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OU Lecture 2008: Privileged work

Updated Thursday 29th May 2008

Asian nations have influenced global prices - and that, warns Professor Kaplinsky - has serious consequences for Africa.

Professor Kaplinsky talks about his work in technology and industrial strategy in the 1980s. And, in the 1990s, his involvement with devising, and practical implementation of, policies for the new South Africa, post Mandela's release.

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During the course of the 1980s, I came to be involved in some really very privileged work - I worked in the Dominican Republic for three or four years on industrial strategy. I assembled a fairly large team, I worked in Cyprus on technology, strategy and industrial strategy. I did a lot of work in Kenya on industrial policy. Kenya was my real love, one of my family was born there. Worked in Jamaica. Spent some really interesting years in Kazakhstan, including one of the young Russian women saying, “Are you from South Africa?”, I said, “Yes,” she said, “Mmm, lots of South African Jews in Kazakhstan.” I said “What?”

“South African Jews, they all come to Kazakhstan.”

"Look, you know, please, I am Jewish. I know the Jews all came to Israel.”

“No, no, they’re all in Kazakhstan. You know what?" she said, "there’s no added sugar!" [LAUGHTER] Juice! [LAUGHTER]

I worked in Armenia, I worked in Russia but until 1988/89 it never crossed my mind that I would go back to South Africa. Remember I had left with a sense of foreboding. The forces of oppression were so overwhelming that this was a situation which was stuck for life. And then I began to hear these stories about what was coming for South Africa. Of course we began to communicate with colleagues and comrades in South Africa and then in 1990/91, I was a political exile, I hadn’t been allowed back to South Africa, I was allowed back to South Africa for the first time. It was, I think, the month after Mandela was released, or it may have been the month before. If it was the month before, I wasn’t the reason he was released!

Together with a group of comrades, I would say about 30 of us from the Congress of South African Trade Unions, from the African National Congress and from the Communist Party we spent 3 wonderful years preparing for the transition in South Africa. And we produced a book which became very well-known in South Africa, called ‘The Industrial Strategy Project’, and ‘The Industrial Strategy Project’ was very important because it essentially described and was then implemented as the policy, industrial policy for the new South Africa. But more importantly it led to the development of capabilities and skills. It’s not so much what’s on paper that’s important, it’s the clustering and the networking which followed from that. And a number of the people on this group, two or three became Ministers, four or five became Permanent Secretaries, one’s now the Ambassador, South African Ambassador to the World Trade Organisation in Geneva. And we were able to do something about making the world a better place. I was now on a trajectory of integration.

By about 1995 I began to be a bit sceptical of the power of paper and words and policy documents. And I thought, you know maybe the more interesting thing isn’t just to describe policy. Because the one thing that South Africa specialises in is policy. South Africa is brilliant at the level of policy. That’s the easy part. The difficult part is the implementation of policy and now my life coincides with yours Brenda, because Brenda was Vice Chancellor at the University of Natal at that stage, and together with Mike Morris who some of you know, we developed a programme which actually made a big difference in a number of important respects around building the capabilities to implement what this document had proposed on paper. And we worked together with a cluster of automobile component firms in South Africa. Who would have dreamt that South Africa of all places would become an exporter of automobiles and components? And we managed to get groups of firms and the unions together to work practically at becoming competitive and to trust each other, to share information about their quality levels, about how to improve work practices, about how to get to the market quicker and all the things of modern business. And then we introduced them to international competitors. And this became a benchmarking cluster in the automobile components. I mean, it still works today and is for those of you who want to chase the website down, it’s a really remarkable example of what can spin off a university and what can indeed make the world a better place.

Well, having done automobiles, where to go next? And an obvious place to go in South Africa was wood. Because South Africa had grown many, many thousands, hundreds of thousands of hectares of eucalyptus trees, fast growing trees, used as props for the mines. Lots of mines in South Africa. The mines started using concrete props and there was the country with this wonderful inventory of eucalyptus trees, all certified as being environmentally sustainable, FSC certification, that’s an international certification of this, the mining companies had been pressured to do this, and what to do with it. And the great thing about eucalyptus is that you can make it look like any wood you like, including mahogany and teak. Which of course is now in very short supply. So here was this wonderful opportunity for us to work outside of the automobile industry and to begin working with the furniture industry. And over a period of 18 months we worked with the value chain of wood and furniture products, getting the people designing, the seeds, the Forestry Commission, the forest people, the sawmills, the furniture makers, the export credit supply facilities and whatever. We actually cut – because the thing is nobody had used it for furniture in the past – and we cut it and we had it delivered to the furniture firms. Actually, it didn’t get delivered because it was hijacked and was found as being used as fence poles for cattle. But anyway! We then managed to get some to the – and we began to work with them – and then one day the penny dropped and my life changed and I now want to talk about China.

I was in a factory in Port Shepstone, which you will know well, south of Durban, making bunk beds and talking to one of the entrepreneurs and he said, you know what the problem is? The price we receive for our bunk beds is falling. Instead of getting £74 for a bunk bed, we’ve only been offered £48. In the space of 4 years instead of our prices going up, they’re going down. Well, obvious answer isn’t it? Pretty inefficient factory. So as in the case in many industries, you have factories clustered together. The next door firm also managed to make bunk beds. What’s happened to your prices? Actually interesting question they said. In the last four years our prices have fallen from £69 to £52. Well it’s obvious isn’t it? There’s an oversupply of bunk beds in the world! So we went to speak to somebody in Durban making wooden garden doors, er garage doors. What had happened … said, you know I’m in real trouble because the price of my garden doors – my garage doors – is falling. So we then went to look at what happened to the price of South African furniture exports. The total value of exports divided by the tonnes of exports and I won’t show you the numbers, that too had fallen. Well, it’s just bunk beds and it’s garage doors and it’s South Africa isn’t it? Well maybe not.

I then went to look at what was happening to the world price of wooden furniture, and I looked at the case of the EU, and here you can see from the EU that over the period 1991 to 1995 the price of all furniture had fallen and wooden furniture had fallen by about 25/26 per cent. And it’s at that stage that I began to realise that the world was changing in a very significant and disjunctual way. And that for me is the story of what we call the Asian drivers in general. And I’m going to talk now about the impact on Africa of the rise of the Asian drivers in general and China in particular. And what implications this has for development strategy and poverty in Africa.

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  • Wall to Wall
  • BBC

Next: Segment 3

The 2008 Open University Lecture

 

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