Science and Public Policy, volume 29, number 2, April 2002, pages 95 –104, Beech Tree Publishing, 10 Watford Close, Guildford, Surrey GU1 2EP, England
Technological capability Building technological capability in the less developed countries: the role of a national system of innovation John Olatunji Adeoti
An intractable issue for many developing countries is in building local technological capability (LTC). Contemporary capitalist economies have amply demonstrated that building LTC is a necessary condition for any nation aspiring to develop technologically. In industrial and newly industrialising countries, the national system of innovation (NSI) has been shown to be a major factor in technological advancement in the past century. We have identified the important features of the NSI framework, especially as related to the less developed countries. Using Nigeria as an illustration, this paper presents some insights into how a less developed country can articulate strategies aimed at building LTC using the NSI features as guides for relevant policies.
John Olatunji Adeoti is a Research Fellow in the Business and Technology Development Department, Nigerian Institute of Social and Economic Research (NISER), Oyo Road, Ojoo, PMB 5 UIPO, Ibadan, Nigeria; E-mail
[email protected]. At the time of writing, he was at the United Nations University Institute for New Technologies (UNU-INTECH) in Maastricht, The Netherlands. This paper has greatly benefited from the comments of three anonymous referees, to whom the author is very grateful. Any remaining errors are the author’s, and the views expressed in the paper do not necessarily reflect those of UNU-INTECH.
Science and Public Policy April 2002
I
N SPITE OF THE ECONOMIC restructuring programmes (largely supported by the International Monetary Fund and the World Bank) within the last two decades in many less developed countries (LDCs) of Africa, the perceived hindrances to economic development have persisted. This is partic ularly true with respect to building a viable industrial base for the economy. In a recent investigation of “de-industrialisation hypothesis” in Africa by Jalilian and Weiss (2000), evidence of de-industrialisation was found in seven out of 16 sub-Saharan African countries from which data was available. Although Nigeria was among the nine countries for which the hypothesis could not be proved, the performance of the Nigerian economy, especially the manufacturing sector, presents a good illustration of the poor state of industry in most African countries in the last two decades. As Table 1 shows, apart from the average annual growth rate of agriculture, which rose appreciably after the apparent slump of the 1960s and 1970s, there were remarkable declines in all other sectors, except services. Industry, which had experienced an average annual growth rate of 14.7% in the 1960s, declined to negative growth (–1.1) in the 1980s. Though the latest data on the average industrial growth rate for the 1990s signified that this trend might have been halted, it is uncertain whether the marginal improvement will be sustained or enhanced. In contrast to the sub-Saharan African industrialisation experience, developed countries have been consistent in increasing both capacity and factor
0302-3427/02/020095-10 US$08.00 Beech Tree Publishing 2002
95
Building technological capability in less developed countries John Adeoti has a background in industrial engineering and development studies. He holds a PhD in Economics from Maastricht University, The Netherlands. He has been ni volved in industrial promotion in Nigeria with particular focus on small and medium-scale enterprise development. His research interest covers the role of science and technology in economic development and environmentally sustainable industrialisation. He is the author of a new book, Technology and the Environment in Sub -Saharan Africa (Ashgate Publishing, UK). He is currently a Research Fellow at the Nigerian Institute of Social and Ec onomic Research, Ibadan, Nigeria.
productivity in recent decades. It has been argued (for instance, in Lundvall, 1992; Freeman 1987) that the industrial nations of today are essentially reaping the benefits of the accumulation achieved over the years through formidable national systems of innovation (NSI). Freeman (1987) defines NSI as the network of institutions in the public and private sectors whose activities and interactions initiate, import, modify, and diffuse new technologies. He further elaborates in Freeman (1992) that NSI may be used in a broad or narrow sense. In a broad sense, NSI encompasses all institutions which affect the introduction and diffusion of new products, processes and systems in a national economy; while in a narrow sense it only involves the institutions that are directly concerned with scientific and technical activities. In this paper, we apply the broad perspective of NSI, in which case the interactions between the producers and users of innovation are of major importance. These interactions are derived from the inter-linkages between the past, present and future prospects of the process of industrialisation. However, the process of appropriating or building on former attainments has grown over the years in intricacy and sophistication. We regard this process of appropriation as equivalent to what is generally referred to as building local technological capability (LTC). Building LTC has become an important and basic
Table 1. Growth rates of the Nigerian economy
Sector
Average annual growth rate (%) 1960 –70
1970 –80
Agriculture VA
–0.4
Industry+ VA
14.7
Manufacturing VA Services VA Total Product (GDP) Notes:
1980 –90
1990 –99
–0.1
3.3
2.9
7.3
–1.1
1.7
9.1
5.2
–1.0
na
2.3
9.6
3.7
3.1
3.1
4.6
1.6
2.4
+ The figure for industry includes manufacturing Na = not available VA = value added Source: Compiled from data in World Bank (1978, 1992, 1995, 1997, 1998, 2001)
96
strategy for any developing country striving for economic and technological development. The experiences of the Southeast Asian countries in recent decades point to this fact. For example, the Asian financial crisis in the late 1990s and the Southeast Asia growth slow-down notwithstanding, Kim (1997) demonstrated that the apparent success of South Korea’s catching-up strategy would have been impossible without a national concerted effort at building LTC. Sharing a similar view with respect to less developed countries (LDCs), we argue in this paper that building LTC requires an appropriate national framework for the generation and use of technological innovation. Although the concept of a national system of innovation has largely been applied only in analysing the ‘techno-economic’ development in industrialised countries, we propose that it can also help in exposing guides for policies aimed at promoting the building of LTC in a less developed economy. 1 We demonstrate this by applying the NSI concept to analyse Nigeria’s attempt at ‘technoeconomic’ development. The next section succinctly explains the notion of technological capability and the concept of the NSI. The following section identifies the role of NSI in building LTC in the less developed countries, while the final section presents the conclusion.
Technological capability and the NSI Central to the concept of the national system of innovation is the dynamics of learning in a national economy. Viewed from this perspective, technological capability may be regarded as comprising the indigenous accumulated knowledge acquired through the accustomed learning processes and the ability to absorb, adapt and advance a foreign technology through an endogenous process of learning. The endogenous learning process through which a foreign technology may be assimilated depends largely on the depth and scope of the existing indigenous knowledge. The advent of a foreign technology may, however, not preclude the deve lopment of existing indigenous technologies. Accordingly, Kim (1997) refers to technological capability as the ability to make effective use of technological knowledge in efforts to assimilate, use, adapt, and change existing technologies. The existing technologies in this respect may include both local and imported technologies. Thus, in this paper we use the term ‘local technological capability’ in a comprehensive sense and in the context of how a society can progressively manage its technological learning processes to achieve the objective of breaking down the barrier of technological backwardness, and attain a regime of effective catchingup.2 A NSI may be viewed as an integrated system of economic and institutional agents directly promoting Science and Public Policy April 2002
Building technological capability in less developed countries
the generation and use of innovation in a national economy. At this juncture, it is necessary to make some basic definitions of innovation and identify the components of the NSI particularly in a developing country context. As implied in our definition of technological capability, innovation in a less developed country would refer not only to the narrow definition of the commercial application of an invention, but also includes the adaptation and improvement of existing innovations. In a national economy, Lundvall (1992) identified the elements involved in the generation and use of these innovations as follows: • • • • •
internal organisation of firms; inter-firm relationships; role of the public sector; institutional set-up of the financial sector; R&D intensity and R&D organisation.
Lundvall acknowledged that missing from this list is the element of the national education and training. Since Lundvall’s focus was essentially developed economies, perhaps he could afford to leave out this element. In industrialised countries, apart from defence R&D activities, the private sector plays an important role in the R&D activities for the generation of innovation. However, in a developing economy, particularly the LDCs, the public sector plays the dominant role. The large firms which are better placed (by their apparent resource advantage) to carry out R&D in the private sector, in many cases are subsidiaries of multinational enterprises,3 and depend on their parent companies for important innovation activities. Thus, in a developing country, the NSI will comprise all the above elements and the national education and training subsystem. In essence, the NSI involves how a nation manages the invention, introduction, improvement and diffusion of new products and production processes emanating within her borders. There is a network of interactions between R&D in its various forms, industry and markets. These interactions, which are pronounced in the modern capitalist economies, have promoted the organisation of R&D beyond the basic and applied laboratories of academic institutes. Research in modern times has become an
In essence, the national system of innovation involves how a nation manages the invention, introduction, improvement and diffusion of new products and production processes emanating within her borders
Science and Public Policy April 2002
economic instrument such that not all outcomes of research are now available as public good. It has therefore become presumptuous for any nation in pursuit of technological capability to depend on other nations to make available, free of charge, the product of their R&D efforts. It is, however, pertinent to note that, in reality, there is no modern nation without an accumulation of technological knowledge. The scope and level of sophistication may differ, and very widely, when developed and developing countries are compared. Although the commercialisation of R&D has brought the role of the private sector into the forefront of technological progress initiatives, it appears that the strategic behaviour of multinational firms and the increasing tendency towards globalisation of production are beginning to obscure the very strong network of national system of innovation that has served (and still serves) as the bedrock and the nerve centre of the economic advance of modern capitalist societies. Examining this trend in an historical perspective, Freeman (1995) strongly argued for the persistent importance of recognising the NSI as the source of the network of relationships necessary for modern firms to innovate. According to Freeman, ‘globalisation’ derives its strength and sustenance from the various national networks for industrial innovation and interrelationships between private and public sectors’ innovation initiatives. From the foregoing, the significance of NSI appears to lie in the fact that it provides an appropriate framework for analysing the institutional structures and factors that support the process of technological capability build ing within an identified national or even, as indicated by Freeman (1995), regional geographical entity. Moreover, as we earlier pointed out, the heart of technological capability development is the process of learning in all its various forms. The NSI concept essentially focuses on the analysis of how learning takes place within the complex national institutional structures that promote technical change and their interrelationships with market structures in which the innovations are used. In this respect, learning is understood to take place interactively, and hence the institutions under which they occur could play a very important role in either promoting or discouraging learning. Policies that will promote technology acquisition should thus facilitate necessary institutional change or adaptations that would enhance the process of technological learning (Lundvall, 1992; Nelson, 1993; Edquist, 1997). Furthermore, the NSI concentrates on ‘national’ technological development strategies, which translates to our emphasis on ‘local’ technological development. Attempts to apply NSI to developing countries, especially in Africa, should however include a caveat that takes the nature of the national states involved into consideration. This caution is based on the NSI framework assumption that nations 97
Building technological capability in less developed countries
have homogenous institutional and cultural settings. Lundvall (1992, pages 2–3) acknowledges this very clearly in his introduction to a series of discourse on the subject of NSI: “It is difficult to find any nation states, in this strict sense, in the real world. Countries differ both in degree of cultural homogeneity and in the degree of political centralisation. In some cases it is not even clear where to locate the borders of ‘national’ system of innovation. This might be true both for ‘multinational’ states such as Belgium, Canada and Switzerland and for single -nation but federal states such as Germany. At the extreme, a country might be solely constituted by joint foreign policy with little in common in terms of its institutional setup and culture. In such cases, the concept of a ‘national’ system of innovation would be of little relevance.” Another very important feature of NSI relevant to building technological capability is an organised intellectual property right protection. For a NSI to be effective, it has to guarantee effective means of appropriation of the returns from invention and innovation for the inventor or innovator. This is not only crucial to motivating the individual and enterprises that get involved in absorption, adaptation and advancement processes of local technological capability building, but also highly essential to ensure international co-operation in the cross border movement of foreign technologies into a nation desirous of acquiring imported technologies. At this juncture, it is important to stress that the firm is at the centre of the NSI framework. Kim (1997) gives a vivid illustration of this. The firm is where the actual innovation takes place, and the network of actors in the NSI has a central objective of promoting firms’ capability to innovate.4 The sum5 effect of firms’ innovation capabilities translates into national technological capabilities (that is, local technological capabilities). Following the concise overview of technological capability and the NSI presented in this section, the next section identifies the role NSI could play in, or how it could be made to promote, the development of LTC in the less developed countries. Using Nigeria as illustration, our focus will dwell on national efforts in the area of policy interventions, institutions, and incentives that can help in building LTC.
Role of NSI in developing countries While the discourse on the national system of innovation (NSI) in developed countries has concentrated on the analysis and description of the ‘technoeconomic’ development experiences of the industrial economies, the analysis of the NSI in developing countries could be classified into two categories: 98
• the case of the newly industrialising economies, particularly those of Southeast Asia, which is becoming increasingly similar to that of the advanced countries, perhaps because of the large influence of the western capitalist economies and the increasing importance of globalised firms; • the case of the less developed countries, which has witnessed an apparent decay in technological innovation activities in recent decades. Our focus is on the second category. What then is the role of NSI in the development of a strategy for building LTC? To answer this question, we will examine the NSI concept with the aim of showing how its various elements can work together to achieve the objective of building LTC in a less developed economy. In view of the fact that the discourse of the NSI is based on the concept of a ‘techno-economic’ development within a national state, we will constrain our illustration to reflect only the Nigerian situation. Innovation as engine of growth From neo-Schumpeterian literature, innovation has been amply demonstrated as playing a central role in economic development. The NSI framework has built on this by placing innovation, especially at the firm level, at its core (Kim, 1997).6 Viewed from this perspective, it is obvious that strategies toward building LTC have to recognise the central role of innovation. A society that lives exclusively by routines, if one exists, will become bored, and eventually worn out like two metal surfaces being monotonously rubbed against each other. In partic ular, the reality that technical progress has been acknowledged as the major reason for the productivity increases and economic development of nations in the last century can inspire LDCs into articulating relevant search processes that may generate technological innovations appropriate for their developmental needs. In the Nigerian case, the development planning processes have so far failed to appreciate the central role of technological innovation in economic development. Attempts at industrialisation in Nigeria have paid little or no attention to the need to focus on how technical innovation can be entrenched into the development strategy. It is, however, necessary to state that Nigerians have not been incapable of technical innovation. In fact, the scientific and technological departments and institutions have a fair record of nationally patented inventions. For instance, Table 2 shows the sectorial breakdown of the industrially relevant patented inventions in Nigeria between 1972 and 1980. More recent examples can be found in Ogbu et al (1995) and Sanni et al (1998). The problem is how to turn these (and many other) inventions into commercial objects so that they can become innovation in the true sense, and Science and Public Policy April 2002
Building technological capability in less developed countries Table 2. Classification of inventions patented in Nigeria by sector, 1972–80
Sector
Food and beverage Agricultural equipment
Number of inve ntions
Percentage
21
35.6
5
8.5
10
16.9
Chemical
7
11.9
Medical
4
6.8
Electronics
2
3.4
Textiles
2
3.4
Engineering
Others
8
13.6
TOTAL
59
100.0
Source: Based on data in Kumuyi and Igwe (1987).
thus play an endogenous role in the industrial transformation of the national economy. Appreciation of the role of innovation as the engine of economic growth is a sine qua non for getting round this problem. Identification of national frontiers for development The analysis of the development process using the NSI framework points to the fact that economic and technological developments over the past centuries have largely been based on a ‘national’ strategy for development. Nelson and Rosenberg (1993) referred to a spirit of ‘techno-nationalism’ as a strong force propelling a society’s movement to higher levels of technological mastery. They pointed out that technical advance proceeds through the work of a community of actors. Although it has not been possible to limit development by national frontiers, the policies, programmes, laws, culture and language of a national state may none the less define the frontier of technological and economic development. Nelson (1993), in his description of the NSI in industrialising and advanced countries, supported this view. This suggests that an exploration of the feasibility of ‘national’ development frontiers within existing contemporary less developed nation states might be an important step that would promote the national desire to build LTC. This is particularly relevant in sub-Saharan Africa where countries are made up of diverse ethnic nationalities.7 For example, when Nigeria became independent in 1960, it had three relatively culturally homogenous regions that were focal points for development (see Ekundare, 1973, pages 295–299). It is on record today that the Nigerian national economy witnessed the highest growth rates during the period of the regions (see Biersteker, 1987; Forrest, 1994). It appears that with the loss of the ‘national’ regions in the late 1960s came the loss of an emerging Science and Public Policy April 2002
spirit of ‘techno-nationalism’ that could have promoted economic and technological development.8 It is, however, important to point out that the creation of ‘national’ frontiers for development would most likely be a complicated long-term process.9 The idea needs further consideration that is far beyond the scope of this paper. Role of social capability It is also pertinent to note that technology does not exist in isolation. Although it has been the greatest force that has changed society, it is a subset of that society. It depends on the society for its existence, and its growth or development is tremendously influenced by other factors of societal development. Thus, technological capability needs to be supported and nurtured by social capability. The notion of social capability was first introduced into contemporary discourse on technology acquis ition by Abramovitz (1986, pages 387–388) in his contribution to the relationship between backwardness and industrial productivity growth rates of nations: “… technological backwardness is not usually a mere accident. Tenacious societal characteristics normally account for a portion, perhaps a substantial portion, of a country’s past failure to achieve as high a level of productivity as economically more advanced countries. The same deficiencies, perhaps in attenuated form, normally remain to keep a backward country from making the full technological leap envisaged by the simple hypothesis (or convergence growth theory). … One should say, therefore, that a country’s potential for rapid growth is strong not when it is backward without qualif ication, but rather when it is technologically backward but socially advanced.” [emphasis added] From the foregoing, our obvious proposition is that the performance of NSI in building LTC depends on the level of the social capability of a nation or within an identified ‘national’ frontier for development. But how can social capability be defined or quantified?
Technology does not exist in isolation: it has been the greatest force to change society, but it is a subset of that society; it depends on society for its existence; its growth is greatly influenced by other factors of societal development
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Building technological capability in less developed countries
This is apparently a very elusive concept that poses a tremendous problem for empirical analysis. However, a factor that has been indisputably associated with social capability is the educational level of a society. For example, Lall (1994), Rodrik (1994) and Shin (1996) gave very clear indications that Japan, South Korea and Taiwan were all societies that had comparatively more educated labour force at the beginning of their industrial take-off than could presently be found in most of the less developed countries of Africa. Furthermore, the advanced western industrial countries had a similar value attached to education. In their discussion of science, technology and the western industrial miracle, Rosenberg and Birdzell (1990, page 22) reported that there are parallels in educational development between Japan and the United States where the industrialisation process started several decades earlier. In their words, “Like Japan, the US at first borrowed technology, primarily from England. Industrialisation began in New England, New York, Pennsylvania and Delaware — regions where, as in Japan, literacy and formal education were already valued.” [emphasis added] It may also be argued that, when cultural/ethnic diversity is pronounced, high literacy might help to minimise its adverse effects on techno-economic development. The case of the United States might be a good example in this respect. Science and technology in development While the existence of a ‘national’ development frontier might be required for a NSI, it seems that the starting point of the NSI is the recognition of the role of science and technology (S&T) in economic development. Landau and Rosenberg (1992) observed that S&T harnessed by an enlightened capitalistic democratic system could improve the standard of living of a country by higher growth rates without requiring wars or colonies. They stressed that, while it took Germany two world war losses to realize this, and the Japanese one, both countries have shown that promotion of S&T is the right path to development. This signifies that S&T have become important tools of economic development. This is because they are the breeding ground for inventions, which the intricate network of other socio-economic agents helps to turn into innovation. In this regard, the national system for scientific and technological education and training becomes a focus for concentrating the national resources for innovation. Whereas in developed countries the institutional structure for S&T has been clearly linked with technological and economic performance; in many developing countries, the opposite appears to have been the case. It seems that, in many LDCs, there is 100
an awareness of what S&T can do, but there is no functional institutional framework that can effectively promote S&T. In the Nigerian case, according to research commissioned by IDRC (International Development Research Center (Canada)) on R&D institutions in Nigeria (Osunbor, 1990), Nigeria’s first scientific research institute 10 was established in 1899 (with a few in the 1950s); by 1964, through the support of UNESCO (UN Educational, Scientific and Cultural Organisation), the basis for a comprehensive national S&T policy was laid. The UNESCOassisted effort eventually led to the establishment of the Nigerian Council for Scientific and Industrial Research in 1966. However, while Nigeria has made diverse and widespread attempts to develop S&T, there is currently no clearly identifiable national system for promoting innovation. The existing apparatus for achieving the objective of scientific development and technical innovation is highly disjointed in establishment, management and operation. Currently, Nigeria has at least 26 public research and scientific development institutes (see The World of Learning, 1998), 38 universities,11 45 polytechnics and colleges of technologies.12 Research efforts at these institutions are expected to provide useful technological information that can improve the technical performance of industrial firms. Linkages between these institutions and manufacturing firms are generally poor 13 (Alo, 1995; Oyelaran-Oyeyinka et al, 1996). Only the food processing industry appears to have shown some anecdotal evidence that R&D results generated in Nigeria have been of some use to Nigerian firms (see Adeboye, 1995; Adjebeng-Asem, 1995; Sanni et al, 1998). The integration of S&T development activities, and linking these activities with the industrial sector to produce economically relevant inventions (that is, innovations) are apparently of utmost importance for building LTC. The next subsection will elaborate on this. System approach rather than linear In many LDCs the perception of a national system of innovation has been from a linear perspective. The national institutions for S&T development are regarded as knowledge-generation institutions without giving cognisance to the intricate links and feedback loops that are involved in contemporary industrial societies. Moreover, there does not appear to be any concrete strategy to promote these important networks. As earlier indicated, in most cases the educational institutions and the R&D institutes work in isolation from the industrial enterprises. The reason for this appears to come from notions of straightforward links between basic knowledge generation from formal educational and/or scientific research institutes and the economic agents that apply scientific knowledge in the market-place. For Science and Public Policy April 2002
Building technological capability in less developed countries
example, reading through the Nigerian National Policy on Science and Technology (FMST, 1986), it can be seen that the thinking of the major policy formulation organs in Nigeria place emphasis on government-sponsored basic and applied research in public R&D institutions, in the hope that industry will pick up the relevant research results for commercial applications.14 This culture of isolation of several inventive activities from users has emphasised the tendency of Nigerian R&D institutions to treat innovation as discrete events. The absence of networking and loops among R&D institutions, and between R&D institutions and industry, leaves many innovation-worthy inventions undeveloped, or inventive activities that could even lead to radical innovations prematurely terminated. This has generally been the approach in many LDCs to innovation generation. Hence, there is a large gap between the R&D institutes and production establishments; and research outputs in most cases find no use beyond possibly acquiring a patent. This has apparently been a great disincentive to innovation. What then could be done to alter the situation? The NSI framework suggests that the process of technological innovation can be treated as a commercial enterprise. Market for innovation plays an important role in the NSI framework, and government can intervene through policies that improve (not deter) the functioning of the innovation market. The current trend of deregulation in many LDCs can incorporate a critical examination of the role of R&D institutions with the objective of making them economically relevant to the industrial establishment. This would require major institutional reforms, which might include: mergers of institutes; integratin g some institutes into larger public concerns that are being privatised or commercialised; and perhaps, privatising and spinning-off industrial establishments from some. R&D establishments, either in public institutes or private industrial laboratories, form the major developmental bases from which local technological in itiatives and development could be demonstrated. They are the core of the industrial network that could tap the opportunities of potential knowledge spillovers of industrial activities involving both local and foreign technologies. In this process, the national absorption, adaptation and advancement capacities for imported technologies are enhanced. Learning As earlier indicated, the NSI framework has demonstrated that learning is fundamental to the process of technological capability building. Learning in this respect may be viewed from the dynamic processes through which a firm or any economic agent (whether public or private) improves its competencies or ability to assimilate and/or advance Science and Public Policy April 2002
technologies. The NSI focuses on how to organise the various stakeholders in a national economy to enhance the learning process. This is because the ability to progress or sustain an effective catching-up in technological development depends largely on the operation of the learning process (Kim, 1997; Mytelka, 1998).15 Learning is closely related to innovation because it generates the dynamic processes that produces innovation. In essence, innovation may be viewed as an important consequence of learning. Thus, if innovation is the engine of growth, learning may be regarded as the force that keeps the engine rolling to produce the momentum for economic development. In the case of Nigeria, while learning has been fairly well appreciated, the appropriate framework that could promote building LTC has consistently been absent. Technological learning has for the most part focused on formal learning in regular institutions without a national policy that encourages the application and adaptation of formal and general scientific and technological knowledge to solving industrial and practical societal technological problems. Even when policies are theoretically favourably disposed towards enhancing learning, the implementation is on many occasions at variance. Technological projects which could have provided crucial opportunities for Nigerian engineers and technicians to learn are usually contracted to foreigners. Worse still, even when the agreements for such contracts provide relevant clauses that may promote learning, the attendant controversial (and sometimes fraudulent) implementation does not provide an atmosphere conducive to technological learning. Examples of such cases cut across several sectors of the Nigerian manufacturing. Oyelaran-Oyeyinka et al (1997) report cases for the fertiliser, machine tools, pulp and paper, iron and steel, and sugar industries. More explicitly, we will use the Nigerian automotive industry as an illustration. The only surviving passenger car manufacturer in Nigeria was established in 1975 to “assemble/manufacture” cars under licence using completely knocked down (CKD) parts supplied by the parent company. The technology agreement included a clause stating that
Innovation may be viewed as an important consequence of learning: thus, if innovation is the engine of growth, learning may be regarded as the force that keeps the engine rolling to produce the momentum for economic development
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Building technological capability in less developed countries
the plant was to achieve 30% local content by value of CKD components in three years through in-plant manufacture and through purchases from local manufacturers; 50% in five years; and 100% local content in 13 years (Adubifa, 1990). Today, as a result of policy failures and unwholesome intrigues, the auto firm still depends heavily on imports. It is also important to note that the problem of contracting technological projects out to foreigners without an adequate framework for local technological learning is an issue that has been partly explained by the need to obtain sufficient benefit from investment in technological projects. The Nigerian policy makers are traditionally sceptical of the ability of local firms/institutions to perform as satisfactorily as their foreign counterparts. This is a case in which it can be extremely difficult for the market to promote learning. Government intervention by means of technology and industrial policies that seek to minimise the trade-off between benefit and learning derivable from technological projects can be very useful. Such policies should provide adequate incentives that preclude private firms (both foreign and local) from bearing the social costs of strategies aimed at building LTC.
‘leapfrog’ as described by Brezis et al (1993) can emerge. It is nevertheless necessary to point out that in some LDCs intellectual property right protection may not be as bad as it may appear to be. For instance, Nigeria has a patent office under the Nigerian Standard Organisation, which is responsible for issuing patents, trademarks and copyrights. The Nigerian trademark law was made in 1965, patent and design law in 1970, and the copyrig ht law in 1988. Moreover, Nigeria is signatory to the universal copyright convention, and became a member of the World Intellectual Property Organisation in 1993. Yet the enforcement of the existing copyright laws seems to be relatively weak. For example, the US State Department (1997) reported in the country report on economic and trade practices in Nigeria that, although cases involving infringements of nonNigerian copyrights have been successfully prosecuted in Nigeria, the enforcement of the existing laws remains weak, particularly in the trademark and patent areas.
A regime of intellectual property protection
Without precluding the opportunities to develop the indigenous local technologies, in this paper we have defined technological capability as the ability to absorb, adapt and advance imported technologies through an endogenous process of learning that derives its effectiveness from a society’s accumulated knowledge. We have argued that the national system of innovation makes a major input into such a dynamic development of the national competence in technological mastery. Since the NSI discourse has largely been viewed from the perspective of developed economies, we have introduced the perspective of developing economies, particularly the less developed countries. We have thus identified the aspects of the NSI in LDCs that can be major reference points for strategies that are aimed at local technological capability building. Because the NSI is a framework that is identified with, and sometimes specific to, a particular national state, we have drawn our illustrations only from the Nigerian experience. The case of any other LDC could also be considered. The peculiarities of such a national state will feature, and perhaps introduce, other dimensions to our arguments or even change some of our apparent propositions. Based on the insights from the NSI framework, we identified seven main issues that should be the focus of local technological capability building in a less developed economy:
The national system of innovation concept also emphasises the crucial role of the protection of intellectual property rights in enhancing the place of innovation in economic development. A regime of intellectual property right is loosely defined in many LDCs. It is a component of the innovation subsystem that ensures that the innovator receives adequate returns from his efforts. When it is absent in a society, a significant disincentive to innovation arises in the economy. In addition, the inflow of foreign copyrights and patented technologies will be jeopardised. Thus, a comprehensive and adequately enforced intellectual property regime can foster technological learning processes in the economy. It would also encourage the inflow of foreign technologies, and thereby increase the opportunities to improve the local knowledge base. It is possible to argue that this view is unrealistic in a developing economy where the chances of ‘leapfrogging’ are currently remote, except by ‘reverse engineering’ of products and copying processes already patented in more technologically advanced countries. We agree to this, however, with an important caveat that still attests to the protection of intellectual property. 16 There are enough products and processes on which patents have expired, and that, with minimal costs, could be objects of reverse engineering or copying. The current state of technological knowledge and infrastructural facilities in many LDCs may be able to cope with this without having to bother with the more intricate cases of protected technologies. However, as local technological capability improves, better opportunities to 102
Conclusion
• innovation as the engine of growth; • identification of the ‘national’ frontiers for development; • the role of social capability; Science and Public Policy April 2002
Building technological capability in less developed countries
• • • •
the role of science and technology in development; system approach rather than linear; learning; and a regime of protection of intellectual property rights.
3. 4.
5.
Available evidence has shown that economic and technological developments in the past century flourished within the bounds of identifiable national states. The somewhat ‘artificial’ national states in many LDCs, particularly in sub-Saharan Africa, appear not to represent real national states that can promote a spirit of ‘techno-nationalism’. This is a complex issue, which has not been expounded upon in this paper. We none the less suggested that an important step to solving the puzzle of building LTC in LDCs is for each country to explore the possibility of creating ‘national’ development frontiers that would serve the purpose of economic and technological development. We acknowledge that this might be a difficult and complicated long-term process. We stressed that policies that promote the development of a nation’s social capability would enhance the ability of the NSI to promote the building of LTC. An appropriate and enduring strategy for science and technology development provides a basis for knowledge accumulation that is necessary for building LTC. An important component of this knowledge comprises the scientific and technical inventions, which turn into innovations when they are commercially employed in the economy. We have argued for the need for LDCs to recognise innovation as the engine of growth, and for the need to adopt a system approach to generating innovation rather than the linear view that has apparently failed in many instances. If innovation is the engine of growth, then learning, in all its variants, might be regarded as the force that keeps the engine rolling to produce the momentum for economic development. While we differ from the current prescriptions of the World Trade Organisation’s Trade-related Intellectual Property Rights Agreement with respect to LDCs, we emphasised the need for an effective and adequately enforced intellectual property regime as a means of promoting the building of LTC. Finally, we wish to attest to the fact that the problem of building local technological capability in LDCs is enormous. We expect this paper to provoke further thoughts that will provide useful contributions aimed at tackling the problem.
Notes 1. 2.
It is important to stress that the less developed countries in focus in this paper essentially comprise the low -income countries of sub-Saharan Africa. From a rather conventional viewpoint, Stewart (1983) provides a good summary of both the theoretical and
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6.
7.
8. 9. 10.
11. 12.
13.
14.
15. 16.
pragmatic reasoning that are the motivations for indigenous technological capability development. See UNESCO (1986). The apparent rationale for this is that technological innovation is very important for firm competitiveness, and subsequently, for the competitiveness of the national economy (Lall, 2001; Fagerberg, 1996). It should be noted that this is not a simple sum as Lall (1992, page 169) rightly observed. Interlinkages between firms and positive externalities or technological spillovers may producesynergies between individual firm-level technological capabilities. This is a departure from the linear view of innovation w hich simply stresses that the importance of S&T in economic development stems from the fact that it breeds inventions that subsequently become innovations when properly linked with appropriate markets for innovation. Although both the colonial and post-independence mode of governance have fostered some homogenous institutional set-up in many modern African states, large disparities in culture and other institutional values still exist in many countries. A good example is the Nigerian nation comprising three large ethnic nationalities and more than 200 smaller ones. The data in Table 1 also attests to this. For example, it shows that the 1960s has been the only period of sustained industrial development in Nigeria. This may be especially true of fragile sub-Saharan African states where there is considerable fear of political disintegration. The first research institute in Nigeria was the Agricultural Research Station at Moor Plantation, Ibadan. It was one of the agricultural research centres whose purpose was to ensure a steady supply of raw materials of good quality to British industries. As at the time of this research, Nigeria has 38 universities: 24 are federally owned, 11 are state owned, and three are privately owned (JAMB, 1999a, pages 33–34). As at the time of writing this paper, Nigeria has 45 polytechnics/colleges of technology: 17 are federally owned, 26 are state owned, while two are privately owned (JAMB, 1999b, pages 30–34). Other LDCs, particularly in Africa, show similar trends (see Lall et al, 1994; Enos, 1995). Very recent illustrations in Nigeria are the case of prototype design of a tricycle (keke Marwa) by the Centre for Automotive Design and Development (CADD), Zaria, Nigeria (see The Comet, Nigeria, 31 December 2000); and the design and manufacture of a hydrated lime plant by the National Research Institute for Chemical Technology (NARICT), Zaria, Nigeria (see The Guardian, Nigeria, 4 January 2001). The former is largely an adaptation of an Indian technology (keke Marwa is the local name for the tricycles imported from India by Lagos State government to ease mass transit problems in 1998). The latter appears to have incorporated somewhat more of local technical invention. The two inventions remain isolated from industry partly because they were apparently produced independent of or without industrial demand for them. Unfortunately, this notion seems to persist among Nigerian technology and industrial policy institutions. For instance, it was recently reported that the Federal Ministry of Science and Technology (FMST) is considering proposing a bill that will “compel” industry to adopt research findings of Nigeria’s public research institutes (The Comet, Nigeria, 31 December 2000). Part II of Kim (1997) presents an interesting description of the dynamics of technological learning in some selected sectors of the Korean economy. It should also be stressed that we do not concur with the World Trade Organisation’s TRIPS (Trade-related Intellectual Property Rights Agreement) as it affects developing countries. For example, according to Shukla (2000, pages 29–30), under the so-called ‘transitional arrangements’ of TRIPS, only a ten-year period is prescribed for even the least developed countries to achieve intellectual property protection levels that match those of industrial countries. Meanwhile, the TRIPS agreement appears to have overlooked the fact that many industrial countries have reaped substantial benefits with relatively inexpensive replication and reverse engineering.
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Building technological capability in less developed countries
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