Issue No.588
Economy
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30 May - 5 June 2002 Issue No.588 Economy |
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| Published in Cairo by AL-AHRAM established in 1875 | Recommend this page | ||
Asian technology: does Egypt need it?
Egypt should look to Asia, particularly Japan, to provide the technological impetus for its economic development, argues Mohamed Abdel-Shafei'i Eisa*
What is Asian technology? Or, more accurately, what are Asian technologies? For there is no one Asian technology. There are, indeed, as many Asian technologies as there are different areas in this vast continent. We can speak meaningfully about North-East Asian technology (from Japan, specifically), East Asian technology (China and the Far East, especially Korea and Taiwan), and South-East Asian technology (the Association of South East Asian Nations (ASEAN) in addition to the Indian sub-continent). There is also Islamic central Asia and, lastly, the west Asian countries: Arab countries in the Middle East, in addition to Iran.
In this discussion, our focus will be the very broad area of East Asia which contains Japan, China, Korea and Taiwan and some ASEAN countries, while our subject is the relevance of East Asian technology to the Egyptian experience of development.
The discussion resolves itself into three key questions, viz:
1) What are the specific features of East Asian technology?
2) Is there any transfer of technology from East Asian countries to Egypt, and what are the main mechanisms for it?
3) How can Egypt make use of East Asian technologies for its own development programme?
Before continuing, it is worth drawing a distinction between three kinds of technology in East Asia. Broadly, we can differentiate between the advanced and highly advanced technology of Japan, the moderately advanced and intermediate technology of China, Korea and Taiwan and the intermediate and simple technologies of some ASEAN countries such as Malaysia, Thailand and Indonesia.
To take Japan first, the story of its success in the post-war era needs no rehearsing. In micro-electronics, integrated circuits and silicon chips, in automotive building, steel and ship-building and all motor vehicles, in electric and electronic machinery and audio visual technology, Japan has achieved what we can call a "Technology Edge." And this achievement, of course, is what has drawn the admiration of the Arab world.
Japan, however, determined its development priorities in the light of strategic and geographic considerations. It gave high importance to its neighbours in East and South East Asia, and of course to the US and Western Europe, for obvious geo-strategic, political and economic reasons. Its investment in Egypt, or other Arab and African countries, by contrast, has been meagre, and there is no efficient transfer of technology from Japan to any of them.
There are many specific reasons for this, beyond the general reasons outlined above, especially in Egypt. Reasons abound, for example, as to why the Egyptian market is not to the taste of Japanese exporters. Japanese companies compete on quality, not on price, while Egyptian consumers tend to favour price over quality. It is also likely that Japanese investors were unable to find appropriate counterparts in Egypt with sufficient productive, managerial and marketing experience, or the disciplined and low-wage labour they can find in South East Asia.
Strategically, Egypt is also outside the loop for Japan. Strategically, Syria, Jordan and Morocco are more important for Japan, while economically, that honour goes to Dubai. The result is that there is no appreciable technology transfer from Japan to Egypt, though Japan's record as a donor to Egyptian mega-projects like the greater Cairo subway and Suez Canal High Metal Bridge and Railway is second to none.
So do we need Japanese technology? Yes: and the reason is the specific nature of technology transfer from East Asian countries generally, other than Japan. (China, Korea, Taiwan and ASEAN countries).
From China, for example, Egypt imports a billion dollars-worth a year of commodities known as "Chinese-model" commodities, which are generally of lower quality than Japanese commodities.
Near to the "Chinese model" commodities we find Taiwanese goods. These dominate Egypt's spare parts market, and are also characterised by low quality and cheap prices.
Of course, this is appropriate for a country with Egypt's current purchasing power. But as Egypt continues on the road to industrial progress by building real technological capabilities, it could speed its development by looking for quality, as well as price, competitiveness. Better cooperation with more technologically advanced countries like Japan, therefore, is a must.
Moving now to Korea, the pattern there of economic relations with Egypt is a striking example of classic trade specialisation on a world scale. Egypt exports the raw materials of cotton and petroleum, and imports semi-assembled machinery and motor vehicles.
It is in this context that the large investment and trade in Korean television sets and cars in the Egyptian market thrives. There is, though, no real transfer of manufacturing technology and know-how from Korea to Egypt. On the contrary, only firms specialising in final assembly of prefabricated products, as well as finished commodity importers, benefit.
The same is true of ASEAN countries, like Malaysia, Thailand and Indonesia. From them, we see only some trade in finished goods like pens and pencils from Indonesia, processed tuna cans and some foodstuffs from Thailand, and some small Malaysian investments in Egypt such as in the palm-oil industry.
We can say, then, that the transfer of Asian technology to Egypt, as it stands now, is not so useful for industrial and technological capability building.
We do not need merely to import ordinary goods and finished commodities, nor do we need merely to import machinery and equipment. To build our own domestic, technology-rich industries, we need the transfer of know-how, specifically manufacturing know-how, so we can produce and apply technologies ourselves.
Importing know-how (through licensing and international scientific exchange and through imitation and reverse engineering), added to our existing national research and development (R&D) capacity, allied to self-learning and learning-by-doing, can and must enable Egypt to build its indigenous base of capital in all its forms: knowledge, human, physical and social.
This process of national science and technology promotion could reinvigorate our education and training methods, R&D, and private and public sector productivity, in both medium and small-scale enterprise (MSEs) and cooperatives.
It is from combining and activating these interrelated components that we can establish what we call a "national system of innovation."
Egypt (and other Arab or African countries) can learn many lessons here from the Japanese experience, viz:
1) The importance of enhancing indigenous industrial and technological capability.
2) The high importance of investment in human capital (the labour force), which in both Egypt and Japan is considered the main productive factor.
3) The importance of transferring foreign technology know-how over physical capital (machinery and equipment).
4) The importance of building a critical mass of domestic know- how by combining imitation, reverse engineering, learning-by- doing and the national R&D capacity.
5) The importance of activating national competencies in order to establish a national system for innovation.
6) The importance of walking on two legs: in other words, linking sound public policy under the guidance of a competent state organ (like MITI in Japan) to an efficient productive system.
But these lessons, in the end, will only be useful if Egypt's elite has the political will for and commitment to development, and if the state, backed by a genuinely productive industry, is ready to embark on the long march towards economic progress, social equality and human self-fulfillment and spiritual enrichment.
* The writer is a professor at the Institute of National Planning; this essay is taken from a speech given to Egyptian and Japanese scholars at a joint symposium held at the Faculty of Economics and Political Science, Cairo University.
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