Not, how, but in what way
does Ownership Matter?
Raphael Kaplinsky
Development Policy and Practice,
The Open University
Reading-UNCTAD International Business
Conference, 10th April, 2013
Beginning with commodities
Resource enclaves and the
necessity of diversification
• Low rates of technological progress in
supplying industries
• Often inputs are technologically complex
and required large scale production
• Adverse terms of trade
• Resource extracting (foreign-owned) firms
are reluctant to source locally
Ownership and ruling paradigms
• Ownership critical, and FDI opposes
linkages
–Singer/UNCTAD/Dependency School
• Ownership is irrelevant – capitalism is capitalism
–Structural Adjustment and the neo-liberal
paradigm
• Both paradigms live in a world of
homogeneity
Commodities-manufactures terms of
trade
?
The commodities-manufactures terms of trade
(1949-2008)
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
1949
1954
1959
1964
1969
1974
1979
1984
1989
1994
1999
2004
Back to Centre Stage
100
% Share of Global GDP
90
80
70
60
50
40
32
28
24
16
30
10
20
10
25
23
25
0
1
1000
1500
China
7
33
1820
India
3
4
1969
17
2008
24
2030
Free download from
http://tinyurl.com/CommoditiesBook
What have we learned?
• 15 African researchers, working on nine countries:
– Mining services
– Oil services
– Subsea oil equipment
– Copper
– Diamonds
– Forestry
– Gold
– Infrastructure
• Resources are not necessarilly a curse
• There is a surprising degree of linkages
Value added
Inside core
Competences
- win-lose
Deepening
Speeding up
Shallowing
Outside
Mining
Company
core
competences
- win-win
Slowing down
Time
Key findings on ownership
• Zambia copper
– Chinese firms actively source locally but don’t upgrade
suppliers
– the solitary Indian firm has little capacity for supplier
development and the development of trust relations
• Chinese firms bring their Chinese suppliers with them
(Sudan, Angola, Zambia and widespread)
• Enormous variation between types of Chinese firms and
this affects linkages (Central SOEs/Provincial SOES,
China-incorporated/migrants)
Key findings on ownership (continued)
• Governments confuse policies to deepen linkages with those
designed to promote local ownership (Angola, Nigeria, South
Africa)
• Linkages sometimes involve extensive local ownership (Nigeria
and S Africa), and sometimes virtually no local ownership
(Botswana)
• Northern firms in the same sector differ in their propensity to
generate linkages (Angola)
• Northern firm’s linkage behaviour differs between sites in the
same country (Tanzania)
• Governments can exploit firm-specific characteristics to deepen
linkages
What of manufacturing and global
value chains…?
Globalisation (GVCs)
End 20th Century
Share
Of
World
Trade
Internationalisation
End-19th century
Arms length
Governed
Hierarchical (Internalised)
What of manufacturing and global
value chains…?
• The ownership of production is much less
important than the ownership of markets
• FDI is often more important in chain
logistics than in production
• Perhaps Chinese lead firms are different
form northern lead firms?
Globalisation (GVCs)
End 20th Century
Share
Of
World
Trade
Internationalisation
End-19th century
Arms length
Governed
China dominated
- <2030…. ??
Hierarchical (Internalised)
In conclusion..
• Ownership matters
–Nationality of ownership
–Firm specific characteristics
• The answers are contingent on sector, time and
place
• There is no “one best way” (F.W.Taylor)
–The policy response must therefore necessarily
be nuanced