Building core capabilities: towards competitiveness

In the context of new technologies and the rapidly changing world market conditions, the process of restructuring for export orientation poses a challenge to Africa. Constraints are bound to arise but opportunities could also emerge for these economies as they set out to restructure and develop their industrial sectors towards export orientation.

One major consideration which will influence the way the industrialization problem is conceptualized relates to the changing character of innovations and their role in international trade and competitiveness. Industrialization, for the less industrialized countries in Africa, will have to take place under conditions of accelerating technical change and the pervasive application of new technologies. The evidence presented in this book supports the Schumpeterian conceptualization of technological change, which emphasizes learning and the accumulation of technological capabilities. This is bound to have considerable implications for the conceptualization of the industrialization problem in Africa.

The findings of this study support the thrust of recent trade and growth models which have focused more explicitly on the micro-foundations of innovation by addressing firm-level decisions to invest in product or process innovations. The case studies have shown that ceaseless search for improvements in technology (especially product quality and cost-lowering process innovations) has been most instrumental in improving productivity. Productivity growth, in turn, was a most important factor enabling exporting firms to succeed in the changing technological and market conditions. Exporting firms maintained and improved their market position by investing in technology and continuing to improve on it. Improvements were made not only in the firm's products but also in the processes of production, in order to cope with pressure to keep costs at competitive levels or to improve product quality (level and consistency). These responses were derived from signals given in e export markets.

A major policy implication suggested by these findings is that, in conceptualizing the industrialization problem in Africa, fuller recognition will need to be given to the altering nature of technological change, with an emphasis on learning and the accumulation of technological capabilities within firms, with the requisite support from the state in the form of various supportive infrastructural investments. This contrasts with the previous emphasis on the transfer of the capital and know-how required for an industrialization process which was primarily directed at import substitution.