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Coping with Global Economic, Technological and Environmental Transformations - Discussion Paper No. 45
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Management of Social Transformations - MOST

Discussion Paper No. 45

Coping with Global Economic, Technological and Environmental Transformations: Towards a Research Agenda

by

Yoginder K. Alagh

    Table of Contents
      Introduction *

      Land, Water and Globalisation *

      Trade, Investment and Technology *

      Global Debates *

      Conclusion *

      References *


Introduction

The questions that must be posed today for research concern the impact of the global transformation --technological and economic-- that is taking place; the extent to which this process is being understood; and the manner in which it relates to concepts such as sustainable development in economic, social and cultural terms. If "impact" studies are not to be just descriptive, emphasis should be put on analytical studies and, if possible, should propose alternative development paradigms. It is suggested that this should be the context of sustainable human development. This theme would draw from both the concepts of economic development based on technological progress, and of sustainable development as an environmental concept of optimal utilization of local natural resources, but it would be different from both.

The attempt now should be proactive in terms of looking at both the natural resources, the technological and socio-economic aspects, and institutions and actual operating rules which govern their working as seen in studies of either the "crisis" or the "benign" aspects of "developments" taking place. If this is not done and economic and technological processes or environmental and cultural "developments" continue to be examined separately, "facts" will run ahead of theory and it will become difficult to understand and explain many global and regional developments. Development such as the interrelation of global technology and economic restructuring with land and water and peasant societies, or of industrial and trade restructuring with the small artisan communities, could, for example, provide the framework of interdisciplinary and comparative analysis. The complex interrelationships of these classes of issues, in which very non-linear and previously unknown developments are already taking place, with concepts of "restructuring" of economic and technological policies, at the national or regional level, in the Neo-Fordist era, is a somewhat more abstract level. It is at this level that the question of global economic and technological transformation and its impact on regional and local issues can be examined.

These questions also have significance for the operational aspects of policies relating to macro-economic restructuring and special sectoral policies such as agricultural trade policies. If our arguments are founded, in terms of describing socio-economic phenomenon, there cannot by definition be a "universal" set of policy rules for development. However, knowledge, technology, investment and trade are powerful influences at play and can be ignored or underplayed only at the risk of showing a lack of realism in the understanding of contemporary reality. This then leads to the concept of "phasing" and "transitional" strategies, which individual communities, initially relatively self-reliant, use to "cope" with global influences. Is it possible to give a concrete context to this concept? Or is it an empty box?

The recent crisis in money markets in East and South Asian economies lends urgency to such questions. The issue is discussed here in the context of a debate which has developed in India over what is called the "level playing field" argument. This concept builds a rigorous economic framework for a phasing and transitional strategy.
 

Land, Water and Globalisation

Agenda 21, adopted at the Earth Summit in Rio de Janeiro (1992), recognizes that behind the problems of "sea warming" and the ozone layer are issues of communities at disequilibrium in terms of resource endowment. The process of historical evolution had led to a certain balance between social activity and resource endowments in different agro-climatic regimes. This is the phenomenon of traditional economic and social and cultural styles related to soils, climate and endowments. It should be noted that water harvesting and soil management techniques developed through the centuries are again being incorporated in watershed development projects. Anthropologists talk of the language, folklore and cultural dimensions of traditional famine-prone societies.

The equilibrium was in many cases cruel (for specific groups such as women, for example), but society had in a sense "coped" with the crises of scarce endowments. Yet, even before the current "global transformation", this fragile equilibrium was being disrupted. Diminishing mortality with its subsequent population pressure and, more generally, commercialization and "marketization" were leading to the breakdown of traditional community arrangements. Increased desertification or proneness to floods could in many cases be traced back to community practices of water harvesting or drainage breakdown, as the impact of commercialization led to a decline in labour contributions in kind.

The impacting of technological progress with peasant agriculture in the developing world is a complex subject. For example, where good soils and assured sources of water existed, markets worked well in the spread of the Green Revolution. The Japanese economist Hayami has documented this experience in one of the more enduring forms of economic organization known in the world, namely Asiatic peasant agriculture. It is now increasingly recognized that hunger and deprivation were minimized in areas where widespread agricultural growth took place, generally supported by market incentives. However, in the absence of these favorable initial conditions, it appears that growth did not occur. The performance of areas with low and/or uncertain rainfall regimes was poor and uneven. There, "marketization", "commercialization" and sometimes "globalization" led to serious problems, with socio-economic deprivation and destabilization, and environmental disaster, as two sides of the same coin. The work of Gerry Helleiner, Chairman of the International Food Policy Research Institute (IFPRI), shows that, associated with the disasters in Saharan and Sub-Saharan Africa, was the systematic decline of peasant and community organization in rural areas. This in turn led to migration, famine, hunger and war (Helleiner, 1986).

These vicious circles in many social phenomena coexist with positive ones. There are examples of households and communities which have coped with the same fragile land and water endowments and have met energy, food, and at a more basic level, employment and income deficits in a sustainable manner. They are sufficiently numerous for it to be safely said that the "demonstration stage" is over and that these are substantive socio-economic developments. One such example is the Indian Agro Climatic Planning Project that reported seven case studies, in which through community efforts, food and energy gaps were met by suitable technological and social interventions under "difficult conditions". These studies, conducted by independent researchers, show high economic rates of return: generally 18 per cent plus, making them very productive investments (Alagh, 1991).

An initial classificatory table prepared by the present author showing the investment, foodgrain, fodder and energy outputs per hectare and internal rates of return, has been substantially expanded and reproduced in the literature with many other examples (compare Alagh, 1991, with K. Chopra and G. Kadekodi, 1993). The various studies conducted to date permit some preliminary generalizations. The success stories are community- and leadership-based, with leadership coming from diverse sources -- an NGO, a local army and a retired person, a scientist working in the field, a "concerned" civil servant. Generally, the leaders had a science background and could at least adapt a technology known in the region (e.g. a field station, an agricultural university).

The experiments undertaken could be as diverse as those of watershed development for tree crops or settled agriculture, reclaiming of saline lands, animal husbandry in desert areas, community organization to run lower level irrigation, or use of flow water in tribal areas. While the economic returns were high, the experiments invariably ran into financial losses, at least in the preliminary phase. For example, initially, seed rates or soil amendment inputs may be high in fragile lands or a nitrogen fixation crop may be needed. Markets generally play a powerful supportive role in such experiences. The value of output of dryland horticulture crops and animal husbandry products goes up as the "soil and water" scheme succeeds. Also, such inputs as modern seeds, an efficient water saving device, etc., are available at cheaper rates. In fact, modern technology (exemplified in biotechnology, photovoltatics, improved processing and communication) has great relevance here. The initial costs can be met in many ways: improved capital markets; acceptance of community collateral by bankers; lending through the watershed development cycle or the tree crop cycle; adaptation of employment or work programmes to the experiment. But the outside effort must be complementary and time phased.

But the more important issues lie in the meshing of market phenomena and community efforts. Just as markets can ravage local endowments, they can also support sustainable development. The key issue is to describe and delimitate both the community effort and the unshackled power of decentralized markets.
 

Trade, Investment and Technology

Let us consider the issue of globalization of trade and investment. Sub-contracting, modern communication and electronic feedback are commonly used by global firms to reduce costs (R. Petrella and the EEC FAST Programme, 1990, has documented the process). The advent of the triardic World (North America, Europe and the Pacific Rim), in terms of dominant trade and investment flow and marginalization of other economies and economic processes not integrated with global actors, is well known. What is not well known is the fact that in many cases small and medium enterprises have been able to integrate themselves with the global economies. In fact, in the Neo-Fordist era the role of small and medium enterprises is again rising in terms of income and employment. This is made possible by modern technology, and a few words on this may be useful. But it is important to realize that the process involves autonomous regional development and the development of socio-economic institutions and organizations to endogenize technology with local endowments and artisan or other skills.

Meanwhile contrariant trends have also started. For example, in 1998 one biotechnology company in the U.S. invested $300 million to provide a wide range of services in a cost- and time-efficient manner in the genomics field, using parallel processing facilities unheard of even a decade ago. This would eliminate a lot of "service" industry elsewhere. The requirement of new "contracts" for science and technology in the field of health and agriculture for the Third World is obvious. This is a research issue.

The triardic pattern of trade and investment flows has been very much in evidence since the end of 1980s. Within the triad, the Pacific Rim is the largest exporter of capital, but the technological superiority of North America still remains a major building block. The considerable instability in the economic arrangements that have emerged arises from the uni-directional nature of investment flows. This is why it is difficult to sustain US imports of capital from the Pacific Rim. Yet, despite some basic difficulties, the system had worked fairly well until now. The East Asian crisis has brought all this into question.

The statement that "the post-industrial revolution technology has great application possibilities" is somewhat incorrect these days. Furthermore, like for all commonplace facts, the implications of the statement are not fully understood and some are only now being dimly appreciated, at least in the developing world. Given the great technological potential of future breakthroughs, societal aspects may be ignored. There is by now considerable empirical research on these aspects and they have been highlighted by global research studies and networks (EEC, 1990, Petrella, 1990, and Petrella and Granrut 1992). It may be useful to begin by identifying the characteristics of the post-industrial revolution technology.

The first aspect to note is that the scientific breakthrough (of an application kind) is, in many cases, of a genuinely inter-disciplinary nature. Research in genetics, communication, computers and diverse fields such as agriculture and public health, impact on it. Petrella (1990) distinguishes this feature as the central characteristic of the technologies of the post-mass production industrial society. In genetic mapping, for example, for the optimal use of scarce funds for biotechnology research, parallel computing and data systems, genetic codes are required both in equal measure, as also highly decentralized information on genetic characteristics spread on a diversified commodity-spatial link.

The second characteristic of this new technology is that given the existence of pre-conditions of the required infrastructure, it spreads very fast. This is true both in terms of sectors and regions. The cost-effectiveness of the technologies is so great that when the initial breakthrough is made it diffuses very rapidly. The sectors to which this applies include: seeds; agro-processing; animal husbandry and agricultural, environmentally friendly products in rural and urban localities; public health; and education and research applications.

The third major feature of this technological phase is its self-destructive nature. The research breakthroughs in terms of technological sweep are at a preliminary stage and the product and process cycles are short. Interdisciplinary work builds on the available findings to quickly develop newer processes and products. Obsolescence is high. Organizations that have flexible organizational mechanisms and are able to respond quickly to new ideas and breakthroughs and newer demands, seem more successful than large corporations or parastatal organizations.

The fourth aspect is that the impact of the new technology can be unequal. This is paradoxical in view of its fast spread under the appropriate conditions. Indeed, when the required infrastructure is not available, both in terms of scientific and commercial skills and level of general training and scientific culture, the diffusion process comes to a standstill.

Fifth, the potential of the new technologies is very high. Once the research breakthrough is made, the programme costs are low, particularly if the application infrastructure is already available. The technologies can also be beneficial to the environment; this is particularly true of the biotic pesticides and the new seeds which save land and water. There are vast possibilities in terms of energy and material conservation, new environment-friendly products applications in non-crop agriculture such as animal husbandry and newer possibilities of agro-processing and waste recycling.

Finally, the nation/state seems to be playing a much smaller role in the new developments as compared to earlier technological revolutions. This seems to be due to the technology’s need for flexibility and rapidity. Small and medium corporations with flexible research organization styles, knowledge-based groups and research establishments seem to work better. From such a perspective, the interaction of such groups at the level of public bodies is seen more with cities, research groups, professional organizations and local governments.

In the fundamental sense of relevant social knowledge, alternative models do exist on a global plane. The real question is whether institutions have the wisdom and the flexibility to adapt them in a relevant quest of globalization. All the alternative approaches rely on unleashing the power of market-based development, but as a part of policy systems which use strategic intervention and planning as a framework. The trend towards market-based development is universal, and so is the decline of allocative control allocation systems. But the agenda should be concerned with the nature of strategic policy-making and intervention which uses market-friendly instruments, to the extent feasible, rather than the "hands off-come what may" policies.

Let us consider some of the studies on alternate globalization models. Following the work of activist MIT economist Enrico Brusco (1990), M Piore and O. Sabel (1984), in their classic book The Second Industrial Divide, have shown that small and medium enterprises are becoming a larger part of advanced economies in the post "mass manufacturing based on scale economy" era. Enrico Brusco designed and participated in the continuous study of the industrial district of Emiglia Romagna (see Pyke and Sengenberger, 1992). The typical model of such industrial district Post-Fordist success stories serves as a base for artisan or skill-based development of thousands of small firms, mobility between workers and entrepreneurs, intense competition in concentrated areas (15 000 plus enterprises in areas of 25 km2 or so), but also detailed cooperation and networking for technological innovation and support, training, standardization and quality control and continuous search for global market trends and adaptation to them.

Sengenberger and Pyke (1992) have documented such success stories in Denmark (work of Neilson in Copenhagen), Spain (IMPIVA in Valenicia) and Japan (Shimada and the concept of "lean production"). All these case studies show reliance on markets for demand and yet are based on substantial technological and support planning and strategic industrial policy interventions. Information networks and technology support systems are subsidized for varying periods of time. These include, for example, continuous studies of change in global demand patterns of the product (garments in the case of Emiglia Romagna); quick dissemination through modern informatics; interdisciplinary research on technology support, for example computer-aided design; and multi-disciplinary search for technological solutions (biomedical engineering for orthopedics and sportsware in Valencia, for example). Industry-run systems were publicly supported.

Pyke shows that the trend of small- and medium-enterprise based industrial district growth entails mobilising latent local energy and enterprise for regional development, in the context of internationalization and globalization of the economy (F. Pyke, 1992), instead of adjusting all economic activity to the uniformity of globalization through world prices. The fact that small industry is a major source of existing exports and that there are large concentrations of artisan-based small industry centres is seen as a sign of weakness to be remedied in many poor countries, by making conditions ripe for large houses and multi-nationals to export. Small enterprises need to be linked with world markets; the fact that industrial policies must be designed to do so occurs only to a few.

It can be argued that these concepts have relevance to the developed world only, since if the initial infrastructure is not available, such possibilities of flexible specialization do not exist. In fact, given the artisan base of production in developing countries, such possibilities do exist in technological opportunities. The question is, which social and economic institutions translate these opportunities into reality? Some examples that have been studied exist in developing countries (Alagh, 1999).
 

Global Debates

The intellectual preparation for the United Nations Conference on Environment and Development (UNCED) included initiatives by many groups in different countries, a number of international meetings which preceded the Rio meeting and the various national position papers. However, by far the two most interesting perspectives came from the United Nations and from the World Bank. The World Bank views were contained in the World Development Report 1992 on "Development and the Environment". This was preceded by a set of fairly detailed reports by Herman Daly and his colleagues which have been widely discussed. The summary of the UN’s view is presented in Guide to Agenda 21: A Global Partnership, released by the Secretariat of UNCED in March 1992. An interesting parallel exercise to this by UNCED is contained in the Hague Report Sustainable Development: From Concept to Action which contained some of the intellectual back-up for Agenda 21. The Finance Minister of the Netherlands, Jan Pronk, and the Pakistani economist, Mahabubul Haq, released the Hague Report based on their understanding of the Hague Symposium held in November 1991 and attended by about forty leading thinkers from all over the world. Pronk and Haq introduced the Hague Report by saying that "the Hague Report was to Rio what the FOUNEX Report was to Stockholm, a ‘seminal document’, and exercised a major influence on global thinking on these issues".

In regard to land and water and the problems of ecologically fragile areas, Agenda 21 seeks a comprehensive approach and asks for the implementation of sustainable development investment strategies and plans at the national level through international cooperation. The Technical Annex to the Hague Meeting Pronk-Mahabubul Haq paper by Ignacy Sachs commends the agro-climatic approach to land and water development costs in the following words:

"Alagh (1991) gives many examples of watershed development projects with a short pay-back period. The techniques for such projects are well-known and their impact at community level would be very favourable. Yet they need public funding for the front-up costs. Alagh argues in favour of an agro-climatic planning in terms of alternative agricultural and farming systems in order to overcome the shortcomings of a favoured crop/region approach".

Concerning industrial technology, Agenda 21 and the Hague meeting advocate the induction of energy-efficient technologies in the development process, particularly in the Third World. The United Nations note commends the kind of proposal made by the late Rajiv Gandhi at the Summit of Non-Aligned Countries in Yugoslavia in 1989 for instituting an international mechanism which makes environmental-friendly technology available to the Third World. The technical annex to the Hague Meeting commends this proposal as follows:

"The proposal made by the Indian Prime Minister at the Summit of Non-Aligned Countries in Belgrade in September 1989 deserves careful examination. It calls for setting up of a one per thousand tax on the Gross World Product for a Fund of Sustainable Development that would finance the research, development and production of environmentally friendly technologies to all those who need them. This proposal combines the principle of automatic financing with the treatment of science and technology as part of the common heritage of mankind".

In this area the World Bank’s approach is to rely on "market-based incentives" and the need to avoid regulations that cannot be implemented.

The United Nations estimates an investment of $125 billion, which is much higher than the World Bank estimate of $75 billion. Both organizations, however, state that this is in addition to the current level of international aid. The United Nations proposal is more innovative and the Hague Report refers to funding mechanisms such as emission taxes and entitlements. An international research programme that would document experience, theorize, draw policy conclusions and synthesize on-going work would be very fruitful.
 

Conclusion

Terms such as "globalization", "flexible specialization", "carrying capacity of agro-ecological zones" are technological paradigms. Technologically it is possible to ensure the development of land and water in fragile areas to meet the energy and food requirements of poor households without damage to the environment. It is possible to relate modern Neo-Fordist technologies with artisan communities in the Third World. It is also possible to conceive of nations becoming a part of global markets without extremely disruptive consequences. It is equally possible to configure adverse consequences.

The real issue is not technology or globalization as a technological paradigm. It is institutions and rules that create powerful incentives and preconditions for sustainable development to take place. Equally important is the nature of incentives and deterrents for positive and negative behaviour. These fall within the domain of social enquiry. Not much can be said at present on the general principles and conclusions that can be reached on these issues. But some observations may be in order.

The first is the speed with which innovation and change arising from economic adjustment is working itself out on an inter-regional or global plane. The speed of adjustment required is fast, at the local or country level. Typically, on the other hand, it takes time for social science research to reach a better understanding of social processes and to distill policy steps. Networking is probably important in this context, as are also modern information-sharing methods, which reduce response time. Second, the nature of social impacts of technological and regional changes is of a holistic nature. Developments arising from trade and innovations can affect resource endowments, levels of income and employment, and social institutions. The plea for inter-disciplinary work in the search for understanding social processes is indeed no longer a "fashionable plea"; it is a "compelling reality". Those who do not understand modern communication and global trading processes may find it difficult to understand the social and economic pressures on farming and artisan communities.


References

Alagh, Y.K. (1991), Indian Development Planning and Policy, WIDER Studies in Development Economics, Delhi, Vikas

Alagh, Y.K. (1992), "Growth Performance of the Indian Economy, 1950-89", The Developing Economies, Tokyo, June 1992, pp 97 - 116.

Alagh, Y.K. (1999), "From Employment Planning to Employment Policies", Presidential Address to the Indian Society of Labour Economics, Indian Journal of Labour Economics, Vol.42, No.1, January-March.

Brusco Enico (1990) in F Pyke and W. Sengenberger, Industrial Districts and Interfirm Cooperation in Italy, Geneva, International Institute of Labour Studies.

Chopra K. and G.Kadekodi, (1993), "Watershed Development: A Contrast with NREP/JRY," Economic and Political Weekly, June 26, pp. A 61 - A 67.

EEC (1990), Commission of European Communities, FAST, European Futures:The FAST II Programme, Prospects and Issues in Science and Technology, Brussels, EEC.

Helleiner, G.K. (1986), "Balance of Payments Experiences and Growth Prospects in Developing Countries, World Development, Vol. 14, pp 877-908

Petrella, Ricardo and C Granrut (1992), La Mondialesation de la Econome, FAST Document No. MO 75-5/34.

Piore, M and C. Sabel (1984), The Second Industrial Divide, New York, Basic Books.

Pronk, J.and Mahabubul Haq, (1992), Sustainable Development: From Concept to Action, New York, UNDP.

Pyke, F. (1992), Regional Development in an Era of Globalisation, Geneva, International Institute of Labour Studies.

Sengenberger, W. and F. Pyke (eds.) (1992), Industrial Districts and Local Economic Regeneration, Geneva, International Institute of Labour Studies.

UNCED (1992), A Guide to Agenda 21, Geneva, UNCED.

World Bank, (1992), World Development Report, Washington, World Bank.


About the author

Professor Yoginder K. Alagh, currently Member of Parliament, Rajya Sabha, in India, has been Minister of State (Independent Charge) for Power and Science and Technology, and earlier, Planning and Programme Implementation, and Member Planning Commission (in the rank of Minister of State). Formerly, he was Chairman, Bureau of Industrial Costs and Prices, Ministry of Industry and Secretary to the Government of India, as well as Vice-Chancellor, Jawaharlal Nehru University. He is President of the Scientific Steering Committee of the MOST Programme, UNESCO, and a Member of the Council of the United Nations University, Tokyo.


The opinions expressed in this publication are those of the author and do not necessarily reflect the views of UNESCO.


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