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On behalf of
Cover design
~1ijnbouwp1ein 11 2628 RI' Delft Tel. 015-783254
Bureau for Foreign Relations Delft University of Technology P.O. Box 5 2600 AA Delft tel. 015-787000 WRIK - Utrecht Lange Lauwersstraat 69 3512 SP Utrecht tel. 030-314277
Copyright@)l983 by Delft University Press, The Nether1ands
tb part of t.his !:xxi< may be reproduced in any form by print, {ilotoprint, mi=ofilrn or any other neans without written pennission fran the publisher: Delft University Press.
1. Genera! Introduction 1
2. D. E7'7Ist - International Transfer of Technology and the
Restructuring of World Industry: trends and perspectives. 4 2.1.
2.2.
Introduction.
International transfer of ted~logy - An essentia! prerequisite for the internationalization of industrial production.
2.3. Actors involved and underlying motivation.
2.4. The grCMing reliance of aultinational corporations on the lIoOrldwide
5
6 10
proliferation of industrial technologies - The underlying rationale. 11 2.5. Perspectives for the 1980s.
3. E.V.K. Fitagero.~d - Technolgoy Transfer and the Restructuring of
3.1. Introduction.
Peripheral Economies: same principles and an illustration fran the Case of Nicaragua.
3.2. The debate on technology transfer 3.3. The case of Nicaragua.
3.4. Gonclusion.
4. P. OdeLt - The International oil Industry: a case study. 4. 1. Introduction.
4.2. Ted~logical develq:rnent and technology transfer by the international oil ccrrpanies to Third World oil inporting countries.
4.3 . The irrpact of OPEX:' s success on the global awlication of develcping oil technology.
4.4. National (state) oil ccrrpanies responsibilities - and dilenma. 4.5. New centres of technological develq:ments.
4.6. The role of international organizations .
15 21 22 22 27 35 37 38 39 44 45 46 47
5. P.M. Mn
as.,.
SLuis - '!he View of Engineering Consultants.6. G.van às.,. Ho.,.st - Rele of the Universities 6.!. Rea! causes of underdevelopnent.
6.2. Tedmological dependence. 6.3. Effective contra!. 6.4. Transfer of technology. 6.5. 'lbe dUef problE!ll. 6.6. Bu:lget-cuts • 6.7. PU:l.
6.8. Technology J\dvisory eentre .
7. H.P.S. Al.thuis. A.L. Ve7"Vuu7"t - Transnational Technology Transfer: knc:7.ring-what, knc:7.ring-h<M, krlo.ri..ng-why.
7.1. Introduction.
7 .2. I<r1c:Mi.ng-what, knc:7.ring-ha.r, kncw.ing-why. 7.3. A framework for international debate. 7 .4. A research-agenda for the 800 s.
50 58 59 59 59 60 61 61 62 65 69 70 70 74 78
1
-GENERAL IN1'ROOOCrION
The syrrposiun 'Transnational Technology Transfers in the 80' s; Myths and
Realities' was held 00 occasioo of the thirthieth anniversary of NUFFIC. '!he acronym NUFFIC stands for Netherlands Universities Foundatioo For
International Oo-operatioo, founded in 1952 by the Dutch universities te foster world-wide academie a:roperatioo.
In retrospect, the record of ==ete results is all but en=uraging. The creatioo of NUFFIC has not yet arrounted te sarething structurally different. A recent survey by NUFFIC-staff shows, that international develcpnent co-operatioo lives by incidental rrotivatioo and involvement of top executives and merriJers of faculty. Sooner or later, anybody active in this field experiences, that such is not a sumd basis.
MeanwtUle the econanic worldcrisis aggravates rapidly and does not leave the rich unaffected. But the reponse of the Western World is ene of
protectionism (as ooe can witness at the present UNCTAD-=ference in Belgrade) . In the 60' s and 70' s discus sion-topics were: unified Approach, Structural Change, Self-reliance, Basic Needs and New International Econcmic Order. In the 80'5 for most Third World =untries the important topic will
be that of 8ul"VivaL.
Presently, a tendency towards oammercializatioo of knowledge is undeniable. Main actors are the multinational enterprises, but also universities are. en=uraged te offer knawledge 00 o::mrercial tenns. Thus the free flow of knawledge is drying up.
Technology experts have =nsequences, not ooly for Delft University of Technology (DIJI'), but for the Third World as well. It is of utrrost ir.portance te investigate the transfer rrechanism in a transnational perspective, and all speakers have tried te do 50 fran various points of view.
In his opening speedl Dr. Dieter Ernst (Projekt Technologietransfer, University of Hamburg) focused 00 recent trends in the international transfer of technologies. He discusses 00 what =nditions, technologies for industrial product ion are transferred te developing =untries and states that especially nultinational =rporations take a great part in the
worldwide proliferation of industrial technologies. Attenpts te extend the life cycle' of techrxJlogies and the need to spread the excessi ve cost burden
are IIBjor IlOtives underlying this. For the 8O's Dr. Ernst ocnsiders t.'NO developuents of special interest: the increasing contraints te North-South transfer of technology and a grcMing resistance against the prevailing daninant technology sys~.
After sane introductory rerrarks en the debate of technology transfer in the period 1950-1983, Prof. Valpy FitzGerald (Institute of Social Studies, The Hague) sho.is that a nore independent developnent is possible. Nicaragua serves as hls case in point. The reductien of dependency does not rrean autarky, but diversificatien towards new 0&:0 poNer centres (EH::, Japan), Third World suppliers (the so-called NIC's) and te the Latin-American market, sudl as Brazil, Mexico and Venezuela. The lessen for a small = t r y is not te say 'no' te all foreign investrnent, rut rather te negociate case by case within a specific technology policy. In this field pecple fran universities can offer an enornCAlS arrount of help, because there is a tatal lack of infonnatien in = t r i e s such as Nicaragua.
Prof. Peter Odell (EraSllUS University Rotterdam) has talked about the relaticnshlp between the internaticnal oH corporations and the = t r i e s of the Third World. Due te OPEX:' s success the internaticnal ccrcpanies have been rrotivated te restrict their activities te politically 'safe' regicns. Nationalizatien situates the respcnsibility for achieving appropriate technology with the state carpany which, unless very successful bath operaticnally and politically, may have te give a lew priority te new technology inputs. Prof. Odell concludes with sane rerrarks en the role of internaticnal organizations •
In the process of technology transfer ccnsul tants play an inportant role. Mr. Pieter van der Sluis (NEDEm, The Hague), has characterized hls professien as a brain intensi ve sector of the ~. He regards know-how as a ccrmodity, te which he relates the product-life-cycle theory. In ccnclusien Mr. Van der Sluis gives hls expectations about the future of engineering ccnsultants, i.e., provided the free market ~ game is ccoducted properly, there is a future in our world for all kinds of ccnsul tants.
In hls oontribution Dr. Gerard van der Horst (NUFFIC, '!he Hague) has
dealt with the role of the DutCh university teaching and researCh activities in as nuch as they are relevant to the problems of the under-privileged. These activities are facing great pressure due to budget cuts and the new system of oonditional financing of researCh. Although, ac=rding to Van der Horst, Delft University has net yet accamplished What it =uld in
developnent co-operaticn. UJT also has rrany old links with DutCh industry, so Van der Horst suggests the creaticn of a new centre of (apprcpriate) industrial teChnology in co-operation with 'lNO ("Nederlandse Organisatie voor Toegepaste Natum:wetenscha}::pelijk Onderzoek"), FM) ("Financierings
~'laatsChappij v=r Ontwikkelingslanden") and RVB ("ResearChinstituut Voor BedrijfswetensChappen"). 'lhis initiative fits very we11 in the ideas of the Lubbers administration.
Ackn<:wledgerrents
~~ should like to express to
our
guestspeakersour
immense gratitude for conscientiously re-tailoring their oontributions to the requirerrents of this booklet.Two more persons should be praised here explicitly; they are: - Dr. M.S.S. EI-Namaki who ably Chaired the synlJOSium
Mrs. Nel van Raamt and Mrs. Cormy Boudewijns who aChieved a masterpiece of typing
Paul Althuis
Dr. D. Ernst
International Transfer of Technology and the Restructuring of World Industry - Trends and Perspectives.
2.1 • Introduction
The focus of ny intervention will he on recents trends in the international transfer of industrial technologies. Af ter giving a few CCllments on the existing nyths of international transfer of technology, I will discuss sarewhat nore in detail scme of the main rredlaniS115 for transferring industrial technology to developing countries. I will underline the need to perceive transborder flON's of technology as an essential element in the internationalization of industrial production . Third, I will identify scme of the main actors involved in this game and
their underlying rrotivations and strategies. Finally, I will add a few ccmnents on the perpectives for the 1980's (1).
Since the end of the 1960' s, international transfer of technology has ranked high on the agenda of international conferences geared to a refonn of international econanic and in particular to North-South relations. In fact, the rapid 't.Orldwide proliferation of technologies, particulary those related to industrial production and constmption, into even the rerrotest corners of the worldmarket, has given rise to a new
type of technological detenninism, i.e. the nyth of international transfer of technology. What this nyth basically inplies, is that first technology per se detennines changes in the given patterns of
international di vision of labeur and that second prevailing m:xies of transborder flON'S of technology would decrease rather than in=ease the inequality of international economic and political relations.
This perception of international transfer of technology has turned out to he remarkably influential. It certainly daninates rrainstream
thinking, oot only in the rrajor capitalist COlUltries of the OEX::D-region, but also in the s=ialist countries of the <XlMECX)N and in agreat
rrajority of developing countries. According to this view, if
international transfer of technolgoy 't.Ould only be acccnpanied by a few secondary reforns, relating mainly to costs and transfer rrodalities, it could became a pCMerful instrument for upgrading the development potential to Third World countries. In particular, according to this view, it 't.Ould lead to a redeployment of industries to a grON'ing rrumber
of developing countries in sudl a way, that these s=ieties could build up viable and internationally oompetitive industrial structures.
In short, ...nat the ~ of international transfer of technology basically cla.in5 is that by means of :ilrporting • nodern' technology, developing oountries could do ëNay with safe IlBjor structural
oonstraints to develcpnent ani could speed up their transfonnaticn into industrial societies.
In what follows, -I will shcM that, in contrast to textbook wisdan ani the Fhraseology of internaticnal conferences, internaticnal transfer of tedux>logy into developing oountries is not the result of safe kind of
global welfare policy, Iohidl would aim at narra..ring daNn international growth ani develcpnent disparities by means of an inproved worldwide distributicn of a=-ess to technology. International transfer of teclmology instead should be percei ved as an inportant element in the strategies of private finns, particulary llUltinaticnal =rporations, originating fron the US, \'1estern Europe and Japan, Iohich are
increasingly forced to internationalize their overall cycle of capital reproduction. '!he message I 1o.OUld like to get a=oss to you is, that amidst a severe crisis of the world econamy, access to key technologies ani irlnovative capacities liOre than ever before has becane an inportant instrurent of daninaticn. 'Ibis applies both to pa..oer relations wi thin a society ani to international relations , particulary to North-South relations. What matters is that access to this type of knowledge is highly unequal ani that it conveys tremendous power to those who control it.
2.2. International Transfer of Technology - An Essential Prerequisite for the Internationalizaticn of Industrial Producticn.
Internaticnal transfer of technology has becane an increasingly :ilrportant ve1llcle for structural change in the world econ~ and particularly for the internationalizaticn of industrial production. L\lring the last two decades najor structural changes have in fact occured in world industry • One of them is the proliferaticn of
industrial activities to producticn sites outside the traditicnal grCMth poles of the OEX:D-regicn ani the CXlo1EO)N, i.e. the redepioyment of industries to the '!hird World.
Until recently priority candidates for this type of industrial restructuring were those products and stages of producticn ...tUch basically require a cheap, &>cile and unskilled lalxlur force
(particularly garn-ents, shce and leather industries, consurnar electronics and chip assembly). In additicn, SOlle basic industries, requiring a lot of energy or being heavy polluters and SOlle first attenpts to proceed with da.-In-stream processing of raw materials have been involved, particulary in the field of petro-chemicals, pulp and paper and so on. What rratters is that a huge part of the rrachinery and technical and organizational kna.oIledge required for designing and constructing these factories in the 'Ihird W::>rld had to be iIrported. 'Ihe sarre applies to the rranagen-ent of producticn and CCIlplementary support services such as inventory, maintenance, marketing, af ter sales services, finance and insurance. It is in this sense, that transborder flows of technology have turned out to be an essential prerequisite for the internationalizaticn of industrial production.
ibw to determine precisely the volume and CCIlposition of these international flows of technology is still very nuch qJEm to dispute (2). Suffice i t to say here, that technologies for industrial producticn are transferred to developing countries rrainly through the following rned1anisms :
a.
Th~oughLicensing and the
8uppLy
of
know-h~,technicaL and
comme~ciaL 8e~vice;b. A8 pan of fo~eign di~ect inve8tment.
c.
Th~oughthe
expo~of capitaL goods and
integ~tedindu8tiaL
p~oject8, pa~ticuLa~ tu~-key p~oject8.
ad.a.
Licen8ing
and the SuppLy of
Know-H~Licensing and the supply of know-how usually takes place at a
considerable cost and i t is surrounded try agreat variety of explicit and inplicit restrictions to the utilizaticn of this knc:Mledge. Worse still, it is of a strictly selective nature - usually it is restricted to globally standardized operational and maintenance know-how, sanetimes i t includes knowledge needed for adaptative engineering. Access to system, knowledge, however, ...tUdl a develcping country would need in order to be able to reproduce and further develop the iIrported technology, is excluded for all practical purposes.
ad.b. Direeot Fo.,.eign Investment
Transfer of technology errb:.xlied inte direct foreign investment (DFI), of which a huge part ccnsists of flaNS internal te large transnational ccnglanerates has been the privileged mechanism for an exclusive ccrmunity of high-qrowth oountries, such as Brazil and ~1exico in Latin America, the ASEl\N graJp in Salth East Asia, and rrost countries of the Eurcpean periphery, particularly Spain and Ireland.
F'= the rest of the Third w::>rld, DF! expressed as a proportien of gross fixed capital formation has ccnsiderably declined during the 1970's and had te be increasingly substituted by carmercial borrCMing, controlled by transnaticnal banking consortia.
Furthen.ure, patterns of DF! in the Third Horld differ considerably, depending en the sectors and regions te v.hich investment is allocated. It can be shaNn for instance that during the 1970's, there have been significant regicnal differences with regard te capital intensity of investrnent and its productivity (3). On the one extreme, firns investing in South-East Asian run-away export platforms industries tended te deplcry relatively la.' values of investment per worker. '!'he values are in an intermediate position for the ~1editerranean area and Latin America, and reach their highest values for OPEX:: and African countries. In the latter t'NO groups of oountries, investment is predoninant1y geared to infrastructure and sane basic industries
aru
related first-stage da.'nstream activities.These types of investment tem te be r.uch lIOre capital-intensive than world market-oriented investment. In the extreme case of sub-Saharian African oountries, v.hich are still dependent on one or two exportable natural resources, this means that oountries with the least resoorces and the highest levels of misery have te pay rrost for their industrial capital formation.
Viewed from the perspective of transnational oorporations, the rationale behind this "perverse" state of affairs is obvious - what oounts for these firms is that access te energy, mineral and certain agricultural resoorces can be secured at lowest oosts. Consequentl y, programces to build up oooplementary infrastructure do not nave to bother with
transferring stills and can rely en solutions transplanted frem abroad which are expected to guarantee a rapid and cost-efficient finalization of the projects.
viewed ha..rever iran the perspective of the African countries "receiving" this type of investrnent, this pattem of transferrin;J teclmology inplies a massi ve waste of resources.
Output per unit of foreign direct investrnent folla..rs the opposite pattern: locations in South East Asia sha.Ned the highest capital productivity whereas investrnent in Africa and OPEX:jMiddle East countries sha..red the la..rest output per unit of investrnent with Latin J\merica takin;J an intennediate position.
Thus, international transfer of teclmology enbodi.ed into DF! certainly has considerably in=eased the already very high disparities bet.ween a handful of industrial grCMth poles in a fe.l NICs and OPEX: countries, and the rest of the 'lhird Horld.
ad.c.
CapitaL GoodsDeveleping countries today are heavily dependent en inported capital goods. According to figures prepared by the OECD Secretariat (4), 58 units of inported capita! goods are needed en an average in develeping <...'Ountries to produce 1,000 units of POO. For capital formation in industry, this dependence en inported capita! goods is considerably higher - even for the IIDre successful NIes, the OECD study reports ratios of 500-700. It is inportant to note that by far the greatest share, Le. nore than 90 per cent of these inported capital goods are still originating fran the OECD region.
Obviously there exists a hierarchY of dependence en capita! goods inports. '!he IlDst extreme case would be sare OPEC countries in the
~liddle East like Saudi Arabia or the Gulf States, which depend practically in total on capital goods and where these inports are pruGarily geared to investments and infrastructure and basic industrial capacities (basic petrochemicals, iron and steel).
en
the other end, 1rJewould have countries like Brazil, Argentina, Spain, Hexico or India, where in aggregate statistical terrt5 at least, local capital goods productien" contributes to arruch higher degree to capita! formation.
ene
shalld add hoNever, that this type of aggregate statistics does not adequately reflect the degree of dependence en inp:>rts of capital goods and en the cx:nplementary knaoTledge needed to cperate, maintain, reproduce, adapt and further develq:> them. In fact, even in the nost positive cases, wbere the aggregate share of local capital goods productien in industrial capital fonnatien tends to be relativelyhigh,
capital fonnation will still ocntinue to depend in a crucial rranner on :inp:>rts of capital goods and t.e<:iln;)logy. This would be so for at least three reasons:the high degree of effective ocntrol exercised by foreign investment over "national" capital goods industries;
the la.r share of strategie capital goods produced locally, for instance: N: machine tools arrl particulary eN: systems, autanated equipnent needed in raw materials processing plants, and infonnatien process:in:J and telecx:mrunications equipnent;
the subordinatien of prevailing capital goods industries to Western industriaiizatien patterns which, due to their high econcmic and social costs and their inability to develq:> viable patterns of capital fOI1\1ation arrl socio-ecooani.c develcprent, are rapidly becaning obsolete.
2.3. Actors involved and underlying notivation
Viewed fran a Third World perspective, all of the afore-mentioned rrechanisms of North-South tedlnology transfer invol ve very high eocnanic and social costs: inp:>rted techrnlogies usually iJrply a waste of scarce local econcmic resources and tend to prcduce a variety of defonnations in the exist:in:J productive and social structures. In fact, prevailing nodes of transfe=ing teclmology have increased rather than decreased international inequalities, and this is true in particular for access to strategie assets for industrialization (systems knaoTledge; innovative capacities; finance) and the geograpuc and sectorial hierarchizaticn of world industry (5).
However as a result of centuries of externally geared underdevelopnent nest develcping oountries, incllrling the nest ?Utspokenly socialist
enes, today need technology intx>rts en a rnassi ve scale if they want to increase output, prcxiuctivity arrl their long-term develcpnent potential, l:xJth in industry and in agriculture. They can thus hardly afford to renounce carpletely to any ene of these mechanisrrs.
The lessons of history are quite obvious: fran Olile to r·bzani:Jique, fran Cuba to Vietnanl (let alone the prospective future of a socialist Central Alrerical. it has always been the sarre sad story. After a political revolution, a developing country strives to get a strategy of transition off the ground toNa.rds a rrode of eoonani.c arrl social develcpnent which stresses autonany arrl the needs of the underprivileged. Sooner or later, the fact that science-based technology has to be intx>rted on a
significant scale, starts to have negative consequences on the scope for such 'alternative' strategies. Clearly, technological dependence per se would nat be that critical. The real issue is rather the effects of technological dependence, rrost of them indirect arrl long term, on the overall eoonani.c, financial and political dependence and structural deformation of
Third
World societies.The crucial problEr.l then for the societies is to ensure that the process of intx>rting foreign technology will not lead to such a qualitative intensificatien of dependence. This certainly inplies, that the intx>rt of technology takes place in a strictly selective manner arrl that these technologies will be sul:xJrdinated to the requirements of an increasingly self-reliant developrent. This is in fact the essence of What I have called elsewhere a 'strategy of selective technological delinking (6). A prerequisite for sudh a strategy would be to collect information en the actors involved in the international transfer of technology, their interests and the distribution of costs and benefits related to the international flows of industrial technology.
2.4. The Gro.ring Reliance of Multinational Corporations on the Worldwide Proliferation of Industrial Technologies - The Underlying Rationale
In principle, experts of technology for industrial prcxiuction in the developing countries could orginate fra" three different sources:
fran OEX::D countries: fron <:n-1EXx:N countries:
and fron other develcping countries, particularly NIe's. Technology suppliers cou1.d be private or public tirne, goverIIl1eIlt instituti<IlS or supranational public organizati<IlS li.ke the United Nati<IlS or the Eurcpean Ecxxlcmic camunity.
In reality, coe particular type of technology supplier is clearly of priIlDrdial iJrportanoe. In fact, private finrs based in OECD countries are by far tlle major source of technology for irrlustrial productien in develcping countries. 'Ihis awlies especially to tirnB orginating fran su countries - the United States, Japan, the Federal Republic of Germany, France, ltaly and Great Britain. To alesser degree, tirnB fran Canada, Scandinavia, the Benelux countries and Austria are involved. It is within this daninant grc:up of technology suppliers that the IlOSt iJrportant structural d1anges todc plaoe during the last 30 ocXI years. 'Ihe increasing rivalry and CClIpE!tition between tirnB based in major OEX::D countries has been the name of the game of transoorder flONS of
irrlustrial technology. 'Ihis is Why
we
have to focus far and forerrost en this type of actors ..menwe
talk about hcw unequal control overinnovative capacities and international transfer of technology is going
to influenoe the restructurin:J of IOOrld irrlustry.
What then have been the rroti vaticns behi.nd the growing engaganent of nultinational =rporati<IlS in transoorder flONS of technology? 'Ihree of
them deserve particular attentien:
atterpts to extern the life cycle of technologies by neans of global strategies of "planned obsolescenoe":
the growing pressure to penetrate new and increasingly protected markets thrcugh export of technology:
and the need to spread the exoessi ve =st OOrden of Ri{) through =rporate strategies of "OOrden sharing arrong unequals".
2.4.1. Attempts to Eztend the Life CyoLe of TeohnoLogies Anûdst a severe crisis of world e<XX~, new forr.s of aglobal oligopolistic (XI,petition are euerging and rivalries both within and between major econanic groupings are dra(,atieally increasing. '!his applies in particular to conflicts between the United States, ~~stern
Europe and Japan.
Consequently, fims are forced to perceive the export of technology increasingly as an instrument for extendin~ tlle life cycle of
technologies which are either at a high state of "maturity" or are going to beCX::'«le obsolete in the very near future .
In this sense, tl1e international transfer of technology perforTl5 the function of a substitute for innovation. In fact, a significant part of the transfer of technology to developing countries consists of mature or obsolete consurnption technologies, whicl! furthernore, are sold at excessive prices.
lIc:t.iever, tlris technologieal conservatism, inherent in the export of technology, should not be overdone. Obviously, it is not only mature or obsolete consur;ption technologies which are transferred to developing countries, as the product life cycle tlleory seer,ed to irrply. H:xlern or high techno logies have recently been transferred to developing countries on an increasing seale, including for instanee tlle transfer of new infonnation technologies based on lfIicroelectronics. It is essential to understand that tlris transfer of "m:x:1ern" technology is no less a part of a global strategy of "planned obsolescence" as is the transfer of lolature and obsolete technologies. '!he near CQI,plete control, by a handful of private finm, of ir,portant product and process innovations is used by these firms as a najor instruroent of oligopolistic
ocr,petition, i.e. by skillfully devising optirnal time patterns for obsolescence.
The Gpowing Ppessupe to Penetpate New and InopeasingLy Ppoteoted Mapkets
Tlte worldwide caaoercialization of technologies has turned out to be a very efficient irlstrument for the penetration of protected markets.
'!here is an obvious need for western capital te penetrate neN
markets: world trade whose volume, during the period 1963-1973, had an average annual growth rate of 9 per cent, since 1974 has grown by less t.han 4 per cent. Latest figures released by GAT!' (7) shari that world trade in real value terms has been CXlIltinuously declining since mid-1980 fram a peak of ~2,OOO billion.
'1hl.s tremen:'lous =ippling of export possibilities applies especially to intra-oEXD trade and, even ITOre dramatically, te trade within the European Econcmi.c camunity. Given the stagnatial of East-West trade, the disclosure of "new frontiers" will have te take place na.inly in sane develCJliI)J = t r i e s , especially the OPEX:: countries and sane NICs in Latin l\merica and South-East Asia. '!here are three types of "grcwth narkets" available in these = t r i e s : private luxury consunption, government procurernent harkets and world market factories . As eacn of these rnarket segments is surrounded by a high level of effecti ve protection, the export of technology might in fact be the only way te penetrate these markets. '1hl.s point has been su=inctly stated by 'lhanas A. Gallaghan Jr., an l\merican industrialist and influential consultant far the technology export policy of the
u.s.
government: "~larkets closed te products are invariably epen to technology. Even extremely close markets will epen te western technology, providing the West gives them the =edit te crake the purchasel .••.. as long as the United States is the predaninant technological pcwer in the world, closed product r.arkets will always be epen te lImerican technology" (8).The need to SpPead the Excessive Cost Bupden of Reseapch
and DeveLopment
'!'he international transfer of technology has been increasingly perceived by corporate headquarters as a necessary and efficient instrument for shifting the enorrrcus cost OOrden of research and develcprent onto ether shoulders, especially those of weaker bargaining partners. For this sake, a lot of very efficient instruments - nost of thE!ll rather inforna.l ales - have been devised by bJ.siness intellectuals and management
think-tanks: the great variety of transfer pricing practices and sane new techniques of global cash nanagement are just two cases in point.
Corporate strategies of "burden-sharing arrong unequals" have =ntribute:i cxmsiderably to the overall dependence
run
structural defonnations of developing cnuntries. In fact, they have helped toestablish very effieient arXI flexible mechanisrrs for a significant and inereasingly perverse transfer of financial rreans fran developing to
industrialized capitalist cnuntries, through whidh developing countries are actively funding R+D activities in the United States, Western E>.lrope
run
Japan.It is inportant to note that technology-exporting finm do not. have nuch
roan for CCIlprauise on this issue. In fact, "burden-sharing am:::ng unequals" is a fairly rational reaction to an objective dilenrna. From corporate headquarters' point of view, this dilenna might be roughly deseribed in the follaring way: RoN to finance that mininun of innovative activities, whidh is essential for securing worldwide oligopolistie r,arket positions, given the follONing constraints:
the strategie lllFOrtance of R+D for capital aCCtInulation; the exeessive rates of inflation pertaining to R+D costs; the very high risks inherent in R+D?
It is thus safe to conelude that nultinational corporations will have to rely inereasingly on the export of teehnologies 50 that at least part of.
the grONing R+D cost burden can be recuperated. As demarrl
run
investment keep stagnating, if not. retrogressing, in practica11y all major OECD countries,run
as an inereasingly pervasive protectionism is surrounding these econcruies, a grONing share of the rrultinational corporations' technology exports will have to go to the Third ~k>rldrun
particularlyto OP&: countries
run
NIes.2.5. Perspectives for the 19805
What then are the implieations to be drawn fram this rather depressing diagnosis
run
What are the perspectives for the 1980s?Let me first refute one possible misinterpretation. By stressing the groNing ll'portance of tedhnology for econcrnie
run
social developuentboth within 'Ihird W::>rld scx:ieties and internationally, ooe should rXJt fall into the trap of teclmological detenni.nism. 'll1e llDtor of the system is rXJt teclmology, rut scx:ial and political change, Le. basically class struggle, both within a society and en an international scale.
My presentatien has been biased in the sense, that I have focused practically exclusively en ooe particular type of actor, Le. huge, transnational ocnglanerates originating fron the U.S.A., Western Europe and Japan. I have done 50, because tllls allowed me to analyse the logic underlying the prevailing nodes of' the international transfer of tedmology.
Reality, ho.riever, is nuch nore CXIlplex and there are in fact iITportant countervailing scx:ial forces arerging, both in the Third W::>rld and in our o.m scx:ieties ...ru.ch are certainly <:ping to play an increasingly iITportant role in this game.
~ developnents would seem to deserve particular attention:
the increasing cx:nstraints to ~rth-South transfer of teclmology: a gro..ri.ng resistance against the daninant teclmology systems.
2.5.1. Inc~easing Cont~int8
to
No~th- South
T~n8fe~of
Teohno1-ogy
'!he cx:nstraints to a consensus anong the rnain actors of international transfer of teclmology, both in industrialized and in develeping countries, have been rapidly increasing amidst the present econanic crisis.
protectionism for instance threatens to beccrne a problen of global prq>ertions in the 1980s. Persistently high unarployment and slow econanic grOoolth in the united States and Eurq>e have ccmbined to intensify protectionist pressures and to weaken free-trade norrrs. '!'rade frictions have 1IU1tiplied between nations and across sectors as the expansien of ...orld trade has care to a halt. 'Ihis outbreak of protectionism has taken a variety of new forrrs. In fact, the
proliferation of so-called "voluntary export restraints" (VERs) and " orderly marketing agreanents" (a1As) has beccrne 50 widespread that these barriers rDIf rank equally with tariffs and quotas as the IlOSt widely used catllercial policies.
Consequently, the "golden age" of international transfer of technology might scx:n gi ve way to a series of 'CJE!W anj basic contradictions v.hich we are cnly just beginning to understand. 'Ihis would apply in particular to the increasingly intense rivalry between United States, Japanese anj \1estern furopean finns, anj their respective
governrrents, rut also to the manifold new forms of conflict emerging between private finns anj governnents in newly industrializing oountries anj "i1ajor oil exporting countries 00 the ene hand, anj their
counterparts in the 01'0) region 00 the other.
Take for instance technology-exporting fiors based in major 01'0)
countries. For them, the balance of North-South transfer of technology was fairly positive throughout rrost of the 1960s anj 1970s: trade increased; surplus petro-dollars were effectively recycled inte deman:i for goods praduced by OECD-based multinationals; off-shore investment in law--laboJr-=st oountries allCMed them te cx:x;press labour oosts and te counter the decline of productivity gro./th in hane locations; the capital goods sector was able to benefit =nsiderably fran technology transfers te developing countries; and, finally, the trade balances of the Jrajor OOCO countries with rvn-<:lPEC developing countries inproved.
Today, hONever, it turns out that the process of transfe=ing anj
disseminating technology, once started, is in=easingly eroding the capacity of these very fioos, including the rrost po,;erful =rporations, to control this technology, i.e. te remain in a position of
teclUlOlogical daninance. The reasons are obvious - inspite of the
extra,~ly
high
social oosts of transfer of technology for tlle so-called host countries, a learning process te recei ve anj adapt technologyinports is certainly underway in a nurnber of gro./th regions in the 'Ihird World. Adaptatioo engineering skills are developing v.hid! 'NOUld allON' to la..>er the real =st of inported techno logies anj enable local finns to
reap e=nanies of scale tllat may facilitate entry to n€!tl danestic and foreign narkets . '!here has also been inprovement in the ability of local engineering finns te participate in nore carplex engineering tasks, particularly in resource-based industries. Potentially at least, this
CXlUld maan that for a gra.d.ng number of technologies , the
international diffusion of technology rnight accelerate arrl that fonner technological advantage of United States, Hest European and Japanese fimB could be eroded away.
It is still very Iiuen open te debate how these neM CO'ltradictions will influence patterns of international trade cx:r,petition and investment allocation, arrl h(],ol this is going te be reflected in key sectors for future 'nlird ~brld industrialization. '!Wo basic facta, hC7oNever, can be
taken f= granted arxi could serve as starting points for future in-depth researen on this crucial topic:
First, the nultipolarization of international trade cx:r,petition for industrial products carmot be stq>ped anyrrore arrl finrB fran
countries like Brazil, Mexico, Argentina, India, arrl South Korea, te name but a feM, will increasingly be involved. This is indeed a considerable dlallenge for nultinational =rporations frem the United States, Western Europe arxi Japan, if only because these new carpetiters cannot anyrrore be {Xlshed around so easily as this was possible with the classical "export platform" countries.
Seccoi, as OECD countries are likely te fail in their endeavour of concerted action te regain technological daninance, this will put individualOECD countries under in=easing pressure te searen for individual arrl short-term gains. Rather than accepting te adapt te the f=thcx:rning transformations of existing international eC01aaic arrl political relations, at least the major OECD countries will try to "fight i t out on their (],oIn", if necessary ~ means of "fuite-en-avant" - strategies, arrl te take increasingly recourse te cutthroat technological cx:rrpetition arrl protectionism.
2.5.2.
Resistance Against the Dominant TechnoLogy Systems
This brings me te a secoo:i arrl equally inFOrtant point, Whidl is going to influence the perspectives for tlorth-South transfer of techno1ogy. DuriD;j the 1970s, the consensus on the social utility of science and techno1ogy has started te bréak da.m, particu1ar1y in Iiajor capitalist countries. In fact, political IlOVements Which aim at establishing viab1e forr,B of socia1 oontro1 over techno1ogy and te resist the dauinant "Big Scienoe - Big Techno1ogy Systems" have certainly gathered considerab1e rn:rrentura. 'nlese Iroveraents have taken different forms in different societies.
In western societies, for instance, anti-nuclear and disarrnament novements have been an inportant catalyst, and new forrrs of resistance to the inposition of technology frem above have also develcped within trade unions and particularly en the shcp floor. Recent developnents in Poland indicate, that similar nDvements are UJ'Xjer way in the societies of Eastern Eurcpe. Finally the nurri:Jer of develcping countries has increased ~lere progressive or socialist governments have seized power and are willing to subordinate technology to the needs of the
UJ'Xjerpriviliged and poer.
Töday, the interactien of new technologies is still the practically exclusive prerogative of =rporate management and government
bureaucracies. Hawever, uses of technology that violate the rights of workers and the basic needs of our societies, will increasingly provoke ti\e ernergence of new fon;s of resistance against the inpositien of technology frem alx>ve. But without UJ'Xjerstanding the driving forces behirrl the introductien of new teclm::>1ogies, and particularly their interaction with cltanging patterns of international division of labeur, it is hard to aclrieve effective social control over cl10ice of
tecllIlOlogy, and to ensure tiJat maclrines will fit tile need of the peq>le ratiler titan the oti1er way rourrl.
Notes
1) See for instance Ernst, D. - "The Global Race in Microelectronics -Innovation and Corporate strategies in a Period of Crisis", with a foreword
I:rf
David Noble, Nassachusetts Institute of Technology (mT). 290 pages, Car;pus, Frankfurt au Hain and New York, 1983.2) For details and a systematic evaluation see Ernst, D. (editor) -"'Ihe New Inteulational Di vis ion of Labour, Teclmology and
Urrlerdeveloprent - Consequences for the 'Ihird World" , 646 pages,
c:anpus,
Frankfurt éIIn Nain and New York, 1:100.3) For a detailed analysis see OECD - "North-South Technology Transfer: 'Ihe issue of r'eedback Effects" , SPI' (80.225), Paris, 15 October 1980, published as: OECD - "North-South Technology Transfer - 'Ihe Adjustments Ahead" Paris, 1981.
4) Figures are taken fran: OF.X;D - "'!he International F10NS of Technology to Developing Countries" , Analytical Study No. 2
(OOTI/SPR/79.32), Paris, 22 October 1979, p. 5 and pp 17-19.
5) For evidence see for instance the sectorial case studies
l:7f
Rafael Tibertrien, Leniel Halkin, Seif Bennac;eur, Fransois Geze, Jacques Perrin, pierre Judet and Aant Elzinga in: Ernst, D. (editor), 1980.6) Ernst, D. - "Techrx>logy Policy and Transitioo Towards Self-Reliance: Scrne Basic Issues", Socialism in the World/Beograd, NBo. 30, 1982.
7) GATl'- "Annual Report 1982", Geneva, September 1982.
8) Thanas A. Gallaghan Jr. - "U.S./European Econanie Cü-operatioo in Military and Civil Technology", ~lished
l:7f
the Center for Strategie and International Studies, Geoorgetown University, Rev. Editioo, septellver 1975, p. 96.Prof. dr. E.V.K. FitzGerald
TeclUlo1ogy Transfer and the Restructuring of Peripheral Ec:xncmi.es: salie princip1es and an i11ustration fran the Case of Nicaragua.
3.1. Introduction
l t is very difficult to follOfl SUdl a distinguished expositien by an international expert such as dr. Ernst. I am really r,vre of a carpenter than an ardritect;
saneaJe...me
adapts the results of this techrx>logy transfer rather than designs it; in ny ...ork in recent years as an eccn::mic adviser to the governrnents of Mexico, Peru arxi rrvst recently of Nicaragua, I have lcx::ked at the technology transfer process fran the positien of Third World governrnents. Arrvng these in the First World who are trying to do sanething about the problems of urrlerdevelcproent. and clearIy in the whoie North-South debate en the relationship between poor c:cuntries and rich oountries, the technology transfer prOOlem has generated a lot of heat but net a great deal of light; the speech by dr. Ernst did clear up a lot of points ~ver, and illustrates the wider view of ...orld eooncrnic structure within whidl techrology transfer is n::JN being viewed. lt seerns to rre that fraa the 'lhird \,orld point of view as well tllere has been an increasing maturi ty about andurrlerstanding of the nature of technology transfer process. 'lhat doesn' t mean that tllE! 'lhird World oountries are very haFf'Y about it, but at least n::JN they understand the anima! they are dealing with: I suppose the first stage in capturing a lien arxi trying to train it, is to urrlerstand what i t looks like and what its habits are.
3.2. '!be Debate on Techrx>logy Transfer
lf we just loek back to the sixties arxi seventies in the great debates about eccn::r,uc develcpnent, we find tllat early on the way in which we looked at technology transfer was closely connected to what we call 'choice of technique'. 'lhat is: should industry or agriculture in develcping countries be based on mechanized production, tlle use of tractors, fertilizers arxi sc on, or should it be based on rrore
labourintensive rrethods of production; similarly there were debates on whether roads should !.Je built on the basis of very larye nadlines or with a lot of labour. I can see by looking around the excellent exhibition incidentally, out in the lobby, that Delft University is contributing innovative sclutions to this problem in the form of awrcpriate technology. '!be debate about technology transfer in the
sixties l'ëIrticularly revolved around this point, alxJut ~ti.ch dloice of technique was appropriate te reduoe poverty: there was a lot of criticiSl,1 of the lack of arployment generation by the techrx:>logy transferred to the manufacturi~ sector; an::1 the suggestion that this terrled to Wild up industry at the expense of agriculture an::1 so on. '!he debate in the sixties tended te conc..'erltrate on the effect of technology transfer on the internal structure of the econat~ ani on inccme
distribution. The reply fran the defenders of such technology transfer, mainly associated with neo-classical eo:xlCXuists, was that this was a problem of what is knaNn as the factor-prioe problem: the relative price of labeur ani capita! in particular. In ether ...ords, if the develop~
countries insist on projective lalxJur legislation, or generous social security payments by ellployers, or forcing foreign crnpanies to pay high wages, than naturally crnpanies adopt capital-intensive technologies
~ch save labeur. '!he solution for the '!hird hbrld countries ...ould be to only adopt the nost labour-intensive technologies to create as llUch eIlployment as possible: they had only to keep their wage-rates la..r an::1 then the llUltinational corporations ani danestic finrs would make sure that the right tec1lD:)logy was chosen, awlying their rx>rmal profit-r:axilllisill<j criteria. This appraoch was even adopted by the
UN/no.
Ha..rever, during the seventies the point of debate, shifted <XXlSiderably,J(ov~ away fron this discussion alxJut the arployment effect to./ards a discussion about bargaining. 'fuat is to say, the newly independent governr.ents of Africa an::1 the increasi~ nationalistic governments of Latin Anerica an::1 Asia began to press harder on the main actors in the techrx>logy transfer business, that is the nultinational corporations, pressing for better tenlIS. Sc tlle debate then caJ1e to revolve rx>t around the inpact of this technology, oot around the prioe that the 'lhird hbrld countries \-lere paying. 'furoughout tlle 'Ihird \.brld governrnent
organizations were set up to monitor this techrx:>logy transfer, to get IiOre data on it; sa,1e countries began to get together (such as tlle case of the Arrlean pact in Latin America) to try an::1 control tlle charges for tec1UlOlogy, the royalties, the profit outfla..rs, the transfer pricing an so 011. 'llie positive pl~ aspect of this wasn't the intermediate tedmology initiative, ~ch had beerl an answer to salie extent to tlle problenlS of the sixties (er,ployrrent creation); the answer this time
was an attenpt to set up a lcx:al capital goeds production capacity to gellerate irrligenous technology, or at laest adapt foreign tecl1llOlogy to lcx:al lleedS. '!he nur,ber of countries such as Mexi= an Brazil enbarked en deliberate progrannes stinulated ~ governruent investliellt, of setting up their o.Ill capacity for producing capital goods.
Now, as ~le [(ove in the eighties, things have changed to sare extent. First, the enornous ar,ount of recent researdl on technology trarlSfer, whidl dr. Ernst has so ably surnnarized for us, has enabled us to see tllio process in a nuch wider =ntext tllan ilie micro-e=nanic ones of
'dloice of technique' or 'technoloç,y bargaining'. It llDVed ilie debate t.owards an analysis of the whole pr=ess of industrialization on a world-scale arxl wbat place techrxJlogy trarlSfer plays in it. TIle very interesting recent survey by the OOCD en llorth-South technology trarlSfer published this year (l), for exanple stresses the lustorical =ntext of technology trarlSfer, that tilroughout ilie pr=ess of industrialization fram ilie earliest days iliere llas been massive technology transfer fram one part of ilie world t.owards tlle otller. In fact, ilie rrajor
technolO<Jical innovations in ilie Hiddle Ages enabled Eurcpe to take off (that is <JUnpa.vder arxl printing) \,oere lJotl'l technology transfer fraL! China to Europe; nat the other way round. In l~ o.Ill =untry, England, in the 13th arxl 16th century we were regarde<l as an inferior lot
tecllllOlogically, arrl in fact we used to export wool to Hollarrl and Flanders to be processed and ilien ooy it back: if anytlling we were =nsidered as a dependent =untry on ilie r.o,... Lands. HOfJever we cleverly developed our military capacity, established control over trading routes arrl managed to ooild ourselves up as a r.ajor ioo.ustrial POfJer. Aliliough I den' t tllink. we 'sllould take tltat moral toe far as industrialization in tlle Third \Iorld is concerned; the exa.ople of Britain, arxl more recently South l'Drea and Brazil is that depe.."ldency is not an innutable =ndition. A key =nclusien fram recent research is tlris =ntradiction dr. F.rnst was llentioning before, ilie desire to control tedmology ~ tlle countries tl'tat have it, oot also ilieir need to sell arxl transfer it to ilie Third Horld for l.lëIrketing p.rrposes, is so\'Cthing iliat lias gene on
historically. ~le can see it in the major techrxJlogical innovations of the early part of tlle last century, sudl as shipbuilding, in coalrnining,
railways for exanple. Britain daninated railway technology, but onee y= had railways all over the country, and in:ieed we had as many as two railways between London and Birmingham at ene time, you have to export it and technology is than absorbed by your potential oc:rrpetitors.
The otller new outlook, apart fran looking at this global in:iustrialization point, is tllat we were becau:ing rrore and fiere
preoccupied about the product itself as qJp06ed in ....nid1 i t is produced. For hany products, particulary oonsumer goods, a najor elanent of teclmology is the product choiee itself, ....nid1 means to a considerable degree the use of braJn-nar;les: the substitution of soap by detergents for exanple in Africa ....nich has lead to a collapse in the indigenous soap-r.aking in:iustry. 'nle replacelilent brought about no real inprovanent in the living standards of pecple using then, just a shift of profits fran small local producers to large r,ultinational producers. 'nlis is not just a question of the technology being used, it is not as if the traditional soap--r.lêlking have been revolutionized by a new d1anical process daninated by the rrultinationals; rather ene product has been sulJstituted for anotiler. Other exaHples are the introduction of sliced bread nade fran ....neat in the camtries whid1 traditionally had eatel1 rraize and l,ri.llet; agaiu tile introduction of Hetor-cars (nade by nultinationals) substituted for railways. In the technology transfer process you can see a process uf tile chaJ1ging of tile product as well as the metilod producing it. Onee a specific product has been d1osel1 (or you have been persuaded by advertising) tiléll the ntunber of ways producing i t are very limited: i t is IlO coincidenee ti1at the technology available frOtI the ilultinatiollals is tile best way to produee 'rrodern' goods. In other words, if y= insist on having a eertain sort of washing-il'ad1ine, i t is not very surprising that Hestinghouse is the only CCIlpany ti1at can provide it. 'nle question ti1at one has to ask oneself is: is this the best way of washing clotlles, not is this the best way of producing a certain style of washing nachine. 'n1is seccrxl point is particularly associated witil econa.ri.sts fran the University of Sussex in England.
'!'he Third point is ti1at during the debate i t has beoane clearer that the fOL~ssing of attention on teclmology alone is to nri.stake the effect for the cause. 'nle souree of the prooien is the developnent strategies
ëIdq1ted en a INOrld scale: the way the INOrld-ecorlCIl!{ is evolving on the ene harxi an;j the developaent strategies adcpted by Third World countries therrselves en the other. It is the interaction of the
develcp\lent strategy of the small poor COUIltry itself an;j its insertion
into the international di vision of labour Which dr. Ernst was talking about, \'ohidl really brings aboot the tec11J'X)logy problem.
'Ibis is the point I want to illustrate in a m::nent. In this stage, it is enough to say (at the risk of over-sinplification) that the nature of the debate has shifted its ground =nsiderably during the last tlrree decades, nevin:J fran a micrcreooncmic choice of technique prOOlen1 in the sixties to a prOOlem of barCjaining in tlle seventies , an;j ~ ta./ards a Here 'macro' or 'structural ' debate in the eighties.
'!'he last point I want to make is that the nature of the debate is highly influenced by the INOrld crisis going on at the nanent. A central point is that inflation, slOtl gra.rtlt an;j unenployment in the First Horld an;j
its effects 00th fran tlle side of those tlJat resist tec}1J'X)logical change, that is pecple wh:> want a nere humane tec}1J'X)logy, an;j those \'oho
are arguing for a restructuring of the rutch eoonar~, \'oho want an acceleratien of technological change. At the same time, in the Third \lorld tlle dauinating thelIe is oot echnology transfer, rut of course the financial crisis itself. That is to say the prOOlem of the balance of payments (export prices, debt service) has beca,Je tlle dauinant theme of North-South relations at the narent. It is interesting to see that While tlle r'irst \.brld 11as been tlle place for Illacro-econouic denlë!.IXl ciBnageilent
an;j 60 on, while tlle Third Horld was preoccupied with tec}1J'X)logical
change; it' s ~days the First \.brld Which is /tDre INOrried about tec11J'X)logy an;j the Third \lorld is nDre INOrried about stabilization and
so en. \Jhy that should be 60 is oot entirely clear, rut it JCBy lJave to do with tlJe fact that tlle industrial restructuring of the First World
an;j financial pressure on the 'Ibird are mt only part of the world
eoanomic crisis rut also the way of 'solving' it in a Darwinian way by pushing the weakest to the wal!. Needless to say, the First \.brld has lX) hesitatien about giving fiancial advice to the Third \lorld, through institutions SUdl as the International l·t:metary F'uOO and the \.brld Bank. But we should also ootice that tlle sort of themes that the Third \lorld
is used to facing (changing econcr:ri.c structure, balance between sectors, dU"onic balance of payments problens, fiscal crisis arxl. so on) are things that we are )ust learning aI:xx.lt: in fact there is quite a lot _ oould leam fraa the Third World aI:xx.lt industrial planning.
Na"" gi ven this dléllging nature of the debate arxl. gi ven the changing nature of the international industrial ecax:my, which
was
outlined by dr. Ernst and the vision of the international energy ecax:my which professor Odell is aOOut to give us, I now want to discuss w\lat can be done about it. Let us iHlagine ourselves in the position of a '!hird hOrld government, trying to 00 sanething aI:xx.lt poverty, trying to 00 sanething aI:xx.lt its excessive extenlal dependence arxl. what i t should actually 00 aI:xx.lt it.3.3. The case of Nicaragua
Ncw' the case that I want to loc:k at is that of Nicaragua; I have two nutives for ooing this. First, i t is a case of a oountry which is atten~ing to design a truly national development model, one wich is socialist in tllat is planned arxl. geared to the needs of the poor, rut based on the mixed e~. '!his mixe:i econa'!f road rreans that Nicaragua will ltave a public sector and a private sector and also very ihportantly does not interrl to Slllply shift fran a dependence on the USA to a dependence on the USSR. In other \lOrds, they are looking for a middle road in the way that other oountries such as Mozanbique are doing. l'ly second r;otive is that here in Delft and in so nany other Dutch universities, there are groups of sttrlents, academies, technologists arxl. so on who are ooing a great deal for Uicaragua in supporting its effort to firrl a new road.
'!he proble.a for a srnall poverty striken oountry like Nicaragua is different front the Newly Industrializing Countries (NIC's) such as Brazil, Mexi= or Korea: They do have the possibility of gaining scme direct =ntrol over the generation I.odem industrial technology. '!here is a possibility that they can follow the road of the 'late developers' (tllat is of OelgiUJol, France, Japan arxl. so on) within the next
generation. 'lhey are actually ruilding up a heavy industry. develcping an indigenous technological capacity arx1 might becaning meni:lers of the first division. of the 1IoOrld econa,uc football-league early in the twenty-first century. You rray not krlc:7N this. rut the eighth. ninth arx1 tenth largest capitalist industrial producers in the 1IoOrld are in fact Brazil. ~1exico arx1 Spain. closely folla.red by Irxtia arx1 South Korea. In Latin America. Brazil arx1 Nexico can adopt a realistic strategy to acquire the characteristics of a m:::xîemized heavy iooustrial econa'!'i. 'Ibis possibility is not epen. in the imnediate future. to the vast majority of develcping countries. where the real poor are. 'l11e oojectives for the poorer econa.ues in the 'lhird Horld (I \>lOUld argue the NIC' s are IX) lenger part of the 'l1lird WOrld) [[1..Ist be framed within an existing technological frame .... ork; the best they can do is try arx1 1IoOrk out an cptien based en self-reliance arx1 basic-needs. This is. to reduce their degree of dependence on foreign teclmology and increase the capacity of their eoonanic systercs to supply the basic health. education needs of their population. 'l1le strategy is not one of attenpting to gain control OIIer the generation of technology. nor is i t merely the adoption of a tougher bargaining position; rather it is a questicning of adapting the econcr.ry to the achievement of popular objectives. Reducing dependency does not "ean trying to ruild up your own heavy industry • whiCh was the error of sa.v: of the poorer countries in the enthusiashl for inport-substitution during the past t1loO decades. What it rreans in practice is diversifying your links with First WOrld suppliers of technology arx1 not. as in the case of Nicaragua in the past relying entirely en the USA for their tec~logical inputs. Nicaragua had Wilt up. umer the previous regime. an enorr.ous dependence in its
export agriculture on iJ.ported fertilizers. inported pesticides arx1 inported transport equiII,ent; i t developed a reliance on inported health system:;. iJrported educational systems. irrported televisien system3. iooustrial syste!,1S and so on. \-ihat could tlicaragua do? It was necessary to riove ~y fran US. but to learn fran the lessons of CUba. so they are trying to Wild up technological links with Eurcpe and Japan first. using the energing ccnpetitien within the OECD countries that we have already discussed.
It al50 neans making use of the NIe's, that is to say Brazil arrl
Mexico in the Nicaraguan case to obtain equipnent arrl industrial SUWlies - fra"!. tractors te oil. And finally it is possible te relate te the less developed or non-central nerrbers of the socialist canp: you try and bargain with Bulgaria, Hungary or Yugoslavia rather tllém with
~bther Russia herself. I f we contrast this with the Cuban exanple, CUba
was
forced by \/ashington to dlCXlSe between the USA arrl the USSR, arrlthere
was
no realistic way of diversifying their deperrlence ta.rards Latin I\l.Ierica in 1959 or even te Europe. Let us loc:k at a few exanples of tllis.In r.ri.ning, exploited in the past by US and canadian ocnpanies, Nicaragua is noving its technical assistance te bath SWedish and Bulgarian
sources, cteliberately trying te assign different mines of different areas te different sources. The Uicaraguan transport system is heavily deperrlent on oil (oil CXlSts forty percent of all tlle inports of
Nicaragua arrl one half of that goes for diesel arrl gasoline): so what do tlley do? 'lhey shift back fran roads taNards your existing railway system, whidl had been abandoned in the fifties ans sixties. \/here do they get aid te Wild up their railway systerû 'nley get it in France, whidl has an aggressive program of tryiTB to make its railway equipnent industry profitabie by exporting railway technology to the 'nlird \k>rld,
and is preprared te finance such a transfer. Nicaragua has large forest resources, and wants te build up pulp arrl paper production with tllose. \ihere do they go for technology and support: te North Arrerica? No, they go to Nexico vihich hás an adequate paper and pulp industry and a desperate shortage of trees, needs te inp::>rt paper and pulp, and is prepared te build up on a co-financing basis tlicaraguan production under strict planning control te conserve the vital forest resources. In agriculture llicaragua has a deperxience 011 inported pesticides: a US
CXJ'!Ilë1I1Y in Nicaragua is producing pesticides with a mercury base, that are forbidden in developed =untries. 'nley are oot made and te be used in developed =untries because they are toxic, but the nercury base pesticides are l.tade by Pelmwalt in Nicaraç;ua for Central America. Nicaragua organizes its cotton-productioo to reduce very heavily the nero for pesticictes: both by reducing tlle nUIolLer of sprayiIl<js and also by spraying, so te say, a cordoo sanitaire round tl1e cotton fields (you spray tlte entry points • .here tlle bugs oa,e in, so as te kill thern in
their way to the =tton bo11s). 'lhis is technology transfer help fran ecologists in the First World who are worried about the over-use of pesticides, who helped the tlicaraguans get in touch with people who knew about this sort of thing and to redesign their =tton-production. 'Ibis net cnly has a positive ecological effect, but it also r.eans tllat the dependency en lnported pesticides is reduced enonl'ously; but this is cnly possible witll planned agriculture; it was oot an objective or an optien urrler the previous free-market system.
Another r.ajor foreign exchange cost and cultural dependence is packaging in the industrial sector. It is possible to reduce the amount of
packaging enornously by reducing tlle amount of cellophane used, the aJ<ount of plastic bags used, the pervoricious tendency no..>adays of producing every smallest thing you buy in a plastic 'blister' mounted on cardboard. I f a = t r y is interested, ho.vever, in iIrplementing a basic needs prcxjI"am where planners are 00 lOI1<Jer interested in producing high
teclulOl~y, highly attractive cxmsur,ter-goods, but rather or want to supply rice, codd.ng oil, bread, beans, and 50 on; than the packaging
does net. really matter that rruch. But if you are interested in selling perfu,tes, whisky, cars and instant cak~ mix the package does r,atter a lot. Sc by shifting the pattern of consunptien away fran luxery consu,ption tawards basic needs consur.ption, the (foreign) techoology ccntent of industrial productien can be cut da.m.
Returning to the industrial sector, Nicaragua is a oountry producing =tton and exporting it to nearby El Salvador, where it is than spun into yam and sent back to Nicaragua for weaving to make the cloth. Sc here the transfer of relatively high teclmology into the spinning sector in order to balance production lines is a positive case of actually strenghtening the industrial capacity of Uigaragua without engaging in a.rry anbitious schentes of iliport substitution; similarly, instant ooffee processing for export, alcohol fran sugar and geothennal energy are
'high' technology INhl.ch is also 'awropriate' to llicaragua. I-loNever in
the case of phan,aceuticals, Nicaragua like many Third World countries was daninated 1.Jy an e.llOnlOUS iJ.port of ptlan,a(:euticals of all kinds and des=ipticns. '!he children of better off families (run many families who
could not afford it) being gT05Sly overdrugged, using an enorr.DUS anount of very sq:histicated drugs at imnense costs for the ~ and making people totally dependent en the ckx..'tOr, on VIDat the pharnacist liaS
