On the other hand, Demas shares some of Lewis’ pessimism about the fate of the small economy. Popu­lation is seen to be too large in relation to natural resources and too small to provide an adequate base for internally-propelled development. Moreover, with its tiny market, the emergence of monopolies is virtually inevitable in a small country, and econo­mies of scale in the provision of government and public utility services arc also largely precluded. Besides, there arc severe difficulties in the way of re­source mobilisation. For one thing, the economy is likely to be highly susceptible not only to the influence of other national economies, but also to easy trans­mission of high consumption standards within its own frontiers. Again, the use by government of monetary, fiscal and other instruments of control is restricted by the influence of international corporations functioning within the country, and by the way in which the operations of these corporations encourage wage bar­gaining by the trade unions.

One feature of this argument (and of the way in which Demas’ method of partial analysis forces him to present it) is that it underplays the importance of some things, which do not matter if economic develop­ment is conceived as a process.

Demas is concerned with total income. Probab­ly because they would be too untidy to handle, he is not too anxious to incorporate into the analysis, the combined effects of such considerations as the level of per capita income, the distribution of income and the degree of market integration. Yet, these are some of the factors which together make the difference. It is true, as Demas points out, that the brilliant resear­ches of Chenery argue eloquently against the chances of the small economy, but what these researches never reveal is that economic development is a problem of management – of timing, sequencing and manipula­tion in an unending effort to perceive or create, and in any case, to exploit a multiplicity of little openings and opportunities.

Another striking feature of Demas’ argument is the interpretation it makes of the role of innovation and technical progress in the process of development – especially in the case of a small country. While he admits that in the course of development, the sectors have got to become technologically progressive, and that the smaller the economy or the more adaptable it must be, he never quite assigns a central place to technological (or organisational) innovation. In keep­ing with his stress on the ‘natural’ variables, and as we shall see, with the highly static theory of interna­tional economic interaction which is implicit in his thinking, Demas comes close to urging upon us that the choice of techniques is unique or very nearly so, and that it is given by the currently ‘developed’ economies.

“…….it is easy to say,” he argues, “that research should be carried out on adapting technology to the requirements of small markets. But such research will take a very long time to bear fruit. And it is doubtful whether one will ever find any techniques which arc efficient.” (p. 56)

With this judgment, it is not surprising that he moves from the observation that the metropolitan countries are the predominant poles of growth “where innovations are first to take place and first to be applied” (p. 34), to argue as if they will always be in “the vanguard of innovations”, leaving other countries to practise “imitative technology” for the most part. It is this view of innovation as the near- monopoly of the large (transformed) economies and as practically beyond the capacity of small economies which perhaps leads Demas, significantly, to attribute the transformation in such small countries as Switzer­land, Belgium, Holland and Luxembourg, to fortuitous circumstances, that is, in the past, a much smaller in­vestment of capital was required to employ labour.

What can account for this view which Demas has of technology and innovation? It may be of interest to speculate as to how far it reveals a passive and optimistic ideology behind all of the argument and method. It may simply be that, as the Head of a Government Planning Division, who is well aware of the limitations on successful intervention, Demas is over-impressed, perhaps, by “naturally-determined” (1) constraints. But it may also be that the essential pessimism of his statement is bound up with the character of the intellectual elites in the newly in­dependent countries. Shils has argued that it is a feature of the current transition that these elites exhibit a deep-seated ambivalence. Although they are intimately involved in the processes of economic and political decolonisation and development of new nation-states, they are unduly transfixed by the scientific and technical achievements of ‘Western’ civilisation. The argument may be extended to show that the intellectual classes in the new countries may be impressed not merely with the fact of Western scientific and technical achievement, but with the particular form and content of Western technology. Thus they have a tendency to underestimate the creative role of technology as a culturally-neutral factor in conditions which differ from those of the ‘West.’

It may also be that Demas assumes that a depen­dence on foreign corporations, capital and markets goes necessarily with being small. Hence his small economy will never be able to escape the introduction of technology from outside. But foreign ownership becomes inevitable in a “small” economy only when the economy is defined as being unable to devise techniques of organisation, production and marketing which would free it from reliance on foreign corpor­ations.

Demas’ assumption about the international flow of technology from well-developed to less-developed economies can be shown to be part of a general theory of international interaction. This approach, it may be noted, underplays the fact that, although a process of international interaction is at work, the particular experiences and resources of a particular people in a particular habitat may lead them both to express qualitatively different sets (as well as different orderings) of preferences from others, and also to devise different means for achieving their goals.

In this theory, behaviour is in fact standardised by implication. Hence is derived what is perhaps the most important conclusion in the lectures: that “transformation” is more feasible through the strategy of balanced growth in ‘large’ economies than through the strategy of export stimulation in ‘small’ ones. This is not, however, a conclusion which is decisively supported by the evidence, and certainly not by the evidence of contemporary India or of, say, north-east Brazil.

We cannot be certain what behaviour patterns are emerging in these countries. Nor can we even be certain what precise ranking is placed on the goal of economic growth in these cultures — especially when Freyre has warned us that there may be pro­found differences between North American and Brazil­ian evaluations in this regard, and what Demas has to say about the economics of development in regard to scale, though it tells much that is rewarding about the way in which differences in resources affect economic growth, it does not convince us that econo­mic goals are necessarily influenced by size.