Technological dimensions of international cooperation and sustainable development

TECHNOLOGICAL

FORECASTING

Technological Cooperation NAWAZ

AND SOCIAL CHANGE

Dimensions

42, 367-383

(1992)

of International

and Sustainable Development

SHARIF

ABSTRACT Just when planners in the South started to accept technological development as being central to their economic growth, the North came to realize that inappropriate use of technology threatens the future development of mankind. Clearly, both development and utilization of technology need to be managed properly. Therefore, with general environmental awareness high on the global agenda, socioeconomic planning emphasis nowadays is rightly on sustainable development. However, most suggested prescriptions for sustainable development appear as if the presently technology-controlling North is imposing its rules and restrictions upon the late-starter South, though inadvertently, without due consideration of the essential need for technological leapfrogging. It is also clear that in an increasingly technologically interdependent world, globally sustainable development certainly calls for still further advancement of technology and the promotion of international technology transactions that are economically efficient, commercially attractive, environmentally sound, and, at the same time, will lead to the realization of the principle of self-reliance for all. This paper attempts to draw attention to the current concerns regarding technology cooperation and sustainable development (both positive and negative) being expressed in the international arena; it also presents a general framework for measures necessary for developing countries’ own implementation before they would be able to join the early-starter North in achieving internationally sustainable development.

The Primary Issue Until very recently, rapid industrialization was considered to be the only acceptable and proven strategy for economic development. To authenticate this recognition, some countries were even categorized as “newly industrialized countries” by international development institutions. Moreover, in the pursuit toward rapid industrialization, nature was perceived as a storehouse containing unlimited resources required for industrial production. However, we now realize that not only are the naturally available resources being depleted at an alarming rate, but activities of industries everywhere are damaging the natural environment extensively and creating very serious risks for our well-being and even threatening the survival of humanity itself. With environmental awareness high on the global agenda, the emphasis is no longer on industrialization but on a rediscovered approach called “sustainable development.” Further, there is a visible pressure to link sustainable development with the use of “environmentally sound technologies” for in-

NAWAZ SHARIF is a professor in the School of Management of the Asian Institute of Technology. He is a former director of the Asian and Pacific Centre for Transfer of Technology of the United Nations Economic and Social Commission for Asia and the Pacific. Address reprint requests to Dr. Nawaz Sharif, School of Management, Asian Institute of Technology, G.P.O. Box 2754, Bangkok, 10501, Thailand. 0 1992 by Elsevier Science Publishing

Co., Inc.

0040-1625/92/$5.00

368

N. SHARIF

dustrial production all over the world. Because most of the technologies currently being used by industries in developing countries are considered to be environmentally “unfriendly,” developing countries are receiving signals from many directions which could be wrongly interpreted that the developed world is now using pollution issues (measured in relation to the amount of gross domestic product [GDP] of a country) to maintain the industrialization gap. This false impression should be removed by the activities of the United Nations and transnational corporations (TNCs). The United Nations Conference on Environmental and Development (UNCED), called the “earth summit,” which was held in Brazil in June 1992, had environmentally sound technology transfer as an issue of paramount importance. Conscious of the importance that participating governments of the UN have placed on the issue of technology transfer, a group of over 50 top world business leaders formed the Business Council for Sustainable Development (BCSD) to provide input to the UNCED through a document that addresses the subject matter of technology transfer from the point of view of industry. The Geneva-based BCSD, which is a club of TNCs, proposes to offer a new concept called “technology cooperation” in place of technology transfer, which is widely misunderstood. Also, the International Chamber of Commerce (ICC) organized in Rotterdam the Second World Industry Conference on Environmental Management (WICEM II) to formulate and present a similar concept to the UNCED, one that will affect world business well into the next century [I]. These initiatives could be suspect because of the apparent misgivings associated with such proposals for cooperation between unequals. One happy and one unhappy partner is a formula for failure! In the developing countries, it is possible to conjecture that, in the name of sustainable development, technology transfer is being given a new dimension as a way of resolving many business problems faced by TNCs in their attempt to cope with environmental regulations recently adopted by the governments of developed countries. Howtver, any businessperson would admit that the new slogan does not change the principles, motivations, and processes of the so-called technology transfer from developed to developing countries [ 11. It is very well known that in the present world, technology is moved elsewhere either to reap commercial benefits or to evade environmental regulations. There is no donor or recipient. Nothing is free. Developing countries, therefore, fear that in the name of saving “our common earth” (also “common heritage,” but not “common resources”), environmental problems may be turned into a trade issue and be imposed on them, like the Montreal treaty on chlorofluorocarbons (CFCs), which contains tough clauses for trade sanctions against countries that do not join the treaty [2]. It appears that the “technology-controlling rich” are imposing their rules and restrictions on the “naturedependent poor” to make the rich richer and the poor poorer. Some of these apprehensions may be true; many are not. It is clear that in an increasingly interdependent world, sustainable development calls for international technology transactions that are economically efficient, commercially attractive, and at the same time environmentally acceptable. In the marketplace there is a buyer and a seller who undertake business transactions; they do not cooperate! Therefore, the primary issue being addressed in this paper is simply a suggestion to all parties “to call a spade a spade.” The paper then presents a general framework for measures necessary in achieving sustainable development. New Industrial Internationalism No country can remain isolated in the present world, which is moving very quickly toward a new industrial internationalism [3]. There is strong evidence of rapidly increasing

TECHNOLOGICAL

DIMENSIONS

OF SUSTAINABLE

DEVELOPMENT

369

interdependence among all nations due to the globalization of industrial production operations and also to the global consequences of environmental degradation [l]. This globalization has been made possible by an unprecedented improvement in transportation and communication technologies during the last few decades. In addition, recent advance in computer-based information technology have enabled the establishment of distributed and flexible manufacturing systems, in which the traditional economy of scale has been virtually replaced by economy-of-scope considerations in production. The global economy operates increasingly as a set of complex networks, which add value in different ways in many different locations before a product or service contributes to the comfort, convenience, or happiness of an individual or a household [4]. Even though comfort and convenience factors are becoming more important considerations for both product and production facility design, the cumulative effect of environmental pollution and the degradation or depletion of natural resources due to industrial activities are now real threats for the world as a whole [5]. Thus technology is being held responsible for both good and bad, depending upon the vested interest. The globalization of industry and trade is a new reality for economic development. Lately, it has become clearer that qualitative factors (such as improved technology) have been more important than quantitative factors (such as an increase in the supply of capital) as the apparent source of growth for industry as well as in national GDP [6]. Furthermore, most will agree that the key competitive advantage now dominant in global trade is the capability of a country’s production units to apply technology rapidly and to undertake technological innovations successfully. Although it worked for a long time, comparative advantage based on national differences in factor costs (such as cheap labor and natural resources) is no longer sufficient for maintaining economic growth [4]. Competitive advantage based on national technological capabilities is more important. Technological differences are indeed central to competitive advantage. However, acquiring technological competitiveness is neither easy nor a once-and-for-all event. It requires a continuous introduction of innovations. It is a dynamic and evolving process. It must also be realized that specialization is essential for competitiveness in a global market increasingly driven by continuous technological innovation [7]. Although international trade is essential for economic growth, it is impossible for an industry to venture into the global market without a strong foothold in the domestic market. There are four distinct stages in industrial technological capability development for eventual competition in the international marketplace [8]: Stage one: Almost all local industries utilize imported mature technologies, and local technology infrastructure is aimed at facilitation of technology acquisition. Stage two: Technology is imported on a selective basis, and attention is directed toward promotion of technology adaptation and diffusion in local industries. Stage three: Along with efforts at improving existing technologies, adequate efforts are given to the production of market-driven indigenous technologies. Stage four: Effective use of the “make-some” (indigenous) and “buy-some” (imported) technology strategy through specialization in capability building for a competitive edge. To develop economically, one must find ways to add value. In this game of value addition, the economic logic of earlier days no longer applies [4]. Nowadays, wealth is created or can be obtained in the marketplace, not in the soil per se [7]. This means giving up the natural resource illusion and figuring out ways and means to add value.

370

N. SHARIF

And people are the only means of creating wealth. It is people with knowledge and skill, not merely natural resources, that can sustain development. The prosperity of a country depends on its ability to create value through people. Japan, Korea, Singapore, Switzerland, and Taiwan-all have a small land mass, almost no natural resources, but welleducated and hard-working people who have the ambition to be self-reliant through acquiring technological capabilities [9]. Therefore, acquiring technology has become very important for development. However, in today’s global market, technologies move to the best and most profitable place for production. The intensity of the flow varies, but the pattern is clearly alarming for the developing countries [ 11. To comprehend the implications of current trends, it may be useful to disclose “technology” (for sustainable development) fully. Working-Level Disclosures The role of science and technology (S&T) in the national production context is to increase productivity and efficiency in both agriculture and industry, to lower the cost of production and improve the quality of outputs, to reduce losses and increase value added, to introduce new products and processes, to increase flexibility to respond to changing market conditions, and to facilitate the efficient utilization, substitution, and consumption of diminishing natural resources. It is also worth noting that there is a distinction of purpose, even though science and technology are interrelated and mutually reinforcing. In early days, technologies (know-how) emanated from experience gained by instinctive adaptation of human life to the natural surroundings. Systematized knowledge, obtained through trial and error, resulted in science (know-why), which is now pushing the further advancement of technology [ 10, 111. Major economic benefits, however, can be derived from technology rather than science, provided the crucial step of putting technology to work is effectively implemented [ 121. Technology has forced the world economy through profound changes in the past, and shows every indication that it will continue to do so in the future. Thus, technological capability building has become a must for the survival and economic advancement of any country in the new international environment. Technological capabilities of a country, however, reside in the production system [7]. Therefore, capability enhancement must be considered in the production context, where the purpose of technology is to transform available inputs (natural resources and semifinished goods) into desirable outputs (consumer goods, semifinished goods, and capital goods) that have market value. Technology is still most commonly perceived to be only the physical means (as black box) used for production. As such, the importance of other elements, such as skills, information, and management, are not explicitly realized. If one accepts the critical role of technological innovation as the most dominant factor in the productivity growth, it is essential to try to understand technology better. One possible way to comprehend technology fully is to decompose technologies for production into four interacting embodiment forms [13, 141: l

l

Object-embodied physical facilities, such as equipment, machines, and structures, which are tools for enhancing human capabilities (for example, increasing the power of muscle, brain, sight, reach, and so forth) and for conditioning living surroundings (for example, increasing comfort). Person-embodied human abilities, such as skills, expertise, and talents, which help to generate, operate, maintain, and improve all kinds of physical facilities used for production purposes.

TECHNOLOGICAL

DIMENSIONS

OF SUSTAINABLE

DEVELOPMENT

371

0 Record-embodied documented facts, such as specifications, designs, and manuals, which store systematized knowledge for reducing learning time and minimizing resource waste in the production of goods and techniques. l Institution-embodied organizational frameworks, such as management practices, linkages, and networks, for effectively coordinating the interactions among the technology components and the markets. Because all four embodiment forms of technology, with different degrees of sophistication, interact dynamically and all are required simultaneously for any economic production activity, they can be considered as the four components of technology [ 131. For any industrial enterprise, there is a wide range of possible choices etween the required minimum level of sophistication and the available maximum level represented by the state of the art for each component of technology. Sophistication of physical facilities represents increased integration of additional operative functions for improving productivity. Many of the required human abilities for operation are often built into sophisticated physical facilities [ 141. Sophistication of human abilities implies amplification of creativity by continuous learning for increasing efficiency [9]. Documented facts sophistication is derived from the accumulation of knowledge through collection, processing, dissemination, and the use of information of increasing value [6]. Sophisticated of organizational frameworks indicates expansion of transactions and competitive edge based on increasing effectiveness in production factor creation and utilization [7]. Obviously, the choice of technology depends upon the characteristics of the transformation (from available inputs to desirable outputs), the interrelationships among the degrees of sophistication of the four components of technology, and the market opportunities (both national and international). The importance of all four embodiment forms of technology and their levels of sophistication and dynamic interaction have not yet been fully appreciated [ 1.51.But to comprehend the scope of technology for sustainable development, it is desirable to specifically keep in mind that technology is a complex combination of continuously improved physical assets, progressively learned skills, routinely acquired knowledge, and evolving management practices. Because technology is embedded in productive investment, the process of technology acquisition is a commercial one (161. Therefore, it is important to understand the rules of the game for technology acquisition through foreign investment and also the limitations of the market mechanism for autonomous technological capability development [ 12). The main reasons behind foreign investment by TNCs are access to natural resources, improved access to national/regional markets, protection of existing and potential markets, taking advantage of the indigenous labor force, and taking advantage of investment incentives. TNCs invest in foreign countries on the basis of commercial opportunities, such as attractive incentives (including guaranteed profitability), adequate infrastructure for business, protection of proprietary rights; least interference by government, and stability of government policies. The relationship between foreign investment and technology transfer is a complex one [ 11, 161. Also, technology acquisition and technology capability building are difficult tasks. However, it is possible to observe the following regarding the flow of technology components under the condition of an open and free market situation: l

Physical facilities for production, other than the state of the art, can normally be bought internationally for a price determined by the relative bargaining position

312

N. SHARIF

of the buyer and the seller. A TNC will locate its production unit in a developing country if it is profitable to do so with minimum risk. It is only through TNCs that developing countries can obtain production facilities [7]. l High-quality personnel migrate from localities having poor standards of living to places having superior material and professional standards of living. Salary, work environment, and living condition are the three most important determinants of labor mobility. Developing countries are the biggest losers when their qualified people migrate. Human abilities can be imported temporarily, and success in acquiring these abilities depends primarily on local learning capability [ 121. l Documented facts that can provide a competitive edge are not sold in the open market. Critical information is a powerful weapon and provides bargaining strength. Valuable raw data generally move from developing to developed countries, while processed and highly packaged promotional (sales) documents normally flow in the other direction. There is a cost associated with acquiring information needed even to make wise purchasing decisions [ 141. 0 Imported management practices nowadays require very sophisticated computer and communications facilities and bring in alien cultures and values. To be effective, organizational frameworks need modem information technology, which has to be adapted to local conditions. Information technology has the ability to automate tedious and repetitive intellectual tasks in much the same way that farming and manufacturing equipment mechanized tedious and repetitive physical tasks [6]. It should be clear that international financial imperatives rather than welfare motives dictate the direction of technology flow [7]. Therefore, developing countries are likely to find TNCs difficult to live with, and yet impossible to live without [16]. TNCs are the biggest exporters of technology, some of which may be mature, material intensive, energy intensive, labor intensive, and sometimes pollution intensive. They have demonstrated that viable business can be established in developing countries through direct investment, joint venture, or licensing agreements. However, as R&D becomes more expensive, and as R&D investment must be adequately rewarded, the purchase of environmentally sound technology will be more costly [I]. How to finance the increasing cost of technology purchase is the most important issue for sustainable development. For this purpose, the disjoined industrialization strategies of import substitution and export promotion should be replaced by an integrated make-some and buy-some technology strategy [ 121. Once developing countries have some technology to sell in the international market, then and only then will international technological cooperation become possible. In order to develop a comprehensive concept of technology cooperation and to accept its relevance, it is necessary to integrate the many elements that contribute to sustainable development. For successful technology cooperation, the most important criterion is that the options and the rules of the game be clearly understood by both parties before the transaction begins. Moreover, the means of transaction should be efficient and felt to be fair by both parties. Furthermore, decisions regarding technology cooperation need to be based on a fuller understanding of its economic and environmental impacts. This implies that a holistic perspective is essential for policy analysis related to sustainable development. Sustainable development and environmentally sound technologies referred to in UN documents and decisions will require much more work to define in operational terms [ 11. Particularly, there is a special need to avoid sensitivity by incorporating the late-starter

TECHNOLOGICAL

DIMENSIONS

OF SUSTAINABLE

DEVELOPMENT

373

considerations. Sustainable development calls for achieving self-reliance (not self-sufficiency). As the value of a product is determined by the technology that goes into it, and not by the raw materials that constitute it, sustainable development can result from balanced trade in terms of technology content of the goods traded. Moreover, sustainable development must be achieved while reducing rather than compounding the burden of debt [3]. However, each country has to find its own pattern of sustainable development by building unique trade advantages based on its technological capabilities and resource endowments. The gradual reduction of dependence on foreign aid is perhaps one essential precondition to achieve sustainable development. Sustainable development has been defined as a process of change in which the exploitation of resources, the direction of investment, the orientation of technological development, and the institutional change are all in harmony and enhance both current and future potential to meet human needs and aspirations [ 171. From the environmental point of view, it means meeting the needs of the present generation without destroying the resources of future generations. From the developing countries’ point of view, it should also mean not limiting the potential for future generations to be economically and technologically self-reliant. This cannot be achieved by the “market” alone, as markets do not always work as they are supposed to! Market mechanisms ensure that the beneficiary of technology transaction is the one who pays. Therefore, it is obvious that one who cannot pay for technology cannot benefit. Under a free and open market situation, technology components naturally move to rich countries, as demand is dependent upon absorptive capacity and purchasing power. Because technological innovations have become progressively novel, costlier to develop, faster in pace, and more pervasive, it is inevitable that the cost of technology import by developing countries will continue to rise. Also, as the balance-of-payment situation becomes increasingly worse for most developing countries, they will have less money to buy newer (environmentally sound) technologies. Hence, the market mechanisms will ensure further deterioration of the plight of the poor countries. For sustainable development, market mechanisms would require that the production systems of developing countries become internationally competitive and achieve a balanced trade situation on the basis of the technology content of goods traded [14]. Therefore, technological innovations must be made to permeate all production activities-a process that cannot be left to chance and must be guided by government, although driven by the marketplace. Industries in developing countries have to buy technologies (imported from TNCs) because they do not have the needed technologies. But to be able to pay for those imported technologies, they have to make and sell some other technologies, as selling raw materials and primary goods is a losing business. Therefore, they have to adopt a make-some and buy-some technology strategy for sustainable development [14]. Make-some and buysome strategies are mutually reinforcing. But experience indicates that make-some has to begin by the adaptation of bought technologies. Like any industrial enterprise, the most pragmatic strategy for sustainable development of a country is to follow the makesome and buy-some path with careful specialization. Also, for rapid socioeconomic advancement, developing countries would like to leapfrog in technological capability building [ 151. Technology transfer (that is, the importation of technology) is considered to be the first step in that direction. But it is not so easy for many reasons. It is, therefore, important to note some of these difficulties in order to determine appropriate strategies for sustainable development. Leapfrogging in the use and production of physical facilities is directly possible if

374

N. SHARIF

human abilities, documented facts, and organizational frameworks are well developed. For example, it is not necessary to learn to use a slide rule before learning to use an electronic calculator. Similarly, it is not necessary to produce a vacuum tube before venturing into the production of transistors. With human abilities well developed, it is not too difficult to master acquired facilities through reverse engineering. However, unlike the mechanical control devices of earlier days which have a moving-part control system, the solid-state electronic devices of the new era make it considerably more difficult to pursue the reverse engineering approach adopted by some of the newly industrialized countries. Furthermore, some emerging technologies are either inherently more difficult or encased in such a manner that they cannot be learned by reverse engineering. Another important factor to note is that physical facilities with very high degrees of sophistication are normally not sold in the free market. In fact, many countries impose restrictions in the international sale of “strategic” physical facilities. Leapfrogging in the development of human abilities is possible indirectly by compressing the learning period (through the use of modem communication technology) and taking advantage of the very large and inexpensive population base, as the sheer magnitude of extraordinary brainpower in a large population is higher. Another very important means for leapfrogging in human abilities is the repatriation of highly qualified technologists from the developing countries who work in industrialized countries. A third way is to use hired foreign consultants (not necessarily the so-called experts provided under foreign assistance schemes). Leapfrogging in documented facts is not possible because the information that will provide a competitive edge in the technology market is unlikely to be available to the developing countries through published documents in the public domain. Information on the location of such information may be. Information is power. New technology reports involving development in many of the latest commercially relevant fields are no longer being published in the open literature. Competitors have moved toward greater secrecy in order to protect new ideas and innovations. Therefore, it is high time for the developing countries to realize that the new fad of computerizing their libraries and establishing on-line linkage with foreign data bases cannot provide any documented facts for technological leapfrogging. Documented facts beyond a certain degree of sophistication are mostly not even sold for any price! It is evident from recent events that those who have access to and control of information will be the power brokers of the future. Leapfrogging in organizational frameworks may be relatively easy. However, sophistication of organizational frameworks needs to be evolved locally, as transplantation of organizational frameworks does not work in most cases. In addition, the factory of the future is likely to see not only increasing automation of physical transformation, but also direct linking among the four components of technology. It can be observed from the above qualitative analysis that under certain conditions technological leapfrogging is possible through technology transfer, and developing countries may be able to take advantage of their late-starter situation provided they are very selective and it is clearly understood that effective transfer of physical facilities requires considerable investment in human abilities, documented facts, and organizationed frameworks. Perhaps the most important point to note is that in mobilizing internal resources, human abilities deserves the maximum attention. Human resource development is the key for technological capability building [9]. Consideration regarding appropriate strategies for indigenous capability development also requires that due attention be given to existing constraints.

TECHNOLOGICAL

DIMENSIONS

OF SUSTAINABLE

DEVELOPMENT

375

Understanding the Predicaments The basic aim of any industrial project is economic growth through higher levels of productivity. In the developed countries, there is an observable emphasis on innovation and specialization in the process of industrialization for international trade. For the advanced countries, the process of expanding exports from more-productive industries, shifting less-productive activities abroad through foreign investment, and importing goods and services in those industries where the nation is less productive is a healthy one for national economic prosperity [7]. The developing countries also have to move to a similar situation, even though the existing constraints make it very difficult [ 121. The difficulties can be appreciated by noting that the developing countries of the present era face significantly different constraints compared to the early developers (now developed countries, who were also once in the developing status some years ago) in terms of the following: l

l

l

l

l

l

The size and density of the population, compared to the geographic boundary and bearing capacity of the land mass, of the late developers are much worse than those of the early developers. While the earth’s land area did not change, the population more than doubled from 2.5 billion in 1950 to 5.2 billion in 1990, with most of the increase being in the developing countries. This is causing enormous pressure for unsuccessful attempts to achieve rapid (even revolutionary rather than evolutionary) economic growth. It may be noted that the so-called industrial revolution in the developed countries occurred at a time when the world’s population was less than one-fifth of its present level. Although the world produces today more food per head of population than ever before, there are more hungry people in the developing countries today than ever before. For many of the late developers, poverty is becoming even more endemic, even more burdensome. Almost three-quarters of the world’s population (mostly in developing countries) is still striving for basic survival needs, while the lucky one-quarter (in the developed countries) is enjoying an unprecedented level of unrestrained per capita consumption. The availability of natural resources per capita is becoming less and less, resulting in a tremendous demand for much higher productivity, conservation of resources, and development of renewable resources for economic growth (rather than growth by expansion), which is possible only with very high level of technological capabilities. The adverse balance-of-payment situation and increasing burden of debt servicing due to a decline in the export prices of many traditional (low-technology content) commodities and a steady increase in the prices of most imported (high-technology content) manufactured products. The lack of time for long-range development initiatives due to the ever-present crisis situation, which is fueled by the revolution of rising expectations, inadequate law enforcement capability and loss of institutional legitimacy against the power of terrorism. The aspiration level of poor people and the glamour of imported, fashionable brand names to the urban elite are being raised unrealistically by the ever-increasing reach and influence of advertisements in the electronic mass media. The poor four-fifths of the world looks with frustration at the affluent one-fifth’s extravagant life-style shown on television. The environmental degradation in developing countries due to overexploitation of natural resources and agricultural land and water for export purposes in an attempt to offset the balance-of-payment problem and reduce the debt. An alarming

316

N. SHARIF

l

level of pollution in industrialized countries is due to overutilization of fossil fuel and chemical compounds which are not biodegradable. The necessity to operate within well-established international marketing and banking systems controlled by the industrialized world, which demand strict enforcement of patent rights all over the world but which also openly practice highly selective immigration policies. Furthermore, early developers did not have to deal with the pressure of international opinion created by sensation-seeking news coverage, which exaggerates human rights violations and corruption in national administrations.

The constraints listed above suggest that a new approach is essential for development planning which explicitly recognizes the current international situation and the emergence of technology as a strategic variable for socioeconomic advancement. However, problems related to the socioeconomic poverty of developing countries cannot be eliminated overnight. Also, the problems are too numerous to be addressed concurrently. Therefore, instead of preparing an exhaustive list of all the problems, this section presents only the most common problems existing in many developing countries [ 181. The entire set may not be applicable to any country. Understanding the current difficulties can help in identifying major issues and possible action plans for technology capability development. Common problems with respect to physical facilities: l Generally old, outdated facilities for production and research activities l Equipment and facilities are poorly maintained and break down very often l Machines and facilities are of different standards and cannot be interchanged 0 Lack of spare parts and inadequate repair facilities for optimal utilization l Locally produced facilities are of poor quality and often very unreliable Common problems with respect to human abilities: l Significant mismatch between supply and demand of skills required by industry l Adverse skill structure due to high outward mobility of scarce technical skills l Widespread underperformance of skilled personnel due to lack of facilities 0 Education system emphasizing knowing (science) rather than doing (technology) l Training and retraining needs still not adequately recognized by leadership Common problems with respect to documented facts: l Accumulated knowledge rarely documented for later use by others l Generally supply-push (not demand-pull) strategy for knowledge accumulation l Inadequate sharing of valuable information within industry and country l Language barrier limits knowledge accumulation and dissemination l Very little appreciation of the value and power of information by leadership Common problems with respect to organizational frameworks: l Emphasis on doing things right (efficiency) rather than doing right things (effectiveness) 0 Inadequate interest and attention to introducing modem management techniques 0 Failure to adopt and blend imported management techniques with local situation l Introducing many concepts in theory only (such as networking) by lip service l Lack of realization of the progressiveness of capability building by leadership Common problems with respect to innovation climate: l Weak linkage among academia, research institution, and industries l Poor work environment and adherence to age-old traditions in most organizations l Inability to deal with long-term considerations in planning decisions

TECHNOLOGICAL

DIMENSIONS

OF SUSTAINABLE

DEVELOPMENT

37-l

0 Failure to generate team spirit for problem solving and promoting innovation culture l Policy instability causing capital flight and no investment for factor creation Common problem with respect to R&D: 0 Compared to developed countries, total R&D effort in most developing countries is significant and generally unproductive l Due to overprotection, private industries in developing countries do not yet feel the necessity for in-house R&D efforts 0 Most of public sector R&D organizations suffer from outdated facilities and rigid management style which inhibit creativity l These R&D organizations are often engaged in too many diversified and everlasting activities with subcritical resources l Missing links of the development chain and virtual isolation from the market pull are critical bottlenecks for both technology adaptation and generation Common environmental problems: l Increase in the scale of human poverty putting high pressure on the environment l Inadequate waste disposal infrastructure for rural poor and urban slum areas 0 Reduction of natural resources due to inefficient use and overexploitation l Significant pollution (mostly from agriculture and relatively little from industry) l Lack of environmental standards, monitoring, and impact assessment of projects. Business and government can and should work together to solve these problems. There can be no question that even a poor developing country should have a development plan that is in harmony with the environment for sustainable growth. It may be worthwhile to note specifically that the ability of a country to use modem technology, as its economic growth develops, is critical and is very dependent on the infrastructure and the degree of industrialization of the country. Fiscal and monitory policies of promoting industrialization by reducing the cost of production through subsidies, raising product prices through protection, and increasing profit margin through tax holidays seem to have failed in most cases to produce sustainable development. Instead, they have caused distortions, widespread inefficiencies, and misallocation of resources. Also, unmanaged technology importation has led to patterns of development that are undesirable from the point of sustainability. A Framework for Self-reliance There are logical roles for both government and market. But first a market has to be created which can promote healthy competition. Governments need to create an economic and regulatory regime that encourages international technology transactions. Government’s real role in national competitive advantage is to create a climate that encourages innovation. Government incentives should help specialization and promotion of a cluster of industries that draws on common inputs, skills, and infrastructure. It is the responsibility of the government to reduce the crippling mismatch between the supply and demand of human skills and to provide an up-to-date information infrastructure for necessary technology-based development, which requires committed, comprehensive, and concerted action on the part of the entire nation (including both formal and informal sectors). How to find the appropriate mix between using market signals and government regulations is one of the critical issue. The following is a framework for technology-based sustainable development. The framework can be easily adapted for national requirements. (For one such example see reference 19.)

378

N. SHARIF

Vitalizing the S&T management system Major issues: l Affirmation of conviction and earnest determination of leadership in using S&T l Strengthening a central authority for effective management of S&T and R&D l Establishing an effective S&T management information network Key questions: l How can sustained political commitment that would allow S&T to play a leading role in promoting socioeconomic development be ensured’? l How can a disproportionately high level of resources allocation be secured for S&T development, which cannot be neglected any more? l What should be the proper role of government interventions with respect to type (fiscal, financial, legal), time period, and target (producer, user) of S&T? l How can one strengthen the effectiveness of linkages between the supply and the demand sides of S&T for development? l What kind of organizational infrastructure would be most suitable to manage the S&T-led economic development strategy? l What lessons can be learned from the experiences of the newly industrialized countries and other developing countries? How can the current trend of an everincreasing technological gap be reversed? l How can the increased cost of modern industrial technologies, particularly environmentally sound technologies, be financed? Accelerating utilization of available technologies Major issues: l Identification, transfer, and adaptation of useful foreign technologies l Strengthening national consultancy and design engineering services l Enforcing standards, quality control, and certification schemes for products Key questions: l How can effective service in the identification, transfer, and adaptation of foreign technologies for local small and medium-size enterprises be provided? l How can local management capability be improved to apply technology rapidly and undertake continuous technological innovation? 0 How should governmental procurement policies and procedures be consolidated to encourage local adaptation of imported technologies? How can R&D investment for adaptation of imported technologies be encouraged? Strengthening R&D activities Major issues: l Increasing fund allocation for industrial R&D l Fostering in-house R&D in private industries l Establishing a direct formal linkage between S&T producers and users Key questions: 0 How can the effectiveness of R&D activities by the public sector organizations be ensured? l How should one select, evaluate, and prioritize national R&D products for funding and joint operation? l How can support services for the commercialization of R&D results be strengthened? l How can private sector enterprises foster industrial technology development? l How can the national capability for design engineering, industrial consultancy, standardization, quality control, and certification scheme be strengthened?

TECHNOLOGICAL

DIMENSIONS

OF SUSTAINABLE

DEVELOPMENT

379

Intensifying technological human resources development Major issues: 0 Involving private enterprises in skill development and continuous upgrading 0 Increasing S&T content of education with more emphasis on know-how l Improving the compensation and reward structure for quality education Key questions: 0 How can industry secure and nurture the cadre of creative scientists and highcaliber technologists needed in order to be internationally competitive? 0 How should skill requirements for the future be determined and how should the characteristics of the current skill structure be evaluated? l How can S&T manpower be kept current, up to date, functional, and flexible in an age when knowledge doubles every five years? 0 How can one emphasize know-how (application) as well as know-why (theory) in education and training at all levels? 0 How can creativity and self-reliance be encouraged at all levels of education? How can training and retraining be promoted as a lifelong process? Fostering specialization in national capability building Major Issues: 0 Monitoring world technological trends and international market opportunities 0 Continuously assessing technological impacts, capabilities, and needs 0 Selecting areas of specialization by a flexible learning strategy of make and buy Key questions: 0 How should the impact of world technological trends be monitored and continuously assessed? 0 How should opportunities from international market trends be evaluated? 0 What ways and means could be introduced for encouraging the formation of new technology-based firms in the country? 0 How can areas of specialization be identified and priorities for research programs and manpower development be determined in the new and emerging technologies? 0 How should the technological capability and technological needs of local industries be assessed? 0 How can selected industries create and sustain a competitive technological edge? 0 How can technological leapfrogging in selected areas be accomplished to take advantage of the unique characteristics of the technological change process? Providing essential support for technological innovation Major issues: 0 Giving technological consultancy services to small and medium-size enterprises 0 Providing venture capital for starting new technology-based firms 0 Enabling participation in international technical seminars and trade fairs Key questions: 0 How can international linkages (personal and organizational) for intelligence gathering be strengthened with respect to S&T? l How can local industry be made to realize that not investing in factor creation is a fatal error in international competition? 0 How should special mechanisms that contribute to the synergistic partnership of business and government be established? 0 What needs to be done to maintain the natural resource base of the country and how can environmental protection for future generations be ensured?

N. SHARIF

Nurturing innovative culture and future orientation Major issues: l Popularizing S&T culture through print and electronic mass media l Instituting an award system to promote creativity and innovation l Creating mechanisms for interest coordination and consensus building Key questions: 0 How can it be ensured that the decision-making process would not shy away from long-term considerations, which are essential for technological capability building? 0 How can a genuine shared vision for technology-led development be achieved? l How can it be instilled in the minds of the people that quality is more important than only quantity? 0 How can the electronic mass media (television) be used to promote an innovative culture and increase awareness about the role of S&T?

An Agenda for Cooperation In the past, nature has been perceived as a dangerous and capricious enemy to be conquered. Technology was used for that. Then, nature was perceived as a storehouse containing the resources required for industrial production. Technology exploited that. Now, activities of industries everywhere are damaging the natural environment and creating serious risks for the well-being and survival of humanity itself. Technology is now needed to protect and conserve nature. With environmental awareness high on the global agenda, the emphasis now is rightly on the development of cleaner, more efficient, and resource-saving technologies. However, the emphasis should not be just to protect the environment, but also to protect and promote development. Technological imperatives are generally set in motion by necessity, opportunity, and aspirations. There can be no economic growth without technology, and without economic growth there is inadequate capital to support environmental protection and sustainable development. For industry to adopt sustainability explicitly as a major development goal means that decisions regarding technology transaction need to be based on a fuller understanding of its economic and environmental impacts. However, environmental considerations at the enterprise level are largely an extension of sound management practice. Without government regulation and enforcement, market forces cannot promote the development of environmentally sound technologies. Government should challenge industry to produce more while polluting less. The “pollutors pay” principle and proper “pricing of natural resources” may be useful. Sustainable development requires both a belief that economic progress is possible without destroying the environment and a vision of progress that is broadly shared. For achieving sustainability at the national level, a major reorientation of traditional thought will have to be fostered in developing countries. No longer can employment generation and growth in income be regarded as sufficient criteria. The most important economic consideration is to reverse the current trend of an increasing resource gap caused by inadequate attention to technological innovation for competitive advantage. However, decisions will have to be made with environmental factors in mind. Sustainability criteria have to be introduced in all development project evaluations. And for this, due considerations must be given to multiple perspectives in decision making [20]. Technology cooperation at the international level (for sustainable development) also calls for a new world order which cannot be criticized as a means to institutionalize inequality and double standards. Cooperation implies a commitment to complement in-

TECHNOLOGICAL

DIMENSIONS

OF SUSTAINABLE

DEVELOPMENT

381

dividual strengths.It has a holistic effect-the sum is more than the individual contribution. It is a process by which two or more parties identify individual and common interests to share technology (maybe different components). Technology cooperation is a projectspecific company-to-company or person-to-person process. All parties must have a vested interest to make the cooperation successful. It is an agreement among parties made equal by their shared interests in the long-term consequences of the present trend of development for achieving sustainability in an economic and environmental sense. There must be great goodwill between the two parties and a strong determination to make the transaction mutually beneficial. There is a need for qualitative improvement in interdependence through a respectable partnership for the exchange of valuable technology components (that is, facilities, abilities, facts, frameworks). The following recommendations may be considered for attempting sustainable development: For consideration by all (developed and developing countries): 0 Remove the misconceptions-useful production technology comes in four embodiment forms and cannot be given away free. The price and mode of payment for technology is determined by many factors. Technology transaction is a business deal, which succeeds if the gap between partners is moderate. l Avoid the misapprehensions-technology cooperation has to be achieved, not demanded. It has to be by choice and on economic grounds, determined on the basis of mutual trust and goodwill. It is important to avoid terms and statements that give false hope. l Refrain from misapplications-technology by itself is not responsible for environmental problems. Environmental problems are due to the mismanagement of technology. Proper management calls for environment protection without compromising economic development. l Prevent misrepresentations-sustainable development simply means sustaining longterm development considering social, economic, technological, and environmental factors, not only environmental factors. Self-reliance on the basis of a make-some and buy-some technology strategy can lead to sustainable development. For consideration by developing countries: 0 Government action is needed to stabilize population growth-qualitative improvement can take place only after quantitative growth is controlled. With affluence obtained through hard work, social aspirations shift from quantity to quality. 0 Government investment in the education and industrial technology capability building infrastructure (like standardization, design engineering, and quality control) should receive a high priority-market forces for private investment in these areas are not strong enough due to the long gestation period. An educated population is the most critical infrastructure of the emerging economics. 0 Government should enact legislation that protects the producers of technological innovations through enforceable patent and intellectual property rights, and also introduce laws that protect the environment-promote innovation and make polluting economically less attractive. There has to be social demand for responsive government and environment protection. 0 Government can provide financial and tax incentives to encourage more private sector R&D and provide funding for market-driven R&D in the public sector for adaptation of imported technologies and generation of environment friendly technologiewonserve and maintain the resource base and natural environment. The tax system can be based on the consumption of nonrenewable resources.

382

N. SHARIF

For consideration by developed countries: l Promote the transaction of environmentally friendly physical facilities+rganize regional expositions of available technologies were the potential buyers and sellers can meet. l Promote the training of manpower for environmental impact assessment-regional training centers can be set up to offer regular courses in “management of technology” and “technology impact assessment.” l Promote the exchange of information through networking-international, regional, and subregional networks may be organized for the exchange of experiences in setting environmental standards, monitoring, and auditing which incorporate environmental impact assessment. l Promote the adaptation of management techniques for sustainable developmentprojects can be implemented for developing microcomputer-based software for investment program evaluation based on social, environmental, and economic factors. Concluding Remarks In the international agenda today are such world-scale problems as global warming, the depletion of tropical rain forests, and environmental pollution. These problems are caused either by the pursuit of affluence in some parts of the world for luxurious and unrestrained consumption or by the overexploitation of natural resources for survival in some other parts of the world. Therefore, any prescription for sustainable development should include both control of the greedy consumption culture and promotion of the considerate no-harm culture. In this direction, the single most critical investment a nation can make is in human resources (development, retaining, and upgrading) to a point where workers can make a productive contribution and also take full advantage of technological advances in a competitive world facing two important issues: the scarcity of concentrated forms of energy and limits to nature’s ability to absorb wastes. Sustainable development cannot be achieved as long as overuse, waste, and inefficiency coexist with resource scarcity in developing countries. Inadequate investment in protecting the natural resource base, underinvestment in human resource development, and underutilization of human-made resources (technology) are problems that need immediate attention. But market forces alone cannot solve these problems. Even in the (socalled open and free) market-economy developed countries, government regulations have been justified for a variety of reasons: controlling the abuse of monopoly power, preventing destructive competition, protecting public health and safety, and ensuring the availability of information in areas where the absence of information could be dangerous or where obtaining such information could be prohibitively expensive. Regulations have also been justified in areas where the market does a poor job of allocating cost and benefits, such as environment protection, education, and scientific research. This paper discussed the issues and presented a framework for incorporating technological considerations which may lead to international cooperation and sustainable development. There is no demand for financial assistance. The emphasis is on self-help. It is difficult, but it is the only way to develop. References 1. World Industry Conference on Environmental

Management (WICEM II), Rotterdam, lo-12 April 1991. Official report included in Environmental Sfrutegy Europe 1991, Campden Publishing, London, 1991. 2. Naar, J., Designfor a Livable Plant, Harper Collins, New York, 1990.

TECHNOLOGICAL

DIMENSIONS

OF SUSTAINABLE

DEVELOPMENT

383

3. Ohmae, K., The Border-less World: Power and Strategy in the Interlinked Economy, Harper Collins, New York, 1990. 4. Solow, R., Growth Theory and After, American Economic Review 78 (1988). 5. Mac Eachem, D., Save Our Planet, Dell, New York, 1991. 6. US Congress, Office of Technology Assessment, Technology and the American Transition: Choices for the Future, special issue of Technological Forecasting and Social Change 36 (1989). 7. Porter, M. E., The Competitive Advantage of Nations, Free Press, New York, 1990. 8. Sharif, M. N. guest ed., Technological Capabilities Assessment in Developing Countries, special issue of Technological Forecasting and Social Change 32 (1987). 9. United Nations Development Programme (UNDP), Human Resources Development, New York, 1990. 10. Golob, D., and Brus, E., The Almanac of Science and Technology: What’s New and What’s Known, Harcourt Brace Jovanovich, New York, 1990. 11. Mansfield, E., Technology Transfer, Productivity and Economic Policy, Norton, New York, 1984. 12. Choi, H. S., Springboard Measures for Becoming a Highly Industrialized Society, UN-ESCAP/APC?T, Bangalore, 1989. 13. Sharif, M. N., Problems, Issues and Strategies for S&T Policy Analysis, and Basis for Techno-Economic Policy Analysis, Science and Public Policy 15 (1988). 14. Sharif, M. N., ed., Technology for Development, UN-ESCAP/APCTT, Bangalore, 1989. 15. Sharif, M. N., Technological Leapfrogging: Implications for Developing Countries, Technological Forecasting and Social Change 36 (1989). 16. Sharif, M. N., Management of Technology Transfer and Development, UN-ESCAP, RC’IT, Bangalore, 1983. 17. World Commission on Environment and Development (WCED), Our Common Future, Oxford University Press, Ofxord, 1987. 18. Sharif, M. N., ed., Technology Policy and Planning, Sixteen Country Studies-Australia, Bangledesh, China, India, Indonesia, Japan, Korea, Malaysia, Nepal, Pakistan, Philippines, Papua New Guinea, Singapore, Sri Lanka, Thailand and Vietnam, UN-ESCAP/APClT, Bangalore, 1986-1989. 19. Ministry of Science, Technology and Environment, Industrial Technology Development, A National Plan of Action, Malaysia, 1990. 20. Linstone, H. A., Multiple Perspectives in Decision Making, Elsevier, New York, 1984. Received 13 August 1991; revised 9 December

1991