I'm fully aware that this way of looking at present Western technology may surprise you, and that your first reaction may be that millions of people in Bangladesh would consider the lot of a Western worker, small farmer, or employee - even an unemployed one - sheer paradise. Fair enough. But consider for a moment what we might have done with our wealth - much of that wealth acquired by exploiting Third World countries.
We could have had more labour-intensive technologies ensuring full employment. Instead, we have at least 30 million unemployed in the OECD countries (Europe and North America). We could have provided an abundant, varied and healthy diet for everyone, regardless of social status. Instead we have chemical additives because they contribute to long product life and thus to the profits of the food industry. We have increased our consumption of highly processed junk foods with little or no nutritional value while consumption of fresh produce has declined. There are millions of malnourished people in the United States and Great Britain (especially among old people and minorities) although you might not always recognize this malnutrition because it often shows up as obesity.
We could have had technologies safe to work with. Instead, to give only two examples, there were five deaths and over 500 serious injuries of workers in a single California shipyard in a single recent year. Business Week has just reported 'a sudden rise in miners' deaths'. Occupational health and safety technologies are readily available, but they are also more expensive for companies than sloppy and dangerous methods. Thus thousands more workers in close daily contact with dangerous chemicals or radio-active materials are being slowly poisoned.
We could have had fast, cheap, efficient public transportation. Instead we've given priority to the costly, energy-devouring private automobile. And in Western countries without an adequate national health care system, like the United States, millions of people live in fear of illness, because hospital care - and our hospitals are full of beautiful shiny technology - will eat up their life's savings. Our technologies are not even clean, so we must eat, drink and breathe the pollutants they leave in the environment.
I could go on giving examples, but my point is that our Western technology - so much admired, it seems, in Third World countries - is far from perfect and serves chiefly those whose incomes put them at the top of the ladder. Obviously I do not wish to do without my telephone or the machine that served to type this speech - but I hope I'm also aware of the harassing working conditions of telephone operators, and that few people who need an electric typewriter as much as I do can afford one.
The phrase 'caveat emptor' - 'let the buyer beware' - has never been truer than for the case of Third World purchases of Western technology - especially if the buyer does not realize the whole social and cultural history that lies behind the products and processes he is getting. As the Indian scholar A. K. N. Reddy has put it perfectly, technology is a carrier of the genetic code of the society that produced it. Once given, genetic codes are invariable. Those who purchase Western technology had best be prepared to adapt to it, because Western technology is not going to adapt to them.
An overwhelming share of technological research and development (R&D) is done in the industrialized countries - only about 2 to 3 per cent of the world's total R&D capacity is located in the Third World. So it's not surprising that technology transfers are one-way streets, that Third World nations have little influence on the types of technology developed and that their specific needs are not served by this technology.
One can cite such obvious cases as the huge sums expended on military R&D which, in 1979, amounted to $35 billion, with more than half a million scientists and engineers devoting their full time to the destruction machine. This represents about a quarter of the world's entire outlay for R&D.
There are non-military dangers as well. When pollution-control laws are passed in the rich countries, we transplant our dirtiest industries to countries where legislation is weak or non-existent. We even use Third World people as guinea-pigs for our potentially harmful products - for example, oral contraceptives were tested on Third World women before being marketed in the industrialized countries. Even research that can be classed as oriented to life rather than death is usually irrelevant to Third World needs. Thus the United States spends about nine times as much on cancer and heart disease R&D as the entire world budget for tropical medicine research.
But let's examine the kinds of technology that are useful - or at least are used in the Third World. Remember that this technology is almost exclusively transferred by TNCs directly or by aid programmes that call upon these same corporations. In my workroom at home, I have pasted up a small cutting from a corporate advertisement in Business Week, because it sums up admirably what TNCs are all about. There are only five words in the ad: 'Objective: Maximize Return. Minimize Risk.' How do Third World countries fit into this succinct programme?
First, they are not allowed to interfere with maximizing return. As the Group of 77 pointed out at the 1979 UN Conference on Science and Technology, 90 per cent of the patents granted, supposedly, to Third World countries are, in reality, granted to foreigners - which is to say, to subsidiaries of TNCs. Even worse, only about 10 per cent of the patents granted are actually used - but so long as they are in force, no one else can use them. The function of the patent system is to prevent the generalization of technology developed in the non-industrialized world.
India's experience with TNC technology transfer is instructive, not least because India has a highly sophisticated technological capacity of its own. A recent report by S. K. Goyal of the Indian Institute of Public Administration comes up with the following results: in many industries, including pharmaceuticals, the impact of supposed 'technology transfer' is nil, because local affiliates act only as 'bottlers' - they simply repack in small containers bulk drugs imported from the parent firm. Routine assembly of components manufactured elsewhere is the rule in electronics, business machines and other high-technology product lines - even though India boasts plenty of skilled workers able to manufacture these components.
Whatever advanced technology does come into India tends to stay within the four walls of the TNC subsidiary where Indians work only as labourers and junior technicians. Parent companies take substantial precautions to prevent their equipment and processes from benefiting the country as a whole. The real crunch comes when the parent transfers - so to speak - an item to its subsidiary, because the subsidiary must then make payment for that item out of India's foreign currency reserves at whatever price the company sets. For Imperial Chemical Industries' Indian affiliate, the technical collaboration agreement on polyester fibres involved the affiliate's commitment of £2 million for engineering and design charges made by ICI. This payment does not include a 3.5 per cent royalty charge on the value of any and all polyester fibres produced in India in the future. This drain on the country's foreign currency reserves is a recurrent and standard aspect attached to TNC technology transfer. Goyal's team showed that the 189 Indian TNC affiliates that made up the sample not only earned no foreign exchange but actually cost the country a minimum of $25 million in 1976 alone.
Transfer pricing is a well-developed art for TNCs - they overvalue what they import from the parent firm and undervalue what they export back to it. Thus Goyal concludes: 'The practice of exporting goods to parent companies at a loss is obviously an indirect method of transferring resources from India, and the motivation for accelerating such exports is to defeat the spirit of foreign exchange regulations, not to promote Indian national interests.' This is all part of 'maximizing return'.
TNCs are not interested in integrating with the rest of a country's economy. They are much more apt to import their raw materials - again paying with precious local foreign exchange - than to encourage raw material production from the local market. But their most negative impact is doubtless on employment.
The number one problem in the Third World today is job creation. Number one - because with millions more jobs, other huge probl
ems like hunger could be virtually eliminated. The International Labour Organization estimates that at least 300 million Third World people are totally unemployed. The figure swells yearly: in India, for instance, an estimated 100,000 people are added to the potential workforce every week. Probably 35-40 million Third World people join this huge army every year.
It is simply not possible, using Western technology, to create anywhere near the billion jobs the Third World will need by the year 2000, for the excellent reason that each industrial job created in the West requires a minimum investment of $20,000. A single job made available in US agriculture costs a staggering $400,000 in capital investment. TNCs claim that they create employment - and this may be true in a few small enclave countries like Singapore or Hong Kong. But TNCs neglect to tell us how many jobs they destroy. A recent ILO study has shown, for example, that in Brazil, from 1970 to 1975, 200 smaller food-processing companies went out of business as a direct result of competition from foreign agro-industrial firms. Overall, TNCs create far less employment than is generally supposed and account for only one-half of one per cent of total Third World jobs, again according to ILO. No one has fully measured their negative influence on employment.
Here is an example from another continent, taken from Stephen Langdon's work on the soap industry in Kenya. Before the advent of TNCs, soap-making in Kenya was a highly labour-intensive industry. All stages of production - mixing, moulding, drying, cutting, wrapping, warehousing and distributing - were carried out mostly by hand with the aid of simple equipment. Then the TNCs, including Unilever, arrived with their modern technology, imported, at a price, from the home countries. As the local manager of the Kenyan affiliate of one of these companies explained:
We have a long history throughout the international firm of being very, very aggressive about the numbers of people we employ ... It's a corporate objective we have to follow. Labour costs are insignificant here, [less than] one per cent of variable costs. And on that basis, we spend an inordinate amount of time searching around for labour reductions. This is a thing we are expected to do. And if I don't do it in my job, then I'm not doing my job right as far as [the parent company] is concerned. So, basically, it's an objective which is in conflict with what this country needs.
This manager did indeed eliminate 19 per cent of his labour force in five years, in spite of huge increases in sales.
This company, like most others, imports its raw materials instead of using readily available local palm oil, so it gives no incentive to agricultural production.
Any TNC which really wants to make a place for itself in a Third World country has options no local company can possibly match. The relatively small market provided by each individual country is only a tiny part of the firm's overall operation. The TNC can thus afford to practise what is called 'deep-pocket financing' - meaning it can undersell local firms, and even sell under its own costs when necessary - until it has captured the market and conveniently eliminated the local competition. When this has occurred, the TNC will naturally put its prices back up to more realistic, not to say monopolistic, levels. There are many hidden costs that come with apparently superior technology. Perhaps the most surprising of these is the fact that Third World countries are themselves financing the expansion of TNCs. In country after country, one discovers that these firms bring relatively little cash with them, and instead finance their operations from local savings. Third World banks consider TNCs more reliable customers than local firms - so the international companies get first go at bank loans at the best credit rates. They thereby indirectly prevent the creation or expansion of national firms which are short of working capital.
In my own work, I've been particularly preoccupied with the harmful effects of the transfer of Western agricultural technology to the Third World. Here I shall limit myself to a single remark. Expensive technology produces expensive food. Someone will have to pay for purchased seeds, chemical fertilizers and pesticides, irrigation equipment, mechanization and the like - and that 'someone' is the final consumer as well as the State. A new area known as post-harvest technology - meaning storage and handling - is now very much in fashion. I believe this vogue is partly due to the fact that this part of the food system has been, up to now, only marginally penetrated by foreign agribusiness, and that companies see this as a potentially profitable activity; as a way of gaining more control over food systems as a whole. In this sense, post-harvest technology investment opportunities could be to the 1980s what the Green Revolution was to the '60s and '70s. Be that as it may, we can be sure that centralized storage, using costly silos and warehousing as opposed to family, village or regional level storage, adds at least 20 per cent to the final cost of the stored food, according to an FAO expert. This kind of cost increase is enough to price the poorest consumers out of the market - the very people who are already suffering from malnutrition.
Whether we're talking about food, health or any other vital area, Western technology has these two characteristics: it favours centralization - meaning cities - and it caters to demand expressed in purchasing power rather than to human needs. The handsomely equipped Third World hospital, rivalling anything in the United States or France, but eating up so much of the State health budget that little is left over for the majority in the countryside, is an excellent example of the centralization syndrome. The introduction of profitable processed foods or cola drinks only a minority can afford (and which are, in any event, an expensive way of consuming empty calories) puts technological expertise to work for socially useless ends. From capital's viewpoint, however, human beings are divided into two groups: those who can pay and those who cannot. The first group is called consumers. The needs of the second are not even noticed. This is how one 'maximizes return'.
The second part of my Business Week ad says 'minimize risk'. TNCs have no intention of giving up real control over the production process, nor of sacrificing any profits to be made, so host countries that welcome their technology should understand that they will be unable to challenge the way the corporations have decided to organize production. An illustration is the electronics industry in Asia. I've seen these operations in Malaysia's Free Trade Zones and it's obvious the companies have very little fixed investment; they could pull out tomorrow with no loss if it became more profitable to produce elsewhere. Meanwhile, they employ young women from about the age of 16 to 25 - after that, the women's eyesight becomes too feeble to continue working all day through a microscope. Then a fresh younger group takes over. A recent study by the Max Planck Institute in Germany indicates that the German work-year in electronics is 1,800 hours, whereas in South Korea it comes to 2,800 hours for equal or superior productivity and, naturally, at far lower wages. This is just common exploitation. But TNC insistence on a docile, risk-free workforce also carries a cost for the whole society. As the Max Planck study points out: 'It is not surprising that the list of those countries in which free production zones and world market factories are in operation ... is to a great extent similar to a list of those countries in which labour unions are either prohibited or greatly hindered and in which strikes are largely suppressed.' Denial of labour rights - even human rights - and TNC investment tend to go together.
Even when countries are willing to create what the companies blandly call a 'favourable climate for investment', or, more baldly stated, to carry out repression, the host country may find little residual benefit in the way the TNC has decided to organize production. The firms' strategies are, as their name indicates, transnational. Some of the more powerful TNCs with a great many subsidiaries have invented a new technological twist. The Ford Motor Company calls it 'complementation'. This strategy consists of producing only one element of the final product in each national subsidiary - say the gearbox or chassis - and assembling these elements subsequently in a third country. Ford is moving towards the 'global car' and when this strategy has reached maturity there will be at least two countries manufacturing each vital component. This not only cre
ates a strike-proof industry: it means that if a country should decide to nationalize the factory, it will not get an automobile plant. It will get nothing but a gearbox or chassis plant of absolutely no interest to anyone but Ford. Following a trip to nine Asian countries, Henry Ford announced, 'Complementation holds far more promise for the region than adherence to old-style purchasing, assembly and manufacturing methods.' From his point of view of risk- minimization, I'm sure that's true.
To sum up, technology transfer is much more often than not labour-displacing and dependency-creating - just the traps Third World countries should most avoid. Many countries believe they are buying independence when they buy technology packages. But because the firms keep control over the way this technology is used, independence is not what they get. Rather, as the German scholar Dieter Ernst has said, 'A strategy which seeks to strengthen national political and economic autonomy through aggressive acquisition of high technology may, paradoxically, lead not to greater technological autonomy but to greater dependence at a qualitatively higher level.'