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It is regrettable that, in the period covered by the Ten Year Plan, the diversification of exports from the Sudan does not go beyond the initial stage, although preparatory studies and experimental work are in progress in many areas. It should not be overlooked, however, that the transition from long-staple to short-staple cotton has a certain diversifying effect, since these are really separate - though interdependent - markets. In the 1 The important restriction that other countries should not increase their supply simultaneously must be borne in mind however.

From this, the following interesting problem arises: A little earlier we distinguished the productivity effect deriving from the elimination Df unproductive labour at the margin from the effect proceeding from improvements in method in the traditional sector itself. We 20 might also call them the indirect and direct productivity effects. 6010 would cause average productivity in the traditional sector to rise to the same extent, so long as these conditions hold good. 6010. But the further economic development proceeds - accompanied by movement of labour into the modern sector - the smaller the difference between average productivity in the traditional sector and the marginal productivity of departing labour, since the productivity of the marginal worker continually Diagram I.

As long as the Sudan does not put new products onto the world markets, it must, in substantial areas of its export trade, accept as given the rate of increase in consumption as determined by the income elasticity of demand, substitution processes, and so on. This fact, of course, also sets limits to economic development by way of expansion of exports. In the matter of development policy - which may be defined as the accumulation and mobilisation of resources - a country is constantly facing decisions in regard to the allocation of additional resources between various alternative uses, and is guided therein by the principle of the return at the margin.

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