Michael Gastrow

A review of trends in the global automotive manufacturing industry and implications for developing countries

This review explores the literature investigating recent global trends in the automotive manufacturing sector, particularly in developing countries. The role of globalisation has been an underlying factor in several key trends: The shift from west to east in terms of production and consumption; the concentration of the supply chain, with a handful of firms gaining control of most of the industry; a greater distribution of production activities around the globe, encompassing regional and local markets; and the concentration of innovation activities in the developed countries. Key trends in developing countries include continuing liberalisation and globalisation, increased foreign investment and ownership, and the increasing importance of follow-source and follow-design forces. Large developing countries have attracted greater critical mass for production and local product adaptation. Smaller developing countries increased their production capacity but not their innovation capacity. Developing countries bordering large markets became low-cost production hubs with lower levels of technological upgrading. Technological transfer has increasingly been facilitated through the purchase of knowledge-intensive assets in developed countries. The global financial crisis has had a large impact on the industry, particularly for developed countries. However, developing countries have generally been less affected. For most developing countries, the primary effect was an acceleration of the global market shift, as well as the accelerated consolidation of the supply chain. The trend of developing country firms purchasing knowledge-intensive industry assets from developed countries also accelerated.

Multinational strategies, local human capital, and global innovation networks in the automotive industry: case studies from Germany and South Africa

This paper focuses on the relationship between strategies of Northern and Southern firms, mostly multinational enterprises (MNEs), and human capital in Southern host countries in the automotive supply industry and the implications of this relationship both for the management of technological change and for the constitution of global innovation networks (GINs). Using a case-study approach drawing on firm-level interviews in both the home country (Germany) and the host country (South Africa), we find that the offshoring of knowledge-intensive activities is beginning to appear in an industry that is known more than others for centralizing most such activity close to headquarter locations and always in developed economies. It is also evident that the extension of GINs is not just based on Northern MNEs taking advantage of advanced capabilities in developing countries. Firms from the South, too, inshore the relevant knowledge through the acquisition of strategic assets in the North.

Global innovation networks, human capital, and development

In this Special Issue, we explore the dynamics of global innovation networks (GINs), and their implications for development. In the neo-Shumpeterian and ‘new trade theory’ context, knowledge is seen as the main determinant of economic growth, competitiveness and employment (Lundvall and Borras, 1998; Archibugi and Lundvall, 2001). The relationship between skills and innovation has been widely investigated (Lall, 2001; teVelde, 2005; Fagerberg and Verspagen, 2007; Martin, 2008; Toner, 2011), and has generated theoretical frameworks such as that of ‘absorptive capacity’ (Cohen and Levinthal, 1990). The evidence in this body of literature suggests that there is a strong causal interaction between capability-building and the growth in demand for, and supply of, technical and organizational innovation. Taken together, this complex of skills, knowledge and innovation holds great potential benefit for development, particularly in the context of developing countries (Grossman and Helpman, 1991; teVelde, 2005; Lorentzen, 2009). Globalization has influenced the international distribution of economic activity, and production chains are increasingly co-ordinated through global production networks (GPNs). These trends are well researched in the economic literature (Henderson et al., 2002; Gereffi, 2005). Despite the evidence of the increasing importance of knowledge and innovation, there has been relatively little research to understand the distribution and coordination of innovation and knowledge-intensive economic activities on a global scale – and what this might mean for economic development. The original research articles in this volume contribute to address this gap. They draw on a research programme on the impact of networks, globalization and their interaction with EU strategies, a first large-scale international attempt to understand the emergence and evolution of GINs. Chaminade (2009) defines GINs as ‘globally organized networks of interconnected and integrated functions and operations by firms and non-firm organizations engaged in the development or diffusion of innovations’. These innovation networks are ‘global’ when developing countries are also involved in knowledge-intensive innovation activities. The research considered the roles of countries, regions, sectors, firms and institutional frameworks in driving the emergence and structure of GINs. Cutting across, and central to such analysis, is the role of competence building. The global distribution of human capital is a major determinant of the global distribution of

Skills and the formation of global innovation networks: a balancing act

In seeking to understand the linkages between skill development and the formation of global innovation networks (GINs), we develop an analytical framework that incorporates concepts of dynamic upgrading with the distinction between centripetal and centrifugal forces that act to expand or contract these networks. Using a multiple case-study analysis methodology, we find that on the whole innovation follows skills, which act as a centrifugal force distributing innovation around the globe. Our cases also reveal that this general pattern overlays many other influential factors at the macro, meso, and micro levels, including factors related to skill availability, market characteristics, sectoral characteristics, policy contexts, and micro-level determinants. While these factors are influential, in principle, in shaping GINs, within each individual network, there is a unique and complex interaction between particular sets of forces.

Borderline innovation, marginalized communities: universities and inclusive development in ecologically fragile locations

ABSTRACT Where do the notional boundaries of the concept of innovation lie, and what does this mean for the study of innovation in socially marginalized settings, where changes are localized, incremental, informal, and social? How can this help us understand new aspects of innovation and inclusive development? To explore these questions, we draw on an evidence base describing university interactions with highly marginalized communities in South Africa, Uganda, and Botswana. These universities have established interface structures through which participative knowledge-building has led to new processes and social structures that have helped communities to address their livelihoods challenges. At the same time, universities have benefitted from the interaction, gaining from the communities’ local knowledge. This paper explores the characteristics of these interactions in order to open up a new empirical frontier, and also to reflect on the utility of innovation systems theory for understanding borderline cases of innovation that take place in informal settings and marginalized communities.

Connecting capabilities in highly unequal developing countries: The case of the Square Kilometre Array telescope in South Africa

ABSTRACT Innovation and skills development require interactive capabilities to function effectively. Interactive capabilities mediate between skills supply and skills demand actors in an innovation system, and in the knowledge economy more broadly. This article investigates such interactive capabilities, and the manner in which they facilitate labour market alignment. Within a case-study focus on the Square Kilometre Array (SKA) telescope in South Africa, we investigate how organisational capabilities, structures, and mechanisms facilitate or constrain interaction between the SKA and its network partners, including universities, firms, intermediaries, and a technical college. This illustrates how pockets of excellence within an unequal South African skills and innovation landscape were effectively connected in order to build a critical mass of skills and technologies that were highly competitive on the international stage. This shows how, in highly unequal developing countries, interactive capabilities form a lever for access to the global science and technology frontier.

Science and the Social Media in an African Context The Case of the Square Kilometre Array Telescope

This study presents a media content analysis of representations of the Square Kilometre Array telescope on Twitter by South African users, drawing on a sample of 1,588 Tweets recorded over a period of 1 year from September 2011 to August 2012. The framing of the Square Kilometre Array was dominated by the site allocation process, which focused on the contestation between South Africa and Australia and formed a proxy discourse for politico-symbolic themes that framed the project as a symbol of African achievement. The overall composition of messages is dominated by large media firms, but there remains substantial scope for individual agency in shaping the discourse, particularly for high-profile users and leading science journalists. Micro-determinants also played a key role in shaping the virality of messages.

Bridging skills demand and supply in South Africa: the role of public and private intermediaries

ABSTRACT Demand-led skills development requires linkages and coordination between firms and education and training organisations, which are major challenges considering that each represents a ‘self-interested’ entity. The need for a ‘collaborative project’ involving government, firms, universities and colleges, and other bodies is thus increasingly recognised. However, the crucial role of intermediaries has been largely overlooked. The article addresses this gap by investigating the main roles of public and private intermediaries across three case studies: sugarcane growing and milling, automotive component manufacturing, and the Square Kilometre Array sectoral systems of innovation. The research highlights the need for a move towards systemic thinking, to bridge across public and private objectives. It shows that private intermediaries play a larger role than is recognised in policy; that public–private intermediaries play crucial roles in coordination; and the potential for public intermediaries to contribute more effectively to systemic functioning.