- To compete internationally, enterprises require a nurturing business environment
to foster vibrant industrial development.
- An array of institutions and organizations can help enterprises to meet
the information, skills, finance and other needs that are difficult to satisfy
in open markets. Industry associations, export agencies, productivity centers,
technology information centers, metrology, standards, testing and quality
control centers, R&D laboratories, and cluster development institutions,
together create a business environment rich with knowledge and information
on new technology, essential for supporting the innovation and learning by
firms.
- Many of the institutions and organizations that provide industrial services
depend on government subsidies. Market failures, public goods character of
the services they provide, constraints on public policy, and multilateral
trade agreements’ constraints on what policy instruments to use, are
some of the arguments in favor of subsidized provision of these services.
- Many of these services are supplied through the market in advanced countries,
but even these countries find it necessary to augment what is supplied through
the market with subsidized services.
- For pursuing subsidized provision of industrial services three principles
are important. Support institutions should be established and managed, and
subsidized services should be provided in strict accord with the framework
of the national strategy for industrial development. Subsidized provision
of industrial services is more justified the more widely shared the specific
services turn out to be. Services should not be supplied solely by government
but also in public-private partnerships or by private firms and associations—with
subsidies, if justified.
- Many developing countries have set up industry support institutions copied
from developed countries. But the record shows bad functioning, poor quality,
inadequate equipment, poorly motivated and remunerated staff, not being demand
driven and with unrealistic objectives, and bad management.
- In the sequencing of the development of institutions and organizations
for innovation and learning, the highest priority at the outset should be
given to institutions and organizations providing general service to enterprises
and then gradually to determine which industrial sectors should be given priority.
Certainly, high priority should go to the reform of institutions and organizations
that serve, or could be reformed to serve, industries in which the country
should readily be able to realize a competitive advantage.
- As a general rule, organizations—whether newly formed or being reformed—should
not seek staffing at a level of technical expertise too far in advance of
that in the firms to be served. The point is to ensure the capability for
effectively serving firms in small, manageable ways before investing large
sums to secure technical expertise without knowing that it can be effectively
deployed in ways that will increase firm productivity.
|
