Technological Capability in the Third World

The aim of this paper is to provide an introduction to some of the issues that are raised by the various contributors to this book. As will be seen, there are a number of important differences between contributors with regard to the perspective that is brought to bear on the study of technological change in the Third World and, correspondingly, the policy implications that follow. While it is clearly not possible to raise here all of the important issues discussed in these contributions, some areas where the differences regarding perspective and policy have been notable have been selected for comment. These are: new approaches to Third World technology in historical perspective; the conceptualisation of technological change and technological capability in the Third World; the political economy of technological change; international trade and technological capability; the world technology frontier; and the capital goods sector. It need hardly be added that this chapter is no substitute for a thorough reading of the rich accounts given in the other contributions to this book.

In broad comparability with the changes in economic theories and policies of the last chapter, the period 1960 to 1980 witnessed shifts in education and development theory which have resulted now in the beginnings of interest in the notion of indigenous technological capability. The critique of the 1960s’ faith in investment-in-education-and-modernisation has been sufficiently widespread that there is no cause to rehearse it here;¹ equally, criticism of dependency theory, which was one of the successors to the modernisation era, has also been effective in undermining the cruder versions of cultural imperialism and of the alleged subordination of the entire education apparatus to the economic system and the international division of labour.² The other successor to the short-lived modernisation period was the very wideranging concern for equity, employment, income distribution and basic needs, especially in regard to rural and marginal urban populations.³ This had a much greater impact on educational thinking from the late 1960s than did the dependency literature. Then finally from the mid to late 1970s, research on education and labour markets started turning up evidence of significant autonomy and self-reliance at the national, regional and community level.

For the purposes of this paper, words are used as follows:

Transfer of technology By ‘transfer of technology to developing countries’ I understand ‘getting knowledge that is only in some foreigners’ heads into the heads of one’s own nationals’. The learning process may well be largely accomplished by buying and studying some piece of imported capital equipment in which the new knowledge is embodied, as when the Japanese government bought its first Jacquard loom, and had its craftsmen dismantle and assemble it time after time until they had learned its technology and could then begin to think about devising or buying or stealing the technology of making it. And nowadays it may be a sensible shortcut to import both machine and its original devisers in some form of joint venture. But it is entirely possible for technology to be transferred as blueprints or as images in someone’s head.

Our basic premise is that to the extent that any one dimension is ‘key’ to the successful application of technology in the development context, it is the quality of indigenous technological activity that counts the most. Moreover, though demonstrably more difficult, we hope to be able to maintain this premise even as we descend from generalities to address the more specific linkages with other dimensions of the complicated technological ‘ball of wax’.

During the course of the past decade I enjoyed the rare opportunity of conducting a vast exploration into the economics of technological change in manufacturing firms of the six largest Latin American countries. Jointly with a team of economists and engineers we examined from a historical perspective — that is, covering various decades of operation — the technological and overall economic performance of well over fifty industrial firms, carefully recording and studying their behaviour both from an economic and an engineering point of view.

This brief note is intended merely to pose some questions concerning the importance of the international context as the essential background against which the development of ‘indigenous technological capability’ must be pursued in practice, defined in discussion and understood in theory. It will seek to establish those aspects of the international situation that are most likely to have a direct bearing on the effectiveness or the significance of any particular set of activities and policies, designed to enhance ‘indigenous technological capabilities’ (ITC).

The following seeks to make two main points. First, the point often made but often forgotten again, that technology is never neutral but is intimately related to the social relations of production; indeed it is an aspect of those relations. Second, in considering indigenous technological capacity as a problem of development strategy the constraints presented by the international economy must be analysed in a way that also focuses on the primacy of production relations.

This short paper will try to address itself to the question of what are the implications for education and training of a policy aiming at developing indigenous technological capacity. We understand indigenous technological capacity (ITC) as being the local capacity to create, adapt, diffuse and use technology. We will not enter into the discussion of whether the transfer of technology equals increased dependence or whether appropriate technology equals ‘cheap technology’ or a technology for underdeveloped countries. We will assume that each country would like to reach an equilibrium between the import of certain techniques necessary to accelerate growth and productivity in some sectors, and the creation of a local technology which is more adapted to the country’s specific needs in other sectors. The creation of any new technology or the adaptation of an imported one to local economic or social conditions requires a certain indigenous technological creativity and has some important implications for education and training. In the following paragraphs we shall purposely restrict ourselves to the problem of middle-level manpower training, leaving aside the problem of research policy and higher education. We shall try to summarise some of what we know, but in this new complex area much remains to be investigated.

In some recent research I have conducted on exports of technology by developing countries, I have argued that India’s performance suggests that it has the broadest and best-developed technological capabilities in the Third World.² This presents a paradox: India combines an impressive performance in exporting its technology with a poor one in terms of industrial growth, the expansion of manufactured exports, the absorption of industrial labour, and the introduction of genuinely innovative products in domestic or foreign markets. Could it be that the same set of policies which have held back growth in general have simultaneously prompted the development and export of indigenous technology? Are the two completely unrelated? Or is there a mixture — have some of the restrictive policies promoted technological growth while others have prevented the exploitation of the resulting capabilities in terms of industrial and export growth?

As with all policy-oriented concepts, there is a risk of tailoring the definition of indigenous capability (ITC) to a conclusion: since ITC is obviously desirable, one is inclined to find in it an omnibus quality which brings all the luck in acquiring and using technology. Whether such a talisman exists or not, it is necessary to specify what precisely is required; and a closer familiarity with how technology actually changes in less-developed countries is necessary to understand how far the acquisition of ITC is feasible. In this paper we seek to set out what we understand by ITC, and to place it in the context of technological changes in Indian industry to get some idea of its feasibility and phasing.

The newly industrialised countries of East and Southeast Asia, first Japan and then in succession Taiwan, Singapore, and Hong Kong, have provided demonstrations of ‘development’ in what was once regarded as the capitalist periphery. Whether these countries are still considered to be appendages of international capitalism or examples of autonomous development is not an issue here. Irrespective of the interpretations given their economic performance, lessons are being drawn for the less developed countries of Africa and Asia. Typically and with much oversimplication the growth rates of the newly industrialised countries are attributed to a mix of economic policies favouring openness to foreign investment, to imported technology and to a collaborative relationship between government and the private sector especially in export industries. Predictably the economic strategies of these countries are favourably compared with countries that espouse scientific and industrial self-reliance. The insularity of the rhetoric of self-reliance is contrasted with the ‘learning and copying’ approach to scientific and technological development practised in Meiji and modern Japan and in other newly industrialised countries. (See, for instance, Ronald Dore’s provocative essay in this volume.)

This paper assesses the relative importance of contractual technology transfers and indigenous efforts in South Korea’s acquisition of technological capability. It also evaluates the role of export activity. The period covered is from the early 1960s, when Korea experienced its ‘economic take-off’, to the late 1970s. For historical perspective and for discussion of related aspects of direct foreign investment and export activity, reference may be made to Westphal, Rhee and Pursell (1981), from which this paper is extracted.

The aim of this paper is to investigate further a number of hypotheses that have been advanced in some of the literature on indigenous technological capabilities (ITC) in less-developed countries. The paper draws on a case study of a sample of machine-producing firms in Hong Kong.¹ Since the firm sample is relatively small, and since all the firms come from only one sector in one country, it is obviously not possible to reach very firm conclusions about the hypotheses. Further-more, all the hypotheses are inherently difficult to examine since it is not clear in any concrete situation what would have occurred had certain crucial parameters been altered. Nonetheless, it is felt that Hong Kong is of particular interest in any discussion of ITC as a result of near-free-trade and minimal government intervention which are principal features of this country. In this respect Hong Kong is significantly different from all the other newly industrialised countries, including Singapore, with which it is often compared.

Developing countries almost by definition have a vast pool of foreign technology on which to draw. However, that a country relies heavily on foreign technology does not necessarily mean that it does not develop indigenous technological capability (ITC). This paper focuses on the experience of Brazil, a country that has drawn extensively on foreign technology for its economic development, to illustrate some of the possible positive relationships between the importation of technology and the development of ITC. The first section provides a short background on the importation of technology and on government science and technology policy in Brazil. The second section presents case studies that illustrate how three different industries were developed in Brazil using different combinations of foreign technology and local effort. Finally, the last section presents some implications for the creation of ITC, investment analysis, and industrial and trade policy.

While the provision of engineering manpower has, for obvious reasons, been consistently identified as being of crucial importance in the development of the indigenous technological capabilities of less developed countries (LDCs), relatively little detailed research has focused on the training and utilisation of engineering skills in these countries. This is clearly revealed by even a cursory review of the literature, which is overly preoccupied with analysing the adverse effects of technological dependence without considering in any systematic manner the engineering manpower aspects of this problem.

This analysis examines indigenous technological capability (ITC) — its meaning, its origin, its impact, and the impediments to it — in two industries in Africa. Textile production and wood manufacturing are the industries under scrutiny, and the evidence reviewed is drawn mainly from Kenya. This evidence was gathered from field research late in 1980.

Twice within a time span of less than 100 years the Tanzanian social formation was drastically reorganised, and in each case an emerging indigenous technological capability was drastically reduced. The first setback was effected by the German colonisation (about 1890) which marked the start of a process of liquidation of the craftsmanship within the society. The second setback was brought about as a result of the post-colonial attempts at socialist transformation initiated in 1967 and formulated in the Arusha Declaration. A consequence of the latter overall policy change was that practically the whole entrepreneurial class (of Asian origin) was proclaimed an enemy of the workers and peasants and therefore restricted in many ways in its technological development endeavour.