Late-industrializing Countries Research Articles

Why do national skill systems vary? The state’s role in skill system institutions for maintaining growth models

ABSTRACT This article combines the comparative political economy of skill formation literature with the one on growth models to analyse the state's role in skill systems of late industrialising countries. It focuses on Mexico and Turkey, which constitute crucial cases for a most similar case analysis. The article shows that Mexico and Turkey followed different growth models after their economic liberalisation, which led to distinct state roles in two key skill system institutions, namely the minimum wage and the vocational education and training (VET) system. In Mexico, the state aligned these institutions with the ‘dependent-downgrading' growth model, which was reliant on external demand and investments with low industrial upgrading and sometimes downgrading, and minimal working-class cohesion. Minimising labour costs was prioritised to attract foreign investment and to reduce the prices of exports, leading to extremely low wages and a liberal VET system in Mexico. In Turkey, the growth model was ‘domestic-upgrading’ with higher role of domestic investments and demand, and some improvements in industrial upgrading and working-class social cohesion. Ensuring high minimum wage and comprehensive VET system constituted key strategies for the state to maintain this growth model in Turkey, leading to relatively higher minimum wage and a statist VET system.

A gendered analysis of trends in the faith‐based provision of social services: Evidence from Egypt and Turkey

A gendered analysis of trends in the faith‐based provision of social services: Evidence from Egypt and Turkey

Leveraging participation in apparel global supply chains through green industrialization strategies: Implications for low-income countries

The global apparel industry has been a gateway to industrialization, but changes in the global economy have eroded the benefits from participating in apparel global supply chains, leading to thin industrialization in low-income countries where suppliers firms are squeezed between low prices and high requirements. More recently, buyers added improved environmental performance as a new requirement for their suppliers, seeking to avoid brand risks in their supply chains due to consumer awareness. This environmental upgrading focused on eco-efficiency gains, which increased productivity among suppliers while using fewer resources, but buyers captured most of the benefits in terms of maintaining low prices due to market power imbalances. This article aims to shift the debate on the limits of participating in global supply chains by conceptualizing the opportunities available to late industrializing countries from embedding the environmental upgrading of individual supplier firms within a broader green industrialization process, which offers more opportunities for value capture and inter-industry linkages through circular industrial economies. We use this conceptual approach to examine the newest apparel sourcing location, Ethiopia, and the government's green industrial policy that aimed to spur industrialization through apparel specific eco-industrial parks.

Creative imitation in late industrializing countries: the case of biopharmaceutics in South Korea and India

ABSTRACT Given that the patents of the first high cost and complex biopharmaceuticals have started to expire, biotechnology offers opportunities for developing countries to pursue an upgrading process by entering the sector as early imitators. In the case of biotechnology applied to the health sector, the characteristics of the innovation process and the specificity of the regulatory process for biopharmaceuticals raises new questions as to the learning path open to the developing countries that intend to build an industrial promotion strategy on the basis of early entry as imitators. Given those specific characteristics, it is worth asking how far creative imitation strategies could constitute an opportunity for late late industrializing countries to undertake rapid industrial upgrading processes.

Diffusion of foreign management practices across Turkish business organizations: a contextualized theory

This paper advances a contextualized theory concerning the spread of foreign management practices across Turkish business organizations. Drawing on the pertinent empirical literature, we expand acclaimed models of diffusion that typically address early-industrialized source countries and develop propositions that address late-industrializing recipients like Turkey. We argue that foreign practice diffusion across Turkish business organizations is driven by two contextual forces, namely the division between the modernizing elite and the more traditional non-elite business organizations and active engagement of the elite in importing and dissemination of foreign practices, typically those that are already well-established in the source country. This context features particular situational opportunities and constraints, most notably moral, as well as pragmatic and coginitive, legitimacy of foreign practices, that shape diffusion within Turkey. Based on these arguments we reconsider motivational and implementational claims in extant literature. Specifically, we suggest that, relative to the non-elite, the elite are more likely to be earlier adopters, boast stronger moral legitimacy concerns, and engage in high-fidelity implementation. We also predict widespread decoupling across elite and non-elite organizations, suggesting the possibility of deinstitutionalization after diffusion. As we conclude, we offer contingent generalizations to similar other contexts, which we argue are more likely to be observed in particular late-industrializing countries.

Adoption of renewable energy technologies (RETs) using a mixed-method approach

Purpose This paper aims to propose that the socio-technical perspective is under-represented when appraising the adoption potential of renewable energy technologies (RETs) in late-industrialising countries and that this results in under-adoption. It also aims to identify a methodological approach that allows the socio-technical perspective to be integrated into management decision-making, alongside the more typical economic appraisal methodology. Design/methodology/approach A case study and novel mixed-methodology approach is used, which applies the diffusion of innovations framework, innovation system (IS) framework and system dynamics modelling (SDM) alongside traditional economic modelling and appraisal techniques. This approach is used to assess the adoption potential of solar photovoltaic (PV) and diesel water pumping systems in the wildlife conservation sector and surrounding rural communities in Kenya. The case study approach tests the merits of the mixed-methodology approach. Findings The life-cycle costs of solar PV water pumping systems are lower in nearly all financing and utilisation scenarios; offer additional social, technical and environmental benefits; and the conditions exist for greater adoption. The use of an integrated diffusion of innovations and IS framework generates significant qualitative data that can support management decision-making. The use of SDM techniques aid conceptualisation of the community economic, water and institutional systems into which water pumps may be diffused and provide a starting point for formal SDM simulation. The results suggest that these techniques capture the socio-technical perspective well and, when used alongside traditional project appraisal approaches, produce more complete information with which to support management decision-making. Originality/value This mixed-methodology approach could be used by practitioners to increase the diffusion and adoption of RETs in more complex contexts in late-industrialising countries. The emergent theory built through the case-study approach should be tested further to assess the merits of applying these techniques to support RET management decision-making in other contexts and more broadly.

The Dark Sides of Social Policy: From Neoliberalism to Resurgent Right‐wing Populism

ABSTRACTThis Forum Debate explores the confluence of neoliberal, populist, conservative and reactionary influences on contemporary ideologies and practices of social policy, with a focus on the poorer peripheries of global capitalism. Several fundamental tensions are highlighted, which are largely overlooked by the social policy and development literatures. First, many recent social policy innovations have been discredited by their association with neoliberalism. The rising political Right has been much more successful than the Left at exploiting this discontent, despite simultaneously deepening many aspects of neoliberalism once in power. At the same time, right‐wing movements have proactively used social policy as a political tool to fashion the social order along lines deemed amenable for their interests and ideologies, expressed along nationalist, racialized, ethnicized, nativist, religious, patriarchal or other lines, and to innovate practices of segregation, exclusion and subordination. While these synergies of neoliberal and right‐wing populism are observed globally, they need to be carefully and differentially interpreted from the perspective of late industrializing (or late welfare state) peripheral countries. Nonetheless, common themes occurring across both centres and peripheries, as identified by the invited contributions to this Debate section, include exclusionary identity politics, hierarchical and subordinating inclusions, and patriarchal familialism. In this context, segregationism is an ominous possibility of post‐neoliberal social policy.

Politics of Social Policy in a Late Industrializing Country: The Case of Turkey

ABSTRACTThis article approaches social policy as an integral component of a capitalist society and, by drawing on the notion of the double movement introduced by Karl Polanyi, argues that social policy intervention both limits and contributes to market expansion. While this argument could be generally applied to recent social policy changes in the current context of economic globalization, these changes were shaped against different histories of social policy development in early and late industrializing countries. This article examines the increasing importance of social policy in late industrializing countries by focusing on the case of Turkey. It is argued that social policy transformation in Turkey has involved the expansion of social security coverage along with the privatization and marketization of health and pension systems. A new system of labour market regulation has contributed to the commodification of labour while the ‘state‐supported familialism’, which forms an important aspect of current trends in the area of social care, has served to integrate women in the prevailing flexible employment relations by simultaneously sustaining their position in the gender division of roles within traditional family relations. The populist strategy of polarization pursued by the ruling government is discussed to show how opposition to these trends toward privatization, marketization and labour commodification has been isolated.

Distinctive context, divergent pattern: Diffusion of imported management practices in Turkey and implications for late-industrializing countries

AbstractIn this paper, we develop and empirically test hypotheses about the diffusion of imported management practices in Turkey. We emphasize the sociopolitical legitimacy of these practices and present hypotheses as to timing, motivations, and self-promotion. We test these hypotheses with quantitative data on Total Quality Management (TQM) adoption by industrial companies in Turkey. Findings reveal that elite companies adopt TQM earlier on, self-report greater levels of sociopolitically driven legitimacy concerns, and are more likely to participate in a prestigious quality award contest. Overall, our study contributes to diffusion research guided by the new institutional approach by expanding existing models to the diffusion of imported practices across organizations in late-industrializing recipient countries. We particularly show that sociopolitical legitimacy of imported practices that is more characteristic of late-industrializing recipient contexts may generate a divergent pattern of diffusion whereby elite organizations emerge as early adopters and engage in brandishing adoption.

In search of a product innovation work process for non-assembled products

The family of process industries embodies multiple industrial sectors and make up an important part of the entire manufacturing industries of particular importance for late-industrialising countries. In a review of the extant literature on product innovation work processes and best practice innovation of non-assembled products, an integrated conceptual framework has been developed. The novel framework is proposed to guide and invigorate company development and design of 'individualised' product innovation work processes more adapted to process-industrial contextual and innovation conditions. Due to the coupling between products and the production systems in the process industries, it is concluded that development of new products must be better integrated with the development of necessary production capabilities in an end-to-end work process perspective. Research on fuzzy front-end of process-industrial product innovation has been amalgamated but it is demonstrated that more attention should be paid to industrialisation and market launch; here denominated the bumpy back-end.

Innovation, institutions and development: a critical review and grounded heterodox economic analysis of late-industrialising contexts

AbstractThis paper critically reviews dominant approaches to the economics of innovation in contemporary developing societies, namely new institutional economics (NIE) and National Innovation Systems (NIS). Both traditions explain capitalist development in late-industrialising countries using underlying assumptions and logics of advanced industrialised societies with respect to transaction costs, path dependence, the nature and structure of institutions and economic history. At their core, both approaches proffer ideal-type institutions as an essentialist route to technological and productivity improvement akin to a staged theory of development. The NIS framework became dominant in scholarly and policy circles but has neglected the implication that the concept was developed at the Organisation of Economic Cooperation and Development during the emergence of first-stage neoliberalism. NIE has become an essential analytical toolkit of mainstream economists and international organisations promoting competitiveness in developing countries. Analyses of the economic performance of developing countries have thus diverged from structural perspectives on development, attributing instead lacklustre technological deepening to certain national features, institutional gaps or linkage failures. The paper exposes narrow assumptions and illustrates that the ‘transition costs’ that arise from new socio-institutional configurations during the development process induces firms and other actors to compete for rents. Conversely, power asymmetries, historical factors and constraining forces in the global capitalist system generate unevenness in productive forces and technological progress. The paper proposes a political economy of technological change that considers the structural, technical and socio-political interdependencies and tensions that underpin transformative policies to improve technological, coordination and collective capabilities in the economic system.

Institutions, Innovation and Development: A Critical Review and Political Economy Analysis of Late-Industrialising Countries

This paper critically reviews dominant approaches to the economics of innovation in contemporary developing contexts, namely new institutional economics (NIE) and national innovation systems (NIS). Both traditions explain capitalist development in late-industrialising countries using underlying assumptions and logics of advanced industrialised societies with respect to transaction costs, path dependence, the nature and structure of institutions, and economic history. At their core, both approaches proffer ideal-type institutions as an essentialist route to technological and productivity improvement akin to a staged theory of development. The NIS framework became dominant in scholarly and policy circles but has neglected the implication that the concept was developed at the Organisation of Economic Cooperation and Development during the emergence of first-stage neoliberalism. NIE has become an essential analytical toolkit of mainstream economists and international organisations promoting competitiveness in developing countries. Analyses of the economic performance of developing countries have thus diverged from structural perspectives on development, attributing instead lacklustre technological deepening to certain national features, institutional gaps, or linkage failures. The paper exposes narrow assumptions and illustrates that the 'transition costs' that arise from new socio-institutional configurations during the development process induces firms and other actors to compete for rents. Conversely, power asymmetries, historical factors and constraining forces in the global capitalist system generate unevenness in productive forces and technological progress. The paper proposes a political economy of technological change that considers the structural, technical and socio-political interdependencies and tensions that underpin transformative policies to improve technological, coordination and collective capabilities in the economic system.

Labour surplus is here to stay: why ‘decent work for all’ will remain elusive

In 2015, the United Nations agreed to pursue the Sustainable Development Goal #8 ‘To promote inclusive and sustainable economic growth, employment and decent work for all’. The paper argues that this goal will not be achieved. The abundance of persons offering their labour power in relationship to the limited demand for their labour stems from the insufficient absorption of peasants set free from their land. In many late industrialising countries, most of those who are leaving agriculture do not find gainful employment even at the current junction. In fact, many of the late industrialisers are prematurely de-industrialising. Explanations for the lack of absorption capacity of industries and productive services range from overregulated labour markets to globalisation. On the basis of a comparison between the conditions prevalent among the early industrialisers and present-day late comers to industry and advanced services, the paper highlights other factors: demographic pressures, restrictions on migration, productivity differentials vis-a-vis the Global North and the few successful late industrialisers, and the constraints on the promotion of industry stemming from neoliberal globalisation.

The nature of industrial development and the speed of structural change

The paper discusses the relationship between industrial development and structural change in the Age of globalization. It sets within the same theoretical framework the fact that both the sectoral concentration of manufacturing activities and the internal structure of the whole economy do change in the course of industrial development, and shows that the speed of such transformations depends upon the time at which industrial development has taken place. In particular, for late industrializing countries the intra- and inter-sectoral structural adjustments have been significantly faster as compared to those experienced by nations that built their manufacturing base in earlier times. These results have strong implications for the current debate on early deindustrialization.

Entrepreneurial capabilities and innovation in firms from late industrialising countries: a case study of a Mexican firm

This paper analyses the role of entrepreneurial capabilities (EC) in the process of innovation of firms from late industrialising countries. The article characterises the emergence and growth of a Mexican firm with regard to the complexity and configuration of those capabilities, since the time when it was founded as a small distributor of products, until it acquired technological and organisational capabilities for the design and production of medical care devices. The argument is that as a firm gradually undertakes more complex activities, 'entrepreneurial capabilities' evolve and in that process, individual entrepreneurial capabilities become collective capabilities internalised in the firm's routines.

A conceptual analysis of conditions for innovation in the process industries and a guiding framework for industry collaboration and further research

The process industries span multiple industrial sectors and constitute a substantial part of the entire manufacturing industry. In a review of the extant literature related to process-industrial production and innovation characteristics, the process industries construct has been analysed and redefined. Since the process industries are a large part of the LMT industries and of significant importance for late-industrialising countries and also constitute a considerable part of the most R&D investment-intensive companies worldwide, it is advocated that studying innovation in this cluster of industries in a cross-sectoral approach is an interesting avenue to follow. It was concluded that operations and innovation management in this family of industries will benefit from methods, tools and best practices more adapted to the process industry-specific context. As a consequence of these findings, a framework aiming at guiding and invigorating further process-industrial research was introduced together with policy implications.

A conceptual analysis of conditions for innovation in the process industries and a guiding framework for industry collaboration and further research

The process industries span multiple industrial sectors and constitute a substantial part of the entire manufacturing industry. In a review of the extant literature related to process-industrial production and innovation characteristics, the process industries construct has been analysed and redefined. Since the process industries are a large part of the LMT industries and of significant importance for late-industrialising countries and also constitute a considerable part of the most R&D investment-intensive companies worldwide, it is advocated that studying innovation in this cluster of industries in a cross-sectoral approach is an interesting avenue to follow. It was concluded that operations and innovation management in this family of industries will benefit from methods, tools and best practices more adapted to the process industry-specific context. As a consequence of these findings, a framework aiming at guiding and invigorating further process-industrial research was introduced together with policy implications.

The dynamics of local learning in global value chains: uma análise crítica

The book “The dynamics of the local learning in global value chains: Experiences from East Asia, by Momoko Kawakami and Timothy Sturgeon describes the process of capability accumulation by several firms and sectors of East Asia. It extends and modifies the existing perspectives of global value chain (GVC) and presents its own frame of reference to explain how the process of accumulation in late industrializing countries occur. It challenges the idea established in the literature on GVC that the possibility of accumulation of capabilities and functional upgrading is determined by the governance of the value chain. It argues that the process of accumulation can occur even in highly coordinated GVCs, if the supplier pursues entrepreneurially a learning strategy that is accompanied by the outsourcing strategy of the leading companies of the GVC. This review introduces the reader to the basic concepts of GVC and summarizes the chapters of the book, emphasizing the theoretical and practical contribution of each one of them. It closes highlighting the strengths and weaknesses of the book and the issues it suggests to researchers interested in the subject. Readers of the review will understand the process that the sectors analyzed in chapters went through and the implications of these experiences for firms in countries like Brazil, which aims to insert themselves more competitively in GVCs.

Institutional development and bank competitive transformation in late industrializing economies: the Spanish case

This paper explores the contribution of national institutions to the competitive transformation of big commercial banks in late industrializing countries through the analysis of the Spanish case. The paper uses a comparative historical analysis to establish that strategic coordination between the state and large banks is a structural feature of the banking sector but may be articulated differently depending on the balance of power between states, banks and industry, the preferences of these actors, and their resources. Using evidence from Spain since the late 1970s, the paper argues that in this country, state-bank coordination was articulated as a non-hierarchical system of negotiated interactions and mutual exchanges of benefits between small groups of decision-makers at the government, the central bank, and big banks. Under the Spanish model, large banks contributed to the fulfillment of public policy objectives to develop the central bank's capacity to conduct monetary policy, strengthen supervision of the banking system, and modernize the financial sector. In exchange, big banks benefited from a favorable regulation that enabled them to restructure, consolidate the leadership of a new generation of bankers, and reach the efficiency frontier of their industry. The paper contributes to the literature of institutionalism by questioning the traditional dichotomy between market and strategic coordination. It also contributes to the literature of competitiveness by stimulating debate about the role of the state in supporting the transformation of big business.

Evolution of the short-fiber technological trajectory in Brazil's pulp and paper industry: The role of firm-level innovative capability-building and indigenous institutions

Despite the growing interest in innovation in the pulp and paper industry (PPI) from strategic management and institutional standpoints, little empirical research exists on the role of firms' technological capabilities and institutions in shaping particular technological trajectories within the industry. The objective of this article is to examine the relationship among firms' technological capability-building process, indigenous institutions, and the evolution of a particular technological trajectory within the PPI. To meet this objective, this article draws on a case study design based on primary and long-term evidence gathered through extensive fieldwork in Brazil. This article shows that (1) Brazil's PPI began by developing technological capabilities in long-fiber technology led by global leaders; instead of moving on a subsequent path-following trajectory, these firms accumulated innovative capabilities that led to the development of the short-fiber trajectory; (2) these capabilities initially permitted the implementation of incremental changes in forestry and process technologies, which evolved into sophisticated R&D; and (3) indigenous institutions shaped this trajectory by providing firms with human capital and research support, funding for production and initial innovative capability development, and IPO and entry into export markets. These capabilities and institutions were effective in developing a technological trajectory that enabled Brazil's PPI to achieve an internationally leading position in this industry; however, new capabilities and institutional arrangements are needed to support Brazil's PPI firms' incipient diversification and to mitigate self-reinforcement. This article shows that innovative capability building combined with effective indigenous institutions enable firms—even those from a late-industrializing country—to create a new technological trajectory. Given the innovation opportunities in the PPI, managers and policy makers should not be satisfied with their achievements; rather, they should be alert to innovative new entrants and explore novel technologically advanced paths.