Federa
tio n o f Malaysia. The study covers the in c e p tio n and growth o f the t i n in d u s try around the turn o f the century and the development o f the rubber in d u s try a f t e r the 1905 in tro d u c tio n o f the Hevea b r a s i1ie n s is . The subsequent growth o f the economy o f the Malay Peninsula w i l l be traced through, approximately 1940.
2The vent f o r surplus theory is discussed, among o th e r places, in H. M y in t's ‘ The Class i c al Theory of In te rn a tio n a l Trade and the Under
developed Countries TOxTorcT: Instituteof"Commonweal th Studies , 1958) , Series Wo. 22. Myint took the term from Professor J.H. W illiams who in his Theory o f In te rn a tio n a l Trade Reconsidered quoted i t from a passage in J.S. M i l l s ' P r in c ip le s .
^M yint, I b i d . , p. 322.
more h e lp fu l s t a r t in g p o in t in the present study than the conventional in t e r n a t io n a l trade theory. The conventional theory holds th a t a country e n te rin g in to in te r n a tio n a l trade can produce the exports only by drawing
4
la b o u r away from domestic production. Such an assumption would be in a p p ro p r ia te , as the l a t e r discussion o f labour w i l l make c le a r , in Malaya's case.
Of more i n t e r e s t in t h i s study are several o f M y in t's obser
v a tio n s regarding underdeveloped cou n trie s and the vent f o r surplus no
t i o n . I t ' s maintained th a t the growth of in t e r n a t io n a l trade i t s e l f introduced or s i g n i f i c a n t l y extended the money economy in underdeveloped c o u n trie s and t h a t the process o f s p e c ia liz a tio n th a t emerged in these c o u n trie s involved "adapting and reshaping the p rod u ctive s tru c tu r e of a country to meet the export demand." 5 The underdeveloped c o u n trie s o f Southeast A s ia , L a tin America and A f r ic a which developed export econo
mies s ta rte d o f f w ith sparse populations r e l a t i v e to t h e i r na tu ra l resources. "Once the opening-up process had got in t o i t s s t r i d e , the e xport production o f these cou n trie s expanded very r a p i d l y , along a t y p ic a l growth curve, r i s i n g very sharply to begin w ith and ta pering
g o f f afterw ards.
The explanation f o r these rapid ra te s o f expansion, can not be found in the comparative costs theory w ith i t s assumption o f given resources and given techniques-- "the t e x t book account o f the impact
^ I b i d . , p. 323. Myint c a lls t h is the conventional in te rn a tio n a l trade theory in i t s Qhlin version.
^ I b i d . , pp. 323 and 319 re s p e c tiv e ly .
6I b i d . t p. 324.
3
o f in te r n a tio n a l t r a d e . N o r does the explanation l i e in re v o lu tio n a ry changes in techniques or increases in p r o d u c t iv it y . Rather the c o n t r i butions o f Western e n te rp ris e to the expansion process are mainly to be found in two spheres: the improvements o f tra n s p o rt and communications and the disco ve ries o f new mineral resources. (The former was described by Professor L.C.A. Knowles as the "unlocking o f the t r o p i c s . " } These observations provide us w ith a s t a r t in g p o in t f o r the a n a lysis o f growth o f one such export economy, Malaya.
The a n a ly tic a l framework to be used in t h is study p o s its th a t as a general r u le the types o f commodities developed as export lin e s in underdeveloped cou n trie s are those h ig h ly using o f u n s k ille d labour or o f a p a r t i c u l a r natural resource. Tobacco, te a , sugar, and rubber are - good examples o f the form er; t h e i r production in volves the use o f a high
labour c o e f f i c i e n t over a wide range o f r e l a t i v e f a c t o r p ric e s . F u rth e r
more, such commodities f i t w ell the c lim a t ic c o n d itio n s o f many less developed c o u n trie s . Mineral products-- copper, b a u x ite , t i n , e t c . — provide examples o f export in d u s trie s whose p r o f i t a b l e development de
pended on the a v a i l a b i l i t y o f a natural resource r a th e r than the a v a ila b i l i t y o f inexpensive u n s k ille d labour. An a d d itio n a l f a c t o r im portant in i n i t i a t i n g development, and shaping development a t the time export in d u s trie s were esta b lish e d was i n f r a s t r u c t u r e . Generally, the term i n f r a s t r u c t u r e is
^H. M yin t, The Gains from In te rn a tio n a l Trade and the Backward
Countries (Oxford: I n s t i t u t e o f Colonial S tu d ie s ), Series ¥oJ—12, p. 133.
Also see, I b i d . O
M yin t, ' The C lassical Theory1 o f In te rn a tio n a l Trade and the Underdeveloped Countries, Joe. c i t .
used to mean "material i n f r a s t r u c t u r e . ” Such a d e f in it io n would subsume means o f tra n s p o rt, energy supply, i r r i g a t i o n , sewage systems--those items o f "s o cia l overhead c a p ita l" th a t "render services as intermediate goods f o r production, consumption and the p r o d u c tiv ity o f investment." 9 Such goods and the services are usually provided by the s ta te .
The concept o f in fr a s tr u c tu r e as used here, however, is extended to include " i n s t i t u t i o n a l in f r a s t r u c t u r e . " This notion subsumes a l l
common and s ta tu te r u le s , a l l ways o f behavior and organizational i n s t i t u tions in an economy. Thus, broadly, in s t i t u t i o n a l in f r a s tr u c tu r e may be said to c o n s titu te the framework w ith in which economic e n t it ie s set up and re a liz e t h e i r plans. Such diverse items as a d m in is tra tiv e and p o l i t i c a l s tru c tu re s , c r e d it and finance systems and cooperative organizations may be said to be p a rt o f the framework. 10 With in fr a s tr u c tu r e defined to include both material and i n s t i t u t i o n a l in f r a s t r u c t u r e , i t may be posited th a t in fr a s tr u c tu r e is important in both the establishment o f export in d u s trie s which i n i t i a t e s growth and in subsequent economic growth.
Reference to the establishment and e arly growth o f tin -m in in g in Malaya w i l l help to elucidate the importance o f in f r a s tr u c tu r e in the establishment o f an export in d u s try . Tin mining was begun in Larut a f t e r the discovery o f such deposits in the 1840's and under the encouragement o f Long Jaafar. He "encouraged the immigration o f Chinese miners in to Larut, financed by Chinese c a p it a lis t s in Penang." ^ One o f the main
^Reimut Jochimsen, "Socio-Economic Dualism and Development S trategy,"
Asian and A frican S tudies, Vol. 6, 1970, p. 97.
1° I b i d . , p . 106.
^ J .M . G u llic k , "Captain Speedy o f L a ru t," Journal o f the Malayan Branch o f the Royal A s ia tic S o c ie ty , Vol. 26, p art 3, p. 19. This a r t i c l e on the
e ccentric Captain Speedy, resident o f Perak, also describes the " d i f f i c u l t a r t o f administering the Malayan Chinese" who were feuding over control o f the t i n f i e l d s . A dditional d e ta ils on the 1848 discovery o f t i n by Long Jaafar w i l l be
provided in Chapter I I , . . .
5 problems to be solved in developing the t i n mines was tra n s p o rt. Thus one o f the e a r l ie s t creations o f material in fr a s tr u c tu r e involved the
b u ild in g o f a road connecting the Larut mining area in Perak to the p o rt o f Telok Kertang--making possible the use o f bullock carts f o r the tra n s p o rt o f t i n . The same general pattern was repeated in Kinta w ith elephants used to tra n s p o rt t i n from the i n t e r i o r to the Kinta River down which i t was
1 ? ca rrie d to the p o rt o f Durian Sabatang f o r shipping to Penang.
The considerable value o f the material in fr a s t r u c t u r e thus created in Larut and Kinta was however enhanced by complementary use w ith i n s t i t utional in f r a s t r u c t u r e . The ports o f Penang, Malacca and Singapore may be suggested as important components o f the i n s t i t u t i o n a l in fr a s tr u c tu r e o f Malaya in th a t they o r i g i n a l l y enjoyed d u ty-fre e s ta tu s . (At the same time, the ports also c le a r ly represent material i n f r a s t r u c t u r e . ) These ports would become very important in the i n i t i a t i o n o f trade-induced growth in Malaya. The establishment o f Penang culminated what Wong Lin Ken c a lls
"a two decade search f o r a convenient p o rt along the trade route to China." 13 And Singapore, ly in g d i r e c t l y on the shortest sea route between Europe and the Far East, was destined to become an even greater p o rt. By the time o f the 1819 founding o f Singapore, t h i r t y three years a f t e r the founding o f Penang, " B r i t i s h trade in the Malay Archipelago had become both valuable and extensive." ^ In subsequent years the i n i t i a l a ttra c tio n s o f the
12P.P. Courtenay, A Geography o f Trade and Development in Malaya (London: G. Bell and Sons, L t d . , 1972), p. 82.
13Wong Lin Ken, "The Trade o f Singapore, 1819-69," Journal o f the Malayan Branch o f the Royal A s ia tic S o c ie ty , Vol. 33, p a rt 4 , p. 16.
1 4I b i d . , p. 1 1.
ports were enhanced by the provision o f "properly conducted auctions and markets, o f banking and insurance f a c i l i t i e s and o f shipping." 15
The p o rts , and e s p e c ia lly Singapore, became c o lle c tin g and r e d is tr ib u t in g centers f o r the produce o f the S tr a its and the archipelago. S t i l l
fu r th e r f i l l i p was provided by the 1869 opening o f the Suez Canal. As reported a t the time, i t was " the beginning o f a new era in the liv e s o f the great commercial and maritime n a tio n s." The "opening o f the Suez Canal w i l l quicken trade and . . , increase the importance of Singapore as a commercial center and a port o f c a l l . " ^ The products o f mines, f ie ld s and ju n g le exchanged fo r B r it is h piece goods o f wool, cotton and s i l k as well as steel goods, gunpowder, iro n and chinaware.
In performance o f these fu n c tio n s , the d u ty-fre e p o rts ' population grew and the tonnage o f ships entering the ports increased. 17 Also, the proportion o f trade w ith various regions and countries changed.
These magnitudes provide glimpses o f the emerging development p a tte rn .
15Courtenay, op. c i t . , p. 71.
1 fiGeorge Bogaars, "The E ffe c t o f the Opening o f the Suez Canal on the Trade and Development o f Singapore," Journal o f the Malayan Branch o f the Royal A s ia tic S o cie ty, Vol. 28, part 1, p. 101 quoting The S tr a its Times, Overland e d it io n , Jan. 4, 1870.
17Tonnage is used as a measure o f increasing trade because the d if f e r e n t u nits in which commodities were recorded--cotton goods in pieces, yarn by lengths, t i n by weight, etc.--make i t extremely d i f f i c u l t to assess volume o f trade. Extensive d e ta ils on shipping and trade are provided in Bogaars, 0£. c i t . , pp. 139-143 and Wong Lin Ken, op. c i t . , pp. 205-301.
7 For example, Singapore's large volume o f trade w ith "other B r it is h colonies" and Siam r e fle c t s Singapore's importance as an entrepot f o r the import o f r ic e from Burma, Cochin China and Siam r e s p e c tiv e ly . 18 This r ic e was destined f o r consumption by labourers opening up export in d u s t r ie s .
I t is s i g n if ic a n t in t h is study th a t the free ports were established under fo re ig n control and on the periphery o f the
"indigenous econorny." As t h e i r main functions were to put primary products in touch w ith world markets and import goods from "o u ts id e ,"
the ports only " i n d i r e c t l y " touched the indigenous population. The in d ir e c t way in which t h is element o f the material and i n s t i t u t i o n a l in fr a s tr u c tu r e touched the indigenous population had important im p lic ations in the shaping o f the contours o f development and growth once i n i t i a t e d . This leads us to the second p a rt o f the a n a ly tic a l frame
work.
Growth having been i n i t i a t e d , i t is posited in t h is study th a t two fa c to rs are o f c ru c ia l importance in shaping the contours o f fu r th e r growth w ith several fa c to rs being o f somewhat less importance. The two fa cto rs considered most important are in fr a s tr u c tu r e and the technolog
ic a l nature o f the production fu n c tio n --th e l a t t e r determining in
18Courtenay, op. c i t . , p. 227.
considerable p a rt the e xte n t to which new techniques and s k i l l s are a c t u a lly d iffu s e d in the underdeveloped area once growth has begun.
I n f r a s t r u c t u r e , i t has already been noted, was an im portant f a c t o r in i n i t i a t i n g growth. I t s importance continues in promoting growth, r i g i d - i f y i n g the p a tte rn i n i t i a l l y established o r , i f you w i l l , e s ta b lis h in g the tra n s p o rta tio n and communication framework w ith in which change and growth occurs and in the extreme case, " fre e z in g " the p a tte rn in the establishm ent o f which i t i n i t i a l l y played a r o le . In many cases e . g . ,
Indonesia and Malaya the p a tte rn t h a t was frozen was a d u a l i s t i c one.
The growth o f i n f r a s t r u c t u r e fo llo w in g the establishment o f an e xp o rt in d u s try in Malaya was very ra p id . Between 1880 and 1931, the e n t ir e Peninsula was covered w ith a r a i l network. Rivers were dredged and the fre e ports were improved. The c re a tio n o f i n f r a s t r u c tu re was la r g e ly an induced development as w i l l l a t e r be explained.
The im portant p o in t th a t i n f r a s t r u c t u r a l p o lic y may lead to an i n t e n s i f i c a t i o n o f dualism is not w ith o u t iro n y d i f f e r i n g as i t does from the conventional view o f in f r a s t r u c t u r e as a "good" th in g in a developing country. To b e tte r appreciate how i n f r a s t r u c t u r a l p o lic y can promote dualism, i t is important th a t we set out e x p l i c i t l y what is meant by dualism. The l i t e r a t u r e on t h i s concept i s , o f course, very extensive and one is thus forced to choose the most s a lie n t points f o r the present study.
Boeke provides a s t a r t in g p o in t by d e fin in g dualism as "the clashing o f an imported so cia l system w ith an indigenous social system"
and attempts f u r t h e r c l a r i f i c a t i o n by adding th a t "the only tru e and r e a l l y cogent a n t it h e s is is represented by the words c a p i t a l i s t i c and
9 non- or p r e - c a p i t a l i s t i c . " 19 E ith e r the term "eastern economies" o r
" d u a l i s t i c economies" may be used to describe "the s it u a t io n th a t is ty p ic a l f o r the countries in South and East A s ia ." 20 Another prominent feature o f the dualism th a t is common in Southeast Asia and elsewhere is the prolonged coexistence and cohabitation o f modern in d u s try and o f p r e i n d u s t r i a l , sometimes n e o l i t h i c , techniques." 21 Geertz, among o th e rs, sees in f r a s t r u c t u r e as an important element in e xp la in in g the growth o f a modern se cto r in dualism.
"B e n e fitin g from the external economies created by the formation o f s o cia l c a p it a l, the forced d if f u s io n o f p la n ta tio n crops and attendent labor s k i l l s over the is la n d , and a c e rta in amount o f more d ir e c t governmental assistance, p r i vate ente rp rise s s te a d ily m u ltip lie d ; soon t h e i r returns were great enough t h a t they could provide most o f the in v e s t
ment required f o r the q u a lit a t iv e changes in c a p ita l s to c k , p a r t i c u l a r l y in sugar m i l l i n g , which was becoming necessary.
. . . the p rotra cte d ' f a l l ' o f the Culture System (which la ste d from 1850 to about 1915) and i t s gradual replacement by the Corporate P la n ta tio n System v/ere la rg e ly se lf-g e n e ra te d ,
because i t s success in e sta b lis h in g a serviceable export economy i n f r a s t r u c t u r e made p riv a te entrepreneurship . . . p rog re ssive ly more fe a s ib le " in I n d o n e s i a .22
The rapid creation o f an export sector lin k e d to world markets meant th a t many developing countries passed from the "mule to the a i r plane in one generation" and they remained " f o r a long time in a s it u a - tio n where both a irp la ne and mule f u l f i l l e d e sse n tia l economic fu n c tio n s ."
19 Dr. J.H. Boeke, Economics and Economic P o licy o f Dual Societies as Exemplified by Indonesia [New York: I n s t i t u t e o f P a c if ic R elations, T553J7" p :
T.
--- :---2 0 I b i d . , p. 12.
21 A lb e rt 0. Hirschman, The Strategy o f Economic Development (New Haven: Yale U n iv e rs ity Press, 1959), p. 125.
2 2 C l i f f o r d Geertz, A g r ic u ltu ra l In vo lu tio n (Berkeley: U n iv e rs ity o f C a lifo r n ia Press, 1968), p. 65.
* 23 .
Hirschman, op. c i t . , pp. 125-126.
Furthermore, the d u a l i s t i c character o f such s o c ie tie s went f a r beyond methods o f production and d i s t r i b u t i o n :
"We f in d a few in d u s tr ie s h ig h ly c a p it a lis e d , such as mining o r e l e c t r i c power, side by side w ith the most p r i m i t i v e tech
niques; a few high class shops, surrounded by masses o f old s t y l e tr a d e r s ; a few h ig h ly c a p ita lis e d p la n t a t io n s , surrounded by a sea o f peasants. But we f i n d the same c o n tra s ts also o u t
sid e economic l i f e . There are one or two-modern towns, w ith the f i n e s t a r c h ite c t u r e , water supplies, communications and the l i k e , in t o which people d r i f t from oth e r towns and v illa g e s which might almost belong to another p la n e t. There is the same c o n tra s t even between people; between the few h ig h ly west
e rn is e d , tro u se re d , n a tiv e s , educated in western u n i v e r s i t i e s , speaking western languages, and g lo ry in g in Beethoven, M i l l , Marx or E in s te in , and the great mass o f t h e i r countrymen who l i v e in q u ite o th e r w o r ld s ."24
Benjamin Higgins is h e lp fu l in f u r t h e r e la b o ra tin g on the d iffe re n c e s in the te c h n o lo g ic a lly advanced and te c h n o lo g ic a lly retarded se c to rs in d u a l i s t i c economies. " T y p ic a lly in the advanced or 'modern' s e c to r is found the petroleum in d u s try (where i t e x i s t s ) , other m ining, la r g e - s c a le m anufacturing, la r g e - s c a le , mechanized p la n ta tio n a g r i c u l tu r e and t r a n s p o r t , fin a n c e , insurance, tra d in g and o th e r services asso
c ia te d w ith these a c t i v i t i e s . In the retarded or ‘ t r a d i t i o n a l ' sector i s found peasant a g r i c u l t u r e , h a n d ic ra fts or cottage in d u s try and very s m a ll-s c a le in d u s try and once again the services r e la te d to these under- t a k in g s . " 25 Higgins notes th a t the ty p ic a l o peration in the modern sec
t o r , in c lu d in g p la n ta tio n s , is c a p ita l in te n s iv e — though the rubber in d u s tr y o f Malaya is an im portant exception to t h i s d e s c r ip tio n . To f a c i l i t a t e r a is in g c a p i t a l , the form o f o rga n iza tio n is fre q u e n tly the
24 I b i d . , c i t i n g W.A. Lewis, Economic Development w ith U nlim ited Supplies o f Labour, p. 147.
25 . . .
Benjamin H iggins, Economic Development: Problems, P rin c ip le s and P o lic ie s (New York: W.W. Norton and Co., I n c . , 1968), pp. 18-19.
11
c o rp o ra tio n . Often shares are sold on a l l the w o rld 's leading c a p ita l markets. With the use o f advanced technology in the modern s e c to r, p r o d u c t i v i t y is high. In c o n tra s t, the t r a d i t i o n a l s e cto r employs tech
niques th a t are themselves t r a d i t i o n a l and correspondingly the produc- t i v i t y is low. 26 Again there may be important exceptions to t h i s gener-
. . 27 a l i z a t i o n .
I t is also posited in t h i s a n a ly tic a l framework th a t as a d u a l i s t i c economy experiences continuing growth c e r ta in c h a r a c t e r is t ic s , d i f f e r e n t i a l s and gaps become even more pronounced. Im portant is the c o n tin u a l coexistence o f d i f f e r e n t sets o f production c o n d itio n s " o f which one can in some meaningful sense be described as 's u p e r io r ' and the o th e r as ' i n f e r i o r ' . " ' 28 "The coexistence is chronic and not merely t r a n s i t i o n a l the degrees o f s u p e r io r it y o r i n f e r i o r i t y show no sign o f r a p i d l y d im in is h in g — they may be constant or even in c re a s in g — the i n t e r r e l a t i o n s between the 's u p e r io r ' and ' i n f e r i o r ' elements, or the la c k o f i n t e r r e l a t i o n s between them, are such th a t the existence o f the s u p e rio r element does not do much to p u ll up the i n f e r i o r element ( i . e . , a weak 's p r e a d ') , o r may even p o s i t i v e l y serve to p u ll i t down ('b a c k - w a s h ') ." 29 Often present are two d i s t i n c t wage le v e ls r e f l e c t i n g d i f
f e r e n t marginal p r o d u c t iv it ie s o f labour in the modern and t r a d i t i o n a l
" 2 6
‘ I b i d . , p. 19.
27Later i t w i l l be seen t h a t peasant or sm a llh o ld ers' rubber produc
t i o n - - owing to the techniques and economics o f rubber p r o d u c t io n - enjoyed y ie ld s a t le a s t as high as the modern estate s e cto r in Malaya.
28'This i s suggested by H.W. Singer in "Dualism R e v is ite d : A New Approach to the Problems o f the Dual Society in Developing C o u n trie s", Journal o f Development Studies, Vol. 7, No. 1, October 1970, p. 60.
Several o f the ideas which fo llo w were derived from t h a t paper.
29I b i d . , pp. 60-61.
s e cto r. 30 Also present is a t le a s t the b e l i e f in a backward sloping supply curve o f labour. Government may a c t iv e ly assume a r o le in labour markets by supporting the im p o rta tio n o f labour to work in the export s e c to r.
As a r e s u l t o f the weak 'spread1 mentioned by Singer o r as a re a c tio n to economic depression, peasant adaptation may take an in v o lu t io n a l form. Whether such an in v o lu tio n a l adaptation occurs depends im p o rta n tly on systemic c h a r a c t e r is t ic s . 31
I t should be stressed t h a t economic growth (measured by, say, changes in GDP or per c a p ita income) is thus an im portant c h a r a c t e r is t ic o f dualism as defined thus f a r . But such growth is not balanced. "Under co n d itio n s o f te ch n o lo gica l dualism i t is possible to have very s u b s ta n tia l investment in the modern sector and q u ite s a t is f a c t o r y increases in per c a p ita income in th a t sector w ith o u t making any dent in the problem o f poverty in the t r a d i t i o n a l se cto r and re g io n ." 32
30 Hirschman, o£. c i t . , pp. 126-127.
31 Geertz, o j d. c i t . , describes a g r i c u l tu r a l in v o lu t io n . As explained by Geertz and as used in t h i s study i t involves a complex o f systemic c h a r a c t e r is t ic s which lead to a s o c io lo g ic a lly c r i t i c a l fe a tu re o f wet- r i c e a g r i c u l t u r e - - " i t s marked tendency (and a b i l i t y ) to respond to a r i s i n g population through i n t e n s i f i c a t i o n ; th a t is through absorbing increased numbers o f c u l t i v a t o r s on a u n it o f c u lt iv a t e d la n d ," p. 32.
The in v o lu t io n a l adaptation th a t was possible in w e t - r ic e a g r ic u ltu r e would be precluded to swidden farmers. In c o n tra s t to the sym biotic r e la tio n s h ip o f sugar and sawah r i c e , swidden tobacco and swidden r ic e e x i s t in a n e u tra l or perhaps m ild ly a n ta g o n is tic r e l a t i o n s h i p , see Chapter 5 in Geertz. I n s t i t u t i o n a l in f r a s t r u c t u r e may also be im portant in shaping the adaptation. For example, re g u la tio n s , iaws or t r a d i t i o n might prevent displaced peasants' e n try in to c e r ta in sectors o f the economy.
32 H iggins, o£. c i t . , p. 21.
13
The special c h a r a c t e r is t ic s o f growth in a d u a l i s t i c economy may be set f o r t h e x p l i c i t l y :
1. I t is h ig h ly confined in a geographical sense.
2. I t is la r g e ly confined to the export in d u s tr ie s .
3. I t "touches" a r e l a t i v e l y small p a rt o f the population due to the r e l a t i v e autonomy o f the sectors..
4. The growth ra te is marked by extreme f lu c t u a t io n s .
I t should also be stressed th a t dualism is a r e l a t i v e concept. The
s e v e r ity o f the d u a l i s t i c c o n d itio n can be gauged by the e x te n t to which the fo llo w in g occur:
1. Agglomoration o f commercialization caused by the r i s i n g output.
2. Exclusive or a t le a s t very strong o r ie n t a t io n o f c e r ta in areas and sectors towards world markets.
3. Concentration o f p o p u la tio n .
Although the economic growth o f any country involves leading and lagging re g io n s , "the agglomerative p u ll o f the leading regions may become so strong t h a t lagging regions become c h r o n ic a lly poor, as is the case in the Mexican south or in the Siamese o r B r a z ilia n n o rth e a st.
The problem seems to be e s p e c ia lly acute when sectors and regions over
lap as they do in many underdeveloped c o u n trie s . Then regional dualism becomes a r e f l e c t i o n o f technological dualism ." 33
A measure o f the exte n t to which the above enumerated co n d i
tio n s developed in the 1920-40 period in Malaya may be gained by a disa ggregative approach which examines changes in the various sectors over t h a t twenty year period. 34
33 I b i d . , p. 20.
34Towards the end o f t h is chapter, more extensive comment w i l l be made on the disaggregative approach to be used in the study.
Examination o f changes in the 1920-40 period w i l l also enable us to t e s t Jochimsen's hypothesis, clo se ly re la te d to the e a r l i e r sta te d hypothesis regarding in f r a s t r u c t u r e and the growth o f dualism, th a t
"many o f the phenomena o f dualism r is e from elements which must be a t t r ib u t e d to n a tio n a l p e c u l i a r i t i e s o f the i n s t i t u t i o n a l s e c to r o f i n f r a s t r u c t u r e . IU 35 This occurs when groups possessing power are
able to provide in f r a s t r u c t u r e in lo c a tio n s , forms and ways t h a t b e n e fit them. In such circumstances in f r a s t r u c t u r a l p o lic y w i l l be exacerbating the conditions o f dualism. The output from one s e c to r, the export
o r commercial s e c to r, grows w h ile the subsistence s e c to r s u ffe rs
r e la t i v e stagnation. Thus in Malaya's case the existence o f a "s u p e rio r"
element did not do much to p u ll up the " i n f e r i o r " element ( i . e . there was a weak 's p re a d ') . The "lagging" regions o f Malaya remained
r e l a t i v e l y poor w h ile in f r a s t r u c t g r a l p o lic y continued to fa v o r growth o f the export se cto r. The data do not appear to support the "backwash"
notion which suggests t h a t lagging regions became poor (as opposed to simply remaining poor) w hile the modern export s e c to r grows. Indeed im portant governmental p o lic ie s , those p e rta in in g to land use f o r
example, were designed and executed to assure the continuance o f peasants in t r a d i t i o n a l p u rs u its such as growing r ic e . 36
Jochimsen, jop. c i t . , p. 106.
36 This p o in t is considerably expanded in Chapters V I, V I I , IX
and XI. Rice growers who might have shared in the increasing p ro s p e rity by growing rubber were in general handicapped by governmental p o lic ie s fa v o rin g rubber estates. This p o in t is a m p lifie d in Chapter V I I . Thus those in the t r a d i t i o n a l sector did not become poorer so much as they
missed the o p p o rtu n ity to enjoy higher incomes (o r enjoyed such o p p o rtu n ity to a lim ite d degree).
15
Being a r e la t i v e concept, dualism may o f course also be found in developed countries e . g . , I t a l y and the United States. How
ever, i t is posited as p a rt o f th is study th a t where dualism is f a r advanced in an underdeveloped country r e s u ltin g in enclaves o f in d u s t
r i a l i z a t i o n as w ell as urbanization and commercialization o f only a region o f a country, the w elfare s ig n ific a n c e is very d i f f e r e n t .
"Welfare programs" in most developed countries provided a t le a s t a minimal f l o o r o f s e c u rity in the 1920-40 period. (T h e ir inadequacy would q u ic k ly be conceded.) This contrasts to the precarious p o s itio n o f a labourer w ith no such p ro te c tio n who v/orks in an export in d u s try su b je c t to the vagaries o f world markets over which the labourer has no c o n tro l. A f u r t h e r c o n tra s t is suggested by the worker who has been relegated to a stagnant subsistence sector in the dual i s t i c
economy. Again, disaggregation, whether by in d u s try , region o r r a c ia l group w i l l make possible some evaluation o f the d i f f e r e n t i a l w elfare
impact o f economic changes. The measures o f w elfare used w i l l be d ic ta te d by the data a v a ila b le . 37
37 See the in te r e s t in g work by Lim Chong-Yah, Economic Develop
ment o f Modern Malaya (Kuala Lumpur: Oxford U n iv e rs ity Press, 1967), p. 26, in which he describes "non-gross domestic product in d ic a to rs o f growth in economic w elfare in Malaya."
The second im portant f a c t o r which t h is study p o s its as determining the broad contours o f economic development, once growth is i n i t i a t e d , is the technological nature o f the production fu n c tio n . This a n a ly tic a l approach to economic change (also re fe rre d to as the f a c t o r proportions approach) and the in f r a s t r u c t u r a l approach are not to be regarded as m utually e x c lu sive , but as complementary.
They c o n s titu te an in te r lo c k in g and re in fo rc in g p a tte rn o f causative fa c to rs th a t shape the economy. By combining these fa c to rs and
drawing f r e e ly from other th eories where re le van t a cumulative p a tte rn o f fa c to rs may be formed and a s e lf-g e n e ra tin g and s e l f - i n t e n s i f y i n g process may be observed th a t w i l l c o n s titu te a t h e o r e t i c a l l y accept
able explanation o f the development process. The expressions and the e x te n t o f t h is complementarity w i l l be m anifest in various parts o f t h is study.
The technological nature o f the production fu n c tio n determines to a considerable degree the extent to which new
techniques and s k i l l s are a c tu a lly d iffu se d in the underdeveloped area. An export in d u s try having been established, the dispersion o f new techniques in the underdeveloped economy would be f a r from an automatic process. Mere knowledge o f the existence o f new production methods would not s u f f ic e f o r t h e i r spread. In a developing economy, there can reasonably be postulated a low income e l a s t i c i t y f o r the food items the people themselves produce and a low marginal u t i l i t y f o r le is u r e . Thus considering the r i s k and
17
s a c r i f i c e involved in le a rn in g new labour s k i l l s and a c q u irin g new c a p ita l goods, the prospect o f la r g e r amounts o f food production and more le is u r e time would probably not induce the ru ra l producers to adopt new techniques
On the o th e r hand, the higher e l a s t i c i t y f o r the money economy's manufactured goods might render the r u ra l producers more w i l l i n g to in c u r
these costs i f they could s e l l t h e i r a d d itio n a l a g r i c u l t u r a l output in the monetary s e c to r. Indeed, cash crops might be introduced. Such a development however would be co ntingent on numerous c o n d itio n s . F i r s t , the concurrent production o f a cash crop w ith a subsistence crop depends im p o rta n tly on the production fu n c tio n . Rubber may be c ite d as an
example o f a Malayan cash crop th a t could e x i s t in a " m u t u a lis t ic " re - la t io n s h ip w ith r i c e . 38 Rubber can be grown on slopes and th e re fo re i t makes no demand on scarce resources o f f l a t o r w e ll-w a te re d land re qu ire d
f o r r i c e . F u rth e r, rubber u t i l i z e s surplus farm la b o u r— e s p e c ia lly a t slack periods in the ric e -p ro d u c in g cycle. A f u r t h e r necessary c o n d itio n f o r the growth o f m u tu a lis t ic production o f cash and subsistence crops is t h a t c u lt u r a l and s o c io lo g ic a l fa c to rs predisposing producers to continue in "o ld ways" and thus i n h i b i t i n g the spread o f new techniques
not be so strong as to o v e rrid e economic c r i t e r i a . T h ird , i t may be neces sary th a t i n f r a s t r u c t u r a l p o lic y encourage-- or a t le a s t p e rm it— such a m u tu a lis t ic r e la tio n s h ip to develop.
The in tr o d u c tio n o f new techniques, where i t occurs, makes possible the a c q u is itio n by the local population o f new labour s k i l l s . 38Geertz, 0£. ci t . , p. 54, speaking o f Indonesia, says th a t "the imposed crops o f the Culture System sorted themselves out in to two broad c a te g o rie s : annuals (sugar, in d ig o , tobacco) which could be grown on sawahs in r o ta t io n w ith r ic e and perennials (c o ffe e , te a , pepper and less im portant cinchona and cinnamon) which could n o t . " Thus these two c u l t i v a t i o n s developed sharply contasting modes o f in t e r a c t io n w ith the esta b lish e d b i o t i c communities,
The a c q u is itio n o f new labour s k i l l s by the lo c a l people i s , in the a n a ly tic a l framework being suggested here, a means by which new techniques may be introduced in to sectors o u tside the e xport in d u s tr ie s . The e x te n t to which the expansion o f export in d u s trie s in less developed c o u n trie s created la r g e r in te r n a l money markets and tra in e d workers determined the exte n t to which new techniques spread throughout the
economy. I n f r a s t r u c t u r e , and in p a r t i c u l a r i n s t i t u t i o n a l i n f r a s t r u c t u r e , assumes importance in promoting or i n h i b i t i n g t h is desired development as do p o l i t i c a l , c u lt u r a l and social fa c to rs .
“ The p a r t i c u l a r c h a r a c t e r is t ic s o f the e xport in d u s try used to describe i t s repercussions on o th e r parts o f the economy are the size and q u a l i t a t i v e nature o f the in d u s tr y 's la b o u r, c a p ita l and m a te ria l
39
in p u t c o e f f ic ie n t s . . . " In t h is discussion o f repercussions, the assumption is made t h a t c o e f f ic ie n t s are g e n e ra lly not f ix e d . Inputs are less than p e rfe c t s u b s titu te s f o r each other in the production o f any commodity. The e l a s t i c i t y o f s u b s t itu tio n among inputs w i l l vary considerably from commodity to commodity.
In mineral production the labour c o e f f i c i e n t is g e n e ra lly r e l a t i v e l y low. This was not the case in Malayan t i n production in the la t e 19th Century. In t h a t period Chinese immigrants mined t i n in a la b o u r-in te n s iv e method by adapting crude implements fo rm e rly used f o r farming. A f t e r the in tr o d u c tio n o f the dredge in 1912 however— and to
.39
Robert E. Baldwin, Economic Development and Export Growth (Berkeley: U n iv e rs ity o f C a lifo r n ia Press, 1966), p. 65.
19
some e x te n t before 1912— t i n mining became much more c a p ita l in te n s iv e . Furthermore, the s k i l l component o f those who worked on dredges was high i n comparison w ith e a r l i e r la b o u r-in te n s iv e t i n mining. In these circum stances the a v a i l a b i l i t y o f cheap u n s k ille d labour would not l i k e l y
r e s u l t in the s u b s t it u t io n o f labour f o r c a p it a l. As a r e s u l t o f the n a tu re o f t h i s labour demand by the export in d u s try ( t i n ) , the money o u tla y f o r food and consumer goods in general was not la rg e . The number o f workers in the in d u s try was not s u f f i c i e n t to make a s u b s ta n tia l con
t r i b u t i o n to the money market f o r consumer items. Thus a weak demand repercussion from the t i n export s e cto r would prevent any la rg e expansion in the in d u s trie s producing simple consumer commodities. I t should be emphasized t h a t simple consumer goods would be the very items in which an underdeveloped country could most r e a l i s t i c a l l y hope to compete.
In c o n tra s t to c a p ita l in te n s iv e export in d u s t r ie s , l i k e t i n and o th e r m in e ra ls , there are export in d u s trie s where the number o f workers employed per d o l l a r o f export output is high. Tea, tobacco,
c o ffe e , and, im portant in the case o f Malaya, rubber are such in d u s tr ie s . In these in d u s t r ie s , the demand e ffe c ts from export expansion are more fa v o ra b le . The la r g e r number o f workers employed would, c e te ris p a rib u s , c re a te a la r g e r market demand than would.export a c t i v i t y devoted to
m ineral p roduction.
In a d d itio n to in flu e n c in g the demand f o r consumption goods, the nature and size o f the labour in p u t in export in d u s trie s are
40'T h is i s documented in the Report on Mines Department (Kuala Lumpur: Government P r in tin q O ffic e ) from approximately 1911 through the
1930’ s. Chapter I I w i l l provide fig u re s on the changes in the horse
power o f the p la n t in mining.
important in determining the extent and type o f the q u a l i t a t i v e changes th a t occur in the labour fo rc e . Mineral in d u s trie s are more favorable on t h is score than p la n ta tio n crops--as in mineral in d u s trie s there Is ge ner al ly a f a i r l y large number o f p o sitions .that are s e m i-s k ille d o r s k i l l e d . This opens up the p o s s i b i l i t y o f t r a i n i n g indigenous workers to f i l l these jobs. Growth in the number o f s k i l l e d labourers could lead to both f u r t h e r export expansion ( in already established export in d u s t
r ie s o r in new export in d u s trie s ) and the development o f in d u s trie s
producing f o r domestic consumption and re q u irin g s k i l l e d labour. 41 Analysis o f the growth o f various in d u s trie s in the period from 1920-40, a f t e r
the export in d u s trie s are w e ll-e s ta b lis h e d * w i l l reveal to what extent increase in the number o f s k i l l e d labourers has led to the growth o f other in d u s trie s . Again, the i m p l i c i t in te ra c tio n w ith i n s t i t u t i o n a l in fr a s t r u c t u r e is obvious. For example, the growth o f d is c rim in a to ry labour practice s could re ta rd or make more d i f f i c u l t (o r in the extreme case, prevent) these developments. On the other hand, in f r a s t r u c t u r a l p o lic y may be designed and executed to help re a liz e the desired economic o b je c tiv e s .
This th e o re tic a l consideration is introduced as o f possible relevance in some developing economies— though, as d e ta ile d in Chapters IX and X I, i t was o f lim ite d germaneness in the case o f
Malaya. This is p a r t i a l l y explained by the f a c t th a t Malaya's immigrant workers were s im ila r to Baldwin's " ta r g e t workers" in Rhodesia. See Baldwin, op. c i t . , pp. 114-121. Many immigrant workers m airtained close t ie s to t h e i r v illa g e s in India and China, remitted funds to fa m ily members s t i l l there and, im p o rta n tly , planned to return to t h e i r v illa g e
a f t e r earning a c e rta in amount o f money. Nor did the hypothesized repercussion occur to a great extent in the case o f Malay workers.
Governmental p o lic ie s were important in b ringing about t h is r e s u l t . Further comment is forthcoming in th is chapter and Chapter XI.
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S t i l l other im portant development b e n e fits are to be derived from the growth o f labour s k i l l s and knowledge in export in d u s tr ie s . Some workers, w ith newly acquired s k i l l s and knowledge, may break away from the export in d u s try and e s ta b lis h small firm s to supply the export in d u s try or the general consumption market. Such developments would, o f course, be r e fle c te d in changes in the in d u s t r ia l censuses between
1920 and 1940.
In la b o u r-in te n s iv e a g r ic u ltu r a l in d u s trie s producing f o r e x p o rt, there is also the p o s s i b i l i t y o f indigenous workers acquiring enough s k i l l and knowledge to e s ta b lis h t h e i r own sm all- scale u n it in the a g r i c u l t u r a l export i n d u s t r y - - i f the production fu n c tio n is such as to allow small producers to compete w ith large producers. C le a rly , the type o f a g r ic u ltu r a l export in d u s try th a t has been established is o f importance as is in f r a s t r u c t u r a l p o lic y which may aid o r o b s tru c t the growth o f small a g r i c u l t u r a l exporters.
I r r i g a t i o n , f o r example, might be an important p a rt o f such p o lic y . An a lt e r n a t iv e development is th a t the bulk o f the indigenous popula
tio n remain poor, u n s k ille d a g r ic u ltu r a l producers employing backward and unchanging methods o f c u lt iv a t io n and p r im a r ily producing
subsistence goods. Such an i n t e n s i f i c a t i o n o f dualism could r e s u l t from c u lt u r a l and s o c io lo g ic a l fa c to rs ta kin g precedence over economic fa c to rs . I n s t i t u t i o n a l i n f r a s t r u c t u r e , in p a r t ic u la r in the numerous cases where government becomes in tim a te ly involved in a g r i c u l t u r e , may c o n trib u te to th is outcome.
The promotion o f s p e c if ic governmental measures e.g. i r r i g a t io n o r attempts to r e lie v e ru ra l indebtedness are g e n e ra lly thought o f as e ffic a c io u s ways to modernize a g r ic u ltu r e , encourage higher y ie ld s and gen e ra lly break down dualism. But such p o lic ie s w i l l not be pursued w ith s u f f i c i e n t vigour i f government p o lic ie s view subsis
tence a g ric u ltu r e and the " t r a d i t i o n a l " way o f l i f e as the "proper"
l o t o f the peasantry. 42 Thus w ith in the framework s e t by the
i n s t i t u t i o n a l in f r a s t r u c t u r e o r governmental p o lic y , the development o f sm all-scale a g r ic u ltu r a l exporters may be precluded. Dualism is thus perpetuated and an in v o lu tio n a l adaptation such as t h a t observed by Geertz in Indonesia may be necessitated. An outcome th a t per
petuates dualism is to be regarded as less desirab le than one th a t would break down dualism.
Another item o f importance in t h is a n a ly tic a l framework is c a p ita l in p u ts . As Baldwin observes, "The composition and size o f the c a p ita l c o e f f i c i e n t in the export in d u s try played a major ro le in shaping the p a tte rn o f growth w ith in the underdeveloped areas." 43 For commodities l i k e m inerals, the most p r o f it a b le f a c t o r combination tended to require large amounts o f complex equip
ment. The production o f th is equipment necessitated the use o f
Ding Eing Tan Soo Hai s The Rice Industry in Malaya 1920- 1940 (Singapore: Malaya Publishing House, L td . , 196377 p. 15, c i t i n g A.S. Haynes, "Extension o f Rice C u ltiv a tio n in the F.M.S.: Need f o r a D e fin ite P o lic y ," Proceedings, F.M.S., 1933, p. C293. The B r i t i s h view o f t h e i r tru s te e s h ip , as expressed by Haynes, included " b u ild in g up a sturdy and t h r i f t y peasantry . . . l i v i n g by the food they grow"
and not foresaking "the l i f e o f t h e i r fathers f o r the glamour o f new ways."
43 B a l d w i n , ojp. c i t . , p . 68 .
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oth e r types o f complex c a p ita l inputs and f a i r l y large amounts o f s k i l l e d labour. The more economically advanced countries were a t a cost advantage in producing such s p e cia lize d c a p ita l equipment which was then imported in to the underdeveloped c o u n trie s . On the oth e r hand9 i f the c a p ita l required by the export in d u s try contained a large element o f c o n s tru c tio n o u tla y s , the chances o f cre a tin g a d d itio n a l lo c a l in d u s trie s would be enhanced.
The nature o f the export in d u s try 's m aterial inputs also a ffe c te d the development prospects o f other in d u s t r i e s - - i n much the same way as the e xport s e c to r's demand f o r c a p ita l goods. The question to be in v e s tig a te d is whether local production was possible and p r o f i t a b l e considering in f r a s t r u c t u r a l p o lic y , the n a tu ra l
resources a v a ila b le l o c a l l y , the lim it e d demand o f the e xport in d u s try and the s ig n ific a n c e o f economies o f scale.
Another im portant f a c t o r shaping the p a tte rn o f develop
ment is the s ig n ific a n c e o f the output o f the e xport in d u s try as an in p u t f o r o th e r in d u s tr ie s . In many cases, the i n i t i a l export
in d u s trie s established did not include any o f the processing a c t i v i t i e s associated w ith the p roduct's movement to f i n a l consumers. The
im portant question f o r in v e s tig a tio n here is whether "forw ard l i n k ages" are made w ith in the underdeveloped country. Were processing
in d u s trie s b u i l t up? I t has been suggested t h a t the p o s s i b i l i t i e s f o r p r o f it a b le production in f u r t h e r processing were enhanced i f the f i n a l consumer goods th a t re sulte d from the export product were im portant consumer items in the budgets o f the workers employed in the export in d u s try ; when the f i n a l goods produced from the product were not s i g n i f i c a n t consumption items w ith in the developing country, then the chances o f f u r t h e r forward production were p o o r . Thus, i f the demand f o r export products is induced by developments in
oth e r countries t h a t f a c t w i l l be re fle c te d in the p a tte rn o f develop ment. I t is s i g n i f i c a n t t h a t , say, the copper o f C hile or the t i n o f Malaya, w i l l u ltim a te ly f in d i t s way to consumers in the United States o r Europe. The r e la tio n s h ip between developments in the West and those w ith in the developing country thus assumes importance in t h is a n a ly tic a l framework.
Another f a c t o r to consider in analyzing the impact o f export development is the nature o f economies o f scale in those in d u s trie s t h a t supply the export in d u s try and in those th a t u t i l i z e the export product as an in p u t. For some export in d u s t r ie s , the demand f o r m aterial and c a p ita l equipment inputs is sm a ll. I f the demand f o r the inputs is too small f o r a production u n i t supplying
Hirschman, c>d, c l t . , Chapter 6, See f o r discussion o f back
ward and forward linkages. He suggests a " r u le o f thumb th a t an in d u s try can properly be established in an underdeveloped but develop ing country as soon as e x i s t i n g 1demand is equal to o n e -h a lf o f the economic size o f the p la n t as defined above. The a d d itio n a l demand needed to j u s t i f y the investment can be expected to come from the growth o f e x is t in g demand and from the development o f new demand through forward lin k a g e , once the p la n t is in e x is te n c e ." p. 103.
45' B a l d w i n , o p . c i t . , p. 69 .
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the export in d u s try to operate e f f i c i e n t l y * the establishment o f lo ca l firms to supply these inputs would not be p r o f i t a b l e . The mineral in d u s t r ie s , l i k e t i n in Malaya a f t e r 1912, rank unfavourably
in t h is regard. The sp e c ia liz e d c a p ita l equipment and m aterial inputs th a t c o n s titu te d a large prop o rtio n o f such in d u s trie s ' inputs were ofte n produced under conditions o f considerable scale economies. Such inputs were imported in t o Malaya ra th e r than manufactured th e re . The scale f a c t o r could also work against the development o f a d d itio n a l processing a c t i v i t i e s i f an e f f i c i e n t p la n t required la r g e r inputs o f the export product than the underdeveloped country could supply. In such a case, processing would be done outside the country. In c o n tra s t to c a p it a l- in t e n s iv e in d u s t r ie s , la b o u r-in te n s iv e in d u s trie s tend to u t i l i z e c a p ita l and m aterial inputs th a t do not require la r g e , complex productive u n its in order to achieve minimum u n it costs.
"Export in d u s trie s f o r which the goods and services content of inputs were favourable to domestic production induced g rea te r secondary development, and i n d i r e c t l y increased the p o s s i b i l i t i e s f o r s t i l l f u r t h e r growth." 46 A good example would be an export in d u s try t h a t induced the development o f a ra ilw a y system. The opening o f a r a i l system increases the o p p o rtu n ity f o r f u r t h e r growth by making i t more fe a s ib le to e s ta b lis h
4 6 I b i d . , p. 70.
