skills replacing directly productive skills and narrow trade specialization (Alfthan, 1985).

In the metal trades, for example, an ILO study indicates that technicians will increasingly be engaged in testing and control, maintenance, technical service before and after sale, and research and development (TLO, 1983). Similarly, in her case study of automobile productior by Alfa Romeo, Pescarollo (1981) found "a gradual vertical integration of work and a shift towards occupations geared to processes rather than to specific skills: regulation of parameters, quality control, minor maintenance, financial management, etc." There is widespread evidence that technicians may also be called upon to take over some decision-making formerly considered the responsibility of management, especially in Japan, Germany and other countries where there is by tradition a close relationship between management and the shop floor. The increases in productivity and the changes in the demand for labor have by no means been independent of the supply of skilled manpower. In Germany, "the plentiful supply of competent labor has made it possible to structure work in such a way that there is need for less supervision and fewer grades in the hierarchy, as well as opportunities for more responsibility at shop floor level than would otherwise be possible." (Hayes, Anderson and Fonda, 1984) More specifically, a detailed comparison of the metal trades in Germany and the U.K., Daly, Hitchens and Wagner (1985), ascribes the higher productivity in German firms to the superior level of the training of shopfloor workers, particularly that of the foremen, who in Germany would typically have an advanced craft qualification, unlike their British counterparts. They found that this had two effects which are bound together. It enables the German workforce to use any given tyDe of equipment more pr(ductively--the technical capabilities of machines were more fully exploited, abuses were less likely to occur, faults were more likely to be diagnosed correctly and rectified in-house. The second effect was that as a consequence management was willing to install more advanced equipment. The average age of the U.K. machinery appeared similar to that in the German firms, but it was less sophisticated. In part this reflected a lack of awareness of technical possibilities, British management also having a significantly inferior level of technical training than their German counterparts, but in part it was attributable to an apparently justified fear that the workforce would experience difficulties in maintaining more complicated equipment and using it effectively.

It is perhaps this X-efficiency effect which is most relevant in most developing countries, for the changes in the state of the art have had greatest impact in the industrialized countries, and then in the larger firms. In the rest of the world their effects have typically been confined to those parts of the economy exposed to international competition, that is, to the few enclaves of production of manufactures or processed goods for export. The cheapness of labor, the small size of domestic markets, the willingness of consumers to tolerate compromises on quality and the relatively relaxed 19 -

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