New Internationalist

The Third Dimension

Issue 162

new internationalist
issue 162 - August 1986

[image, unknown]
Photo: Camera Press
The third dimension
Third World countries, and particularly those of the Far East,
have been intimately involved in the spread of micro-electronics.
As this NI survey show, a few have even been able to challenge
Western countries at their own game - and offer fierce competition
in the global marketplace. But for the majority the new
technology has only meant new forms of dependence.

ASIAN women painstakingly solder circuit boards together, or peer down microscopes. Their production lines rumble round the clock, 365 days a year.

Meanwhile outside the factory, and outside the city, bullocks squelch through the fields pulling their heavy ploughs - light years away from all the brushed aluminium and the flashing lights of the high-tech installations.

This is the conventional picture of high technology in the Third World - and accurate enough in many countries. But the picture is changing fast

Four Far Eastern countries were the first to plug themselves into the high-tech circuit. Honk Kong, South Korea, Taiwan and Singapore seized an opportunity in the 1960s to sell something which they had in abundance - human labour: cheap labour that would work in multiple shifts, docile labour intimidated by authoritarian governments and unprotected by trade unions.

These, the 'newly industrialized countries', acquired reputations as brash and successful outposts of capitalism. But in reality this was a victory more for planning than for market forces. Singapore and South Korea, for example, had autocratic regimes with the will and the power to synchronize business decisions. Hesitant investors, local and foreign, were coaxed into industrial expansion with loans or tax incentives.

This was 'intermediate' technology. The transistor had been developed, and later the integrated circuit. But even these miniature wonders still needed human help. They had to be placed by hand into the radios and the TVs and the computers. And Taiwan and South Korea had people prepared to do just that.

Nimble-fingered young women (and the labour force in such industries is typically 80 per cent women) were attracted by the prospect of cash in their hands and of escaping some of the strictures of family, and often rural, life. Not that they necessarily enjoyed themselves when they arrived. They often had to sleep in shifts in barrack-like sheds. And surveys in Singapore reported a high proportion complaining of failing eyesight from endless hours of squinting at tiny components.

Savings for foreign companies through such 'offshore assembly' have been such that the labour component of electronic goods fell in the 1970s from 46 per cent of total costs to 35 per cent. And keen to take advantage of such savings, the likes of IBM and Philips and Hewlett-Packard came increasingly to dominate some Far Eastern economies. In Singapore in the 1970s transnational corporations accounted for 70 per cent of the country's exports.

Trade in such goods was expanding rapidly; by 1980 these four countries accounted for 50 per cent of the manufactured exports of developing countries. And this was a style which other countries like the Philippines, Sri Lanka and many others tried to ape with more or less success.

But this wasn't the pattern everywhere in developing countries. Larger nations like India and Brazil tried to navigate along a more independent path. They could see a large market within their own borders and didn't want to see foreign companies seizing this prize.

In India, for example, tariff barriers were raised to keep out external competition and the US share of the market dropped from 80 per cent to 40 per cent. IBM left India in a huff in 1978 rather than submit to the condition that 40 per cent of the Indian subsidiary be locally owned.

But the smaller and poorer developing countries, particularly those in Africa, never set out along any high-tech path of any kind. Tied as they were to the production and export of raw materials like groundnuts or metals, all their electronic equipment would have to be imported.

And goods seemed to penetrate even the poorest communities. African village chiefs tend to make sure they are the first to get a heavyweight transistor radio. The roofs of Latin American shanty towns are a thicket of TV aerials. And few modern males in any country are to be seen without their digital watch. Relatively cheap entertainment and inexpensive status symbols are high on the agenda no matter how poverty-stricken the surroundings. And as often as not such products would come from Asia. South Korea alone had 40 per cent of the world trade in monochrome TVs by 1982.

It was during the recession of the 1970s that the pattern started to shift again. Transnational corporations watching their profits fall were eager to find yet cheaper sources of manufacture. This was the footloose phase of capitalism. A company might at first find cheap labour in Haiti, say, but then discover that the wage rates were rising, however minimally, either because of increased competition for the workers or because of trade union pressure. So off they would hop to fresher fields to Indonesia, say, or Malaysia.

But the companies also had more fundamental changes in mind. Research and investment was being poured into techniques that would reduce human intervention, however cheap. Robotization makes labour a much smaller proportion of overall costs. So factories that ten years ago might have been located in the Far East are now being built in the countries where the products are to be sold.

This helps minimise the risk for the corporations. With the spread of political unrest in South Korea in the 1980s, for example, companies like Pioneer and Sony have been pulling out IBM is believed to require cost savings of at least 25 per cent to justify the political risk of relying on Third World suppliers - and these are savings which are increasingly difficult to achieve.

Where does this leave the developing countries - the sellers of cheap labour? Well, the more fast-moving among them saw the writing on the wall some time ago. South Korea and Taiwan are racing to upgrade their own industries as fast as they can so they can compete face-to-face with Western countries at the level of technical sophistication. No longer content with a part of the manufacturing process, they want all of it.

South Korea, for example, now makes many of its own integrated circuits rather than import them. It wasn't easy to acquire the technology. Japan refused to pass on the kind of equipment they were looking for - nervous of aggressive competition on their doorstep. Most of what was needed had to come from the US. And now South Korea is making its mark as a more independent industrial power; Samsung and Goldstar are companies you will see promoted heavily in Western stores. So confident are the South Koreans about facing Western competition head on that they are now even building their own highly automated plants in Europe and North America.

But this demands large quantities of money and only those countries which have developed some sort of manufacturing base can find the funds by borrowing at home or abroad. The others are likely to get left by the wayside.

Those countries which had originally tried to go it alone had limited success. They did manage to produce and sell their goods when protected from the foreign competition, but not that efficiently. Brazil was producing equipment which cost up to 130 per cent more than that on the world market. Now they need to invest still further to make any more progress but find that many of the funds have dried up as the international debt crisis has bitten. And on top of this the US is threatening to retaliate by banning imports of Brazilian shoes if US companies are not given a free hand to manufacture micro and minicomputers in what they see as a lucrative market for the future.

India's self-imposed self-reliance also allowed it to produce basic electronic equipment but tended to isolate the country from international innovation. Now under Rajiv Gandhi's new broom it is opening its doors again - with IBM back once more and engaged on a $500m project to computerize the railways.

There is still, however, a role for Third World countries who can sell their labour cheap. Many of the older style factories will keep producing - even if they are not being updated. But there are other opportunities.

A high proportion of the money spent on computers these days goes on software rather than hardware. And countries like India with an educated workforce can offer the sort of programmers needed if companies want to develop a new financial system, for example. Payroll costs for an Indian programmer might be $3,000 compared with $30,000 in the US. This is likely to be a temporary opportunity, however. Computers will change in the future in ways which make them less reliant on software. And programs which write on a $500m project to computerize the railways.

There is still, however, a role for Third World countries who can sell their labour cheap. Many of the older style factories will keep producing - even if they are not being updated. But there are other opportunities.

A high proportion of the money spent on computers these days goes on software rather than hardware. And countries like India with an educated workforce can offer the sort of programmers needed if companies want to develop a new financial system, for example. Payroll costs for an Indian programmer might be $3,000 compared with $30,000 in the US. This is likely to be a temporary opportunity, however. Computers will change in the future in ways which make them less reliant on software. And programs which write equipment but for data. We are beginning to see the internationalization of clerical work. One of the most expensive parts of data handling is keying in the information. Jamaica, for example, has just announced that it is opening a 'Teleport' where up to 10,000 people will be engaged in keying information into computers and then transmitting the results back to the US by satellite.

The divisions into the haves and have-nots would therefore seem to be widening. Those developing countries which can find the money can try to run very fast to catch up with the Western elite producers. The rest may find themselves pushed even more onto the sidelines - or having to survive on new and more sophisticated crumbs from the rich world's table.

High-tech poverty
The introduction of new technology may be seen as a
means of catapulting poor communities out of poverty.
But in reality only those who have the power and
the money are likely to reap the benefits.

[image, unknown] RADIO and TV and watches and calculators have permeated into the furthest corners of the Third World. Will micro-computers follow the same route? Cost, for one thing, makes this altogether less likely - not to mention the lack of stable electricity supplies and reliable phone lines.

Progress may therefore be slower than in Western countries. But micros are springing up in government and private offices throughout the Third World. And they will have an effect on even their poorest citizens, whether they like it or not. It now, for example, becomes more practicable to collect and analyze detailed information on local soil conditions. This might mean that the government could be more responsive to the individual needs of small farmers - or it could just mean they exercised much more effective control over them.

Powerful micro-computers are also available to independent development groups which can raise a thousand dollars or so. And indeed they may have to acquire them if they are to have an impact. They could for example use a micro to collate and present information on pollution around power stations or factories. And there are several projects afoot subsidised through international networks like ECONET which can keep them in touch with similar groups in Japan and the United States.

With an eye to the future, many Third World children are being introduced to the possibilities of micro-technology. Micros are now being introduced into Indian schools - manufactured locally under licence from Acorn and Amstrad - with plans to have them in 250,000 out of 650,000 schools by 1990. And there are computer literacy projects in African countries. A computer laboratory has now been set up, for example, at the Starehe Boys Home in Nairobi with the help of a $150,000 grant from the West German government. Now they have 37 Apple and Sinclair micros.

But they face problems similar to those with using other Western educational materials. Much of the software has been written abroad and is loaded with Western concepts. There are some cases such as a pilot scheme in Senegal where the computer language Logo has been translated in a local language, Wolof, for use by schoolchildren, but this seems to be rare.

Inevitably such schemes will be introduced on an isolated basis with an elite group of children. In addition to the Starehe example in Nairobi, for example, a UNESCO study found that computers were being used in 18 private schools. There is no shortage of more starry-eyed hopes for international communications using micros and satellite communications - ways of giving groups in the Third World instant access to the sort of information available from Western databases. There are even suggestions of an Electronic Peace Corps offering technical advice and information through international bulletin boards.

But the question will remain of who within the developing countries will be in a position to take advantage of such advances. Micro-technology is just as flexible, but no more democratic, than the money it takes to buy it.

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