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A Vision for Latin America: a resource-based strategy for technological dynamism and social inclusion |
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A Vision for Latin America: a resource-based strategy for technological dynamism and social inclusion |
| Download file: | Perez_Vision_LA_English_050708.pdf |
| Link: | http://dcsh.xoc.uam.mx/eii/globelicswp/wp0804-en.pdf |
Contents and Introduction
Table of contents INTRODUCTION |
| INTRODUCTION By way of executive summary |
| This essay looks at the current trends in globalization and in the diffusion of the ICT (Information and Communications Technology) revolution and its paradigm in order to propose a vision of a successful and socially equitable future for Latin America, based on the common features, while harboring all the variety of its countries. It hopes to provide the basis for intensive research and for a serious and wide ranging debate on the matter. The proposal is rooted in the author’s work on the diffusion of technological revolutions, on how technology and technological capabilities determine growth potential and on the way in which the world technological context changes the windows of opportunity for development of countries and regions. It is a suggestion in response to the growing concern among Latin Americans that without an agreed sense of direction it will be very difficult to get onto a dynamic development path. The rising prices of raw materials have indeed provided the fuel for regaining a higher rhythm of growth, but technological capabilities are not growing apace and profound social inequalities persist –often deeper than in the 1970s. The region is becoming aware of the need to provide a solid foundation for a more stable source of economic growth and of social development potential. Given the strong Asian bias of the current globalization process, it is very important to identify areas of technological potential where Latin America has a comparative advantage vis-à-vis Asia. In highly simplified terms one can say that Asia is a very densely populated continent with a relatively low endowment in natural resources, while Latin America is very rich in natural resources with a much lower population density. These conditions give Asia the advantage in labor intensive fabricating (assembly) industries, while in Latin America they favor the resource-based processing industries. Since the region is extremely varied in resource endowment, this general direction should allow and in fact demand differentiated specializations. Fabrication would not –and could not– be abandoned, but the bulk of it would be strengthened in those areas that are either at the service of the processing industries or that target high-value low-volume niches, taking advantage of the hyper-segmentation of markets that characterizes the current globalization wave. Of course, in larger countries such as Brazil or Mexico volume fabrication can be competitive by leveraging the home market or incorporating specific technological features. Acquiring capabilities in the resource-based industries associated with biology and materials has the added advantage of preparing the terrain for being well placed in the technologies that are likely to be part of the next technological revolution: biotechnology, nanotechnology, new materials and energies. A focused effort is proposed in order to make sure that such preparation takes place. The process industries are usually not labor-intensive and tend to need a high proportion of skilled and highly-skilled personnel. This means that although such industries can contribute to economic growth and to the enrichment in human and technical capital, –both crucial for catching-up– they cannot do enough to reduce the gulf between rich and poor, eliminate unemployment and overcome poverty. Neither can one rely on the “trickle down” effect that has been so deeply questioned by historical experience. This suggests the need for a complementary and simultaneous set of policies; a two-pronged approach to development: top-down and bottom-up. Thus, this proposal involves what could be called a dual integrated model. The top-down part of the strategy already outlined aims at competitiveness in world markets, reaching the technological frontier in certain areas and processes and even forging ahead, often in alliance with global companies. In turn, the bottom-up half of the strategy would act directly in every corner of the territory at the municipal and local level by identifying, promoting, facilitating and supporting wealth-creating activities aimed at whatever market is most suitable: local or regional, national or global. These would tend to be specialized “clusters” targeting niche markets based on local advantages. As we will discuss below, both halves of the dual strategy are enabled by the new global conditions.The bottom-up half would be aimed directly at reducing poverty, and the top-down half would aim at activating and strengthening the engines of growth of the economy, and therefore providing the resources that make both halves feasible. This dual strategy cannot be achieved by the market alone, but neither can it effectively be imposed by government, much less so in the current paradigm which requires constant innovation and flexibility to context changes. Such a model can only function properly as a socially shared vision, with the various agents of change acting autonomously in the agreed directions and integrated by an active government with an adequate and effective institutional framework. Its implementation would require a process of consensus building involving business, government, universities and society, followed by the adequate policy measures to induce and facilitate market behavior in the agreed directions. To set the stage for this strategy proposal we begin with an interpretation of Raul Prebisch’s Import Substitution model, seen as a successful positive-sum strategy within a very specific window of opportunity. This suggests the need to identify the nature of the current windows. With that in mind, the following section examines globalization as an intrinsic element of the ICT paradigm and singles out three processes of hyper-segmentation that strongly influence the opportunity space. The dual model is then presented in broad brush strokes identifying the general directions for the resource-based specialization in the process industries, while taking into account the urgent need to confront poverty and the rise of Asia. The next three sections analyze the three key hyper-segmentations in detail –of markets, value networks and technologies– and look at how each of them defines opportunity spaces for both sides of the proposed strategy. The following section argues that a resource-based specialization route may also effectively prepare the ground for a successful insertion in what is likely to be the next technological revolution. Then there is a very brief discussion of the theories about resource-based development and of the current conditions that create a window of opportunity for such a route to development. The concluding section argues the need to revitalize the role of government both as consensus builder and as proactive facilitator of the strategy in its two components. While this discussion is based on the author’s work on the patterns that recur in the spread of technological revolutions, it is not possible in this brief paper to present a summary of those patterns or to review the meaning of the various concepts and terminology. It is hoped that the succinct explanations provided will be sufficient for the current purposes.1 Furthermore, it is useful to advise the reader that this is mainly an essay rather than a research article, a proposal argued from a particular world view rather than an empirical analysis of context or viability. It is meant to open –rather than close– a necessary debate. |
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