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Introduction
1. Technology has often been
viewed as one of the strongest forces driving
economic growth. This has been accompanied by
a growing interest in the indicators for measurement
of the progress and the status of technology
and its integral counterpart science. S&T
(science and technology) indicators are signals
of the status of science and technology and
what contribution they are likely to make to
economic development. Such indicators are often
used in two ways. The first is for purely descriptive
purposes, where comparisons are made among countries
and firms over time. The second is to discern
the patterns of scientific and technological
activities existing in a system, where technological
indicators go beyond pure description and become
an important aid to achieving a better understanding
of the causal relationships in a system of science
and technology development. The first category
of use would only return temporal patterns,
which without the second category of use would
create direct policy interventions, often leading
to unforeseen outcomes. Both categories of use
implemented together, on the other hand, would
identify pressure points for indirect intervention
with a high degree of efficacy and a low potential
for surprises.
2. Individual countries and
international organizations such as the Organisation
for Economic Cooperation and Development (OECD),
the World Bank, the Asian Development Bank and
the various organizations of the United Nations
have all attempted to formulate technological
and industrial policies and plans to foster
economic growth in the developing countries
at the fastest possible rate. Meanwhile, considerable
effort has also been made by the individual
countries and international organizations to
develop a useful set of S&T indicators.
However, many conceptual problems and methodological
difficulties have emerged. The construction
of these indicators implicitly embodies hypotheses
concerning the characteristics of S&T and
its interaction with the social-economic system.
Presently, the construction of S&T indicators
appears to be oriented towards international
technology transfer, whether or not such a transfer
may create sustainable economic development.
Since an indicator may often represent narrowly
just one facet of what is being measured, it
is likely that such narrowly focused indicators
will lead to distorted policies that may not
contribute to sustainable development in the
long run.
3. Policy design has traditionally
been driven by situational models rather than
a comprehensive understanding of the complex
relationships formed through the interaction
of the concerned organizations. As a result
of this, contradictions invariably appear in
the performance of policy. Policy design for
the developing countries can especially not
rely on situational models relevant to the developed
countries in view of the differences in the
economic structure and social set up which preclude
the distribution of benefits to the majority
of the people. Therefore, the role of technology
and its consequences for sustainable development
in developing countries must be carefully understood
before a particular set of S&T indicators
is delineated for wide application.
4. The methodology used to
collect data and formulate indicators must also
be evaluated very carefully. Expensive and time-consuming
data collection and formulation cannot in actual
fact support policy design in the developing
countries owing to the lack of well-trained
personnel and organizational support. S&T
indicators, like other social and economic indicators,
are never ends in themselves. They are supposed
to bring information feedback to the policy
makers. The important consideration in selection
and measurement of these indicators is understanding
their role and interpreting their operational
implications. Therefore, organizations concerned
with S&T indicators should be involved in
collating and interpreting data as well as creating
a broad policy framework for its use rather
than simply collecting data.
5. This paper provides an
appraisal of the existing S&T indicators
and their use, and suggests a framework for
designing effective S&T policies. Chapter
I presents a review of three main indicator
systems currently in use: (a) OECD S&T indicators,
(b) UNESCO S&T indicators and (c) ESCAP
Technology Atlas project. Chapter II reviews
selected country case studies on the development
and utilization of S&T indicators in the
ESCAP region. These include studies on Indonesia,
Malaysia, India and Thailand. Chapter III discusses
the effectiveness of S&T indicators. Chapter
IV provides a conceptual framework for improving
S&T indicators for developing countries.
Finally, system dynamics is introduced in chapter
V as a methodological framework for designing
S&T policy.
I.
REVIEW OF SCIENTIFIC AND TECHNOLOGICAL INDICATORS
IN THE ESCAP REGION
6. Technology began to draw
academic and government attention in the 1950s.
Since then, there has been a growing interest
in the measurement of the status of technology.
In the 1950s and 1960s, this interest led to
the establishment of many specialized quantitative
S&T indicators. The use of such indicators
became more widespread in the 1970s when international
organizations also began to develop standard
S&T indicators for international comparison.
The establishment of S&T indicators is,
however, not merely a statistical endeavour.
It embodies theoretical assumptions on the relationships
between technology and social-economic structure.
Any evaluation of S&T indicators should,
therefore, necessarily examine the premises
that development planners hold on the relationships
between science and technology and social-economic
structure. This is attempted in this section
in the evaluation of OECD, UNESCO and Technology
Atlas indicators.
A.
OECD S&T indicators
7. The most widely used and
influential S&T indicators are those of
OECD. These indicators have been developed primarily
for application to developed countries. However,
since the formulation of S&T indicators
for the developing countries is influenced by
OECD indicators, it is necessary to overview
their conceptual and methodological characteristics.
1.
Conceptual framework of OECD S&T indicators
8. The original objective
of the OECD S&T indicators was to provide
an assessment of the current state of science
and technology in the OECD member countries
and to understand the determinants of technological
change. They were also expected to facilitate
the understanding of the consequences of technological
change in terms of growth, productivity, competitiveness,
employment, skills and international patterns
of industrial production and international trade.
With accurate information provided by relevant
indicators, S&T priorities were expected
to be set for achieving an optimal resource
allocation among many possible research projects,
which would yield the best possible results
in terms of "progress," in this case implying
mainly the utility of the research conducted.
Therefore, S&T indicators were directed
essentially to the concern for an effective
allocation of resources to S&T research
and data analysis so it is useful to a wide
cross-section of the public.
2.
Indicators used in OECD
9. OECD R&D indicators
are placed into categories of input indicators
and output indicators. The input indicators
deal with resources that are required as inputs
in the pursuit of S&T activities. Usually,
this includes the financial resources and human
resources in both public and private sectors
that are devoted to R&D. Financial resources
allocated to R&D will be used to estimate
the general evolution of the resources devoted
to R& D and production. Human resources
in R&D activities are generally used to
examine the performance of higher education
in carrying out R&D work and its role in
the R&D effort.
10. The output indicators
are of major interest to S&T developers.
Output indicators try to measure the direct
products of S&T activities. Through output
indicators, the efficacy of technological policies
can be surmised. The output indicators basically
consist of the technological balance of payments,
patent statistics and high-tech transfers. The
technological balance of payments arises from
technology transfer between countries, which
measures the degree of a given country's dependence
on foreign technology. Patent statistics measure
invention activities. The state issues patents
to encourage inventors to make public their
inventions. Patents are granted for products,
compositions, apparatuses and processes that
are useful, new and inventive. They may be used,
therefore, as indicators of the level and nature
of inventive activities, the technical areas
of inventive activities and the loci of inventive
activities. The patents reflect scientific and
technological activities which are "leading
edge". The indicator of trade in high-tech intensity
products is to demonstrate the impact of research
and development on international trade. One
may use this to help to determine the trade
pattern in a product group. It is expected that
a carefully specified study would permit one
to establish and analyse a link between trade
specialization and technological indicators.
Also, comparisons between international specialization
and technological indicators permit researchers
to place each product in its innovation cycle
for each period, which in turn can be used as
a new indicator for innovation.
3.
Limitations of OECD S&T indicators
11. OECD indicators have achieved
some success in at least unifying terminology.
OECD has developed standard definitions for
the terms used in its indicators. It provides
technical notes to explain a wide range of terms
such as "public funding" and "government R&D
funding" etc., which have been used in S&T
indicator system developed in other countries.
These indicators, however, have limitations
for application to policy design:
- OECD S&T indicators
are based on inflow-outflow analysis. None
of these indicators are able to represent
technology as a stock, which is essential
for discerning any potential for technological
change, although it is expected that the technological
trend can be predicted through use of these
indicators;
- Another source of technological
change not captured by aggregate R&D expenditure
is innovation by small firms. It has been
found that, in the United States, 80 per cent
of all new jobs are created in firms which
employ less than 20 persons and which are
less than five years old. In the United Kingdom,
the number of plants with less than 100 employees
increased by more than 50 per cent between
1968 and 1978. On the other hand, during the
same time, the number of firms with more than
100 employees decreased by 15 to 20 per cent.
Small specialized firms may not even have
separate R&D departments reported in the
R&D statistics, but they often have scientists
and engineers working part-time in the design
office or production system, inventing and
developing new products and processes. Yet,
it is reported that no country has attempted
to measure or estimate the R&D effort
of these small enterprises;
- R&D expenditure captures
only a part of the expenditure on innovation.
It does not subsume the development effort
of the production engineering departments
of large firms. They are often not reported
as undertaking R&D research but still
play an important role in designing, modifying
and developing particular instrumentation
and production machinery. R&D expenditure
as a measure of S&T activity may therefore
underestimate its actual level;
- The impacts of R&D
and innovation are only partly captured in
the input-output balance sheet constructed
with OECD S&T indicators. In reality,
these impacts are exceedingly complex. If
R&D planners are to succeed in harnessing
technology for the benefit of overall human
progress, they must be in a position to anticipate
all the significant effects of R&D before
they are realized in addition to being unable
to assess the potential for R&D. Technology
being a key policy instrument for achieving
sustainable development, these limitations
greatly reduce the usefulness of the indicators
for policy design;
- Patents as output indicators
might seem to provide reliable and detailed
time series information on the impact. Their
utility is, however, weakened by a number
of factors: (i) patent laws and procedures
may differ from country to country, which
creates a variability in the definition of
the measure; (ii) different inventors do not
make similar use of the patent systems, hence
there is variability in reporting; (iii) patents
are issued for inventions of unequal value
which cannot be easily weighted in an aggregate
measure; (iv) many patents are issued for
inventions which are never used until long
after the patent is issued, creating inter-temporal
impacts unrelated to the measures; (v) patent
applications are governed by market pull as
well as by technology push, so there will
be a lower tendency to patent in small markets
or small countries than in large markers and
large countries; (vi) patent statistics are
often incomplete and often not directly comparable,
hence unreliable;
- OECD S&T output indicators
are not generally applicable in the developing
countries. The technological balance of payments
is relevant only to payments incurred in formal
contracts of transfer of technology from one
country to another forming a major part of
technology transfer in the developed countries.
In the developing countries, technology is
transferred through many modes, including
import-export of technology, import-export
of machinery, the exchange of experts, the
transfer of embodied skills, copying and imitating
foreign technology and foreign direct investment;
- Last but not least, both
input and output indicators of OECD, as well
as the technology balance sheets they draw,
represent topological snapshots rather than
patterns of change, which limits their use
in the design of any policy endeavours for
change.
B.
UNESCO indicators
12. The international standardization
of OECD S&T indicators is rooted in a relatively
small but wealthy group of nations. These indicators
may not necessarily be relevant to the developing
countries. To partially tide over this problem
UNESCO has developed a standardized set of indicators
with a wider posited application. UNESCO, at
its twentieth session in Paris in November 1978,
adopted a recommendation concerning the international
standardization of statistics on science and
technology. This was followed by a series of
Guides and Manuals to aid member
countries in developing and improving their
S&T statistics.
1.
The conceptual framework of UNESCO indicators
13. UNESCO indicators were
the first set of indicators developed specifically
for the developing countries. The scientific
and technological activities in the developing
countries were quite underdeveloped and it was
deemed necessary to promote science and technology
in the planning agendas and to focus policy
attention on them. Since the contribution of
science and technology was not widely recognized
by the Governments of the developing countries,
the early UNESCO S&T policies endeavoured
to impress upon Governments the importance of
S&T development. Since scientific and technological
activities are for the most part carried out
in the public sector, the S&T indicators
also focused on government initiatives on scientific
and technological activities.
2.
Indicators included in the UNESCO framework
14. In the case of the UNESCO
S&T indicators, the input indicators include
the following:
- The major R&D input
indicators that have been developed by NSF
(National Science Foundation) and OECD;
- Science and technology
education and training at the third (higher)
level (STET), which the OECD and NSF did not
include. This incorporates statistics of the
educational background of staff in engineering
and science which provide useful information
on the scientific and technological profiles
of firms, industries and nations. These indicators
were expected to be more useful in the developing
countries since engineers and scientists with
a higher educational background in these countries
might be engaged in tasks directly related
to their training. Secondary and basic educational
levels are also included, although no specific
explanation is given for this. The secondary
education level can, however, represent the
potential catchment for further technical
education. The secondary educational level
also facilitates to a certain degree the process
of learning and innovation in the informal
sector. The basic education level might influence
the value system in developing countries since
widespread illiteracy acquiesces into continuation
of unprofessional attitudes;
- Scientific and technological
services (STS): UNESCO recommended that the
main effort should be concentrated on "scientific
and technical information and documentation".
STS mainly represents the scientific and technological
atmosphere of a country as manifested in information
institutions and their characteristics.
15. The UNESCO output indicators
include: (i) bibliometric indicators, such as
S&T publication counts, citation counts,
authorship counts, international authorship
and international co-authorship counts. These
indicators serve two purposes. First, they make
research literature available to other researchers;
second, the publications in literature serve
as a principal means for establishing responsibility
for the advancement of science; (ii) patent-related
indicators such as patent counts, patent citations,
patents taken by residents, patents taken by
foreigners, and patents taken out in foreign
countries. Patent indicators are used to assess
the volume of invention activities. The UNESCO
output indicators might appear to be academically
oriented, although they are expected to capture
the expertise needed for the pursuit of S&T
activity.
3.
Limitations of the UNESCO S&T indicators
16. The UNESCO S&T indicators
are limited in the following ways in their ability
to facilitate S&T policy in the developing
countries:
- The output and input indicators
may be used as a basis for determining overall
national budget allocations and for designing
incentives to regulate funds allocation within
the private sector. Since, they are not cognizant
of the structure of the system in which allocations
may be made or incentives implemented, they
would issue interventionist rather than operational
policy instruments. The indicators have not
been an effective way to guarantee an effective
allocation. Even when an effective allocation
can be made, its impact in terms of technological
improvements achieved is a question mark;
- The UNESCO S&T policy
aims to align economic sectors and social-economic
objectives with scientific manpower and expenditure.
However, the relationship between social-economic
objectives and public-funded scientific manpower
and expenditure is not clear as there is indeed
no direct relationship between the two;
- The work on output indicators,
according to some writings, appears to have
been carried out independently of the work
on input indicators. It is also seen to be
primarily of academic orientation.
C.
ESCAP Technology Atlas project
17. Taking note of the limitations
of the application of the OECD and UNESCO S&T
indicators to developing countries, ESCAP in
1986 initiated the Technology Atlas project
to develop a decision-support tool using a comprehensive
set of S&T indicators to guide the developing
countries.
1.
Conceptual framework of the Technology Atlas
project
18. The Technology Atlas project
does not clearly define its indicators in terms
of inputs and outputs; instead it develops indicators
to monitor the present technology level itself
and assess technology capability. The Technology
Atlas schema is at best mechanistic and subjective.
It also incorporates use of information that
is very difficult to assess accurately. Technology
itself is the target of the Technology Atlas
project study, whose identification and measurement
as an entity in the real world is difficult.
The policy framework that it issues attempts
to achieve targets which should help to alleviate
unequal terms of trade between the developed
and the developing countries, although without
substantiating the empirical and logical basis
of this a priori or relating target achievement
to the terms of trade.
2. Indicators used in the Technology Atlas project
19. The Technology Atlas S&T
indicators are measured at three levels. At
the enterprises level, these measures include
technology components, technology capabilities
and technology strategies. At industry level,
they include technology resources and technology
infrastructure. At the national level, these
measures are related to technology climate and
technology needs. The S&T indicators serve
the following major purposes: assessment of
current standing against international bench
marks, evaluation of strengths and weakness
to focus investment effort, and quantifying
achievements for setting targets and for motivating
growth in a set of postulated indicators of
technological level. There are the following
five categories of indicators:
(a) Value added at the
firm level
Value added is related to the
sophistication level of four postulated components
of technology, technoware, humanware, infoware
and orgaware, discerned through a combination
of weighting of the inventory of facilities
and expert opinion. It is claimed that such
a schema facilitates assessment of the strengths
and weaknesses of transformation elements, and
enables the determination of priorities in resource
allocation for upgrading the technology component.
The generic criteria used in the assessment
of the state of the technology are expected
to help to improve capabilities for screening
the technology selection for procurement by
the enterprises.
(b) Technology climate
assessment
The technological climate of
a country is the setting in which technology-based
activities are carried out. For the same technological
level existing in the production units, their
actual technological contribution will vary
according to the technological climate that
they experience. The technology climate assessment
analysis can indicate whether the situation
in a country is conductive to effective utilization
of its technology or not. This assessment is
carried out by expert opinion.
(c) The inter-country
comparison of technology status
The technology status assessment
of an industry helps in evaluating the technology
gaps using the same postulated components as
in the case of a firm. Measurement of gaps in
terms of the four components is posited to be
useful for achieving a better understanding
of the nature of the gap and for describing
corrective action since this is seen to facilitate
the preparation of plans in specific terms for
strengthening technology in an industry.
(d) Assessment of national
technological capability
The assessment of national
technological capability requires the measurement
of the indigenous potential to improve technological
capacity. It includes appraisal of independent
technological learning capacity, independent
technology creating capacity and independent
technology reconnaissance capacity, which allow
one to ascertain the speed of the technological
change towards a desired level indicated by
an international standard.
(e) Technological needs
assessment
The assessment of technological
needs aims to formulate a strategy for sustainable
development. The sustainable strategy is defined
as "make some and buy some". Therefore, it is
necessary to forecast the international technology
market and compare it with the national technological
capacity to classify the technological areas
and to assign priorities to them.
3.
Problems of the Technology Atlas project indicators
20. The criteria for the evaluation
of technology are discretional and rather narrowly
defined. The Technology Atlas project appears
to propose that public policy concerning technology
in the developing countries can be formulated
in the same way as business strategy. Efficiency,
defined as economy in the use of resources,
is considered to be the chief criterion used
in assessing development. Although the overall
objective of the Atlas project is to offer a
decision-support tool in the form of a set of
methodologies for integrating technological
considerations in the development planning process,
the only way to realize a plan is to improve
efficiency in resource use. Yet, the causal
relation between technology and other social-economic
factors is not considered. In reality, it is
doubtful that an increase in efficiency alone
can improve welfare for the majority of the
population in the face of the economic structure
and the institutions on ground in the developing
countries.
21. The need for change in
technological components is determined through
a comparison of the present technology level
in the developing countries with the developed
countries. This method demands forecasting the
international technology market and whether
the technology policies are successful or not
depends on the accuracy of forecasting. However,
the discretional technology components forecast
are based on extremely rough data. It is also
unclear who is going to intervene in the system,
private enterprises or government, and how.
22. The policies are formulated
on the basis of experts' opinions and assessments.
There is no rigorous model to test the experts'
mental models and relate them with real world
structure. Indeed, a large amount of information
is stored in the human mental model. The driving
force both for delineating the micro-structure
of the system and in verifying its behaviour
is empirical experience. Quantitative information,
qualitative data and the mental model are all
information sources for formal model building.
Yet, it is difficult to gain confidence in our
understanding of the structure underlying the
behaviour pattern without rigorous testing.
Therefore, testable methodologies should be
developed before policy suggestions are put
into use.
23. The problem of low technology
performance in developing countries is defined
within the international market context. The
technology of developing countries is valued
at a low level in the international market.
Hence, developing countries are forced to exploit
their natural resources in exchange for high-tech
imports. The Atlas project implies that technology
transfer can help to remove this disparity.
The relationship between technology transfer
and international socio-economic structure is,
however, complex. There is no convincing evidence
to demonstrate that there is a linear relationship
between the adoption of modern technology and
the removal of the postulated disparity. Studies
show that technology transfer may result in
an extreme case in moving all production to
the developing countries while the majority
of the resources are still controlled by the
developed countries, which will further strengthen
income disparities.
24. The technology components
and their magnitude are measured relative to
their counterparts in the developed countries.
Given that technological developments of the
past have striven to consume natural endowments
and externalize environmental costs, technological
development in the developing countries emulating
the developed countries, which is posited as
a solution to all problems, would be divorced
from environmental agendas.
II.
COUNTRY STUDIES ON THE DEVELOPMENT AND APPLICATION
OF S&T INDICATORS
25. This section examines
attempts made at the national level to develop
and apply S&T indicators for national planning.
Five cases, concerning four countries, respectively,
Indonesia, Malaysia, India and Thailand are
reviewed.
A.
The Indonesian Science and Technology Management
Information System under the methodology of
the Technology Atlas project
26. In 1989, UNDP/UNESCO supported
a four-year project named Science and Technology
Management Information System project (STMIS)
for Indonesia, which attempted to adopt the
indicators suggested in the Atlas project for
a specific country case. The project sought
to collect S&T information at the micro
level, using both qualitative and quantitative
data. Later, the data were aggregated at the
industry level. Nine categories of indicators
were delineated, as shown in table 1.
Table 1. Indicators
developed in STMIS
| |
Purposes |
| Company profile and activity
indicators |
To assess transformation
activities and outputs of firms |
| Technology component |
To assess technology used
by the firm |
| Technology capability |
To assess the accumulation
of technological capability by the firm |
| Technology infrastructure
building |
To assess firm-level technology
infrastructure for technology transfer and
technology development |
| Technology productivity |
To assess
the efficiency of the transformation activities
carried out by the firm |
| Owners' and suppliers'
influence |
To assess material and
support inputs required by the firm but
influenced by owners and suppliers |
| Market rivalry |
To assess the influence
of rivalry |
| Customer influence |
To assess the influence
of customers |
| Industry climate and regulation |
To assess national-level
development policy climate |
27. The project staff reported
several difficulties in constructing the indicators.
The data required at the firm level were related
to strategic information which the firm managers
were reluctant to provide; hence, most of the
data collected were descriptive and based on
the judgement of the surveyors. Since, the survey
teams could not obtain the data that they sought,
a recommendation of the project was that the
industry bureaux organize their own survey teams.
Difficulties also arose when the information
collected at the firm level was to be aggregated
into industrial level indicators. Apparently,
the problems involved with data identification,
collection, processing, storage, maintenance
and analysis could not be surmounted and the
project generated only descriptive statements
about an attempt, hence the yield of the effort
is uncertain.
B. Science and Technology for Industrial Development
[STAID] and Macro-Scale S&T Indicators In
Indonesia [STAID 1993]
28. This project was developed
under the sponsorship of the World Bank and
called Science and Technology for Industrial
Development (STAID). Unlike the STMIS project,
the purpose of this project was to develop indicators
of particular interest to policy makers concerned
with S&T and the industrial development
of the country. The head of the project reported
that this project dealt mainly with resources,
human and financial, and the output of the S&T
process. The objective was to create and periodically
publish S&T indicators to assess the national
S&T climate. The indicators constructed
and their respective purposes are listed in
table 2.
29. The indicators developed
by STAID were expected to reflect the government
effort to build an environment conducive to
S&T development. Not only might these indicators
appear to be judgemental, but it is also unclear
how the relationships between government effort
and industry motivation work to realize the
development of S&T and its impact on the
economy.
C.
S&T indicators in the sixth Malaysian national
plan
30. Malaysia's sixth national
plan postulated science and technology development
to play a prominent role towards achieving a
competitive, diversified and globally based
economy which should yield a high standard of
living for public. The role of S&T is aimed
at widening and improving the S&T base and
ensuring the development of comparative advantage
in the production of goods and services. The
impact of the technology on income distribution
is, however, not mentioned.
31. The S&T indicators
used since the Fifth Plan cover a comprehensive
orientation in terms of the size and management
of research and development expenditure and
the volume of R&D activities. These indicators
are basically used for determining resource
allocation to R&D. Technological importation
is also used as an indicator to demonstrate
the extent of reliance on foreign technology
and to assess the rate of technological innovation.
The technology import indicator is constructed
by using the number of contractual agreements
approved by the Government.
Table 2. S&T indicators
developed by STAID
| Indicators |
Purpose |
| Input indicators |
|
| General situation of R&D and production engineering expenditures |
To determine the likelihood
for the country to move towards knowledge-based
industries and technology-intensive production |
| Human resources for science
and technology |
To guide national human
resource planning |
| Government resources for
science and technology |
To provide the insight
into the relationship between the country's
stock of natural scientists and engineers
and its ability to achieve national development
goals |
| Science and technology
in industry |
To assess the role played
by science and technology in Indonesia's
manufacturing sector in the training of
Indonesian technical personnel |
| Science and technology
in higher education |
To assess the future demand
and supply of higher education service |
| Output indicators |
|
| Publication patterns |
To measure the quality
of the Indonesia higher education faculty,
which serves a critical function |
| Patenting by Indonesian
inventors |
To serve as indicators
of economically oriented S&T activities
in a country |
| Foreign and domestic investment
in Indonesia |
To be used as leading
indicators of the growth of technology intensity
in Indonesian manufacturing industries |
| Foreign investment in
Asian countries |
To serve as a catalyst
for technological development in newly industrializing
economies |
| Impact indicators |
|
| Manufacturing output and
value-added |
To illuminate the economic
impact of industrial S&T activities
on manufacturing output and value-added |
| Imports and exports of
manufactured products |
To illuminate the economic
impact of industrial S&T activities
on export and import of technologic-intensive
products |
32. As in the earlier cases,
not only are the measurements difficult, but
the constructed indicators are not easy to relate
to their postulated impact. Hence, the efficacy
of the process of indicator construction and
their use in planning raise many doubts.
D.
S&T indicators in the Indian national plan
33. India's recent eight-year
plan calls for S&T to play a pivotal role
in all important development tasks. Hence, the
deployment of S&T as an effective instrument
of growth and change becomes an essential strategy.
The main indicator used in the Indian case is,
however, only the percentage of GNP spent in
the past on S&T, which is a basis for new
allocations. Apparently, both the criteria for
allocation and its postulated impact are arbitrary
and little can be said about their efficacy.
E.
S&T indicators in Thailand's eighth national
plan
34. In Thailand's eighth five-year
plan, the role of S&T in sustainable development
is defined on the application of modern S&T
to raise productivity in the agricultural and
industrial sectors and to gain competitiveness
in the export market. The problems of the technologies
are seen to be inefficiency in the acquisition
and transfer of technology and the limitations
of scientific and technological manpower stock.
35. The budget allocations
are made on the basis of discrepancies between
targets and actual conditions of two indicators
reflecting, respectively, the S&T budget
and the qualified manpower. Fiscal incentives
are also provided to the private sector to encourage
R&D in general. Although intuitively sensible,
this policy may guarantee neither the attainment
of the target S&T levels nor the achievement
of the expected welfare benefits since the relationship
between the budget and performance is not known.
III.
EFFECTIVENESS OF S&T INDICATORS
36. Almost all likes of S&T indicators seem to have been
constructed from conjecture and often have little
relationship with what they attempt to measure,
how those measurements might be carried out
and used in policy design, and how the policy
instruments that they create would influence
the working of the economic system. In particular,
the following problems are seen with the S&T
indicator systems discussed in the last section:
(a) Situational underlying
models unrelated to system performance
Since the relationship between
S&T performance and the social-economic
system is very complex, there is no agreement
on what the S&T policies should be. In different
geographical areas, and at different times,
different patterns between S&T performance
and certain social-economic factors are observed.
Therefore, theories guiding the formulation
of S&T indicators are diverse. OECD indicators
assume that the presence of R&D activities
is adequate to guarantee S&T development.
The UNESCO system assumes that government effort
would deliver S&T development. The Atlas
indicator system assumes that collecting certain
ingredients at the organizational and country
levels would deliver the kind of S&T development
that would help developing countries to compete
better in the global system. Not only are these
models situational, but their actual relationship
with system performance is not understood and
many contradictions exist in their assumptions.
There also appears to be a serious identification
problem in cases when the indicators attempt
to represent abstract entities, as in the case
of the Atlas project system;
(b) Indicators unrelated
to policy formulation process
None of the indicator systems
discussed above attempts to understand the relationships
that connect the indicators to policy intervention
and policy intervention to economic performance.
Hence, they might only lead to the creation
of arbitrary targets for direct intervention.
Thus, OECD S&T indicators mainly create
targets for R&D outlays, UNESCO indicators
for the public sector, S&T expenditure,
and Atlas indicators for technology transfer.
None outlines how should these targets should
be met in the complex social-economic system
which exists in reality;
(c) Normative rather
than positive perspectives
The exiting models prescribe
change without understanding the S&T problem.
These models give very little attention to the
dynamic processes underlying the problems that
they address. The Atlas project claims that
it forces policy makers to use a dynamic approach
to formulate a strategy, but refers only to
dynamic forecasting of the international technology
market rather than to understanding the information
structure of the dynamic systems that determine
their internal trends. These models create normative
policy that may interfere with the internal
dynamics arising out of the systems actually
existing;
(d) Moral appeals rather
than operational policy
Because the present S&T indicator models focus on policy
design rather than on the understanding behaviour
patterns, effective policy entry points that
can lead to changing existing patterns are difficult
to determine. The majority of policy instruments
call for more responsibility on the part of
the government. Such policy agendas have in
the past led to encouraging the enlargement
of the scope of government in the developing
countries. The empirical experience also demonstrates
that the government may not necessarily commit
itself to S&T plans as expected.
IV.
IMPROVING S&T INDICATORS FOR DEVELOPING
COUNTRIES
37. If S&T indicators
are to be of assistance in developing countries
for designing policies for change, they must
at the outset be based on a valid theory of
where technology fits into a particular social-economic
structure. Before the indicators are constructed,
it is necessary to review the basic socio-economic
structure and the emerging problems in the developing
countries.
A.
Socio-economic structure in place in developing
countries
38. There are four facets
of the socio-economic structure to be considered.
These are duality in domestic economic systems,
duality in the global economic system, externalization
of cost to the environment and the functioning
of the production units.
1.
Duality in domestic economic systems
39. Basic differences exist
in the structure of the economies of the developed
and the developing countries which make it difficult
directly to transfer strategic instruments or
achieve comparable performance when turnkey
transfers of technology are made. Policy instruments
which work well in the developed countries may
not be very effective when implemented in the
developing countries.
40. The economic structure
of the developing countries is characterized
by the side-by-side existence of two equally
significant subeconomies, a formal sector and
an informal sector. This classification has
been referred to variously in the literature,
for example as capitalist and worker sectors,
oligopolist and peripheral firms, capitalist
and subsistence sectors, modern and traditional
subeconomies, and wage-paying and self-employed
sectors. Such a structure is predisposed to
a value transfer from the traditional to the
modern sector, thus excluding a large cross-section
of households from the benefits of economic
and technological development.
41. A dual economy structure
is quite pervasive in the ESCAP countries. Table
3 gives a sampling of cases incorporating a
dual economic system. Malaysia lies at one end
of the spectrum in those cases with a predominantly
wage employed workforce (62.7 per cent) while
Pakistan is at the other end where the majority
of the workforce is self-employed (73.4 per
cent). For the remaining countries in the ESCAP
region, the size of the two sectors seems to
be comparable. It is also widely known that
the level of sophistication of technology, discerned
in terms of productivity and capital intensity,
is much higher in large capitalist firms offering
wage employment than in small entrepreneurial
firms with self-employed workers, with the former
firms also having a higher labour productivity.
Although the factor proportions as well as the
productivity of labour and the capital worker
ratio in the two production modes vary from
country to country, there appear to be many
similarities in the overall pattern. These similarities
are manifested in the side-by-side existence
of both production modes with a relatively low
productivity in the self-employed sector and
a relatively high capital-worker ratio in the
formal sector. The pervasive existence of a
duality in the developing country economic systems
renders all analysis implicitly or explicitly
assuming the existence of a uniform economic
environment quite invalid.
Table 3. The number
of self-employed workers and wage workers in
various countries
| |
Self-employed
workers |
Wage workers
|
Total |
| (Million) |
(%) |
(Million) |
(%) |
(Million) |
| Bangladesh |
17.3 |
56.7 |
13.2 |
43.3 |
30.5 |
| Indonesia |
53.3 |
73.5 |
19.2 |
26.5 |
72.5 |
| Malaysia |
2.2 |
37.3 |
3.7 |
62.7 |
5.9 |
| Pakistan |
19.9 |
73.4 |
7.2 |
26.6 |
27.1 |
| Philippines |
11.6 |
54.2 |
9.8 |
45.8 |
21.4 |
| Republic of Korea |
7.2 |
42.6 |
9.7 |
57.4 |
16.9 |
| Sri Lanka |
2.2 |
42.3 |
3.0 |
57.7 |
5.2 |
Source: ILO, Statistical Yearbook,
1990.
42. When economic efficiency
determines who should carry out production and
financial efficiency who should control resources,
while technology is homogeneous, the ownership
of resources becomes concentrated in the formal
sector in a dualist system while the informal
sector carries out all production. When a technological
differentiation is also created between the
formal and informal sectors through international
technology transfers, the former sector is able
to employ a part of its resources in production
because of the possibility of higher productivity
and both formal and informal sectors carry out
production, although ownership is still concentrated
in the formal sector, which limits the dispersion
of the benefit to a wide cross-section of households.
The prevailing theories that guide the construction
of S&T indicators only show the trend of
the S&T activities and public policies in
formal and big enterprises. The large cross-section
of people engaged in informal or small enterprises
is totally outside such policy considerations.
This neglect, at the outset, overstates the
effectiveness of any technology policy applied
to the developing countries.
2.
Duality in the global economic system
43. At the outset, the global
economy can be divided into the industrialized
and the developing country blocks which are
intrinsically different in terms of their markets,
motivations, enablements and access to production
resources and technology. The former block consists
of profit-maximizing coalitions operating in
established niches and controlling a major part
of the global production, as well as its technology.
The latter constitutes fringe producers competing
in small market segments, often with the responsibility
to maximize consumption rather than profit.
The global economy, therefore, can also be viewed
in the aggregate to have a dualist economic
structure, with a formal sector consisting of
the industrialized countries and an informal
sector comprising the developing countries.
With increasing interaction occurring between
the subeconomies of this dualist system, the
resource base of one country often extends to
other countries. Thus, trade pricing structure
and the nature of trade flows cannot be divorced
from a valuation system that transfers value
from the developing to the developed countries
and costs in the opposite direction when a trade
exists between the two sectors, which in the
long run would transfer control of resources
to the developed countries. When technology
transfer is allowed between the two country
blocks, production would gradually shift to
the developing countries, but not the control
of the resources. When technology flows are
restricted, production is carried out in both
blocks, but with the control of resources still
resting in the developed block.
44. World trade volume almost
doubled over the decade 1980-1990 (figure 1).
This increase is accompanied, however, by a
worsening of the terms of trade for the developing
countries. Developing countries have long been
compelled by the global market to rely heavily
on their natural resource endowments to support
their real income and earnings of foreign exchange.
The industrialized countries, on the other hand,
have undergone a change from raw material processing
and heavy manufacturing towards knowledge-intensive
products and services. It should be noted that
value added measurement is not independent of
the criteria underlying the valuation process.
The trade relations between the two understate
the true economic worth of natural resources
while overstating the value added through knowledge
intensity. The overall trend is poised to create
serious environmental damage in the developing
countries.
Figure 1. International
trade patterns in 1980-1989
Source: K. Saeed and
S. Acharya, forthcoming, "An attempt to operationalize
the recommendations of the 'Limits to Growth'
study to sustain the future of mankind", Dynamics
Review, 12(4).
3.
Externalization of environmental cost
45. Technological developments
in the West have often been based on consuming
the resource slack present either in the well-endowed
territory from which the technology emerged
or on resource availability through transfers
from colonized lands. Application of technologies
based on such criteria in the precariously balanced
resource environment of a developing country
possessing little slack can be quite disastrous
since they would externalize cost on a precariously
balanced environment with little slack in it.
Ironically, history has generally seen the opposite
situation take place. Thus, as consumption pressures
have risen, technologies have been developed
to tap richer geological resources. Control
of technological progress thus appears to be
an important entry point for implementing a
sensible resource use policy. Resource use should
apparently be based on geological information
rather than on economic criteria. This implies
a need to investigate ways and means of influencing
technological progress that would help to balance
resource consumption and regeneration rates,
which cannot be achieved when technology is
obtained largely through a transfer process.
4.
Learning disability in production units
46. Technology improvement
is basically a learning process. Learning has
been posited as a vehicle for economic development
through its contribution to innovation and technological
growth, which have been established as key sources
of economic growth in the analyses concerning
the developed countries. Seen as a prime mover
of human ingenuity, innovation and entrepreneurship,
the learning process indeed appears to be a
powerful means for effecting economic development.
Tapping these sources requires the creation
of innovative organization designs that not
only allow knowledge acquisition, but also its
imbedding in the societal context.
47. Experience shows, however,
that the learning function of an organization
itself is not easy to sustain. A very large
number of attempts to create organizational
learning are met with frustration, while organizations
in which knowledge acquisition and application
are key processes often transform themselves
into rigid bureaucracies that lack learning
ability. A wide range of formal and informal
training processes involving information giving
and skill practice are used for socializing
members of an organization into their respective
roles. Even if created through such a training
processes, individual learning cannot be imbedded
into the organizational context unless an appropriate
organizational culture converging individual
and organizational interests is in place. It
is indeed a challenge to create an appropriate
set of S&T indicators in the face of the
above realities and to create a fruitful set
of policies in drawing on such indicators.
B.
National framework for a technology policy
48. Given the structure on
the ground in the four domains discussed in
the previous section, a national framework should
first be discerned for an appropriate technology
policy. This framework should evidently have
four parts relevant to each of the four domains
identified, organized as shown in figure 2.
Figure 2. Subsystems
concerning technology in a national economic
system
49. Considering all four domains
together would unfortunately create a level
of complexity not amenable to a penetrating
analysis. Complex problems can, however, be
partitioned into smaller systems and these systems
analysed separately, provided that the partitioning
process retains the symbiotic relationships
existing in the larger system. The four domains
discerned in the last section form four natural
partitions of the complex economic system with
important symbiotic relationships intact. The
related systems organized into a hierarchy are
shown in figure 2. Technological considerations
concerning each are discussed below.
1.
Technological considerations in the management
of resource base and environment
50. The main consideration
for managing the resource base outlined in the
previous sections was to balance the consumption
and regeneration rates of the aggregate resource
basket in use. This is essentially a problem
of directing technological progress in a way
that the use of a resource is severed when it
becomes scarce and increased when it is abundant.
Given that nature will regenerate all resources
given enough time, this policy practically amounts
to influencing the aggregate regeneration time
of the resource basket in use, which should
increase the speed of circulation of materials
through the regeneration cycle when consumption
rises, so that inter-temporal transfers are
avoided. This can be attempted by a set of fiscal
and institutional policies linked to the geological
information and operationalized using a system
dynamics framework. The inputs needed to drive
such policy instruments comprise depletion patterns
of existing stocks of resources and their consumption
rates, which will indicate the degree of appropriateness
or inappropriateness of the technology in use
and the extent of correction needed.
2.
Technological considerations in the management
of production units
51. The ability of a technology
to perform reliably is not necessarily only
a function of its design; the use of a new technology
must pass through a learning phase during which
the user must become familiar with its idiosyncrasies
and understand its managerial requirements.
Many technologies may not successfully pass
this phase, thus limiting the performance of
the production units. A variety of normative
models have been proposed to explain the process
of technology adoption. Unfortunately, the structure
of these models is often highly abstract and
difficult to utilize in real world applications.
Hence, they may have had little significance
from the point of view of policy design, although
they are sometimes used for forecasting. The
most important organizational characteristic
in fostering a constant search for an appropriate
technology, guided of course by fiscal instruments,
and successfully adopting it, is the organizational
learning function which should create an uninterrupted
evolution of technology. It is, therefore, necessary
to create and adopt innovative organizational
designs for the production units, so they are
able to live up to the technological challenges
outlined above. A framework for creating such
designs has been proposed. The inputs into such
design endeavours consist of patterns of organizational
performance in terms of trends in resource allocation,
productivity and knowledge acquisition, performance
attributes not available in any of the existing
S&T indices.
3.
Technological considerations for managing a
dual domestic economy
52. Technology is an influential
factor in the dual economy. Prior to the commencement
of the economic development effort, the developing
country economies were largely closed, with
very little inflow of technological information
from the developed countries. Production was
carried out in an artisan mode in a feudalist
environment in which the means of the production
were largely controlled by the capitalist sector.
These economies opened with respect to trade
and capital flows as well as technological information
when organized economic development effort was
undertaken. Transfer of modern production methods
from the industrialized countries allowed the
owners of the capital to shift from renting
to the artisans to a formal mode of production,
which created large firms. The modern technology
used in large firms also made their production
more efficient than the small firms, thus allowing
them to displace the latter. This emergence
of large firms is often seen as the expanding
capitalist nucleus in the literature on economic
development that has led to the creation of
the dual economies now pervasive in the developing
countries. In such a system, any improvement
in productivity due to the introduction of new
technologies may not be passed on to workers
in terms of increases in wage rates, which is
widely supported by evidence.
53. The pressure to invest
in technology by a firm is determined by market
competition. A firm must innovate to improve
its productivity to function in a competitive
market. However, when a firm has a monopoly,
it does not have to innovate since its profitability
is already high. The other factor which greatly
affects the investment in technology is the
production sector's financial muscle. A high
liquidity makes a production enterprise capable
of taking the risk involved in investment in
technology. The literature on diffusion of innovation
also suggests that the size of investment for
the adoption of innovations affects the rate
at which it diffuses.
54. Large firms often have
no constraints on their liquidity while they
also enjoy higher technological capability compared
with the self-employed. However, their innovation
rate remains low because there is little incentive
for them to invest in technology improvement
owing to a lack of competition in a highly monopolistic
market. Therefore instruments to foster indigenous
technological growth are a promising alternative
to the traditional development policies which
have focused on growth of capital and importation
of technologies. Promoting competition among
the monopolistic formal firms simultaneously
with providing positive assistance to the competitive
informal firms is critical to the success of
any technology development effort in terms of
meeting both growth and equity goals effectively.
The patterns driving this policy should incorporate
information about the financial and performance
attributes of both formal and informal sectors
and so that a set of fiscal and institutional
measures can be created to meet the objectives
of the policies outlined above.
4. Technological considerations for dealing
with a dual global economy
55. Similar to the duality
in a national economy, the main implication
of the global duality is that unrestricted trade
and factor movement between a monopolist industrialized
block and a competitive developing block would
transfer value from the latter to the former,
gradually shifting the control of resources
to the former. When a technological differentiation
exists between the two blocks, production is
carried out by both; when free technology transfer
is allowed, production will shift to the developing
block, but not the control of resources. This
pattern extends also to the externalization
of the environmental costs (see figure 1) and
the consumption of the resource base.
56. It has been widely argued
that policies that help to promote the technology
level in developing countries can help to reduce
the reliance on natural resources-based exports
and slow down the depletion of natural resources.
Since developing countries are now in a disadvantaged
bargaining position, and if the biased international
trade pattern cannot be changed within a short
period, it is possible that during the technology
transfer process the natural resource slack
will be totally depleted. There obviously is
a need to create a valuation process in which
the developing block may receive a better value
for its production so that any transfers of
technology can work to its advantage. The patterns
driving such policy initiatives must take into
consideration the existing trends in value transfer.
V. SYSTEM DYNAMICS AS A METHODOLOGICAL FRAMEWORK
FOR DESIGNING S&T POLICY
57. A positive policy design
framework cannot be divorced from a concerted
effort to understand first the logic of the
structural and information relationships that
have created the need for the policy. This is
best achieved through creating a valid model
of the socio-economic system creating problematic
patterns. The experimental procedure of system
dynamics can be applied with advantage to support
such a modelling effort.
58. The problem issues concerning
technology policy were described earlier and
consist of four systems. At the outset, these
four systems and the variety of technological
patterns that they subsume must be carefully
understood. It is, however, not possible in
this brief paper actually to propose an alternative
system for S&T policy design, which should
rightly claim a more substantive effort. It
is, however, possible to outline the framework
within which such an effort can be undertaken.
59. System dynamics, a tested
and proven continuous-system simulation methodology
developed at the Massachusetts Institute of
Technology some 30 years ago, provides insight
into the structure and behaviour of whole economies,
organizations and other systems. It uses concept
from feedback systems theory as a basis for
structuring everyday knowledge about social,
ecological or technological systems and transferring
that knowledge into a computer simulation model.
The model may be used to diagnose and explain
the causes of problems behaviour and to design
policies that improve national performance in
technological development and environmental
upgradation since this technique allows for
goals and policies to be evaluated together.
60. Unfortunately, many developing countries are not in a
position to meet development expectations because
the planning process uses tools that are particularly
inadequate for the present-day environment of
complexity and rapid change. Planning often
boils down to setting goals arbitrarily and
then taking action based on intuition and experience.
This, however, yields variable results. Some
countries may realize success while the performance
of others is mediocre or poor; also, performance
often changes over time in response to changes
in, say, the international business or technology
environment. What was a successful plan in one
setting becomes unsuccessful in another.
VI.
CONCLUSION
61. Since the relationship
between S&T performance and the socio-economic
system is very complex, there is no theoretical
agreement on what S&T policies should be.
In different geographical areas, and at different
times, different patterns depicting S&T
performance as well as certain socio-economic
factors are observed. Theories, based on such
situational patterns, which can be quite diverse,
have guided the formulation of S&T indicators.
The conceptual models and the methodologies
followed to construct S&T indicators are
in general discretional and lean towards dogmatism
rather than science. There is often little relationship
between an indicator, the policy it issues and
the system that the policy is expected to change.
It is not surprising that S&T policy has
often been associated with uncertain performance.
62. This paper has attempted
to provide a conceptual and methodological framework
to help policy makers to understand the nature
of the S&T indicators currently in use and
their relevance to S&T development agenda.
A theoretical framework is outlined to achieve
a better understanding of the causal relationship
existing between science and technology and
other variables in the socio-economic system
in developing countries. This framework divides
the S&T policy-related agenda into four
parts: (a) resource base and environment; (b)
management of production units; (c) domestic
macro-economic policy; and (d) global economic
relations. More work must be done to identify
the variety of temporal patterns in these domains
and understand their underlying decision relationships.
These patterns can then be organized into categories
leading to the archetypal relationships in the
complex socio-economic systems affected by S&T
policy. These categories of patterns and their
underlying archetypal relationships should perhaps
substitute the discretional systems of indicators
in place.
63. The system dynamics method
is posited both as a learning process and as
a policy design tool to discern patterns, identify
archetypal relationships underlying these patterns,
and build apparatuses for experimental policy
exploration. Following this methodology, policy
designers have to undergo several iterations
in a cyclical process to gain confidence on
their understanding of the information relations
in the system underlying the problem being addressed.
With the simulation tool, policy makers can
experiment with the suggested policies and identify
pressure points for indirect intervention with
a high degree of efficacy and a low potential
for surprises. A concerted effort stretching
over an extended period of time should be dedicated
to this task.
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