Developing Capabilities and Capacities in African LDCs: A Strategy of Accessing International Knowledge Pools and Pursuing Deep and Rapid Trade and Investment Liberalisation Will Only Suceed If Africa Makes Technical Progress, an Important Report States

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Technology is transforming the lives of millions of African entrepreneurs and citizens, opening up new markets and opportunities for industries and money transfers. Sustained economic growth and poverty eradication in the least developed countries (LDCs), 34 of them in Africa, require improving their productive capacities through three closely interlinked processes. They include capital accumulation, technological innovation and structural reforms.

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Last year, Unctad's Least Developed Countries Report warned: "Unless the LDCs adopt policies to stimulate technological catch-up with the rest of the world, they will continue to fall behind other countries technologically and face deepening marginalisation in the global economy."

The report also stated that since the 1990s a large number of LDCs have pursued "deep and rapid trade and investment liberalisation", but that without much-needed technical progress such efforts will result only in "increased marginalisation". These countries are at the start of a learning curve and policies to enhance technical learning and innovation should be adapted to their specific needs. Needless to say, LDCs are remote from the technological frontier with most farms and companies still operating with rudimentary automation and lacking funds for research and development (R&D).

In addition, many remain trapped in low-skilled activities in the primary industries. Their knowledge systems are essentially poor. The Unctad report stressed: "The technological gap between developed and developing world, and particularly the LDCs has grown over the years."

Unctad believes combating poverty through 'pro-poor growth' depends on technological choices and developing capabilities at the enterprise level. That, in turn, demands access to the international knowledge pool and the ability to grasp advanced technologies, thus benefiting from worldwide technology diffusion. The latter takes place via formal (e.g. foreign direct investment), informal (e.g. interaction with suppliers or customers, particularly through the integration of LDC firms into global value chains) or non-market channels (e.g. technical assistance programmes of donor agencies or non-governmental organisations).

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The LDC governments are advised to pursue "creative technological innovation", where products and processes, new to developing economies, are "commercially introduced". They should focus on the successful imitation of products/processes used in developed economies, often using modifications and adaptations to suit conditions in their own markets. Unctad acknowledges: "It is not easy to escape from marginalisation, but it is possible and domestic firms' efforts to build technological capabilities are essential."

African countries should embrace science, technology and innovation (STI) policy, at the heart of their development strategies. In all sectors of the LDC economy, knowledge, skills and reliable information are vital for efficient operations of factories, mines and farming enterprises, thereby ensuring higher productivity and profitability. The report explained: "In order to ensure poverty reduction, strategic priorities of STI policy should be articulated with a view to promoting economy-wide expansion of productive job opportunities."

Unctad identifies six goals for LDCs during early stages of catch-up:

* Boosting agricultural productivity in basic staples, mainly by promoting a Green Revolution (see African Business June 08 p21-22), which is "the surest base for substantial poverty reduction".

* Encouraging the formation and growth of domestic companies, notably small and medium-sized enterprises (SMEs).

* Improving the absorptive capacity of domestic knowledge systems.

* Leveraging more learning from external trade and inward foreign investment.

* Fostering diversification through agricultural linkages and production clusters based on natural resources. …