Politics, Technology and Development

Only a short time ago technology was widely hailed as the means by which mankind could achieve a new level of well-being. Through its application, advanced countries would become post-industrial societies characterized by harmony and the rational management of problems; the Third World would achieve self-sustaining economic growth and modernize rapidly. Today such views are held by a minority and are generally regarded as reflecting a naive optimism. To apply modern technologies, let alone to master them, has proven to be a complex and expensive proposition. Often the results have been disappointing and the costs, direct and indirect, extremely high.

Just as our understanding of technology and its potential have been oversimplified for decades, so have the difficulties that are inherent in the struggle to achieve modernity, a struggle that continues to be waged daily throughout the globe. At first, especially in the decades following World War II, it was naively expected that infusions of capital and technology would achieve the same results in what were then termed the ‘underdeveloped countries’ as the Marshall Plan had for Europe. That illusion was quickly dispelled as it became clear that Europe’s infrastructures of skills, technology, values and social systems were unique.

The news that the government of Prime Minister Menderes wished to build Turkey’s second integrated iron and steel works soon reached the Swiss representative of the Koppers Company, Inc. of Pittsburgh, a majoring engineering firm specializing in iron and steel. He promptly flew to Ankara where he discussed the proposed project with various Turkish officials. On 8 November 1958, the Turkish government contracted with Koppers to carry out a feasibility study for a plant that would meet the country’s need for the kind of iron and steel products that were not manufactured at Karabük. The report which was delivered to the Turkish government on 1 September 1959 found that the project was quite feasible. It suggested the establishment of a consortium with Westinghouse Electric and Blaw Knox to construct a plant which would cost about $208 million, $158 million of which would be foreign exchange, the remainder would be in local currency. Equity, in the form of common stock, would total about $50 million, the remaining $158 million would be in the form of long-term debt. The plant, like the existing facility at Karabük would be owned and operated by the state.¹

ERDEMIR began operation in early 1965 in a relatively trouble-free atmosphere with the Koppers personnel essentially running the plant. The most serious difficulty involved the reversing hot mill, a complex machine, but this and some other difficulties were quickly overcome.¹ Soon all of the units were exceeding guaranteed production levels by significant margins.

The projects that were implemented during the ‘Interim Expansion’ led to a profound change in the condition of ERDEMIR and in its performance. Sales, profits and productivity all improved steadily and ERDEMIR became a thriving enterprise. This remarkable transformation was due partly to the continued learning that was taking place and to the increased level of mastery that was being achieved but also, more importantly, to the elimination of bottlenecks which had previously limited the plant’s ability to operate successfully. Now the plant could produce at levels that ensured profitability since it possessed a monopoly in a protected market. Although its quality and productivity levels were not high, these shortcomings were overshadowed by a structural flaw: its debt-equity ratio still stood at a very high level. It had declined somewhat in the late sixties as a result of the restructuring but increased again in 1970 owing to the devaluation of the Turkish lira. These developments are summarized in Table 5.1.¹

While ERDEMIR was undergoing its travails, several other ambitious projects designed to provide a massive expansion in Turkey’s iron and steel capacity were implemented. The third iron and steel plant (ISDEMIR) came on stream, work began on a fourth plant, SIDEMIR, and a massive modernization program was launched at Karabük. None of these would serve as a textbook example of how to design and implement a technological project or how to achieve technological mastery.

Turkey’s determined efforts to forge modernity by building up the iron and steel industry date back over fifty years but Ataturk’s vision has only partially been realized. Turkey has emerged as a major Third World producer but each of its integrated plants, Karabük, ERDEMIR and ISDEMIR, were typical technology transfer projects — they encountered numerous problems which have been only partially resolved. And, though one can discern differences in the levels of mastery achieved, none could operate its technologies at internationally accepted levels of productivity and quality.