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New technologies and the implications of changing technological conditions

Technological change in the developed countries has important implications for the competitiveness of manufactured exports in Africa. The policy implications of the changing technological conditions are likely to surface at two levels: a focus on monitoring new and emerging technologies with a view to making policy decisions relating to adopting and learning the new technologies at the right time, and an examination of the internal evolution of technological and demand condition.

Developments in some new technologies

During the past decade the greatest technological progress has been made in information technology (microelectronics and micro-photonics), space technologies, new materials, nuclear energy, biotechnology, and pharmaceuticals and fine chemicals (Salem, 1992).13 Technological change can boost the growth of some industries (and even revitalize declining industries) and cause decline in others. New industries may emerge and old ones may disappear.

Recent technological developments have led to shifts in the composition of factors of production, with a considerable decline in the importance of raw materials, energy and labour inputs and an increase in knowledge intensity. Material-saving innovations have led to a decline in the consumption of natural materials and their replacement by new and advanced materials (especially engineering ceramics and polymers, composites, semi-conductors, opto-electronic materials and amorphous alloys). In addition to replacing natural materials, the advanced materials also improve strength and quality, add flexibility and cut weight. In world trade there has been an increase in the share of manufactured products and in particular high-tech products.

Technological change can result in the redefinition of industry boundaries. Where key factors of success are capable of being shared, the limits between businesses (industries) tend to be blurred (e.g. computers, telecommunications and office automation) (Dussauge et al., 1992).14 Where technological change leads to a reduction in the sharing of the costs of key resources, the result may be de-segmentation of the industry into smaller units. The distinction between manufacturing and services sectors is being blurred by their growing interconnectedness. The competitiveness of manufacturing firms now depends crucially on the quality of their interactions with the services sector, notably business services (which collect, treat and supply specialized information) and key infrastructural services (OECD, 1992a).

In reality, the pattern of manufacturing industry in the highly industrialized countries has changed considerably as services take the lead, with new skill-and-capital intensive services such as informatics gaining ground. This makes Engels' elasticities more difficult to predict and the growth of many traditional capital goods industries has slowed (e.g. construction materials, electrical machinery industries, general engineering' machine tools, iron and steel industries) (Bagchi, 1987).15

The most economically significant of the new technologies, in terms of the range of new products, cost savings, quality improvements and sectors of application, is information technology, followed by new materials and biotechnology (Salem, 1992). The discussion here is confined to information technology as it has been most pervasive and has the greatest economic significance.

The new paradigm in information technology (IT) is characterized by profound changes in the business application of computers, in the nature of the technology itself and in leadership in the use of technology. Tapscott and Caston (1993) have identified several shifts that are revolutionizing IT: a shift from traditional semi-conductors to microprocessor-based systems; from host-based to network-based systems16 which allow users to access a wide range of data, applications and computing resources; from proprietary software to open software standards, which allow information to be transferred and software to be run on hardware of any size or brand; from single media to multimedia, enabling computerized documents to be exchanged containing data, text, voice and images; from account control to computer-assisted vendor-customer partnerships based on free will, with vendors now seeking partnerships with their customers based on customer choice; from craft to factory-based software development, with software developers using and reusing standardized and interchangeable modules;17 from alphanumeric forms to a multiform graphical user interface (GUI) with icons on the screen which can be manipulated using a mouse or by touching the screen; and a shift from stand-alone to integrated software applications, with modular software built to standards that make the programs more interchangeable and integrative.

Tapscott and Caston (1993) have noted that as hardware becomes a commodity, the software proportion will continue to grow. Software, rather than hardware, is where business value is added, so software is the differentiator of competitive advantage. Software production is manufacturing with a difference: it still requires a high degree of creativity to fabricate both individual parts and broader systems. There is a growing argument for computer-aided software engineering (CASE), which enables developers to apply software engineering principles, methods, techniques and concepts such as parallel processing, object orientation and reusable code more easily.

Changes in IT use have involved a shift from stand-alone equipment and applications to computer-based networking and new information services. Telecommunications are used to connect IT equipment in the office to equipment on the factory floor. This shift is a response to changes in market conditions. Changing market demands have to be adjusted to more quickly, and just-in-time deliveries and more customized products and services impose their own requirements. The rapid feedback and response which IT permits may spur innovation processes in terms of product and/or service improvements, including improvements in R&D itself (OECD, 1992b).

The application and impact of IT have even permeated many traditional industries (e.g. textiles and clothing), where the need to improve competitiveness has led to the internalization of production and rapid increases in the knowledge-intensiveness of production. This makes the adoption of new technologies a necessary investment in competitiveness. The rapid changes in technology and globalization favour flexibility and innovativeness in the adjustment process. Low labour costs are less effective as a basis of competitiveness, while low educational levels are not conducive to the adoption of new technologies.

Clothing and textiles

Mody and Wheeler (1990)18 found that clothing and textiles producers in the NICs. are facing competition from the exports of the newly invigorated economies of Asia, e.g. China, India, Indonesia, based on low wages. Along with this increase in wage-based competition, sophisticated microelectronics-based systems for clothing and textile production are emerging in the OECD economies. Robotics, in this scenario, is a critical infant industry, with protection of the textiles market expected to give enough time and investible surplus for the OECD manufacturers to consolidate and restructure for automated production. It is hoped that 10 years of phasing out the MFA, as agreed in the Uruguay Round, will provide ample time for this infant industry to mature (Mody and Wheeler, 1990).

However, semi-automated technology is now viable for a number of operations, resulting in very low wage costs. The advantages of using advanced technologies are most likely to be reflected in shortening the production cycle, thus saving time and working capital and improving the ability to respond to customer demand at short notice. Some of the areas which are likely to be relevant for technical progress in clothing are: computer design; automatic cutting; flexible sewing and finishing technology incorporating microprocessors; robotic handling; unit production systems; shop-floor controls; logistics; supplier linkages; retail linkages and merchandise control and implementation.

The textile industry has been characterized by continuous incremental technological changes. The industry produces some final products for the consumer market but its main products are inputs (yarn and cloth) into the clothing industry, which normally imposes product and design choice. This makes engineering design more important than product design in textiles. New raw materials are continuously being introduced to the industry but the basic characteristics of the products do not change dramatically. The introduction of microelectronics to machinery control operations has contributed to productivity increases, improved effectiveness and greater reliability, quality and flexibility. While developments in the textile industry are influenced by technological change, one should not lose sight of the influences of other factors such as changes in global demand and developments in the clothing industry and, in particular, the firm strategies of large clothing enterprises.

The share of developing countries in the global textile export market increased from 18.8 per cent in 1973 to 22.7 per cent in 1982 and 28 per cent in 1988. Exports from developed market economies accounted for 62 per cent of international trade in textiles in 1970, falling to 50 per cent in 1980 and to 39 per cent in 1985. At the same time, exports from developing market economies increased from 21 per cent of world trade in 1970 to 36.5 per cent in 1980 and 50.5 per cent in 1985 (UNIDO, 1990).19 Within the developing countries, the core of production is moving from the East Asian NICs to the second tier of lower-wage ASEAN countries such as Indonesia, Bangladesh, Sri Lanka, Thailand and the Philippines.

However, there are indications that OECD countries may be regaining competitiveness in some labour-intensive industrial activities in which they had seemed to be losing out to developing countries. For instance, in the textiles and clothing industries, the diffusion of the newest innovations has been greater in spinning and weaving technologies in OECD countries than in developing countries (UNIDO, 1990b).20 In the late 1980s textile exports from developed countries actually increased more than from developing countries, indicating that a turning point may have been reached following a new technology boost. The case for adopting new technologies is likely to be strengthened further by the fact that profit margins in the textile industry are lower than the manufacturing industry average, implying great pressure to increase efficiency.

Recent technological developments have occurred in overall mill control, the integration of factory departments, improved quality and reliability and increased flexibility in production. The main technological changes in the past 40 years (1950-90) have been automatic bale feeders, aerofeed systems, high-draft spinning, texturizing (with the development of the air-jet method and the false twist method resulting in increases in the speed and quality of yarn), shuttleless looms21 providing higher speed and better quality and flexibility of the woven fabric, needle-punch machines, transfer printing, rotary screen printing and increasing computer integration in the manufacturing process. The main changes in spinning have occurred in the spinning frame itself, through high-draft spinning and the development of new spinning methods (open-end spinning) which run at much higher spindle speeds. The main effect has been to reduce the number of pre-spinning steps and limit the need for roving. The newer spinning systems have also reduced the trade-off between productivity, product flexibility and quality. For instance, rotor and air-jet spinning can produce a greater number of yarn counts, of good quality and at high speed, suitable for most applications in knitting and weaving.

Rapid diffusion of some of these new technologies in spinning (see Tables 4.1 and 4.2), weaving and dyeing has led to considerable productivity gains in recent-years, reducing labour time, energy consumption, materials wastage and throughput time, while improving product quality (Mytelka, 1991).

There is still a relative advantage in labour costs in developing countries, as shown in Table 4.3. However, a country such as Italy does not have low labour costs, even within the OECD, yet it was the most successful in the OECD both in textile production and exports. This suggests that labour costs do not tell the whole story. The role of technological and organizational factors (including flexible linkages and production chains and contacts with the markets) in ensuring flexibility, fast and timely delivery and reliable high quality needs to be appreciated.

Table 4.1 Main technological developments in various phases of short staple-spinning and their effects on output

Activity/process Output (pounds/hr) 1969 Output (pounds/hr) 1987 Projected output (pounds/hr) 2000 % change 1945-69 % change 1969-87
Blender 200 1320 2200 0 560
Cards 18 88 154 157 389
Drawings (ft/m) 800 547 874 700 -32
Lapping 500 836 990 233 67
Combing 50 110 132 78 120
Roving (warp)* 1.75 2 2 73 14
Roving (filling)* 1.30 - - 87 -
Spinning (warp)* 0.036 0.036 0.048 66 0
Spinning (filling)* 0.023 0.036 0.048 51 55

Source: Adapted from UNIDO, 1990b. p. 202
Note: *Pounds/spindle/hour

Table 4.2 Main technological developments in various phases of short staple-spinning and their effects on capital cost per machine

Activity/process Cost/unit (US$ 1000) 1969 Cost/unit (US$ 1000) 1987 Projected cost/unit (US$ 1000) 2000 %change 1945-69 % change 1969-87
Blender 4.5 103.4 206.9 228 2198
Cards 6.0 103.4 172.4 171 1623
Drawings 3.2 51.7 103.4 - 1516
Lapping 14.0 124.1 172.4 183 786
Combing 14.5 137.9 172.4 285 851
Roving 26.4 124.1 310.3 212 370
Spinning 21.5 79.5 149.0 340 270

Source: Adapted from UNIDO 1990b p. 202

Table 4.3 Labour costs in selected countries 1980-90

Country 1980 1990 % change 1980-90
Switzerland 9.65 19.23 99.3
Sweden 10.43 18.70 79.3
Holland 11.68 17.84 52.7
West Germany 10.65 16.46 54.6
Italy 9.12 16.13 76.9
Japan 4.35 13.96 220.9
UK 5.75 10.20 77.4
USA 6.37 10.02 57.3
Spain 4.90 7.69 56.9
Greece 4.03 5.85 45.2
Taiwan 1.26 4.56 261.9
South Korea 0.78 3.22 312.8
Brazil 1.57 1.97 25.5
Turkey 0.95 1.82 91.6
Thailand 0.33 0.92 178.8
Malaysia - 0.86 -
India 0.60 0.72 20.0
Philippines 0.43 0.67 55.8
Indonesia 0.63 0.25 -60.3
Sri Lanka 0.16 0.24 50.0
Tunisia 1.13 2.82 149.6
South Africa - 1.57 -
Morocco 0.85 1.28 50.6
Ethiopia - 0.87 -
Kenya - 0.63 -
Tanzania - 0.32 -
Nigeria - 0.30 -

Source: Time Horizons. March 1991

The relative labour cost advantage is not sufficient reason to delay the selective adoption of new technologies in low-wage economies. In spite of their relative labour cost advantage, some developing countries (especially the Asian countries) are closing the technological gap with developed countries. One indicator of this process is investment in new machinery. In 1988, Asian countries accounted for 46.3 per cent of world investment, ahead of Western Europe (26.1 per cent) and North America (10.5 per cent). South America (3.4 per cent) and Africa (1.9 per cent) seem to have lagged far behind. More investment occurred in new spinning machinery (US$2.8 billion) than for weaving (US$2.5 billion), suggesting an emphasis on modernizing yarn making rather than fabric making.

The clothing industry is not very dynamic. Its share of total manufacturing employment in the OECD declined from about 8 per cent in the 1960s to 3-4 per cent in the late 1980s (UNIDO, 1992b).22 However, clothing has grown relatively strongly in some countries (e.g. France and Italy) until recently. Developing country exports have increased from 30.2 per cent of world clothing exports in 1973 to 42.3 per cent in 1982 and 45.4 per cent in 1988 (GATT, various reports). Clothing production in developing countries rose from 20 per cent of world clothing production in 1970 to 29 per cent in 1985, suggesting greater export orientation in developing countries. The response of the developed countries to the growing import penetration has been twofold: the rise of protectionism, and technological innovations and the use of micro-electronic-based technologies.

The clothing industry is less strongly driven by its production technology than textiles, while product design and market considerations were found to be more important. The industry is more segmented, with very differentiated products (in terms of materials, designs and production requirements) for a variety of markets (Mytelka, 1991: UNIDO, 1992b).

In one segment of the clothing industry (that producing basic products) production cost is the main competitive advantage, while in the fashionable goods segment rapid response is the main focal point of manufacture. A third segment producing high-quality clothing has its competitive advantage in variety.

Intricate formal and informal links are found between retailers, manufacturers, textile merchants, subcontracting units and home-workers. Computer-assisted design (CAD) and electronic data interchange (EDI) are becoming important in developing and retaining these relationships. CAD enables a designer to consider different weaves and colours even before weaving begins, and the possibility of quick response to the market is enhanced. Combining CAD with telecommunication networks can enable the design functions and the labour-intensive core of the clothing industry to be geographically separated. For example, the Mattel Company transmits data on clothing design to Indonesia for manufacture. However, the advantages have to be weighed against the problems of time scales for delivery, the frequency of fashion changes and transport costs.

The main phases of clothing manufacture are: the pre-production stages such as design, pattern making, grading, nesting, marking and cutting; the actual production process such as sewing and assembling the product; and the finishing operations, which consist of inspection, pressing and packaging. While technological change has occurred in all these phases, it is the pre-production activities that have seen the most important technological developments. The major microelectronic improvements have occurred in pre-assembly (design, marking, grading and cutting) and post-assembly (warehouse, distribution and management) stages. In both clothing and textile production, the advanced technologies which were observed by Mody and Wheeler (1990) are reported to be still so costly that they are optimal only in high-labour-cost environments. This finding is welcome for African countries but it is uncertain how long this situation will continue.

Developed countries have applied new technologies and organizational forms to improve flexibility, a benefit that could erode and invalidate the advantage of low wages in the developing countries. The success of the Italian networking fashion clothing companies (e.g. Benetton) is a case in point. Analyses of the costs of the various stages in the clothing industry have shown that flexible automation technology is gaining ground, especially in the pre-assembly stages, where the US now ranks first in competitive advantage in the production of women's high-style printed polyester dresses, displacing Jamaica from first position (Mody and Wheeler, 1990).

The most important technological innovations in the 1970s have been: the use of computers in marketing, inventory control and work-flow management; the use of CAD in grading and marking operations; the use of numerically controlled equipment and computer-aided laser cutting systems, which are faster, are more accurate and reduce material losses; and the use of pre-programmed, dedicated sewing machines in sub-assembly operations.

In pattern making, CAD systems are used to break down a piece of clothing to manageable components more efficiently, although there are still difficulties with tasks where optical and sensory attributes are necessary. The steps to be followed in assembling the various pieces can be defined, and the corresponding production times and costs can be calculated, using computer-based production planning. The similarity of clothing production processes allows for the use of inter-firm production planning services to improve the overall efficiency of the industry (as practiced in the US). CAD and computer-assisted manufacturing (CAM) permit almost instantaneous grading for any market-specific size specifications, a task that was once tedious and time-consuming, and reduce material wastage and skilled labour requirements. The cutting process, the most highly skilled activity, underwent considerable innovations in the 1970s, with the introduction of hot wires, plasma streams, water jets and laser beams.

Sewing technology has developed slowly, with the gradual replacement of electro-mechanical systems with electronics. Three basic types of machine control applications have been developed: the dedication of microprocessors and numerical control units to the operations of specialized work stations; the use of pre-programmable convertible multi-task machines; and the use of operator-programmable sewing machines which, once programmed, take over all functions except guiding the material. Technological change in the sewing process has been essentially incremental and concentrated in three features: faster operation, the development of work aids to facilitate material handling and the mechanization of small-parts assembly.

Technological innovations in the finishing phase have been limited to pressing and repairing rejects from the inspection process.

The spread of automation has been found to be slower in small firms Considering that many clothing firms are small (even in Germany over 50 per cent of all firms employ fewer than 50 persons), labour-intensive and operate with high flexibility in the design-based segments of the industry, the spread of new technologies is not expected to be very rapid. In Germany, for instance, only 6 per cent of firms had introduced flexible sewing units by 1987, while 8 per cent had sequential automation and 14 per cent had full cycle automation. Some 23 per cent used CAD in pattern making and grading and 36 per cent in production planning.


The footwear industry23 grew by only 4.1 per cent between 1983 and 1987, to 9.7 billion pairs. Global production was dominated by Asia (51 per cent), followed by Eastern Europe (18 per cent), Western Europe (12.5 per cent), South America (9 per cent) and Central and North America (6.5 per cent). World footwear exports amounted to US$20 billion, led by Italy and followed by Taiwan, Korea and Brazil. These four countries together accounted for 65 per cent of exports. Footwear exports from Korea and Taiwan increased from US$10 million in each country in 1969 to $1.5 billion and $2.3 billion respectively, in 1985 (Levy, 1990).24 Recently, high export growth has occurred in China, Thailand and Indonesia. For the latter two, growth has resulted from a shift of high-volume, low-cost footwear manufacturing from South Korea. They have also benefited from the General System of Preferences in the KU, benefits which are not available to Taiwan, South Korea, Hong Kong and Singapore. African footwear has been insignificant and has even declined.

Technological development has been relatively slow, evolutionary and incremental, with modest automation occurring in stand-alone machines and the functions of the production process only. Machinery is quite standardized and even old machines are still in use. Microelectronic machinery controls have been applied in only a few areas such as cutting, closing, and preparing the bottom stock. Computers are used mainly in product design and management systems. New technology has had the greatest impact in the 'making' process (pulling the uppers over the last and attaching the sole), particularly in the roughing and lasting stages. Numerically controlled machines are an improvement over both the manual method and automatic machines using templates. Little technical change has taken place in finishing (examining the shoe, correcting minor faults and spraying the colour if necessary), while many technological innovations have occurred in new materials for the uppers, new insole or lining fabrics, new threads, adhesives and glues.

Towards new organizational patterns

As was noted in Chapter 2, what happens when a new technology enters a mature industry depends on whether the new technology enhances the core capabilities of extant firms or requires very different kinds of capabilities, which may entail a change of management or strategy. Organizational change must be seen as the handmaid of technological advance and not a separate force behind economic progress.

There is a growing consensus that technological developments and market trends are converging. Some refer to a transition from Fordism to neo-Fordism, characterized by more flexible production and fragmented demand. Others, such as Michael Porter, refer to the declining importance of economies of scale and the growth of flexible factories serving multi-niche markets. Yet others argue that under flexible specialization, technologically dynamic smaller firms using craft practices will challenge larger manufacturers.

Others, such as Kaplinsky (1990),25 suggest that the greatest impact of advanced manufacturing technologies (AMT) will be in batch production, thus improving the competitiveness of small and medium-sized enterprises. Tidd (1991, p. 4) found that the management literature was unanimous in predicting that the winners in the 1990s will be smaller, more specialized, focused factories competing on the basis of quality and responsiveness to niche markets.

Tapscott and Caston (1993)26 identify four paradigm shifts which are affecting business today: new technology (new roles for IT and open, user-centred and network computing); the new business environment (open, competitive dynamic market place); new enterprises (open, networked and information-based organization); and the new geopolitical order (open, volatile and multi-polar world).

The new enterprise is becoming more open in scope, shifting from a multi-layered hierarchy to flatter networks of relatively autonomous businesses. The concept of the organization is expanding to include links with external business partners and the professional is replacing the manager as the central player, often working in multidisciplinary teams. Individuals develop strong specialized expertise and broader competencies in a working-learning environment, where the notion of life-long learning is replacing the older notion of learning job skills that require only periodic updating. The new team is self-managed, with the team members united by a common vision and individuals empowered to act responsibly and creatively. The new enterprise structure is possible when each member understands the team vision, has the required competencies, has the trust of others and has access to the information and tools required to function and collaborate within the team in a broader context.

In fact, production organization and increasing responsiveness to the market may be more important factors for competitiveness than microelectronic applications. Over time, however, microelectronics are likely to gain in importance to the extent that they enhance quality and productivity and enable more efficient control over the whole production process.

As to whether a new techno-economic system has emerged, this is debatable if a techno-economic system is defined as a bundle of technologies, institutions and forms of economic and social organization which make up a coherent whole, are mutually interdependent and enable synergies to emerge (OECD, 1991).27 However, the mass production model is undergoing change in the direction of greater flexibility and variety, and previously separate production phases are being integrated due to generic technologies such as information technologies or new materials. Technological fusion is taking place as firms combine technologies and firms are searching for new types of relationships. Three aspects of such cooperation deserve attention: technological cooperation in relation to the diversity and variety of technological skills required, vertical cooperation between producers and users and relationships between assemblers and their suppliers. All this does not necessarily mean that a new dominant technological style has emerged; instead we may be at the beginning of a process, the elements of which are not yet wholly under control. For instance, the advances in IT have also meant an explosion in the mass of information that needs to be handled, raising problems of compatibility and bottlenecks arising from human error. Diffusion is slowed further by the high fixed costs which are involved, uncertainty, 'pure vintage effects' (the time needed to adapt the structure of capital to the demands of best practice) and the heterogeneity of firms and their environments.

It is against this background of incompatibilities and bottlenecks (at least in part) that, even in the OECD countries, there is a notable contradiction between the rapid technological progress from the end of the 1970s and the apparent failure to make a significant impact on total factor productivity. It is difficult to separate out the effect of progress made in the services sector, because its frontiers are increasingly being blurred with the manufacturing sector, but there are indications that the lack of significant impact from technical progress on total factor productivity is a reflection of the mismatch between earlier forms of corporate organization (including the public sector) and the requirements of new technologies (OECD, 1992a, 1992b). Tapscott and Caston (1993) have suggested that the main challenge for organizations is not in the area of technology but in managing change. The organizational structures for managing change, along with the knowledge, skills, resource base, approaches to systems planning and even organizational culture, are being challenged by the new era. Many of the information system (IS) professionals and managers are so buried in fighting the bush fires of the old IS world that they are unable to lead in the new era; vendors are unlikely to provide leadership because the new enterprise has relationships with multiple vendors; and third parties (e.g. consultants) are unlikely to lead the way because old approaches, knowledge, methods and attitudes die hard. The study found that leadership to manage change came from every conceivable place in every conceivable type of organization, leading to the conclusion leadership is your personal challenge, whatever your organizational role.

The concept of flexible specialization (FS) has been used to capture new ways of organizing industrial production. The concept can capture changes at macro and at micro level. At the macro level, the concept of FS refers to the move from a dominant mass production system (where stable markets, factor cost reductions and economies of scale are key variables) to more diversified and ever-changing markets, products and production processes where flexibility and innovation are central (Rasmussem et al. 1992).28 At the micro level the concept captures a new type of industrial organization able to cope with the demands of increasing flexibility and innovation. In large firms FS takes the forms of decentralization into semi-autonomous specialized units, new factory layouts and just-in-time inventory control. In small firms it may take forms such as independent production. working as subcontractors to large firms and cooperative production in industrial districts.29 Piore and Sabel (1984)30 have used the attribute ‘flexible' to refer to four aspects: technology (the multi-purpose machine), the worker (wide range of skills), the individual firm (wide range of products) and groups of firms (wide range of products and volumes).

In the neoclassical concept of the firm, flexibility is simply interpreted as the flatness of the average cost curve, implying the firm's ability to respond to changes in price and/or demand. However, in the presence of economies of scope (where the cost of the joint production of several products is less than the cost of producing each separately), the fact that the firm has end product and technology choices to confront can provide a rationale for diversification. Tidd (1991) has identified two forms of flexibility: 'active' (or adaptable), referring to the ability to respond to change by taking appropriate action; and 'passive' (or insensitive), referring to the innate ability to function well in more than one state. In the former case, three dimensions have to be considered: the range of possible states, the cost of moving from one state to another and the time taken. Tidd, drawing on earlier work by Browne et al. (1984),31 has distinguished different types of flexibility: machine flexibility (ease of producing many types of products on one machine), process flexibility (ability to make a product in different ways), product flexibility (ability to switch to producing a new product), routing flexibility (ability to cope with breakdowns by processing via alternative routes), volume flexibility, expansion flexibility, operation flexibility (ability to switch the order of several different operations for each product) and production flexibility (the universe of product types that the system can produce). Since different types of flexibility may conflict in practice, the firm must decide which types of flexibility are most important and the most appropriate means of achieving them.

Innovations in firm organization in the clothing industry, characterized by the creation of firm networks, were rated as more important than technological innovations. The core of the network may be a marketing firm using outside designers and producers, or a designing firm using outside producers and marketers, or a manufacturer using outside designers, marketing agencies and other specialized subcontractors.

However, no international patterns of development or adoption of AMT have emerged, after more than ten years of diffusion, probably because different organizational and market contexts lead to divergent paths, the technologies themselves being inherently adaptable.

Changing requirements for human resource development

The move to FMS and other integrated automation technologies poses a challenge to traditional organizational patterns. Various departments need to work together and to coordinate their activities - design and production functions, and business systems engineers with manufacturing systems engineers - and to encourage coordinated and broadening skills. The trend is towards flatter and less structurally functional occupations. It has even been suggested that the benefits of FMS investment often come more from the organizational changes it induces than from the equipment as such.

The structure of employment is changing, with a shift from manual to mental work as indirect production/support work is gaining ground over direct work. Practical skills have to be complemented by higher levels of theoretical skills in science and modern technologies and there is a preference for personnel with multidisciplinary skills.

In the case of the footwear industry, for instance, changing skill requirements are apparent with deskilling in pattern making, cutting and stitching and increased skills requirements in management information and control and pre-production planning. New and better skills are required in functional management (organization and control of workers, human relations, quality control, marketing, financial planning and cost control). As a starting point, user-oriented strategies towards new technologies can result in improvements. The question is how much learning is necessary for the effective use of new technologies. Computer literacy and basic electronic hardware maintenance skills are likely to be essential.

The technical innovations in clothing have not had significant effects on the modes of manpower use or on the content of individual tasks at firm level, since the major changes have been in the initial stages of the manufacturing process. However, the division of labour between the designer and the master-tailor has become more obscure, automation of the cutting process has reduced the professional cutter to an operator and automatic conveyor systems have reduced cooperation among workers at various stages. In the process, new needs for training have emerged: needs for higher basic education, training for increased flexibility, training in machinery know-how, in production planning systems and the circulation of goods, and in electronic data processing and information and communication techniques, and training to improve quality.

Towards further internationalization and globalization

The processes of internationalization and globalization were referred to briefly in Chapter 2 (pp. 18-19) as one factor influencing views on the explanatory power of conventional trade theory. The new wave of internationalization is led by the increasing importance of TNCs and by DFI (direct foreign investment) in manufacturing and services rather than by international trade. The deregulation and globalization of finance and pressure from new technologies have led to new forms of inter-firm agreements which have developed into major means of international technology transfer. These tendencies threaten to leave many developing countries on the margins of globalized information networks and may invoke the role of the state in setting rules and codes of behaviour for firms engaged in global competition (OECD, 1992b).

In the context of globalization, computer networking extends the reach of companies and organizations, allowing better coordination of various activities at international level. Such networks may be alternatives to strategic alliances among firms and can present new opportunities which could influence the structure of industrial activities and their location (OECD, 1992b).32 Furthermore. recent developments indicate that new technology is increasingly under commercial control and can therefore be obtained from firms and not from governments. It has also been suggested that there is a tendency for some TNCs to be more willing to locate a greater portion of their R&D activities in developing countries than they did in the past. The implications of these and related new trends for the transfer of technology are worth exploring, with a view to taking advantage of opportunities they may offer.

Africa needs to recognize these trends and respond to these changes by putting greater effort into exploring the possibilities of beneficial inter-firm linkages with TNCs from the North and from the South. New forms of networking with TNCs need to be forged and the conditions under which the role of TNCs could be complementary and supportive of the development of international competitiveness by developing countries need to be identified. However, it would appear that, if the potential benefits from TNCs are to be realized, domestic policies concerning the development of domestic firms' technological capabilities, education and vocational training, investment, trade, technology adaptation and R&D can play a crucial role. The guiding question here should be: in what ways can global trade negotiations increase the access of African firms to forging inter-firm linkages and cooperation arrangements, which can contribute to the development of the technological and other capabilities that are necessary for making gains in international competitiveness? Recent work on global trends in inter-firm partnering has raised some doubts about the usefulness of such partnerships for the less developed partner. In a recent article, Freeman and Hagedoorn (1994)32 have concluded that inter-firm partnering has not enabled the LDCs (less developed countries), or most of the NICs to catch up. This is because it has, on the whole, led only to the concentration of technological competence within the developed economies. They distinguish between two forms of inter-firm technology partnering: strategic technology partnering and inter-firm technology transfer agreements. Of the strategic technology alliances during the 1980s, they found 95.6 per cent to have been between firms in developed countries, 2.3 per cent between firms in the Triad (US, EU and Japan) countries and those in NICs. and just 1.5 per cent were between Triad firms and LDC firms. The corresponding shares for technology transfer agreements were 90 per cent, 6 per cent and 4 per cent. Nevertheless, in their conclusions they suggest, correctly in my opinion, that the building of indigenous technological capabilities could be facilitated by capitalizing on the learning process that comes with international partnering. After all, learning by learning and learning by doing are strong elements of successful corporate innovative behaviour. Although the learning capabilities have to be built up within firms, the process can in part depend on the broader technological infrastructure.

Within the broader context of forging inter-firm linkages and cooperation arrangements, special attention will need to be paid to the possibilities of promoting investment flows among developing countries (Lecraw, 1981; UNESCAP, 1990).33 The case for promoting inter-firm linkages within the South can be made on grounds of complementarily to other forms of networks. There is evidence that TNCs from developing countries have undertaken various modifications in response to the characteristics of raw materials (type, quality and input mix), size (scaling down), product quality and product mix (degree of diversification), machinery (simplicity and capacity) and factor intensity (Lecraw, 1981). These TNCs have tended to produce simpler, lower-technology, low-cost products which required little marketing ability to sell in world markets. They have had a higher propensity to form joint ventures with local firms, have used more local human resources and raw materials and often have down-scaled imported technologies. A case study of an Indian joint venture in Thailand showed that, since they are themselves in a learning stage, developing country firms transfer not only the know-how but also the know-why (UNESCAP, 1990). One reason why this occurs is that developing country TNCs often set up overseas enterprises using machinery imported from developed countries. This necessitates adaptation of this machinery to local conditions on site in the host country, thus providing the TNC with the opportunity to learn by doing. This would imply that developing country TNCs may be more skilled in specific technology adaptations and that they transfer those skills. Developing country firms are also associated with the ability to design smaller plants for small market segments. Through these various forms of learning, adapting and modifying imported technologies, Southern TNCs have acquired unique technological capabilities and can carry out these and related activities quite efficiently (Lecraw, 1981). This is corroborated by further indications that TNCs from the South are more appropriate for developing country needs, in terms of the characteristics of the technology with which they have expertise, integration with domestic demand and balance of payments effects (Sharma, 1993).

However, various obstacles inhibit further South-South technological cooperation: lack of information, inadequate institutional frameworks and economic and legal harriers. Some of these obstacles can be mitigated through trade policy, which needs to shift in several directions: improved South-South trading infrastructure, liberalization of intra-South trade restrictions, forging organizational ties to enhance the exploitation of economies of specialization and the creation of an effective and innovative capacity for more efficient appropriate processes and products (Sharma, 1993).

The changing characteristics of technological efforts: role of the state

Technological development requires effort. Much of this effort is expected to take the form of tangible and intangible investments. The former is the traditional investment in physical assets, while intangible investments refer to human and financial resources allocated to R&D expenditures and other forms of purchasing technology, and to training. business services, marketing expenditures and the acquisition and exploration of software (OUCH, 1992a).

In recent years there has been a tendency to take a hands-off, attitude towards the role of the state, especially in Africa. Yet governments elsewhere are playing a leading role in shaping new trade relations. In addition to the crucial role that governments are playing in forging new trade blocs (e.g. NAFTA, EU), they have been instrumental in assisting firms to acquire international competitiveness. In the OECD there is evidence of renewed interest in funding industrial R&D, with a shift from ensuring public funding on terms favourable to enterprises to greater emphasis on the organization of capital markets and harking policies and the manner in which these influence firms' investment decisions.

Building on strategic trade theory and administrative theories of the firm, as well as the conventional explanations that focus on country characteristics, it has now become clear that when industries become globally concentrated, visible hands (of TNCs and governments) rather than the invisible hands of the market emerge to guide trade. The patterns of international trade and production are the complex outcome of several factors: traditional country advantages, the international structure of the industry, specific firm characteristics of TNCs, the style and intrusiveness of government policy and the inertia of history (Yoffie, 1993). One policy implication of these patterns is that the government can facilitate the expansion of the sources of competitive advantage over time.

The case for selectively supporting specific high-potential industries through government policy has been demonstrated to varying degrees in the experiences of the developed countries and the NICs. In the case of Japan, for instance, MITI is reported to have picked winners after ample consultation with, or the participation of experts from, diverse sectors (industry, universities, banks, trade unions and the mass media) and to have figured out which development strategy suited the capabilities of Japanese producers after paying close attention to developments in the domestic and international markets (Yamamura, 1986; Carliner, 1986).34 In the case of South Korea, the government intervened to create and develop market agents. Its intervention was selective and favoured industries which were deemed to have dynamic comparative advantage. In selecting industries to be supported, the government consulted extensively with knowledgeable agents in the private sector (Pack and Westphal, 1986). The government operated a dual policy structure, with industries in which Korea had a static comparative advantage operating largely in a neutral incentive structure and the infant industries getting direct and indirect promotional incentives. Export performance has been the main practical measure of progress towards international competitiveness, with detailed strategy in this highly uncertain area being reformulated in the light of information gained (market signals, perceptions about industrial operations and potentials) during implementation (Pack and Westphal, 1986). Unlike most African countries, protection in Korea was not confined only to import substitution industries but went beyond and made export an ultimate target.

In mainframe computers and semi-conductors, where barriers to entry were high and the US had a first-mover competitive advantage, the government of Japan employed trade restrictions combined with limitations on FDI to encourage Japanese firms to invest aggressively in emerging technologies. The Japanese carefully limited the role of dominant foreign firms in the domestic market while providing domestic firms with incentives to export. Other governments' interventions have determined the longevity and exporting success of local industries such as textiles and apparel, steel, machine tools and colour televisions. Protectionism has kept American producers in the textile and steel business long after most free-market-based trade models would have predicted their exit (Yoffie, 1993). The governments' heavy, visible hand has often sculpted, manipulated or even directly determined the direction and volume of trade flows.

The OECD (1992a) has emphasized the role played by non-market coordination between private agents in the creation of externalities and interactive mechanisms. For countries with less developed markets, such policies may be the only way to create crucial externalities and trigger growth-generating cumulative processes. Trends in automation have shown that state intervention is necessary is various ways: in the development of education and skills; in providing consultancy assistance; in conducting awareness-raising activities, including applications and demonstration projects; in creating enabling infrastructure and information channels for technology transfer from publicly supported technology institutes and decentralized applications centres; in enhancing technology supply (upstream) by supporting domestic technology supply and improving access to foreign technology suppliers; in supporting product development and helping with organizational changes, process development and process applications; in supporting modernizing industries which have failed to adopt best-practice technologies (e.g. by providing finance to overcome their investment barriers); in organizing support programmes for diffusing new technologies; and in market identification, exploration and development (UNIDO, 1992b).

New policy challenges in the OECD countries have been in the area of policy formulation, taking into account the increasing overlap of previously distinct areas, such as industrial, telecommunications and IT policy-making, and of the institutions involved in this process. Two policy issues are relevant: industry must be supported in its efforts to develop technology, markets and competitiveness; and the legitimate regulatory functions of government must be established and maintained (OECD, 1992b).

It may be useful to emphasize that, while Africa must avoid the mistakes of the past, efforts to influence Africa's position in the new global trade relations will require that governments play an active role.

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