Abstract
This Chapter presents the evolution of analysis and policy with regard to technology and innovation in the post-World War II period. It starts with a review of analytical issues and notes that (1) technology is created, and requires resources and focused and dedicated effort. The driving force for technological innovation and for productivity growth in capitalism has been the quest by capitalists for producer rents; (2) technology is malleable and the direction of technological progress is induced by a series of environmental factors as well as by the unfolding imperatives of the technology itself. The chapter documents the evolution of innovation and technology policy and its associated analytical discussion during the phase of import substituting industrialisation, beginning in the 1950s and ending around the end of the 1970s. This was a period in which low and middle income countries were heavily dependent on technologies imported from the high income economies, many of which were inappropriate to operating environments in low and middle income environments. Import substitution was complemented, and then succeeded by outward-oriented growth strategies from the early 1970s. This transition was associated with the growth of human and technological capabilities in many low and middle income economies. From the mid-1980s, a rapidly growing proportion of global trade occurred within Global Value Chains, which now dominate global trade and this helped to shape the direction of technological progress.
However, since the millennium, growth trajectories have faltered globally. Productivity growth has declined in the advanced economies and is static in many low and middle income economies. At the same time, the dominant growth trajectories have run into a crisis of sustainability. Not only is economic growth uneven and unstable, but its environmental and social character threaten its sustainability and the survival of life on earth. This has posed new challenges for the organisation and path of innovation, giving rise to growing attempts to foster more inclusive patterns of innovation.
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Notes
- 1.
Not all economic rents are innovation rents (Kaplinsky 2019). For example, resource rents arise from ownership or exclusive access to scare natural resources. Another important type of rent provided by barriers to entry arises from monopolistic and oligopolistic control of input and output markets.
- 2.
This is only a simplified model. As shown later, whilst competition may indeed spur innovation, there are important respects in which it produces economically, social and environmentally sub-optimal outcomes.
- 3.
Another characterisation of the disadvantages arising from path dependency is the concept of core rigidities (Leonard-Barton 1992), in which firms are locked into static competitive advantages and fail to make the transition into dynamic competences.
- 4.
For example, IBM neglected the arrival of the 51/4 floppy disc since it was hopelessly inadequate for the needs of its customers who required vast quantities of data storage. Its problem was that it knew its existing corporate and military customer base too well, but it had no feel for a new generation of much less demanding individual customers.
- 5.
An important but largely overlooked part of this story was the growing concentration of the retail sector in the US from the mid-1960s and in Europe in later decades (Hamilton et al. 2004). These chains required large volumes of low-cost supplies but had no production capabilities of their own. They then actively sought indigenously owned suppliers in developing economies such as Hong Kong, Korea, Singapore and Taiwan, which had built their capabilities during the import substitution industrialisation (ISI) protectionist periods.
- 6.
Personal Communication, Richard Jolly (18/07/2017).
- 7.
- 8.
Mining equipment is one of South Africa’s largest exports, constituting 8.5 per cent of total South African exports in 2005–2009. South Africa’s share of global mining equipment trade was almost 1 per cent in 2011, compared to its share of global capital equipment exports of 0.22 per cent.
- 9.
This extensive trade in intermediates distorts global trade estimates. For example, the screen in a smart phone is counted twice in world trade—once as an export item from Korea to China and then again as incorporated in the mobile phone exported from China. UNCTAD estimates that this data distortion led to an overestimate of 28 per cent in the value of global Trade in 2010 (UNCTAD 2013).
- 10.
As we observed above, a major reason for the failure of the European command economies was their weakness with regard to innovation. China’s experience in recent decades in which innovation has in part been pursued by state-owned enterprises is a special case and needs to be understood through a different analytic lens.
- 11.
I am grateful to Martin Bell for this insight, and also for the additional observation that the R&D-centred gathering of data in the Frascati-era innovation manuals was partly responsible for the misspecification of innovation policies in Africa and elsewhere. There, to this day, R&D-centred S&T policy concerns are geared to the strengthening of research and technology organisations (RTOs) at the cost of focusing on plant- and firm-level changes in production organisation and practice.
- 12.
For example, the number of the 500 largest global firms headquartered in emerging economy markets grew from 21 in 2000 to 132 in 2014 (http://fortune.com/fortune500/).
- 13.
In East Africa, technologies imported from China and India are demonstrably more appropriate than those imported from northern economies. Amongst other attributes, they are cheaper to acquire, are more labour intensive and operate at smaller scales (Hanlin and Kaplinsky 2016).
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Kaplinsky, R. (2019). Technology and Innovation for Sustainable Development. In: Nissanke, M., Ocampo, J.A. (eds) The Palgrave Handbook of Development Economics. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-14000-7_17
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