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CHAPTER 4 Rising to the Challenge: Priorities for the Developing Countries and the International Development Community The changes that will result from the new technologies described at this symposium will present a different face to different countries. Many countries simply do not have the minimum levels of capital, infrastructure, human resource capability, basic services, and technological awareness to benefit from the tele- communications/computer revolution over the short term. Many of these coun- tries, however, are the very ones that will have to rely most on technology to relieve the pressures on their food supply, health and education services, and environment that will accompany the next doubling of the world's population. Ironically, while the rapid changes fostered by today's sophisticated telecommu- nications and computer technologies are likely to become reality and many of them already are those still required for survival remain on the drawing board. The international development community must, therefore, not abandon its ef- forts to assist these least-developed countries. The telecommunications/computer revolution may, in fact, have little to offer them. For other countries, however, there are opportunities to grasp that would allow them to catch up with the developed countries, with the world economy, with their own environmental remediation requirements, and with the demands of their own growing populations. But to succeed, they too will require some assis- tance in planning, some awareness-raising, and substantial changes for invest- ments in economic growth. This chapter seeks to identify some of the priorities, delimited by problem area, that will permit developing countries to accelerate the process of applying This chapter draws substantively on the invited papers by Baruch (technological innovation and services) and Shine (health technology), as well as the discussions of the break-out groups. 50

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PRIORITIES 51 the new tools offered by the technology revolution. Most of these priorities must be implemented by the countries themselves, the private sector, and the scientific community. Others will be part of an international effort coordinated by develop- ment agencies and the World Bank. This chapter will conclude by examining the corresponding new roles for the cast of actors on the international stage. FOOD SUPPLY The population pressures that will affect a significant number of the world's countries in the early twenty-first century give priority to issues of food security. The increases in crop and livestock production that will be required, estimated at greater than 100 percent over the next 40 years, will have to come mainly from gains in yields per hectare, mostly on land already under cultivation. This will require technological advances in agriculture that can be compared in scale and impact only to the green revolution of the 1960s-a revolution that was largely led by international research centers located in developing countries, funded by international organizations, developed countries, nongovernmental organizations, and host governments. But since the sixties the international political climate has changed. The global markets are no longer dominated by so few countries, and the private sector plays a greater role in research and development. Nevertheless, the remedy for projected food shortages remains the same: more technology. Basically, three farm types are found in the tropics: the industrial-scale or plantation sector; integrated, multicrop farms; and the traditional farms, usually found in marginal-soil or low-resource areas. In general, private market incen- tives should suffice to spur growth in the commercial plantation sector. Thus efforts to promote increases in the food supply should focus on productivity and concentrate on the most competent, integrated, multicrop farms found in high- resource areas. New technologies must be introduced on these integrated farms; newly strengthened national research and educational institutions could help to develop or transfer the technology and support productivity gains. Such measures also might have an impact on the traditional sector if efforts are made to study and improve traditional crops and farming systems. Assuming the new technolo- gies will be forthcoming, the key problem will be getting them into the hands and the minds of the farmers technology transfer. Market incentives for the adoption of biotechnology-generated products gen- erally reach the plantation sector. But the integrated farm sector has less access to information and may be more conservative about new technologies, having less margin for survival. Promotion, demonstration, and extension may be essential to the further adoption of new cultivars and improved varieties. Investments in soil productivity enhancement, associated with crop rotations, conservation tillage practices, increased efficiencies of fertilizers and pesticides, and improved farm- ing practices to avoid erosion and runoff, will provide major gains. For the traditional sector, scientific breakthroughs that might permit the cultivation of

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52 , Marshaling Technology for Development high-value commodities on marginal lands without unduly degrading the envi- ronment would make a major impact. This problem, however, holds little interest for the developed countries, where most biotechnology research is carried out. Solutions, then, should be pursued in national and regional agricultural and bio- technology research centers. PRODUCTIVITY AND COMPETITIVENESS It is in manufacturing and services that developing country firms perhaps have the best chance of using advanced technologies to propel them into equal participation in global markets. But two conditions must be satisfied for these firms to become integral parts of global integrated manufacturing networks: the developing country firms must be competitive in price, timeliness, and quality; and the policy environments of their countries must be conducive to global production. The notion of "design-for-developing countries" will work if these countries are able to offer access to large or emerging markets, or to sources of materials that cannot be readily obtained elsewhere. For example, a developing country firm could introduce a product such as an electric water pump designed for a consumer appliance to a new market for use in tandem with a solar generator. Another firm might provide workers with a moderate level of education and skills at relatively lower wages. Or a firm might offer boutique manufacturing because it is small enough and flexible enough to custom manufacture on demand and in small quantities. Consideration of the new patterns in collaborative manufactur- ing will help to identify many opportunities for manufacturing enterprise devel- opment in developing countries. In much of the developing world, the industrial sector is dominated by a few very large firms and a large number of cottage industries. Middle-sized compa- nies that have the flexibility and capability to serve as reliable suppliers in a value chain are in short supply. For such countries to compete, new government-devel- oped incentive programs could encourage the formation of such mid-sized firms to serve as a supplier base, thereby reducing imports of subassemblies and com- ponents. Proximity of suppliers is a valuable asset, as is the timely import of high- technology components such as displays or integrated circuits that are not manu- factured locally. Similarly, a good transport infrastructure, including rapid customs services, is important. The establishment of industrial parks and duty- free zones would encourage participation in global networks. For some countries, substantial changes in the domestic economic environ- ment-such as low inflation, deregulation, and intellectual property rights pro- tection and a commitment to change by both the government and the private sector will be needed to create the climate for effective participation in global networks and markets. But any such changes should be undertaken as part of a vision of the future created and articulated by each country. All sectors govern

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PRIORITIES 53 meet, private sector, universities, labor should contribute to that effort and then identify and carry out the actions to achieve that vision. A mechanism useful for this purpose is a national government-university-industry roundtable at which government officials, business leaders, scientists and engineers, and economists exchange ideas and prepare a plan for public debate and government decision. Nongovernmental organizations, particularly trade associations and professional associations, also should play a part. The knowledge required for rational deci- sion making in this area is not exclusively held by governments. The challenge presented by the technology revolution requires participation by all sectors of society. Such a vision should be supported by a strategy to fulfil it. A country may decide to enter global manufacturing markets in areas where it has a comparative advantage by first offering peripheral components or services such as software, spare parts, field services, tools, or postharvest processing of agricultural prod- ucts. These arrangements could be consolidated by license, joint ventures, for- eign direct investments, or government-required offsets on other contracts. Such ventures will spin off knowledge of the technologies and of the international markets. Later, the country may wish to introduce products to local markets, enter into long-term partnerships with major international producers, or undertake com- plete product manufacture in competition with producers in other countries. Each country must be firmly aware of its own interests and recognize that no one gives away anything valuable. Today's technologies may be available for license, but only when tomorrow's are on the test bed. Governments, in collaboration with the private sector, can take several kinds of actions to implement their visions. For example, in a competitive environ- ment low-cost labor will by itself count for less, but a moderately low-wage yet educated and trainable work force may have a definite competitive advantage. Even so, the cost to a firm of training may offset low direct labor costs, and thus it may be advantageous for government to share training costs and to take measures to discourage the practice of one firm hijacking workers trained by other firms. Government also could create institutions that offer training in the management of technology, possibly following the model of the institute set up through joint U.S.-Chinese cooperation at Dalian. Other services that would assist local firms are: technology scanning and forecasting, technology demon- stration and transfer institutes, trade shows, and technical information services linked to worldwide information networks. Information also might be distrib- uted through the facilities of other public services, such as electricity and tele- phone, that reach most establishments. Deregulation and the elimination of trade barriers are important steps along the path to competitiveness. New informatics technologies are, in any case, erod- ing the capability of regulatory agencies to control the service industries, or to prevent domestic services from being marginalized by international competitors. An example is modular telephones, which can undercut local telephone services

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54 Marshaling Technology for Development and provide untaxed and unregulated international service as well. (In Chapter 2, however, this example is used positively as a way developing countries can jump-start a telecommunications industry.) Obstacles to foreign direct invest- ment and to high-technology imports can impede local participation in global markets. A closer look at the experience of the newly industrializing countries of Asia and Latin America would be useful. The World Bank and other neutral parties are ready to advise developing countries in the area of regulatory reform. The success of many of the actions described here will depend on coopera- tion from the developed countries, from investors who see a profit in working in the developing countries, from manufacturers seeking partners, and from scien- tists and engineers who can provide valuable advice. Communication among all these players is essential, and this too could be facilitated by modern informatics technology. On an Internet bulletin board, questions can be posted and answers returned, and third parties can comment on both the questions and the answers. A bulletin board devoted to the technological aspects of development could serve as a forum for questions from developing countries on technological opportunities and answers from investors, potential partners, and scientists and engineers, with commentary from the World Bank and other international monitors. This initia- tive would cost virtually nothing and could be either informal and open to the public or restricted to a defined group. ENVIRONMENTAL AND ENERGY TECHNOLOGIES Technology will contribute in different ways in the environmental arena. Pollution and resource depletion, the two faces of environmental destruction may find some sources of remediation among the emerging technologies. New techniques for bioremediation can clean up some of the damage to fragile envi- ronments, such as oil spills or heavy metal contamination. Similarly, other tech- nologies, developed in the West in response to public agitation over hazardous waste sites and industrial pollution, can reduce the emissions and clean the efflu- ent from industrial plants. These technologies can be licensed and applied in developing countries before extensive damage has been done. Energy generation and use are a major source of pollution, but many new and emerging technologies for efficient, cleaner electricity generation are available and well suited to developing countries. In fact, this is a good time for developing countries to add new, more efficient low-emission technologies to their capital stock while per capita demands are still low. Based on current demand projec- tions, in 20 years the developing countries will require a tenfold increase in generating capacity as well as end-use equipment. Fortunately, these countries are in a position to leapfrog to a new generation of technologies that is far more efficient, less costly, and less polluting than was historically available to the industrial countries. even at a far more advanced state of development. The result will be an approach from below to the present-day optimal level of energy use per

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PRIORITIES 55 capita for the given size of an economy, instead of the path of expensive retrofit- ting required in many developed countries. During the oil crisis of the seventies, many international organizations and bilateral donor agencies undertook extensive energy planning, assessments, and research programs. Today's situation may be just as critical in the long run. Many countries, finding themselves undercapitalized in the energy sector and with growing demand, are making key decisions that will affect the economy and the environment for a long time. The issue this time is not so much the choice of fuel although there are still choices to be made among fossil fuels, renewables, and nuclear than that of generating and end-use technologies and their relative benefits in terms of high efficiency, decentralization, and pollution control. The scientific community, supported by donor and development organizations, should take the lead in providing good offices and advice for these important decisions. The great importance of macroeconomic stability, of pricing and tax policies based on economic principles, and of a satisfactory regulatory framework for investment, is well known. Government must play a key role in sending consum- ers the right signals and enabling markets to function efficiently. This role should embrace such approaches as (1) setting standards and codes (for example, for the performance of buildings, appliances, and equipment); (2) monitoring pollution, establishing environmental standards, and introducing environmental taxes, laws, and regulations (such as for phasing lead out of gasoline); (3) attending to prop- erty rights issues, which can be important for the design of environmental policy (rights of the polluting and the polluted parties) as well as for investment; (4) providing investment incentives for the adoption of new and innovative technolo- gies; and (5) providing for the sharing of risks, especially important in countries with undeveloped capital and insurance markets. RESEARCH AND DEVELOPMENT The research and development community has brought the world the com- puter/telecommunications, materials, and biotechnology revolutions. A creative partnership of the public and private sectors in the Western countries and Japan produced most of the new technologies discussed in this proceedings and is in the process of changing the world. One would not assume that the research and development system needs any remediation, but in many sectors it is not, in fact, providing the innovations and discoveries required for the problems of most importance to developing countries. Most fundamental research is done in and by the developed countries, and much of the applied and developmental research is carried out with their large and affluent markets in mind. The needs of the poorest countries or of some tropical countries-especially in agriculture, health, educa- tion, and the environment-often are not considered. This is in a sense a "market failure" in research and development, and some "intervention" may be necessary. The most successful model for research and development for the benefit of

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56 Marshaling Technology for Development the developing countries is the system of research laboratories of the Consultative Group for International Agricultural Research (CGIAR). These laboratories, most located in developing countries, specialize in corn and wheat (Mexico), rice (Philippines and Liberia), forestry (Kenya and Indonesia), livestock (Ethiopia and Kenya), insect physiology and ecology (Kenya), tropical grains and legumes (Colombia and Nigeria), arid-zone agriculture (India and Syria), potatoes (Peru), training (Netherlands), food policy (United States), and other areas of agricul- tural research. Their successes stem from their concentration of scientific re- sources, including the skills of researchers from all countries, on local problems in the developing countries. Some of their weaknesses have been related to diffi- culties in disseminating and communicating their findings. The lessons revealed by several assessments of the CGIAR research network should be studied with care before the model is copied or expanded. Other areas that could benefit from regional centers of excellence in research and development are: health research, with a concentration on vaccine develop- ment, contraceptive technologies, and tropical diseases, as well as the capability to track emerging diseases and drug resistance; energy research, with an empha- sis on adapting renewable source technologies to local conditions; environmental research, to understand and minimize the impact of agriculture on the tropical environment; and education, with a focus on technologies for mass education in poor countries. The new centers of excellence could be built on existing research centers either national research institutes, which exist in many countries, or the CGIAR research centers. They would offer professional training to developing country researchers and an environment that would attract distinguished research- ers from both developing and developed countries for limited stays. Research in the social and behavioral sciences should be included in the programs of these centers. The proposed centers might differ from the centers of the CGIAR system, established in the 1960s, by utilizing telecommunications and computer tech- nologies to involve the private sector and a wide spectrum of scientists working in their own laboratories. This different kind of international research network, appropriate to the 1990s and into the next century, should be explored thoroughly by the scientific and donor communities. Many developing countries have been sending scientists, engineers, and other professionals overseas for training for decades; China now has more Ph.D.s than England, France, Germany, and Japan. Some say, however, that these developing country professionals are not yet producing up to expectations. A similar situa- tion occurred before World War II when the United States had more scientists than Europe, but they too were not making a great impact. The war focused the efforts of the Americans, and a radical but more benign upheaval might serve to energize the scientific elites of the developing world in a similar way. The stimu- lus could be provided by modern information-computer-telecommunications tech- nology, coordinated by regional centers of excellence to give these scientists

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PRIORITIES 57 access to up-to-date technical information and publications and allow them to communicate easily with their colleagues around the world. These scientists might, then, provide the leadership needed to bring their countries into the tech- nological mainstream. INSTITUTIONAL ROLES The developments suggested here will not come to pass unless all sectors of the world community do their part. The challenge of marshaling technology for development will require new roles for governments, the private sector, research and scientific institutions, and the World Bank and the development community at large. These new challenges are described in the rest of this chapter. Governments Maintain awareness of the profound influence that technological changes may have on the global economy. Initiate a planning process involving all social sectors to create a vision of the country's role in a new global market and take steps to implement that vision. Create a legal and economic policy framework that encourages innova- tion and provides firms and individuals with the ability to respond to technical change in an agile way. New technical and information-oriented institutions and technical assistance programs, especially related to quality management, may be vital. Provide incentives to the productive sector to respond to opportunities for small, technically-oriented companies. Invest in the physical and technological infrastructure, especially commu- nications and transport, needed to enable the productive sector to acquire and put to use the most appropriate and effective technologies, seeking private sector participation where possible. Bring technology to bear in the provision of public services, in particular to reduce the cost and increase the quality and coverage of educational and health services. Consider investments in new technologies for energy generation that are more efficient and less polluting and in technologies for cleaning up the environ- ment. Private Sector Maintain awareness of technological advances in industry and acquire the most effective production methods and products through research and develop- ment, international agreements, joint ventures, and imported technology. Gain the capability to access knowledge through international networks. Be aware of quality management requirements in international markets and reorganize proce- dures and facilities to achieve quality standards.

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58 Marshaling Technology for Development . Adopt organizational changes to better manage intellectual assets, invest in innovative activity, and improve quality control. Because most technical change comes from incremental innovations on the factory floor, be open to employee- initiated changes. Recognize the importance of employee training to incorporating new tech- nologies and converting knowledge to value. Be prepared to join forces with the government and other private firms to leverage resources for employee training. Scientific and Research Community . Take a leading role in advising developing country governments and the development community of new technologies and their implications for develop- ing countries. Participate in information clearinghouses on the Intemet to assist researchers and producers in developing countries. Identify research priorities for regional and national research centers, addressing the needs of developing countries. Assist and encourage research and development on the local level to encourage the application and adaptation of new technologies in specific developing country contexts. Form partnerships with research institutions in developing countries and encourage research partnerships across developing countries. . Development Community Put technology issues at the forefront of individual country development assistance strategies. Help the least-developed countries adapt to the changes brought on by the new telecommunications and computer technologies. Raise the awareness of developing country governments and other donors of the opportunities and challenges offered by new technologies-for example, by supporting seminars and studies on the implications of technological change for developing countries. Play a connector role, forging partnerships between developing countries and the scientific and research community to increase access to knowledge and apply it to developing country problems. Help to make information on technologies more widely and easily avail- able to developing countries. Explore options for providing information facili- ties for example, on energy and environmental technologies via networks such as Intemet. . Provide honest broker services, an advisory role that could be performed in conjunction with national scientific academies or other scientific organiza- tions, to assist governments to evaluate different technologies. Finance pilot or demonstration projects that apply new technologies in specific developing country circumstances. Assist developing countries in managing the negative impacts of change brought by the technology revolution.