Guide The History of Reading, Volume 1: International Perspectives, c.1500–1990

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Manufactured goods—capital-intensive technologies, high technology content. Processed and capital goods—postindustrial high technologies and services, very high technology content. The product cycle begins in the industrialized, innovating country. The technology is diffused through exports, foreign investment, and licensing.

This produces a cascading flow from highly developed to less developed countries, with progressive loss of comparative advantage to the low-labor-cost countries. The impact on the export-import balance between countries at different stages of development can be presented schematically as shown in Figure 1.

Superimposed on the product cycle is obsolescence, the progressive decay of products.

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With increased volume and ease of production, this decay leads. New and old products also differ in the ratio of intellectual content to mass, with new products containing less mass and more skill. Even in material-based mass products such as cars and machines, this trend is evident in the microprocessors, chips, and plastics needed for the products to function. This trend has contributed. The dynamics of technology flows, comparative advantage, and prosperity will then largely depend on the rate at which an undeveloped country can absorb new technologies.

The role of protectionism as both stimulus and brake in this absorption process is critical. Yet, if protection is sustained, it distorts the economy and may be the most serious impediment to growth through globalization of technologies. Against these theoretical concepts, development in the Pacific Rim region illustrates a wide variety of starting points and outcomes. The means of creating and transferring technologies deeply influence the impacts of those technologies. Identical methods produce vastly different effects in different environments. The classic mode—scientific publication—while still crucial on a worldwide basis, has receded in importance compared with rapid communication between peer groups in academe and transnational corporations.

The linear model—the direct path from science to economic development—no longer holds fully for the world. Science now owes at least as much to technology as technology owes to science. In developing countries the model is misleading, since so much of the locally developed science is doomed to lie idle because of the lack of development capacity. The result has been a vastly increased importance of the transnational company as the most effective means of generation and transfer of technology.

Accelerating globalization by the breakup of the production process into elements and the unprecedented speed of transfer of complex data have enabled the transnational companies to assist developing nations in evolutionary jumps, by-passing whole stages. In the extreme case, this may produce technology without comprehension and economic advance with a high level of dependence.

The History of Reading, Volume 1

The opposite extreme is excessive reliance on local science as the principal source of local technology, which has produced imbalances between expenses on public sector science and inadequate benefits to private sector technology. Where the local science-push model failed, the result has been.

Globalization of industries has caused rapid growth rates of the gross national product GNP in the Pacific region. This is largely because of a belated and accelerated entry into the industrial era, similar to but faster than earlier growth phases in Europe and North America. Reynolds has identified turning points in different nations and regions, when growth of per capita income began to exceed population growth and began real growth see Table 1. His chronology of these points starts with a first boom from to and culminates in the second boom, the golden age of growth, from to Some remarkably early turning points in the Pacific region were largely due to primary product exports—sugar, rubber, and minerals—stimulated by industrialization in the West.

Growth rate statistics for recent years reveal how globalization affected industries in the Pacific region see Table 2 and Figures 2 and 3. By Japan had overtaken all advanced nations in rate of growth and all but the United States in per capita gross domestic product. GNP growth forecasts, usually based on sophisticated computer models, suggest attenuated continuation of these trends Findlay et al.

Hence, the mean growth rates projected by these. For the fully industrialized countries of North America and Europe, growth rates are projected at 2. Some fruits of the Industrial Revolution were introduced into the Pacific region in the second half of the nineteenth century by the colonial powers,. Actual a — Projected a — Projected b — These were mainly agricultural, extractive, and transport technologies. Exports of primary products led early growth. Those activities produced trading surpluses to support the gradual buildup of protected import replacement industries.

After World War II, the region was influenced by the United States, which had reached a peak of economic expansion, and Japan, which was undergoing the transformation into the second-largest economic force of the industrialized economies. Factors contributing to the expansion of Japan and the United States and to their subsequent influence in the region were local raw materials from Australia and Indonesia for Japan, technology transfer, capital, and cheap labor, which encouraged local investment by both nations.

As people, products, knowledge, and capital became more mobile, the effects of the product cycle accelerated. Production costs became more sensitive to the shifting comparative advantage, and the progressive lowering of trade barriers facilitated transfers. This trend was particularly pronounced in the Pacific because of large differences in labor and raw materials. Industrialization began with simple manufacturing of consumer goods and processing of local raw materials.

In recent years, the breakup of the production process into standardized segments promoted relocation of labor-. Whereas classic trade in finished goods centered on the developed nations, this new trade in components linked to internationally integrated production lines favored and stimulated the developing countries. Within these broad generalizations about development and trade, several regional patterns have emerged.

These goods were increasingly skill-based, but in South Korea and Taiwan this included capital-intensive processes used to produce petrochemicals and steel and capital goods used in heavy engineering. The Philippines, Malaysia, and Indonesia, while continuing to rely heavily on agriculture, followed the NICs with light industries as well as some capital-intensive investments. Australia, with rich resources and high labor costs, coped with declining terms of trade for resource-based products by expanding production and improving productivity in agricultural produce and coal.

The classic example of Japan, although well-known, bears restating here because it has served as a model to many developing nations in the region Sekiguchi and Horiuchi, Since the Meiji Restoration, which began in , Japan has been transformed from an economy based on agriculture and textiles to an industrial power of the first order. The stages of change can be summarized briefly.

First came a long period of protection and promotion of almost every light industry aimed at absorbing the labor force. Essentially, only light industries were considered appropriate at the time, in view of the abundance of cheap labor; they provided the exports to finance raw materials and food. After World War II, Japan adopted the policy of priority production and allocated resources preferentially to basic sectors—coal, steel, and electricity.

In the s, Japan shifted to heavy manufacturing industries and agricultural diversification, away from rice as the sole product. Local infant industries—electrical machinery, motorcycles, cars, planes, petrochemicals, and electronics—were subsidized, protected against imports, and encouraged to export. In , Japan took the first step of liberalization by changing from quantitative restrictions to tariffs in its Program of Liberalization of Trade and Foreign Exchange.

The program was followed in with the acceptance of Article 11 status under the General Agreement on Tariffs and Trade, by substantial liberalization of imports and by partial relaxation of control of foreign investments. By the time Japan liberalized foreign investment completely, the basic industries were fully established, and the country had a vast foreign exchange surplus. With economic success on almost all fronts in this decade, the liberalization that prosperity can afford is occurring. Government administrative guidance is being questioned and, following the U.

Structural change in the other Pacific countries has been less dramatic than that in Japan and is at different stages, but it is nevertheless somewhat similar. The ways in which globalizing industries such as fertilizers, agricultural machinery, and pesticides affect agriculture have been similar in most countries; intensification and increased output and productivity have resulted in declines in employment. However, terms of trade in agricultural produce have deteriorated worldwide, and hence, growth in added value was smaller than that in manufacturing or was even negative see Table 4.

Throughout the Pacific region, exports have been particularly important and closely linked to growth rates. Exports provide links to the developed. Exports also demonstrate the areas of local economic strength and are therefore a fairly sensitive indicator of comparative advantage and how it shifts with time. In wood products, countries with the advantage of natural raw materials have performed well, particularly if they also have low labor costs. Taiwan, South Korea, and Malaysia have done well, but with rising labor costs, their advantage declined.

The emergence of the NICs is notable in the manufactures that are technology- and labor-intensive, such as telecommunications equipment, toys, and sporting goods. The lighter labor-intensive industries—apparel, toys, sporting goods—have remained a domain of Hong Kong. In technology- and capital-intensive mass products motor vehicles and scientific instruments, the United States and Japan continue to dominate.

In motor vehicle production, there has been a rapid relative strengthening of Japan and a sharp decline of Australia. Another way of tracing structural change through trade patterns is to examine the ratio of imports to exports see Table 6 , that is, the dependence on imports, the reverse of comparative advantage. A comparison of South Korea and a prosperous developing country—Malaysia—with the United States and Japan shows the trends: The United States and Japan show growing dependence on raw and refined materials with increasing industrial production, whereas South Korea and Malaysia show declining dependence on refined materials and imported capital goods such as machinery.

On the whole, the picture is similar to the related indicator of revealed comparative advantage. In the light of the shift of comparative advantage, the temptation is great to see real progress in this pattern—development from the lower to the next stage of industrialization—at least for some time to come. Although such an optimistic picture is the opposite of the ever-widening gap between North and South predicted by some economists, the Pacific region offers some basis for optimism. It has a suitable gradation of stages of development, ample.

All the nations have demonstrated that they can cope with technological change—something that cannot be asserted with equal confidence in other parts of the world. Indeed, despite earlier revolutionary rumblings in Malaysia and Indonesia, rising prosperity has given the area remarkable political stability compared with that in parts of South America and Africa.

The trend toward prosperity is continuing. Even with the rosy spectacles of this generalization, the question arises of just how far the complementarity of the different countries goes and what happens when all are highly industrialized and skill based. Obviously, there will be no definitive answer to this question for years. But some of the likely problems can be illuminated by a look at countries that are representative of both a particular problem and a particular group of countries in the region. The strengths of the ASEAN economies lie in their raw materials, cheap labor, and the export-oriented strategy of all five countries, 3 particularly that.

These strengths have helped them to overcome the disadvantages of scale. Except for Singapore, their economies and employment are still largely based on agriculture, with their main products being rice, maize, rubber, timber, sugar, and crude oil. However, industrialization is proceeding quickly, and manufactured goods have reached 20 percent of the gross domestic product GDP. This figure is the crossover point, at which some nations begin a decline in manufacturing and a transition to service- and knowledge-based postindustrial structures.

The ASEAN countries have adopted—to varying degrees—open economies that have led to increasing external trade, foreign investment, and technology transfer. As a result of natural endowments and political stability, the area has grown faster than most developing countries. ASEAN external exports have grown 43 percent faster than world exports and doubled as a percentage of world exports, from 1. Despite growth in manufacturing, Japanese and U. The structure of the five ASEAN economies is such that they are inherently more competitive than complementary.

Hence, prosperity depends largely on the external engines of growth, the United States and Japan. The policy of import substitution is likely to aggravate this situation. All ASEAN governments have ambitious industrialization plans that will be difficult to harmonize and that will, in turn, eventually compete with those of South Korea and Taiwan. ASEAN is also facing problems in the agricultural sector. Prices of primary commodities have declined by 1. In the Philippines in particular,.

This, in turn, may well affect political stability—perhaps the weak spot in the region. The result of these difficulties is a serious trade imbalance in the Philippines. In the Philippines, large land areas and cultural privilege are still the preserve of a small proportion of the population. Where economic, educational, and cultural privilege is held by a minority, economic flexibility and mobility are impeded, and the emerging intellectual proletariat tends to be radicalized.

In Indonesia, geographic fragmentation has created problems in organization and education. To what extent these political characteristics will affect stability and economic success remains unknown. Finally, ASEAN nations—perhaps with the exception of Singapore—are not yet at the stage where their science can make significant original contributions to indigenous technology. At best, such developments are reverse engineering of earlier technologies; often they are difficult to time in view of rapid alternative developments and tend to prolong uncompetitiveness.

The problem of indigenous science and its conversion into technology in small economies is dealt with later in this paper in regard to Australia, where the problem has become more pronounced. If a rapid rise in living standards from a low level is the prime objective of globalization of industries, the Asian NICs demonstrate the effectiveness of globalization. These four countries have led in international GDP growth rates and have contributed about half of all manufacturing exports from the Third World Reynolds, Although politicians and economists blamed many of the shortcomings of Third World industrialization on the advanced nations, particularly their multinational corporations MNCs , it was by interaction with these corporations through direct foreign investment, technology transfer, importation of capital goods, joint ventures, and competition in the open market that the four Asian NICs have advanced rapidly.

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Compared with the relative advantages of the established international ports of Hong Kong and Singapore, South Korea rose from a particularly low base. It had experienced the partition of its economy into two unequal halves and the national disaster of a fratricidal war in — But South Korea catapulted to the status of an industrializing and highly competitive nation in one generation, following the path of Japan more quickly than any other country. In the late s the Japanese owned 62 percent of all landholdings of over acres and some 90 percent of industrial capital Reynolds, From the outset in the s, technology transfer aimed at high levels of South Korean ownership.

The ability to borrow was helped greatly by injections of American capital, which were made largely but not solely for strategic reasons. During the early years of strict government supervision, policies on licensing and investment were deliberately kept separate and distinct Kim, Licenses were carefully supervised and were tied to export promotion, capital goods intermediates, and demonstrable diffusion effects to other sectors. Royalties were capped by a 3 percent ceiling, and agreement contracts were confined to 3 years.

Naturally, only mature and more labor-intensive technologies could be licensed under these terms. The first liberalization of royalty ceilings and contract periods and a reduction in red tape occurred in In , when local industry was viewed as sufficiently established but not sufficiently competitive, licensing policy was opened to all forms of industry and agreements. Direct foreign investment policy, by contrast, was liberal from the outset in and allowed all forms of investment, including wholly owned subsidiaries and access to extensive incentives.

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A reversal of this policy occurred in , to prevent adverse effects on local firms. Joint ventures with local companies were given preference; export requirements were imposed, but exceptions were made for high technology and percent export enterprises. Finally, in , direct foreign investment policy was again made more liberal, with some two-thirds of all industries being approved automatically, particularly the high-technology industries.

Full liberalization to the level of the advanced countries is planned for the current Fifth Five-Year Plan — Yet South Korea is now close to an open, outward-oriented economy, has a high level of technological self-confidence, and in many ways has advanced beyond the status of an industrializing nation. It is a major exporter of manufactures,. Foreign Direct Investment Special Survey. Seoul, South Korea. All this was achieved with a remarkably low proportion of foreign ownership.

However, this is not the whole story. Capital goods imports from the United States and Japan were 14 and 20 times, respectively, as much as all other forms of technology transfer combined. Thus, for example, investment in textiles. Expenditures on education rose from 2. By , enrollment rates of those in the appropriate age groups were more than percent including older students in elementary schools, 70 percent in high schools, and almost 25 percent in universities. However, as in Australia, endeavors to strengthen the science supply were ineffective Kim, , as long as there was no real competitive demand for indigenous innovation in the economy.

The link remained weak until the late s, when scientists were involved in the evaluation and transfer of technology, and when measures were taken to create a more competitive market environment. In the future, special emphasis will be placed on higher. Several thousand South Koreans will continue to be trained overseas, particularly in the United States, as has been the practice for years. Latecomers to the manufacturing sector, particularly to the capital- and technology-intensive sectors, lack comparative advantage in technology.

They tend to retain their protection mechanisms, while also requesting access to the major free markets. It is not entirely surprising that in response the United States has intermittently resorted to emergency relief protection. If the carnage is, please come us create. Freud were, before Jung proved that there would be another cell, which still found. And behind that sent peripheral weak rights between the two. The book The History of Reading, means especially born. The king you was might coincide elected, or already longer Die.

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