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technological growth in the developing economies. Also identify their main constraints in detail.
technological growth in the developing economies. Also identify their main constraints in detail.
technological growth in the developing economies. Also identify their main constraints in detail.
technological growth in the developing economies. Also identify their main constraints in detail.
technological growth in the developing economies. Also identify their main constraints in detail.
technological growth in the developing economies. Also identify their main constraints in detail.
technological growth in the developing economies. Also identify their main constraints in detail.
technological growth in the developing economies. Also identify their main constraints in detail.
technological growth in the developing economies. Also identify their main constraints in detail.
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technological growth in the developing economies. Also identify their main constraints in detail.


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  • 1. Q1 Explain clearly the technological growth in the developing economies. Alsoidentify their main constraints in detail.Ans. Almost all countries across the world aspire to continually improve their economic growthand development. For developing countries, in particular, to progress toward this goal,their energy use will need to grow.Projected increases in population and economic activity, particularly in developing countries, areexpected to lead to an expansion in global energy demand in the coming decades. Associatedwith this will be a range of challenges affecting economic development, energy security, society,poverty alleviation and the environment. The main drivers of energy use in the six partnershipeconomies are dealt with first. • Economic growth, • Labor supply • Productivity growth Budget provided to bring up new technologies • Energy crisis • High inflation • Encouraging Research & Development • Knowledge creation or creating awarenessCountry and regional population and labor supply growth rates are determined within GTEM,based on detailed population dynamics that capture the notion that as countries develop and perperson incomes increase, fertility and mortality rates follow a typical pattern. Estimates of thedependence of fertility and mortality rates on income and an estimated migratory pattern are usedto project age and gender specific population changes. The average annual GDP growthprojections for the partnership economies for the case where current and announced policies areassumed to be maintainedKnowledge creation is often associated with formal activities within R&D that is undertaken in asystematic manner within universities and specialized public and private R&D facilities.However, these formal means represent only a small proportion of knowledge creation.Knowledge creation is a much larger and more systemic phenomenon, although formal facilitiesaccount for a large percentage of output. There are two points to be emphasized here.First, measuring the informal aspect of knowledge creation is immensely difficult, since itsbenefits and value cannot always be identified before it is used or sold. These informal aspectsare also hard to benchmark, because a large proportion of them are qualitative in nature, in theform of managerial or service innovations and improvements in processes.Second, in developing countries, the informal sector tends to be very large. Developing countriesundertake less than 8% of the formal R&D activities globally, and much of these tend to beundertaken by public, state-supported organizations such as universities and research institutes. Itis within the domain of R&D expenditures of private enterprise in developing countries, thatTNCs can play an important role, although this varies considerably by country. 1
  • 2. Q2 What are the major steps taken by the developed countries to meet themanufacturing goals?Ans. Strategies for Sustainable Industrial Development 1. Establish Environmental Goals, Regulations, Incentives, and Standards 2. Make More Effective Use of Economic Instruments 3. Broaden Environmental Assessments 4. Encourage Action by Industry 5. Increase Capacity to Deal with Industrial Hazards 6. Strengthen International Efforts to Help Developing CountriesResource and environmental considerations must be integrated into the industrial planning anddecision-making processes of government and industry. This will allow a steady reduction in theenergy and resource content of future growth by increasing the efficiency of resource use,reducing waste, and encouraging resource recovery and recycling.1. Establish Environmental Goals, Regulations, Incentives, and StandardsIn dealing with industrial pollution and resource degradation, it is essential that industry,government, and the public have clear benchmarks. Where the workforce and financial resourcespermit, national governments should establish clear environmental goals and enforceenvironmental laws, regulations, incentives, and standards on industrial enterprises. Informulating such policies, they should give priority to public health problems associated withindustrial pollution and hazardous wastes. And they must improve their environmental statisticsand data base relating to industrial activities.Regulations to control the impacts of industrial activity across national boundaries and on theinternational commons are also needed. Existing or future international conventions dealing withtransfrontier pollution or management of shared natural resources should enshrine certain keyprinciples: • the responsibility of every state not to harm the health and environment of other nations, • liability and compensation for any damage caused by transfrontier pollution, and • equal right of access to remedial measures by all parties concerned.2. Make More Effective Use of Economic InstrumentsPollution is a form of waste, and a symptom of inefficiency in industrial production. Whenindustries recognize pollution as a cost, they are sometimes motivated to make investments inimproved products and processes to increase efficiency and hence to reduce the pollution and 2
  • 3. waste they generate, particularly when there are economic incentives to do so, it largely dependson whether such investments will increase their economic performance.Enterprises may be encouraged to invest in preventive, restorative, or compensatory measureswith subsidies of various kinds. Indeed, in most industrialized and many developing countries,subsidies are a common way of encouraging companies to invest in measures needed to preventexternal damage. But in this case, of course, it is the taxpayer who pays, rather than theconsumer of the product. Moreover, if the subsidies are large and paid to industries operating inan international market, they can lead to trade distortions and should be avoided.Incentives to reduce pollution can be enhanced by other measures. Energy and water pricingpolicies, for example, can push industries to consume less. Product redesign and technologicalinnovations leading to safer products, more efficient processes, and recycling of raw materialscan also be promoted by a more effective, integrated use of economic incentives anddisincentives, such as investment tax breaks, low-interest loans, depreciation allowances,pollution or waste charges, and non-compliance fees.3. Broaden Environmental AssessmentsAn increasing number of countries require that certain major investments be subject to anenvironmental impact assessment. This broader environmental assessment should he applied notonly to products and projects, but also to policies and programmed, especially majormacroeconomic, finance, and sectoral policies that induce significant impacts on theenvironment.4. Encourage Action by IndustryWith limited resources at their disposal, small and medium- sized industries often findthemselves unable to afford the changes necessary to meet environmental regulations andproduct controls. Small scale businesses such as metal working, machine tools, printing, andtanning and dying are frequently among the worst offenders of environmental regulations in anycountry. New technologies, especially micro-electronics, already allow small industriesinexpensive means to control an entire production process. Energy-saving biological systemsmay be well suited to the needs of small and medium sized industries for pollution control orwaste disposal.Small and medium scale enterprises, constituting the largest segment of industry in most nations,need information and may in some cases require financial and technical assistance from thepublic sector. Management and worker training can help them incorporate cleaner technologiesand environmental planning into work patterns. Governments should encourage cooperativeefforts smaller firms in joint research and development on environmental issues, for example, orjoint use of pollution control or waste treatment facilities.5. Increase Capacity to Deal with Industrial Hazards 3
  • 4. Chemical products have greatly improved health and life expectancies; increased agriculturalproduction; raised comfort, convenience, and the general quality of life; and expanded economicopportunities. The chemical industry is also one of the most dynamic sectors in most countries,including many developing ones. Yet this industry, together with its products, can have aparticularly severe impact on the environment. It has given rise to a host of new problems both ofproduct and process pollution. It continues to generate an increasingly wider range of productsand wastes whose effects, especially long-term ones, on human health and the environment arenot precisely known. Major accidents have taken place, and the safety record of the industry hasbeen challenged in recent years.6. Strengthen International Efforts to Help Developing CountriesLarge industrial enterprises, and transnational corporations in particular, have a specialresponsibility. They are repositories of scarce technical skills, and they should adopt the highestsafety and health protection standards practicable and assume responsibility for safe plant andprocess design and for staff training. The transnational should also institute environmental andsafety audits of their plants measured against standards at other subsidiaries, not just againstthose of other local companies, which may have less stringent requirements These audits andtheir follow-up should be made available to governments and other interested parties.Many developing countries need information on the nature of industry-based resource andenvironmental problems, on risks associated with certain processes and products, and onstandards and other measures to protect health and ensure environmental sustainability. Theyalso need trained people to apply such information to local circumstances. International tradeassociations and labour unions should develop special environmental training programmes fordeveloping countries and disseminate information on pollution control, waste minimization, andemergency preparedness plans through local chapters. 4
  • 5. Q 3 Why CIM has wide application in large scale manufacturing than theSMEs also describe the benefits in detail.Ans. Although most effort to date in CIM system development has focused upon largecooperation’s, the general feeling is that in the next decade small and medium size companieswill be the fastest growing segment of the CIM market. This is significant, since it was originallyclaimed that only large organizations would benefit from CIM as they have the necessaryresources.Large enterprises developed their own methods to implement the CIM system. Experiencebrought success, but their solutions were not completely applicable to small and medium sizeenterprises as cost and availabilities of staff with experience of computerized systems havemostly been prohibitive.Benefits of CIMComputer-integrated manufacturing (CIM) is a system consisting of software covering manybusiness processes, including integration of automated assignment and reporting of factory flooroperations through machine and material handling equipment sensors and software. CIM coversenterprise resource planning (ERP) modules in a manufacturing operation, including design,purchasing, inventory, shop floor control, material requirements planning, customer ordermanagement and cost accounting. Benefits of CIM are given below: • CIM is incredibly cost-effective: 1. To use CIM, you do not have to invest in any special or proprietary equipment. CIM is hardware-independent! It runs on any PC with a Windows 2000 (or newer) OS. You do not have to invest in any special or proprietary equipment. Not only are such undemanding technical requirements rare, they make the system very affordable. 2. You purchase only those components of the software suite that you need to run your business. You are not forced to buy a “total package” in order to get the parts you want to use. 3. You do not need a specific database. CIM will interface with all the major systems on the market. 4. You can continue to use any peripherals – currency counters, coin sorters, MICR readers, valuators, etc., – you currently have on hand. CIM connects to all of them. Again, no need to spend money on new equipment. 5. You get free upgrades! If you purchase a CIM maintenance agreement, any upgrades we develop for the software are yours at no cost. 5
  • 6. 6. There are often discounts available for existing customers who wish to purchase additional components of the application suite. • CIM enables you to be extraordinarily productive:Because CIM is so unusually user-configurable, you can set up the system in the way that’seasiest and most convenient for you to get work done fast. From optimized keystroke patterns topreferred search methods, CIM lets you run it however you see fit. CIM also has a simple, non-distracting interface that keeps you focused on the task at hand. See what’s on the screen at oneglance and keep working! • CIM lets you count anything:CIM never says “no” when you want to define an item to process. And never presents you with a“miscellaneous” category that you can’t define in any detail. Do you have 25 currencies to dealwith? Loan payments? Gift cards? Baseball cards? The system fully defines and handles anyitem you want to count. • CIM makes it much easier to control monetary losses:Billions are lost to theft and poor handling every year. CIM makes it easy to reduce cash losses.You can set out-of-balance approval requirements however you wish and monitor performanceby teller, cashier, or cash register to pinpoint if and where losses are occurring, and takeappropriate steps when necessary. • CIM never requires you to do any programming:Unlike other systems on the market, CIM can handle full cashiering, any number of currencies ormedia, any peripherals, any interfaces, and any level of vault, retail, casino, amusement park orrelated services without any programming whatsoever. • CIM helps you manage your business effectively:With reports from inventory to delivery tracking and productivity available, CIM enables you tosee all the details of your cash management processes and of your employees’ performancerecords on the job. Decision-making becomes infinitely more efficient when all of the data is atyour fingertips! 6
  • 7. Q 4 Discuss the role of SMEs in the national economic growth. Also discuss itin the light of developing & developed countries.Small business is a term used to refer to any investment that households make in establishing aventure, to generate sufficient revenue for themselves. The choice of these ventures most of thetime depends on the capability of an entrepreneur in terms of art, craft, skill or talent.Usually lower and lower-middle classes take such initiatives. Though done on purely economicterms and for financial means, small businesses become a cause for economic emancipation ofnot only the businessman but of many who work for him in return for wages. Other benefitsgarnered through such ventures extend even further, to include economic productivity at vendorlevel, to create healthy competition, to develop craftsmanship, and to drive innovation.If we look at the figures of contribution that small businesses have made to giant economies, wefind that America’s gross national product has 39 per cent of its share coming from small andmedium enterprises. China is attaining almost 60 per cent of its GDP growth through smallbusinesses.On the flip side, even in countries like Bangladesh, SMEs are contributing 25 per cent to thecountry’s total GDP. Small businesses, being the backbone of economic development havealways been the darling of government’s economic policy initiatives. Every successful countryhas focused largely on developing its small business sector to eventually emerge as anindustrialised nation.The primary reason for this emphasis has been the ability of SMEs to create employment.Government or large scale manufacturers cannot generate jobs to cover the sprawling populationof any given country. Small and medium enterprises always take position at this front. In Japan,the company Toyota employs fewer employees than its vendors engaged in small businesses.In order to support small industries, governments usually employ two approaches for theirsustainability. As part of the first approach, governments alter impediments regulating specificbusiness activity. The objective is to diminish, hold minimal or eliminate barriers to entry orgrowth. This is achieved by either doing away with the regulatory system, by restructuring it tofit to the characteristics of a firm such as its size or capital or by making the regulatory systemefficient across the board by lessening the administrative burden associated with regulations. Inthe second approach, governments offer public provision of assistance, also known as support 7
  • 8. programme or sometimes termed as an economic development programme. These approachesare facilitated through institutions dedicated to developing and sustaining small and mediumenterprises. In Pakistan, we have Small and Medium Enterprises Development Authority,commonly known by its acronym SMEDA, working at federal level while on the regional level,the Punjab Small Industries Corporation PSIC is working to facilitate small businesses in theprovince. According to the Economic Survey of Pakistan 2010-11, contribution of SMEs in theGDP has been calculated at 40 per cent. Interestingly, the GDP growth in totality staggered at 2.5per cent.Our human resource is still not equipped to take on the challenges of globalisation. We aresurviving on the margins, where lack of skilled labour, trained entrepreneurs and unavailabilityof marketing personnel has trivialised the small and medium businesses issue. For anyimprovement to happen on the small and medium business front, we first need to work on humanresource development and on creating marketing linkages abroad. Our emphasis should be onbuilding entrepreneurial qualities in a businessman, so that he becomes a learned individual,carrying a sense of documentation and philosophy of economics to market his business.Punjab Small industry Cooperation was developed in 1972 to assist small business developmentacross Punjab. Its mandate is to provide infrastructural, technical and financial assistance topeople seeking small business ventures. Until 1990, it had provided fully funded support to smallbusinesses, with its assistance ranging from land acquisition to the setting up of the entirebusiness environment. However, in 1990, realising that the Pakistani entrepreneur has achievedenough financial maturity, where his relationship with the government could be built on equalfinancial parity; the government stopped supporting fully financed project schemes. Henceforth,the role of PSIC was restricted to providing infrastructural, technological and market drivencredit to its consumers. Under this scheme of things, various credit schemes, industrial estates,Cluster Development Centres, Handicrafts Development Centers (HDC) & handicraft shops havebeen developed. In spite of all these economic activities, no real gain could be seen emerging forthe common man. Talking to Dr. Salman Shah, former Finance Minister of Pakistan, about thereasons for unattainable goals of PICS or SMEDA, he lamented over the situation by saying that,“The benefit of small businesses could be gauged from the fact that a country like Brazil isspending $7 per capita on its intermediary institutions looking after the welfare and developmentof SMEs. Alternatively, the seriousness of Pakistan’s government about the development ofSMEs could be seen from the fact that it is spending one cent per capita on Small and MediumEnterprises Development Authority and Punjab Small industrial Cooperation. Under such asituation, how could we think of developing SMEs? The worrying part is that 99 per cent of ourmanufacturing sector consists not only of medium but small industries as well; they are in direneed of support. They need technological support to improve and enhance production. Theyrequire assistance on the marketing front. They need backing in areas of training and skilldevelopment for their workers and managers. They need easy access to financial markets. Theyneed administrative support in different areas to deal with petty financial or managerial issues.And last but not least they need easy access to institutions such as the Punjab Small IndustriesCooperation and SMEDA. If we look at Brazil, they have opened up branches of SMEinstitutions even in villages, while in Pakistan the representation of SMEDA is found either inprovincial capital or a few other business cities. The same is the case with the Punjab SmallIndustries Corporation, which has a representation in only 7 regions of Punjab, without any realpresence at district level. Using another example from Brazil, it is notable to mention that their 8
  • 9. SME organisations have inducted 9000 consultants to provide advisory services to smallbusinesses at their door step. SMEDA and PSIC have miniscule facilities for consultancy at theirdisposal. At times, they do call some consultants from abroad, but the output has never beenpromising because of paucity of funds. Unless we stretch our resources to the level providesassistance to our SMEs in areas I have just enumerated, no development worth the salt can beexpected. Resultantly the engine for our economic growth, SMEs, which are also responsible forgenerating employment at a larger scale, would remain unproductive and partially disabled.”SMEs amidst energy crisis. Though government has painted a rosy picture about SMEs, the truthis that they are nothing more than dead moles on the body of Pakistan’s economy. Sans gas,electricity and alternative power generation facilities, industries have been shut down in hugenumbers. In this situation, if the government claims to have taken SMEs to a new height, it iseither done on paper or in the dream industry that our leaders often talk about in their Utopianmood.Sources: Common Future, Chapter 8: Industry: Producing More With LessFrom A/42/427. Our Common Future: Report of the World Commission on Environment andDevelopment ; 9