BRINGING PRODUCTION BACK INTO DEVELOPMENTJan 25, 2022
without further ado i think we can start and i will give the floor to arjun chang of course from a very well known economist from the university of cambridge who will chair the first panel in session and also present the the special attachment is yours thank you antonia welcome everyone to this launch event of a special edition that I have edited with uh antonio uh well the reason why we organized this special edition is somehow the
productionthat was at the heart of the economy has disappeared from the economy I mean because Of course there's that, but that's very schematic, you know the
productionfunction, what I mean, it goes through production, but you know when you think about it, production was at the heart of economics from the beginning, you know what it was the first chapter adam smith ever wrote that it wasn't about the market it wasn't about finance it wasn't about farming it was about the factory because to him what q What was happening on the show floor in the factories was at the center of this socio-economic transformation that was taking place and which then gave birth to a whole new economic system called capitalism and yes, the classical economist that after the blacksmith at the end of the Marxist economists were very aware of the importance of production in shaping our lives, not just our type of economy and our society, you know, all these Smithyan and Marxian theories of stages of production, stages of
development, you know. , but unfortunately with the rise of neoclassical and Austrian economics. economics at the end of the 19th century, the so-called marginal revolution uh, you know that the focus of economics has come to be traded for the market and you know that although there was a Keynesian counterattack to that marginal revolution, Keynes also focused on dominance from demand and finance and i mean of course the very important things but that production was what is still missing there i mean t of course there were a couple of key indian academics like uh koletsky and broth who paid attention to production, but it was largely missing and then we had a period where production went
backto the core economy, at least in relation to developing countries because the so-called, you know
developmenteconomics, you know the kuznets that riders uh they did all these people they were writing about production again because they basically understood you know poverty uh in what we now call the global south was basically that pro The problem, uh, was emanating from weakness in the production domain and they were writing about how they know that this domain could be transformed using the links and some of the new concepts that didn't exist in the older productionist discourse that you know about Smith's Marks, etc. ., and then they discussed how that's going to be, I mean Kuznets was very important, I mean how he morphed into Domi. no production is not going to affect the rest of society unfortunately that this uh that new discovery about production in the economy was delayed uh with the so-called neoliberal counterrevolution since the 1980s and basically the problem of development has been reduced to poverty reduction basically you know palliative care and the recent nobel prize receiving for d flow and banerjee is probably the height of that trend now me and antonio thought it was about time we brought production
backto develop this course and may it be very lucky to gather a number of excellent academics contributing to this special issue and I am very pleased that all these wonderful people have joined us in our effort to refocus economics, not just development economics. but that especially development economics so we've picked up that various articles in this volume we've divided the sessions into so something more theoretical but something more thematic, but this division is largely a bit artificial, you know, most of the articles have very significant meaning of the empirical dimensions even mainly empirical articles I have but very interesting and important theoretical contributions to make so I want to say please don't think the papers belong to the first panel is that somehow , they are more theoretical and the second panel is composed only of empirical papers in this first panel we introduce you to the four speakers, so we have possible maria Savona, who has written this article, reviewing the theory of high development to explain the perspectives improvement in the global value chain of commercial services. signatures and then we have labrunid from mattel who along with antonia and I have captured this role in the digital l industrialization, originally we were going to have spencer henson as one of the editors for the magazine but unfortunately spencer who has as lunil should having proposed that antonia join this panel to discuss our article with uh is it about to be established that uh discussing uh the missing dimensions of the human capabilities approach so without further ado let me invite the panelists to do a very short presentation of their papers and some thoughts on how, uh, he or she sees the theoretical and empirical developments found in this very important but neglected field, so the first speaker I'd like to invite is Maria Savona from the university of sussex and given the importance of that brief period in the 1950s and 1960s when we had a production revival is that thinking about the issues of the development of the economy in general i think maria's article talking about intermediary linkages and demands is very relevant so let me ask mari a to speak for a few minutes so we can have a discussion later ok thank you hajjun and i would like to thank antonio junio for the opportunity to contribute to this great special issue and i have been answering the call to revisit the classics so um and i will also mention that i started this wool research a few years ago and also the i have developed empirically with some co-authors, so filippo bontadini valentina miliciani and javier lopez gonzalez at uac trade and therefore part of the reflections are property for them as well, so the main objective of this paper was to try to explain um, improve prospects prospects or create opportunities or diversification opportunities in business services now , so business services, especially in the global value chain of business services, try to review these classics to understand a modern phenomenon and new forms of trade and new forms of trade of intermediate products that business services are particularly for reflect if this represents an eff Effective opportunities for development or if there are some uh hidden traps specialization traps that could be uh we need to uh unpack or take into account so what uh the idea what what the article proposes is a hypothesis that I call a hypothesis from hishman linda that combines the contribution of two classics, hirschmann and linda, respectively, from development theory and trade theory, now I would say that both had a particular vision on the role of the former, so here schmann had a particular vision about the value of interdependence. of the structure of the economy and in particular seeing some of the sectors as more conducive to development pathways, particularly manufacturing at that time, and the structure is therefore uh so you can explain some patterns of development and also some patterns of trait specialization.
On the other hand, he was particularly um an outsider at this point because he was trying to explain trade patterns in terms of what he called a country's representative domestic demand, so he had a particular insight about the scale value of a particular structure, so the combination of the two would be to understand the role of some sectors that represent a valuable intermediate demand in particular in case the manufacturing sector which also explains why some countries then specialize and trade specialized in particular sectors, but specifically business services now business services have a specific role compared to manufacturing because this is what I bring up in the paper is the idea that they don't necessarily represent a pattern of de-industrialization, but they are the intrinsic and intrinsic component of manufacturing production because complement an intermediate production, so they rep They resent a crucial intermediate input for manufacturing, but interestingly I also put forward in the article the idea that they could represent a useful diversification path and backward diversification pattern when we can see that special countries specialize in natural resources, so what What I also raise in the paper is that the idea that manufacturing should be at the center of development as the main thread of the special edition, but also when countries are specialized in natural resources, this might not necessarily be a curse because it could there may be opportunities to branch out backward into activities that could complement this specialization uh from uh from a uh high, you know, providing um knowledgeable, so informed input, for example, so this doesn't necessarily mean diversifying into low-tech manufacturing going forward low-tech manufacturing but with more opportu nities to develop eh towards retrograde participation, so this idea theoretically, but also from a policy perspective, implies that, firstly, classical economics has revisited opportunities to explain emerging phenomena such as the international fragmentation of production and the global value chain have intrinsic value in understanding this phenomenon, but it also helps us understand what are the policy implications for that because, ideally, focusing on national capacities and the national structure is for me a new form of infant industry protection if you want, so it's a new way of running the industry. policy at the national level to allow new ways of beneficial ways to get into global value chains and this is a different form of infant industry because instead of a protection, sort of the usual way of looking at, there's an intrinsic active promotion of national capabilities. before entering or before trade specializing in particular sectors and this is basically trying to square the circle of looking for new forms of internationalization and protecting national capacities to be able to benefit from these new forms of international production and I think this is uh more or less what i had to say and i look forward to the reactions uh and questions from the room thank you very much maria yes no i think your job is a very hard menu in the sense that you know he always looks for a kind of lateral and indirect route and that reverse loop and your behavior is very much what it takes is that theories are one step ahead in doing exactly the kind of things that he was a master at, uh, a lot but very interesting theoretical potential there, uh, it's Okay, I mean we could talk about Maria's work for two hours, but since we have limited time, uh, should we move on to Fiona Fiona, please? vor, um, thank you, hajun, um, and greetings to everyone from south africa, um, here in south africa, today is a holiday, we are celebrating, uh, freedom day, uh, which is uh, the date of the first elections democrats in 1994. but, even though it's a holiday, I'm very happy to join this event and happy to have contributed to the special issues, um, congratulations to hajjun and antonio, I think it's a really great contribution um I'm going to start with a brief description um uh of our article um co-authored between elvis avenue and erica cremember um or from the university of johannesburg and then i'm just going to make a couple of uh brief comments about the productionist agenda, especially as it relates to developing countries and then linking productive capacities, which is the focus of our contribution to this agenda, which I think is the thematic focus of the special issue, yes, as I said our article focuses on productive capacities among companies. those Africans and specifically the effects of these skills on the export performance of firms and, obviously, it is recognized that export performance is crucial for growth and development in African economies and that it tends to be low performance in this regard in Africa relative to other regions, so this requires a firm level of focus to look at export performance broadly in terms of our perspective in the article on productive capacities um and drawing on the existing literature on this, I think it is recognized that um productive capacities are developed during a long learning process in the production process and through this continuous learning new productive capacities or strength and um productive capacities can improve the productive possibilities and the prosperity of the companies from the existing level of evidence of the company. both in the marketsboth national and international, as in the case we focused on in our own article, so these types of capabilities provide opportunities for companies to gain a competitive advantage, particularly as these types of capabilities are not shared or copied. um and particularly relevant to the development of new endeavors and also provide opportunities for newcomers to catch up and overcome competitive challenges by allowing companies to venture into the production of more complex new and sophisticated products, for what we do in our article is we use recent company level data from around the world. survey of banking companies in 29 African countries and we built new multidimensional indicators of productive capabilities that are conceptualized here as a combination of technological and production capabilities, so to measure technological capabilities we use variables such as innovation and fixed assets, licenses and ownership , while for production capacities we use variables such as formal training, labor regulations, education of the labor force, a broader level. a broader measure of education and certification and we estimate a censored regression model and use instrumentation to address uh possible indigeneity in terms of our results um we find that um both technological and production capabilities um are very important drivers of performance and measures of direct export of the firm specifically in terms of export intensity and at the policy level, we see that the findings underline the importance of policies that support the strengthening of productive capacities in African countries, so these may require specific policies that help companies to learn to develop. p and adopt new knowledge to recombine um all knowledge and acquire skills to transform the mix of products and services offered um and this is likely to require an appropriate mix of policies, including innovation and technology policy, industrial policy, education and training policy integrated with other policy domains that are relevant for the construction of productive capacities at the firm level in terms of the novelty of our study, we see it as being in the first place in the construction of new measures of productive capacities that recognize the complexity and multidimensionality nature and something that uh antonio has been drawing attention to in his own uh pioneering work in this area um but when we try to put it into practice with uh the development of these new multidimensional indicators um and a second broad contribution is that uh as far as we know, this is the first er empirical um analysis of the issue at the company level for a large sample of companies across African countries, um, so there's an overview of our article and I won't limit myself to some broader comments, um, on the subject of the special edition, um, and I think the link between my productive capabilities and that topic and these are just my own personal comments just implied by my co-authors, um, so maybe the first thought is that I think, in a way, It seems absurd that there's even a case for a renewed focus on production and development, which is the subject of the special edition. um, it seems crazy that there should even be such a topic and such a special issue devoted to it and the fact that the special issue is really timely and relevant and helps fill this gap is itself a poor reflection. on the state of the economy as hajjun said that production really is at the heart of the economy and when we think about the various dimensions of this and what is produced how it is produced how much is produced where it is produced by whom om it is produced for who um under whose control and so on um this is absolutely central uh to the economy and of course by production here we mean not just the production of things uh but production in the broader sense which also includes services so that when you think about the various uh what are sometimes called the spheres of production, distribution and consumption, these are effectively so inextricably linked that only in a rather limited sense can we really think of them as separate spheres um linking this to uh the project of board development, I think uh probably everyone here in this core would recognize the importance of structural change as a key to achieving d development and that this implies a transformation of the productive structure of developing economies so that we can see that production plays a constitutive role in the development process um linking then uh this broad type of uh conceptualization of uh the productionist agenda that is the topic of t The special issue and trying to connect this with uh productive capabilities um which is our own focus in a sense applied in our article um we can see the advancement of productive capabilities at the firm level uh as part of the micro foundations of structural transformation um that was perhaps somewhat neglected relatively um in some of the early uh literature on structural transformation I think such an essential part of our structural transformation is obviously a change in the sectoral structure of economies um that ties in with the drive towards industrialization um but it also implies the improvement of the sectors d e costs, so it is not just a change in security or structure, but it is an improvement of companies in all sectors of the economy and this is again connected to the issue of productive capacities, this is also linked closely with learning. and the centrality of learning to the recovery and development process, so that not only are productive capacities partly developed through learning, including learning by doing, but we can see individual and miso-level productive capacities as an integral part of a broader practical learning, also important here, I think it is the recognition of one more minute, yes, the collective role of productive capacities. and this is critical to catching up in the catching up process and helping us understand why some countries catch up and others lag further behind and lastly I would just recommend an interactive or we could say dialectical understanding of the relationship between the company level the productive capacities and the more macroeconomic dimensions of the development process, so that, on the one hand, we need to improve the firmly reproductive capacities to allow high rates of investment and extract the benefits of investment for development at the At the same time, I think we can't lose sight of the macro imperatives so we also have to be careful of an exclusive m icro focus um so the basics of development like having high enough rates of investment at the macro level and still matter and we really needed an iterative understanding of the relationship between these thank you thank you fiona yes I think your article is very much in the spirit u from adam smith and the brands you know these are people trying to link what was going on in the shop, the rise of the factory system and looking at manufacturing as well as the broader social data and economic structural changes thank you mateo's uh next uh yes uh thanks arjun uh yes very happy to be here and talk to great scholars about these fascinating topics uh so my name is matthias laborini and this me together with antonio andreoni and ajang wrote the paper on the challenges and opportunities for digital industrialization in developing countries and this history of technology and economic development has been studied by many authors and the economic discipline is returning to what arjuna adam smith marx june peter said and more recently to the new Schumpeterian authors, so the contribution of our article here would be to follow this tradition of the study of technology in economic development and deal with to break down what are the characteristics of the emerging technological paradigm right after called the fourth industrial revolution industry 4.0 digital transformation advanced manufacturing anyway many names and try to understand what this means for economic development especially for developing countries uh the motivation here it is also that many authors have pointed out that moments of rapid technological transformations are windows of opportunity for development, since technology is new for everyone, some of the barriers to entry would be lowered in these periods, also because established companies could stay with the old technologies and having a lot of momentum there, so there's a lot of opportunity for a new entry.
So what we find is that first we need a better understanding of the nature of the fourth industrial revolution and what we find is that individually the technologies are not that new, but what really sets them apart is the high level of technological fusion that is occurring. Ok, so this means the combination of different technologies from different fields of knowledge in complex technological systems, so in a single solution it is common to find a combination of sensors, actuators, connectivity devices, cloud computing, artificial intelligence, etc. . So, one of the conclusions of our paper is that what is needed today is not so much the uh technology, the development of individual technological capabilities, but more the uh development of what we call foundational capabilities, which would be the capabilities, uh, I mean technological capabilities. and organization of production that would allow you to learn this myriad of technologies uh and combine them and implement them in production uh what this means for developing countries is that before they can even start thinking about making the leap to the fourth revolution industry would need uh this long and gradual process of developing these fundamental capabilities and that's why the the name of the article is nature nonfaced jumps nature doesn't jump and then we go on to provide evidence of the impacts of these uh of this technological fusion and of the individual technologies of the fourth industrial revolution in ten uh productive sectors uh and and hemo It's been shown that, for countries that already have these fundamental capabilities, various opportunities to make a leap, so they are open, of course, I won't have time here to analyze these impacts in detail, but just to give some examples. have impacts on R&D and pre-manufacturing activities, such as the use of virtual reality and augmented reality technologies in product development. elopment 3d print for faster prototyping are also affected by process innovations, such as the so-called cybernetic physical systems of smart and connected production or the smart factory model where basically everything is connected and machines are increasingly autonomous and they communicate with each other.
It also impacts product innovation, so smart products, like smart wearables, also smart home appliances, and smart vehicles, like drones, autonomous tractors, and even possibly self-driving cars, there are impacts as well, uh, in supply chain management, and the key point here is that there is now an increasing ability to track and monitor products both upstream to trace raw material components and also downstream for consumer delivery and usage monitoring of the product by consumers uh so the important thing to keep in mind here is that these opportunities are being opened not only in high technology sectors but also in the rs sector that is typical of developing countries, such as agriculture and livestock , its extractive industries and also the manufacture of textiles and clothing and, finally, in the last m part of the paper we discuss what this means for industrial policy and here we highlight the importance of understanding the different roles of different sectors in technological development, right, so some sectors are technologically driven, like, well, ICT, information and communication technologies, and capital goods, and some sectors are a demand group in the sense that, for the most part, they are users of these new technological solutions, such as consumer goods, basic inputs, pharmaceuticals etc So, for the technology-driven sectors, policies must prioritize the formation of ecosystems that exactly bring together these traditionally separate players to take advantage of these technological fusion opportunities and for the demand sectors on the other hand, the priority must be in t Technology diffusion policies reduce the cost and risk of adopting these technological solutions and therefore it is the interplay between these push and pull dynamics that can enable developing countries to create and develop successful players tailored to their needs. local needs and could eventually create an internationally competitive compact. actors, yes, only to conclude that the fourth industrial revolution will probably make it even moredifficult for developing countries to catch up because it has not only developed individual capabilities but also these broader foundational capabilities, but also creates many opportunities and therefore industrial policy has to be rooted in the reality of these digital technologies and even smarter now and up the tech ladder than it's ever been can i ask antonio to briefly introduce our people in their own cap? skills focus and also that joan has kindly agreed to let me make some comments that before we open the float to the general audience, okay antonio thank you very much thank you all i'll be very brief this was not in the in the program in the plan but, in fact, it was one of the fundamental ideas that created space for this special issue, in an earlier article with June, we were looking back at exactly, the moment in time where production was going out of style and We were trying to identify ourselves as a radialis hamster, in fact, in a similarly titled article a few years back in the early 90's why production was out of development.
The speeches lost that centrality and, of course, for those of you who are working on a development, we have seen. not simply the disappearance of production but the rise of paradigms that have been very influential and one of those is not simply related to the liberal paradigm but also to a certain vision of development that is very focused used in a kind of human study of development if It is thought on paper that the capacity approach that arose, of course, with the work the seminal work of a marquis san y carta martinez baum and others was eh and has been and continues to be a fundamental foundation of uh not just a great literature on understanding uh and developing but also quite influential in shaping the narrative at the level of uh probably the most well known report of the un which is the human development report so in this document what What we tried to do was see what was missing from an emergent narrative that was encapsulated in a sense-making approach and how it was possible to really bring back some of the d e the ideas of classical development economics about this approach and try to understand why this approach basically means two dimensions and one is what we call the collective damage and the other the productive damage now if we think about the capacity approach the traditional approach of sensory capacity already in the early 2000s there was a lot of debate among critics around its individualistic nature, big bands like francis stewart, uh, peter evans and others propose an alternative concept of capacities, but this concept doesn't really He moved, uh, towards literature, they did not become a current in literature, um concepts such as social capacities that in fact Moses Abramo Vitz had already introduced from the beginning or group capacities were introduced to recognize that the beings and the actions of the Individuals are, of course, an end of development, but there are also a series of capacities and collective functioning that are relevant and could receive the same type. of status as an end and not simply as a means in development and we try to address this first dimension of the collective because we believe that when we look at production it is impossible to think of production as an individual effort and this is the idea of the division of the I work the idea that fundamentally production is about organizations about collectives that are coordinating their effort for a certain kind of purpose eh is very much at the core of what arjuna was referring to from the beginning is not that eh martinus ban or sam don' t talk about work in some cases, but most of the time it is not about how production and participation in collective reproductive activities uh generates and c constitutes people it is more about how instrumental these activities are to other beings and valuable actions in the capability approach we now try to explore in this paper why even though people have started to get involved with it With this problem, the production dimension has remained uncovered, and one of the things that we are highlighting is the fact that the development literature, in particular, those that have been looking at different ideas of capabilities, have in fact missed the opportunity to integrate these frameworks.
I'm glad Maria is here because Nick Fontunzel wrote something a few years ago. around exactly how we can combine the capability approach, the whole development micro literature with a literature inspired by this humanistic perspective, so what we do is reflect on how, in fact, there is a missed opportunity here, which is the opportunity to think of everyone. these alternative capacity approaches and in the case of course the level of the firm and p production we cannot overlook the role that the rose played in shaping our understanding of the dynamics of growth and the collective dynamics of the firm and how these approaches can provide a framework that pursues these humanistic types of development goals but at the same time does not understand just instrumental, but the constitutive role that production plays we now understand in development.
This is a fundamental point, I think that what we aspire to as development, as freedoms in amateurish language, is actually partly determined by how the material conditions in our environment change. In the place where we work, then the aspiration that people had for a certain freedom is partly the result of this process of productive transformation and consequently we need to think about this constitutive dimension, not simply instrumental, final point that I will do just to give John time to To comment on this first session is that this is not a purely theoretical ethical debate, it is not an attempt to simply engage intellectually with some issues, these are these types of issues that have very strong implications if we think about how the Human Development Report began to approaching the human development index with the idea of inequality alone in 2011, 20 years after it was introduced, is symptomatic of this problem of not understanding the collective dimension of the problem because inequality, of course, is not an individual dimension of freedom, it's a matter of interdependence, it's about how you are part of the collective and in this The document, what we do is try and it's very much based on some of isabelle's quotes or standards work, uh, look at how literally the human development discourse within UNDP has evolved over the years and how a lot of opportunity has been lost to capture the collective in the productive dimension of that i'll stop there and come back to that thank you should just take over thank you thank you can i invite you to give us some feedback yes i hope you can listen to me because i'm doing this through my phone now we can hear you very good ok thank you um first of all leave me alone on behalf of the european journal of research for development uh thank you uh both legume and antonio for this great special issue i have to say the quality is very high and the topic the topic is very timely even though we have been discussing these topics for many years and i think we have a huge or large number of l ectors for this kind of special issue and we can already see now that a lot of my students are already using the papers to generate ideas so I think it will spawn a lot of new idea ships and maybe get us back on track with respect to production economies , i'll just do this because it was actually spencer who was supposed to provide comments for this but i'll split it into three comments for maria fiona and matteos so take one each because i'll just bring back to maria's article and there's an interesting result that the natural resource industries are likely to be part of this global commercial services value chain so I would like us to think about it a bit and maybe Maria can comment if we have the time is should we split this type of analysis into services higher value-added commercial services versus lower value-added commercial services. the natural resources sector is actually generating higher value added business services and as far as I can see this is not really the case whereas manufacturing is more likely to be linked to higher value added business services e.g. what if we could think about this in relation to this i think this could be beneficial moving towards fiona's article um i think this discussion of productive capabilities is something we've been doing for quite some time now we too I have other academics, uh, looking at this in terms of trait theory and so on, but I think the interesting part to elaborate on a bit would be how we break it down into these manager skills and worker skills, and can we distinguish between those? in terms of defining the capabilities of a company, I like the idea of digging into data at the company level, but we also have to say something about social capital, the interconnectedness between managers and workers, does it work differently in different sectors and to the extent? as i can read in fiona's doc not much to say about this using the type of data you can get from world bank enterprise data here you may need linked employee data and this is just common for fiona working in south africa i think you have access to this linked employer employee data which is available now in the south african context so i guess there will be a lot of new work at least in the south african context on this eventually for matthews um i think it's very interesting and I think the last part you mentioned about we can also apply your strength to agriculture in developing countries I think it's an important issue to raise because the comparative advantage of most developing countries is cheap labor work and how to see that in relation to the fourth industrial revolution I think it will be key you can not discuss these two things independently believe or that has to be discussed in combination um i attended this uh richard baldwin conference at the in bangkok a year ago low i think it was the unu water conference in bangkok in september oh two years ago now i forgot about covet i lost a year I'm sorry and he was also discussing these things and I think uh the interfacing with his work is likely to be beneficial when you read the paper that the materials have been involved in so I would encourage you to engage with that kind of a bit more literature that richard baldwin also talks about labor skills in developing countries so that was my two cents on these three papers thank you thank you very much john yes we have some questions mihai zhurang pedro phillip gwendolina so that we really can't deal with these questions individually.
I think a common theme among these questions is how industrial policy should be designed or according to what it is trying to achieve. I mean, what kind of policies do you need for technology to catch up versus technological leapfrog do you need a vertical industrial policy or a horizontal industrial policy uh other than uh I asked if you can give us an example of successful creation of an innovation ecosystem I want say obviously that cases like uh south korea and taiwan uh that the obvious example then probably the candidate will have something to say about that later on so that's the common theme other is t What does this imply?
What is the implication for a broader type of international initiative? We accept that this is mainly from Philip. and so on, I think that's the second topic, oh, that's another one about the union, oh gosh, we're running out of time here and I want each panelist to have a minute or two to react to what's been. he said yes and I think that other common theme was how do you know the exchange rate, but I'm sorry, the evolution of that global value chain and the changes that stem from the pandemic, how are they going to affect future development and more specifically . which is as if I have been able to summarize that the question will be very very short and I will give each panelist a maximum of two minutes to react to whatever was said, uh regarding their own article or something notable in general, so let's start with maria thank you arjun yes i would like if i can quickly pick out what antonio was saying based on nick's perspective on this and i think it's relevant and could also serve as a general response to some of the questions, so the idea of industrial development policy must first and foremost identify opportunities and direction for structural transformation, something that the private sector would not be able to do on its own if it were not led that is the big picture um, what, for example, nick was talking about and this goes back to antonio's point: ideally, to shape industrial policy for development, it would be more like identifying what is the best governance of the alignment of the network so that these different actors contribute to development paths and this is very much within the perspective of an innovation system, much more from the perspective of aligning differentincentives of stakeholder groups towards a common goal of having uh development pathways that are instructor transformations that are um beneficial to countries uh so this is just a general point in the general discussion more specifically on john's topic about um uh the the natural resources sector I mean, in fact, I mean that as a resource it is very peculiar and I consider it to be within the sphere of production that Antonio and June proposed in their introduction, the idea here is to again identify a direction of development more beneficial and diversification and what I consider to be a marvel of competition, so moving back towards a business, a high value-added commercial service that can serve the sector, this has a lot to do with the technological opportunities that are intrinsic in the natural resource sector and there are examples in countries and the cliché is Chilean and the work that has been done in the mini knowledge intensive ng sector p so something that has developed uh complementary to the extractive industries maybe in this context that we can open another discussion about the sustainability of this but i don't want to open it now but ideally it can also help to identify a development direction that is based in the endowment that, in fact, can ideally move towards a more sustainable direction of that particular industry and diversify into something that can then become a competitive advantage for that particular country in this regard, I was proposing the area that might not be necessarily a curse and that it can actually open up opportunities to move towards a more sustainable direction of our development.
I hope it makes sense, yes, to stop there. tamil, i'll just comment on gwendoline's question, which was posed directly in our article, um, part of it was, uh, asking if the analysis is correct. ss uh sectors or for a specific sector and if we detect differences by country or whatever um yes it's across sectors um so in our data we have uh companies in 33 industries that we then group into manufacturing construction um services and then separate from that uh transportation warehousing and communications and and rt um and we have um your industry and uh country controls in our specifications um we haven't looked specifically in this paper uh differences let's say by region within Africa or low versus middle income um or by sector but I think This would undoubtedly be interesting extensions and because we could find that the relationship between productive capacities and export performance varies by sector, by groups of countries, etc. and i think the second part of gwendolyn's question is how do we expect the relationship to change in the future considering gvcs and covert and so on um you know it's hard for me to see productive capabilities uh becoming uh less significant if anything i think which we would probably expect to be more significant uh with the integration of companies within gvcs in terms of um affecting the location of companies uh within gvcs um and the potential to improve uh of all kinds uh functional products and processes ss and so on within gbc's um and in relation to um covered some uh current uh separate work of this paper between myself and uh common naidu from umass amherst we are looking at business survival and business performance and uh how businesses get hit by covert um and actually as part of that we are looking at productive capacities um types of uh indicators um of companies and we find that um the types of firm characteristics associated with productive capabilities as one might expect are important determinants both of firm survival uh before during covert um and of the extent to which they have been affected by covert um on their performance.
I'm very time conscious so I'll tell my stories for a minute or two and then I'll have to move on to the next panel, but it was yes, thanks. I will be very fast. I was going to comment on catching up vs. jumping. question but I saw t Actually Quinley already answered that in the chat so I'm going to skip that uh I was uh regarding the question about uh whether sectoral policies or horizontal policies are necessary in the context of industry 4.0 , uh, I would just make a brief comment that uh, I think it still makes sense to talk about productive sectors and that's even why we use that in our document, but I think the changes with industry 4.0 could be uh, the idea of sectors tech sectors and the fact that these are merging so this separation between the tech sectors may not make much sense anymore and so this should be more uh uh together and also thank uh uh john rand for the suggestion of about baldness and regarding this uh discussion of industry 4.0 together with agriculture, I think that is eh very key eh and in our article we talked about this dynamic between the technological push and the demand group and cr I think that's exactly where it fits in, you know, like the demands of agr Culture is an incentive for the development of solutions tailored to local needs and possibly stimulate new technological solutions from that, so yeah, oh, okay , leave it at that and let's go, yes, I will have to stop you, yes, thank you very much. to the panelists on this first panel uh without further ado i'll pass it over to d'antonio at the start of the second panel thank you very much i'm aware we designed this for strength so it's going to be of course many of these issues would take a lot more time, but we thought, as I just mentioned, to have the second panel that would move right into a number of emerging issues in this field and for many of the contributions like you'll see the idea of understanding organizational output at the international or what people call global value chain global production network was an important organizing principle in understanding what is changing in which direction many of these industry value chains are going what are the dimensions that are relevant to understanding improvement and understand the learning capacity along these value chains? for development in the era of global value chains there is a growing emphasis on understanding whether the rise of value chains has produced the kind of expected or desired outcome for development and a number of contributions from various academic readers in this The field has been pointing out, uh, in some cases, if you want a very positive narrative about the opportunities of gdc integration, while others have also pointed out how this isn't really an automatic process, there may also be many cases where the value chain does not deliver the kind of structural transformation that we would like to see and the reasons for that are very diverse so the contribution that we are going to make We will discuss now that we are going to try very hard to get involved in this issue and I would like to ask you Professor Julie to be the first to present some of the ideas through this paper on global value chains, industrial policy and better quality. now industrial where with the focus or in the automotive sector with the comparative analysis between malaysia, thailand and china also in relation to the korean experience thanks the word is yours thanks antonio uh thanks uh it's great to be on this panel today also to be on this specialist ok let me introduce you to my article in this specialist on, with the title, gvc industry police and upgrading in east asia, and we're comparing, uh, all sectors in china, malaysia, and thailand to the case of korea serving as benchmark ok and our motivation The puzzle occasion is why did malaysia fail despite active industrial policies in the first place?
They basically failed in terms of promoting the local brand. Ok Proton finally sold to ch. ile of China, so what if Thailand almost succeeds as Boldin argues even though it is still under Japanese ownership and thirdly what if China how and why China is succeeding goes to the industrial police or is it despite industry policies, okay? those are motivating questions and we discuss the actualization or success of these countries in terms of three main races based on gbc two measures of bangalore participation in gbc when and a linkage measure of uh fold gbc is ok and so we are trying to say what are the requirements to be successful with industrial policy, especially the local content requirement, that's fine, and our goal is to show that you need three vectors to be successful with industrial policy: first, local ownership, you're ok so unless you eventually uh promote local ownership you can't have full success so that in the Thailand sense it's just mixed success okay and the second fact is you have to have a world market discipline or competition without which you cannot access that is the case of malaysia local malaysian company in near monopoly and therefore they have no discipline for the world market e sa is the source of the failures third party must have funnel effort to build technical capabilities especially locating eh core part hi tech pad in case of car engine and transmission that is where malaysia failed even though they have local ownership ok this is our main takeaway but in doing so we use the gbc specific measure our first measure is that under the peg which is something called fba foreign shareable added in ex gross export , so in the case of korea and china it has decreased for a period where the decrease means the local edition is increasing ok that is not happening in thailand this is happening in malaysia it only happened in korea and china the second base is barrel link 2 which is the shareable mid part responsible for your total input top o If this spell means you're becoming more expo oriented sition, it has increased very rapidly in Korea, but not much in China because China is still domestically oriented, but it's also not increasing in uh, it's increasing in Thailand, so Thailand is successful as an export. countries but that's not the case in malaysia let's just focus on the domestic market ok the third measure is full linkedin and that has increased in uh china and korea but uh not increased at all in thailand and malaysia thus serving as korea as one of the most successful cases china is becoming similar to the korean pattern in terms of three major races out of three and malaysia is writing in any of the three major races thailand is successful only to the extent of export orientation ok so our whole story is that in terms of three factors for a successful requirement and Malaysia's failure is that despite local ownership and supportive policies they don't have any disciplinary competence and , therefore, they did not opt for the export market and t.
Hey don't increase domestic support while Thailand just has mixed success probably better than Malaysia at least export orientation but no local ownership under Japanese ownership so they are constrained in terms of domestic value increase okay, and they didn't go globalization, okay, very low. In other words, while protecting local manufacturers through the restriction of foreign ownership and government to actively participate in the turbine, so that based on the discipline of the domestic market, they can upgrade, so they're increasing more, adding more nationally and uh. also for the outward orientation in terms of globalization they already sell the factory abroad but they only issue success in export orientation but they don't go to the export market too well so the lesson is you have to assume local ownership to be long-term success talent makes success is catching up very, very slowly, so there is a limitation, not bad, but it is a limited limit Success in terms of increasing the degree of domestic value Ok, I think that's a quick summary of my gist of the docs.
Thanks. That was very dense but extremely important to emphasize. your emphasis on ownership reminds me I'm an old job you know is critical in terms of understanding internationalization transnational cooperation and the role of competition in that space so thank you very much for that of course one of the problems that eh in gdc the discussion has probably been uh not so much uh discussed is the role of competition within the value chain and the power exercised uh in uh in the context of various countries such as south africa where uh the type distribution in terms of power downstream upstream along this chain can have a dramatic impact in terms of improvement trajectories not only in terms of the companies but in terms of the country as a whole give it a try I would like to invite uh pamela mundigua of the berkeley research group, as well as the center for the economic development of competition regulation at the university of johannesburg, who has contributed with an article on the productivity capabilities of competition and structural transformation in south africa with uh erkoabsolute smile and samuel roberts summit pamela glorios you antonio and good afternoon everyone i must point out that the opinions expressed here are my own and my co-authors and not the berkeley research group that is just a small disclaimer i have to give greetings from south africa also as fiona working on a holiday as described by antonio i am going to give some thoughts on the production schedule from a competition perspective and as he mentioned this is a drawing from an article that is in the volume that he co-authored with uh sumaya gaga and simon roberts who are colleagues at um the center for competition regulation and economic development at the university of johannesburg so from a competition perspective we have seen a growing debate about what is the adequate conceptualization of competition, both in terms of economic law and policy, to address contemporary challenges of economic development. ico and provide some context.
For those who may not be up to date with those debates, competition law has been part of the market liberalization package that has been promoted in developing countries as a model for achieving economic development, so this is part of the agenda, you just need to get the fundamental right to grow here competition has been based on the neoclassical model of competition that privileges static allocative efficiency and largely ignores production this fundamentalist conceptualization of the market privileges exchange and fails to address the role of competitive rivalry in terms of stimulating investments in uh in accumulating uh capabilities to increase uh, productivity and further ignores path dependencies and market conditions such as size of economy concentration levels and scope barriers to entry and how these factors shape competitive outcomes, um, assumes you know all the s important factors that we must understand. dynamic competition, I mean, one example is that the neoclassical framework would assume that anti-competitive behavior, like cartels, is a distortion that occurs in a well-functioning market, whereas we actually know and especially in small economies like South Africa that there is Entrenched market power and the strategic interactions between firms that would be seen in global value chains are intrinsic features of market economies, so if you don't take the time to understand the distribution of power and the various ways in which companies can use that power to um to balance uh to ensure that uh rents accrue for them so the competition can really miss the boat in terms of results um and so the implication that this template that we've seen in south africa has had but is also the case in many other developing countries is that it has maintained the status quo in terms of this economic structure so if the companies that have power were the ones that were part of the economic structure in the case of south africa in 1994 when we became a democracy because of that power and then you add that market liberalization with the neoclassical type of competition struggles to achieve the diversification that is required in To achieve comparatively long-term growth, a focus on production rather than exchange when thinking about competition requires competition in terms of whether it stimulates or undermines investment by firms in developing capabilities for technological progress and engaging in long learning by making and developing new products and what this implies is that you need dynamic efficiencies rather than static efficiencies and this is in line with what amsterdam singh called optimal competition which is a balance between antitrust competition law as it is known in the United States and the corporation ties and what competition implies optimal competition is that there must be enough competitive rivalry to reduce inefficiency within large firms, but also enough discipline to exercise discipline against the exercise of market power and, at the same time, stimulate investment and innovation and, as such, in the embassy it represents a balance of interests consistent with maximizing the rate of industrial growth in the long run. term, taking into account achieving economies of scale, improved deficiencies and optimal use of resources, and what our article does is it contributes to this larger discussion by maybe uh teasing out a few things we can think about or some ways that we can think about how we could move the analysis towards more optimal competition, so the document uses two value chains in South Africa that are quite important to the economy and value chains. they range from minerals to industrial and consumer goods and in both case studies there is a large concentration in the upstream levels of activities that result, among other factors, from prior state support and what we do in the case studies is review how competition law has dealt with the market power of these companies and how successful it has been in terms of shifting the cost of inputs to support the diversification of downstream companies, as well as getting involved in how industrial policy has supported the companies at the various levels of the value chain and the main points that are drawn from the paper are at three levels and the first one that ties in a little bit to what Kern was talking about earlier is that optimal competition requires a commitment to the power across valley value chains, this means understanding the vertical relationships and the changes needed to ensure that u n more constructive relationships are created that will support the improvement of productive capacities here vertical coordination is essential to support i investments in the improvement of the key issue is how to deal with the power of large companies that govern this and this is not what you see that often in competition law for example because you tend to look at what's going on at a discrete level of the market and where you are looking at the vertical relationships uh you tend to limit yourself too much to one aspect and forget that a lot of these strategies that companies would adopt are reinforcing and multiple, and addressing only one problem does not solve the problem in terms of ensuring, for example, that there are competitively priced inputs to support the growth and development of downstream industries and what we see and What we see in South Africa is that there has been a separation of competition law and industrial policy and what this really does is hurt the government in terms of reconfiguring markets, um because the tool that's primarily used to address market power is competition, whereas actually industrial policy is used. it could support the creation of effective competitors or support national companies to become more internationally competitive and another important aspect that seems to be lost in the current approach to competition is the importance of linkages and here linkages are very important for investment and product development needed for capabilities, but because we are so concerned with competition in particular discrete markets, we tend not to encourage or support coordination even sometimes at vertical levels of companies to bring new products or support joint investment in r d um e innovation and the second point that came out of the case studies was that competition law has been really ineffective in terms of addressing market power when it came to key industrial inputs, well the price of key industrial inputs in south africa, the contentious nature of competition law meant time, yes, this ok sean the litigious nature of competition law meant a lot of these cases were over 10 to 12 years in some cases and where there was potential for some downstream business industries to grow those capabilities were eventually lost over time , maybe I'll skip to the last part since I have a minute, but what I think we end up with next is what would be a conceptualization of competition or optimal competition that would support a more productive schedule and here we say that
bringingproduction back requires starting from the objective of building shared productive capacities and generating competition and recognizing the creative functions of the markets, which is why in the spaces of computer law it is often heard that we protect the competition and not the competitors, but competitors are needed to have uh competition so it comes down to really looking and focusing on understanding what the competitive process is ivo and how you can support that process instead of focusing on statistics c efficiencies which is what we have seen and there are alternatives to this um so for example in germany they have auto liberalism um and of course there is the famous example that is used in amsterdam which is in south korea which is really about the balance between industrial policy and um competition or antitrust policy and this really focuses and focuses on understanding the horizontal and vertical relationships um between companies and understanding the type of incentives that need to be created to for companies to invest in long term projects that would support long term economic growth thank you thank you paul this was brilliant and I think it's great to see more and more of this combination of industrial competition policy understanding how these things are strongly interrelated and thanks again to you guys and fiona too for joining in on the day which is, you know, vacation huh i would take advantage too this occasion to say that we are a lot of the content you put forward it's all so part of a longer project which is now coming to fruition in a volume with oxford university press due out in the summer so we'll hear if you're interested in that, we will have the opportunity to continue discussing these issues inside. probably a few months with another with another event and of course it's also very important this issue of looking back at the work of people like ajit singh and ali samson who were exactly trying to have this much more dynamic efficiency perspective on the competition and structural transformation.
One of the things that we could not overlook in an analysis of the productive transformation was also to understand how the conditions for investment have changed as a result of a great financialization and, of course, the work of academics like William Lazonic is very fundamental in Financialization thinking is not just about economics, it's about what happens inside companies, the extent to which companies reinvest and are able to keep up with some kind of level of tobacco and learning capacity building and of course innovation um sophie vanullen from the economics department at source university london is our next speaker presenting a joint paper on the potential for improvement in financialized agreed food chains with a case from the ghana cocoa sector sophie implemente yours thanks antonia and also thanks to harjun for giving me the opportunity to contribute to this excellent special issue congratulations to both of you um yes antonio said this is course work with uh muammar abubakar who is working for cmc the marketing board in ghana and his input of course has been vital in giving a lot of detail on the study of particular case that we are investigating, so the document analyzes or tries to answer the question of what?
To what extent does financialization open up new opportunities? runities and to what extent it changed nearby opportunities for functional improvement, so that was the initial question. Then we look at different dimensions of financialization, basically two different dimensions, one is how financialization has changed the way large multinational corporations operate, both in the way profits are generated. how profits are reinvested or not reinvested as well as how these corporations compete and the other level that we saw in terms of financialization was, um, more at the level of global finance and that's where some of the debates about monetary hierarchies arose um, they came up. up front, so what does it mean to trade the currency that is not part of the hierarchies of the higher monetary hierarchy? in terms of how they both hinder and promote opportunities for functional improvement, particularly looking at the cocoa chocolate sector in ghana the reason why chocolate or cocoa is particularly interesting in the context of ghana um is that um the kokosak that plays a very important role in terms of reserve accumulation or for the accumulation of financial reserves or the access to financial reserves by the central bank of guinea and that is linked to a particular mechanism in which cocoa contracts are used to obtain funds in us dollars through international markets um so um ghana is one of the few countries that has not liberalized their cocoa board that means ghana has an absolute monopoly um through the cocoa marketing board or cocoa marketing board cocoa purchased cocoa insured by the cocoa marketing companycacao which is a subsidiary of cocobot used to then use these contracts with multinational buyers to access cheap US dollar financing which then goes to guinea and the central bank so that t The way we looked at this was um double um and first, What does it mean that multinational corporations would now operate and compete quite differently than they might have done previously in the financial sphere?
What does it mean for new companies to enter these markets? what are the factors that hinder what are the factors that promote functional improvement and then also what does it mean for a government to promote functional improvement so what is the scope to actually do it and it could be beneficial or not for that economy the conclusion was as follows like this that we identified um um conflicting forces in conflict at both levels um the first conflicting force at the level of multinational companies and the capacity for local processing higher local value added and eventually chocolate production um was in the direction of financialization at the level of multinational corporations has promoted the establishment of primary processing in Ghana so that these core companies are now more willing to, um, relocate some of the messier, um, more inventory-intensive, um parts of the production process that they involve primary processing in areas like or in locations like ghana so basically outsourcing these activities, which then allowed sort of a mid-level processing capacity to be built in ghana and other cocoa-producing economies as well; however, the level of competition that is taking place now predominantly in the financial sphere either does not allow for these competitions or prevents these companies from advancing beyond that level of primary processing into actual chocolate production and branding to some degree. , so to show off promotion to some degree, but then to lock these countries up or risk locking these countries into a middle processing or middle value-added trap at the level of international finance, once again, we have two forces, one is and we know that ghana, like many other low- and middle-income economies, is dependent on primary communications. commodity exports and that has all sorts of ramifications for microeconomic management so it's imperative to diversify away from exporting primary commodities and promoting a domestic primary processing but at the same time these exports are the main source of foreign exchange reserves that are urgently needed even more needed if you are a dependent commodity exporting economy to manage your market economy and cushion the volatility of commodity cycles so again there are different kinds of forces that attract and they push towards primary processing, how that ultimately ended up in the ghana political space is that ghana strongly promotes the primary processing of cocoa at a particular level which is the semi-finished level very low value publishing activities and these are purely oriented towards the export wait exclusively for export because they are still set aside to generate foreign reserves now for or at least we argue that in order to build a domestic chocolate industry and there has to be a level of um the domestic market needs to be explored first um before we can expand into the regional market and then the international market for this to be feasible the policies have to change and that also means we would have to divert or divert some of the cocoa revenue from the international market away from um exports and therefore also give up some of the US dollar reserves that would be gained otherwise, now, this is not a feasible policy strategy and that is not the case, that is not a feasible strategy for Ghana, it is also not a feasible strategy for most primary commodity exporters, which we suggest suggesting instead. as a policy solution is to exploit the existing system, which is a monopoly forward sales system by the cacao marketing board, which is a subsidiary of the state cacao board that actively promotes the national processes and also the chocolate producers through installment sales of some of their products. so guarantee the revenue in US dollars and then give the remaining profits which is also us in US dollars to use to slowly generate by slowly building a domestic chocolate producing sector and there are success stories in Ghana so Ghana has a very long history of producing chocolate it has capabilities it has comparative advantages um produces chocolate that can withstand very high temperatures and therefore is able to expand into regions and geographic regions that have very tropical climates so there is a lot of potential there in terms of capabilities and some companies have recently come out of this relationship between a very productive relationship between cmc, which is the quaker marketing company, um, and that particular chocolate producer that came out of primary processing, so we suggest actively use this example to promote, um, such processing, such interaction, um, to slowly building a country uh chocolate producing sector and therefore overcoming uh step by step um some of the constraints that financialization would otherwise face um that's basically what was brilliant very much reflects also this invitation to try to understand the link between these micro dynamics macro table especially in economies where these sectors are strategically important also from the macro p point of view in terms of the ability to generate resources to reinvest in the economy and develop improve this supply chain I am also particularly pleased because it that you find what you found with your code or is it that sometimes we tend to overestimate the lack of capabilities, you know?
That's the same thing that we found in the context of South Africa and you know it goes back to work that also changes and others in the '70s that we're trying to point to, do you know that there are capabilities here and there are? pockets of capabilities that can be tapped, and sometimes we need to identify what is really limiting that capability from providing the kind of structural transformation that we're talking about. also to address the issue of how you engage with industrial policy, innovation policy, but of course also sustainability and green industrial policy, and there is an increase. g amount of research now on how to make value chains more sustainable how we use the value chain framework to swarm about sustainability and greening technologies production processes and markets development so the latest article by wendy nancylin and amir joy is leaving to provide some ideas on this in this last dimension that we have put for the emir special you're welcome the producers thanks antonio and thanks to hadoon for coordinating the special issue and to all the other authors for the inspiring work huh so yeah good afternoon everyone i am very pleased to have the opportunity to briefly introduce this paper co-written with uh gwandalina anzalin from the european commission and iapp joint research center on the three dimensions of industrial policy green in the context of climate change and sustainable development, so the reason why g wendoline and I started this work was precisely the result of our collaboration frustration because the discussion in the global policy discussion and at the academic level on climate change has focused mainly on consumption while often neglecting production and therefore we wanted to bring structural transformation to the climate change debate to light in the spirit of this special issue and even critical perspectives like d growth tend to reproduce this emphasis on consumption while neglecting production on the grounds that we know that we need to reduce or shift consumption towards greener products and cleaner energy sources, but as we look at a surprisingly little attention is paid to what it means to shift from green to greener consumption in terms of transforming productive structures.
The challenge of climate change mitigation goes beyond consuming less, as it also involves producing differently to maintain low-carbon consumption patterns. In that sense, the role of green. industrial policy is of central importance and we review and build on the growing academic work investigating the synergies between environmental sustainability and economic development, but note that although the term green industrial policy is becoming increasingly popular, what really it means remains unclear, the term means different things to different people and therefore we identified three main approaches to classifying the different types of dimensions of green interventions. The first is the consumption-centric approach that focuses on individual consumption.
The second is the company-level sustainability approach that emphasizes resource efficiency in existing supply chains and the third is the innovation-driven, predictive agenda that involves developing and manufacturing low-carbon technologies and our message The main point here is that all three dimensions are essential and highly interconnected in the process towards a more sustainable social and economic model, in other words, it is not just one approach over the others, but actually all three, the best industrial policies Green are the ones that will coherently cross these three dimensions and each of these dimensions by itself has strong limits, so the first dimension allows changing consumer behavior. that a product can have an impact on production through the power of consumers in the governance of buyer-driven value chains, but it is unlikely to change consumer behavior if it knows that the cost of shifting consumption towards greener products is too high or if everything is adequate there is a lack of alternatives and could even have a uniform impact on lower income groups, such as in France and Ecuador, the second dimension can help deliver the same final goods with less emissions and waste , which implies some changes in production systems without having to change consumer preference, but these policies I mean having a clear limit without complementary investments in r d is for uh new technology to improve resource efficiency efficiency, even if we basically promoted modernization with existing technology, we would really limit well and it would not be enough to meet various objectives.
The third dimension takes into account the production side of climate change mitigation. compatible sustainability, but first they can be difficult to achieve in some countries that lack pre-existing technological institutional capacity, but also this line of thinking is often used to divert attention from all the actions we can do. Now write the idea that the new technology will come out, we don't need to do anything, it's going to be fine, but the idea that it's all three, I need an author, I also needed to, uh, expand uh, local technologies and make them more profitable by not just changing consumer behavior in line with the technology that is currently being developed, as it is done in Europe, LED lighting and many solar technologies and many others, now something more than f The only thing is that the third dimension is one that developing countries rarely address it correctly and this is important because most industrial opportunities associated with green transitions could be located in the third and we show this by using the case of Ecuador, which is often presented as a transition success story angel and, uh, in some parts with good reason, but most policies have emphasized the first and second dimensions, which means that the country has lacked is a case of transparency ang position without industrial transformation, right? and also due to the lack of coherence between the type of in terms of policies in the different dimensions, in short, what ali samsden and many other academics that are present today have identified in terms of the global the broader trends that dominate the anti-poverty policies that are consumption oriented while ignoring production jobs are also evidence in climate change mitigation debates, however we argue and show that for included countries and especially developing countries seeking to take advantage of employment opportunities industrial technology that derive from the green transition the third the third dimension of our matrix is of particular importance and must be carefully synchronized uh coordinated and aligned with the first and second dimension policies the accumulation of productivity capabilities, including fundamental innovation capabilities what matteo and maria sophie fiona and the others mentioned today required for the export of goods and servicesSo it's still a very important agenda in the context of 21st century development thank you thank you amir thank you that was very, very important as it also connects some of the dots that we've been making, in a sense, the emphasis on the production side is not just that you can't underestimate or replace it by talking about innovation or other things which of course are very much a part of that, but they're not fully addressing the producti Five Dimensional Transformation in the ecological space as well.
John, I think you now have the floor for a round of comments and reflections. and they apply an interesting methodology so I'll try to keep it a bit broad and then get us thinking a little bit about what we can use this type of work for moving forward and starting with the first paper I think this is very interesting to use these types of studies of cases to understand the development, what types of policies work, what types of policies didn't work for the specific industry, but what are the insights that we can get for this for possible predictions? for development let's say big push policies uh going forward uh in certain types of industries in different markets in different contexts so how much of this development can we actually use in an African context and that leads for example , some of the other papers that we just discussed uh what uh how much is the failure of the government versus that we have not focused on the right kind of analytical framework to understand the dynamism in all sectors within the economy and what is basically the failure of the government I will return to that with the second document.
I really enjoyed uh your presentation pamela um and I'm very interested in the South African economy and I think the conclusion that comes out of the paper is also very very interesting but again I'll do that. then talk a little bit about my experience that i have in vietnam where i think there are also policy failures and there have been many of the same problems that we face here in south africa but one thing i noticed is that in south africa the south african context, often we don't really discuss whether it is the government that is slow to come out of bad policies compared to, for example, the Asian cases. policies in vietnam and we have seen there has been a paper showing that five out of four policy initiatives and industrial policy initiatives in vietnam have failed but the one that succeeded was hugely successful so are we discussing whether governments are bad to quickly abandon bad policies?
Enough I'm talking about, for example, not being able to separate industrial policy from competition law so they can't combine them uh they should be quicker to figure this out and start doing this i i draw the conclusion from the paper and really I support this, but are we also lacking? Is there a missing link that we don't understand in terms of industrial policy? What role does the failure of government play in all the things we are discussing now? and that will lead me to sophia's article and i think this is very interesting but it's also what i call very interventionist ideas of intervention and again could it be a concern in ghana in a specific industry how successful has it been?
The Ghanaian government has been implementing other types of interventionist ideas like this, so maybe we should discuss that a little deeper or more in-depth so you can see that all the comments I have here are related to Kian's article that We must not neglect the issue. of the government's willingness to change policies quickly when we talk about industrial policy as well, so that's the main problem that I have here antonio if you will allow me to just deviate a little bit because I would also like to highlight because I see a lot of young people here in the audience and I i would like to refer to the journal so the european development research journal kinda we have an early career initiative which is basically helping you can say or helping young academics to promote their work and help them with improving their papers to fit a journal like the european development research journal currently the european development research journal has an impact factor of 1.93 so it ranks quite high for development journals of this type and since Spencer took over and other very prominent people have been a part of the magazine, not me, but I can talk about something. one of my colleagues who are doing a tremendously good job that we have been able to create a journal where we allow special issues like this very and if you go back in time you can see that young scholars have also been able to start special issues and get the journal accept them to promote your work in the future so I really encourage you to consider the journal basically it's the young staff here or the young academics here because we can say that some in some we do get preferential treatment in some sense to the journal in some part of the numbers of course has to be of a certain quality there is no question about this but we do recognize the age difference between people coming into the germ ok and just wanted to highlight this thank you antonia thank you john thank you i think that is a very good one way to close your comments you know talking about child industry protection and helping to develop learning and capabilities I'm particularly pleased because I would exactly join the editorial board, so I double down on your invitation to have more embedded research communities with more senior young scholars working together. er on these topics this is great so I think we have some questions that are coming up here there's only eight ten minutes left so I'll try to be a junior round one just to answer a question that came up uh for the cube uh When it comes to local content requirements, developing countries are often very concerned about restricting wuhw and introducing, of course, local ownership rules. do it ask about local content and there were some questions as well at one point across the panel in terms of the challenge and pick this one from us also towards pamela which refers to also reflect on something that john mentioned the challenge of coordinating government interventions in all industry and competition points so I'll pick those but there's more so like we did before a couple of minutes for each of the panels just to address them and I'll ask you a truth.
Just to give us the last bucket of the last word please okay thank you yes I read this comment. china but they all have to give up because of the derby applause request so in others they have the same start and the same test or uh uh they interfered with wgo but only china succeeded that was um best case scenario is you promote fdi or oem first but eventually by meeting local requirements or some other manageable learning by local entities eventually grows the company from india it happened in china it happened in korea before but not much happens in thailand or malaysia ok even in vietnam they are really assembly samsung mobile phone makers but they can grow a local company called bin a local owned company so you learn from foreign company fti in parallel you should be able to grow a local company and that's basically what happened in the past in korea and recently in china and pop maybe heptune in vietnam ok in the case of malaysia too although they failed in october they are successful in some resource based sectors that is my job we make a mirror emir in other words in the palm oil or love industry they can grow locally owned companies and they are not they are way behind and they are too they export so these are the amazing new source of growth in malaysia so malaysia is now doing well not based on manufacturing but based on local resources.
Sectors based on them also don't create much value locally in the IT sector, or it's the same as car, it dominates a certain image of Thailand, so they only create to a limited extent local aggregates, so they're less accessible, but there is success better more intolerable those palm oil sectors and more global resources thank you very much pamela please thank you very much john for the comments and uh matthias for the um question you sent and I think there are two main points I would like to make on these questions that are a bit linked, one could say that in terms of your question, John, you know the government is slower to get out of bad policies and change and adopt new policy work that we've done that will actually reflect in the book that antonio mentioned you have shown that the distribution of power within the economy does not really support diversification of skills, so there is a lot of power and part particularly economic power tied to the existing structure of the economy, so there is little you know about the incentive for the powers that be to walk away and this makes it a bit more difficult for the government to abandon bad policies and indeed the competition is a perfect example.
From this, some of the recommendations that we're making now were actually part of the initial draft of the 1919 law of the 1998 law that was written, however, that draft was brought to um nedla ch, which is a platform where government companies and workers negotiate policies, and through those policies, many of the domain abuse provisions, in particular, were watered down because they were influenced by the power of companies, I mean in combination, of course, with the paradigm of dominant politics that was happening at the time that I think the Washington consensus was very strong when South Africa was entering a democracy and creating these policies, but there is also a related aspect of this that is what Antonio raised, which is the government coordination so instead of seeing more coordination in south africa over time we have seen more fragmentation of government we have seen the creation of multiple the government departments that would effectively be dealing or organizing the same thing so industrial policy sits with me I can't really even tell you the number of different departments and this was done in part to facilitate corruption um and what um i' As I have argued with Simon, one of the co-authors, in a different article, is that this stems in part from the kind of exclusion felt by the majority of the population because the system was created to preserve the status quo, so that all those who were outsiders felt increasingly excluded. excluded to the point that some um and in political circles that had some political power then picked up on the idea that the only way you can, you know, accumulate wealth is by breaking the rules and hence the oh, sorry, nice so two dynamics that are at play at least in the south african context thank you very much sophie thank you john for the comments um i agree the conclusion is a bit interventionist the rest of the paper not at all uh just focus on analysis um there is a problem of generalization, so I think the trade-offs that you're describing are very common in commodity-dependent economies, and of course there's also a lot of heterogeneity in these economies and differences that are based on agriculture, right?
Are they more energy based? But these merchants exist, um, for a large number of countries. However, the solutions are very specific to Ghana, so it is not something that can be replicated in another economy. um it's a lot of context uh specific um to the question of how what is the appetite of the current government uh when it comes to interventionist policies it's huge um so the current uh president of ghana um has a very very strong agenda um of um to do meet almost um processing and also chocolate production nationwide um then recently threatened um switzerland from uh saying they are not willing to trade any more raw or raw cocoa beans uh with global laws if they want um so they very um can being very concerned about this and it is a key item on the political agenda, the struggle right now is that we have two different forces within the government that are fighting around these issues. one is the ministry of finance and the central bank which is dependent on these foreign reserves the other is kokobot and both are Ghana's koku board both are very very strong political sacrament so Ghana's coker board is not it is a small ministry. or a small player when it comes to government it's a huge player so I would say they have about equal power when it comes to negotiating the terms of these policies the suggestion that cmc sells some of the primary process products doesn't it's something that's the hint of something that's already happening for some of the home processes, so this is something that's already been implemented. which is very open to debate, uh, nationally, but yeah, there's a huge appetite, incredible appetite resources right now because of Corvette and Commodit. and the slash situation is very inductive it's a bit questionable sorry antonio now i would like to give amir a chance uh for his one minute comment andmedium uh amir please i don't think i got any comments or questions so feel free to if if you would like to have a final comment feel free and then i'll move on to a juniper well well maybe uh uh one uh comment The very brief end of looking forward to this agenda is the notion of sustainability and in the green sectors in general there is a sector that traditionally the legion industrial policy field has not necessarily considered but that is very important today, especially because it knows that the new generation of students that when they hear about industrial policy, generally the cases they hear are cases of you know the type of sectors that tend to be polluting and so on and do not associate it with something the tool that can serve as a solution to move forward to face the challenges of today well and that is a fallacy because obviously Only those state interventions can be used for different sectors and to also address d Iferent sectors, such as sustainability issues, so I hope this is an agenda that the neo-Champarian developers and industrial policy literature are increasingly taking advantage of. amir um i would just say one word as my last comment i am particularly pleased that it was in the second round we have noticed from many of the comments in the discussion that production is political it is not the technical exercise and i think this is also something that we increasingly need to take into account in our analysis beyond a rather dry version of understanding what happens in terms of productivity innovation technological change all of these things have a fundamental political nature that must be understood as part of this technical transformation and stuff so thank you all for that and last quick tune in to the last word thank you no I just wanted to say one thing you know I think what came out of the research that was done for this special issue is that we really need to understand the granularity of individual situations, if you will, because our studies have shown exactly that. what policy entails which actors work in which domains that is good depends on how is the country that knows what level of development what kinds of capabilities it has what are the resource endowments and then also what it wants to achieve you know I mean is it a Leap or that kind of redesign of the power system or is it breaking into new markets?
So I think that's what we'd like to encourage the contributors and also the people who have come. this seminar is to really think about policy intervention in this kind of context and in a detailed way, and I think our theoretical frameworks that we've developed in this special topic really help us to do that because you know that by definition, the domain of production is characterized because you know the singularities and you know the minor differences and so on between different activities you know that in the market everything I want to say probably shouldn't be, but that gets that down to some kind of comparable monetary unit, but when it's about production, you know each technology, each sector that they have about their unique characteristics and those kinds of theoretical frameworks that we've developed from this experience should really help us see that and hopefully that should encourage us to, uh, sorry , allow us to engage in the policy debate in this more uh sensitive way but uh, instead of just uh discussing whether the government should intervene go or not I mean, we have that, myself included, I wasted too much time having that debate, yeah, so hopefully this special issue will allow us to take the debate to another, more productive level.
Thank you very much for this productive note.
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