Vertical Considerations in Choice-of-Technique Studies: Evidence from Africa's Indigenous Beer Industry

Abstract

Over the past 15 years, small-scale, labor-intensive enterprises have received substantial attention as potentially valuable vehicles for promoting equity-oriented development strategies.1 But questions of small enterprise efficiency have loomed large in professional debates, and many observers worry about trade-offs-between output and employment, efficiency and equity, equity and growth. A choice-oftechnique literature has mushroomed up to investigate alleged tradeoffs by addressing the following question: For a given commodity, do techniques of production exist that are both labor intensive and economically efficient? The question is asked with considerable urgency because an affirmative answer is required to enable developing countries to adopt employment-oriented development strategies without sacrificing economic growth. White has reviewed a substantial body of literature bearing on this question. After sifting through a great quantity of evidence, he concludes that greater labor intensity in LDC manufacturing is feasible and would be efficient.'2 But he turns up no smoking gun, no incontrovertible evidence, in part because much of the empirical work he reviewed suffered from one methodological shortcoming or another. In the end, much like the prosecutor in a celebrated recent murder trial, White founded his case on a web of imperfect but tantalizing evidence, the weight of which pointed to conviction-in White's case, the conviction that LDC policymakers can improve efficiency and promote employment by encouraging the adoption of labor-intensive technologies. White and others suggest that large gaps remain in our knowledge. Not only the range but also the quality of data are at issue. In fact,