technology without the direct involvement of the foreign firm. This was strik-
ingly difference from the dependence on imported technology and compo-
nents in Malaysia. Finally, by the 1980s electronics in South Korea saw the
growth of local capabilities and diversification of exports into high-quality
precision engineering products such as hard disk drives, PCs, camcorders, and
semiconductors. In 1983 Sanyo withdrew from its joint venture with Samsung
and in 1987 NEC withdrew from its link with Goldstar Electric. By the 1990s
the industry had shifted towards advanced electronics and information tech-
nology based on in-house research and development (R&D), the acquisition of
overseas high-tech firms and more equal technology partnerships with leading
foreign companies (Hobday, 1995).
Continual technological upgrading in electronics and other industries in
South Korea did not occur automatically. Firms were pushed to upgrade
through a state industrial policy. The Korean state chose several industries at a
time as ‘priority sectors’ and provided subsidized credit and foreign exchange,
state investment funds,preferential tax treatments (such as tax holidays and
accelerated depreciation allowances), import protection and entry restrictions.
The most important policy tool was the use of ‘policy loans’ (subsidized inter-
est rates and priority access to credit) which accounted for nearly 60 per cent
of total bank loans made between 1962 and 1985 (Chang, 1993:143).
Empirical studies of industrial policy have generally found them to have been
a success. Korean infant industries have in general tended to mature – as shown
by domestic costs of production dropping below world costs of production. In
the 1970s this occurred in iron and steel,electrical machinery, precision instru-
ments,and non-industrial chemicals (Lee, 1997:1275–7). An important
feature of Korean industrial policy was the tight performance-monitoring
system. All firms in the ‘promoted’industries were required to report not just
on export performance but also on performance in other areas such as absorb-
ing new technologies and research efforts. Failure to report/false reporting
could result in fines and imprisonment. The commitment of the political lead-
ership to exports (and truthful reporting), especially during the rule of
President Park in the 1960s and 1970s, signalled to private businessmen that if
they were to obtain government help (or avoid penalties) in the long run, they
had to boost exports. The important political pre-conditions for a state to be
developmental and enforce such conditionalities were discussed in Chapter 3.
In Sub-Saharan Africa there has been a generalized slow diffusion of tech-
nology from abroad. Between the 1970s and 1990s Africa did not experience
a Green Revolution in agriculture and had the lowest uptake of high-yield vari-
ety (HYV) seeds in the developing world. This was partly because the thrust
of technological changes was not appropriate for African conditions and
Africa has lacked the capabilities to adapt such technology for local condi-
tions. Worldwide, HYV research has focused mainly on wheat and paddy rice,
while Africa produces maize,sorghum, millet and tubers (such as cassava,
coco yams and sweet potatoes). Between 1980 and 2000 food production per
capita actually fell by –0.1 per cent per annum in Sub-Saharan Africa, while
Technology and Economic Growth 107