Note sur «le degré d’intensité capitaliste» des investissements dans les pays sous-développés

Abstract

A note on the degree of capital intensity in under-developed countries. Discussion of the policies of underdeveloped countries is governed by the dogma that, since a scarcity of capital relatively to labour is a usual characteristic of such countries, capital investment needs there to take the form of projects with a «low capital intensity». The form in which the above principle is stated rests on the assumption of a given stock of capital equipment in existence as the country's heritage from the past, and or the assumption that the rate of new investment is given. But the choice between more or less capital-intensive forms of investment should depend not on the existing ratio of available labour to capital, treated as a slock, but on precisely the same considerations as those which determine the choice between a high and a low rate of investment — namely, the importance to be attached to raising consumption in the immediate future, compared with the potential increase of consumption in the more distant future which a particular form of investment will make possible. There is no reason to suppose that an under developed country should always choose a lower rate of investment than a more developed one — if anything the converse, since, although the lowness of existing consumption per head may put a high premium upon raising it in the near future, the effect upon productivity (and hence upon potential consumption in the more distant future) of a given increase in the (relatively small) stock of capital is likely also to be abnormally large. A simple model, gradually refined, illustrates the argument.