This dissertation research, supported by the Science, Technology, and Society program at NSF, will explore the dynamics of technology development and diffusion in labor-intensive industries in developing countries. It specifically seeks to address why, in the context of globally integrated economies, some industries in the developing world end up on the high road of upgraded production while others are forced down the low road of compromised wages and labor conditions. Why are some more successful at generating and diffusing productive ideas and technologies than others? How can governments affect innovation and labor conditions in these industries?
This comparative study will examine three small, labor-intensive industries in the Mexican state of Michoacán that had varied responses to economic integration (ceramics, avocado growing, and furniture). The project seeks to test the notion that innovations in these small, labor-intensive industries are best co-produced by responsive, committed government agents and producers with strong social and professional ties to each other, as well as to explore the social and political underpinnings of these commitments in a single Mexican state. In so doing, this research expands our understanding of the broader conditions under which productive knowledge is disseminated across communities and organizations. Interviews with producers and government agents as well as small-scale producer surveys will provide both qualitative and quantitative data for the study.
Gaps exist in social scientific understanding of how small producers may adapt to new market conditions through innovation. These questions are of concrete relevance not only to scholars but to development agencies and especially to communities in poor and medium-income countries that face the prospect of declining quality of jobs and working conditions in their industries. Given the relative ease with which some innovations may be made in these industries and that many potentially viable technologies and ideas are freely available, understanding how they are diffused and adopted by producers is particularly important. The research has broad impact by empirically investigating how clusters of producers in the developing world may benefit from incorporation into the global economy.
Technology upgrading is critical to a firm’s capacity to survive in competitive global markets: those that do not innovate are often forced to cut wages and reduce labor protections in order to survive. Small and micro-firms in low-tech industries are the least capable of innovating and adopting existing technologies, yet these same firms are extremely important sources of employment in the developing world. Therefore, understanding which small firms are able to innovate and which are not has important implications for the welfare of these workers and the development of low-income countries. This study sought to advance our understanding of which small firms innovate and which do not along with what role government might play in mitigating the costs of innovation for these firms. It focused on a single case: the traditional ceramics sector in Mexico, on which some 3.8 million Mexicans are economically reliant. When Mexico opened its economy to foreign trade beginning in the late 1980s, ceramics producers were exposed to cheaper competing imports but were unable to export their own goods to more lucrative foreign markets because of their use of lead-oxide glaze, banned by Mexico’s major trade partners. Under these circumstances, some workshops have been able to adopt a new lead-free glaze technology and access foreign markets (along with vastly improving working conditions), while others have not. The first part of the study focuses on the kinds of barriers to innovation faced by small workshops. While these are in part financial, they are also include a lack of access to information about what existing technologies are available, how to develop new ones that are not, and what the long term benefits of innovation will be. Regardless of the incentives, because of informational problems, Mexican ceramics workshops were unable to develop an alternative glaze on their own. Consequently, the Mexican government stepped in to coordinate the generation of an alternative glaze by bringing together a working group of researchers and ceramics workers. The remainder of the study focuses on how the glaze technology has been diffused (or not) to workshops. The study found that training workshops in its use and getting them to adopt the lead-free glaze has been much more challenging than simply generating the innovation. Economists tend to think of information and ideas as moving freely and easily; this study refuted that assumption by looking carefully at how the new technology has actually moved from public to private sector and between workshops in the private sector. The technology was diffused most effectively in situations where the government engaged with existing networks of ceramics producers (cooperatives), which provided conduits for the passage of information between workshops. Strong informational ties between public and private sectors allowed the beneficial technology to be introduced to clusters of producers, and formal relations between producers allowed for the technology to be spread within the community. On a community level, the study found that government agents were less likely to be able to form coordinated informational ties with communities that were more isolated culturally and geographically, making workshops in those communities much less likely to upgrade to lead-free glaze and have access to foreign markets. The implications of the study are numerous. First, it challenges the notion that upgrading in response to the pressures of the global economy is not automatic or simple by demonstrating not only that information that is free in theory (i.e. nonproprietary and openly available) is costly in practice. However, it shows that government has a role to play in mitigating this cost, turning globalization from a threat into an opportunity. Second, it provides insight into what characteristics of small firms in the developing world make accessing information costly, and the manner in which governments might be able to work cooperatively with networks to mitigate the costs of access to information. Finally, it suggests that for industrial development policy, attention should be paid not only to the structure of the market but to the structure of the network between the firms in the industry.
