New Technologies, Scale and Scope, and Location of Production in Developing Countries

The paper presents the preliminary results of an international research project undertaken in Brazil, India, Mexico, Turkey, Thailand and Venezuela on whether and to what extent flexible automation and associated organizational techniques have diffused to developing countries, and what their impact has been on product, plant and firm scale and scope. It shows that while diffusion has been rapid in the countries under study, particularly in the case of computer-numerically-controlled (CNC) machine tools, it was far slower than in developed countries. Diffusion of new organizational techniques was also slow. The paper analyses the data on product scale, and concludes that NT do not necessarily lead to reductions in product scale, product variety or scope. On the contrary, the data show significant increases in variety and availability of sizes of the products on offer, not because of new products, but due to vertical integration in the production of components. The paper concludes that the output or capacity of most firms surveyed increased as a result of the adoption of NT, due to reduction in waiting times, better factory and labor organization, increased efficiency of CNC machine tools and higher capital and marketing 'fixed' costs. Such findings imply that scale will continue to be an impediment to entry into industrial production by small developing country firms.