Edited by Oliver Morrissey and Michael Tribe
Chapter 3: Firm-level capability building in less developed countries
Wise Mainga* 1 INTRODUCTION Since the late 1980s, most African countries have undertaken efforts to restructure their economies. Most reforms had to be undertaken after decades of economic decline. In some of the countries, the economic crises1 had produced some degree of consensus that was needed to pursue wide-ranging restructuring reform packages. In countries like Zambia and South Africa,2 relatively rapid and wide-ranging trade liberalisation policies were adopted as one means of revamping the manufacturing sector. The effects of Structural Adjustment Programmes (SAPs) on the manufacturing sector in countries of Sub-Saharan Africa (SSA) have proved to be very controversial, however. One view is that the across-the-board rapid liberalisation of foreign trade has not been conducive to industrial restructuring and upgrading. Not only has rapid exposure to foreign competition led to unavoidable destruction of inefﬁcient high cost manufacturing, it has also resulted in wasteful deindustrialisation of accumulated capital stock that may have been viable in the medium term (Lall, 1995; Stein, 1992).3 Some proponents of this view have urged that some of the liberalisation efforts have been too fast and have not provided enough time for ﬁrms to modernise and upgrade their competitive capabilities (Lall and Wangwe, 1998; Riddell, 1990). This view emphasises the need to address simultaneously the complex process of strengthening the technological competence of ﬁrms. The design, pace and implementation of SAPs must take account of such complexity. The opposing view – which is often seen to be enshrined in most SAPs – assumes that manufacturing ﬁrms...
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