«ANSA Alternatives to Neo-liberalism in Southern Africa The search for Sustainable human development in Southern Africa Editors: Godfrey Kanyenze, ...»
Even then, Hong Kong was the first country among the NICs to set up a technology support and extension institution of its kind, i.e. the Hong Kong Productivity Council (HKPC) in 1967. It provided information on international standards and quality and gave training and consultancy services to the many small and medium enterprises that constituted her industrial structure. Between 1991 and 1992 it undertook 1255 consultancy projects, trained 14000 people and provided support to 2112 firms. The government also set up the Hong Kong Design and Innovation Company. So, in the field of science and technology, it is not entirely the case that the government adopted a completely laissez faire approach.
Singapore was more interventionist in its science and technology strategy through the encouragement of TNCs to subcontract to local firms. This was done by the Singapore Economic Development Board through its Local Industries Upgrading Programme. In return for training local subcontractors and other forms of assistance, the government provided cost sharing grants and loans for the purchase of equipment or consultancy and provision of training (Lall 1999). The Technology Development Centre, set up in 1989, helps firms to identify their technology requirements, purchase technology and upgrade.
The Republic of Korea is the largest of the NICs and perhaps the most advanced in terms of science and technology capability. It, perhaps, was the most interventionist in its industrialisation strategy and science and technology development. But the unique feature of Korea was the nationalism that went with this strategy. This was mainly driven by indigenous enterprises that imported technology and assimilated it. The government provided prolonged protection to domestic enterprises in selected sectors while forcing those that approached competitiveness to export a substantial share of their output. One aspect of the Korean strategy was the fostering of large conglomerates that could more easily absorb the costs of technology assimilation, i.e. the chaebols. Firms were also encouraged to set up their own R&D facilities through a variety of incentives.
A strategy that was dependent on domestic enterprise for technology importation and diffusion necessarily assumed higher domestic skills.
While investments in human capital are the general pattern of the NICs, this was probably most prolific in the Republic of Korea.
The upshot of the Korean strategy is a diversified manufacturing sector that produces high technology goods that, in some instances, out compete those from the developed countries. A case in point is that the Republic of Korea is now a world market leader in microwave ovens.
Japan provides an interesting example to developing countries with a large informal sector characterised by small enterprises that are generally technologically backward, i.e. the dualism that we note in the ANSA approach.
Hayami (2000) observes that while the South East nations have generally been able to import, adapt and diffuse technology, this process has not been replicated in the rest of the developing world. He suggests that in order to exploit great opportunities in technology borrowing and adjust foreign technologies to their economic and social environment, developing economies need "institutional innovations" in the areas of "market structure, industrial organisation, labour management and regulation, research, training and education systems".
How did Japan, which has been characterised as a "Gerschenkron model", i.e. a late industrialiser borrowing capital-intensive and labour-saving technology, avoid the pitfalls of dualism? This, it is argued, is where the crucial lessons for developing countries lie.
Three distinct periods in Japan's post World War II growth is observed.
The high economic growth period from the 1950s to the early 1970s, the adjustment or stable growth period from the early 1970s to early 1980s and the period of slow growth from the 1980s to date (MITI 2002, Mano and Otsuka 2000). The first period saw the process of rapid technology borrowing, but unlike in the import substituting strategies of the developing countries, this was done on the fabric of past investments in human capital formation and the establishment of R&D institutions to facilitate this process.
This is the hallmark of Japan's strategy that sets it apart from similar efforts by the developing countries. Despite the capital-using bias inherent in borrowed technology, the space for small enterprises was not closed out because the process of adaptation was carefully monitored by both the government and the private sector through industry associations. For instance, in the 1950s and 1960s, business associations of casting firms were set up for importing, adapting and disseminating technology. Local public research institutes also helped disseminate information and techniques to small firms (Kojima and Okada 1997).
Japan, like her successor, the Republic of Korea, had an interventionist strategy, especially in the area of small and medium enterprises.
However, since the 1970s, the "role of government agencies such as MITI (now METI) has changed from direct and interventionist to indirect and intermediary (p.7). In 1970 the Industrial Structure Council of MITI began advising government on the "maximum use of the market mechanism".
The lesson from the Japanese case is that there is space for small and medium enterprises provided there is deliberate intervention by government to make this possible. Furthermore, there is a need for the protection of industry while technological capability builds up.
The issue to bear in mind is that the acquisition of technology does not mean "break through" technology but small incremental innovation.
However, it also requires the ability to learn. This presupposes investments in the training of personnel, which all the countries referred to invested in heavily.
All the case study countries developed on imported technology. In fact, the leader country, Japan, was criticised in the 1970s for not engaging in basic research but riding on the success of other countries. It was against the background of these criticisms that Japan started engaging in basic research. However Japan made a quick transition from basic research to applied research with commercial application. With the bursting of the bubble economy in the 1990s, an environment was created "whereby there was a greater requirement for applied research leading to practical application, which would translate directly into profits, than for basic research extended all the way to research laboratories themselves" (Arakawa 2004).
The bottom line of the preceding observation is that even for Japan, the road to science and technology capability was a long one, but one which was traversed purposefully.
However, when all is said and done, there are certain salient points that are often left untold in many analyses of South East Asian success.
5.1 Industrial relations and the repression of labour In the field of industrial relations and the repression of labour that has hitherto underpinned this success, at least in the later industrialisers, the methods range from recognition of one union per industry, negotiations at the industry or enterprise level (Republic of Korea) and the mandatory death sentence for strike activity in Taiwan, at least until 1987.
"In Singapore and Malaysia transfer, promotion, retrenchment and lay-off and work assignments are considered management prerogatives and are excluded by law from the scope of collective bargaining. No bargaining on the introduction of new technology is possible in Taiwan. In Singapore and Malaysia collective agreements require certification by the Industrial Court, which is entitled to refuse certification if the provisions are harmful to the national interest... In some cases limits have been placed on negotiations on terms and conditions of employment in certain types of industries – in "pioneer" industries in Malaysia and in "new industrial undertakings" in Singapore" (De Silva 1998).
As noted by Young et al (1992), part of Singapore's efforts to attract foreign investment saw the tightening of labour legislation in 1968 which led to the drastic reduction in person hours lost due to strikes from some 40,000 per annum in the mid-1960s to nil between 1978 and 1990. In fact, the reduction occurred within a space of two years.
However it is noted that "with the introduction of a flexible wage system in Singapore in the late 1980s, negotiations on wages have been substantially decentralised. The low unionisation rates in Asia dictate that any scope for collective bargaining is largely at the enterprise level" (De Silva 1998).
In view of the ANSA objective of a people driven development strategy, the experience of South East Asia has to be taken with a certain amount of caution. The question is on how we share the costs of development between different stakeholders. The logic of ANSA is that this should not fall on the shoulders of the working class only as has hitherto been the case. The science and technology strategy should bear this in mind.
5.2 International climate for technology The international climate for technology borrowing and pirating through reverse engineering has changed since the advent of the World Trade Organisation. In the past International Property Rights (IPRs) were administered through international conventions and agreements, e.g. the Paris Convention for patents and the Berne Convention for copyrights. The advent of the WTO has set in motion a "new and powerful enforcement mechanism … to facilitate the harmonisation of IPR laws and their administration throughout the world". The most powerful implication of this development is that developing countries no "longer have the option of seeking to pirate technology under systems of weak IPR protection to foreigners". (Evenson and Westphal 1994:59).
5.3 Geo-political factors With the end of the Cold War, the geo-political factors that made the success of these countries possible no longer prevailed. It was imperative for the U.S.A. that these countries be successful as shining examples of the advantages of capitalism over the "Communist threat" of both China and the Soviet Union in the 1950s to 1970s. This condition obviously does not prevail anymore.
The above three conditions are not replicable, nor is it in the interests of the SADC region that they be replicable. At most. what is applicable from these countries is a leadership that fully took advantage of the situation to the benefit of their countries.
6. Alternative science and technology strategy for Southern Africa Debate on approaches to utilise science and technology for development has, to a large extent centred on the role of the state. Whatever strategies different countries have followed, have been influenced by the convictions on the role that government can play on the economic front. At one time, economists believed that developing countries had excessive market failures to the extent that the only way in which such countries could develop was through forceful government interventions through the use of policy instruments and direct investment. There was then a time that economists started to believe that government failure was by far the bigger evil and government should take its hands off and confine itself to ensuring property rights, contract enforcement and ensuring macroeconomic stability leaving the private sector, guided by market forces, to do the rest.
The failure in Africa, Latin America and other parts of the world, of the economic structural adjustment programmes sponsored by the BWIs bears testimony to the fallacy of the above approach. In those countries, where market oriented reforms were taken the furthest, the disappointment of the outcomes has been correspondingly the greatest.
The World Bank itself has conceded failure of this approach and is now advocating for poverty reduction strategies i.e. some form of human centred development. For example, the Latin American and Caribbean department of the World Bank produced a report conceding that some kind of industrial policy was necessary to generate technological dynamism in the region (De Ferranti et al. 2002).
The case for state planning and public investment in direct production as the driving force for economic development seems to have taken a serious battering. Persistent deficits of parastatals have not helped the case either. Convictions have, as it were, softened on both sides.
The negative experiences of the two extreme philosophical approaches shows that there is room for developing an effective strategy that takes advantage of the positive factors in these two while minimising potential disadvantages. The arguments for and against both these extremes has been captured in the debate on import substitution versus export oriented industrialisation, and since these are well documented to the extent of becoming common knowledge, they shall not be repeated here.
What might be more useful in developing an alternative strategy is to benefit from the experiences of the East Asian countries and those that did not do well, such as the Latin American countries, in utilising science and technology for development by drawing lessons on what can work for Africa and what should be avoided, taking into consideration the current environment that the region faces and constraints imposed by the nature of integration into the global community.
This section therefore presents an alternative approach in utilising science and technology for development so as to meet the needs and requirements of the suffering majority. It should be emphasised that this is only a framework – a general approach. It necessarily has to be so because conditions prevailing in the individual countries of the Southern African region are not the same.
The alternative strategic approach we are tabling is an intermediate position between the two extremes referred to earlier on. The general principle is that it recognises market forces and private entrepreneurship as important in development, but also that the state/government has a strategic role in co-ordinating and stimulating the development process.