in the modern sector, sometimes in the Middle East, and had returned to set up in the traditional sector out of choice.

Is skill-development a constraint on traditional sector output?

Skill-development is only one of several possible constraints on the levels of activity arvi productivity in the traditional sector. Others are the general level of effective demand, the supply of complementary inputs (capital and materials), or inappropriate government nolicy. Any training intervention which does not pay due regard to these other aspects runs the risk of automatic failure. It may even be the case that training interventions may prove to be unnecessary once some other bottleneck has been broken.

Effective demand: The traditional sector is almost wholly dependent on Ehe rest of the economy in the sense that the demand for its output depends on the level of activity elsewhere. Although the pattern varies from trade to trade and from place to place, the dependency is primarily a direct one through incomes (King and Byerlee, 1978; Liedholm and Mead, 1986), with much of the output of the traditional sector taking the form of final goods and services purchased by households. Where there are forward linkages to other sectors, as in the case of small enterprises making agricultural implements (Chuta and Liedhom, 1985: blacksmithing in Sierra Leone; Mishra, 1985: machinist manufacturing in India) or automobile mechanics repairing and servicing transport vehicles, they are usually simple and activity-related. The dependency is relatively strong for commerce and services (Papola, 1981), perhaps less so for manufactures, the demand for which may benefit from a scope for innovative import substitution. Isolated instances of exports can be cited but they are of insignificant magnitude (Liedholm and Head, 1986).

It follows that the rate of growth of the output of the sector is largely limi_ed to the rate of growth of the more autonomous sectors of the economy and that any attempt to expand capacity at a faster rate, either by increasing the numbers employed or by increasing their productivity, will only be self-defeating. The consequence of increasing the numbers employed beyond the saturation point--diminishing real incomes all round for those involved-was termed "involutionary growth" in the ILO Kenya report (ILO, 1972) and has received much.more attention than the consequences of saturation caused by productivity increases.

The possibility of saturation of the latter type raises equally difficult issues for policymakers since it gives rise to a trade-off between productivity and employment. As has been noted, part of the new government interest in the traditional sector is attributable to a desire to shift back from the public to the private sector some of the burden of occupational skill development. But part is attributable to the demonstrated ability of the traditional sector to provide employment. And if the second aspect is the more important, as would seem generally to be the case in labor-surplus countries, one may question the desirability of promoting higher productivity through the dissemination of more sophisticated technology or improved training facilities.

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