The dynamic nature of socio-economic factors

2. The dynamic nature of socio-economic factors

Communities are dynamic and their SEFs change with time. In the present era, as communi- ties pass through different phases of economic development, the two SEFs — heterogeneity and dependence — change. The nature of these changes is discussed herein. 2 . 1 . The dynamic nature of heterogeneity The presence of diversity in language, culture, religion and race, but strong ‘primordial attach- ments’ of kinship, race, language, religion and custom, are the features of many developing economies. Hence, these economies have cultural, social, and economic heterogeneity at the macro- level but a high degree of homogeneity at the micro or community level. Other features of these economies are the pooling of family resources to hedge economic uncertainties, the system of self- help to hedge other hazards and difficulties of life, and non-integration with market and market economies. The process of economic growth at- tempts to bring these economies within the fron- tiers of market. However, market arrangements reduce the need for compassion, patriotism, brotherly love and cultural solidarity as motivat- ing forces behind social improvement Schwartz, 1987, p. 247, and favours social stratification and the dissolution of ethnic bonds and customs Seeland, 1991. In the early stages of growth, the community moves from an agricultural to an industrial foundation, and machines and non-hu- man factors take the role of nature and human factors which leads to impersonal relationships, competition, and absence of altruism. On conver- sion of subsistence farming to commercial farm- ing, members of rural communities leave for urban areas without their immediate family mem- bers, resulting in a disruption of existing social relationships and a decline in the quality of per- sonal existence. Hence, these new processes of economic growth lead to social and cultural het- erogeneity. In addition, the initial stages of urban- isation and industrialisation may also intensify awareness of religious, racial, and cultural differ- ences, and thus produce social tensions Adelman and Morris, 1973, p. 31. An increase in agricul- tural productivity, due to commercial farming initiatives, tend to benefit the larger, more pro- gressive farmers disproportionately in both abso- lute and relative terms, and hence tend to increase income inequalities Adelman and Morris, 1973, p. 18. Similarly, dualism, seen in the joint exis- tence of traditional sectors and rapidly growing exchange sectors, is accompanied by inter-sector differences in factor productivity and per capita income Adelman and Morris, 1973, p. 20. The availability of new resources such as a physical infrastructure, opportunities for income genera- tion and socially-sanctioned access to valued jobs and administrative positions, creates conflicts of interest among various groups, and thus leads to social stratification. The new employment oppor- tunities created through the development process require specialised knowledge that is not equally distributed, and hence gives rise to social as well as economic heterogeneity. Thus, normally, within the development process first level hetero- geneity will increase. However, the rate of change of heterogeneity will depend upon the rate of economic growth of the community and the inter- nal inertia of the community against this change. Forest product preferences are dependent on the economic as well as the social and cultural condi- tions of a community. As communities pass through different stages of economic growth, product preferences of people move from unpro- cessed raw products, such as non-timber forest products, fuelwood, and poles for house construc- tion, to quality products such as furniture and paper products, and finally to outdoor recreation and environmental values. Hence, even in small traditional communities, differential impacts of economic growth will increase product preference heterogeneity. Forest management practices vary from tradi- tional management based on the concepts of sub- sistence, respect for nature, minimal timber harvesting, and intensive labour, to modern west- ern forest management practices that are based on profit maximisation and modern technology, and are export-oriented and capital intensive. The in- tensity of these variables of forest management practices varies across communities that are under different phases of economic growth. Hence, di- verse forest product preferences and preference for different management practices by the people in different economic groups will increase the diversity of forest management practices. Nor- mally, third level homogeneity of resource man- agement will depend upon the first and second levels of homogeneity. However, the third level of homogeneity may sometimes be imposed upon by external factors such as mutual dependencies over social, economic, or cultural heterogeneous groups. But, these are exceptions to general rules, and are not of direct concern to the present discussion. 2 . 2 . Dynamic nature of the direct dependence on forests Economists have discussed the role of natural resources in different stages of economic develop- ment. Rostow 1956 attributed the critical role of natural resources in the first and third stage of development. In the first stage traditional soci- eties, natural resources offer a quick yield of increased productivity to new techniques and per- mit the application of innovations. In the takeoff third stage, foreign trade of natural resources contributes significantly to enhanced investment. Schultz 1961 observed that, at a particular time, the proportion of natural resources to all re- sources employed for income generation is greater in poor countries than in rich countries. The share of natural resources declines with economic growth due to improvements in the efficiency of resource use, substitution of natural resources by man-made resources, and the service sector taking a leading role over the manufacturing sector. Adler 1961 argued that in the earliest stages of organised society — ‘collectional’ economy of hunters and ‘pre-cultural’ nomads — economic activity was entirely dependent upon natural re- sources, and in each subsequent stage, dependence upon the resource-base of a particular location diminishes. A rise in the national or per capita income, an increased share of industrial produc- tion in GDP, urbanisation, a higher rate of liter- acy, increased nutritional awareness, and an improved information media are associated with economic growth. The change in individual in- come transforms the composition of the utility bundle, and increased and diversified industrial production enhances the range of the substitute product. An inclusion of monetary income in the utility bundle of traditional, resource-dependent communities enhances the possibility of substitu- tion of forest products by man-made products. Nutritional awareness will encourage the substitu- tion of raw forest products by quality products with desired nutritional values, and an improved information media will extend the knowledge of substitute products. Urbanisation reduces the di- rect pressure of local populations on forests. Hence, economic growth will lead to a reduction in the direct dependence of such communities on forests. However, higher per capita consumption, including the consumption of pulp and paper and other wood products, and increased environmen- tal awareness and recreational values are associ- ated with economic growth. But these associated phenomena will increase the one-to-many or many-to-one indirect-dependence on forests, and not the direct one-to-one dependence. Assuming that economic growth is a continuous process, the direct dependence of a forest-dependent commu- nity will decrease continuously. However, this rate of decrease may not be the same for all communi- ties in a country. The rate of decrease will depend on the rate of economic growth. However, eco- nomic growth may not have a direct relationship in some special cases such as a community’s de- pendence upon spiritual values. But, indirectly, the economic growth may reduce the spiritual values, and hence, may subsequently also decrease the direct dependence. Thus, the two SEFs, the heterogeneity of com- munity and the direct dependence upon forests, will change over time; and their rates of change will depend upon the rate of the economic growth process, as well as some social and cultural at- tributes of communities. Hence, one of the main tasks of forest managers in developing economies is to design forest regimes in such a way that they remain optimal with respect to the evolving socio- economic environment. In the next section, the dynamic nature of these two SEFs is incorporated into a model that helps to explain the dynamic nature of optimal forest regimes.

3. Optimal control model of dynamics of forest regimes