Technology and the public sector

14/10/1992

A MAJOR preoccupation of developing countries that have undergone the colonial experience is to avoid, at any cost, the substitution of political colonialism with economic colonialism. An important and influential theoretico-ideological position of the post-colonial era has been the "dependency theory" of social scientists Immanuel Wallerstein and Andre Gunder-Frank, that stresses the role of comprador capital in perpetuating neo- colonial relations. The lesson has been learnt altogether too well. The control not only of foreign direct investments but of the domestic private sector as well has formed the backbone of much of the development strategies followed the world around.

This strategy has now come into disrepute, particularly since the 1980s. The attack has been double-pronged. On the one hand, the rather dismal performance of most developing countries in the sphere of technology development has been cited as a basic cause of economic retardation. On the other, state control of industrial production, either directly through parastatals and public sector undertakings or indirectly through controls on investment, has been identified as a major factor in engendering inefficiencies in the industrial sphere.

These views have been steadily growing more popular in India as well. The book under review is therefore of particular topicality and relevance. In it, the author attempts to examine the performance of the Indian public sector as a vehicle of technological progress and to assess whether the hopes and aspirations of our development planners have been totally belied. That this issue is critical, cannot be doubted. The present mood towards junking all vestiges of "socialist" development rests firmly upon certain perceptions, right or wrong, without much in the way of hard evidence. It is about time that the facts were laid on the table.

The book begins with an overview of the pattern of technology import, assimilation and adaptation by the Indian public sector. It goes on to a more detailed analysis of a single sector namely, telecommunications and then winds up with two case studies of public sector companies. Thus the depth of analysis progresses in a step-wise fashion. The book's conclusions come as no great surprise to anyone familiar with the public sector. The most important point it makes is that on the whole, the public sector has not done too badly in technology adoption and is getting progressively better at it. This is, of course, qualified by what is almost a truism -- the ability of the companies to carry out this function is severely circumscribed by political and bureaucratic interference and is affected by the calibre of top management.

It is unfortunate that the book's major finding is based on an analytical framework that is somewhat suspect, to say the least. But, fortunately, the microanalysis tends to support it to quite an extent. It is equally unfortunate that the scope of the book does not cover the experience of private sector firms in similar industries, as the case against the public sector can always be restated in comparative terms, even though it is usually presented as an absolute statement.

Given that R&D investment by the Indian private sector is pathetic, it is almost certain thast a comparative analysis would almost certainly show the public sector in considerably better light, despite all its limitations. On the whole, however, the author is to be commended for an extremely painstaking and detailed work in a controversial area of research. Anyone who still pretends to keep an open mind on the public sector versus private sector debate, would be well advised to read this book.

Pronab Sen is economic adviser to the Government of India.

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