Arts, Faculty of
Geography, Department of
DSpace
UBCV
Chandra, Rajesh
Doctor of Philosophy - PhD
University of British Columbia
Industrialization has become one of the key strategies of development in the majority of the developing countries. Although not as committed to industrial transformation as the Newly Industrializing Countries, Fiji has, nonetheless, attempted to industrialize. Industrialization currently forms an important component of Fijian development strategy. This thesis investigates the industrialization of Fiji. Although its main focus is the contemporary manufacturing sector, the manufacturing sector is placed in its historical context. Ten major questions are posed in the thesis. These questions cover the theoretical approaches to and empirical situation in Third World industrialization, Fiji's integration into the international economic system, and the structure and organization of the contemporary Fijian manufacturing sector. The remaining questions address manufacturing linkages, location, and the role of the state in industrialization. Data used in the thesis were derived from field surveys, informal interviews, and documentary sources. Data were analysed using the Statistical Package for the Social Sciences at the University of British Columbia. The thesis finds that the Fijian manufacturing sector makes a small contribution to the GDP, but that it is an important component of the economy because of its close links with Fiji's most important foreign exchange earners. Although the volume of industrial production has increased in Fiji since independence, its share of the GDP has not altered significantly. The manufacturing sector consists of a large number of small units and a small number of large units that provide the bulk of employment and output. Intra-manufacturing sector linkages are weak, but resource processing activities have strong backward linkages with the primary sector. The state has maintained its commitment to the private sector since independence, although its ownership of the Fiji Sugar Corporation makes it an important direct producer in the manufacturing sector. State policies relating to the manufacturing sector have evolved steadily in Fiji, although the government has not effectively co-ordinated them. The Fijian experience of industrialization provides both support and criticism of existing theoretical approaches to Third World industrialization, and suggests a greater need for synthesis in these approaches.
INDUSTRIALIZATION IN FIJI By RAJESH CHANDRA B.A. and Grad. Cert. Ed., The University of the South Pacific, 1975 M.A., The University of the South Pacific, 1980 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY in THE FACULTY OF GRADUATE STUDIES Department of Geography We accept this thesis as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA August 1985 (c) Rajesh Chandra, 1985 In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of British Columbia. I agree that the Library shall make i t freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the head of my department or by his or her representatives. It i s understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission. Department of The University of British Columbia 1956 Main Mall Vancouver, Canada V6T 1Y3 Date D E - 6 n / R -n i i ABSTRACT I n d u s t r i a l i z a t i o n has become one of the key s t r a t e g i e s of development i n the m a j o r i t y of the developing c o u n t r i e s . Although not as committed to i n d u s t r i a l t r a n s f o r m a t i o n as the Newly I n d u s t r i a l i z i n g C o u n t r i e s , F i j i has, n o n e t h e l e s s , attem-pted to i n d u s t r i a l i z e . I n d u s t r i a l i z a t i o n c u r r e n t l y forms an important component of F i j i a n development s t r a t e g y . T h i s t h e s i s i n v e s t i g a t e s the i n d u s t r i a l i z a t i o n of F i j i . Although i t s main focus i s the contemporary manufacturing sec-t o r , the manufacturing s e c t o r i s placed i n i t s h i s t o r i c a l c o n t e x t . Ten major q u e s t i o n s are posed in the t h e s i s . These qu e s t i o n s cover the t h e o r e t i c a l approaches to and e m p i r i c a l s i t u a t i o n in T h i r d World i n d u s t r i a l i z a t i o n , F i j i ' s i n t e g r a t i o n i n t o the i n t e r n a t i o n a l economic system, and the s t r u c t u r e and o r g a n i z a t i o n of the contemporary F i j i a n manufacturing s e c t o r . The remaining q u e s t i o n s address manufacturing l i n k a g e s , l o c a -t i o n , and the r o l e of the s t a t e i n i n d u s t r i a l i z a t i o n . Data used i n the t h e s i s were d e r i v e d from f i e l d surveys, i n f o r m a l i n t e r v i e w s , and documentary s o u r c e s . Data were ana-l y s e d using the S t a t i s t i c a l Package for the S o c i a l Sciences at the U n i v e r s i t y of B r i t i s h Columbia. The t h e s i s f i n d s that the F i j i a n manufacturing sector makes a small c o n t r i b u t i o n to the GDP, but that i t i s an impor-tant component of the economy because of i t s c l o s e l i n k s with F i j i ' s most important f o r e i g n exchange e a r n e r s . Although the volume of i n d u s t r i a l p r o d u c t i o n has increased in F i j i s i n c e independence, i t s share of the GDP has not a l t e r e d s i g n i f i c a n -t l y . The manufacturing s e c t o r c o n s i s t s of a l a r g e number of small u n i t s and a small number of large u n i t s that provide the bulk of employment and output. Intra-manufacturing sector l i n -kages are weak, but resource p r o c e s s i n g a c t i v i t i e s have strong backward l i n k a g e s with the primary s e c t o r . The s t a t e has maintained i t s commitment to the p r i v a t e s e c t o r s i n c e independence, although i t s ownership of the F i j i Sugar Co r p o r a t i o n makes i t an important d i r e c t producer in the manufacturing s e c t o r . State p o l i c i e s r e l a t i n g to the manufactu-r i n g s e c t o r have evolved s t e a d i l y i n F i j i , although the gover-nment has not e f f e c t i v e l y c o - o r d i n a t e d them. The F i j i a n experience of i n d u s t r i a l i z a t i o n p rovides both support and c r i t i c i s m of e x i s t i n g t h e o r e t i c a l approaches to T h i r d World i n d u s t r i a l i z a t i o n , and suggests a grea t e r need f o r s y n t h e s i s i n these approaches. i v TABLE OF CONTENTS ABSTRACT i i TABLE OF CONTENTS iv LIST OF TABLES x LIST OF FIGURES xv ACKNOWLEDGEMENTS xvi CHAPTER 1: RESEARCH AIMS, METHODOLOGY, AND STUDY AREA 1 Research Questions and the S i g n i f i c a n c e of the Study 1 The Scope of the Study 8 The C e n t r a l Concepts of the Study Defined 8 Data Requirements and C o l l e c t i o n 12 Survey of Manufacturing Firms and Establishments 13 Survey of Records i n the R e g i s t r a r of Companies' O f f i c e 21 Examination of Records in Government and Related O f f i c e s 23 Informal Interviews 24 Data A n a l y s i s 25 The Study Area: F i j i 25 L o c a t i o n and S i z e 26 P o p u l a t i o n 29 The A d m i n i s t r a t i v e and P o l i t i c a l System 31 The Economy 33 The Growth of Mass Consumption i n F i j i 38 The O r g a n i z a t i o n of the T h e s i s 47 V Notes 49 CHAPTER 2: INDUSTRIALIZATION IN DEVELOPING COUNTRIES 52 The H i s t o r i c a l Context 53 The L e v e l , S t r u c t u r e , and O r g a n i z a t i o n of the T h i r d World I n d u s t r i a l Economy 58 Le v e l 58 S t r u c t u r e 67 Org a n i z a t i o n 69 The Role of the State 75 The P r e - C a p i t a l i s t and Small-Scale I n d u s t r i a l Sector 86 The I n t e r n a t i o n a l Context of I n d u s t r i a l i z a t i o n in Developing C o u n t r i e s 88 Si z e of Countries and I n d u s t r i a l i z a t i o n 91 Conclusions 97 Notes 100 CHAPTER 3: THEORETICAL APPROACHES TO THIRD WORLD INDUSTRIALIZATION 101 I n t r o d u c t i o n 101 I n d u s t r i a l Geography 102 N e o c l a s s i c a l Economic Approach 111 Marxi sm 118 Dependency 128 Conclusions 136 Notes 140 v i CHAPTER 4: THE INCORPORATION OF FIJI INTO THE INTERNATIONAL ECONOMIC SYSTEM 142 Contact with the World System 143 Di s c o v e r y , E x p l o r a t i o n , and Casual Contact 144 I n t e n s i f i c a t i o n i n Contact: the Merchant C a p i t a l Phase 145 European Settlement and E a r l y C a p i t a l i s t Production 148 The Cession of F i j i 152 C o l o n i a l i s m 153 The Development of C a p i t a l i s t E n t e r p r i s e i n F i j i 156 The Emergence of the C o l o n i a l Sugar R e f i n i n g Company L i m i t e d and the Rise of Large Scale C a p i t a l 158 The Development of the Urban I n d u s t r i a l Economy 165 The C o l o n i a l State and I n d u s t r i a l i z a t i o n 174 Conclusions 181 Notes 183 CHAPTER 5: FIJI'S CONTEMPORARY MANUFACTURING ECONOMY: STRUCTURE AND ORGANIZATION 185 The Level and S i g n i f i c a n c e of Manufacturing Production 185 I n d u s t r i a l S t r u c t u r e 187 Types of Manufacturing A c t i v i t i e s 187 Nature of Manufacturing 193 Number and S i z e of E s t a b l i s h m e n t s 196 Number and S i z e of Firms 199 Conc e n t r a t i o n 206 V e r t i c a l and H o r i z o n t a l I n t e g r a t i o n 215 Mergers and Takeovers 219 v i i F a c t o r U t i l i z a t i o n 223 O r g a n i z a t i o n of the I n d u s t r i a l Economy 232 Conc l u s i o n s 239 Notes 243 CHAPTER 6: THE MANUFACTURING SECTOR OF F I J I : CHARACTERISTICS OF MANUFACTURING FIRMS ESTABLISHMENTS 2 44 H i s t o r i c a l Background of Firms 244 Burns P h i l p 246 Motibhai and Company L i m i t e d 249 Cheer I n d u s t r i e s L i m i t e d 256 I n d u s t r i a l Plant and Operating C h a r a c t e r i s t i c s 261 F e a s i b i l i t y Studies 261 The S e t t i n g up of E s t a b l i s h m e n t s and I n i t i a l Machinery 263 Ca p a c i t y U t i l i z a t i o n 274 Marketing i n the Manufacturing Sector 282 The Supply of Raw M a t e r i a l s 282 Marketing the Output 284 Marketing Problems 290 Manufacturing Labour Force 291 The P a t t e r n of Employment 291 Firm A _ 303 Firm B 304 Firm C 304 Future Plans 307 v i i i C o n c l u s i o n s 308 Notes 314 CHAPTER 7: FIJI'S CONTEMPORARY MANUFACTURING SECTOR: INTERNAL AND EXTERNAL LINKAGES 316 I n t r o d u c t i o n 316 Intra-Manufacturing L i n k s i n F i j i 317 Manufacturing and the N a t i o n a l Economy 322 Manufacturing and the N a t i o n a l Economy: A Synoptic View 324 Manufacturing and Employment 333 Manufacturing and the Gross Domestic Product 335 Manufacturing and the U t i l i t i e s Sector 339 Manufacturing and Government Revenue 341 Manufacturing Sector and T r a i n i n g 343 Manufacturing and Fo r e i g n Exchange 344 Manufacturing and Innovation 353 Conclusions 356 CHAPTER 8: THE CONTEMPORARY MANUFACTURING ECONOMY OF F I J I : LOCATION 359 The L o c a t i o n of Manufacturing A c t i v i t i e s in F i j i 360 The Primacy of Suva i n F i j i ' s Urban System 362 The Chief L o c a t i o n a l F a c t o r s i n F i j i a n Manufacturing 368 L o c a t i o n a l S t a b i l i t y and M o b i l i t y in F i j i 382 P u b l i c P o l i c i e s on L o c a t i o n 385 Con c l u s i o n s 390 ix Notes . 393 CHAPTER 9: THE STATE AND INDUSTRIALIZATION IN F I J I 395 I n t r o d u c t i o n 395 The E v o l u t i o n of Government P o l i c i e s on I n d u s t r i a l i z a t i o n 397 The State i n D i r e c t Production i n the Manufacturing Sector 414 The State and the Manufacturing S e c t o r : E v a l u a t i o n s by Manufacturers 424 The Investment Climate in F i j i 425 The Role of For e i g n C a p i t a l i n F i j i i n the Future 432 Assessment of Government Departments and S e r v i c e s 436 Conclusions 441 Notes 446 CHAPTER 10: CONCLUSIONS 447 The Study i n a Wider T h e o r e t i c a l Context 464 Prospects f o r the Future of I n d u s t r i a l i z a t i o n i n F i j i 472 Notes 481 REFERENCES CITED 482 APPENDIX 516 Appendix 1 516 Appendix 2 527 X LIST OF TABLES TABLE PAGE 1.1 Procedures for A l l o c a t i o n of Interviews to Manufacturing Establishments w i t h i n the ISIC Groups Using the 1980 Census of I n d u s t r i e s Data 15 1.2 The S t r u c t u r e of F i j i ' s Economy : Economically A c t i v e P o p u l a t i o n Aged F i f t e e n Years and Over by I n d u s t r y , 1976 34 1.3 The S t r u c t u r e of F i j i ' s GDP by O r i g i n , 1980 ($F000) 35 1.4 The Gross Domestic Product of F i j i , 1950-1981 36 1.5 D a i l y Mean Wages in F i j i , 1965-1982 41 1.6 The P a t t e r n of Urban F o r t n i g h t l y Household Expenditure i n F i j i , 1968, 1973, and 1977 44 1.7 The P a t t e r n of Weekly Urban Household Expenditure in F i j i by Income Groups, 1977 45 2.1 The Share of Manufacturing i n GDP (at Current Factor Cost) of Developing C o u n t r i e s by Regions 59 2.2 Share in World Exports of Manufactures and i n World Manufacturing Value Added by Country Groups, 1960-1980 (Percentage) 60 2.3 The D i s t r i b u t i o n of Manufacturing Value Added in Developing C o u n t r i e s i n 1981 i n 1975 $US M i l l i o n s 62 2.4 I n d u s t r i a l i z a t i o n in Developing C o u n t r i e s : The Key C o u n t r i e s 65 2.5 Unweighted S t r u c t u r e of Net Manufacturing of Developing C o u n t r i e s for S e l e c t e d Years and Economic Groupings (Percentage) 68 2.6 The D i s t r i b u t i o n of Stock of D i r e c t F o r e i g n Invest-ment i n Developing C o u n t r i e s , 1978 ($US M i l l i o n ) 71 2.7 Stock of D i r e c t F o r e i g n Investment in S e l e c t e d Developing C o u n t r i e s , Late 1970's ($US M i l l i o n ) 74 X 1 2.8 The Share of TNCs in Export of Manufactures of S e l e c t e d Developing C o u n t r i e s , V a r i o u s Years (Percentage) 74 4.1 Urban Population Growth in F i j i , 1911-1966 168 4.2 Economically A c t i v e Urban P o p u l a t i o n Aged 15 Years and Over by I n d u s t r i a l C l a s s i f i c a t i o n , 1976 172 4.3 The S t r u c t u r e of the Manufacturing Sector of F i j i , 1968: Number of E s t a b l i s h m e n t s , Employees, and Gross Output 175 5.1 The S t r u c t u r e of Manufacturing in F i j i , 1981 188 5.2 The C o n t r i b u t i o n of ISIC Groups to Value Added and Gross Output in F i j i , 1981 190 5.3 The S t r u c t u r e of Manufacturing Production by Value Added ($F000 in 1972 Constant P r i c e s ) and Employ-ment, 1978 192. 5.4 The Most Important Output of the E s t a b l i s h m e n t s Interviewed 194 5.5 The Nature of Manufacturing i n F i j i , 1983 195 5.6 Number of Persons Engaged by Manufacturing Establishments in F i j i , 1981 197 5.7 D i s t r i b u t i o n of Persons Engaged in Manufacturing E s t a b l i s h m e n t s , 1983 198 5.8 Labour Force S i z e and C o n t r i b u t i o n to Employment and Gross Output, 1983 200 5.9 The L e v e l of C o n c e n t r a t i o n i n F i j i a n M anufacturing, 1981 209 5.10 Presence of Monopolies and O l i g o p o l i e s i n F i j i a n Manufacturing 210 5.11 P a r t i c i p a t i o n of F i j i a n Manufacturing Firms in Non-Manufacturing A c t i v i t i e s i n F i j i , 1983 217 5.12 C a p i t a l to Output R a t i o and C a p i t a l to Person Engaged i n F i j i a n M a n u f a c t u r i n g , 1981 225 5.13 Value Added per Person Engaged and per D o l l a r of Employee Compensation, 1981 227 x i i 5.14 Value Added Less Employee Compensation per Employee, 1981 230 5.15 Labour Share of Manufacturing Value Added in F i j i , 1981 231 5.16 Legal Forms of O r g a n i z a t i o n of Manufacturing Firms in F i j i , 1983 238 6.1 The H i s t o r y of Manufacturing Firms i n F i j i : Data from the Survey of Manufacturers in F i j i , 1983 259 6.2 The P e r i o d of I n c o r p o r a t i o n of Manufacturing Firms in F i j i : Data from the R e g i s t r a r of Companies 261 6.3 The Degree and Nature of F e a s i b i l i t y S t u d i e s in Manufacturing Establishments i n F i j i 262 6.4 I n i t i a l Machinery of Manufacturing Establishments in F i j i 265 6.5 The Replacement Cost of (New) Machinery i n Manufacturing Establishments i n F i j i , 1983 267 6.6 The Nature of Machinery Purchase D e c i s i o n Among F i j i a n Manufacturers, 1983 269 6.7 The A c q u i s i t i o n of the Production Know-How i n Manufacturing i n F i j i 271 6.8 The Degree of Capacity U t i l i z a t i o n i n F i j i a n Manufacturing Establishments Using Method A 276 6.9 The Degree of Capacity U t i l i z a t i o n in F i j i a n Manufacturing Establishments Using Method B 277 6.10 Reasons Given by Manufacturers for the Low Degree of C a p a c i t y U t i l i z a t i o n i f Capacity Could be Increased by 25 Percent or More 279 6.11 Arrangements f o r the Supply of Raw M a t e r i a l s to Manufacturing Establishments in F i j i 284 6.12 The Arrangements f o r the Marketing of Manufactured Outputs i n F i j i 285 6.13 The Age S t r u c t u r e of Employees in F i j i , 1982 294 6.14 Hourly Mean Wages of Wage Earners by Industry Groups i n Cents, 1960-1982 296 XI 1 1 6.15 Average Wages in Manufacturing in S e l e c t e d Developing C o u n t r i e s , 1976 ($US) 6.16 Job C l a s s i f i c a t i o n of Firm B's Labour F o r c e , 1983 6.17 The Employment Pa t t e r n i n a Large Manufacturing Firm i n F i j i 6.18 The Future I n t e n t i o n s of Manufacturing Establishments i n F i j i 6.19 Methods of In c r e a s i n g Future Output i n F i j i a n Manufacturing Establishments 7.. 1 Percent of F i r s t and Second Most Important Raw M a t e r i a l s Derived from F i j i 7.2 Intra-Manufacturing Linkages i n F i j i , 1980: Use of Input in $F000 Factor Cost in 1980 P r i c e s 7.3 The D i s p o s a l of the Output of the Manufacturing S e c t o r , 1980 ($F000) at Factor Cost 7.4 The L i n k s of the Manufacturing Sector with the N a t i o n a l Economy: Input and Output R e l a t i o n s , F a c t o r Cost ($F000), 1980 P r i c e s 7.5 The Output M u l t i p l i e r s of Manufacturing A c t i v i t i e s in F i j i , 1980 7.6 D i r e c t and I n d i r e c t Employment Linkages i n the F i j i a n Economy 7.7 Gross Domestic Product at Factor Cost by Economic S e c t o r , 1950-1970 i n Current P r i c e s ($F M i l l i o n ) with Percentage Share i n Parent h e s i s 7.8 Real Output per Worker i n Some Manufacturing I n d u s t r i e s i n F i j i , S e l e c t e d Years 7.9 The Output and Export O r i e n t a t i o n of the Manufacturing S e c t o r , 1980 7.10 Exports of the Manufacturing S e c t o r , 1982 7.11 The Export Performance of I m p o r t - S u b s t i t u t i n g Manufacturing i n F i j i , 1970-1983 7.12 Composition of Imports by SITC S e c t i o n (Percentage) x i v 7.13 F o r e i g n Exchange Costs of Manufactured Exports i n F i j i , 1980 354 8.1 F i j i ' s Urban H i e r a r c h y , 1976 365 8.2 Reasons Why F o r e i g n Investment was Made i n F i j i 372 8.3 Reasons f o r Choice of L o c a t i o n of Manufacturing Establishments i n F i j i , 1983 380 8.4 Number of Years at Current L o c a t i o n of Manufacturing E s t a b l i s h m e n t s ' 383 8.5 L o c a t i o n a l l y - C o n s c i o u s Concessions P o l i c y Towards the Manufacturing S e c t o r , 1976-1980 389 9.1 P a r t i c u l a r s of Government E q u i t y i n the Manufacturing S e c t o r , 1983 415 9.2 Reasons f o r I n d i c a t i n g F i j i Has a Good Investment Climate 427 9.3 Reasons Behind a Negative E v a l u a t i o n of F i j i ' s Investment Climate 428 9.4 Reasons Why the Government's Manufacturing P o l i c i e s are Considered I n e f f e c t i v e 436 9.5 E v a l u a t i o n of Government Departments and Semi-Government O r g a n i z a t i o n s by Manufacturers, 1983 437 9.6 The Awareness, Use, and E v a l u a t i o n by Manufacturers of Key Government S e r v i c e s to the Manufacturing S e c t o r , 1983 439 XV LIST OF FIGURES FIGURE PAGE 1.1 F i j i ' s S e t t i n g in the World 27 1.2 A General L o c a t i o n Map of F i j i 28 1.3 The Number of V e h i c l e s R e g i s t e r e d in F i j i , 1960-1983 . 43 3.1 Amin's Model of Accumulation i n Central/Core C o u n t r i e s and in P e r i p h e r a l S o c i a l Formations 132 5.1 The S t r u c t u r e of the Carpenter South P a c i f i c Group, 1983 202 5.2 Group S t r u c t u r e of Burns P h i l p (South Sea) Company L i m i t e d 204 5.3 The Corporate S t r u c t u r e of Motibhai and Company L i m i t e d 206 7.1 I n t e r n a l Linkages w i t h i n the I n d u s t r i a l Sector in F i j i , 1983 323 7.2 Employment in Manufacturing i n F i j i , 1971-1982 334 7.3 Some of the Major Inputs i n t o the Manufacturing S e c t o r , 1981 342 8.1 Manufacturing Employment i n F i j i , 1979 361 8.2 D i s t r i b u t i o n of Manufacturing Establishments i n F i j i , 1983 363 8.3 D i s t r i b u t i o n of Gross Output of Manufacturing ($F000) i n F i j i , 1983 364 8.4 I n d u s t r i a l S u b d i v i s i o n s i n F i j i , 1983 378 x v i ACKNOWLEDGEMENTS I have become deeply indebted to a number of org a n i z a -t i o n s and i n d i v i d u a l s in the p r e p a r a t i o n of t h i s t h e s i s . The U n i v e r s i t y of the South P a c i f i c granted me leave to undertake the program and extended the leave to enable me to complete my s t u d i e s . The I n t e r n a t i o n a l Development Research Centre of Ottawa, Canada, generously funded the f i e l d w o r k , and the Cana-dian government, through i t s Commonwealth S c h o l a r s h i p P l a n , has met the cost of my s t u d i e s . I am very g r a t e f u l to a l l these o r g a n i z a t i o n s . The Department of Geography of the U n i v e r s i t y of B r i t i s h Columbia has provided an s t i m u l a t i n g environment f o r the l a s t four y e a r s . P r o f e s s o r T e r r y McGee, my s u p e r v i s o r , has been a constant source of encouragement, guidance, and c r i t i c i s m and I am most g r a t e f u l to him. The other members of my D i s s e r t a t i o n Committee, P r o f e s s o r Marwyn Samuels of the Department of Geog-raphy and P r o f e s s o r C y r i l Belshaw, of the Department of Anthro-pology and S o c i o l o g y , have been very h e l p f u l i n the p r e p a r a t i o n of the t h e s i s , and I g r a t e f u l l y acknowledge t h e i r a s s i s t a n c e . I am a l s o indebted to the Head of the Department of Geography, P r o f e s s o r Olav Slaymaker, f o r h i s a s s i s t a n c e and i n t e r e s t i n my s t u d i e s . Raymond Torchinsky p r o v i d e d a s s i s t a n c e when needed and I am g r a t e f u l to him. In F i j i , most thanks go to the manufacturers who gave of xv i i t h e i r time so ge n e r o u s l y . The F i j i C e n t r a l Planning O f f i c e p rovided o f f i c e space d u r i n g f i e l d w o r k , and helped i n many other ways. I would l i k e to e s p e c i a l l y thank Mr Jayant Prakash and John Samy for t h e i r i n t e r e s t and a s s i s t a n c e . I a l s o r e c e i v e d s u b s t a n t i a l a s s i s t a n c e from the f o l l o -wing i n d i v i d u a l s to whom I wish to record my thanks: K a l i v a t i Bakani; Sheik Basha; Michael Chand; Vinoo Dayal; Nand Kis h o r e ; Dhirendra Kumar; J a i n d r a Kumar; Varma Nand; Harry Narayan; Mrs Saras Narayan; Mrs Barbara N a i s o r o ; V i l l i a m e Navoka; Devendra P a t h i k ; the l a t e Dr and Mrs Prem Prasad; V i j e n d r a Prasad; Ram Deo Prasad; Ken Roberts; C. R. Rattan; David S i x t o n ; and T a i t o Waqa. As i n a l l my p r e v i o u s work, my w i f e , Dharma, has been an i n v a l u a b l e source of encouragement and p r a c t i c a l a s s i s t a n c e . She prepared the diagrams f o r the t h e s i s . I am more g r a t e f u l to her than t h i s acknowledgement of g r a t i t u d e can convey. 1 CHAPTER 1 RESEARCH AIMS, METHODOLOGY, AND STUDY AREA T h i s study aims to examine the i n d u s t r i a l i z a t i o n1 of F i j i i n terms of the development of the manufacturing sector and i t s contemporary s t r u c t u r e and o r g a n i z a t i o n . A secondary aim of the study i s to examine how the s i z e of a country and i t s dependence on the i n t e r n a t i o n a l economic system a f f e c t s t r a t e g i e s of i n d u s t r i a l i z a t i o n . Research Questions and S i g n i f i c a n c e of the Study T h i s study attempts to answer s e v e r a l q u e s t i o n s that c o l l e c t i v e l y seek to i l l u m i n a t e the contemporary manufacturing economy of F i j i and the processes that have shaped the pa t t e r n of i n d u s t r i a l i z a t i o n i n F i j i . A p u r e l y hypothesis based inves-t i g a t i o n was not thought to be a p p r o p r i a t e i n t h i s case given the e x p l o r a t o r y nature of the r e s e a r c h . The questions that guide t h i s study a r i s e out of a c o n s i d e r a t i o n of F i j i as a country with a small market, remote from the main c e n t r e s of p r o d u c t i o n and consumption i n North America, Europe, and Japan, and h i g h l y dependent on other c o u n t r i e s f o r the importa t i o n of most of i t s requirements and exports of i t s p r o d u c t s . While not c e n t r a l q u e s t i o n s , the study w i l l a l s o attempt to shed l i g h t on i s s u e s such as how the s i z e of a c o u n t r y , and i t s dependence on the i n t e r n a t i o n a l economic system a f f e c t i t s i n d u s t r i a l i z a t i o n , and whether F i j i ' s indus-t r i a l i z a t i o n experience i s unique to i t s resource c o n f i g u r a -t i o n , p a t t e r n of i n c o r p o r a t i o n i n t o the i n t e r n a t i o n a l economic 2 system, and the nature of p u b l i c p o l i c i e s . The t h e s i s has four p a r t s , each of which has a set of qu e s t i o n s g u i d i n g data c o l l e c t i o n a n d - a n a l y s i s . The f i r s t p a r t of the t h e s i s o u t l i n e s the t h e o r e t i c a l background and e m p i r i c a l data on T h i r d World i n d u s t r i a l i z a t i o n that are necessary f o r 2 the examination of F i j i a n manufacturing. The three questions that t h i s s e c t i o n answers are: 1. What are the major t h e o r e t i c a l approaches to the a n a l y s i s of T h i r d World i n d u s t r i a l i z a t i o n ? 2. How does the F i j i a n i n d u s t r i a l i z a t i o n experience r e l a t e to these approaches? 3. What are the p a t t e r n s of contemporary i n d u s t r i a l i z a t i o n i n the T h i r d World? The second part of the t h e s i s i s concerned with the h i s t o r i c a l dimensions of F i j i a n i n d u s t r i a l i z a t i o n . The major qu e s t i o n g u i d i n g t h i s s e c t i o n i s : 4 . How was F i j i i n c o r p o r a t e d i n t o the i n t e r n a t i o n a l economic system, and how d i d the nature of the i n c o r p o r a t i o n a f f e c t i t s i n d u s t r i a l i z a t i o n ? A s u b s i d i a r y q u e s t i o n i n t h i s s e c t i o n i s : 4.1 How d i d c o l o n i a l i s m a f f e c t i n d u s t r i a l i z a t i o n in F i j i ? F i j i ' s contemporary manufacturing s e c t o r i s the concern of the t h i r d and the most important p a r t of the t h e s i s . Four q u e s t i o n s are answered i n t h i s s e c t i o n : 5. What i s the s t r u c t u r e of F i j i ' s contemporary manufacturing s e c t o r i n terms of the types of economic a c t i v i t y , number and 3 types of manufacturing establishments and firms, degree of concentration, v e r t i c a l and horizontal integration, firm diver-s i f i c a t i o n , factor u t i l i z a t i o n , and ownership and organiza-tion? 6. What are the other most salient c h a r a c t e r i s t i c s of the manufacturing sector of F i j i in terms of the h i s t o r i c a l bac-kground of manufacturing firms, c h a r a c t e r i s t i c s of i n d u s t r i a l plant, u t i l i z a t i o n of capacity, marketing arrangements, and the nature of manufacturing employment? 7. What is the extent and nature of internal and external linkages of the manufacturing sector? 8. What i s the pattern of location in the manufacturing sector, and how can one explain the contemporary pattern of manufactu-ring location ? The last part of the thesis i s concerned with the a c t i -v i t i e s of the state as they relate, to the manufacturing sector. The two main questions answered in thi s section are: 9. What i s the nature and extent of governmental involvement in the manufacturing sector? 10. What development strategies have been adopted since indepe-ndence and what role has i n d u s t r i a l i z a t i o n played in the ove-r a l l development strategy? Prosperity, increased control of the natural environ-ment, technological advance, and s c i e n t i f i c progress have a l l been almost synonymous with i n d u s t r i a l i z a t i o n in the last two centuries (Deane, 1965:1; Thomas, 1974:177). It i s not su r p r i -sing, then, that i n d u s t r i a l i z a t i o n has become a central focus 4 of development theory and p l a n n i n g . As Deane (1965:1) p o i n t s out, " I t i s now almost an axiom of economic development that the route to a f f l u e n c e l i e s by the way of an i n d u s t r i a l r e v o l u -t i o n . " I n d u s t r i a l i z a t i o n has a l s o been h i s t o r i c a l l y l i n k e d with n a t i o n a l p r i d e , m i l i t a r y s t r e n g t h , and s o c i a l i s t transforma-t i o n . For these reasons, most p r e s e n t l y n o n - i n d u s t r i a l i z e d s o c i e t i e s have adopted i n d u s t r i a l i z a t i o n as simultaneously a major development s t r a t e g y and goal (Brandt et a l . , 1980; Dickenson, 1978; Donges, 1976; Donges and Kasper, 1971; Hamil-ton [ E d ] , 1978; Hamilton and Linge [ E d s ] , 1979, 1981; Kemp, 1983; Mountjoy, 1975, [ E d ] , 1978; Rweyemamu, 1973, [ E d ] , 1980; Unit e d Nations I n d u s t r i a l Development O r g a n i z a t i o n [UNIDO], 1979a,b, 1980a). F i j i has not been as committed to an i n d u s t r i a l t r a n s f o -rmation as many c o u n t r i e s of the T h i r d World, such as Taiwan, 4 South Korea, Hong Kong, Singapore, B r a z i l , or India . Neverthe-l e s s , F i j i has attempted to d i v e r s i f y the narrow economic base bequeathed i t by Great B r i t a i n ( see, f o r i n s t a n c e , F i j i C e n t r a l Planning O f f i c e , 1970, 1975, 1980 f o r accounts of these d i v e r -s i f i c a t i o n e f f o r t s ) . Although the primary emphasis i n F i j i ' s d i v e r s i f i c a t i o n program has been the development of a broader-based a g r i c u l t u r a l system, and the development of tourism as a major a l t e r n a t i v e source of both employment and f o r e i g n exchan-ge (on t o u r i s m , see B r i t t o n , 1979; D e s a i , 1973; V a r l e y , 1977), the government has attempted to i n d u s t r i a l i z e F i j i , concentra-t i n g on areas that complement F i j i ' s primary s e c t o r . The ef-f o r t s to i n d u s t r i a l i z e F i j i have been stepped up i n the l a s t 5 few y e a r s , and i n d u s t r i a l i z a t i o n i s a major component of the government's present development s t r a t e g y . The s t u d y , then, d e a l s with a t o p i c of c o n s i d e r a b l e s i g n i f i c a n c e to F i j i . The process of i n d u s t r i a l i z a t i o n in F i j i has been par-t i a l l y analysed by Prakash (1982). Prakash's study i s a u s e f u l f i r s t study of i n d u s t r i a l i z a t i o n i n F i j i , and p r o v i d e s an overview of the i n c o r p o r a t i o n of F i j i i n t o the i n t e r n a t i o n a l economic system, and of the e v o l u t i o n of p u b l i c p o l i c i e s r e l a -t i n g to i n d u s t r i a l i z a t i o n i n F i j i . The study, however, focusses mainly on the h i s t o r i c a l e v o l u t i o n of the manufacturing s e c t o r in F i j i w i t h i n a dependency framework, and does not c o n c e n t r a t e on the o r g a n i z a t i o n and s t r u c t u r e of the contemporary manufac-t u r i n g s e c t o r . The F i j i Employment and Development M i s s i o n , which began to i n v e s t i g a t e avenues for i n c r e a s e d employment g e n e r a t i o n in F i j i in August 1982 ( F i j i Employment and Development M i s s i o n [FEDM], I984:preface 1), a l s o examined the manufacturing s e c t o r to the extent that i t examined a l l s e c t o r s of the F i j i a n econo-my. However, the f i n a l report of the M i s s i o n c o n t a i n s only a few pages on the manufacturing s e c t o r , and c o n c e n t r a t e s on how the performance of the manufacturing s e c t o r can be im-proved. There are no other s t u d i e s of the manufacturing s e c t o r of F i j i . The t h e s i s represents the f i r s t major, comprehensive a n a l y s i s of the manufacturing economy of F i j i s i t u a t e d i n i t s h i s t o r i c a l c o n t e x t . It should represent an important e v a l u a t i o n of the progress of i n d u s t r i a l i z a t i o n i n F i j i , and by e x t e n s i o n , of p u b l i c p o l i c i e s r e l a t i n g to the manufacturing s e c t o r . In 6 addition, the study should represent a major source of data on the manufacturing sector of F i j i . Given the problems / that government departments concerned with industrialization face in synthesizing the large number of documents relating to indus-t r i a l i z a t i o n , i t is hoped the study will be of value to them as well. Every study in the social sciences i s , however, part of an international body of literature, and the significance of this study goes beyond its usefulness for F i j i . This study straddles two major areas of study--the geography of develop-ment, and the geography of industrialization in the Third World. F i j i is an excellent case study of an isolated, small (in population, land area, and market size), dependent country attempting to move its economy away from its historical r e l i -ance on the primary sector. The study could add to the growing 5 literature on the small scale economies . In particular, it should add additional information to the debate on the effect of size of a country on development. There has also been a major interest in the social science in the issue of dependence (see Chapter 3 for more details on the dependency school). Dependence can take various forms, and can be either direct or indirect (see Chase-Dunn, 1975:721; dos Santos, 1971). Roemer (1981:429) identifies five major kinds of dependence that can be targeted by policy: market dependence, technological dependence, managerial and entrepreneurial dependence, foreign capital dependence, and economic i n f l e x i b i l i t y . Most of these are direct forms of 7 dependence. A country can a l s o experience i n d i r e c t dependence r e s u l t i n g " . . . from a n a t i o n ' s l o c a t i o n i n a r e s t r i c t e d p o s i t i o n i n the world trade network or i t s s p e c i a l i z a t i o n i n a marginal r o l e i n the i n t e r n a t i o n a l d i v i s i o n of labour" (Chase-Dunn, 1975:721). F i j i i s a c l a s s i c case of a dependent s o c i e t y . U n t i l r e c e n t l y , f o r e i g n p r i v a t e investment was the dominant for c e i n the economy. I t s economy i s almost completely dependent on developed c o u n t r i e s f o r the s a l e of n e a r l y a l l of i t s output and f o r the i m p o r t a t i o n of a c o n s i d e r a b l e p o r t i o n of i t s re-quirements. It i s completely dependent on developed c o u n t r i e s for i t s technology, and has become i n c r e a s i n g l y o b l i g a t e d to the i n t e r n a t i o n a l banking system due to i t s r e c e n t l y i n c r e a s i n g i n t e r n a t i o n a l debt. Furthermore, d e s p i t e g a i n i n g p o l i t i c a l independence in 1970, and l o c a l i z i n g the c i v i l s e r v i c e , the government i s s t i l l s t r o n g l y guided by i n t e r n a t i o n a l experts in i t s d e c i s i o n - m a k i n g . T h i s study co u l d thus shed some l i g h t on how a high degree of dependence on the i n t e r n a t i o n a l community helps or hinders a country's development e f f o r t s . T h i s study w i l l a l s o represent an a d d i t i o n to the l i t e -r a t u r e on T h i r d World i n d u s t r i a l i z a t i o n . While there are many s t u d i e s in i n d u s t r i a l geography d e a l i n g with i n d u s t r i a l l o c a -t i o n , i n d u s t r i a l geography has been d e f i c i e n t i n p r o v i d i n g i n -depth a n a l y s e s of the manufacturing s e c t o r s of developing coun-t r i e s , and t h i s study w i l l attempt to f i l l t h i s research l a c u -6 na. 8 The Scope of the Study The study i s mainly c o n f i n e d to the l i c e n s e d and i n c o r -porated firms i n the manufacturing s e c t o r . Output from the u n l i c e n s e d e s t a b l i s h m e n t s , in F i j i ' s case l i m i t e d to house-h o l d s , t h e r e f o r e f a l l o u t s i d e the scope of t h i s study. Although the u n l i c e n s e d manufacturing sector tends to be a major component of the n a t i o n a l manufacturing economies of many developing c o u n t r i e s , s p e c i a l l y in South and Southeast A s i a • (see, for i n s t a n c e , the f o l l o w i n g : Bromley and G e r r y , 1979; Cook, 1984; G e r r y , 1974, 1979; K i n g , 1979; McGee, 1973; McGee and Yeung, 1977; Moser and Marsie-Hazen, 1984; S c o t t , 1979), the u n l i c e n s e d manufacturing s e c t o r i n . F i j i i s r e l a t i v e -l y i n s i g n i f i c a n t . Although more d e t a i l s of the u n l i c e n s e d manu-f a c t u r i n g sector i n F i j i are l e f t to Chapter 5, where the " i n f o r m a l s e c t o r " , f r e q u e n t l y used synonymously with the u n l i -cenced s e c t o r , i s more f u l l y d i s c u s s e d , we can note here that i n 1976, a year f o r which complete data on the manufacturing s e c t o r are a v a i l a b l e from the p o p u l a t i o n census, 91 percent of a l l people engaged i n manufacturing were i n the l i c e n s e d s e c t o r ( c a l c u l a t e d from F i j i Bureau of S t a t i s t i c s , 1978:11; L o d h i a , 1977:515). In t o t a l output, the u n l i c e n s e d manufacturing s e c t o r in F i j i , as elsewhere, i s much s m a l l e r . The u n l i c e n s e d manufac-t u r i n g s e c t o r i n F i j i mainly i n v o l v e s curio-goods p r o d u c t i o n for the t o u r i s t i n d u s t r y , and small s c a l e f u r n i t u r e making i n r u r a l a r e a s . The C e n t r a l Concepts of the Study Defined Since the terms manufacturing, i n d u s t r i a l , and indus-9 t r i a l i z a t i o n are c e n t r a l to t h i s study, and given that these terms are f r e q u e n t l y used d i f f e r e n t l y , i t i s necessary ' to d e f i n e these terms. The term manufacturing i s used i n t h i s study as r e p r e s e n t i n g the I n t e r n a t i o n a l Standard I n d u s t r i a l 7 C l a s s i f i c a t i o n of A l l Economic A c t i v i t i e s (ISIC) category 3. The d e f i n i t i o n of manufacturing employed by the U n i t e d Nations i s used in t h i s study: Manufacturing i s d e f i n e d as the mechanical or chemical t r a n s f o r m a t i o n of i n o r g a n i c or organic substance i n t o new products whether the work i s performed by hand, whether i t i s done in a f a c t o r y or in a worker's home, and whether the products are s o l d wholesale or r e t a i l (United N a t i o n s , 1971:28). The use of t h i s widely accepted d e f i n i t i o n of manufacturing w i l l h elp maintain c o m p a r a b i l i t y with other s t u d i e s as w e l l as enable data to be used from i n t e r n a t i o n a l a g e n c i e s , such as the U n i t e d Nations system, the World Bank, and the I n t e r n a t i o n a l Monetary Fund. The term i n d u s t r y i s used i n t h i s study i n i t s every-day s e n s e — t o denote s i m i l a r economic a c t i v i t i e s . In p a r t i c u l a r , i t r e f e r s to the major d i v i s i o n s 0 to 9 of the ISIC (see United N a t i o n s , 1971:26 f o r a l i s t i n g of the ISIC d i v i s i o n s ) . Thus a g r i c u l t u r e i s an i n d u s t r y and manufacturing i s an i n d u s t r y . At another l e v e l , we can speak of the wine i n d u s t r y , or the sugar i n d u s t r y . The term i n d u s t r i a l means, as i s the custom, ISIC d i v i -s i o n s 2 (mining and q u a r r y i n g ) , 3 (manufacturing), and 4 ( e l e c -t r i c i t y , water, and g a s ) . Thus i n d u s t r i a l i s a more i n c l u s i v e term, always i n c l u d i n g manufacturing. Manufacturing, on the 10 other hand, does not i n c l u d e two of the three components im-p l i e d i n the term i n d u s t r i a l . The term i n d u s t r i a l i z a t i o n a l s o needs d e f i n i t i o n . U n l i k e the p r e v i o u s terms, however, which r e f e r r e d to c a t e g o r i e s , i n d u s t r i a l i z a t i o n r e f e r s to a p r o c e s s . Thus i t i s necessary to d e l i n e a t e what the process i s and what i t e n t a i l s , and how to measure i t s i n c i d e n c e . I n d u s t r i a l i z a t i o n in t h i s t h e s i s w i l l r e f e r to an i n -crease i n the share of the gross n a t i o n a l product c o n t r i b u t e d by the manufacturing s e c t o r . T h i s d e f i n i t i o n r e c o g n i z e s the g d i a l e c t i c a l r e l a t i o n s h i p between i n d u s t r i a l i z a t i o n and the process of development, as pointed out by S u t c l i f f e (1971:3): I n d u s t r i a l i z a t i o n i s i n one sense a process which has been the outcome or accompaniment of economic development. In another sense i n d u s t r i a l i z a t i o n denotes a set of p o l i c i e s which, more than any other broad set of p o l i c i e s , i s seen as a means towards economic development (emphasis i n the o r i g i n a l ) . The process of i n d u s t r i a l i z a t i o n i s , i n i t s broadest sense, a process of s o c i e t a l t r a n s f o r m a t i o n : I t [ i n d u s t r i a l i z a t i o n ] . . . i n p r a c t i c e i n v o l v e s a r a d i c a l t r a n s f o r m a t i o n of s o c i e t y i n a l l i t s a s p e c t s --economic, s o c i a l , p o l i t i c a l , and c u l t u r a l ( S u t c l i f f e , 1971:Ix) . The above q u o t a t i o n emphasizes the m u l t i f a c e t e d nature of the process of i n d u s t r i a l i z a t i o n . D e f i n i t i o n s of i n d u s t r i a -l i z a t i o n that are based on q u a n t i t a t i v e measures r a r e l y do j u s t i c e t o the range of a t t r i b u t e s that are c o n s i d e r e d i n t e g r a l to the process of i n d u s t r i a l i z a t i o n . These i n c l u d e , a c c o r d i n g to Thomas (1974:177-179) , a s i g n i f i c a n t i n c r e a s e i n the share of manufacturing i n the t o t a l output of a country and i n the 11 a b s o r p t i o n of resources; a growth in i n t e r - i n d u s t r i a l t r a n s a c -t i o n s ; a s h i f t i n output in favour of those based on complex technology and c a p i t a l i n t e n s i v e techniques; a r i s e i n the r e l a t i v e p r o d u c t i v i t y per worker i n i n d u s t r y against those in primary and t e r t i a r y s e c t o r s ; a s e l f - s u s t a i n e d r i s e in labour p r o d u c t i v i t y ; spread of i n d u s t r i a l techniques to the r e s t of the economy; and a s h i f t i n a t t i t u d e s and r e l a t i o n s h i p s to m a t e r i a l phenomena. Deane (1965:1) argues in a s i m i l a r v e i n i n d e s c r i b i n g what i s i m p l i e d by an i n d u s t r i a l r e v o l u t i o n : widespread use of s c i e n c e and technology to p r o d u c t i o n ; i n c r e a s i n g s p e c i a l i z a t i o n of economic a c t i v i t y d i r e c t e d to n a t i o n a l and i n t e r n a t i o n a l markets as opposed to f a m i l y and p a r o c h i a l use; a s h i f t to urban settlement; an enlarged and impersonal u n i t of produc-t i o n ; movement of labour from the primary s e c t o r to manufactu-r i n g ; the supplementation and replacement of human e f f o r t by c a p i t a l resources; and the emergence of new s o c i a l and occupa-t i o n a l c l a s s e s based on r e l a t i o n s h i p s to c a p i t a l . The concern of the t h e s i s , however, i s not with the broader l i n k s between the manufacturing s e c t o r and the s o c i e t y at l a r g e ; the t h e s i s i s more sh a r p l y focussed on the manufactu-r i n g s e c t o r . But i t p r o v i d e s the b a s i s for a broader examina-t i o n of i n d u s t r i a l i z a t i o n i n F i j i . The degree or l e v e l of i n d u s t r i a l i z a t i o n can be measured in a number of ways, the most common of which i s the p r o p o r t i o n of the Gross Domestic Product (GDP) c o n t r i b u t e d by the manufac-t u r i n g s e c t o r ( i . e . ISIC d i v i s i o n 3) (Hughes, 1980:20). Some-1 2 times, another measure that looks at the value added in manufa-c t u r i n g as a p r o p o r t i o n of value added in commodity production ( a g r i c u l t u r e , f i s h i n g , f o r e s t r y , mining, manufacturing, power and other u t i l i t i e s , and c o n s t r u c t i o n ) i s a l s o used (Hughes, 1980:20). Another e q u a l l y v a l i d measure of the degree of indus-t r i a l i z a t i o n i s the p r o p o r t i o n of the t o t a l labour fo r c e en-gaged in the i n d u s t r i a l s e c t o r , or i n manufacturing. The process of i n d u s t r i a l i z a t i o n i s much l i k e the pro-cess of u r b a n i z a t i o n i n that one i s i n t e r e s t e d both in the absolute growth of the i n d u s t r i a l sector and i t s growth r e l a -t i v e to the other s e c t o r s . At the heart of the process of i n d u s t r i a l i z a t i o n i s s t r u c t u r a l change in the economy, with output from the manufacturing s e c t o r becoming r e l a t i v e l y more important than other s e c t o r s of the economy. Data Requirements and C o l l e c t i o n The study c a l l e d f o r both q u a l i t a t i v e and q u a n t i t a t i v e data d e r i v e d from f i e l d w p r k i n F i j i , and documentary data from sources from o u t s i d e F i j i . The comparative data on T h i r d World i n d u s t r i a l i z a t i o n was c u l l e d from academic s t u d i e s of T h i r d World i n d u s t r i a l i z a t i o n and from the r e p o r t s of i n t e r n a t i o n a l a g e n c i e s , such as the. I n t e r n a t i o n a l Labour O f f i c e , World Bank, I n t e r n a t i o n a l Monetary Fund, and the United N a t i o n s . Fieldwork i n F i j i was conducted from 3 J u l y , 1983 to 17 December, 1983, and was p a r t i a l l y f i nanced by the I n t e r n a t i o n a l Development Research Centre of Ottawa, Canada. Data c o l l e c t i o n i n F i j i adopted a four-pronged s t r a t e g y , and i s d e s c r i b e d 1 3 below. Survey of Manufacturing Firms and Establishments The F i j i Bureau of S t a t i s t i c s has been conducting annual censuses of i n d u s t r i a l e s t a b l i s h m e n t s s i n c e 1969 using guide-l i n e s p rovided by the United Nations S t a t i s t i c a l O f f i c e . I t had been hoped that the 1981 i n d u s t r i a l census would be ready for p r o c e s s i n g when the f i e l d w o r k began in J u l y , and that I c o u l d c o n f i d e n t i a l l y use p a r t s of the q u e s t i o n n a i r e schedules for a d d i t i o n a l a n a l y s e s . However, the Bureau of S t a t i s t i c s , concer-ned about the impact of such an arrangement on t h e i r ongoing data c o l l e c t i o n , d e c l i n e d my r e q u e s t . I was thus l e f t with the p u b l i s h e d r e s u l t s of the census, although with the promise from the Bureau that they c o u l d p r o v i d e a d d i t i o n a l t a b l e s i f they c o u l d spare the p e r s o n n e l . The main focus of my f i e l d w o r k was a q u e s t i o n n a i r e survey of manufacturing establishments and f i r m s . The survey was intended to be based on a r e p r e s e n t a t i v e sample. The F i j i Bureau of S t a t i s t i c s was approached to see i f use c o u l d be made of the Bureau's master l i s t of manufacturing e s t a b l i s h m e n t s for the study's sampling. However, t h i s too was d e c l i n e d because although the names on the l i s t were p u b l i c knowledge, the d a t a , being c o l l e c t e d under the S t a t i s t i c s A c t , c o u l d not be d i v u l g e d to anyone not an o f f i c e r of the Bureau. I t then became necessary to compile a comprehensive l i s t of manufacturing establishments i n F i j i . Using the telephone d i r e c t o r y , the F i j i Business Guide (1981), a l i s t of the mem-14 bers of the F i j i Manufacturers' A s s o c i a t i o n (FMA) provided by i t s P r e s i d e n t , Mr David S i x t o n , the l i s t of manufacturing firms maintained by the F i j i N a t i o n a l T r a i n i n g Council--which i s very comprehensive, as the C o u n c i l c o l l e c t s a levy from the manufac-t u r e r s , and thus maintains a comprehensive l i s t i n g — t h e F i j i Products Guide i s s u e d by the Economic Development Board, and my own knowledge of the F i j i b u siness scene a l i s t of manufactu-r i n g e s t a b l i s h m e n t s was compiled. T h i s l i s t was d i s c u s s e d with a few people knowledgeable on the t o p i c and the f i n a l l i s t was drawn up. The e n t r i e s were cross-checked and the f i n a l l i s t was a comprehensive one. A sample s i z e of 150 was decided upon. T h i s would have been a 30 percent sample survey of the 495 manufacturing estab-lishments known to e x i s t i n the country i n 1980, the l a t e s t year for which data were a v a i l a b l e at the time of the survey. To r e s o l v e the q u e s t i o n of how to d i s t r i b u t e the 150 i n t e r v i e w s among the manufacturing sub-groups ( I S I C ) , i t was decided to use an index combining the ISIC group's c o n t r i b u t i o n to the t o t a l number of e s t a b l i s h m e n t s , employment, and gross output, using the 1980 census of i n d u s t r i a l p r o d u c t i o n d a t a . The r e s u l -t i n g a l l o c a t i o n i s summarized i n Table 1.1. In t h i s r e s p e c t , i t i s u s e f u l to note that the number of e s t a b l i s h m e n t s , f r e q u e n t l y used as the b a s i s of a l l o c a t i o n of i n t e r v i e w s to the ISIC groups, can be g r o s s l y m i s l e a d i n g because of the wide divergen-ce between the number of e s t a b l i s h m e n t s i n any ISIC group and the c o n t r i b u t i o n of that group to employment or output, and that the composite index, by combining three dimensions of TABLE 1.1 PROCEDURES FOR ALLOCATION OF INTERVIEWS TO MANUFACTURING ESTABLISHMENTS WITHIN THE ISIC GROUPS USING THE 1980 CENSUS OF INDUSTRIES DATA ISIC Group aEstablishments ^ Persons Engaged Gross Output ($F000) Index Number Percent of Total Number Percent of Total in Producer's Value Amount Percent 3111 6 1.21 155 1.18 2239 0.56 0.98 3112-3114 13 2.63 677 5.15 22089 5.53 4.44 3115 4 0.81 190 1.44 14541 3.64 1.96 3116 8 1.61 264 2.01 22938 5.75 3.12 3117 11 2.22 431 3.28 7834 1.96 2.49 3118 4 0.81 4082 31.03 179855 45.06 25.63 3119 9 1.82 213 1.62 2851 0.71 1.38 3121-3122 12 2.42 161 1.22 8432 2.11 1.92 3133/3140 4 0.81 368 2.80 31052 7.78 3.80 3134 12 2.42 226 1.72 3149 0.79 1.64 3220 100 20.20 812 6.17 5012 1.26 9.21 3240 7 1.41 68 0.52 175 0.04 0.66 3311 43 8.69 1055 8.02 13352 3.34 6.68 3312/3319 11 2.22 69 0.52 390 0.10 0.95 3320 77 15.55 638 4.85 7897 1.98 7.46 3418 6 1.21 150 1.14 4423 1.11 1.15 3420 32 6.46 740 5.63 8255 2.07 4.72 3521 4 0.81 111 0.84 4402 1.10 0.92 3523/3525/3529 8 1.61 197 1.50 8103 2.03 1.71 3558 7 1.41 131 1.00 2296 0.58 1.00 3560 13 2.63 184 1.40 4831 1.21 1.75 3698 10 2.02 346 2.63 11789 2.95 2.53 3812/3813 9 1.82 284 2.16 3779 0.95 1.64 3818 33 6.67 561 4.27 18370 4.60 5.18 3822 17 3.43 167 1.27 1197 0.30 1.67 3828 3 0.61 13 0.10 133 0.03 0.25 3838 4 0.81 61 0.46 1118 0.28 0.52 3841 5 1.01 382 2.90 4526 1.13 1.68 3843 6 1.21 208 1.58 2618 0.66 1.15 3908 17 3.43 209 1.59 1517 0.38 1.80 Total 495 99.97 13153 100.00 399163 99.99 99.99 h-1 On is the number of establishments that existed in 1980, not those that reported in response to the question-naire from the Fiji Bureau of Statistics. It is thus a better index for calculating the allocation of interviews. ^he numbers here are actual numbers reported in 1980. TABLE 1.1 (Continued) PROCEDURES FOR ALLOCATION OF INTERVIEWS TO MANUFACTURING ESTABLISHMENTS WITHIN THE ISIC GROUPS USING THE 1980 CENSUS OF INDUSTRIES DATA ISIC Group No. of Est. Est. with Est. with Est. with % of Est. % of Per- % of Gross Index No. of to be >100 persons 50-99 per- >50 per- without sons without Output with- without Est. Chosen sons sons Sugar sugar out Sugar Sugar to be Taken 3111 1 0 0 0 1.22 1.71 1.02 1.32 2 3112-3114 7 2 2 4 2.65 7.45 10.07 6.72 10 3115 3 0 1 1 0.81 2.09 6.63 3.18 5 3116 5 1 1 2 1.63 2.90 10.46 5.00 7 3117 4 1 4 5 2.24 4.74 3.57 3.52 5 3118 38 4 0 4 4 3119 2 1 0 1 1.83 2.34 1.30 1.82 3 3121-3122 3 0 0 0 2.44 1.77 3.84 2.68 4 3133/3140 6 2 0 .2 0.81 4.05 14.16 6.34 9 3134 2 0 1 1 2.44 2.49 1.44 2.12 3 3220 14 2 3 5 20.37 8.93 2.29 10.53 15 3240 1 0 0. 0 1.43 0.75 0.08 0.75 1 3311 10 2 3 5 8.76 11.61 6.09 8.82 13 3312/3319 1 0 0 0 2.24 0.76 0.18 1.06 2 3320 11 1 0 1 15.68 7.02 3.60 8.77 13 3418 2 1 0 1 1.22 1.65 2.02 1.63 2 3420 7 3 1 4 6.52 8.14 3.76 6.14 9 3521 1 0 0 0 0.81 1.22 2.01 1.35 2 3523/3525/3529 3 0 1 1 1.63 2.17 3.69 2.50 4 3558 2 0 2 2 1.43 1.44 1.05 1.31 2 3560 3 0 1 1 2.65 2.02 2.20 2.29 3 3698 4 1 1 2 2.04 3.81 5.38 3.74 5 3812/3813 2 1 1 2 1.83 3.12 1.72 2.22 3 3818 8 0 2 2 6.72 6.17 8.38 7.09 10 3822 3 0 0 0 3.46 1.84 0.55 1.95 3 3828 0 0 0 0 0.61 0.14 0.06 0.27 1 3838 1 0 0 0 0.81 0.67 0.51 0.66 1 3841 3 2 0 2 1.02 4.20 2.06 2.43 4 3843. 2 1 0 1 1.22 2.29 1.19 1.57 2 3908 3 - 1 1 3.46 2.30 0.69 2.15 3 I—1 cn 152° 25 25 50 99.98 99.79 100.00 99.93 150d number comes to 152 because of rounding off. "the number actual came to 149 due to rounding off. Since ISIC 3828 had no firms to be allocated on the basis of its index, and there was space for one additional allocation, it was allocated one establishment. This ensured that all ISIC groups had at' least one establishment in the sample. 1 7 importance, presents a f a r more u s e f u l y a r d s t i c k of importance, and b a s i s f o r i n t e r v i e w a l l o c a t i o n . The q u e s t i o n of how to choose the a c t u a l establishments w i t h i n the ISIC groups s t i l l remained. Convinced that a random sample would not adequately represent the l a r g e r establishments and firms which, although major c o n t r i b u t o r s to both gross output and employment, were small i n number, and thus had a higher chance of being l e f t out, i t was decided to include a l l the manufacturing establishments that employed more than f i f t y people in the sample. I was c o n s c i o u s of the p o s s i b i l i t y that t h i s may r e s u l t i n the o v e r - r e p r e s e n t a t i o n of the l a r g e r estab-l i s h m e n t s , but as i t turned o u t , the share of the l a r g e r firms and e s t a b l i s h m e n t s , based on t h e i r c o n t r i b u t i o n to employment would have been h i g h e r — a p p r o x i m a t e l y s i x t y - n i n e of the 150 e s t a b l i s h m e n t s to be i n t e r v i e w e d . The f a c t that there were only f i f t y e stablishments employing more than f i f t y people i n F i j i at the time of the 1980 census of i n d u s t r i a l p r o duction meant that the survey method d i d not b i a s the sample in i t s attempt to o b t a i n a f a i r r e p r e s e n t a t i o n of the l a r g e r establishments i n the sample. The number of e s t a b l i s h m e n t s employing more than f i f t y people in 1980 was given in the 1980 census of i n d u s t r i a l p r o d u c t i o n ( F i j i Bureau of S t a t i s t i c s , 1983a), and t h i s was noted. From a general knowledge of the s i t u a t i o n , and a s s i s t e d by data from a survey of c l o t h i n g manufacturers by the F i j i C e n t r a l Planning O f f i c e , the e s t a b l i s h m e n t s employing more than f i f t y people were i d e n t i f i e d and used. The r e s t of the e s t a b l i -18 shments w i t h i n the ISIC groups were then s e l e c t e d using a random numbers t a b l e . The q u e s t i o n n a i r e to be used for the survey was d r a f t e d in the Department of Geography at the U n i v e r s i t y of B r i t i s h Columbia, and had been approved by my s u p e r v i s o r , P r o f e s s o r T e r r y McGee, and i t was given to P r o f e s s o r C y r i l Belshaw, the only other member of my D i s s e r t a t i o n Committee at hand at the time. It was r e v i s e d in F i j i , and subsequently given to a number of people in the F i j i C e n t r a l Planning O f f i c e , where I had been a l l o c a t e d o f f i c e space, the F i j i Bureau of S t a t i s t i c s , the M i n i s t r y of Economic Planning and Development, and the U n i v e r s i t y of the South P a c i f i c . T h e i r r e a c t i o n s and comments were i n c o r p o r a t e d in the r e v i s e d q u e s t i o n n a i r e to be used for the p i l o t survey. The r e v i s e d q u e s t i o n n a i r e was used in a p i l o t survey of ten manufacturing e s t a b l i s h m e n t s , both in Suva and in the Western D i v i s i o n . The experience gained during the p i l o t survey was used to modify the q u e s t i o n n a i r e s m a r g i n a l l y , and the data gathered were t r a n s f e r r e d to the f i n a l q u e s t i o n n a i r e s . The f i n a l q u e s t i o n n a i r e c o n s i s t e d of both s t r u c t u r e d q u e s t i o n s , with t h e i r advantage of ease of computer a n a l y s i s , and open-ended que s t i o n s designed to e l i c i t responses from in t e r v i e w e e s without perhaps i n f l u e n c i n g t h e i r responses through p r e - c l a s s i f i c a t i o n . The s t r u c t u r e d q u e s t i o n s had been precoded f o r computer p r o c e s s i n g of d a t a . The q u e s t i o n n a i r e (Appendix 1) contained seventy-seven q u e s t i o n s , some of which were very short (yes/no t y p e ) , and 1 9 some of which were r e l a t i v e l y l o n g . Topics covered i n the q u e s t i o n n a i r e were: F i j i ' s investment c l i m a t e ; government ser-v i c e s and a s s i s t a n c e ; h i s t o r i c a l background of f i r m ; o r g a n i z a -t i o n and ownership of f i r m ; s i z e of f i r m ; l o c a t i o n of a l l manufacturing establishments owned by the f i r m concerned or i t s ho l d i n g or s u b s i d i a r y companies; range of economic a c t i v i t i e s of f i r m ; nature of manufacturing a c t i v i t i e s ; i n d u s t r i a l p l a n t and o p e r a t i n g c h a r a c t e r i s t i c s ; marketing arrangements; f u t u r e p l a n s ; and the labour p r o c e s s . The manufacturing establishments in the sample were sent a l e t t e r from me i d e n t i f y i n g m y s e l f , o u t l i n i n g my r e s e a r c h , and seeking t h e i r c o - o p e r a t i o n . Although r e p l i e s from the e s t a b l i s -hments had not been sought, many establishments wrote to i n d i -cate t h e i r readiness to co-operate in the study. The study had a l s o been d i s c u s s e d with the D i r e c t o r of F i j i Employers' C o n s u l t a t i v e A s s o c i a t i o n (FECA), Mr Ken Ro-b e r t s , and with Mr David S i x t o n . Both of them were e n t h u s i a s t i c about the study, and Mr Sixton i n v i t e d me to a t t e n d a meeting of the Executive Committee of the FMA and to present the out-l i n e of my proposed study to h i s members, which I d i d . Mr Sixton subsequently wrote a l e t t e r to h i s members e x p l a i n i n g to them the nature of my r e s e a r c h , and urging them to co-operate with my study. T h i s l e t t e r was i n c l u d e d i n my l e t t e r to the manufacturing establishments a l r e a d y r e f e r r e d t o . The i n t e r v i e w schedules were drawn up a f t e r telephone c o n v e r s a t i o n s with the esta b l i s h m e n t s being i n t e r v i e w e d . Usual-l y , I made the in t e r v i e w arrangements. When t h i s was not p o s s i -20 b l e , when for instance I was i n the Western D i v i s i o n , these arrangements were handled by the Se c r e t a r y to the Department of Geography, U n i v e r s i t y of the South P a c i f i c , Mrs Saras Narayan. The interview l a s t e d an average of one hour, although f r e q u e n t l y more time than t h i s was spent with the interviewees on matters a r i s i n g from the i n t e r v i e w . This e x t r a time, u s u a l l y at the i n v i t a t i o n of the person being i n t e r v i e w e d , r e s u l t e d in the c o l l e c t i o n of u s e f u l q u a l i t a t i v e d a t a , a l l the more u s e f u l because by that time a good rapport had been b u i l t with the i n t e r v i e w e e . I conducted the i n t e r v i e w s i n most c a s e s , although I was a s s i s t e d by a Research A s s i s t a n t , Mr Vinoo Day a.l. Mr D a y a l , an economics and accountancy graduate from the U n i v e r s i t y of the South P a c i f i c , had p r i o r experience of i n t e r v i e w i n g , and had completed a research paper as part of the requirements of h i s degree. Furthermore, Mr Dayal had worked f o r a major business f i r m i n F i j i , and thus proved not only to be knowledgeable on the t o p i c being i n v e s t i g a t e d , but a u s e f u l source of business c o n t a c t s . A l t o g e t h e r only 108 i n t e r v i e w s were completed. T h i s was short of the 150 i n t e r v i e w s planned, but was adequate f o r the study because i t s t i l l r epresented a r e p r e s e n t a t i v e 25 percent sample. Two of the forty-two establishments th a t c o u l d not be i n t e r v i e w e d had r e f u s e d to be i n t e r v i e w e d , four had been absor-bed i n company r e - o r g a n i z a t i o n s or mergers, and ten e s t a b l i s -hments had ceased to o p e r a t e . Of the remaining twenty-four 21 e s t a b l i s h m e n t s , eight c o u l d not be l o c a t e d i n the f i e l d , seven were v i s i t e d but i n t e r v i e w s c o u l d not be conducted because t h e i r key personnel were not at hand, and nine e s t a b l i s h m e n t s were not approached because of time c o n s t r a i n t s . The i n t e r v i e w schedule was upset because of my i l l n e s s f o r a f o r t n i g h t . An examination of the data used to draw up the sample i n d i c a t e s that there i s no reason to b e l i e v e that the non-i n c l u s i o n of these forty-two establishments b i a s e s the sample with regard to l o c a t i o n , s i z e , or ownership. Only one of these establishments was l a r g e , employing more than f i f t y p e o p l e . Where more than one establishment was i n t e r v i e w e d belon-ging to the same f i r m , the i n f o r m a t i o n on the f i r m was f i l l e d only once to avoid d u p l i c a t i o n . The response r a t e f o r the survey was extremely good; only two i n t e r v i e w s were c a n c e l l e d because of management r e l u c -t a n c e . The response was judged to be very good a l s o because of the enthusiasm shown by most of the f i r m s ; there were many in s t a n c e s of i n v i t a t i o n s to spend more time with them i f the need a r o s e . Survey of Records in the R e g i s t r a r of Companies' O f f i c e The R e g i s t r a r of Companies of F i j i i s r e q u i r e d to main-t a i n a r e g i s t e r of a l l companies o p e r a t i n g i n F i j i , whether i n c o r p o r a t e d i n F i j i or o v e r s e a s . Companies are d e f i n e d simply as business u n i t s r e g i s t e r e d under the Companies Act; t h i s means a l l types of business o r g a n i z a t i o n s except c o - o p e r a t i v e s , s o l e p r o p r i e t o r s h i p s , and p a r t n e r s h i p s . Since most of the manu-f a c t u r i n g establishments i n F i j i are owned by f i r m s incorpo-22 r a t e d under the Companies A c t , the R e g i s t e r of Companies repre-sents a u s e f u l source of i n f o r m a t i o n . Information, d e r i v e d both from the Company's Prospectus, and from annual r e t u r n s , covers the address of the f i r m s , the nature of the business (although t h i s i s f r e q u e n t l y too general to be of much u s e ) , the amounts of share c a p i t a l a u t h o r i z e d and paid-up, i n f o r m a t i o n on share-h o l d e r s , i n c l u d i n g t h e i r n a t i o n a l i t y (country of c i t i z e n s h i p ) , and i n f o r m a t i o n on d i r e c t o r s , a l s o i n c l u d i n g t h e i r n a t i o n a l i t y . A survey of manufacturing companies was conducted. A l -though the l i s t of manufacturing firms being i n t e r v i e w e d i n the main survey formed the core of the sample, other f i r m s , p a r t i -c u l a r l y h o l d i n g companies and s u b s i d i a r y f i r m s , were a l s o i n -c l u d e d . For the purposes of a n a l y s i s , however, those firms not i n the manufacturing s e c t o r were taken out. A l t o g e t h e r ninety-one useable q u e s t i o n n a i r e s were completed. The q u e s t i o n n a i r e used was developed i n F i j i a f t e r studying the nature of the data in the R e g i s t e r , and was p r e - t e s t e d (Appendix 2). A l l the q u e s t i o n n a i r e s were completed by a Research A s s i s t a n t , Mr Dhi-rendra Kumar. Mr Kumar, a s c i e n c e student at the U n i v e r s i t y of the South P a c i f i c , had p r e v i o u s l y been an i n t e r v i e w e r f o r a energy survey conducted by the members of the School of N a t u r a l Resources of the U n i v e r s i t y of the South P a c i f i c . The R e g i s t r a r of Companies a l s o keeps a R e g i s t e r of Business Names that c o n t a i n s some d e t a i l s on the unincorporated business s e c t o r . Although attempts were made to gather informa-t i o n on the unincorporated f i r m s i n the survey, the g e n e r a l l y incomplete nature of the r e t u r n s i n the R e g i s t e r made t h i s 23 i m p o s s i b l e . The i n f o r m a t i o n c o l l e c t e d was, t h e r e f o r e , not coded fo r computer a n a l y s i s , but was more g e n e r a l l y used in the study. Records in Government and Related O f f i c e s The study recognized from the outset that s u b s t a n t i a l data e x i s t i n government departments and other semi and or non-government o f f i c e s and that these data can s u b s t a n t i a l l y com-plement survey d a t a . C o n s i d e r a b l e time, t h e r e f o r e , was spent in o b t a i n i n g i n f o r m a t i o n from these sources; in some cases these were unpublished d a t a , and i n some represented p u b l i s h e d data not a v a i l a b l e through the U n i v e r s i t y of B r i t i s h Columbia l i b r a -ry system. Apart from the censuses of i n d u s t r i a l p r o d u c t i o n , which were c r i t i c a l to the study, more general economic data were obtained from the F i j i Bureau of S t a t i s t i c s . From the F i j i C e n t r a l Planning O f f i c e , where I had been a l l o c a t e d o f f i c e space and f u l l access to i t s l i b r a r y , i nformation on government p o l i c i e s on i n d u s t r i a l i z a t i o n , and more general data were gat-hered. S i m i l a r l y , data were gathered from the M i n i s t r y of Economic Planning and Development, the Economic Development Board, the F i j i Development Bank, the F i j i N a t i o n a l T r a i n i n g C o u n c i l , and the Department of Inland Revenue. I was a l s o able to o b t a i n i n f o r m a t i o n from the F i j i Employment and Development M i s s i o n , headed by Dr Manfred B i e n e f e l d . In r e t r o s p e c t , the d e c i s i o n to spend the amount of time that I d i d on these sour-ces proved very v a l u a b l e . 24 Informal Interviews Q u e s t i o n n a i r e surveys r a r e l y provide a complete p i c t u r e of phenomena being i n v e s t i g a t e d , and t h i s was to be overcome in my study through the use of i n f o r m a l i n t e r v i e w s with businessmen, b u r e a u c r a t s , and academics. Interviews were conducted with a l a r g e range of p e o p l e . These i n c l u d e d those with the o f f i c i a l s of the F i j i C e n t r a l Planning O f f i c e ; Dr Manfred B i e n e f e l d ; members of the Economic Development Board; D i r e c t o r of FECA; members of FMA; academics at the U n i v e r s i t y of the South P a c i f i c ; and businessmen, spe-c i a l l y , Mr Mahendra Motibhai P a t e l , Executive D i r e c t o r of the Motibhai groups of companies, and Mr Hari Punja, the s e n i o r D i r e c t o r of Punja and Sons L i m i t e d . U n f o r t u n a t e l y , I c o u l d not i n t e r v i e w the S e c r e t a r y of the Trades Union Congress, Mr Mahen-dra Chaudhry, but was f o r t u n a t e to be able to i n t e r v i e w the Congress' Research O f f i c e r . F i n a l l y , an attempt was made to gather in f o r m a t i o n on the firms being interviewed from the n a t i o n a l newspapers. One of the two d a i l y newspapers in F i j i , and the o l d e s t , The F i j i Times, has a comprehensive index at the U n i v e r s i t y of the South P a c i f i c , and t h i s was used to obtain i n f o r m a t i o n on the f i r m s and on i n d u s t r i a l i z a t i o n i n g e n e r a l . Given the time c o n s t r a i n t s , i t was not p o s s i b l e to c o l l e c t as much i n f o r m a t i o n as I would have l i k e d ; however, the whole of 1981, 1982 and 1983 data were examined. Before we leave t h i s s e c t i o n , i t i s important to add that although s i x months i s a short time f o r f i e l d w o r k , being a 25 F i j i c i t i z e n , I had much e a s i e r a c c e s s t o d a t a , and h a v i n g p r e v i o u s l y conducted r e s e a r c h on F i j i , and e s t a b l i s h e d v a l u a b l e c o n t a c t s i n government d e p a r t m e n t s , I was a b l e t o c o l l e c t f a r more d a t a than might have been c o l l e c t e d by someone not as e x p e r i e n c e d i n r e s e a r c h or f a m i l i a r w i t h the r e s e a r c h a r e a . F u r t h e r m o r e , many f r i e n d s i n F i j i have been s u p p l y i n g a d d i t i o -n a l d a t a as they have e i t h e r been needed or have become a v a i l a -b l e . Data A n a l y s i s The q u e s t i o n n a i r e s were e d i t e d i n the f i e l d as they were c o m p l e t e d . However, as the q u e s t i o n n a i r e c o n t a i n e d many open-ended q u e s t i o n s , which had t o be a s s i g n e d new c o d e s , the ques-t i o n n a i r e s were r e - e d i t e d and the new codes e n t e r e d i n the q u e s t i o n n a i r e s t h e m s e l v e s . The q u e s t i o n n a i r e s were then punched i n by the U n i v e r s i t y of B r i t i s h Columbia Computing C e n t r e . The second s e t of q u e s t i o n n a i r e s , d e r i v e d from the survey i n the R e g i s t r a r of Companies' O f f i c e , were e n t e r e d d i r e c t l y by me i n t o the Computing C e n t r e ' s M i c h i g a n T e r m i n a l System (MTS) u s i n g a m i c r o computer. I had p r e v i o u s l y used the S t a t i s t i c a l Package f o r the S o c i a l S c i e n c e s (SPSS), and was thu s f a m i l i a r w i t h i t . Most d a t a a n a l y s e s c o n s i s t e d of f r e q u e n c i e s , c r o s s t a b u l a t i o n s , and breakdown a n a l y s e s . The Study A r e a : F i j i T h i s s e c t i o n p r o v i d e s a h i g h l y s e l e c t i v e i n t r o d u c t i o n t o F i j i t h a t s h o u l d p l a c e the r e s t of the t h e s i s i n a pro p e r p e r s p e c t i v e . 26 L o c a t i o n and Si z e F i j i i s a South P a c i f i c a r c h i p e l a g i c s t a t e , l o c a t e d between the l a t i t u d e s 15 degrees and 22 degrees South of the equator, and between 177 degrees West and 175 degrees East l o n g i t u d e ( D e r r i c k , 1957:1; F i g u r e 1.1). F i j i comprises over three hundred i s l a n d s , although only 9 about one hundred are i n h a b i t e d . V i t i Levu, which has an area 2 of 10,388 km , and comprises 57 percent of the t o t a l land area 2 of F i ] i of 18,272 km , i s the l a r g e s t and the most important i s l a n d i n terms of p o p u l a t i o n , p o l i t i c a l power, and economic 10 2 strength (Figure 1.1). Vanua Levu, with an area of 5537 km , i s the second l a r g e s t and second most important i s l a n d . Between them, the two main i s l a n d s comprise 87 percent of the t o t a l land mass, and c o n t a i n 94 percent of the t o t a l p o p u l a t i o n (Chandra and Gunasekera, 1982:12). The other main i s l a n d s are Taveuni (440 km2), Kadavu (412 km2), and Ovalau (109 km2), the s i t e of F i j i ' s f i r s t c a p i t a l , Levuka (Figure 1.2). On the whole, the o u t l y i n g i s l a n d s c o n t a i n only a minute p r o p o r t i o n of the landmass, p o p u l a t i o n , and economic a c t i v i t y , although h i s t o -r i c a l l y , as w i l l be seen from Chapter 4, they were extremely important. However, the small land mass of F i j i , although impor-t a n t , needs to be set against another dimension of s i z e of s p e c i a l relevance to a r c h i p e l a g i c s t a t e s - - t h a t of marine space. Recent developments r e l a t i n g to the Law of the Sea Conference 2 have r e s u l t e d i n a sea area of F i j i of 1,290,000 km (Kearney, El80w FIGURE 1-2 A GENERAL LOCATION MAP OF FIJI DIVISION / / Q A V E A / / / T A V E U N I >—+—+— +-VANUA BALAVU 'MAGO aciA LAU I8S-WESTERN DIVISION |CENTRAL DIVISION J <3 BEQA VATU ft | LELE 1 L.AKEBA GROUP M O A L A CO i Q O N O j i S 0 U[T H j C - ^ ^ K A D A V U j TOTOYA ' (ft flKABARA PAC I F I O C E A N D FULAGA ^7 SOURCE: Adapted from Fiji Central Planning Office, 1980: Appendix £ 180 W 29 1980:42). Although no f i n d s of o f f - s h o r e minerals have been r e p o r t e d , the ,sea area s t i l l r epresents a major new resource f o r b e t t e r i n g the standard of l i v i n g of the people of F i j i , s p e c i a l l y with respect to f i s h e r i e s development. Populat ion The p o p u l a t i o n of F i j i in the middle of 1983 was e s t i -mated to have been 672,000 ( F i j i Bureau of S t a t i s t i c s , I984a:3), r e p r e s e n t i n g a f a i r l y small domestic market. The p o p u l a t i o n has been heterogenous s i n c e the middle of the l a s t c e n t u r y , when F i j i came i n t o s u s t a i n e d contact with the i n t e r -n a t i o n a l economy, which r e s u l t e d i n the immigration of Euro-peans, South P a c i f i c I s l a n d e r s , and Indian indentured labou-r e r s . I n d o - F i j i a n s , mainly descendents of indentured l a b o u r e r s , now comprise 50 percent of the t o t a l p o p u l a t i o n , while i n d i g e -nous F i j i a n s , the indigenous p o p u l a t i o n of F i j i , comprise 45 percent ( F i j i Bureau of S t a t i s t i c s , I984a:3). The.remaining 5 percent of the p o p u l a t i o n i s made up of Chinese, Europeans, Part-Europeans, P a c i f i c I s l a n d e r s , and o t h e r s . The p o p u l a t i o n i s roughly e q u a l l y d i v i d e d among males and females. L i k e many other developing c o u n t r i e s , the popula-t i o n of F i j i i s r e l a t i v e l y young: 37 percent of the t o t a l p o p u l a t i o n of F i j i at the end of 1982 was under f i f t e e n years of age ( c a l c u l a t e d from data i n F i j i Bureau of S t a t i s t i c s , I984a:4). A f t e r a p e r i o d of r a p i d p o p u l a t i o n i n c r e a s e , s p e c i a l l y h i g h d u r i n g the i n t e r c e n s a l p e r i o d 1956 to 1966, the rate of p o p u l a t i o n increase had d e c l i n e d to about 2.1 percent per annum 30 i n 1983 ( F i j i Bureau of S t a t i s t i c s , I984a:3). Although the bulk of the decrease i n the rate of p o p u l a t i o n increase has been the r e s u l t of a major decrease i n f e r t i l i t y , p a r t of the r e d u c t i o n in p o p u l a t i o n increase i n recent years has come from an i n -crease in emigration from F i j i , s p e c i a l l y to A u s t r a l i a , New Zealand, the United States of America, and Canada (on emigra-t i o n , see Jones, 1976). The p o p u l a t i o n i s d i s t r i b u t e d mainly on the two main i s l a n d s , as we have a l r e a d y noted. Within the main i s l a n d s themselves, the C e n t r a l and Western D i v i s i o n s , two of the four a d m i n i s t r a t i v e d i v i s i o n s in F i j i , account f o r 76 percent of the t o t a l p o p u l a t i o n . These two d i v i s i o n s a l s o c o n t a i n n e a r l y a l l the manufacturing e s t a b l i s h m e n t s . The Northern D i v i s i o n i s s p e c i a l l y under-populated i n r e l a t i o n to the r e s t of the coun-t r y . F i j i has reached a comparatively h i g h l e v e l of urbaniza-t i o n for a developing country; at the time of the l a s t census, 37 percent of the pop u l a t i o n was r e s i d i n g i n urban areas (Chan-1 2 dr a , 1980a:146). Nearly 54 percent of the t o t a l urban popula-t i o n r e s i d e s i n the country's c a p i t a l c i t y , Suva. The second l a r g e s t urban c e n t r e , and the country's only other c i t y , -Lauto-ka, c o n t a i n e d only 13 percent of the urban p o p u l a t i o n i n 1976, c l e a r l y a t t e s t i n g to the very high degree of urban primacy i n F i j i ' s urban system (more on urban primacy i n F i j i w i l l be found i n Chapter 8 when the l o c a t i o n of manufacturing e s t a b l i s -hments i s a n a l y s e d ) . 31 The A d m i n i s t r a t i v e and P o l i t i c a l System When F i j i became independent in 1970, i t accepted a bicameral form of government. The House of R e p r e s e n t a t i v e s i s the main l e g i s l a t i v e organ of the government. It has f i f t y - t w o members, comprising twenty-two members from the two main e t h n i c groups, indigenous F i j i a n s and Indo-Fi j i a n s , and e i g h t members from the remaining 5 percent of the p o p u l a t i o n . The l a s t group, the General E l e c t o r s , comprising everybody not c l a s s i f i e d as indigenous F i j i a n or I n d o - F i j i a n , with 15 percent df the seats and only 5 percent of the p o p u l a t i o n , i s c l e a r l y over-represen-t e d . E l e c t i o n i s h e l d on a mixture of communal and n a t i o n a l , or c r o s s - v o t i n g r o l l s , although i t i s q u i t e c l e a r that the commu-nal r o l l i s the dominant r o l l . The Senate i s the second p a r l i a m e n t a r y body. I t s twenty-two appointed members comprise e i g h t appointed by the Prime M i n i s t e r , seven by the Leader of the O p p o s i t i o n , s i x by the Great C o u n c i l of C h i e f s , and one by the Rotuma C o u n c i l . The l i f e of both the Senate and the House of Representa-t i v e s i s f i v e y e a r s . The c u r r e n t governing p a r t y i s the A l l i a n -ce P a r t y , and i t has r u l e d F i j i s i n c e independence. The A l l i a n -ce i s composed of three separate r a c i a l l y composed u n i t s — t h e F i j i a n A s s o c i a t i o n , General E l e c t o r s A s s o c i a t i o n , and the In-d i a n A l l i a n c e . However, there i s seldom any doubt that the A l l i a n c e i s an indigenous F i j i a n p a r t y , supported wholehear-t e d l y by General E l e c t o r s and, to a l e s s e r e x t e n t , by Indo-F i j i a n s . S i m i l a r l y , the o p p o s i t i o n N a t i o n a l F e d e r a t i o n Party i s mainly an I n d o - F i j i a n p a r t y , with support from some indigenous 32 F i j i a n s , and a very small number of General E l e c t o r s . Although both p a r t i e s have t r i e d to a t t r a c t other e t h n i c groups to them, the very nature of F i j i ' s c o n s t i t u t i o n a l arrangement has preve-1 3 nted t h i s by t u r n i n g p o l i t i c s i n t o an e t h n i c a f f a i r . Government in F i j i has been h i g h l y c e n t r a l i z e d u n t i l now. However, the urban c e n t r e s have long had r e l a t i v e autonomy in t h e i r l o c a l a f f a i r s . There has not been a comparable l o c a l government in the r u r a l a r e a s , although the F i j i a n A d m i n i s t r a -t i o n , which i s d i s c u s s e d below, has been a form of l o c a l gover-nment for indigenous F i j i a n s . The foundation of the F i j i a n a d m i n i s t r a t i o n was l a i d by the f i r s t ( i n t e r i m ) governor of F i j i , S i r Hercules Robinson ( M o r r e l l , 1960:362). However, i t was more f i r m l y e s t a b l i s h e d , and given i t s d i r e c t i o n by the f i r s t s u b s t a n t i v e governor of F i j i , S i r Arthur Gordon. Gordon wanted both to provide F i j i a n s with a measure of government by t h e i r own people, and to econo-mize in a d m i n i s t r a t i o n through " i n d i r e c t r u l e " . The F i j i a n A d m i n i s t r a t i o n , although g r e a t l y m o d i f i e d , s p e c i a l l y s i n c e the middle of 1960s, conti n u e s to e x i s t to safeguard the i n t e r e s t s 1 4 of the indigenous F i j i a n p o p u l a t i o n . A d d i t i o n a l l y , the government has been dev e l o p i n g a re-g i o n a l development s t r a t e g y f o r F i j i from the onset of the Development Plan Seven (see F i j i C e n t r a l Planning O f f i c e , 1975, 1980; Chandra and Gunasekera, 1982). As part of t h i s s t r a t e g y , i t has been d e v i s i n g a system of r e g i o n a l a d m i n i s t r a t i o n that would i n v o l v e the d e v o l u t i o n of c o n s i d e r a b l e power to the r e g i o n s . For the moment, however, t h e . p r e c i s e a d m i n i s t r a t i v e 33 s t r u c t u r e f o r the plan has not been en u n c i a t e d , and a d m i n i s t r a -t i o n continues to be h i g h l y c e n t r a l i z e d , even i f the regions are allowed more say i n minor i s s u e s r e l a t i n g to the implemen-t a t i o n of p o l i c i e s . 1 5 The Economy F i j i i s a middle income developing c o u n t r y . In 1982, i t s GDP was $US1974 per person (World Bank, 1984:276). 1 6 The s t r u c t u r e of F i j i ' s economy can be seen from i t s o v e r a l l employment p a t t e r n and the composition of i t s GDP by o r i g i n . O v e r a l l , F i j i s t i l l remains an a g r i c u l t u r a l country (Table 1.2), although s e r v i c e s now provide a major source of employment. A g r i c u l t u r e , together with f o r e s t r y and f i s h i n g , absorbed 44 percent of the economically a c t i v e p o p u l a t i o n aged f i f t e e n years and over i n 1976, and s e r v i c e s absorbed another 17 percent (Table 1.2). Table 1.3 summarizes the s t r u c t u r e of F i j i ' s GDP by o r i g i n . The importance of a g r i c u l t u r e , f i s h i n g , and f o r e s t r y d e c l i n e s s u b s t a n t i a l l y when t h e i r c o n t r i b u t i o n s to the GDP are c o n s i d e r e d , although a g r i c u l t u r e s t i l l remains the s i n g l e l a r -gest c o n t r i b u t o r to the GDP. S e r v i c e s , however, c o n t r i b u t e almost as much, so i t would be accurate to d e s c r i b e F i j i as an a g r i c u l t u r a l and s e r v i c e economy. The F i j i economy has become much more d i v e r s i f i e d than i t was before independence. The d i s t r i b u t i v e s e c t o r , manufactu-r i n g , and finance and r e a l e s t a t e s e c t o r s have a l l become important components of the economy. While not i n the same c l a s s as the f a s t e s t - g r o w i n g ten 34 TABLE 1.2 THE STRUCTURE OF FIJI'S ECONOMY: ECONOMICALLY ACTIVE POP-ULATION AGED FIFTEEN YEARS AND OVER BY INDUSTRY, 1976 Industry Number Percent A g r i c u l t u r e , f o r e s t r y & f i s h i n g 76,886 44 Mining & q u a r r y i n g 1 ,662 1 Manufacturing 13,039 7 E l e c t r i c i t y , gas & water 1 ,628 1 Construct ion 11,186 6 Wholesale, r e t a i l , h o t e l & r e s t a u r a n t s 17,372 10 T r a n s p o r t , communications & storage 9,039 5 Fi n a n c e , insurance & r e a l e s t a t e 3,518 2 Community, s o c i a l & p e r s o n a l s e r v i c e s 29,134 1 7 Industry not s t a t e d 12,321 7 T o t a l 175,785 100 SOURCE: L o d h i a , 1977:514-517. Percentages have been c a l c u l a t e d by the a u t h o r . c o u n t r i e s in the world between 1960 and 1976 (UNCTAD, I983a:28), the h i s t o r i c a l performance of the F i j i a n economy has been impressive (Table 1.4). Even though the r e l i a b i l i t y of the estimates by the F i j i Bureau of S t a t i s t i c s i s i n some doubt, s p e c i a l l y as i t i s known that the F i j i C e n t r a l Planning O f f i c e r e l i e s on i t s in-house estimates of GDP i n s t e a d of the n a t i o n a l s t a t i s t i c s compiled by the Bureau, the o v e r a l l impression, n o n e t h e l e s s , i s t h a t of impressive economic growth r i g h t up to 1981. Furthermore, and t h i s i s even more s i g n i f i c a n t , the growth r a t e s have remained high even when allowance i s made f o r p o p u l a t i o n i n c r e a s e , 35 TABLE 1.3 THE STRUCTURE OF FIJI'S GDP BY ORIGIN, 1980 ($F000) A c t i v i t y C o n t r i b u t i o n Amount Percent of GDP A g r i c u l t u r e , f i s h i n g , & f o r e s t r y 199,548 22 Mining & q u a r r y i n g -2,545 <1 Manufacturing 107,645 1 2 E l e c t r i c i t y , gas & water 14,769 2 B u i l d i n g & c o n s t r u c t i o n 73,383 8 Wholesale, r e t a i l , h o t e l s , r e s t a u r a n t s & c a f e s 149,184 1 6 Transport & communications 87,522 1 0 F i n a n c e , r e a l e s t a t e & other business s e r v i c e s 112,442 1 2 Other s e r v i c e s 189,974 21 A l l a c t i v i t i e s not elsewhere c l a s s i f i e d 6,745 • 1 Less imputed bank charges -31,024 -3 T o t a l 907,643 101 SOURCE: F i j i Bureau of S t a t i s t i c s , I983b:7. Percentages have been c a l c u l a t e d by the a u t h o r . implying a s u b s t a n t i a l improvement in the standard of l i v i n g i n F i j i a f t e r the Second World War. L i k e many economies in the world, both developed and d e v e l o p i n g , the F i j i a n economy has been s l u g g i s h from 1981 onwards. As the C e n t r a l Monetary A u t h o r i t y (CMA, 1983:16) put i t i n one of t h e i r annual r e p o r t s , "The economy was v i r t u a l l y stagnant i n 1982, r e c o r d i n g a n e g l i g i b l e growth of l e s s than 0.5 percent a g a i n s t an average growth of more than 5 percent i n the p r e v i o u s three years and of 6 percent i n 1981." 36 TABLE 1.4 THE GROSS DOMESTIC PRODUCT OF F I J I , 1950-1981 Year GDP at Current Annual Growth Annual Growth Fac t o r Cost Rate (%) Rate of GDP ($F M i l l i o n ) Per C a p i t a 1 950 36.0 ____ 1 953 50.8 12.2 8.6 1 957 61.1 4.7 2.0 1 962 90.2 8.1 4.3 1 963 93.9 4.1 0.1 1 964 99.6 6.1 2.8 1 965 104.7 5. 1 2.3 1 966 108.8 3.9 1 .3 1 967 117.3 7.8 5.2 1 968 129.6 10.5 8.3 1 969 1 40.5 8.4 7.6 1 970 1 68.9 20.2 14.9 1971 184.7 9.3 7. 1 1 972 230.5 24.8 22.2 1 973 300.6 30.4 27.6 1 974 410.5 36.6 34.3 1 975 515.4 25.5 23. 1 1 976 570.6 10.7 8.9 1 9771 605.7 1 978 642.9 6.1 4.2 1979 779.4 21.2 18.5 1 980 907.6 16.4 14.1 1981 2 1053.6 16.1 13.9 SOURCE: F i j i Bureau o f - S t a t i s t i c s , I983b:6. The F i j i Bureau of S t a t i s t i c s completed a r e v i s e d new s e r i e s of GDP estimates based on 1977 benchmark d a t a . It has not been ab l e to r e v i s e the e a r l i e r d a t a . These are p r o v i s i o n a l f i g u r e s . 37 Although the s l u g g i s h performance, of the F i j i economy i s in p a r t r e l a t e d to the general g l o b a l r e c e s s i o n , the s i t u a t i o n in F i j i was made worse by the sharp r e d u c t i o n in sugar cane p r o d u c t i o n as a r e s u l t of a drought i n the 1982-1983 sugar 1 7 season. The stagnant F i j i a n economy i s , however, not the only major concern of the government. F i j i i s c u r r e n t l y f a c i n g i n c r e a s i n g trade d e f i c i t s , balance of payments d i f f i c u l t i e s , and i n c r e a s i n g domestic and i n t e r n a t i o n a l indebtedness. Let us look at trade d e f i c i t f i r s t . F i j i i s , of c o u r s e , an extremely open economy, r e l y i n g h e a v i l y on i n t e r n a t i o n a l trade both for i t s goods and s e r v i c e s and e x p o r t s . Although exports i n monetary terms have grown i m p r e s s i v e l y s i n c e 1950 (to 1981) by an annual average rate of 9 p e r c e n t , the compara-t i v e growth of imports over the same p e r i o d has been even h i g h e r — 1 1 . 1 percent per annum (UNCTAD, I983a:27). The trade d e f i c i t stood at $F248,171,000 in 1982 ( F i j i Bureau of S t a t i s -t i c s , I984a:53). The large and growing d e f i c i t in the merchandize account of F i j i has been p a r t i a l l y covered by a s u r p l u s i n the s e r v i c e s account, although the o v e r a l l balance on the combined- goods, s e r v i c e s and p r i v a t e t r a n s f e r s account has always been negative s i n c e 1970 (UNCTAD, 1983a:314-315). Since 1980, however, the d e f i c i t has grown q u i t e l a r g e . The d e f i c i t i n the goods, s e r v i c e s and p r i v a t e t r a n s f e r s account has been s u c c e s s f u l l y met in most years by f o r e i g n loans and f o r e i g n investment. Of l a t e , however, the government 38 has had balance of payments d e f i c i t s , f i n a n c e d by drawing on i t s e x t e r n a l r e s e r v e s and the S p e c i a l Drawing Rights (SDRs) (from data i n UNCTAD, 1983a:314-315). As i n d i c a t e d i n the e a r l i e r paragraph, the government has been borrowing h e a v i l y both d o m e s t i c a l l y and i n t e r n a t i o n a l -l y to both finance i t s balance of payments, and to continue to make a major c o n t r i b u t i o n to investment i n the c o u n t r y . At the end of 1982 the domestic debt stood at $F238,820,000 ( F i j i M i n i s t r y of F i n a n c e , 1983:Appendix 12). The overseas borrowing l i a b i l i t y stood at $F142,141,680 at the same time ( F i j i M i n i s -t r y of F i n a n c e , 1983:Appendix 12). Thus, although the F i j i economy has performed i m p r e s s i -v e l y u n t i l now, the 1980s mark a watershed in F i j i ' s develop-ment. The economy i s s t a g n a n t , balance of payments problems are looming, and indebtedness c o u l d become a major problem. These problems are compounded by a growing l e v e l of both underemploy-ment and unemployment, a problem that c o u l d exacerbate e t h n i c r e l a t i o n s i n the c o u n t r y . It i s i n t h i s context that the government has been, as we w i l l see l a t e r in the t h e s i s , undertaking a major review of i t s development s t r a t e g i e s , a s s i s t e d by the F i j i Development and Employment M i s s i o n . I t i s , in p a r t i c u l a r , t r y i n g to boost f o r e i g n d i r e c t investment, and the exports of the manufactu'ring s e c t o r , which has developed u n t i l now as a mainly import-sub-s t i t u t i n g s e c t o r . The Growth of Mass Consumption in F i j i The process of i n d u s t r i a l i z a t i o n s p e c i a l l y , and of eco-39 nomic development g e n e r a l l y , are c r i t i c a l l y r e l a t e d to the development of mass consumer goods markets. McGee (1984) has argued in a recent paper that the development and the nature of the mass markets are important v a r i a b l e s in u r b a n i z a t i o n and, by e x t e n s i o n , i n i n d u s t r i a l i z a t i o n . T h i s s e c t i o n d e s c r i b e s the p a t t e r n of consumption in F i j i , and the processes r e s p o n s i b l e for a changing p a t t e r n of household e x p e n d i t u r e . The p a t t e r n of household expenditure at any point s i g n i f i c a n t l y i n f l u e n c e s the nature of i n d u s t r i a l p r o d u c t i o n , and the nature of i n d u s t r i a l p r o duction f r e q u e n t l y shapes the p a t t e r n of consumption, not only through a d v e r t i -s i n g , but through government p o l i c i e s r e l a t i n g to domestic manufacturing p r o d u c t i o n , such as import c o n t r o l s and t a r i f f p r o t e c t i o n . Hamish F r a s e r (1981), a c c o r d i n g to McGee (1984:7), i n d i -c a t e s that four f a c t o r s were c r u c i a l to the development of mass markets in Great B r i t a i n . F i r s t , the market expanded in terms of the number of consumers as the p o p u l a t i o n i n c r e a s e d . Second, the amount of d i s p o s a b l e income grew. T h i r d , a growing l e v e l of l i t e r a c y and education among consumers ensured that a d v e r t i s i n g c o u l d be used with d e v a s t a t i n g e f f e c t to mould the shape of household e x p e n d i t u r e . F i n a l l y , there was a growing d i f f e r e n t i a t i o n between the b o u r g e o i s i e and workers, the former being h e l d as models f o r the l a t t e r i n an attempt to promote the s a l e of mass consumer goods. Furthermore, McGee (1984:8) suggests that two p r o c e s s u a l changes were a l s o t a k i n g p l a c e that were important to the development of mass consumer markets 40 i n Great B r i t a i n - - a - m a j o r growth in the number of wage workers, concentrated i n urban a r e a s , and the growth of a type of family u n i t that was d i v o r c e d from the p r o d u c t i o n p r o c e s s . As we have a l r e a d y seen, F i j i ' s per c a p i t a income has i n c r e a s e d s u b s t a n t i a l l y i n the l a s t two decades, and c u r r e n t l y stands at a l e v e l that makes i t a middle income developing c o u n t r y . A r i s e in personal income i s a l s o i n d i c a t e d by other e v i d e n c e . Table 1.5 presents the i n c r e a s e in d a i l y mean wages in F i j i between 1965 and 1982. Although separate data for the s a l a r y earners are not a v a i l a b l e , we know that the income of a l l employees has i n c r e a s e d s u b s t a n t i a l l y . Between 1970 and 1982, f o r i n s t a n c e , the average monthly earnings of a l l emplo-yees in F i j i i n creased by 523 percent ( c a l c u l a t e d from data i n F i j i N a t i o n a l Provident Fund, 1984:3). The l e v e l of u r b a n i z a t i o n i n F i j i has a l s o increased s u b s t a n t i a l l y . At the time of the l a s t p o p u l a t i o n census in 1976, 37 percent of the t o t a l p o p u l a t i o n of F i j i r e s i d e d i n urban a r e a s , a r e l a t i v e l y high f i g u r e f o r a developing c o u n t r y . Concomitant with t h i s u r b a n i z a t i o n , and a l s o as a cause of i t , the number of paid employees ( i . e . p r o l e t a r i a n s ) has increased s u b s t a n t i a l l y . Between 1970 and 1982, for i n s t a n c e , the t o t a l p a i d employment in F i j i i n c r e a s e d by 52 percent to 78,290 ( c a l c u l a t e d from data i n F i j i Bureau of S t a t i s t i c s , I984a:77). The r i s e i n the number of workers, t h e i r i n c r e a s i n g income, and the c o n c e n t r a t i o n of the workers i n a few urban c e n t r e s , has provided the necessary p r e r e q u i s i t e s f o r the emergence of manu-f a c t u r i n g i n F i j i . 41 TABLE 1 5 DAILY MEAN WAGES IN F I J I , 1965-1982a Year (End of June) Wage (F$) Percentage Increase over Previous Year Annual Rate of I n f l a t i o n 1 965 1 .83 na 1 966 1 .96 7.10 na 1 967 2.01 2.55 na 1968 2.20 9.45 na 1969 ' 2.32 5.45 3.9 1970 2.47 6.47 4. 1 1 971 2.72 10.12 6.5 1972 3.08 13.24 9. 1 1973 3.98 29.22 11.2 1974 4.89 22.86 14.4 1975 5.97 22.09 13.1 1 976 6.68 1 1 .89 11.4 1 977 7.11 6.44 7.0 1 978 7.89 10.97 6. 1 1 979 8.48 7.48 7.7 1980 9.27 9.32 14.5 1981 10.16 9.60 11.2 1982 1 0.96 7.87 7.0 SOURCE: F i j i Bureau of S t a t i s t i c s , I984a:66, 78. Percentages have been c a l c u l a t e d by the aut h o r . Wage workers are those engaged i n r e g u l a r manual work. The data f o r 1982 are p r o v i s i o n a l . Wage workers represented 57 percent of a l l pa i d employees i n F i j i in 1981. F i j i has a l s o been a c h i e v i n g other p r e r e q u i s i t e s of the development of a mass market i n the l a s t two decades. The t r a n s p o r t a t i o n system has been improved v a s t l y , with the la r g e p art of the main i s l a n d of V i t i Levu now po s s e s s i n g a t a r s e a l e d a l l weather highway. A t r a n s i n s u l a r road l i n k i n g the two main urban c e n t r e s i n the second-ranking i s l a n d of F i j i , Vanua Levu, has been completed. Furthermore, many j e t t i e s and a i r s t r i p s have been developed on the i s o l a t e d i s l a n d s . In sum, an im-42 proved t r a n s p o r t a t i o n system has c o n s i d e r a b l y increased the flow of i n f o r m a t i o n , people, and goods w i t h i n the. c o u n t r y . The ownership of p r i v a t e automobiles, a major component of household consumption in most developed c o u n t r i e s , has been i n c r e a s i n g r a p i d l y i n F i j i , a lthough the demand f o r automobiles has been met e n t i r e l y through imports of f i n i s h e d p r o d u c t s . From 1970 and 1980, the number of v e h i c l e s r e g i s t e r e d in F i j i i n c r e a s e d by 197 percent; the i n c r e a s e from 1960 to 1983 was 619 percent ( c a l c u l a t e d from data i n F i j i Bureau of S t a t i s t i c s , 1 8 1984a:100; see F i g u r e 1.3). The i n c r e a s i n g i n c i d e n c e of ve-h i c l e s i n F i j i t e s t i f i e s to an i n c r e a s i n g l e v e l of d i s p o s a b l e income, and an i n c r e a s i n g l y u n i f i e d n a t i o n a l market, and the success of merchants to p r i s e l o o s e savings of consumers. The p a t t e r n of consumer expenditure has a l s o been chan-ging s t e a d i l y . Although surveys of household income and expen-d i t u r e have been undertaken i n F i j i from as e a r l y as 1944 ( F i j i Bureau of S t a t i s t i c s , 1981 a:1), the four more widely used and a v a i l a b l e surveys were undertaken i n 1968, 1972, 1973, and 1977. The f i r s t three of these surveys were r e s t r i c t e d to urban household income and expenditure p a t t e r n s , while the l a s t one attempted to o b t a i n a n a t i o n a l coverage. The p a t t e r n s of household expenditure i n urban areas i n F i j i are presented i n Table 1.6. The expenditure on food, beverages, and tobacco has remained almost s t a b l e at around 40 percent of the t o t a l household e x p e n d i t u r e , while the expendi-t u r e on t r a n s p o r t a t i o n and communications has i n c r e a s e d from 6 percent of the t o t a l urban household expenditure i n 1968 to 13 FIGURE 1-3 THE NUMBER OF V E H I C L E S REGISTERED ilN FIJI, I960" 1983 (OOO) eel-s' 0 ' " • i • i —• . • i i i i i —•— . —• • • • 1 • • 1 I960 1961 1962 1963 19641965 1966 1967 1968 1969 1970 1971 1972 1973 874 1975 1976 19771978 1979 19801981 1982 1983 SOURCE : Fiji Bureou of Statistics , 1984a 100 44 TABLE 1.6 THE PATTERN OF URBAN FIJI , FORTNIGHTLY 1968, 1973, HOUSEHOLD EXPENDITURE IN AND 1977 Expenditure Percent of F o r t n i g h t l y Expenditure 1968 1 973 19773 Food, beverages, and tobacco 41 42 40 C l o t h i n g and footwear 5 5 9 Housing and household operat ions 39 38 23 Transport 6 8 1 3 Mi s c e l l a n e o u s 10 8 1 5 T o t a l 101 101 100 SOURCE: C a l c u l a t e d from data in F i j i Bureau of S t a t i s t i c s , 1974:22-24 and F i j i Bureau of S t a t i s t i c s , I982a:21. Some expenditures have been r e a l l o c a t e d to ensure c o m p a r a b i l i t y between the d i f f e r e n t surveys. percent i n 1977 (Table 1.6). The data from the F i j i Bureau of S t a t i s t i c s ' surveys do not adequately r e f l e c t the major changes t a k i n g p l a c e in consu-mer e x p e n d i t u r e . If we examine the p a t t e r n of average urban household weekly cash expenditure for the d i f f e r e n t income groups ( d e c i l e groups), we f i n d that i n c r e a s i n g income a f f e c t s the p a t t e r n of expenditure s i g n i f i c a n t l y (Table 1.7). Expendi-ture on food, beverages, and tobacco as a p r o p o r t i o n of t o t a l expenditure d e c l i n e s c o n s i s t e n t l y and s i g n i f i c a n t l y with i n -creases i n income. For i n s t a n c e , the poorer s e c t i o n s of the po p u l a t i o n i n the f i r s t d e c i l e spent 65 percent of t h e i r t o t a l TABLE 1.7 THE PATTERN OF WEEKLY URBAN HOUSEHOLD EXPENDITURE IN FIJI BY INCOME GROUPS, 1977 Expenditure Percent of Weekly Cash Expenditure by Decile 1 2 3 4 5 6 7 8 9 10 Food, beverages, and tobacco 65 66 57 53 51 49 46 40 39 27 Rents, fuel, and power Clothing and footwear 10 9 11 10 13 13 11 12 15 18 6 3 4 6 6 7 10 11 9 9 Household equipment and operations 13 5 7 7 6 8 8 9 10 • 10 Medical care and health services <1 3 2 2 2 2 2 2 2 2 Transport and communications 3 7 10 11 10 10 10 12 12 18 Recreation and entertainment <1 2 3 4 4 4 4 4 5 5 . Education 3 2 2 2 2 1 2 3 2 1 Miscellaneous goods and services <1 3 4 5 6 6 7 7 5 11 Total 100 100 100 100 100 100 100 100 99 101 SOURCE: Calculated from data in F i j i Bureau of Statistics, 1982a:55-64. 46 expenditure on food, beverages, and tobacco, while the r i c h e s t consumers spent only 27 percent of t h e i r t o t a l expenditure on these items. Table 1.7 a l s o i n d i c a t e s that as p r o p o r t i o n a t e l y l e s s money i s spent on b a s i c items such as fo o d , more money i s spent on c l o t h i n g , footwear, t r a n s p o r t a t i o n and communication, r e c r e a t i o n , entertainment, and on m i s c e l l a n e o u s goods and ser-v i c e s . Thus with i n c r e a s i n g incomes, a market i s cr e a t e d f o r consumer durable goods, such as f u r n i t u r e , e l e c t r i c a l household equipment, as wel l as f o r canned and processed foods. The use of e l e c t r i c i t y - - i n d i c a t o r of r i s i n g incomes as we l l as a p r e r e q u i s i t e f o r the emergence of a mass consumer market--has a l s o been i n c r e a s i n g , although not as r a p i d l y as the ownership of v e h i c l e s . Between 1976 and 1983, for i n s t a n c e , the domestic consumption of e l e c t r i c i t y in r e a l terms (kwh) in c r e a s e d i n F i j i by 27 percent ( c a l c u l a t e d from data i n F i j i Bureau of S t a t i s t i c s , I984a:26). Although the data from the household income and expendi-ture surveys are not i n d i c a t i v e of any major r e d u c t i o n i n the p r o p o r t i o n of expenditure on food, beverages, and tobacco, the l e v e l of expenditure on these items of 40 percent i n d i c a t e s t h a t ' s u b s t a n t i a l d i s p o s a b l e income i s a v a i l a b l e f o r expenditure on other items, some of which have been met from the domestic manufacturing s e c t o r . The wage r a t e s too have been i n c r e a s i n g r a p i d l y . These two f a c t o r s , coupled with a major i n c r e a s e i n the number of workers, and i n the l e v e l of u r b a n i z a t i o n , and high l e v e l s of import p r o t e c t i o n to l o c a l manufacturing have c r e a t e d favourable c o n d i t i o n s f o r the emergence of manufactu-47 r i n g in F i j i . The O r g a n i z a t i o n of the T h e s i s The remainder of the t h e s i s i s organized as f o l l o w s : Chapter 2 examines the p a t t e r n of i n d u s t r i a l i z a t i o n i n develo-ping c o u n t r i e s . Chapter 3 i s a d i s c u s s i o n of the main t h e o r e t i -c a l approaches to the study of i n d u s t r i a l i z a t i o n in developing c o u n t r i e s and focusses on n e o c l a s s i c a l economic approach, the i n d u s t r i a l geography approach, the Ma r x i s t approach, and depen-dency approaches. The manner of F i j i ' s i n c o r p o r a t i o n i n t o the i n t e r n a t i o -n a l economic system up to 1970 i s t r e a t e d in Chapter 4. An understanding of t h i s process i s important to the a n a l y s i s of the contemporary F i j i a n economy. The contemporary manufacturing se c t o r i s d e s c r i b e d and analysed i n Chapters 5, 6, 7, and 8. Chapter 5 d i s c u s s e s the s t r u c t u r e and o r g a n i z a t i o n of F i j i ' s contemporary manufacturing s e c t o r , r e l y i n g l a r g e l y on data from the F i j i Bureau of S t a t i s t i c s ' survey of manufacturing a c t i v i -t i e s . Chapter 6 extends the d i s c u s s i o n of the manufacturing s e c t o r with a d d i t i o n a l data from a survey of manufacturing es t a b l i s h m e n t s and firms i n F i j i . The l i n k a g e s w i t h i n the manufacturing s e c t o r , and those with the r e s t of the F i j i a n economy are analysed i n Chapter 7, the aim of which i s to a s c e r t a i n the major c o n t r i b u t i o n s of the manufacturing s e c t o r to F i j i ' s economy. I n d u s t r i a l l o c a t i o n , which has been a major focus of i n d u s t r i a l geography rese a r c h i n both developed and developing c o u n t r i e s u n t i l r e c e n t l y , i s d i s c u s s e d i n Chapter 8. T h i s 48 chapter aims to both describe the contemporary location of manufacturing activities in F i j i and to identify the major factors responsible for the pattern of location. Chapter 9 focusses on the role of the state in F i j i ' s industrialization. This chapter attempts to trace the evolution of state policies for the manufacturing sector, explain the current industrial policies, and to discuss the role of the state in direct manufacturing production. The evaluation of the government's performance in terms of public policies by manufa-cturers is also discussed. Chapter 10, the concluding chapter of the thesis, begins with a summary of the major findings of this study. It then proceeds to place these findings within a- wider theoretical context, and indicates how this study either provides support, or refutes the main positions maintained by the major theoreti-cal approaches to the study of Third World industrialization as discussed in Chapter 3. 49 Notes 1. The term i n d u s t r i a l i z a t i o n and other terms c e n t r a l to t h i s study are d e f i n e d and e x p l a i n e d in a l a t e r s e c t i o n . 2. The term " F i j i a n " r e f e r s to t h i n g s p e r t a i n i n g to F i j i as a whole; the term "indigenous F i j i a n " r e f e r s to the indigenous p o p u l a t i o n of F i j i ; and the term " I n d o - F i j i a n " r e f e r s to the p o p u l a t i o n of F i j i of Indian o r i g i n . 3. The terms economic growth, economic development, and deve-lopment are widely used i n the l i t e r a t u r e and the l a s t two terms are used f r e q u e n t l y i n the t h e s i s . These terms are ex-p l a i n e d or d e f i n e d below. The term economic growth i s the most s p e c i f i c of the three terms, and r e f e r s to an i n c r e a s e in output over a p e r i o d of time, u s u a l l y one y e a r , and i s expres-sed i n terms of the gross n a t i o n a l product, or per c a p i t a gross n a t i o n a l product (Crane, 1980:100). Economic development, on the o t h e r hand, " . . . i m p l i e s both more output and changes in the t e c h n i c a l and i n s t i t u t i o n a l arrangements by which i t i s produced and d i s t r i b u t e d . " F i n a l l y , development i s the most i n c l u s i v e of the three terms and i n c l u d e s economic as w e l l as non-economic changes in s o c i e t y . C l i f f o r d and Osmond (1971:18) suggest t h a t i t i n c l u d e s the f o l l o w i n g : (a) Growth i n the gross n a t i o n a l product or gross n a t i o n a l product per c a p i t a (b) S t r u c t u r a l changes in the economy (c) S o c i a l , p o l i t i c a l , and i n s t i t u t i o n a l changes that improve the q u a l i t y of l i f e . The t h e s i s w i l l observe the above conventions regarding these terms. 4. More d e t a i l s on the development of i n d u s t r i a l i z a t i o n i n these c o u n t r i e s w i l l be p r o v i d e d i n Chapter 2. The f o l l o w i n g a u t h o r s , among o t h e r s , p r o v i d e d e t a i l s on the o b j e c t i v e s and progress of i n d u s t r i a l i z a t i o n i n these c o u n t r i e s : Balassa (1971, 1981); Balassa and A s s o c i a t e s (1982); B a l l a n c e , A n s a r i , and Singer (1982); Byres (1982); Donges (1976); Evans (1979); Galenson (1979); Gupta and Singh (1978); Ho (1978); L i n (1973); Richards (1981); Tan and Hock (1982). 5. The r e l a t i o n s h i p s between the s i z e of a country and i t s development o p t i o n s and performance are d i s c u s s e d i n Chapter 2. The f o l l o w i n g s t u d i e s represent the major debates on the i s s u e : Anderson (1982); Benedict (Ed, 1967); Demas (1965); J a l a n (Ed, 1982); K a p l i n s k y (1980); Selwyn (Ed, 1975); Shand (Ed, 1980). 6. For g e n e r a l reviews of i n d u s t r i a l geography, see Alexander-sson (1967); Hamilton (Ed, 1974, 1978); Hamilton and Linge (Eds, 1979, 1981, 1983); Keeble (1977); Rees, Hewing, and S t a f f o r d (Ed, 1981); Walker and C o l l i n s (Ed, 1975); Wood (1981) . 7. More d e t a i l s of the ISIC c a t e g o r i e s can be found i n United 50 Nations (1971). The ISIC was o r i g i n a l l y adopted i n 1948 and has been r e v i s e d in 1958 and 1968. The l a t e s t ISIC i s r e f e r r e d to as ISIC r e v i s i o n 2. 8. As Jackson (1936:186) e x p l a i n s , a d i a l e c t i c a l r e l a t i o n s h i p r e f e r s to not only to what one phenomenon does to another, but to what the other phenomenon does to i t as w e l l . 9. Watters (1969:2) mentions 361 i s l a n d s , while the V i s i t o r s Guide to F i j i says there are over 500 i s l a n d s ( U n i v e r s a l B u s i -ness D i r e c t o r i e s , 1974:9). 10. The areas given here have been converted to metric measure-ment from f i g u r e s given in i m p e r i a l measurement. The conversion f a c t o r used was 2.58999 as given i n the F i j i Bureau of S t a t i s -t i c s , 1983b:114). 11. Developments r e l a t i n g to the Law of the Sea can be seen in C a s t l e and Homes (Eds, 1976); Hodgson and Smith (1979). 12. U r b a n i z a t i o n i n F i j i between 1956 and 1966 i s t r e a t e d in Ward (1965), while that between 1966 and 1976 i s t r e a t e d in Chandra (1980a, 1985 [forthcoming]) and Walsh (1977, 1978). 13. More d e t a i l s on the p o l i t i c a l system and processes i n F i j i w i l l be found i n A l i (1977), L a i (1982); M e l l e r and Anthony (1968); Milne (1981); Norton (1977). 14. On F i j i a n a d m i n i s t r a t i o n , see Belshaw (1964); France (1969, 1971); Nayacakalou (1955, 1975); Roth (1973); Spate (1959); S a h l i n s (1962). 15. U n l i k e F i j i ' s geography, i t s economy has not a t t r a c t e d as much a t t e n t i o n by academics. There i s no recent p u b l i s h e d account of the economy of F i j i , although those by F i s k (1970) and Ward (1971) s t i l l remain u s e f u l sources of i n f o r m a t i o n . This s e c t i o n represents my own i n t e r p r e t a t i o n of the o v e r a l l economic s i t u a t i o n of F i j i , and r e l i e s mainly on data p u b l i s h e d by the F i j i Bureau of S t a t i s t i c s and the U n i t e d N a t i o n s . 16. We s h o u l d , however, note d i f f e r e n c e s of o p i n i o n on t h i s , as the F i j i Bureau of S t a t i s t i c s (I983b:7) puts the f i g u r e at $US1200. 17. The 1983 sugar cane p r o d u c t i o n was only 54 percent of the 1982 sugar cane p r o d u c t i o n , a d e c l i n e of 46 percent ( c a l c u l a t e d from data i n F i j i Bureau of S t a t i s t i c s , I984a:20). 18. The t o t a l number of v e h i c l e s as used here comprises the f o l l o w i n g : p r i v a t e c a r s , t a x i s , r e n t a l and h i r e c a r s , goods v e h i c l e s , buses, t r a c t o r s , motor c y c l e s , and " a l l other v e h i c -l e s " ( F i j i Bureau of S t a t i s t i c s , 1984a:100). The ownership tr e n d of p r i v a t e c a r s i s approximately the same as f o r the t o t a l number of v e h i c l e s . The t o t a l number of v e h i c l e s r e g i s -51 t e r e d i n F i j i i s used here because i t provides a more comprehe-n s i v e p i c t u r e of p o t e n t i a l m o b i l i t y i n F i j i . 52 CHAPTER 2 INDUSTRIALIZATION IN DEVELOPING COUNTRIES1 As i n d i c a t e d i n Chapter 1, the m a j o r i t y of the develo-ping c o u n t r i e s are f i r m l y committed to i n d u s t r i a l i z a t i o n . T h i s chapter examines the degree to which, and i n what ways develo-ping c o u n t r i e s have achieved t h e i r o b j e c t i v e of r a p i d indus-t r i a l t r a n s f o r m a t i o n . Since i n d u s t r i a l i z a t i o n i n these coun-t r i e s has been p o w e r f u l l y shaped, and i s c o n t i n u i n g to be shaped , by the i n t e r n a t i o n a l environment, or in W a l l e r s t e i n ' s t erminology, the "world system" ( W a l l e r s t e i n , 1974: 347), t h i s chapter begins with a b r i e f account of the h i s t o r i c a l context i n which i n d u s t r i a l i z a t i o n of d e v e l o p i n g c o u n t r i e s has taken p l a c e . It then examines the c u r r e n t l e v e l , s t r u c t u r e , and o r g a n i z a t i o n of the i n d u s t r i a l economy of developing c o u n t r i e s . T h i s chapter a l s o d i s c u s s e s how the s i z e of a country may or may not i n f l u e n c e i t s development and i n d u s t r i a l i z a t i o n . The i n d u s t r i a l i z a t i o n of d e v e l o p i n g c o u n t r i e s has been v a r i o u s l y i n t e r p r e t e d . Views have ranged from the h i g h l y p o s i -t i v e , as c h a r a c t e r i z e d by t h i s statement from S i n c l a i r (1982: 3) that If the r a p i d growth of i n d u s t r i a l output, employment and incomes i n the developed c o u n t r i e s s i n c e 1945 has s u r p r i s e d f o r e c a s t e r s and confounded s c e p t i c s , the experience of the t h i r d world c o u n t r i e s i n the post-war p e r i o d has been no l e s s impressive to t h i s more sombre assessment by M a i z e l s (1976:31): "One of the outstanding f e a t u r e s of postwar economic growth has been that economic p r o s p e r i t y has v i r t u a l l y by-passed a l l but a 53 handful of developing c o u n t r i e s . " T h i s sombre assessment of T h i r d World development i s shared, in the context of i n d u s t r i -a l i z a t i o n , by Cody, Hughes, and Wall (1980:3): Despite the c o n s i d e r a b l e progress a l r e a d y made by develop-ing c o u n t r i e s i n these d i r e c t i o n s , the pace of i n d u s t r i a l i -z a t i o n , p a r t i c u l a r l y i n the low-income c o u n t r i e s , i s f a r from s a t i s f a c t o r y . ^ While the assessment of T h i r d World i n d u s t r i a l i z a t i o n has v a r i e d as much w i t h i n d i f f e r e n t t h e o r e t i c a l p e r s p e c t i v e s as among them, a major debate has ensured between w r i t e r s charac-t e r i z e d as "dependency w r i t e r s " and some M a r x i s t s on the one hand, such as Amin (1974a, b) and Frank (1967, 1969, 1979), and orthodox M a r x i s t s on the other hand, such as Warren (1973, 1980). T h i s chapter w i l l provide data to eval u a t e some of these p o s i t i o n s and to c l a r i f y the t h e o r e t i c a l arguments i n the next c h a p t e r . The H i s t o r i c a l Context The i n d u s t r i a l r e v o l u t i o n , which f i r s t o c c u r r e d i n Great B r i t a i n i n the l a t e r p a rt of the 18th century (Deane, 1965:3; a l s o see Hoskins, 1955:162-179), spread from Europe and the Un i t e d s t a t e s of America to Japan and the S o v i e t Union (see M a i t r a , 1980:9-19). The l a t t e r are the only non-European s o c i e -t i e s to have undergone the i n d u s t r i a l r e v o l u t i o n i n the twen-t i e t h c e n t u r y , making many development w r i t e r s p e s s i m i s t i c about the i n d u s t r i a l p r o s p e c t s of the p r e s e n t l y n o n - i n d u s t r i a -l i z e d s o c i e t i e s . Even i n c o u n t r i e s not undergoing i n d u s t r i a l transforma-2 t i o n , some elements of the i n d u s t r i a l r e v o l u t i o n , l i k e other i n n o v a t i o n s , spread to most of the world soon a f t e r i t s occur-54 rence in Europe and the United Sta t e s of America, l a r g e l y through c o l o n i a l i s m . Mass mi g r a t i o n from the e a r l y i n d u s t r i a -l i z e d s o c i e t i e s occurred l a r g e l y to temperate c o u n t r i e s , such as A u s t r a l i a , New Zealand, South A f r i c a , and South America. Many of these areas have achieved r e l a t i v e l y high l e v e l s of p r o s p e r i t y , even i f they have remained r e l i a n t upon a g r i c u l t u r e for much of t h e i r economic wealth. The bulk of the p r e s e n t l y n o n - i n d u s t r i a l i z e d c o u n t r i e s share a common legacy of having been c o l o n i e s of the p r e s e n t l y i n d u s t r i a l i z e d c o u n t r i e s . The impact of c o l o n i a l i s m on these s o c i e t i e s g e n e r a l l y , and on t h e i r i n d u s t r i a l development in p a r t i c u l a r , has been d i f f e r e n t l y i n t e r p r e t e d ( f o r some of the v i e w p o i n t s , see A l a v i et a l . , 1982; B agchi, 1982; Baran, 1973; B l a u t , 1975; Brewer, 1980; B r o o k f i e l d , 1972, 1975a; Chisholm, 1982; d'Encrousse and Schram [ E d s ] , 1969:149-186; de Souza and P o r t e r , 1974; Harvey, 1975; Mack, P l a n t , and Doyle [ E d s ] , 1979; Marx, 1972a; Myrdal, 1971; Ocampo, 1981; O'Connor, 1970; Roxbo-rough, 1979; Rweyemamu, 1973). I t i s g e n e r a l l y agreed that c o l o n i a l i s m d i d make i t p o s s i b l e , a l b e i t u n i n t e n t i o n a l l y , the t r a n s f e r to the c o l o n i e s of elements of the i n d u s t r i a l economy. In the case of I n d i a , f o r i n s t a n c e , as Marx (I972a:586) has p o i n t e d out, B r i t a i n promoted the development of r a i l w a y s with a view to more i n t e n s i v e l y e x p l o i t i n g Indian raw m a t e r i a l s . C o l o n i a l i s m a l s o i n i t i a t e d some l i m i t e d degree of i n d u s t r i a l p r o c e s s i n g of raw m a t e r i a l s to reduce b u l k . One can a l s o argue that many i n f r a s t r u c t u r a l developments, whatever the motive of t h e i r c r e a t i o n , provided a base on which i n d u s t r i a l development 55 in the p o s t - c o l o n i a l p e r i o d took p l a c e (see, for i n s t a n c e , Myrdal, 1971; Ocampo, 1981). However, the c o l o n i a l powers a l s o a c t i v e l y discouraged i n d u s t r i a l i z a t i o n i n the c o l o n i e s . Moreover, in the case of some c o l o n i e s , such as I n d i a , c o l o n i a l powers destroyed t h r i -v i n g and s o p h i s t i c a t e d manufacturing economies so as to induce them to import manufactured goods from the m e t r o p o l i t a n coun-t r i e s (on d e - i n d u s t r i a l i z a t i o n of d e v e l o p i n g c o u n t r i e s , see Bagchi, 1982; Baran, 1973; B r o o k f i e l d , I975a:4; D u t t , 1949; UNIDO, 1980a:128). Some idea of the impact of these p o l i c i e s on the i n d u s t r i a l systems of d e v e l o p i n g c o u n t r i e s can be obtained from the f a c t that the p r o p o r t i o n of the Indian working popula-t i o n engaged in i n d u s t r y and h a n d i c r a f t s f e l l from about 25 percent at the beginning of the n i n e t e e n t h century to about 18 percent in 1881 (UNIDO, I980a:l28). As Chisholm (1982:89) admits i n a study g e n e r a l l y favou-r a b l e to the former c o l o n i a l powers, "The c o l o n i a l powers had no p a r t i c u l a r i n c e n t i v e to f o s t e r i n d u s t r i a l i z a t i o n i n t h e i r overseas p o s s e s s i o n s . " We can go a s t e p f u r t h e r and argue that i t was i n t h e i r i n t e r e s t not to encourage i n d u s t r i a l i z a t i o n i n t h e i r c o l o n i e s , as i s i n d i c a t e d by t h i s statement from the B r i t i s h S e c r e t a r y of S t a t e : " I t was u n d e s i r a b l e to a c c e l e r a t e the i n d u s t r i a l i z a t i o n of East A f r i c a which must, for many years to come, remain a country of primary produce" ( B r e t t , 1973: 2 7 4 )3. The a c t i o n s of m e t r o p o l i t a n powers are to be e x p l a i n e d i n terms of the important r o l e c o l o n i e s were p l a y i n g i n t h e i r 56 own development. Adam Smith (quoted in B a l l a n c e , A n s a r i , and S i n g e r , 1982:9) ex p l a i n e d i t thus: By opening up a new and i n e x h a u s t i b l e market to a l l com-mod i t i e s of Europe i t [ i . e . c o l o n i z a t i o n of the Americas] gave occasion to a new d i v i s i o n of labour and improvement of a r t , which in the narrow c i r c l e of a n c i e n t commerce would never have taken p l a c e f o r want of a market . . . . One o f . t h e p r i n c i p a l e f f e c t s of these d i s c o v e r i e s has been to r a i s e the m e r c a n t i l e system to a degree of splendour and g l o r y which i t would never otherwise have a t t a i n e d . It i s the o b j e c t of that system to e n r i c h a great nation rather by trade and manufacture than by the improvement and c u l t i -v a t i o n of l a n d , rather by the i n d u s t r y of the towns than by that of the c o u n t r y . Marx (quoted in B a l l a n c e , A n s a r i and S i n g e r , 1982:9) expl a i n e d the importance of c o l o n i e s to the c o l o n i a l powers in t h i s manner: The c o l o n i e s provided a market f o r the budding manufactures which was guaranteed by the mother country's monopoly of the market. The resources c a p t u r e d o u t s i d e Europe flowed i n t o the mother country and were turned i n t o c a p i t a l t h e r e . We can see, t h e r e f o r e , that c o l o n i a l powers had a d e f i -n i t e i n t e r e s t i n ensuring that minimal i n d u s t r i a l i z a t i o n took place i n the c o l o n i e s . The c o l o n i a l powers e i t h e r a c t i v e l y and d i r e c t l y reduced e x i s t i n g manufacturing in c o l o n i e s where i t e x i s t e d , or discouraged the development of manufacturing i n d i -r e c t l y , or simply d i d not encourage i t . I t i s not s u r p r i s i n g , t h e r e f o r e , that i n d u s t r i a l i z a t i o n i n most developing c o u n t r i e s s t a r t e d i n earnest only a f t e r they had a t t a i n e d p o l i t i c a l independence. T h i s i s not to say t h a t there was no i n d u s t r i a l i -z a t i o n d u r i n g the c o l o n i a l p e r i o d — f o r t h i s i s not true--but r a t h e r to suggest that c o l o n i a l i s m was a major c o n s t r a i n t to i n d u s t r i a l i z a t i o n i n the T h i r d World. The importance of the attainment of p o l i t i c a l independ-57 ece by developing countries to their attempts to industrialize cannot be overemphasized, as this observation by Grif f i n (1981:221) in another, but related, context indicates: "Without •decolonization there probably would have been no development economics or development studies and possibly not much develop-ment either." Most developing countries had adopted develop-ment planning as their route to rapid economic development from 1930 onwards following its adoption by the Soviet Union (Bal-lance, Ansari, and Singer, 1982:28). Mindful of the neglect and discouragement of industrialization during the colonial era, and recognizing the v i t a l role of industrialization in meeting quickly the demands of their large and burgeoning populations, most developing countries quickly adopted ambitious industria-lization plans. The above account of the evolution of industrialization in the Third World would be misleading if it did not note the spurt of industrialization many colonies and independent non-industrial societies enjoyed during the depression of the 1930s--especially in Latin America—and during the Second World War. Breakdowns in the international trading systems, and the requirements of the war promoted the development of manufactu-ring in developing countries. This disruption in the interna-tional economic system is regarded by some writers as offering developing countries an opportunity to evolve their own indus-t r i a l structures without the dominating influence exerted by the international system (Bienefeld, 1979; Frank, 1969). 58 The L e v e l , S t r u c t u r e , and O r g a n i z a t i o n of T h i r d World I n d u s t r i a l Economy Le v e l I n d u s t r i a l p r o d u c t i o n in developing c o u n t r i e s has become s i g n i f i c a n t , as has a l r e a d y been noted, only a f t e r the Second World War, when most of them became independent. The i n s i g n i f i -cance of t h e i r i n d u s t r i a l s e c t o r s p r i o r to the war i s i n d i c a t e d by the f a c t that in 1938 developing c o u n t r i e s accounted f o r only 4.5 percent of g l o b a l manufacturing value added ( B a l l a n c e , A n s a r i , and S i n g e r , 1982:96). We can examine the importance of i n d u s t r i a l i z a t i o n i n the T h i r d World in two ways. The f i r s t i s to examine the impor-tance of manufacturing production in t h e i r GDP. T h i s i s an important i n d i c a t i o n of the c o n t r i b u t i o n that manufacturing makes in the s o c i e t y ' s w e l l - b e i n g , and i s presented in Table 2.1. Three p o i n t s emerge from Table 2.1. F i r s t , manufacturing s t i l l c o n s t i t u t e s only a small part of the n a t i o n a l economy f o r most developing c o u n t r i e s . Second, A f r i c a and the Middle East had the lowest degree of development of manufacturing in deve-l o p i n g c o u n t r i e s , both i n 1960 and i n 1977, although the Middle E a s t , with i t s petroleum money, i s f a r b e t t e r p l a c e d to improve i t s s i t u a t i o n in the f u t u r e . F i n a l l y , the most dramatic i n c r e a s e in manufacturing has been recorded by East A s i a and the P a c i f i c group. The i n d u s t r i a l performance of a small group of develo-ping c o u n t r i e s , such as South Korea, Hong Kong, Singapore, and Taiwan have been so remarkable that B a l l a n c e , A n s a r i and Singer (1982:50) maintain that "The r e l a t i v e performance of a few Asian c o u n t r i e s i s so prominent as to suggest that dynamic 59 TABLE 2.1 THE SHARE OF MANUFACTURING IN GDP (AT CURRENT FACTOR COST) OF DEVELOPING COUNTRIES3 BY REGIONS Region Share of Gross Domest i c Product 1 960 1 965 1 970 1 97' A f r i c a , South of Sahara 10.3 12.3 13.1 13.3 M i d d l e East & North A f r i c a 12.4 14.0 14.9 13.2 E a s t A s i a & Pac i f i c 13.5 15.4 18.3 20.7 S.outh A s i a 13.2 14.3 13.9 15.5 L a t i n America & Caribbean 24. 1 24.6 24.7 26.5 Southern Europe 25.0 25. 1 24.7 26.2 SOURCE: World Bank, 1980:390. aThe World Bank's usage of "developing c o u n t r i e s " has two f e a t u r e s that need to be po i n t e d out here. Developing c o u n t r i e s i n c l u d e these c o u n t r i e s , some of which are not u s u a l l y i n c l u d e d as d e v e l o p i n g : Cyprus, I s r a e l , Greece, M a l t a , P o r t u g a l , S p a i n , Turkey, and Y u g o s l a v i a . The category excludes what the World Bank c a l l s " c a p i t a l - s u r p l u s o i l e x p o r t i n g developing c o u n t r i e s " : Kuwait, Libyan Arab R e p u b l i c , Oman, Qat a r , Saudi A r a b i a , and United Arab E m i r a t e s . export performance i n the 1960s and 1970s was l a r g e l y a r e g i o -n a l a f f a i r . " The second, e q u a l l y important, index of T h i r d World i n -d u s t r i a l i z a t i o n i s t h e i r share of g l o b a l manufacturing value added and t r a d e . Both of these have i n c r e a s e d i n the l a s t two decades, as shown in Table 2.2, although the export performance has been s u p e r i o r to t h e i r gains i n g l o b a l manufacturing value added. The share of de v e l o p i n g c o u n t r i e s i n world manufacturing v a l u e added inc r e a s e d from 8.2 percent i n 1960 to 10.9 percent 60 TABLE 2.2 SHARE IN WORLD EXPORTS OF MANUFACTURES3 AND IN WORLD MANUFACTURING VALUE ADDEDb BY COUNTRY GROUPS, 1960-1980 (PERCENTAGE) Region 1960 1 970 1980 Exports Value Added Exports Value Added Exports Value Added Developed market economies 83.8 77.8 84.9 72.6 82.9 65. 3 Developing c o u n t r i e s 3.9 8.2 5.0 8.8 9.0 10.9 S o c i a l i s t c c o u n t r i e s 12.4 14.0 10.1 18.6 8.1 23.8 SOURCE: UNCTAD, 1983b:7 • Manufactures comprise Standard I n t e r n a t i o n a l Trade C l a s s i f i c a t i o n (SITC) ( R e v i s i o n 2) s e c t i o n s 5-8 but excludes d i v i s i o n 68 (non-ferrous m e t a l s ) . More d e t a i l s on SITC can be found in Uni t e d Nations (1975). Manufacturing value added of ISIC 3. cT h i s excludes C h i n a . in 1980, while that of g l o b a l exports of manufactures i n c r e a s e d from 3.9 percent in 1960 to 9 percent i n 1980. Although Table 2.2 i s a cause f o r both s a t i s f a c t i o n and disappointment i n that the share of developing c o u n t r i e s ' value added in manufacturing, although i n c r e a s i n g , was s t i l l only 11 percent of the of world manufacturing value added i n 1980, i t i s important to note that growth i n deve l o p i n g c o u n t r i e s has been more r a p i d than i n developed market economies, even a f t e r 61 a l l o w i n g f o r the small i n d u s t r i a l base of developing c o u n t r i e s . Between 1968 and 1980, for i n s t a n c e , manufacturing in develo-ping market economies i n c r e a s e d by 6.4 percent a n n u a l l y , while i n developed market economies i t was 3.3 percent (United Na-t i o n s , 1982:591-592). The growth of exports of manufactures from developing c o u n t r i e s has been even more remarkable--manufactured exports from developing market economies increased by 15 percent per annum between 1960 and 1975, while the f i g u r e f o r developed market economies was 10 percent (Hughes, 1980:12). Developing c o u n t r i e s comprise a group of d i v e r s e s o c i e -t i e s that have performed unequally i n development and i n d u s t r i -a l i z a t i o n . I t i s important, t h e r e f o r e , to note r e g i o n a l cont-r a s t s i n the l e v e l of i n d u s t r i a l i z a t i o n and i n recent indus-t r i a l performance. The development of manufacturing i s h i g h l y uneven i n the T h i r d World. The d i s t r i b u t i o n of manufacturing value added i n seventy-three c o u n t r i e s for which data are p r o v i d e d by the World Bank are given i n Table 2.3. Data are not a v a i l a b l e f o r China and a number of other c o u n t r i e s as w e l l , but Table 2.3 presents the best d i s t r i b u t i o n of manufacturing a c t i v i t i e s i n developing c o u n t r i e s that c u r r e n t data a l l o w . In terms of manufacturing value added, the major i n d u s t r i a l developing c o u n t r i e s are B r a z i l , Mexico, I n d i a , C hina, A r g e n t i n a , South Korea, Indonesia, P h i l i p p i n e s , Venezuela, Hong Kong, T h a i l a n d , Egypt, Peru, and N i g e r i a , a l l having manufacturing value added in 1981 i n excess of $US4 62 TABLE 2.3 THE DISTRIBUTION OF MANUFACTURING VALUE ADDED IN DEVELOPING COUNTRIES IN 1981 IN 1975 $US MILLIONS3 Country Manufacturing Value Added i n 1981 in 1975 $US M i l l i o n s Alger i a 31 25 Argent ina 1 061 2 Bangladesh 1 290 Benin 56 B o l i v i a 390 Braz i 1 40673 Burma 456 Burundi 44 Cameroon 477 C e n t r a l A f r i c a n Republic 29 Chad 21 C h i l e 2161 Colombia 3260 Congo People ' s. Republ i c 1 04 Costa Rica • 531 Dominican Republic 956 Ecuador 887 E9 y p t , Arab Republic 4544 E l Salvador 270 E t h i o p i a 349 Ghana 505 Guinea 26 Honduras 254 Hong Kong 4966 I ndia 1 61 90 Indones i a 5998 Ivory Coast 706 Jamaica 359 Jordan 286 Kenya 531 Korea, Republic of 10542 Kuwa i t 986 Lesotho 1 0 L i b e r i a 39 Li b y a 544 Madagascar 272 Malawi 81 Ma l a y s i a 2918 Mali 55 M a u r i t a n i a 36 Mexico 31115 Morocco 1960 63 TABLE 2.3 (Continued) Nicaragua 360 Niger 1 72 N i g e r i a 4020 Pakistan 2496 Panama 280 Papua New Guinea 1 32 Paraguay 430 Peru 4038 P h i l i p p i n e s 5706 Rwanda 1 06 Saudi A r a b i a 3568 Senegal 298 S i e r r a Leone 37 Singapore 2556 S r i Lanka 714 Sudan 421 S y r i a n Arab Republic 1318 Tanzan i a 202 Thai land 4636 Togo 1 4 T r i n i d a d and Tobago 434 Tun i s i a 820 Uganda 87 Upper V o l t a 96 Uruguay 960 Venezuela 5531 Yemen Arab Republic 1 02 Yemen, P.D.R. 59 Zai r e 1 63 Zambia 444 Zimbabwe 969 T o t a l 189783 SOURCE: World Bank, 1984:230-231. The l i s t above excludes those developing c o u n t r i e s f o r which data were not a v a i l a b l e , and European c o u n t r i e s l i s t e d by the World Bank as d e v e l o p i n g ( Y u g o s l a v i a , Turkey, Greece, and P o r t u g a l ) . I t a l s o excludes I s r a e l and South A f r i c a . b i l l i o n i n 1975 p r i c e s (Table 2.3). Only one c o u n t r y , B r a z i l , accounted for 21 percent of the t o t a l manufacturing value added of the seventy-three 64 d e v e l o p i n g c o u n t r i e s r e f e r r e d to i n 1981, and i t , together with Mexico, I n d i a , A r g e n t i n a , and South Korea, accounted f o r 58 percent of the combined manufacturing value added of these seventy-three c o u n t r i e s . Furthermore, t h i r t e e n developing c o u n t r i e s ( e x c l u d i n g China because data on i t are not a v a i l a b l e ) i d e n t i f i e d as major i n d u s t r i a l developing c o u n t r i e s , c o n t a i n e d an i n c r e d i b l e 78 percent of the t o t a l manufacturing value added of the seventy-three developing c o u n t r i e s mentioned ( c a l c u l a t e d from World Bank, 1984:230-231). These s t a t i s t i c s serve to h i g h l i g h t the h i g h l y uneven development of manufacturing i n developing c o u n t r i e s g e n e r a l l y . The most s i g n i f i c a n t d eveloping i n d u s t r i a l i z i n g c o u n t r i e s are i s o l a t e d i n Table 2.4, which presents a d d i t i o n a l data concerning i n d u s t r i a l i z a t i o n i n these c o u n t r i e s . Table 2.4 r e i n f o r c e s our o b s e r v a t i o n s concerning the h i g h l y uneven d i s t r i b u t i o n of manufacturing i n developing c o u n t r i e s . It a l s o demonstrates the h i g h l y uneven performance of developing c o u n t r i e s i n e x p o r t i n g manufactured goods. B r a z i l , South Korea, Hong Kong, and Singapore c l e a r l y dwarf the r e s t of the d e v e l o p i n g c o u n t r i e s i n the export of manufactured goods. Below t h i s group of high-performing T h i r d World e x p o r t e r s can be i d e n t i f i e d another group that comprises China, I n d i a , Mexico, A r g e n t i n a , M a l a y s i a , I n d o n e s i a , P h i l i p p i n e s , Venezuela, T h a i l a n d , Colombia, and C h i l e . The r e s t of the T h i r d World can be put i n a category of r e l a t i v e l y i n s i g n i f i c a n t e x p o r t e r s of manufactured goods. As we saw i n Chapter 1, one of the main i n d i c e s of the TABLE 2.4 INDUSTRIALIZATION IN DEVELOPING COUNTRIES: THE MAIN COUNTRIES3 Country^ Manufacturing Rank Cumulative World Trade in Rank Share of MVA in Value Added in 1981 Percentage of Manufactures, GDP in 1982 in 1975 $US Millions the Total 1981 in $US MVA of 73 Developing Millions Countries Brazil 40673 1 21 16495 1 29e Mexico 31115 2 37 4566 9 21 India 16190 3 46 4894 8 16f Argentina 10612 4 52 4990 7 22f Korea, Republic of 10542 5 58 16458 2 28 Indonesia 5998 6 61 3727 11 13 Philippines 5706 7 64 3215 13 24 Venezuela 5531 8 67 6470 5 16 Hong Kong 4966 9 70 13421 4 na Thailand 4636 10 72 3950 10 19 Egypt 4544 11 74 714 19 27 Peru 4038 12 76 1962 15 24 Nigeria 4020 13 78 217 20 6 Saudi Arabia 3568 14 80 na na 4 Colombia 3260 15 82 3535 12 21 Algeria 3125 16 84 1632 17 10 Malaysia 2918 17 86 6120 6 18 Singapore 2556 18 87 15726 3 26 Pakistan 2496 19 88 1903 16 17 Chile 2161 20 89 3010 14 20 Morocco 1960 21 90 994 18 16 Syria 1318 22 91 na na na Bangladesh 1290 23 92 na na 7 China c c ' c na na na Iran c c c na na na SOURCE: World bank, 1983:388-482; 1984:222-223, 230-232; and Economic Cocimission for Latin America, 1983:82, 176. a0nly countries with 1981 manufacturing value added in excess of $US1 billion have been included here. Note also that European developing countries listed by the World Bank, such as Greece, Yugoslavia, as well as Israel have been excluded. ''Countries have been arranged according to the magnitude of their manufacturing value added in 1981. Note that it was not possible to rank China and Iran. They should not be assuned to of lower rank because of their placement at the bottom of the table. Unfortunately, data on the manufacturing value added of China and Iran were not available. They are, nonetheless, significant industrializing developing countries. s column represents the sum of individual country proportions of the total manufacturing value added of the seventy-three developing countries represented in Table 2.3. ^ata are from Economic Conmission for Latin America, 1983:176 and are for 1981. D^ata are for 1981 and are from Economic Commission for Latin America, 1983:82. 66 l e v e l of i n d u s t r i a l i z a t i o n i n a country i s the share of manufacturing value added i n the GDP. Table 2.4 i n c l u d e s these d a t a , which a l s o d i s p l a y great d i v e r s i t y among the twenty-one c o u n t r i e s f o r which data were a v a i l a b l e . The four most outstanding developing c o u n t r y e x p o r t e r s of manufactured goods a l s o have the highest l e v e l s of i n d u s t r i a l i z a t i o n , although a few other developing c o u n t r i e s , such as P h i l i p p i n e s , Egypt, and Peru a l s o have r e l a t i v e l y h i g h l e v e l s of i n d u s t r i a l i z a t i o n . The second t i e r of T h i r d World e x p o r t e r s of manufactured goods a l l have l e v e l s of i n d u s t r i a l i z a t i o n exceeding 13 percent of the GDP. Data i n Table 2.4 show, on the whole, that whether one looks at l e v e l s of i n d u s t r i a l i z a t i o n , t o t a l manufacturing value added, or exports of manufactured goods, a small number of developing c o u n t r i e s , numbering about f i f t e e n , emerge as the key, and dominant c o u n t r i e s . Apart from India and C h i n a , most of the success enjoyed by developing c o u n t r i e s i n manufacturing p r o d u c t i o n has been c o n f i n e d to middle and upper income developing c o u n t r i e s . The World Bank (1980:390) n o t e s , f o r i n s t a n c e , that the low income developing c o u n t r i e s i n 1977 had only 13.3 percent of t h e i r GDP made up by manufacturing, while the comparative f i g u r e f o r middle income developing c o u n t r i e s was almost twice as much (23.2 p e r c e n t ) . T h i s i s c o r r o b o r a t e d by the f i n d i n g s of the UNIDO that whereas low income developing c o u n t r i e s , which con-t a i n e d 57 percent of the p o p u l a t i o n of the sample of e i g h t y f i v e d e v e l o p i n g c o u n t r i e s , experienced a constant annual rate of growth i n manufacturing value added of 5.2 percent per annum 67 between 1960 and 1975, high income developing c o u n t r i e s , which con t a i n e d a m i n i s c u l e 1.6 percent of the sample p o p u l a t i o n , experienced an annual growth rate in manufacturing value added of 8.3 percent (UNIDO, 1979a: 39). Thus to summarize t h i s s e c t i o n , we can say that i n aggregate terms, the T h i r d World has made impressive gains i n i n d u s t r i a l i z a t i o n , but that t h i s has not been enough given the magnitude of the problems f a c i n g these c o u n t r i e s , and that most of the poorer d e v e l o p i n g c o u n t r i e s have not improved t h e i r i n d u s t r i a l p o s i t i o n very much at a l l . S t r u c t u r e The contemporary i n d u s t r i a l . s t r u c t u r e of developing c o u n t r i e s i s summarized in Table 2.5. The food i n d u s t r i e s (ISIC 311-313) form the core of the i n d u s t r i a l s t r u c t u r e , although t e x t i l e s , "other c h e m i c a l s " , and petroleum r e f i n e r i e s have a l s o emerged as important i n d u s t r i a l a c t i v i t i e s . The exports of manufactured goods from developing coun-t r i e s have become more s o p h i s t i c a t e d in the l a s t two decades. The exports of e n g i n e e r i n g goods, f o r i n s t a n c e , formed only 9 percent of the exports of n o n - o i l - e x p o r t i n g developing coun-t r i e s i n 1973; by 1979, i t had r i s e n to 13 percent ( c a l c u l a t e d from S i n c l a i r , 1982:9-10). Many recent s t u d i e s on exports from developing c o u n t r i e s demonstrate the a b i l i t y of many developing c o u n t r i e s to export e n g i n e e r i n g s e r v i c e s , l a r g e standard c a p i -t a l goods, and turn-key p r o j e c t s to other d e v e l o p i n g c o u n t r i e s and to developed market economies themselves. The changed i n d u s t r i a l s t r u c t u r e of developing c o u n t r i e s 68 TABLE 2.5 UNWEIGHTED STRUCTURE OF NET MANUFACTURING OF DEVELOPING COUNTRIES FOR SELECTED YEARS AND ECONOMIC GROUPINGS (PERCENTAGE) Economic Groups 1963 1970 1978 Food products 26.3 21.2 18.9 Beverages 5.7 4.9 5.7 Tobacco 6.3 4.9 4.4 T e x t i l e s 11.3 11.8 10.8 Wearing ap p a r e l 3.6 3.9 4.1 Leather & fur products 1.0 0.9 0.9 Footwear 1.7 1.8 1.6 Wood & cork products 3.7 3.2 2.8 F u r n i t u r e & f i x t u r e s e x c l u d i n g metal 2.1 1.8 1.3 Paper -1.8 2.0 2.3 P r i n t i n g & p u b l i s h i n g 2.9 2.6 2.4 I n d u s t r i a l chemicals 2.1 2.8 3.2 Other chemicals 4.2 4.6 5.3 Petroleum r e f i n e r i e s 5.6 7.2 7.1 Mi s c e l l a n e o u s products of petroleum & c o a l 0.2 1.0 0.8 Rubber products 1.9 1.6 1.6 P l a s t i c products 0.6 1.1 1.4 P o t t e r y , china & earthenware 0.6 0.5 0.5 Glass 0.6 0.7 0.7 Other n o n - m e t a l l i c mineral products 3.5 3.9 4.0 Iron & s t e e l 1.6 2.5 2.6 Non-ferrous metals 1.5 1.2 1.3 Metal products e x c l u d i n g machinery 3.5 4.2 4.3 N o n - e l e c t r i c a l machinery 1.6 1.9 2.3 E l e c t r i c a l machinery 1.5 2.6 3.7 Transport equipment 2.7 3.1 3.8 P r o f e s s i o n a l & s c i e n -t i f i c equipment, photographic & o p t i c a l goods 0.3 0.4 0.5 Other manufactures 1.6 1.6 1.6 SOURCE: UNIDO, 1982a:19. 69 i s a l s o r e f l e c t e d by the f a c t that heavy i n d u s t r y i s forming a growing share of the i n d u s t r i a l o u t p u t - - r i s i n g from 33 percent in 1955 to 43 percent i n 1963 and reaching 57 percent of manu-f a c t u r i n g value added in 1978 (UNIDO, 1982a:17). O r g a n i z a t i o n Manufacturing i n developing c o u n t r i e s possesses s e v e r a l d i s t i n g u i s h i n g f e a t u r e s , the most important of which are the high degree of f o r e i g n d i r e c t investment, presence of l a r g e 4 p r e - c a p i t a l i s t manufacturing s e c t o r s , and the i n c r e a s i n g l y l a r g e r o l e played by the s t a t e , not only i n manufacturing, but in the economy at l a r g e , i n almost a l l developing c o u n t r i e s , whatever t h e i r p o l i t i c a l o u t l o o k . 5 Foreign p r i v a t e d i r e c t investment F o r e i g n ownership i n the manufacturing s e c t o r of develo-ping c o u n t r i e s i s s i g n i f i c a n t , although v a r i a b l e , depending on the p o l i t i c a l p h i l o s o p h i e s of the government and the n a t u r a l resource and c a p i t a l s i t u a t i o n of the s o c i e t i e s concerned. Since f o r e i g n investment in d e v e l o p i n g c o u n t r i e s i s almost synonymous with t r a n s n a t i o n a l c o r p o r a t i o n s , and d i r e c t f o r e i g n investment, these three terms w i l l be used interchangeably i n t h i s t h e s i s . Although T h i r d World i n d u s t r i a l i z a t i o n has been based, in the main, on domestic r e s o u r c e s , shortage of c a p i t a l , tech-nology, i n t e r n a t i o n a l marketing e x p e r t i s e , and the urgency of the development q u e s t i o n in these c o u n t r i e s have forced most developing c o u n t r i e s to seek e x t e r n a l f i n a n c i n g and other as-70 s i s t a n c e f o r t h e i r development. E x t e r n a l f i n a n c e comprises d i f f e r e n t types of f i n a n c i n g , i n c l u d i n g o f f i c i a l development a s s i s t a n c e , "other f i n a n c i a l f l o w s " , grants by p r i v a t e v o l u n t -ary a g e n c i e s , and p r i v a t e f l o w s . The l a t t e r has assumed import-ance s i n c e the 1970s, a c c o u n t i n g , f o r i n s t a n c e , f o r 61 percent of the t o t a l f i n a n c i a l flows from Development A s s i s t a n c e Member Co u n t r i e s i n 1977 (UNIDO, 1979a:292). D i r e c t f o r e i g n p r i v a t e investment i s the major component of p r i v a t e c a p i t a l i n f l o w s , although f o r e i g n d i r e c t investment as a p r o p o r t i o n of t o t a l f i n a n c i a l i n f l o w s has been de c r e a s i n g (UNIDO, I979a:292; UNCTC, I983a:2). Nonetheless, f o r e i g n d i r e c t investment i n developing c o u n t r i e s has been growing s t e a d i l y , and i s v i t a l i f developing c o u n t r i e s are to come even c l o s e to meeting the ta r g e t set by the Lima D e c l a r a t i o n (see, f o r i n s -tance, UNCTC, 1979; UNIDO, 1979a). L a t e s t estimates i n d i c a t e a g l o b a l p r i v a t e f o r e i g n d i -re c t investment of $US47.2 b i l l i o n i n 1979 (UNCTC, 1983a:1). Of t h i s , $US13.7 b i l l i o n , or 29 percent was l o c a t e d i n developing c o u n t r i e s , a share that has remained roughly the same s i n c e the 1960s. The d i s t r i b u t i o n of the stock of f o r e i g n d i r e c t i n v e s t -ment i n developing c o u n t r i e s i s shown in Table 2.6. The h i g h l y c o n c e n t r a t e d nature of these investments i s c l e a r l y shown--only three c o u n t r i e s ( B r a z i l , Mexico, and Indonesia) account f o r a s t a g g e r i n g 34 percent of the e n t i r e s t o c k ^ of d i r e c t f o r e i g n investment i n developing c o u n t r i e s ; twenty one c o u n t r i e s ac-count f o r about f o u r - f i f t h s of the e n t i r e stock ( c a l c u l a t e d TABLE 2.6 THE DISTRIBUTION OF STOCK OF DIRECT FOREIGN INVESTMENT IN DEVELOPING COUNTRIES, 19783 ($US MILLION) Country Stock L a t i n America Argent ina 3340 Bahamas 2060 Barbados 1 80 B o l i v i a 1 40 B r a z i l 1 3520 C h i l e 1 440 Colombia 1510 Costa Rica 290 Dominican Republic ' 390 Ecuador 660 E l Salvador 1 50 Guatemala 290 Guyana 230 Honduras 270 Jamaica 900 Mex i c o 6000 Panama 31 40 Paraguay 1 1 0 Peru 21 50 Surinam 420 T r i n i d a d & Tobago 1 300 Uruguay 330 Venezuela 3620 Sub-Total 42440 r i c a A l g e r i a 385 Angola 100 Congo 1 70 Egypt 245 E t h i o p i a 1 00 Gabon 780 Ghana 280 Guinea 200 Ivory Coast 530 Kenya 520 L i b e r i a 1230 Libyan Arab Jamahiriya 660 Madagascar 190 Malawi 1 00 Morocco 350 Mozambique 100 Niger 100 N i g e r i a 1 1 30 72 TABLE 2.6 (Continued) Senegal 340 Somalia 100 Togo 100 T u n i s i a 280 Unit e d Republic of Cameron 370 Unit e d Republic of Tanzania 170 Za i r e 1250 Zambia 330 Zimbabwe 400 Sub-Total 10510 West A s i a Bahrain 210 Iraq 150 I s r a e l 1000 Kuwait 180 Lebanon 100 Qatar 150 Saudi A r a b i a 250 Turkey 450 United Arab Emirates 190 Sub-Total 2680 South A s i a India 2500 Iran 1000 Pakis t a n 790 Sub-Total 4290 South-east A s i a & Oceania F i j i 220 Indonesia 5760 Ma l a y s i a 2880 Papua New Guinea 860 P h i l i p p i n e s 1820 Republic of Korea 1500 Singapore 1700 T h a i l a n d 445 Sub-Total 15185 Europe Malta 120 Yug o s l a v i a 170 Sub-Total 290 T o t a l 75395 SOURCE: UNCTC, 1983a:311-315. aC o u n t r i e s with d i r e c t f o r e i g n investment stock of l e s s than one hundred m i l l i o n d o l l a r s , or those f o r which data were not a v a i l a b l e , are excluded. 73 from Table 2.6). Table 2.6 c o r r o b o r a t e s the f i n d i n g s of the UNCTC (1983b:17) that only s i x developing c o u n t r i e s ( A r g e n t i n a , B r a z i l , Hong Kong, M a l a y s i a , Mexico, and Singapore) c o n s i s t e n -t l y accounted for between one h a l f and three q u a r t e r s of a l l d i r e c t f o r e i g n investment flowing i n t o developing c o u n t r i e s i n the l a s t years of the l a s t decade. The presence of TNCs in the manufacturing i n d u s t r i e s of developing c o u n t r i e s i s h i g h l y v a r i a b l e but s i g n i f i c a n t . The d i s t r i b u t i o n of d i r e c t f o r e i g n investment in manufacturing in s e l e c t e d developing c o u n t r i e s i s presented i n Table 2.7--which r e i n f o r c e s our o b s e r v a t i o n concerning the v a r i a b i l i t y of d i r e c t f o r e i g n investment in the manufacturing i n d u s t r i e s of develo-ping c o u n t r i e s . There has been an i n t e r e s t among w r i t e r s on i n d u s t r i a l i -z a t i o n i n developing c o u n t r i e s i n the r o l e p l a y ed by TNCs in exports of manufactures (see, for i n s t a n c e , L a l l , 1980; Nayyar, 1978; R i e d e l , 1975; UNCTC, 1979). The o v e r a l l assessment of t h e i r r o l e would have to be that they have had a major r o l e in the case of some c o u n t r i e s , while i n o t h e r s , t h e i r r o l e has not been s i g n i f i c a n t (Table 2.8). On b a l a n c e , i t appears th a t . . . the mere presence of t r a n s n a t i o n a l c o r p o r a t i o n s i n a country's manufacturing i n d u s t r y does not n e c e s s a r i l y con-t r i b u t e to strong export performance, at l e a s t not more than domestic e n t e r p r i s e s ; n e i t h e r does that presence impair export performance i f the trade and macroeconomic environment i s favourable (UNCTC, 1983b: 158). A l o t , then, depends on government p o l i c i e s , f a c t o r advantages enjoyed by the country, and on the nature of the t r a n s n a t i o n a l c o r p o r a t i o n i t s e l f . The presence of t r a n s n a t i o n a l c o r p o r a t i o n s i n d e v e l o p i n g 74 TABLE 2.7 STOCK OF DIRECT FOREIGN INVESTMENT IN SELECTED DEVELOPING COUNTRIES, LATE 1970s ($US MILLION) Country Stock B r a z i l 13005 Indonesia 4202 Mexico 3868 Singapore 1773 India 1238 N i g e r i a 873 Republic of Korea 737 P h i l i p p i n e s 716 Colombia 572 Hong Kong 434 Malaysia 433 Peru 350 T h a i l a n d 198 Ecuador 97 Morocco 92 Venezuela 84 SOURCE: UNCTC, 1983b: 135. TABLE 2.8 THE SHARE OF TNCs IN EXPORTS OF MANUFACTURES OF SELECTED DEVELOPING COUNTRIES, VARIOUS YEARS (PERCENTAGE) Country TNC Share Year A r g e n t i n a >30 1969 B r a z i l 43 1969 Colombia >30 1970 Hong Kong 10 1972 India 5 1970 Republic of Korea 27 1978 Mexico 34 1974 Pa k i s t a n 10 1975 Singapore 92 1978 SOURCE: UNCTC, 1983b: 137. 75 c o u n t r i e s , and to a l e s s e r e x t e n t , in developed c o u n t r i e s , has been c o n t r o v e r s i a l . There have been f e a r s and charges of domi-n a t i o n of the domestic economy, hindrance to the development of domestic e n t r e p r e n e u r s h i p , d i s t o r t i o n i n the n a t i o n a l economy r e s u l t i n g from the t r a n s n a t i o n a l c o r p o r a t i o n ' s bias towards high wages and c a p i t a l i n t e n s i v e technology, t r a n s f e r p r i c i n g , and the t r a n s f e r of t a s t e s and l i f e s t y l e s that are not capable of being met from n a t i o n a l r e s o u r c e s . Much of these have been p a r t i a l l y r e s o l v e d with the e f f o r t of the UNCTC, which has been ins t r u m e n t a l i n drawing up an i n t e r n a t i o n a l code of conduct f o r t r a n s n a t i o n a l c o r p o r a t i o n s , and p a r t l y by the growing a b i l i t y of developing c o u n t r i e s to r e c o g n i z e , monitor, and deal with these i s s u e s . The r e a l i t y of T h i r d World development, and i n t e r n a t i o n a l f i n a n c i n g i s , however, that developing c o u n t r i e s w i l l have to draw on t r a n s n a t i o n a l c o r p o r a t i o n s f o r c a p i t a l and i n t e r n a t i o n a l marketing e x p e r t i s e for the f o r e s e e b l e f u t u r e . The Role of the State The second f e a t u r e that d i s t i n g u i s h e s i n d u s t r i a l i z a t i o n i n d e v e l o p i n g c o u n t r i e s from that i n developed market economies i s the high degree of s t a t e involvement, not only in i n d u s t r i -a l i z a t i o n but i n the n a t i o n a l economy as a whole. The s t a t e has, of c o u r s e , always been c l o s e l y i n v o l v e d i n i n d u s t r i a l i -z a t i o n . In the case of p r e s e n t l y i n d u s t r i a l i z e d market econo-mies, i t provided s t i f f p r o t e c t i o n to nascent i n d u s t r y , a f a c t o f t e n n e g l e c t e d by w r i t e r s when d i s c u s s i n g the p r o t e c t i o n p o l i c i e s of d eveloping c o u n t r i e s ( f o r B r i t i s h and German pro-t e c t i o n p o l i c i e s , see B a l l a n c e , A n s a r i , and S i n g e r , 1982: 7-38; 76 Bagchi, 1982: 17; Dutt, 1949). Most of these governments also engaged in colonialism, providing their industries with much needed raw materials and markets, often captive. The current international f i n a n c i a l and trading system was also put into place by these governments; these arrangements have served the interests of i n d u s t r i a l i s t s in these countries very well. The state in developing countries has also been intima-tely concerned with i n d u s t r i a l i z a t i o n . We have already noted the adoption by most developing countries of planning as their route to rapid economic transformation. A major distinguishing feature of state involvement in developing countries has been i t s increasingly large role in dir e c t production and, to a lesser extent, in d i s t r i b u t i o n . There has been a p r o l i f e r a t i o n of state-owned enterprises engaged in i n d u s t r i a l production (Dickenson, 1978:96; G i l l i s , 1980:248; Guisinger, 1980; L a i , 1980: 211). In f a c t , the p r o l i f e r a t i o n of state-owned enter-prises in developing countries has been so marked and s i g n i f i -cant that G i l l i s (quoted in Ballance, Ansari, and singer, 1982: 269) has claimed that . . . only in very small number of natural resource export-ing nations have multinationals loomed larger in terms of investment shares, generation of value added, employment or foreign exchange. By whatever standards employed, state-owned enterprises now play a more c r i t i c a l role in the development process of a number of developing countries than do multinationals and [their] r e l a t i v e importance i s l i k e l y to grow in the future. Lai (1980:, 211) also echoes t h i s conviction: Public enterprises play a s i g n i f i c a n t role in the develop-ment process in many developing countries . . . . In recent years there has been a resurgence of public enterprises in manufacturing, p a r t i c u l a r l y in o i l - r i c h countries and those 77 seeking to i n c r e a s e l o c a l ownership of manufacturing f i r m s . UNIDO (I979a:315) a l s o argues that state-owned e n t e r p r i s e s have become an important component of the i n d u s t r i a l landscape i n developing c o u n t r i e s , and B a l l a n c e , A n s a r i , and Singer (1982:269) p o i n t out that of a l l the firms based i n l e s s deve-loped c o u n t r i e s i n c l u d e d in the Fortune magazine's l i s t of the l a r g e s t 500 i n d u s t r i a l e n t e r p r i s e s o u t s i d e the United St a t e s of America were state-owned manufacturing e n t e r p r i s e s . The importance of the p u b l i c s e c t o r i n the i n d u s t r i a l economy of d e v e l o p i n g c o u n t r i e s i s a l s o i n d i c a t e d by t h e i r c o n t r i b u t i o n to o u t p u t , employment, and investment. In a survey of eleven d e v e l o p i n g c o u n t r i e s , the UNIDO reported that the p u b l i c s e c t o r ' s c o n t r i b u t i o n to output ranged from e i g h t per-cent (Mexico) to 85 percent (S o m a l i a ) , the a r i t h m e t i c mean of a l l country percentages being f o r t y four ( c a l c u l a t e d from data in UNIDO, 1979a:324). The share of the p u b l i c s e c t o r in i n v e s t -ment i n manufacturing i n a sample of twenty c o u n t r i e s v a r i e d from 9 percent (Morocco) to a high of 90 percent ( E g y p t ) , the a r i t h m e t i c mean of country f i g u r e s being 48 percent ( c a l c u l a t e d from data i n UNIDO, I979a:325). The c o n t r i b u t i o n of the p u b l i c s e c t o r to employment i s of a s i m i l a r l y l a r g e magnitude. The o b j e c t i v e s of d i r e c t p a r t i c i p a t i o n i n manufacturing by the s t a t e are many. L a i (1980:212) i d e n t i f i e s four main o b j e c t i v e s : 1. F i l l i n gaps l e f t by a lack of e n t r e p r e n e u r s h i p or by r i s k a v e r s i t y by e x i s t i n g f i r m s 2. Assume the r o l e of an absent middle c l a s s 78 3. C o r r e c t or change r a c i a l balance 4. Supply c a p i t a l to the manufacturing s e c t o r . The UNIDO (1979a:316-317) has a more e x t e n s i v e l i s t of eleven o b j e c t i v e s of s t a t e d i r e c t i n t e r v e n t i o n i n the manufacturing se c t o r of developing c o u n t r i e s . The presence of the s t a t e in manufacturing i s not very branch s e l e c t i v e , although i t s presence i s f e l t most s t r o n g l y in the b a s i c i n d u s t r i a l goods sector and, to a l e s s e r e x t e n t , in b a s i c consumer goods se c t o r (based on data i n UNIDO, l979a:322-323) . As the s t a t e ' s d i r e c t involvement i n the i n d u s t r i a l s e c t o r , and i n the economy as a whole has grown, a concern f o r the e f f i c i e n c y of p u b l i c e n t e r p r i s e s has emerged (see, for i n s t a n c e , H i l l , 1982; G i l l i s , 1980). In most developing coun-t r i e s , given the recency of the phenomenon, o r g a n i z a t i o n and c o - o r d i n a t i o n i n the p u b l i c s e c t o r are poor. Some c o u n t r i e s , such as A r g e n t i n a , Guyana, M a l a y s i a , and Mexico have e s t a b l i s h -ed separate m i n i s t r i e s of p u b l i c e n t e r p r i s e s , while o t h e r s , such as I n d i a , have e s t a b l i s h e d a d v i s o r y and s u p e r v i s o r y e n t i -t i e s . These attempts to improve the o r g a n i z a t i o n and e f f i c i e n c y of p u b l i c e n t e r p r i s e s have not, however, permeated the bulk of the d e v e l o p i n g c o u n t r i e s . Attempts to e m p i r i c a l l y evaluate the e f f i c i e n c y of pub-l i c e n t e r p r i s e s have been scarce and the evidence i s c o n f l i c t -i n g . H i l l (1982:1015), i n a study of s t a t e - r u n e n t e r p r i s e s i n Indo n e s i a , concluded that "By almost any i n d i c a t o r , the econom-i c performance of the s t a t e m i l l s has been i n f e r i o r to that of 7 9 private m i l l s . " On the other hand, some state enterprises, p a r t i c u l a r l y in heavy engineering and machinery branches, have been very successful, and have achieved impressive export per-formances. Bharat Heavy Industries of India would be a good example. In the case of F i j i , the state-owned F i j i Sugar Corpo-ration has not only expanded sugar cane c u l t i v a t i o n and sugar production, but has modernized the m i l l s , paid dividends, and developed subsidiary enterprises u t i l i z i n g i t s by-products. It has done a much better job than i t s predecessor, multinational Colonial Sugar Refining Company of Australia Direct p a r t i c i p a t i o n in manufacturing has been only one element of the multi-pronged development and in d u s t r i a l strate-gy followed by the state in developing countries. These have included a wide range of incentives offered to both foreign and lo c a l c a p i t a l to engage in i n d u s t r i a l production. Perhaps one of the most common attempts to attract c a p i t a l has been the offer of f i n a n c i a l packages, usually implemented through taxa-tion (Lim, 1 9 8 0 : 1 5 9 ) . Incentives offered include substantial tax holidays, usually of f i v e to ten years; generous deprecia-tion allowances; loss carryover; reinvestment allowances; and export incentives providing for tax exemption on various pro-portions of p r o f i t s derived from exports. Among other measures to attract foreign investment have been assurance to foreign investors, sometimes enshrined in the co n s t i t u t i o n , as is the case in F i j i , that they w i l l be allowed unfettered flow of their investment c a p i t a l , p r o f i t s , inter-e s t s , and dividends. 80 Another s t r a t e g y followed by many developing c o u n t r i e s has been the p r o v i s i o n of i n d u s t r i a l e s t a t e s and, more recent-l y , of export p r o c e s s i n g zones. A v a r i e t y of approaches to i n d u s t r i a l e s t a t e s have been adopted, but a l l hope to e l i m i n a t e b o t t l e n e c k s to i n d u s t r i a l growth caused by a shortage of indus-t r i a l l a n d . Extension s e r v i c e s to manufacturers, p a r t i c u l a r l y to s m a l l - s c a l e u n i t s and " i n f o r m a l " i n d u s t r i a l s e c t o r , have a t -tempted to cover management a s s i s t a n c e , machinery checking and maintenance, and q u a l i t y c o n t r o l . The establishment of export p r o c e s s i n g zones i s a f a i r l y recent phenomenon, i n a way an extension of the concept of the i n d u s t r i a l e s t a t e . A recent study (UNCTC, 1983b:155) notes that i n 1980, the l a t e s t year for which data are a v a i l a b l e , there were f i f t y three export p r o c e s s i n g zones in developing coun-t r i e s , employing c l o s e to one m i l l i o n p e ople. They are most common in A s i a , e s p e c i a l l y in the Republic of Korea, Singapore, Hong Kong, and M a l a y s i a and i n L a t i n America (mainly in Mexico, H a i t i , and B r a z i l ) . Export p r o c e s s i n g zones have been h i g h l y c o n t r o v e r s i a l p o l i c y instruments because of t h e i r many un d e s i r a b l e f e a t u r e s . They have u s u a l l y been used mostly by f o r e i g n firms which have had minimal l i n k s with the r e s t of the economy, and which thus d i d not c o n t r i b u t e much to the economy. Export p r o c e s s i n g zones have a l s o been c r i t i c i z e d because they have l e d to the employ-ment of low s k i l l people who have on the whole not gained much a d d i t i o n a l t r a i n i n g or s k i l l s . Indeed, the monotonous nature of 8 1 many of the assembly-type jobs have been s a i d to have c o n t r i -buted to the d e - s k i l l i n g of the workers concerned. Another reason f o r t h e i r c r i t i c i s m has been the manner in which many fi r m s i n these zones employ very young female l a b o u r e r s f o r short p e r i o d s o n l y , without much regard to the many s o c i a l problems t h i s causes. F i n a l l y , these zones have come in f o r c r i t i c i s m because s t a t e s have o f t e n given some guarantee of labour peace to f o r e i g n c a p i t a l , f r e q u e n t l y l e a d i n g to r e s t r i c t -ions on the b a r g a i n i n g p r o c e s s . In a world of h i g h l y c o m p e t i t i v e and mobile c a p i t a l , the l a c k of strong l i n k s with the r e s t of the economy of export p r o c e s s i n g zone i n d u s t r i e s should be of concern to the gover-nments in these c o u n t r i e s . However, i f labour c o s t s are s u f f i -c i e n t l y low, i f the s t a t e i s c a u t i o u s , and i f there i s a deve-lopment minded bureaucracy, export p r o c e s s i n g zones o f f e r an a d d i t i o n a l i n d u s t r i a l s t r a t e g y f o r developing c o u n t r i e s . Another area i n which the s t a t e has been a s s i s t i n g TNCs in developing c o u n t r i e s has been t h e i r a c t i v e pursuence of i n t e r n a t i o n a l a i d and trade a g r e e m e n t s — a l t h o u g h I w i l l not e l a b o r a t e on them here as they are covered i n a coming s e c t i o n . Perhaps the most c o n t r o v e r s i a l aspect of i n d u s t r i a l p o l -i c y i n developing c o u n t r i e s has been the i s s u e of import sub-s t i t u t i o n and i t s accompanying high l e v e l s of import p r o t e c t -i o n . Import s u b s t i t u t i o n , or i m p o r t - s u b s t i t u t i o n i n d u s t r i a l i z a -t i o n ( I S I ) , which has a voluminous l i t e r a t u r e around i t , became the dominant i n d u s t r i a l s t r a t e g y i n developing c o u n t r i e s a f t e r the Second World War (on I S I , see Ahmed, 1978; B a l l a n c e , 82 A n s a r i , and S i n g e r , 1982; B a l a s s a , 1971; C l a r k , 1970; Donges, 1976; Hirschman, 1968). It has to be seen in the context of the i n t e r n a t i o n a l s i t u a t i o n that gave r i s e to i t - - t h e depression of the 1930s, d e t e r i o r a t i n g terms of trade for primary products, and the d i f f i c u l t y of p e n e t r a t i n g -developed country markets in the face of the s t r a n g l e h o l d maintained by f i r m s from developed c o u n t r i e s with two c e n t u r i e s of i n d u s t r i a l e x p e r i e n c e . Import s u b s t i t u t i o n emerged from the experience of L a t i n America, with Raul P r e b i s c h as i t s i n t e l l e c t u a l mentor. It was q u i c k l y adop-ted by the bulk of the d e v e l o p i n g c o u n t r i e s as the new route to p r o s p e r i t y . Import s u b s t i t u t i o n went hand-in-hand with high l e v e l s of p r o t e c t i o n . J u s t i f i e d on grounds of p r o t e c t i n g the i n f a n t i n d u s t r y through i t s t e e t h i n g p e r i o d , high levels--sometimes as high as 500 percent- of p r o t e c t i o n from imports were provided (Hirschman, 1968:2). P r o t e c t i o n was not l i m i t e d to t a r i f f . L i c e n s i n g was widely used to l i m i t c o m p e t i t i o n f o r the new i n d u s t r i e s , imports being allowed only to supplement domestic p r o d u c t i o n . P r o t e c t i o n accorded to i n d u s t r y was f u r t h e r enhan-ced through tough reviews of f o r e i g n investment, and through "understandings" and agreements. I m p o r t - s u b s t i t u t i o n p o l i c i e s have been the t a r g e t of i n c r e a s i n g c r i t i c i s m , not only from academics of a l l per-s u a s i o n s — i n c l u d i n g dependency w r i t e r s — b u t from many develo-ping country a n a l y s t s themselves, and from the i n t e r n a t i o n a l f i n a n c i a l community, p a r t i c u l a r l y from the I n t e r n a t i o n a l Mone-ta r y Fund and the World Bank. C r i t i c s have argued that import-83 s u b s t i t u t i o n p o l i c i e s have produced an i n e f f i c i e n t i n d u s t r i a l s t r u c t u r e that has a l s o been incapable of s o l v i n g the unemploy-ment problems of developing c o u n t r i e s . T h i s statement from Donges (1983:280) summarizes w e l l the general e v a l u a t i o n of i m p o r t - s u b s t i t u t i o n i n d u s t r i a l i z a t i o n i n developing c o u n t r i e s : Although c o u n t r i e s a p p l i e d d i f f e r e n t sets of instruments and techniques, i n v o l v i n g severe t a r i f f and q u a n t i t a t i v e r e s t r i c t i o n s on imports as w e l l as exchange c o n t r o l s , the i m p o r t - s u b s t i t u t i o n s t r a t e g y has turned out to be a s e r i o u s impasse in the i n d u s t r i a l i z a t i o n process almost everywhere ( o r i g i n a l emphasis). A re-examination of i n d u s t r i a l i z a t i o n p o l i c i e s of d e v e l -oping c o u n t r i e s , sometimes being indigenous r e - e v a l u a t i o n s of development s t r a t e g i e s and sometimes the r e s u l t of e x t e r n a l pressure from IMF and the World Bank, has s e r i o u s l y questioned the e f f i c a c y of the i m p o r t - s u b s t i t u t i o n p o l i c i e s as followed by the m a j o r i t y of the d e v e l o p i n g c o u n t r i e s . As a r e s u l t , these p o l i c i e s have been m o d i f i e d , t h e i r excesses e l i m i n a t e d , and a strong export o r i e n t a t i o n i n these p o l i c i e s has been i n t r o -duced. The export o r i e n t a t i o n i n i n d u s t r i a l p o l i c i e s has been i n s p i r e d by the success of a small group of developing coun-t r i e s that had followed export o r i e n t e d i n d u s t r i a l p o l i c i e s s i n c e the 1960s, and by the t r a d i t i o n a l p o s i t i o n of the IMF and the World Bank regarding the d e s i r a b i l i t y of open t r a d i n g . One cannot but note that development p l a n n i n g , f o r a l l i t s p r o g r e s s , i s s t i l l s u b ject to f a d s . In the developing c o u n t r i e s , i t i n i t i a l l y l e d to the wholesale adoption of im-p o r t - s u b s t i t u t i o n p o l i c i e s . Now, with the weight of the IMF and the World Bank, and with the example of the success enjoyed by the Newly I n d u s t r i a l i z i n g C o u n t r i e s (NICs), the fad i s 84 export o r i e n t a t i o n . The importance of export o r i e n t a t i o n has probably been s e r i o u s l y o v e r r a t e d and the c o n t r i b u t i o n of impo-r t - s u b s t i t u t i o n been inadequately taken i n t o account because of the problems that were c r e a t e d , but which c o u l d have been avoided i f c o u n t r i e s had evolved from the i n d u s t r i a l base c r e a t e d by the i n i t i a l l y s u c c e s s f u l i m p o r t - s u b s t i t u t i o n p o l i -c i e s . It does not seem to be adequately r e a l i z e d that the i n t e r n a t i o n a l market i s inadequate to absorb the output of the l a r g e developing c o u n t r i e s . On balance, i n t e r n a t i o n a l experience has f i r m l y i n d i -c a ted that excessive inward-looking development p o l i c i e s i n h i -b i t development in the long run because the domestic economies are deprived of a powerful source of i n f o r m a t i o n , technology, and most important, of c o m p e t i t i o n . Furthermore, many develo-ping c o u n t r i e s face small domestic markets, and an import-s u b s t i t u t i o n p o l i c y imposes severe p e n a l t i e s of economies of s c a l e . The i n d u s t r i a l i z a t i o n experience and t r a d e performance of those c o u n t r i e s that have fo l l o w e d i m p o r t - s u b s t i t u t i o n indu-s t r i a l i z a t i o n , such as I n d i a , have been l e s s impressive than those of c o u n t r i e s , c h a r a c t e r i z e d as NICs, such as the Republic of Korea, Taiwan, Singapore, or Hong Kong, t h a t have followed an export o r i e n t e d i n d u s t r i a l i z a t i o n s t r a t e g y . Having s a i d t h i s , ' however, i t must be s a i d that import-s u b s t i t u t i o n i n d u s t r i a l i z a t i o n has served an important purpose i n developing c o u n t r i e s . Without i m p o r t - s u b s t i t u t i o n i n d u s t r i a -l i z a t i o n , i n d u s t r i a l development in d e v e l o p i n g c o u n t r i e s would have been minimal or non e x i s t e n t . Furthermore, i m p o r t - s u b s t i -85 t u t i o n i n d u s t r i a l i z a t i o n helped prepare an i n d u s t r i a l base for s u c c e s s f u l forays i n t o e x p o r t i n g . C o u n t r i e s such as Singapore, Republic of Korea, Taiwan, and B r a z i l , a l l c o u n t r i e s regarded as having been . s u c c e s s f u l i n d u s t r i a l i z i n g c o u n t r i e s , a l l began t h e i r i n d u s t r i a l i z a t i o n with import s u b s t i t u t i o n . I t has not been shown by c r i t i c s of i m p o r t - s u b s t i t u t i o n i n d u s t r i a l i z a t i o n that t h e s e , or other c o u n t r i e s c o u l d have become s u c c e s s f u l e x p o r t e r s of manufactured goods without the a s s i s t a n c e of im-p o r t - s u b s t i t u t i o n i n d u s t r i a l i z a t i o n i n the i n i t i a l stages of t h e i r i n d u s t r i a l i z a t i o n programs. The r e a l f a i l u r e of import-s u b s t i t u t i o n i n d u s t r i a l i z a t i o n l a y not i n the s t r a t e g y i t s e l f , but i n the i n a b i l i t y of these c o u n t r i e s ,save for c o u n t r i e s such as Singapore, Republic of Korea, Taiwan, and B r a z i l , to c r i t i c a l l y review t h e i r p o l i c i e s , and to reduce t h e i r l e v e l s of p r o t e c t i o n to domestic manufacturing i n d u s t r i e s , and to adjust t h e i r i n c e n t i v e systems to remove d i s i n c e n t i v e s to e x p o r t i n g . The developing c o u n t r i e s thus need to formulate t h e i r i n d u s t r i a l s t r a t e g i e s with both the domestic and i n t e r n a t i o n a l s i t u a t i o n and prospects i n mind, and to allow as much exposure to the i n t e r n a t i o n a l economic f o r c e s as can be accommodated by the domestic i n d u s t r y without i t being swamped. Even the de v e l -oped c o u n t r i e s f o l l o w t h i s p r a c t i c e - - g i v i n g t h e i r i n d u s t r i e s strong f i n a n c i a l and t a r i f f p r o t e c t i o n i n the face of what appears more e f f i c i e n t i n d u s t r y i n d e v e l o p i n g c o u n t r i e s i n some l i n e s of manufacturing. It w i l l be very i r o n i c a l i f the develo-ping c o u n t r i e s were fo r c e d to swallow the f u l l impact of the i n t e r n a t i o n a l system while the developed c o u n t r i e s , among them 86 the U n i t e d S t a t e s of America, the champion of u n f e t t e r e d world t r a d e , t r y to s h i e l d t h e i r i n d u s t r i e s a g a i n s t imports from other c o u n t r i e s . The P r e - C a p i t a l i s t and Small-Scale I n d u s t r i a l Sector The f i n a l d i s t i n g u i s h i n g c h a r a c t e r i s t i c of i n d u s t r i a l i -z a t i o n in developing c o u n t r i e s i s the presence of a l a r g e pre-c a p i t a l i s t i n d u s t r i a l sub-sector i n t h e i r i n d u s t r i a l systems. T h i s sub-sector has been v a r i o u s l y c a t e g o r i z e d as " i n f o r m a l s e c t o r " , "bazaar s e c t o r " , and " l o w e r - c i r c u i t " , i n a d d i t i o n to i t s d e s i g n a t i o n of " p r e - c a p i t a l i s t " and "petty producer" sec-t o r s . The q u e s t i o n of both p r e - c a p i t a l i s t and s m a l l - s c a l e indu-s t r y i s of much p r a c t i c a l consequence, and has been widely debated. The i n t e r e s t i n p r e - c a p i t a l i s t i n d u s t r i a l sub-sector i s part of a more general attempt to understand the urban economy of non-European s o c i e t i e s . These date from the compartmentali-z a t i o n of the T h i r d World urban economy in the Dutch East Indies as d u a l i s t i c by Boeke (1953). The concept of urban dualism was r e f i n e d and f u r t h e r developed by Geertz (1963), who d i v i d e d the urban economy of an Indonesian town i n t o bazaar and f i r m - c e n t r e d s e c t o r s . McGee (1974), f o l l o w i n g F r a n k l i n (1965), v i s u a l i z e d the T h i r d World urban economy as composed of peasant and c a p i t a l i s t s e c t o r s , while Hart (1973) i n t r o d u c e d and the I n t e r n a t i o n a l Labour O f f i c e (ILO) p o p u l a r i z e d the concept of i n f o r m a l and formal s e c t o r s . Santos (1976, 1977, 1979) i n t r o -duced the more dynamic, but s t i l l d u a l i s t i c concept of c i r -87 c u i t s . In the meanwhile, r e s e a r c h e r s informed by Marxist and dependency paradigms were examining T h i r d World urban economy in terms of d i f f e r e n t modes of p r o d u c t i o n , and c h a r a c t e r i z e d the s e c t o r under study as p r e - c a p i t a l i s t (eg G e r r y , 1974, 1979; K i n g , 1979). Whatever the terminology, there i s l i t t l e d i s p u t e that the n o n - l a r g e - s c a l e manufacturing sub-sector i n developing c o u n t r i e s i s a major component of the i n d u s t r i a l s t r u c t u r e in terms of both output and employment. The UNIDO (1979a:271) r e p o r t s that the non-modern i n d u s t r i a l s e c t o r i n a sample of f i f t e e n developing c o u n t r i e s c o n t r i b u t e d from 10 to 44 percent of manufacturing value added. In some c o u n t r i e s , i t s importance can be very much indeed. In a study by the Indian government, i t i s r e p o r t e d , for i n s t a n c e , that 78 percent of Indian indus-t r i a l labour f o r c e was engaged i n the non-modern s e c t o r . Over-a l l , UNIDO (I979a:274) r e p o r t s that s m a l l - s c a l e p l a n t s ( e x c l u -ding the non-modern, f r e q u e n t l y unenumerated sub-sector) con-t r i b u t e about one-quarter of manufacturing value added and s l i g h t l y more than one-half of i n d u s t r i a l employment in develo-ping c o u n t r i e s . S m a l l - s c a l e modern p l a n t s are a l s o important f o r developed c o u n t r i e s , although much l e s s so than i s the case in d eveloping c o u n t r i e s (UNIDO, I979a:275). Although most of the i n d u s t r i a l investment i n developing c o u n t r i e s has gone i n t o the development of l a r g e - s c a l e modern manufacturing s e c t o r , most of these c o u n t r i e s have p o s i t i v e programs to help both the non-modern sub-sector and the s m a l l -s c a l e modern manufacturing u n i t s . A s s i s t a n c e has t y p i c a l l y 88 taken the form of i n d u s t r i a l e x t e n s i o n , s o f t f i n a n c i n g , p r o v i -s i o n of i n d u s t r i a l e s t a t e s , o f t e n with i n d u s t r i a l b u i l d i n g s a l r e a d y c o n s t r u c t e d f o r lease by t h i s s u b - s e c t o r , and some p r o t e c t i o n from the modern s e c t o r . Most developing c o u n t r i e s , however, given t h e i r develop-ment o r i e n t a t i o n , are planning to absorb t h e i r non-modern and s m a l l - s c a l e i n d u s t r i a l sub-sectors i n t o the modern i n d u s t r i a l s e c t o r , and to maintain only those u n i t s where economies of s c a l e are not c r i t i c a l , and where s o c i a l j u s t i c e gains are s u b s t a n t i a l . The I n t e r n a t i o n a l Context of I n d u s t r i a l i z a t i o n in Developing C o u n t r i e s I t i s now i n c r e a s i n g l y r e a l i z e d , thanks to the e f f o r t of dependency w r i t e r s , that i n d u s t r i a l i z a t i o n i n developing c o u n t r i e s i s c l o s e l y r e l a t e d to the i n t e r n a t i o n a l environment. B a l l a n c e , A n s a r i , and Singer (1982:4) d e c l a r e , at the outset of t h e i r important recent study that " C l e a r l y then the e x t e r n a l s e c t o r p l a y s an important r o l e in f a c i l i t a t i n g or h i n d e r i n g a co u n t r y ' s a b i l i t y to r e s t r u c t u r e i t s manufacturing s e c t o r . " The i n t e r n a t i o n a l environment of p a r t i c u l a r importance to i n d u s t r i a l i z a t i o n i n developing c o u n t r i e s r e l a t e to trade p o l i c i e s adopted by the developed market economies; i n t e r -n a t i o n a l commodity agreements that provide earnings s t a b i l i t y and funds f o r improvement i n commodity p r o d u c t i o n , s t o r a g e , and p r o c e s s i n g ; m u l t i n a t i o n a l and b i - l a t e r a l trade and a i d agree-ments; the i n t e r n a t i o n a l f i n a n c i a l mechanism; and the workings of i n t e r n a t i o n a l agencies f o s t e r i n g development i n developing 89 c o u n t r i e s , such as the UNIDO and the UNCTAD. Since developing c o u n t r i e s are a l a r m i n g l y indebted to the i n t e r n a t i o n a l economic community, the c o n t i n u a t i o n of the s o c i a l f a b r i c i n these c o u n t r i e s , leave alone i n d u s t r i a l prog-r e s s , depends on the r e s t o r a t i o n of reasonable commodity p r i c e s , and on f l e x i b i l i t y on the part of the i n t e r n a t i o n a l business community. In the short run, then, the issue of i n -debtedness i s a major c o n s t r a i n t on T h i r d World i n d u s t r i a l i z a -t i o n . An e q u a l l y p r e s s i n g i n t e r n a t i o n a l i s s u e f o r developing c o u n t r i e s i s the i n c r e a s i n g p r o t e c t i o n i s t trade p o l i c i e s being implemented in the developed market economies, i n c l u d i n g , as we have seen, i n the United S t a t e s . As Hughes and O h l i n (1980:300) note, developed market economies have been very p r o t e c t i o n i s t a g a i n st exports from developing c o u n t r i e s from the b e g i n n i n g . With c o n t i n u i n g r e c e s s i o n and i n the face of hig h l e v e l s of unemployment, developed market c o u n t r i e s are probably going to incr e a s e the scope of t h e i r p r o t e c t i o n i s t p o l i c i e s . C l e a r l y , however, developed c o u n t r i e s must accept the t e n e t s of the law of comparative advantage, something they have always used when d e a l i n g with the T h i r d World, and formulate a general r e s t r u c -t u r i n g of t h e i r i n d u s t r y more i n l i n e with changing compara-t i v e advantage. Indeed, i f the present p r o t e c t i o n i s t p o l i c i e s were to continue f o r any length of time, d e v e l o p i n g c o u n t r i e s w i l l not be able to repay t h e i r huge de b t s , throwing the whole i n t e r n a t i o n a l banking and t r a d i n g system i n a t u r m o i l . T h i s would harm everyone concerned, but e s p e c i a l l y the developed 90 c o u n t r i e s , which stand to l o s e the b i l l i o n s they have loaned. Developing c o u n t r i e s are a l s o engaged in a b a t t l e to evolve a New I n t e r n a t i o n a l Economic Order (NIEO), an order that i s more e q u i t a b l e than the c u r r e n t one developed l a r g e l y by the developed c o u n t r i e s , and which has served the i n t e r e s t s of developed c o u n t r i e s more than of developing c o u n t r i e s . A key component of the NIEO would be an i n t e r n a t i o n a l f i n a n c i a l and trade system i n which developing c o u n t r i e s would have more p o l i t i c a l and a d m i n i s t r a t i v e c o n t r i b u t i o n . While developing c o u n t r i e s have been a c t i v e i n i n t e r n a -t i o n a l f o r a , they have a l s o been engaged i n n e g o t i a t i o n s on I n t e r n a t i o n a l Commodity Agreements through the UNCTAD and in e s t a b l i s h i n g the Common Fund which would purchase b u f f e r stocks of commodities, and would a i d commodity development g e n e r a l l y (Brandt et a l . , 1980:149). Many developed and de v e l o p i n g c o u n t r i e s , however, are a l s o engaged i n more l o c a l - l e v e l n e g o t i a t i o n s . A good example would be the Lome Convention, signed by the European Economic Community on the one hand and f o r t y seven developing c o u n t r i e s in A s i a , Caribbean, and the P a c i f i c . The Lome Convention i s a comprehensive t r a d e , a i d , and development agreement. For d e v e l -oping c o u n t r i e s , i t p r o v i d e s not only long-term p r i c e agree-ments, but commodity earnings s t a b i l i t y with i t s STABEX s y s t e m — a system that p r o t e c t s developing c o u n t r i e s from natu-r a l d i s a s t e r r e l a t e d d i s r u p t i o n s to commodity p r o d u c t i o n . Another example, and more meaningful from the po i n t of view of F i j i , i s the South P a c i f i c Regional Trade and Economic 91 Cooperation Agreement (SPARTECA) signed by the core c o u n t r i e s of t h i s r e g i o n — A u s t r a l i a and New Zealand--with the developing i s l a n d c o u n t r i e s . The wide p o t e n t i a l of t h i s agreement i s i n d i c a t e d by i t s scope: [The agreement] prov i d e s that A u s t r a l i a and New Zealand w i l l grant duty f r e e and u n r e s t r i c t e d access f o r most of the products exported by forum c o u n t r i e s on a non-r e c i p r o c a l b a s i s . A l s o , the agreement recognizes that Forum exports can only be incr e a s e d as a r e s u l t of a p p r o p r i a t e a i d and co - o p e r a t i o n programmes (Bellam, 1980:73). Many i n t e r n a t i o n a l improvements f a v o u r i n g developing c o u n t r i e s a r e , in no small way, c l e a r l y due to the e f f o r t s of two major United Nations agencies--UNIDO and UNCTAD. The UNIDO has t i r e l e s s l y and c o n t i n u a l l y w r i t t e n and d i r e c t e d i t s a c t i v i -t i e s towards improving the prospects of i n d u s t r i a l i z a t i o n i n developing c o u n t r i e s . The Lima D e c l a r a t i o n adopted by i t i n 1975 proposing that by the year 2000, approximately 25 percent of world i n d u s t r i a l output should be l o c a t e d i n developing c o u n t r i e s (Brandt et a l . , 1980; UNIDO, 1979b:15) has given UNIDO's work ari even grea t e r urgency. Since trade i s an i n t e g -r a l component of i n d u s t r i a l i z a t i o n , the work of UNCTAD i s c r i t i c a l to f u r t h e r i n d u s t r i a l i z a t i o n i n developing c o u n t r i e s . The UNCTAD has al r e a d y been instrumental i n drawing up some I n t e r n a t i o n a l Commodity Agreements, and i s c o n t i n u i n g with o t h e r s . I t has a l s o helped keep a v i g i l a n c e on i n t e r n a t i o n a l t r a d i n g mechanisms, p a r t i c u l a r l y on the trend towards i n c r e a -s i n g p r o t e c t i o n i s m . S i z e of C o u n t r i e s and I n d u s t r i a l i z a t i o n The r e l a t i o n s h i p between the s i z e of a c o u n t r y , whether 92 measured in terms of p h y s i c a l s i z e , or in terms of p o p u l a t i o n , or income, and i t s development o p t i o n s and performance has been widely debated i n the recent p a s t . The i s s u e of the s i z e of a c o u n t r y , and i t s impact on development and i n d u s t r i a l i z a t i o n o p t i o n s , i s of relevance to t h i s study at two l e v e l s . F i r s t , the impact of the s i z e of a country on i t s development s t r a t e -g i e s and performance. Second, the c o n s t r a i n t s of small s i z e on manufacturing i n developing c o u n t r i e s . Although the s i z e of markets has long been a concern of economists, the d i s c u s s i o n of the s i z e of a country as an e x p l i c i t development v a r i a b l e can be s a i d to have s t a r t e d i n earn e s t - with the conference organized i n 1957 by the Inte r n a -t i o n a l Economic A s s o c i a t i o n on the consequences of the s i z e of nat i o n s (Demas, 1965:39; proceedings of the conference were p u b l i s h e d as Robinson [ E d ] , 1960; more on the e v o l u t i o n of the t h i n k i n g on t h i s q u e s t i o n can be found i n Selwyn [Ed], 1975 and Shand [ E d ] , 1980). I n t e r e s t i n the consequences of s i z e of nat i o n s gained momentum i n the middle of 1960. The seminal work was c l e a r l y that of Demas (1965). This was fol l o w e d soon a f t e r by Benedict (Ed, 1967). These s t u d i e s were i n turn followed by those by Selwyn (Ed, 1975), Dommen (Ed, 1980), Shand (Ed, 1980), and J a l a n (1982). There have a l s o been reviews of small s c a l e i n d u s t r i e s i n dev e l o p i n g c o u n t r i e s and the c o n s t r a i n t s they experience (see Anderson, 1982; K a p l i n s k y , 1980; UNIDO, 1984) . Most authors examining the iss u e of s i z e of a country and economic development are convinced that s i z e does indeed 93 influence and seriously constrain a country's development op-tions and performance (Brookfield, I975b:54; Demas, 1965:21; Ward, 1975:116; Ward , 1967:87) , although the most recent analysis of the problem indicates that no consistent or plausi-ble theory of size has been developed yet (Jalan, 1982:2) . The size of a country can affect its development in a number of ways. F i r s t , and most fundamentally, the small size of a country may affect the very possibility of structural transformation (Demas, 1965:21) . This means that a small coun-try could f a i l to industrialize, for industrialization has historically been the chief instrument of structural transfor-mation. The failure to industrialize could result from a small domestic market, either because of a small population or be-cause of low per capita income, or it may result from a psycho-logical conditioning of politicians and planners alike that smallness precludes industrialization. The evidence on the relationship between smallness and manufacturing performance is conflicting, though. Thomas main-tains that a few countries, despite what would appear to be theoretical disadvantages, . have developed flourishing manufacturing sectors which have made very substantial contribution to GDP and have continued to grow swiftly, mainly on the basis of a successful export performance (Thomas, 1982:103) . However, Thomas (1982:115-116) goes on to argue in the same paper that the success of small countries, such as Hong Kong, Singapore, and Israel have to be related to their- "special demographic and location-cum-strategic considerations". In sum, Thomas argues that while some small countries have shown a 94 c a p a c i t y to transform t h e i r economies to a p o i n t where manufac-t u r i n g makes a s i g n i f i c a n t c o n t r i b u t i o n to the GDP, the m a j o r i -ty of the small c o u n t r i e s — s p e c i a l l y those with low incomes and small p o p u l a t i o n s — a r e not l i k e l y to be able to develop major manufacturing s e c t o r s . Where manufacturing s e c t o r s do develop, or have deve-lop e d , small c o u n t r i e s f i n d i t d i f f i c u l t to develop c a p i t a l goods i n d u s t r i e s , a s e c t o r that has been regarded by economists as c r i t i c a l to a true i n d u s t r i a l t r a n s f o r m a t i o n . While consumer goods can be manufactured with acceptable s c a l e p e n a l t i e s , the manufacture of c a p i t a l goods imposes p r o h i b i t i v e s c a l e penal-t i e s , and i s p o s s i b l e i n only the l a r g e r developing c o u n t r i e s . I t i s not s u r p r i s i n g that the c o u n t r i e s with the most s o p h i s t i -cated c a p i t a l goods i n d u s t r i e s i n the developing world are l a r g e c o u n t r i e s , such as B r a z i l and I n d i a . Small c o u n t r i e s a l s o occupy marginal p l a c e s i n the i n t e -r n a t i o n a l economic system. The high degree of openness of these c o u n t r i e s ' economies.mean that economic shocks are e a s i l y and q u i c k l y t r a n s m i t t e d to them (see, f o r i n s t a n c e , Garnaut, 1980:313), while these c o u n t r i e s , because of t h e i r small volume of production and t r a d e , do not have any leverage on the i n t e r -n a t i o n a l economic system. Small c o u n t r i e s cannot hope to s t r i v e f o r s e l f s u f f i c i e -ncy e i t h e r (Demas, 1965:22). S e l f - s u f f i c i e n c y i s i t s e l f a con-t r o v e r s i a l p l a n n i n g o b j e c t i v e , but most c o u n t r i e s that can a f f o r d i t are committed to a modicum of s e l f - s u f f i c i e n c y . While t h i s i s p o s s i b l e i n the case of l a r g e c o u n t r i e s , such as 95 B r a z i l and I n d i a , i t i s not p o s s i b l e in the case of small c o u n t r i e s such as F i j i . Furthermore, while most de v e l o p i n g c o u n t r i e s are h i g h l y dependent on i n d u s t r i a l i z e d c o u n t r i e s for investment funds, markets, technology, and managerial know-how, s m a l l e r c o u n t r i e s are much more dependent than the l a r g e r c o u n t r i e s . T h i s high degree of dependence on the i n t e r n a t i o n a l economic system e f f e -c t i v e l y c o n s t r a i n t s the development op t i o n s of small c o u n t r i e s . Small land s i z e a l s o means that the resource base i s very narrow—and hence the p r o s p e c t s for the d i s c o v e r y of metals and o i l are that much lower. Although the Law of the Sea Conference has improved the s i t u a t i o n of some small c o u n t r i e s , s p e c i a l l y those of the i s l a n d c o u n t r i e s , the small s i z e has been a major c o n s t r a i n t to economic development. Small s i z e of c o u n t r i e s has a l s o f r e q u e n t l y l e d to a s p e c i a l i z a t i o n by these c o u n t r i e s on a narrow range of a g r i c u l t u r a l crops and e x p o r t s , such as sugar cane i n the case of F i j i and M a u r i t i u s (Thomas, 1982:109). F l u c t u a t i n g world p r i c e s f o r primary commodities a f f e c t these c o u n t r i e s more than the l a r g e r c o u n t r i e s that have much wider economic bases. F i n a l l y , there have been two other c o s t s that small c o u n t r i e s f r e q u e n t l y f a c e . F i r s t , many small c o u n t r i e s are faced with unfavourable l o c a t i o n s — t h e y are f a r removed from the main c e n t r e s of pr o d u c t i o n and consumption. T r a n s p o r t a t i o n not only adds c o n s i d e r a b l y to the c o s t of both imports and e x p o r t s , i t i s f r e q u e n t l y beyond the c o n t r o l of these coun-t r i e s . Second, the small e r c o u n t r i e s , f o r c e n t u r i e s c o n d i -96 tioned to believe that they could not hope to experience the same development performance that was possible in the larger countries, may have become psychologically deterred from under-taking imaginative and bold development strategies. While so far we have concentrated on the disadvantages of small countries, we should also note that these countries also face some advantages accruing to them because they are small. Demas (1965:80-83) provides this l i s t of advantages: 1. Smaller countries can have a higher price elasticity in commodity exports 2. These countries may be able to obtain concessions from developed countries more easily as the granting countries are not likely to fear that their own producers will be threatened. These "small" concessions from the point of view of the gran-ting countries, could mean "big" concessions from the viewpoint of small countries 3. Small countries could specialize in the export of high income specialty goods 4. Small amounts of foreign exchange can achieve quite a bit more in small countries than in larger countries 5. Small countries can frequently engage in t a r i f f protection and other activities without inviting retaliation 6. Small countries are frequently not lumbered with major defence spending 7. Devaluation can be used without a major deterioration in the commodity terms of trade 8. Smallness means that the development of an integrated natio-97 nal market i s e a s i e r 9. Smallness makes the task of d i s s e m i n a t i n g i n f o r m a t i o n , spe-c i a l l y r e l a t e d to development p o l i c i e s , e a s i e r . To summarize the evidence on the r e l a t i o n s h i p between the s i z e of a country and the development of manufacturing, one would have to say that there i s no c l e a r - c u t e vidence. Whereas in' the past most authors were i n c l i n e d to view smallness as imposing many c o n s t r a i n t s on development o p t i o n s and performan-c e , the success of a few small c o u n t r i e s , has l e d to a re-e v a l u a t i o n of the e v i d e n c e . Current t h i n k i n g i s that the small s i z e of c o u n t r i e s does impose c o n s t r a i n t s on the development of manufacturing, but that p u b l i c p o l i c i e s can h e l p overcome some of these disadvantages. Small c o u n t r i e s with determined, c o n s i -stent p o l i c i e s are thought to have a reasonable chance of s t r u c t u r a l t r a n s f o r m a t i o n . The emphasis on p u b l i c p o l i c i e s , r a t h e r than f a c t o r endowment, i s w e l l i l l u s t r a t e d by t h i s d e c l a r a t i o n from Blazk-Metzner and Hughes (1982:85): Perhaps the s t r o n g e s t l e s s o n of the development experience of the l a s t 30 years i s that no matter how w e l l or i l l c o u n t r i e s are endowed n a t u r a l l y ( i n terms of m i n e r a l s , c l i m a t e , l o c a t i o n e t c . ) , t h e i r economic performance depends p r i m a r i l y on t h e i r commitment to growth and the a p p r o p r i a t e n e s s of the p o l i c y framework they evolve to implement t h e i r growth s t r a t e g y . C o n c l u s i o n s T h i s chapter has attempted to provide an overview of the process of i n d u s t r i a l i z a t i o n i n developing c o u n t r i e s . It has shown how the course of i n d u s t r i a l i z a t i o n i n these c o u n t r i e s has been p o w e r f u l l y shaped by the p r e s e n t l y developed c o u n t r i e s 98 through c o l o n i a l i s m , and how, with the achievement of independ-ence, governments of near l y a l l developing c o u n t r i e s adopted p o l i c i e s , as part of t h e i r development p l a n s , aimed at r a p i d i n d u s t r i a l t r a n s f o r m a t i o n . These governments had recognized that i n d u s t r i a l i z a t i o n was indespensable to developing t h e i r s o c i e t i e s , as well as to the maintenance of t h e i r t e r r i t o r i a l i n t e g r i t y . We have seen that d e s p i t e the s e r i o u s e f f o r t s i n the l a s t two decades of i n t e r n a t i o n a l a g e n c i e s , T h i r d World gover-nments, and developed c o u n t r i e s , the T h i r d World has not exper-ienced the i n d u s t r i a l t r a n s f o r m a t i o n that Marx (l972a:586) had o p t i m i s t i c a l l y p r e d i c t e d , when he had w r i t t e n i n the middle of the n i n e t e e n t h century concerning c a p i t a l i s t p e n e t r a t i o n of In d i a : I know the E n g l i s h m i l l o c r a c y intend to endow India with r a i l w a y s with the e x c l u s i v e view of e x t r a c t i n g at d i m i n i -shed expenses the [ s i c ] c o t t o n and other raw m a t e r i a l s for t h e i r manufactures. But when you have once introduced machinery i n t o the locomotion of a c o u n t r y , which posses-ses i r o n and c o a l s [ s i c ] you are unable to withhold from i t i t s f a b r i c a t i o n . . . . The ra i l w a y system w i l l - t h e r e -f ore become, in I n d i a , t r u l y the forerunner of modern i n d u s t r y or that non-Marxist development economists had hoped f o r and expected i n the post-war e r a , p a r t i c u l a r l y i n the wake of the F i r s t Development Decade ( B r o o k f i e l d , 1975a). However, t h i s chapter i n d i c a t e s that d e s p i t e the f a i l u r e of a general i n d u s t r i a l t r a n s f o r m a t i o n , i n d u s t r i a l i z a t i o n has been steady. Given o f t e n c e n t u r i e s of domination by other c o u n t r i e s , a s s o c i a t e d with i n d u s t r i a l s t a g n a t i o n and, at times, d e t e r i o r a t i o n , the achievements of deve l o p i n g c o u n t r i e s are 99 remarkable. Data i n t h i s chapter show that more i n d u s t r i a l develop-ment , and o f t e n of a higher q u a l i t y , i s t a k i n g p l a c e i n de-v e l o p i n g c o u n t r i e s than i s o f t e n c l a i m e d . T h i s chapter p a r t i c u -l a r l y r e f u t e s the arguments advanced by such w r i t e r s as Frank (1967,1969) and Amin (1974a,b) concerning the degree and nature of i n d u s t r i a l development in deve l o p i n g c o u n t r i e s . However, t h i s should not be taken to imply agreement with the p o s i t i o n of c r i t i c s of these a u t h o r s , such as Warren (1973, 1980) because much of the i n d u s t r i a l advance i n develo-ping c o u n t r i e s has been h i g h l y l o c a l i z e d , and has b e n e f i t t e d mostly the al r e a d y r i c h d eveloping c o u n t r i e s . A l s o , the poorer c o u n t r i e s , e s p e c i a l l y i n A f r i c a , have made l i t t l e i n d u s t r i a l progress even as the NICs have performed i n d u s t r i a l m i r a c l e s . T h i s study recognizes that many of the more s u c c e s s f u l i n d u s t r i a l i z i n g developing c o u n t r i e s have i n c r e a s e d t h e i r de-pendence on i n d u s t r i a l i z e d c o u n t r i e s , and while t h i s has served them w e l l i n the short run, there i s a p r i c e to i t , and given the r a p i d l y d e t e r i o r a t i n g i n t e r n a t i o n a l t r a d i n g c o n d i t i o n s , these c o u n t r i e s may w e l l f i n d themselves i n more t r o u b l e than those choosing the more c a u t i o u s path of a more inward - l o o k i n g i n d u s t r i a l i z a t i o n s t r a t e g y . The success of a small number of developing c o u n t r i e s does show that the world system i s s t i l l dynamic, .and that at l e a s t some members of the semi-periphery can j o i n the core c o u n t r i e s . 100 Notes 1. The term developing c o u n t r i e s r e f e r s to c o u n t r i e s other than developed market economy c o u n t r i e s and c e n t r a l l y planned econo-my c o u n t r i e s . It i s used int e r c h a n g e a b l y with the term " T h i r d World. Most of the T h i r d World c o u n t r i e s belong to what W a l l e r s t e i n has c a l l e d the p e r i p h e r y ( W a l l e r s t e i n , 1974:348). I do not l i k e to use these terms, given much debate concerning t h e i r usage, but w i l l use them f o r want of b e t t e r a l t e r n a t i v e s . For some impression of the debates concerning these terms, see, among o t h e r s , the f o l l o w i n g : B r o o k f i e l d (1978); Buchanan (1964); Worsley (1964). 2. The i n d u s t r i a l r e v o l u t i o n , a c c o r d i n g to Deane (1965:1) i n -c l u d e s : a. The p e r v a s i v e use of modern s c i e n c e and e m p i r i c a l knowledge to the process of p r o d u c t i o n f o r the market b. S p e c i a l i z a t i o n of economic a c t i v i t y l e a d i n g to p r o d u c t i o n for n a t i o n a l and i n t e r n a t i o n a l markets r a t h e r than for f a m i l y or f o r p a r o c h i a l use c. Urban form of settlement becomes dominant d. The emergence of an enlarged and impersonal u n i t of produc-t i o n geared to corporate or p u b l i c e n t e r p r i s e e. S e c t o r a l s h i f t of employment from primary p r o d u c t i o n to secondary and t e r t i a r y s e c t o r s f . The replacement and supplementation by c a p i t a l resources of human e f f o r t g. The emergence of new s o c i a l c l a s s e s determined by r e l a t i o n s of p r o d u c t i o n as opposed to ownership of l a n d . 3. T h i s q u o t a t i o n was s u p p l i e d to me, i n another c o n t e x t , by my c o l l e a g u e at the U n i v e r s i t y of the south P a c i f i c , Dr Wadan L a i Narsey. I am g r a t e f u l to him. 4. By p r e c a p i t a l i s t manufacturing s e c t o r i s meant the s e c t o r that c o n t a i n s manufacturing o p e r a t i o n s that do not i n v o l v e the h i r e of wage l a b o u r e r s , and where producers have c o n t r o l over the means of production (at l e a s t on c a p i t a l and l a b o u r ) . L i k e any mode of p r o d u c t i o n , the p r e c a p i t a l i s t mode of p r o d u c t i o n does c o n t a i n w i t h i n i t elements of other modes of p r o d u c t i o n , s p e c i a l l y of c a p i t a l i s t mode of p r o d u c t i o n . 5. According to the United Nations Centre on T r a n s n a t i o n a l C o r p o r a t i o n s (I983a:1), F o r e i g n d i r e c t investment g e n e r a l l y r e f e r s to investment abroad i n v o l v i n g an element of c o n t r o l by the i n v e s t o r over the c o r p o r a t i o n i n which the investment i s made. 6. The stock of f o r e i g n investment means the share c a p i t a l of these c o r p o r a t i o n s . 101 CHAPTER 3 THEORETICAL APPROACHES TO THIRD WORLD INDUSTRIALIZATION Introduct ion In the l a s t decade or so there has been a s e r i o u s break-down in the e s t a b l i s h e d paradigms i n the s o c i a l s c i e n c e s (see, f o r i n s t a n c e , Giddens, 1977, 1979; Gregory, 1978; H a r l o e , 1977; H o l l a n d , 1976; Keat and U r r y , 1975; Ley and Samuels, 1978). 1 T r a d i t i o n a l approaches have been c r i t i q u e d and m o d i f i c a t i o n s as 2 w e l l as a l t e r n a t i v e approaches have been o f f e r e d . Geography has been no exception to t h i s trend (see, for i n s t a n c e , Ar-mstrong and McGee, 1985 [for t h c o m i n g ] ; Clark and Dear, 1978; C u r r y , 1981; Gale and Olsson [ E d s ] , 1979; Gregory, 1978; Har-vey, 1972, 1973, 1975, 1978, 1982; Massey, 1973, 1978, 1979; Peet, 1969; 1977 [ E d ] , 1980; Szymanski and Agnew, 1981; Z e l i n -sky, 1975, 1978). The breakdown in t r a d i t i o n a l paradigms mentioned above i s a l s o c l e a r l y evident i n s t u d i e s of T h i r d World i n d u s t r i a l i -z a t i o n . Although most s t u d i e s do not have e x p l i c i t paradigms, and o f t e n draw on more than one, four major t h e o r e t i c a l approaches to T h i r d World i n d u s t r i a l i z a t i o n can be i d e n t i f i e d : 1. S t u d i e s i n i n d u s t r i a l geography, r e l y i n g f o r the most p a r t on n e o c l a s s i c a l l o c a t i o n t h e o r y , but which have r e c e n t l y deve-loped both an awareness of the t o t a l i n d u s t r i a l system as opposed to j u s t l o c a t i o n , and a b e h a v i o r a l approach 3 2. N e o c l a s s i c a l economic approach , which has perhaps dominated the i n v e s t i g a t i o n of T h i r d World i n d u s t r i a l i z a t i o n , and which 1 02 i s c h a r a c t e r i z e d by, f o r i n s t a n c e , the O r g a n i z a t i o n f o r Econo-mic Cooperation and Development (OECD) s e r i e s of s t u d i e s of the i n d u s t r i a l i z a t i o n experiences of s e l e c t e d T h i r d World c o u n t r i e s (see L i t t l e , S c i t o v s k y , and S c o t t , 1970, for a s y n t h e s i s of the country s t u d i e s ) 3. Marxist approaches, i n c l u d i n g both orthodox and neo-Marxist schools 4. Dependency approaches. While these approaches are not based on d i f f e r e n t epistemolo-g i e s , there i s , n o n e t h e l e s s , a d i s c e r n i b l e break between appro-aches drawing t h e i r i n s p i r a t i o n from p o s i t i v i s m , ( i n d u s t r i a l geography, n e o c l a s s i c a l economic approach) and those drawing t h e i r i n s p i r a t i o n from r e a l i s m4 (Marxism and dependency ap-p r o a c h e s ) . This d i f f e r e n c e i n t h e i r u n d e r l y i n g e p i s t e m o l o g i e s may p a r t l y e x p l a i n the more q u a n t i t a t i v e approach of the former compared with the more q u a l i t a t i v e approach of the l a t t e r . T h i s chapter c r i t i c a l l y reviews these major t h e o r e t i c a l approaches to the study of T h i r d World i n d u s t r i a l i z a t i o n . While the review w i l l i n d i c a t e the u t i l i t y of the v a r i o u s approaches, i t w i l l a l s o enable the author to i n d i c a t e h i s own t h e o r e t i c a l l e a n i n g s , important to an understanding of the t h e s i s . I n d u s t r i a l Geography Most tw e n t i e t h - c e n t u r y re s e a r c h on the problem of indus-t r i a l l o c a t i o n has pursued a dominant theme: the explana-t i o n of the c h o i c e of l o c a t i o n of new manufacturing p l a n t s (Hamilton, 1974:3). I n d u s t r i a l geography was so completely dominated by i n d u s t r i a l l o c a t i o n a l a n a l y s i s i n the past that the term "indu-1 03 s t r i a l geography" i s probably a misnomer for a d e s c r i p t i o n of the e a r l y work of t h i s group. The preoccupation with l o c a t i o n a l a n a l y s i s - - t o the e x c l u s i o n of other e q u a l l y important, i f not more important, t o p i c s - - a n d the shortcomings of i n d u s t r i a l l o c a t i o n a l analyses themselves have se v e r e l y l i m i t e d the cont-r i b u t i o n of i n d u s t r i a l geography to an understanding of indus-5 t r i a l i z a t i o n in both developed and developing c o u n t r i e s . The i n d u s t r i a l l o c a t i o n a l a n a l y s i s i n geography i s esse-n t i a l l y d e r i v e d from models developed by n e o c l a s s i c a l econo-m i s t s . I t i s u s u a l l y dated from 1909, when A l f r e d Weber (1868-1958) p u b l i s h e d h i s seminal work, Uber den Standort der Indus- t r i e n ( H o l l a n d , 1976:2; Massey, 1979:61; Smith, 1981:69), a v a i -l a b l e to E n g l i s h readers from 1929 onwards.6 I t s i n f l u e n c e has been f a r reaching enough to l e a d most commentators on l o c a t i o -nal a n a l y s i s to regard Weber as the father of i n d u s t r i a l l o c a -t i o n t h e o r y . Weber based h i s theory of l o c a t i o n on three b a s i c assum-p t i o n s : (1) raw m a t e r i a l s are found in only some p l a c e s ( i . e . resources are g e o g r a p h i c a l l y d i f f e r e n t i a t e d ) ; (2) market area comprises a number of separate p o i n t s and these are given i n terms of t h e i r s i t u a t i o n and s i z e ; (3) there are s e v e r a l f i x e d labour l o c a t i o n s , and labour i s f i x e d and i n l i m i t e d supply at a given wage rate (Smith, 1981:69-70). Smith argues that Other i m p l i c i t assumptions are made. He suggests that Weber d i s r e g a r -ded i n s t i t u t i o n a l f a c t o r s , and assumed p e r f e c t c o m p e t i t i o n and u n i f o r m i t y of c u l t u r e and p o l i t i c a l system. In a d d i t i o n , Weber h e l d that t r a n s p o r t c o s t s were p r o p o r t i o n a l to d i s t a n c e (Hoi-1 04 l a n d , 1976:2). According to Weber, three f a c t o r s determine i n d u s t r i a l l o c a t i o n . These are t r a n s p o r t and labour c o s t s , which he termed r e g i o n a l f a c t o r s of l o c a t i o n , and agglomeration or deglomera-t i o n f a c t o r s , which he termed l o c a l ( H o l l a n d , 1976:3; Smith, 1981:70). Weber introduced, i n d i c e s of m a t e r i a l and labour cost to o p e r a t i o n a l i z e h i s model. Weber's l o c a t i o n a l a n a l y s i s was used as a base by a s e r i e s of l o c a t i o n a l t h e o r i s t s , ranging from Tord Palander, Edgar Hoover, August Losch, Walter I s a r d , to David Smith. Of t h e s e , Losch and I s a r d have e x c e r c i s e d a p a r t i c u l a r l y strong i n f l u e n c e on geography, and are s i n g l e d out f o r f u r t h e r t r e a t -ment . August Losch (1906-1945) c r i t i c i z e d Weber's model' for i t s a b s t r a c t i o n from demand and f o r i t s p a r t i a l e q u i l i b r i u m n a t u r e . He set out to develop a general e q u i l i b r i u m theory of l o c a t i o n p r e d i c a t e d upon demand (Smith, 1981:85).. Losch's aim was n o t , however, to e x p l a i n r e a l l o c a t i o n s , but to develop a normative theory of l o c a t i o n : The r e a l duty of the economist i s not to e x p l a i n our s o r r y r e a l i t y , but to improve i t . The q u e s t i o n of the best l o c a t i o n i s f a r more d i g n i f i e d than determination of the r e a l one (Losch, 1954:4). According to Losch, optimum l o c a t i o n i s where i t i s most p r o f i t a b l e , that i s , where the t o t a l revenue exceeds t o t a l c o s t s by'the g r e a t e s t margin. His aim was to t h e o r i z e on how, given c e r t a i n c o n d i t i o n s , economic a c t i v i t i e s ought to l o c a t e in space. In order to do t h i s , he made f a r ranging and very r e s t -1 05 r i c t i v e assumptions (see Smith, 1981:86-87 f o r the a c t u a l assu-m p t i o n s ) . These assumptions made Losch's theory even more ab-s t r a c t than Weber's, which he had c r i t i c i z e d f o r i t s a b s t r a -c t i o n ! F i n a l l y , Walter I s a r d i s c r e d i t e d with the development of the p r a c t i c a l component of l o c a t i o n a l a n a l y s i s , p a r t i c u l a r l y the f i e l d of r e g i o n a l a n a l y s i s (see H o l l a n d , 1976). In terms of a c t u a l t h e o r e t i c a l c o n t r i b u t i o n , however, I s a r d does not add s i g n i f i c a n t l y to the e a r l i e r works. P o s t - I s a r d i a n l o c a t i o n theory i n the n e o c l a s s i c a l mould has not r e a l l y broken new t h e o r e t i c a l ground (Smith, 1981:107), and a good deal of t h i s can be a t t r i b u t e d to the undue emphasis on the techniques of l o c a t i o n a l a n a l y s i s that has c h a r a c t e r i z e d these e f f o r t s . While l o c a t i o n a l a n a l y s i s has, i n the main, been i n t e r e -sted i n modelling i n d u s t r i a l l o c a t i o n , i t d i d extend i t s scope to i n c l u d e i n d u s t r i a l change, t h i s emphasis on l o c a t i o n a l chan-ge being marked by the p u b l i c a t i o n of Hamilton's (1978) book. The i n d u s t r i a l l o c a t i o n a l school has been s e v e r e l y c r i -t i c i s e d . There have been two major p o i n t s of c r i t i c i s m : the nature of the l o c a t i o n models themselves, and the narrowness of the l o c a t i o n a l a n a l y s i s s c h o o l . Let us d e a l with the f i r s t c h a l l e n g e . Geography u n c r i t i c a l l y adopted models of i n d u s t r i a l l o c a t i o n developed by n e o c l a s s i c a l economists. These models, as we have al r e a d y p o i n t e d out, were based on most r e s t r i c t i v e a s s u m p t i o n s — i n the words of a prominent economist, " . 1 06 assumptions about human behavior that are plucked from the a i r " (Brown, 1972:3). Although models by t h e i r nature i n v o l v e the removal of "noise" through s i m p l i f i c a t i o n of a complex r e a l i t y (see, f o r i n s t a n c e , the d i s c u s s i o n i n Harvey, 1969), i n d u s t r i a l l o c a t i o n models were f a r too removed from r e a l i t y to be able to r e l a t e to i t . Even a w r i t e r such as David Smith, who has a l o t of sympathy with the pioneer l o c a t i o n t h e o r i s t s , and who him-s e l f has made a c o n t r i b u t i o n to l o c a t i o n a l a n a l y s i s , admits that " O p t i m a l i z a t i o n r e q u i r e s a l e v e l of i n f o r m a t i o n and d e c i -sion-making a b i l i t y that i s beyond the c a p a c i t y of both the human mind and the resources of the i n d u s t r i a l o r g a n i z a t i o n " (Smith, 1981:10). T h i s u n r e a l i t y , and u n a t t a i n a b i l i t y of the requirements of these models i s amply i l l u s t r a t e d by the concept of the "Economic Man". T h i s concept i s so c r i t i c a l a f e a t u r e of indus-t r i a l l o c a t i o n a l a n a lyses that i t i s u s e f u l to quote Wolpert's summary of the concept (1964:537): As u s u a l l y s t a t e d , . the concept of Economic Man i s a norma-a t i v e one, an i n v e n t i o n d e s c r i p t i v e only of the types of d e c i s i o n s which would or should be made under the assump-t i o n s of economic r a t i o n a l i t y . As a r a t i o n a l b e i n g , Econo-mic Man i s f r e e from the m u l t i p l i c i t y of goals and imper-f e c t knowledge which introduce complexity i n t o our d e c i s i o n b e h a v i o r . Economic Man has a s i n g l e p r o f i t g o a l , omni-s c i e n t powers of p e r c e p t i o n , reasoning and computation, and i s b l e s s e d with p e r f e c t p r e d i c t i v e a b i l i t i e s . For these reasons behavior may be s t u d i e d i n a c o n t r o l l e d environment, h i s s t r a t e g i e s may be a n t i c i p a t e d , and the outcome of h i s a c t i o n s can be known with p e r f e c t s u r e t y . I n d u s t r i a l l o c a t i o n a l analyses have a l s o s u f f e r e d from too narrowly f o c u s s i n g on f a c t o r s of l o c a t i o n . I n d u s t r i a l l o c a -t i o n , although important to geographers, has not weighed as 107 h e a v i l y on manufacturers as has been assumed or hoped for by geographers. In f a c t , Hamilton (1974:6) e x p l a i n s in an autho-r i t a t i v e review of s p a t i a l i n d u s t r i a l r e s e a r c h , that "The choice of a l o c a t i o n [ o r i g i n a l emphasis] was, and s t i l l i s , of t e n a non-issue f o r the s m a l l - s c a l e entrepreneur i n i t i a l l y e s t a b l i s h i n g an i n d u s t r y " . Moreover, no matter how important, l o c a t i o n i s only one fac e t of a complex i n d u s t r i a l system, a p o i n t now i n c r e a s i n g l y r e a l i z e d by i n d u s t r i a l geographers (see, f o r i n s t a n c e , Linge and Hamilton, 1981). The requirements of o v e r a l l corporate planning o f t e n o v e r r i d e the p u r e l y l o c a t i o n a l c o n s i d e r a t i o n s i n d e c i d i n g on i n d u s t r i a l l o c a t i o n s . Probably as a r e s u l t of the n e o c l a s s i c a l r o o t s of the l o c a t i o n models, l o c a t i o n a l analyses have g e n e r a l l y been com-p l e t e l y a h i s t o r i c a l . L i k e other socio-economic phenomena, howe-v e r , i n d u s t r i a l l o c a t i o n s are products of the h i s t o r i c a l pro-c e s s , and a h i s t o r i c a l a n a l y s i s i s c a l l e d f o r i f we are to adequately understand and e x p l a i n contemporary i n d u s t r i a l l o c a -t i o n s . E a r l y i n d u s t r i a l geography a l s o f a i l e d to take account of the changing nature of i n d u s t r i a l and corporate organiza-t i o n . The e m p i r i c a l i n a p p r o p r i a t e n e s s of much i n d u s t r i a l geog-r a p h i c a l r e s e a r c h i s thrown i n t o sharper r e l i e f when we examine changes i n the pro d u c t i o n process and o r g a n i z a t i o n of f i r m s . In the l a s t few decades, p a r t i c u l a r l y s i n c e the 1960s, the m u l t i -p l a n t and multi - p r o d u c t c o r p o r a t i o n has become the dominant fe a t u r e of the c a p i t a l i s t i n d u s t r i a l s t r u c t u r e . Conventional 1 08 l o c a t i o n theory i s s t i l l i l l attuned to t h i s changed r e a l i t y . The c orporate s t r u c t u r e has a l s o changed g r e a t l y , and the major i s s u e s of i n d u s t r i a l o r g a n i z a t i o n c u r r e n t l y r e l a t e to the i n -c r e a s i n g importance of m u l t i n a t i o n a l c o r p o r a t i o n s , and the ensuing is s u e s of c o n t r o l , c o m p e t i t i o n , s o v e r e i g n t y , and ine-q u a l i t y . T r a d i t i o n a l l o c a t i o n a l a n a l y s i s " has not adequately addressed these i s s u e s . In a d d i t i o n to these shortcomings, the t r a d i t i o n a l l o c a -t i o n t h e o r i e s have a l s o pretended to be the only t h e o r i e s of i n d u s t r i a l l o c a t i o n , r a t h e r than seeing themselves as t h e o r i e s of l o c a t i o n in a p a r t i c u l a r , in t h i s i n s t a n c e , c a p i t a l i s t , mode of p r o d u c t i o n . I r o n i c a l l y , Weber was very much aware of t h i s r e l a t i o n s h i p (Gregory, 1981:176). Geographers have a l s o become too i n v o l v e d with the tech-niques of l o c a t i o n a l a n a l y s i s . However, d e t a i l s and techniques are only important when the o v e r a l l design of the theory i s sound, and t h i s was not the case with the t r a d i t i o n a l l o c a t i o n t h e o r i e s . Moreover, an undue preoccupation with techniques i n h i b i t s t h e o r e t i c a l advance. As Sjoberg and Nett (1968:4) p o i n t out, " . . . a n emphasis upon mere t e c h n i c a l v i r t u o s i t y i n r e s e a r c h w i l l l e a d to s t e r i l e r e s u l t s " . The n e o c l a s s i c a l l o c a t i o n t h e o r i e s i n geography thus c o n c e n t r a t e d upon technique, at l e a s t s i n c e I s ard's time, and f a i l e d to enhance our understanding of the i n d u s t r i a l system, even i n the area of i n d u s t r i a l l o c a t i o n . The general f e e l i n g of disappointment with t r a d i t i o n a l l o c a t i o n t h e o r i e s i s well sum-med up by t h i s statement from Michaelson made i n another 109 c o n t e x t : . . . the data provide few f e e l i n g s that good answers have been p r o v i d e d . . . . There i s no f e e l i n g of r e l i e f or e l a t i o n . There i s no i n d i c a t i o n that we know more about why [ o r i g i n a l emphasis] t h i n g s happen the way they do (quoted in Downs and Meyer, 1978:66). I n d u s t r i a l geography has been responding to some of these c r i t i c i s m s , and the new, h i g h l y e c l e c t i c i n d u s t r i a l geog-raphy of the l a t e 1970s and e a r l y 1980s i n c o r p o r a t e s many new i d e a s . F i r s t , the scope of i n d u s t r i a l l o c a t i o n a l analyses has been widened to i n c l u d e i n d u s t r i a l (meaning l o c a t i o n a l in most cases) change (see, f o r i n s t a n c e , Chaudhuri, 1978; Karan, 1964; Onyemelukwe, 1978). Second, the scope of i n d u s t r i a l geography i t s e l f has been c o n s i d e r a b l y i n c r e a s e d . Hamilton and Linge (1981:1-23), fo r i n s t a n c e , devote c o n s i d e r a b l e space i n t h e i r important e d i t e d volume to the concept of an i n d u s t r i a l system, t h e i r i m p l i c i t argument being that i n d u s t r i a l geography must examine the e n t i r e i n d u s t r i a l system r a t h e r than j u s t l o c a t i o n . To some e x t e n t , that indeed i s being done now. Geograp-hers have r e c e n t l y focussed a t t e n t i o n on the m u l t i n a t i o n a l c o r p o r a t i o n , which, as we have seen i n Chapter 1, i s an impor-tant component of the world economic and p o l i t i c a l landscape (see, f o r i n s t a n c e , Singh and Choo, 1981; T a y l o r and T h r i f t [ E d s ] , 1982). Other t o p i c s now being i n v e s t i g a t e d i n c l u d e ex-port p r o c e s s i n g zones (McGee, 1982), i n d u s t r i a l d e c e n t r a l i z a -t i o n ( S i t , 1979), and r e g i o n a l d i s p a r i t i e s (Enders, 1980). So, on the whole, i t can be s a i d that t r a d i t i o n a l i n d u s t r i a l geog-raphy, which was c o n f i n e d to l o c a t i o n a l a n a l y s i s , has been 1 1 0 r e i n v i g o r a t e d through c r i t i c i s m and s e l f - a n a l y s i s , and has c o n s i d e r a b l y broadened i t s scope. T r a d i t i o n a l i n d u s t r i a l geography has a l s o been changed as a r e s u l t of the s o c i a l sciences-wide tr e n d towards behavio-r a l a n a l y s i s . The b e h a v i o r a l approach developed as a r e a c t i o n against the unreal assumptions of the l o c a t i o n models, and against the normative i n f l u e n c e i n s o c i a l s c i e n c e . I t s ba s i c premise i s that t h e o r i e s should be based on human behavior i t s e l f , and that i n d i v i d u a l b e h a v i o r a l d e c i s i o n making should be emphasized (see Cadwallader, 1975:33; Kunkel and B e r r y , 1968:21). The b e h a v i o r a l approach was s p e c i a l l y strong in indus-t r i a l geography i n the 1970s, prompting Smith (1981:124) to maintain that the 1970s was a decade of the b e h a v i o r a l approach (see a l s o Downs, 1970; E y l e s , 1971; G o l d , 1980; G o l l e d g e , Brown, and W i l l i a m s o n , 1972; Keeble, 1977; K o r o s c i l , 1971). Given the unreal nature of many of the assumptions embodied i n the concept of "Economic Man", i t i s easy to understand the a t t r a c t i o n of the a l t e r n a t i v e c o n c e p t i o n of " S a t i s f i c i n g Man" that the b e h a v i o r a l approach used. The b e h a v i o r a l approach a l s o l e d to the i n c o r p o r a t i o n of p e r s o n a l f a c t o r s i n l o c a t i o n r e -search, as w e l l to an awareness of the broader b e h a v i o r a l environment of the business e n t e r p r i s e . P e r c e p t i o n , measured through the concept of image, became an important concept (see Downs, 1970). The b e h a v i o r a l approach a l s o l e d to the study of the i n d u s t r i a l e n t e r p r i s e i t s e l f i n i n d u s t r i a l geography (see, f o r 111 i n s t a n c e , Barr and F a i r b a i r n , 1978; B r i t t o n , 1974; Gilmour, 1974; Hamilton, 1974, 1978; Nor t h , 1974; Rees, 1974). The b e h a v i o r a l approach i t s e l f has come under c r i t i c i s m . Many of the c r i t i c i s m s l a b e l l e d a g a i n s t t r a d i t i o n a l l o c a t i o n a l analyses a r e , to a la r g e e x t e n t , a l s o a p p l i c a b l e to the beha-v i o r a l s c h o o l . The b e h a v i o r a l approach belongs to the same epistemology as the t r a d i t i o n a l l o c a t i o n a l a n a l y s e s ; what i t does i s to ask for more reasonable assumptions. Thus i t s u f f e r s from some of the same c o n s t r a i n t s that the t r a d i t i o n a l l o c a t i o n models s u f f e r e d from. Moreover, as Massey (1979) argues, the b e h a v i o r a l approach i s s t i l l s e eking for the i d e a l f i r m and the i d e a l l o c a t i o n , much i n the same way the t r a d i t i o n a l i n d u s t r i a l l o c a t i o n a l a n a l y s t s were. To compound these problems, the beha-v i o r a l approach has a major e p i s t e m o l o g i c a l problem because given that b e h a v i o r a l t h e o r i e s are i n d u c t i v e l y d e r i v e d , i t faces the problem of developing t h e o r i e s of general a p p l i c a t i o n as i t i s not c l e a r how many o b s e r v a t i o n s are adequate for the g e n e r a l i z a t i o n of the f i n d i n g s . A l s o , given that the c h a r a c t e r of the f i r m s i s h i s t o r i c a l , and r e l a t e d to the mode of produc-t i o n , there would appear to be very l i m i t e d b a s i s for the e v o l u t i o n of laws a p p l i c a b l e to d i f f e r e n t h i s t o r i c a l p eriods and modes of p r o d u c t i o n . N e o c l a s s i c a l Economic Approach In the study of i n d u s t r i a l i z a t i o n i n developing coun-t r i e s , those by n e o c l a s s i c a l economists are dominant. Studies such as those by the O r g a n i z a t i o n f o r Economic Cooperation and Development (OECD) alr e a d y r e f e r r e d t o , and more recent s t u d i e s 1 1 2 such as Balassa (1981), Cody, Hughes, and Wall (Eds, 1980), F a t t a h (1979), Edwards (1975), and S i t , Wong, and Kiang (1979) we l l i l l u s t r a t e the main t h r u s t of the n e o c l a s s i c a l approach to T h i r d World i n d u s t r i a l i z a t i o n . A c e n t r a l feature of these s t u d i e s , i n sharp c o n t r a s t , f o r i n s t a n c e , with those by i n d u s t r i a l geographers, i s that they are f u l l - s c a l e s t u d i e s of the i n d u s t r i a l systems of coun-t r i e s . Even when these s t u d i e s are not f u l l - s c a l e i n v e s t i g a -t i o n s c o v e r i n g the e n t i r e i n d u s t r i a l system, they cover the m a j o r — u s u a l l y more than o n e — a s p e c t ( s ) of the i n d u s t r i a l sys-tem. T o p i c s most f r e q u e n t l y covered by n e o c l a s s i c a l economists i n c l u d e i n d u s t r i a l s t r u c t u r e , u t i l i z a t i o n of f a c t o r s of produc-t i o n , types and l e v e l s of p r o t e c t i o n , p u b l i c i n d u s t r i a l p o l i -c i e s , f i n a n c i n g , i n d u s t r i a l technology t r a n s f e r s , income d i s -t r i b u t i o n , m u l t i n a t i o n a l c o r p o r a t i o n s , and trade p o l i c i e s . The l a t t e r , in p a r t i c u l a r , has been s t u d i e d c l o s e l y i n r e l a t i o n to T h i r d World i n d u s t r i a l i z a t i o n . The n e o c l a s s i c a l approach has provided the b a s i c concep-t u a l and measurement t o o l s f o r the d e s c r i p t i o n , a n a l y s i s , and p r e s c r i p t i o n s f o r T h i r d World i n d u s t r i a l i z a t i o n f o r non-Marxist w r i t e r s . N e o c l a s s i c a l economics now has a stock of h i g h l y r e f i n e d t o o l s f o r examining the i n d u s t r i a l systems of the developing c o u n t r i e s . However, d e s p i t e i t s preeminent p o s i t i o n , and advanced t o o l s , n e o c l a s s i c a l economics has not been able t o make a major c o n t r i b u t i o n to our understanding of T h i r d World i n d u s t r i a l i z a -t i o n because of i t s u n d e r l y i n g assumptions, e s p e c i a l l y those 113 relating to the efficacy of the market mechanism, the mobility of factors of production, and the role of the state. Further-more, neoclassical economics has promoted the concept of value-free social science, and has elevated essentially social issues to the status of technical problems. Many of these studies also suffered from a complete neglect of the historical dimension of contemporary phenomena. Finally, perhaps the most serious draw-back of the neoclassical approach has been an unwillingness to interrogate its underlying premises, even in the light of increasing incongruence between its teachings and empirical reality. Let us look at some of these issues in d e t a i l . A central component of the neoclassical economic approach to industriali-zation has been its stance on external trade. Since manufac-tures are essentially traded items, a trade theory is of utmost importance in guiding both analysis and policy prescription. The Heckscher-Ohlin approach to trade, based on the theory of comparative advantage, "predicts that trade will be mostly between unlike [original emphasis] economies, and that the gains will be greatest where conditions are most dissimilar" (Stewart, 1976:94). Following from this formulation, one would expect the most trade and the most gains between the North and the South, and that the developed countries would export capi-tal-intensive goods, and developing countries labour-intensive goods. However, as Stewart argues, trade has been' much greater between the developed countries (Stewart, 1976:94). Also, Leon-1 1 4 t i e f has shown the Uni t e d States e x p o r t s , as a case of exports of a developed c o u n t r y , to be more l a b o u r - i n t e n s i v e than her imp o r t s . Furthermore, one can see the widespread tendency on the part of the developed c o u n t r i e s to maintain labour-i n t e n s i v e i n d u s t r i e s , such as footwear and t e x t i l e s , even i n the face of f i e r c e c o m p e t i t i o n from developing c o u n t r i e s . The mainstay of the n e o c l a s s i c a l approach to i n t e r n a t i o -n a l trade has been the law of comparative advantage. This s t a t e s that "A country w i l l tend to export the commodity whose r e l a t i v e cost (to the other commodity) or comparative cost of p r o d u c t i o n i s lower than i t i s in the other country" ( H e l l e r , 1973:36). While c o n c e p t u a l l y the theory i s a t t r a c t i v e , i n r e a l i t y , i t i s w e l l known that c o u n t r i e s have used the theory of compa-r a t i v e advantage only when i t has s u i t e d them, and have not been bound by i t when they have been disadvantaged. In t h i s c o n t e x t , p r e s c r i p t i o n s f o r T h i r d World i n d u s t r i a l i z a t i o n based on the theory of i n t e r n a t i o n a l trade has probably been harmful to these c o u n t r i e s . F i r s t , n e o c l a s s i c a l economists have b e l i e v e d on a p r i o r i grounds that trade i s b e n e f i c i a l to both p a r t i e s . But both h i s t o r i c a l experience and common sense suggest that trade bene-f i t s c o u l d be and are a p p r o p r i a t e d u n e q u a l l y . Moreover, one a l s o has to examine the system of trade i t s e l f , s p e c i a l l y the r u l e s of the system and i t s f a i r n e s s . The i n t e r n a t i o n a l econo-mic system was b u i l t a f t e r World War II by the i n d u s t r i a l i z e d c o u n t r i e s , and i t has worked to the advantage of the more 1 1 5 powerful c o u n t r i e s and c o r p o r a t i o n s . Hence the p e r s i s t e n t c a l l s f o r the e v o l u t i o n of a New I n t e r n a t i o n a l Economic Order (NIEO). Furthermore, comparative advantage i t s e l f was made more t e c h n i c a l than i t i s . There has been an i m p l i c a t i o n that compa-r a t i v e advantage was f i x e d and r i g i d . However, comparative advantage i s a dynamic s i t u a t i o n , and i s far from " n a t u r a l " or f i x e d . The success of a small group of c o u n t r i e s i n t h e i r attempts to export to developed country markets i n competition to developed country producers t e s t i f i e s to the dynamism of comparative advantage. Comparative advantage i s a l s o c r e a t e d or b u i l t . While to some extent there i s some n a t u r a l comparative advantage, spe-c i a l l y where resource endowments are concerned, comparative advantage i s o f t e n accumulated through c a r e f u l p l a n n i n g . The success of both Japan and Korea i l l u s t r a t e w e l l the r o l e of the s t a t e i n b u i l d i n g "comparative advantage". Furthermore, the theory of comparative advantage has not always guided the trade p o l i c i e s of c o u n t r i e s . H i s t o r i c a l l y , the bulk of the p r e s e n t l y i n d u s t r i a l i z e d c o u n t r i e s used t h e i r c o l o n i a l s t a t u s to set the terms of t r a d e . In contemporary i n t e r n a t i o n a l economic r e l a t i o n s t o o , comparative advantage i s l i b e r a l l y tampered with on grounds of n a t i o n a l i n t e r e s t , u n f a i r c o m p e t i t i o n , and employment. N e o c l a s s i c a l economics a l s o f a l t e r s because i t has de-voted l i t t l e a t t e n t i o n to the r o l e of the s t a t e i n i n t e r n a t i o -n a l t r a d e . Apart from the f a c t that a s i z e a b l e p r o p o r t i o n of i n t e r n a t i o n a l trade today i s conducted by s t a t e owned or con-1 1 6 trolled corporations, government action in terms of the nego-tiation of foreign trade treaties, provision of financial pac-kages, and timely market intelligence, needs to be properly assessed. Many major international trade deals today are c l i n -ched not purely on the basis of comparative advantage, but on the basis of negotiated deals, such as the a b i l i t y to offer attractive financial packages. Another area in which the neoclassical approach to indu-strialization in the developing countries has been inadequate has been it s faith in the efficacy of the market. In most developing countries, the market mechanism is either inadequa-tely developed or distorted, thus seriously limiting the value of serious econometric analyses. Even where the market system is developed, as it is in the case of the developed capitalist countries, the market has not necessarily ensured fair competi-tion. The rapid rise of multinational corporations, already seen in Chapter 2, is a powerful refutation of the uncritical faith in the market mechanism. Clearly, given a similar begin-ning, some firms outperform others, and expand, often at the expense of the smaller firms, and utlimately lead to either monopoly, or, more commonly, to oligopoly. In fact, the inabi-l i t y of the market system to ensure fair competition is now recognized even in the United States, where anti-combines and anti-trust legislation exist. The rapid rise of the multinational corporation, and of intra-firm trading and transfer pricing, the latter currently accounting for a very sizeable portion of the global trade, as 117 a l r e a d y seen in Chapter 2, means that the p r i c e system has l o s t i t s importance. F i n a l l y , n e o c l a s s i c a l economics i s p r e d i c a t e d upon eq u i -b l i b r i a t i n g systems. I n t e r n a t i o n a l trade theory p r e d i c t e d that with the m o b i l i t y of f a c t o r s of production from resource r i c h areas to resource scarce r e g i o n s , and through the b e n e f i t s from t r a d e , i n t e r n a t i o n a l i n e q u a l i t y would be reduced, even e l i m i -n a ted. The evidence, however, i s that no such r e d u c t i o n has been w i t n e s s e d . Indeed, there i s evidence of i n c r e a s i n g i n t e r -n a t i o n a l i n e q u a l i t i e s , not only between the developed and deve-l o p i n g c o u n t r i e s , but among developing c o u n t r i e s themselves. Moreover, i t i s now i n c r e a s i n g l y r e a l i z e d by planners and p o l i t i c i a n s a l i k e that i n t e r n a t i o n a l i n e q u a l i t y i s much l i k e r e g i o n a l i n e q u a l i t y w i t h i n c o u n t r i e s . L i k e the l a t t e r , the former w i l l a l s o r e q u i r e a massive governmental i n t e r v e n t i o n ; the market system i s simply not geared to s o c i a l j u s t i c e . The n e o c l a s s i c a l economic approach does a major d i s s e r -v i c e to the T h i r d World a l s o by l i m i t i n g i t s a n a l y s i s to the contemporary i n d u s t r i a l system. The cru s h i n g impact of c o l o n i a -l i s m , which n e a r l y a l l of the p r e s e n t l y underdeveloped coun-t r i e s had to endure, i s not adequately d e a l t w i t h . N e i t h e r i s there any d i s c u s s i o n of the i n e q u i t i e s inherent i n the i n t e r n a -t i o n a l economic system. F i n a l l y , the n e o c l a s s i c a l economic approach does not d i r e c t l y address i s s u e s of i n t e r e s t and b e n e f i t to the workers, the c r e a t o r s of v a l u e , such as c l a s s a n a l y s i s and the approp-Q r i a t i o n of su r p l u s v a l u e . Indeed, i t may not be d i f f i c u l t to 1 18 portray n e o c l a s s i c a l economics as a champion of c a p i t a l . As mentioned ear1ier,however, n e o c l a s s i c a l economics possesses v a l u a b l e t o o l s f o r the examination of T h i r d World i n d u s t r i a l i z a t i o n . It i s not an exaggeration to say that most of the major concepts used by non-Marxist a n a l y s t s of indus-t r i a l i z a t i o n , such as i n d u s t r i a l s t r u c t u r e and o r g a n i z a t i o n , income d i s t r i b u t i o n , technology t r a n s f e r , were a l l developed i n i t i a l l y i n n e o c l a s s i c a l economics. We have noted many of the problems a s s o c i a t e d with t h i s approach. However, i f these c r i -t i c i s m s are taken i n t o account, and the expla n a t i o n s o f f e r e d by n e o c l a s s i c a l economics reviewed c r i t i c a l l y , and i f the i s s u e s r a i s e d by the other p e r s p e c t i v e s are adequately d e a l t w i t h , n e o c l a s s i c a l economics can make a major c o n t r i b u t i o n to the a n a l y s i s of i n d u s t r i a l i z a t i o n of the T h i r d World. Marxism Marxism has enjoyed an i n t e l l e c t u a l renaissance i n the l a s t two decades i n Western c o u n t r i e s , and has presented a major c h a l l e n g e to the more e s t a b l i s h e d s o c i a l science para-digms ( H a r l o e , 1977; H o l t o n , 1981; Saunders, 1980). As Tucker (1972 : v i i ) observes, " . . . c l a s s i c a l Marxism . . . . has profoundly a f f e c t e d men's views about h i s t o r y , s o c i e t y , econo-mic, i d e o l o g y , c u l t u r e , and p o l i t i c s ; indeed, about the nature of s o c i a l i n q u i r y i t s e l f . " The r i s e of Marxism has c o i n c i d e d with the f a i l u r e of c o n v e n t i o n a l t h e o r i e s to deal with r i s i n g unemployment, socio-economic i n e q u a l i t y , environmental degrada-t i o n , and s o c i a l a l i e n a t i o n . I t s l e g i t i m a c y has been i n c r e a s e d 1 1 9 by the r a p i d increase i n the number of people adopting v a r i o u s 9 strands of M a r x i s t - L e n i n i s t philosophy of l i f e . . While there have been f u l l y - f l e d g e d Marxist s t u d i e s d e a l i n g with other aspects of development in the T h i r d World, no such s t u d i e s of i n d u s t r i a l i z a t i o n are a v a i l a b l e . However, the Marxist p e r s p e c t i v e ( s ) on t h i s issue can be gauged from some i s o l a t e d Marxist papers on the t o p i c as well as from Marxist s t u d i e s of i m p e r i a l i s m , c o l o n i a l i s m , and s o c i a l evolu-t i o n . F i n a l l y , elements of the general corpus of Marxist w r i t -ings can be a p p l i e d to T h i r d World i n d u s t r i a l i z a t i o n . Let us f i r s t o u t l i n e the methodological elements of Marxism, as they overcome many of the shortcomings of both the t r a d i t i o n a l i n d u s t r i a l geography s t u d i e s as w e l l as those of n e o c l a s s i c a l economics. Marxism has a thorough-going h i s t o r i c a l approach to q u e s t i o n s i t a d d r e s s e s . T h i s comes, of c o u r s e , from the emphasis Marx hi m s e l f p l a c e d on h i s t o r i c a l a n a l y s i s . The second important element of Marxist a n a l y s i s i s the emphasis on a h o l i s t i c a p p r o a c h — i n seeing problems in t h e i r t o t a l i t y , r a ther i n c o n t r a s t to n e o c l a s s i c a l economics' tenden-cy to carve out s p e c i f i c problems. T h i s emphasis on a h o l i s t i c approach stems from the b e l i e f in the i n t e r r e l a t e d n e s s of t h i n g s . The t h i r d methodological element of Marxism i s i t s em-p h a s i s on the search f o r fundamental e x p l a n a t i o n s as opposed to s u p e r f i c i a l e x p l a n a t i o n s . Marxism, perhaps because of i t s c l o s e l i n k s with r e a l i s m (already r e f e r r e d to) i s more i n t e r e s t e d than other p e r s p e c t i v e s i n u n d e r l y i n g reasons and e x p l a n a t i o n s 1 20 of phenomena.1^ In a d d i t i o n to these methodological a s p e c t s , Marxism overcomes one of the major d e f i c i e n c i e s of c o n v e n t i o n a l s o c i a l s c i e n c e with i t s emphasis on c l a s s and power a n a l y s i s . C l e a r l y power r e l a t i o n s are c r i t i c a l i n any s o c i a l i n t e r a c t i o n ; and c l a s s e s represent the fundamental groups i n s o c i e t y - e v e n i f we do not accept b i - p o l a r c a t e g o r i z a t i o n of the s i t u a t i o n i n t o e s s e n t i a l l y workers verses c a p i t a l i s t s . Marxism d e s t r o y s the myth, i n c u l c a t e d by economics, that the terms of reward f o r f a c t o r s of production are i m p a r t i a l l y and f a i r l y e s t a b l i s h e d ; that these terms should be immune from s c r u t i n y and c h a l l e n g e . And f i n a l l y , Marxism has a strong i n t e r e s t i n a p p l i e d s t u d i e s - - i n changing the s i t u a t i o n r ather than studying for studying's sake. As Marx himself s a i d , "The p h i l o s o p h e r s have only i n t e r p r e t e d the world, i n v a r i o u s ways, the p o i n t , howe-v e r , i s to change i t " (Marx, 1972b:109). This idea of change, and of p r a c t i c e i s f i r m l y i n g r a i n e d i n Marxism. As Jackson (1936:184) p o i n t s out, a c c o r d i n g to Marxism, " . . . p r a c t i c e i s the source, the o b j e c t , and the f i n a l a c i d t e s t of a l l knowledge." The Marxist methodology and e x p l a n a t i o n i s based upon Marx's view of human s o c i e t y . Marxism b e l i e v e s that a s o c i a l formation i s based on i t s mode of p r o d u c t i o n . As Engels ex-p l a i n e d , The m a t e r i a l i s t conception of h i s t o r y s t a r t s from the p r o p o s i t i o n that the pr o d u c t i o n of the means to support human l i f e , and, next to p r o d u c t i o n , the exchange of th i n g s produced, i s the b a s i s of a l l s o c i a l s t r u c t u r e . . . . the manner i n which wealth i s d i s t r i b u t e d and s o c i e t y d i v i d e d i n t o 121 classes or orders is dependent upon what is produced, how it is produced, and how the products are exchanged (Engel, 1880, quoted in Anderson, 1980:172). These, then, are the main methodological elements of marxism were one to apply to any f i e l d of study. The actual interpretation of the routes to development in developing coun-t r i e s , and the extent and nature of industrialization in the Third World, varies considerably within Marxism. Classical Marxism, as the thoughts and writings of Marx and Engels have come to be called, believed that colonialism, although cruel and unpleasant, was historically necessary and beneficial in so far as it destroyed pre-capitalist modes of production and led to the establishment of capitalism. Marx's opinion in this matter can be gauged from his statement that "In broad outlines, Asiatic ancient, feudal, and modern bour-geois modes of production can be designated as progressive epochs in the economic transformation of society" (Marx, 1972c: 5). Marx's support of colonialism as historically necessary can be seen from this statement (Marx., 1 972a : 58 1-582 ) : Now, sickening as it must be to human feeling to witness those myriads of industrious patriarchal and inoffensive social organizations disorganised and dissolved into their units, thrown into a sea of woes, . . .We must not forget that these i d y l l i c village communities, inoffensive though they may appear, had always been the solid foundation of Oriental despotism, that they restrained the human mind within the smallest possible compass, making it the unresisting tool of superstition, enslaving i t beneath traditional rules, depriving it of a l l grandeur and historical energies. Classical Marxism, as Marx's quotation on the prospect of Indian industrial transformation in the nineteenth century 1 22 in Chapter 2 shows, regarded c a p i t a l i s m as a p r o g r e s s i v e f o r c e , l e a d i n g to the development of the T h i r d World, although he was aware of the problems of the nature of c a p i t a l i s m i m p l i e d by c o l o n i a l c o n t r o l . The same arguments are presented by two l e a d i n g orthodox M a r x i s t s d e a l i n g with T h i r d World i n d u s t r i a l i z a t i o n , S c h i f f e r (1981) and Warren (1973, 1980). We can i l l u s t r a t e the arguments by examining the p o s i t i o n adopted by Warren. Warren leads the most s u s t a i n e d c r i t i c i s m a g a i n st both the dependency school as w e l l as neo-Marxists who, he c l a i m s , have fundamentally departed from c l a s s i c a l marxism. Warren regards c a p i t a l i s m i n developing c o u n t r i e s as both p r o g r e s s i v e and d e s i r a b l e (Warren, 1980:3). T h i s , he r i g h t l y p o i n t s out, i s the p o s i t i o n , as we o u r s e l v e s have seen i n a preceding s e c t i o n , that Marx had taken. Warren's work has two o b j e c t i v e s - - t h e f i r s t i s to ana-l y s e the development of M a r x i s t thought on i m p e r i a l i s m , and the second, i n h i s own words, . . a polemic a g a i n s t widely accepted views that imperi-a l i s t (and subsequently n e o - c o l o n i a l i s m ) i s and has been a s o c i a l l y r e t r o g r e s s i v e f o r c e p r e v e n t i n g or d i s t o r t i n g economic development and thereby c r e a t i n g r e l a t i o n s h i p s of mounting s u b o r d i n a t i o n and dependence between r i c h and poor c o u n t r i e s (Warren, 1980:9). Warren makes eleven major p o i n t s i n h i s book (1980:7-10) : 1. We should recognize the c o n t r i b u t i o n of c a p i t a l i s m , p a r t i -c u l a r l y i t s r e l e a s e of human c r e a t i v i t y and "organized coopera-t i o n i n p r o d u c t i o n " 2. C a p i t a l i s m and b o u r g e o i s i e democracy are c l o s e l y l i n k e d , 1 23 and democracy p r o v i d e s a u s e f u l environment f o r the s o c i a l i s t movement 3. Lenin was the seed of the a n t i - i m p e r i a l i s t p o s i t i o n of Marxism 4. Behind the s h i f t i n Marxism's p o s i t i o n on i m p e r i a l i s m were c o n s i d e r a t i o n s such as the s e c u r i t y of the Soviet s t a t e and the requirements of a n t i - i m p e r i a l i s t propaganda 5. The l a t e s t t h e o r i e s of underdevelopment are modern v e r s i o n s of Lenin's theory; their- dominance serves p o l i t i c a l purposes 6. The prospects for s u c c e s s f u l c a p i t a l i s t development i n many T h i r d World c o u n t r i e s are " q u i t e f a v o u r a b l e " . T h i s i n d i c a t e s the p o s s i b i l i t y of s u b s t a n t i a l i n d u s t r i a l i z a t i o n and a g r i c u l t u -r a l t r a n s f o r m a t i o n 7. S u b s t a n t i a l advances i n i n d u s t r i a l i z a t i o n i n developing c o u n t r i e s have already been made, while c a p i t a l i s t a g r i c u l t u r e has developed more slowly 8. D i r e c t c o l o n i a l i s m " . . . a c t e d as a powerful engine of p r o g r e s s i v e , s o c i a l change, advancing c a p i t a l i s t development f a r more r a p i d l y than was c o n c e i v a b l e i n any other way . . . " 9. The i n t e r n a l c o n d i t i o n s of the T h i r d World are the r e a l o b s t a c l e s to t h e i r development r a t h e r than t h e i r e x t e r n a l , i m p e r i a l i s t r e l a t i o n s 10. In g e n e r a l , the p o l i c i e s of " i m p e r i a l i s t " c o u n t r i e s a c t u a l -l y favour T h i r d World i n d u s t r i a l i z a t i o n and development 11. There i s a growing interdependence, and dependence r e l a -t i o n s are being loosened, p a r t l y because of the growth of indigenous c a p i t a l i s m and p a r t l y because of changing power 1 24 r e l a t i o n s w i t h i n the developed w o r l d . Warren (1980:39) i s supremely c o n f i d e n t of the a b i l i t y of c a p i t a l i s m to i n c o r p o r a t e p r e c a p i t a l i s t modes of p r o d u c t i o n : The exogenous i n t r o d u c t i o n of c a p i t a l i s m does not imply a s t a t i c dualism or s t e r i l e compound of the newly-entered c a p i t a l i s t mode of p r o d u c t i o n with p r e c a p i t a l i s t modes of production w i t h i n the same p o l i t y , f o r the d e v a s t a t i n g l y s u p e r i o r p r o d u c t i v i t y and c u l t u r a l a t t r i b u t e s of c a p i t a -l i s m are bound in the end to subordinate a l l other modes of p r o d u c t i o n and e v e n t u a l l y e l i m i n a t e them e n t i r e l y . Arguments along s i m i l a r l i n e s are made by S c h i f f e r (1981). His main a t t a c k i s on Amin i n r e l a t i o n to the post-war development record of developing c o u n t r i e s a g a i n s t the p r e d i c -t i o n s of Amin. Li k e Warren, S c h i f f e r (1981:518) argues that there has been no blockage to T h i r d World c a p i t a l i s t develop-ment and claims that "In s p i t e of Amin's c l a i m s , the post-war performance of LDCs has been extremely impressive." He f i n d s that the manufacturing s e c t o r of both l a r g e and small c o u n t r i e s "performed admirably w e l l " in the 1960s. These p o s i t i o n s , s p e c i a l l y that regarding r a p i d c a p i t a -l i s t development in developing c o u n t r i e s , are supported by other orthodox M a r x i s t s . Mandle (1980:868) m a i n t a i n s , for i n -s t a n c e , that the environment of n e o - c o l o n i a l s o c i e t i e s i s con-ducive to economic expansion. He puts h i s p o s i t i o n as f o l l o w s : B r i e f l y put, these data show that for a s u b s t a n t i a l number of l e s s developed c o u n t r i e s , post World War II growth r a t e s have been q u i t e i m p r e s s i v e . Such evidence i s now so abundant that continued d i s r e g a r d of these e m p i r i c a l obser-v a t i o n s can no longer be s u s t a i n e d on s c i e n t i f i c grounds. Furthermore, Mandle (1980:871) m a i n t a i n s that The growth r a t e s reported here i n d i c a t e that whatever d i f -f erences are present between contemporary c a p i t a l i s m and and i t s nineteenth century v e r s i o n s , that system s t i l l rep-1 25 res e n t s a mode of p r o d u c t i o n capable of generating sus-t a i n e d expansion in p r o d u c t i v e c a p a c i t y . Warren's attack on the dependency paradigm w i l l not be eval u a t e d here as that d i s c u s s i o n more p r o p e r l y belongs to the s e c t i o n on the dependency paradigm. Warren, S c h i f f e r (1980), Mandle (1980), and Palma (1981) marshall impressive s t a t i s t i c a l evidence f o r t h e i r a s s e r t i o n that c o n s i d e r a b l e development, i n c l u d i n g i n d u s t r i a l development, has taken p l a c e in the T h i r d World. Indeed, we have a l r e a d y seen t h i s i n Chapter 2. In a g r i c u l t u r e , t o o , s u b s t a n t i a l progress has been made. The Green Re v o l u t i o n has succeeded i n d r a m a t i c a l l y i n c r e a s i n g food produ-c t i o n i n many developing c o u n t r i e s . I n d i a , f o r i n s t a n c e , has regained s e l f - s u f f i c i e n c y i n food production d e s p i t e a burgeo-ning p o p u l a t i o n (on the Green R e v o l u t i o n , see Brown, 1970; Jacoby, 1972). However, we have a l s o seen that the progress we have noted r e f e r s to only a handful of c o u n t r i e s , s p e c i a l l y those that a l r e a d y were economically w e l l - o f f . The bulk of the poorer c o u n t r i e s have not experienced any major i n d u s t r i a l develop-ment. Thus while many dependency w r i t e r s have no doubt under-s t a t e d the degree of development i n developing c o u n t r i e s , or-thodox M a r x i s t s such as Warren are c l e a r l y p a i n t i n g too rosy a p i c t u r e . We can note here, t o o , that many of the r a p i d l y indus-t r i a l i z i n g c o u n t r i e s are now f a c i n g r a p i d l y d e t e r i o r a t i n g terms of trade f o r t h e i r primary produce, and are encountering i n -c r e a s i n g t a r i f f and n o n - t a r i f f b a r r i e r s to t h e i r exports i n developed country markets. Moreover, many of these c o u n t r i e s are f a c i n g h i s t o r i c a l l y u n p a r a l l e l e d l e v e l s of f o r e i g n indebte-.1 26 dness i n part brought about from t h e i r need to purchase the technology f o r i n d u s t r i a l development using short-term l o a n s . On the r o l e of c a p i t a l i s m t o o, Warren and others are on f i r m ground i n saying that c a p i t a l i s m i s p r o g r e s s i v e . However, as we have seen from Chapter 2, Marx was f a r too o p t i m i s t i c about the a b i l i t y of c a p i t a l i s m to transform the c o l o n i e s . Warren i s r e i t e r a t i n g Marx; only a century l a t e r . Warren's p o s i t i o n on c o l o n i a l i s m i s a l s o untenable i n that c o l o n i a l i s m represented only one of a number of p o s s i b l e ways in which the Western c o u n t r i e s c o u l d have i n t e r a c t e d with the p r e s e n t l y developing c o u n t r i e s . The Western c o u n t r i e s c e r -t a i n l y d i d not have a g l o b a l mission to develop the r e s t of the world, and c o l o n i a l i s m has to be seen f o r what i t has b e e n — a crude, c r u e l , and s e l f - m o t i v a t e d way of e n r i c h i n g one s o c i e t y at the expense of o t h e r s . F i n a l l y , there are many i n t e r n a l o b s t a c l e s to develop-ment in the T h i r d World. Most development w r i t e r s would accept t h i s p o s i t i o n . However, i t i s not accurate to say that i n t e r n a l o b s t a c l e s are the only o b s t a c l e s to T h i r d World development. Warren seems to be r e t u r n i n g to the e a r l y days of the moderni-z a t i o n paradigm i n a s s e r t i n g that the c h i e f impediments to T h i r d World development are i n t e r n a l . So f a r , of c o u r s e , the d i s c u s s i o n has focussed on the orthodox M a r x i s t s c h o o l — w h i c h i s f i g h t i n g to r e - e s t a b l i s h i t s e l f a g a i n s t at l e a s t a q u a r t e r century of a s s a u l t by neo-M a r x i s t s . Neo-Marxists have been very i n f l u e n t i a l i n the ana-l y s e s of development i n the T h i r d World. 1 27 A general change in the p o s i t i o n of M a r x i s t s on imperia-l i s m and on the best development s t r a t e g y for developing coun-t r i e s has been eviden t from the S i x t h Congress of the Communist I n t e r n a t i o n a l in 1928, which d e c l a r e d that " . . . c a p i t a l i s m , r a t h e r than developing a l l areas i t touches, can p o s i t i v e l y "underdevelop" (quoted i n Mandle,( 1980:866). Since then, par-t i c u l a r l y f o l l o w i n g the w r i t i n g s of Paul Baran, most M a r x i s t s have adopted an a n t i - c a p i t a l i s t and a n t i - t r a n s n a t i o n a l corpora-t i o n s t a n c e , arguing that the development s t r a t e g y best s u i t e d to the T h i r d World s i t u a t i o n i s to s k i p the c a p i t a l i s t phase and make a jump to s o c i a l i s m . Lenin had s t a t e d h i s p o s i t i o n on t h i s p o s s i b i l i t y i n J u l y , 1920 when he had d e c l a r e d that If the r e v o l u t i o n a r y , v i c t o r i o u s p r o l e t a r i a t c a r r i e s on systematic propaganda among them,.and i f the S o v i e t govern-ment render them a l l the a s s i s t a n c e they p o s s i b l y can, i t w i l l be wrong to assume that the c a p i t a l i s t stage of d e v e l -opment i s i n e v i t a b l e f o r the backward n a t i o n a l i t i e s ( L e n i n , 1920 i n d'Encrouse and Schram [ E d s ] , 1969:159). As S c h i f f e r (1981:516) p o i n t s out, and Palma (1981:22) a g r e e s , Baran p o w e r f u l l y shaped the way neo-Marxists viewed underdevelopment i n the T h i r d World. U n l i k e Marx, who had argued that c a p i t a l i s m was the only way the developing coun-t r i e s c o u l d transform themselves, and who was f u l l y c o n f i d e n t t h a t - c a p i t a l i s m would perform t h i s h i s t o r i c a l mission i n these c o u n t r i e s , Baran argued that the reason why the r e s t of the world was l e f t behind the Western nation s depended on the nature of t h e i r c o n t a c t with the West (Baran, 1973:273). He a l s o p o i n t e d to the major t r a n s f e r s of wealth from the c o l o -n i z e d areas to the m e t r o p o l i t a n c o u n t r i e s , where i t was used 1 28 for much needed and p r o f i t a b l e investment. Although Warren and S c h i f f e r c l e a r l y regard dependency w r i t e r s as neo-Marxists, the dependency w r i t e r s w i l l be d e a l t with i n a coming s e c t i o n . Here we can summarize the neo-Marxist p o s i t i o n . Neo-Marxists b e l i e v e that c a p i t a l i s m i n developing c o u n t r i e s i s incapable of developing these s o c i e t i e s , and the-r e f o r e argue that a s o c i a l i s t t r a n s f o r m a t i o n i s c a l l e d f o r without going through the c a p i t a l i s t phase. F o l l o w i n g from t h i s b a s i c premise, then, they a l s o argue that a c l o s e connection with the world economic and p o l i t i c a l system stymies the deve-lopment e f f o r t s of these c o u n t r i e s . Consequently, neo-Marxists are a g a i n s t i n c r e a s i n g the l e v e l s of f i n a n c i a l , a i d , and t e c -h n o l o g i c a l flows i n t o these c o u n t r i e s . I m p l i c i t l y , they argue f o r more l i n k s w i t h i n the d e v e l o p i n g c o u n t r i e s themselves, and for c l o s e r match between n a t i o n a l resource c o n f i g u r a t i o n s and demand. Dependency Founded p a r t l y on the work of the U n i t e d Nations Econo-mic Commission for L a t i n America (ECLA), s p e c i a l l y that of i t s i n f l u e n t i a l d i r e c t o r , Raul P r e b i s c h , and p a r t l y developed as a r e a c t i o n to the f a i l u r e of the i m p o r t - s u b s t i t u t i o n i n d u s t r i a l i -z a t i o n promoted by the ECLA, and born of the inadequacies of the p r e v a i l i n g modernization t h e o r y , the dependency paradigm has developed more as a school than a theory ( B i e n e f e l d , 1981:79; C h i l c o t e , 1978:55; Fagen, 1977:7; Palma, 1981:20; V i l l a m i l , 1979:1).1 1 Although i t would have been e a s i e r to take an author i n t h i s s c h o o l , such as Gunder Frank, and d i s c u s s the 129 p e r s p e c t i v e , i t i s more a p p r o p r i a t e to d i s c u s s the school as a whole to the extent t h i s i s p o s s i b l e . The dependency p e r s p e c t i v e c o n s i s t s of two main components—a methodology f o r undertaking s t u d i e s of the T h i r d World, and a set of i d e a s , not q u i t e a t h e o r y , that guides e x p l a n a t i o n . Given the hasty d i s m i s s a l of dependency by some w r i t e r s uncomfortable with the p o l i t i c a l stance of the perspec-t i v e (see, for i n s t a n c e , Chisholm, 1982), i t i s important to make t h i s d i s t i n c t i o n . It i s a l s o important to note that many of the e x p l a n a t i o n s used by t h i s p e r s p e c t i v e draw l i b e r a l l y from Marxism, although dependency w r i t e r s such as Frank, des-p i t e using Marxist frameworks, do not consider themselves Mar-x i s t s . M e t h o d o l o g i c a l l y , dependency w r i t e r s i n s i s t , l i k e M a r x i s t s , on a thorough-going h i s t o r i c a l a n a l y s i s of s i t u a -t i o n s . Indeed, t h i s should be evident from i t s b a s i c reasoning that part of the e x p l a n a t i o n of the underdevelopment of the T h i r d World i s to be found in the nature of the contact between them and the now developed c o u n t r i e s . Much l i k e M a r x i s t s t o o , dependency w r i t e r s i n s i s t on a h o l i s t i c approach to T h i r d World development, h o l d i n g that one cannot analyse i n d i v i d u a l l y , and in i s o l a t i o n , the v a r i o u s components of what i s a thoroughly l i n k e d system. Thus, i n t e r n a t i o n a l trade i s f r e q u e n t l y c o n s i -dered i n terms of i n t e r n a t i o n a l power r e l a t i o n s h i p s , and indus-t r i a l i z a t i o n i s c o n s i d e r e d i n the context of the o v e r a l l deve-lopment s t r a t e g i e s of the T h i r d World. The dependency p e r s p e c t i v e . a l s o r e j e c t s the view of the 1 30 modernization t h e o r i s t s , and a l s o of orthodox M a r x i s t s , that the causes of T h i r d World development are to be found in the i n t e r n a l s t r u c t u r e s of these s o c i e t i e s . Dependency w r i t e r s maintain that the e x t e r n a l r e l a t i o n s h i p s of c o u n t r i e s themsel-ves have to be a n a l y s e d , not only to examine why they have evolved in the way they have, but to evaluate t h e i r f u t u r e development s t r a t e g i e s . The explanatory ideas of the dependency p e r s p e c t i v e f o l l o w very much the ideas expounded by Baran i n the 1950s. The c e n t r a l conception of the p e r s p e c t i v e i s that c a p i t a l i s m i n developing c o u n t r i e s i s q u a l i t a t i v e l y d i f f e r e n t l y from what i t was i n the now developed c o u n t r i e s , and that t h i s c a p i t a l i s m i s incapable of l e a d i n g to an i n d u s t r i a l t r a n s f o r m a t i o n i n these c o u n t r i e s . According to the dependency p e r s p e c t i v e , T h i r d World s o c i e t i e s are p e r i p h e r a l and dependent. Although dependent development was r a r e l y c l e a r l y d e f i n e d , p e r i p h e r a l c a p i t a l i s m was d e f i n e d as " . . . s o c i a l formation i n which the complete a r t i c u l a t i o n of the c a p i t a l i s t mode of p r o d u c t i o n i s blocked and thus economic development i s aborted" (quoted i n Mandle, 1980:867). The most complete ideas on p e r i p h e r a l c a p i t a l i s m come from the w r i t i n g s of Samir Amin. The core of h i s w r i t i n g s i s h i s model of a p e r i p h e r a l s o c i a l f ormation, which he himself summarized i n h i s important 1974(a) paper. Amin bases h i s d i s c u s s i o n of the p e r i p h e r a l s o c i a l f o r -mation on a d i s t i n c t i o n between the accumulation process i n the c e n t r a l (core) c o u n t r i e s and that of the p e r i p h e r y . Since h i s 131 model i s c r u c i a l to our d i s c u s s i o n , i t i s reproduced i n F i g u r e 3.1. The b a s i c argument of Amin i s that in the case of the c e n t r a l (core) economies, development was p r e d i c a t e d upon the c a p i t a l goods sector and the production of goods for mass consumption. In these s o c i e t i e s , wages were both a cost and demand f o r ( f u r t h e r ) p r o d u c t i o n . These s o c i e t i e s d i d not depend on e x t e r n a l r e l a t i o n s to any s i g n i f i c a n t degree (Amin, 1974a:12). Amin argues that the sequence of p r o d u c t i o n — t h e e a r l y appearance of mass p r o d u c t i o n , the e a r l y t r a n s f o r m a t i o n of a g r i c u l t u r e - - w a s based on demand in urban a r e a s , and the l a t e a r r i v a l of consumer d u r a b l e s . In the p e r i p h e r a l economies, however, a " d i s t o r t e d " 1 2 p i c t u r e p r e v a i l s . To begin w i t h , the process of accumulation began with o u t s i d e impulses. According to him, "This was to p l a y a determining r o l e i n the c r e a t i o n and shaping of the market" (Amin, I974a:12). Amin argues that the export of c a p i t a l to the p e r i p h e r y takes p l a c e i n the context of f a l l i n g r a t e s of p r o f i t , and unequal exchange. Amin f i n d s the o r i g i n a l theory of unequal exchange, developed by Emmanuel, wanting and r e f o r m u l a t e s i t . In essence, Amin argues that whereas c a p i t a l i s more mobile and tends to e q u a l i z e p r o f i t s , the remuneration of l a b o u r , d e r i v i n g from i t s i m m o b i l i t y , i s h i g h l y unequal. The r a t e of s u r p l u s values d i f f e r , and s i n c e world p r i c e s tend to converge, d i f f e -rent r a t e s of s u r p l u s value mean value i s being t r a n s f e r r e d from the p e r i p h e r y to the c e n t r e (Amin, 1977:187). Thus the 1 32 FIGURE 3.1 AMIN'S MODEL OF ACCUMULATION IN CENTRAL/CORE COUNTRIES AND IN PERIPHERAL SOCIAL FORMATIONS C e n t r a l Determining R e l a t i o n s h i p 2 4 Mass Consumption Goods C a p i t a l Goods Main Peripheral-Dependent R e l a t i o n s h i p 1 ; 3 Exports Consumption of Luxury Goods SOURCE: Amin, 1974a:10. t r a n s f e r of value takes p l a c e r e g a r d l e s s of the organic compo-s i t i o n of c a p i t a l . The i n t e r n a t i o n a l unequal exchange i s r e p l i c a t e d i n t e r -n a l l y w i t h i n the p e r i p h e r y . Low wages are maintained d e s p i t e modern tech n o l o g y , l e a d i n g to a slowdown i n p r o l e t a r i a n i z a t i o n and the e x p l o i t a t i o n of p r e - c a p i t a l i s t modes of p r o d u c t i o n (Smith, 1980:10). The domestic market, being born from the export s e c t o r , 1 33 i s l i m i t e d and d i s t o r t e d . The smallness of the market i s not very a t t r a c t i v e to c a p i t a l , although the r a t e s of return are higher (Amin, 1974a:14). When a domestic market does develop, as i t does, i t " i s ( r e l a t i v e l y ) b i a s e d a g a i n s t the demand f o r mass consumption goods and ( r e l a t i v e l y ) in favour of the demand for " luxury" goods" (Amin, 1974a:14). In a c r i t i c a l l y important comment on i n d u s t r i a l i z a t i o n , he maintains that "The i n t e r n a l market i s thus mainly based on the demand f o r 'luxury goods'. . ."(Amin, 1974b:14). As we have a l r e a d y gathered, dependency w r i t e r s hold that the nature of the contact between developing c o u n t r i e s and the now i n d u s t r i a l i z e d c o u n t r i e s i s a strong e x p l a n a t i o n of the present c o n d i t i o n of these developing c o u n t r i e s . While Frank (1969:X), i n saying that "Underdevelopment i n L a t i n America (and elsewhere) i s a r e s u l t of the c o l o n i a l s t r u c t u r e of world c a p i t a l i s t development" i s c l e a r l y t a k i n g an extreme p o s i t i o n , most dependency w r i t e r s would agree that the e x t e r n a l r e l a t i o n -ships of a s o c i e t y are p o t e n t i a l i n h i b i t o r s of development. In any c a s e , they would argue, e x t e r n a l r e l a t i o n s h i p s need to be c r i t i c a l l y examined. Dependency w r i t e r s a l s o argue that the f u r t h e r i n f u s i o n of m e t r o p o l i t a n c a p i t a l cannot develop T h i r d World s o c i e t i e s . Frank (1969:4) argues t h a t , " . . . on the c o n t r a r y , economic development i n the underdeveloped c o u n t r i e s can now occur only independently of most of these r e l a t i o n s of d i f f u s i o n . " The dependency p e r s p e c t i v e , given i t s b e l i e f i n the impotence of p e r i p h e r a l c a p i t a l i s m , n a t u r a l l y down-plays the 1 34 q u a n t i t y and q u a l i t y of T h i r d World i n d u s t r i a l i z a t i o n . Frank, l i k e most dependency w r i t e r s , regards i m p o r t - s u b s t i t u t i o n indu-s t r i a l i z a t i o n as having f a i l e d (Frank, 1979:129), and he i s not o p t i m i s t i c about the p r o s p e c t s of the NICs. He argues that export o r i e n t e d i n d u s t r i a l i z a t i o n " . . . . i n t e n s i f i e s dependence and f a i l s to r e s o l v e the c e n t r a l problem of i n t e r n a l market development i n most underdeveloped c o u n t r i e s " (Frank, 1979:30). However, we must note here that Frank rep r e s e n t s an extreme p o s i t i o n w i t h i n the wide spectrum of views w i t h i n the dependency paradigm c o n c e r n i n g development i n the T h i r d World. Instead of Frank's c e l e b r a t e d "development of underdevelopment" t h e s i s , which does not admit the p o s s i b i l i t y of development in the p e r i p h e r y , other authors are more c a u t i o u s i n t h e i r ap-proach. B i e n e f e l d (1981:84) has argued, for i n s t a n c e , that . . . dependency does not deny the p o s s i b i l i t y of c a p i t a -l i s t development i n the p e r i p h e r y . It simply d e r i v e s from both h i s t o r i c a l and t h e o r e t i c a l sources an a p p r e c i a t i o n of the enormous d i f f i c u l t i e s which are p l a c e d i n the way of t h a t p o s s i b i l i t y . . . Cardoso (1972) has a l s o argued f o r the p o s s i b i l i t y of what he terms "dependent c a p i t a l i s t development" i n the p e r i p h e r y : In f a c t , dependency, monopoly c a p i t a l i s m and development are not c o n t r a d i c t o r y terms; there occurs a kind of depen- dent c a p i t a l i s t development i n the s e c t o r s of the T h i r d World i n t e g r a t e d i n t o the new forms of m o n o p o l i s t i c expansion (Cardoso, 1972:89; o r i g i n a l emphasis). The r o l e of the s t a t e i n p e r i p h e r a l s o c i a l formations has been c a r e f u l l y examined by dependency w r i t e r s (Cardoso, 1977:19). Given that n a t i o n a l b o u r g e o i s i e , a c c o r d i n g to dependency w r i t e r s , cannot perform the same r o l e that the n a t i o n a l b o u r g e o i s i e p l ayed i n the case of now developed c a p i -1 35 t a l i s t c o u n t r i e s (Cardoso, 1977:19), the s t a t e i n p e r i p h e r a l s o c i a l formations i s looked upon as an important instrument f o r n a t i o n a l development.' The c e n t r a l i t y of the s t a t e i n i n d u s t r i a -l i z a t i o n in the T h i r d World i s w e l l summarized by Evans (1979:43): Regardless of a m b i g u i t i e s i n i t s r e l a t i o n to the n a t i o n a l b o u r g e o i s i e , the c e n t r a l i t y of the s t a t e to accumulation on the periphery i s i n c o n t r o v e r t i b l e . Imperialism as a process and the m u l t i n a t i o n a l s as o r g a n i z a t i o n s concentrate accumulation at the centre of the i n t e r n a t i o n a l system. The l o c a l owning c l a s s has f a i l e d to achieve domination over l o c a l i n d u s t r y even in the most advanced p e r i p h e r a l c o u n t r i e s . Unless the s t a t e can enforce a p r i o r i t y on l o c a l accumulation and push l o c a l i n d u s t r i a l i z a t i o n e f f e c t i v e l y , there i s no e f f e c t i v e sponsor for p e r i -p h e r a l i n d u s t r i a l i z a t i o n . The r o l e of the s t a t e i n p e r i p h e r a l s o c i a l formations becomes even more c r i t i c a l because the n a t i o n a l b o u r g e o i s i e , o f t e n unable to counter the l a r g e m u l t i n a t i o n a l s even i f the d e s i r e to do so was t h e r e , f r e q u e n t l y a l i g n s i t s e l f with m u l t i -n a t i o n a l c o r p o r a t i o n s through a v a r i e t y of mechanisms--trade arrangements, j o i n t v e n t u r e s , and management r e l a t i o n s h i p s . Dependency w r i t e r s have engaged i n a l o t of s e l f - c r i t i -cism (e.g. Cardoso's c r i t i c i s m of Frank [Cardoso, 1977:1]; Leys, 1977; Palma, 1978, 1981) and i t has a l s o been roundly c r i t i c i z e d from o u t s i d e the p e r s p e c t i v e (e.g. Bauer, 1972; Chisholm, 1982; L a l l , 1981; Smith, 1980). As we have a l r e a d y seen, i t has a l s o come under strong and su s t a i n e d a t t a c k from orthodox M a r x i s t s . C r i t i c i s m s have been l a b e l l e d at j u s t about every aspect of the p e r s p e c t i v e . Orthodox M a r x i s t s have at t a c k e d the very n o t i o n of p e r i p h e r a l s o c i a l f o r m a t i o n . The over-emphasis on the 1 3 6 r o l e of the e x t e r n a l r e l a t i o n s h i p s of T h i r d World s o c i e t i e s i n e x p l a i n i n g t h e i r underdevelopment has been c o n s i s t e n t l y c r i t i -c i s e d . The very loose nature of the concepts employed by the p e r s p e c t i v e has a l s o been s e v e r e l y c r i t i c i z e d . B r o o k f i e l d (1975a), i n an important c r i t i c a l survey of the development l i t e r a t u r e , has suggested that although the view of the dependency w r i t e r s concerning the inte r - c o n n e c t e d -ness of the g l o b a l development process i s c o r r e c t ( B r o o k f i e l d , I 9 7 5 a : i x ) , and t h e i r h i s t o r i c a l and h o l i s t i c approaches are u s e f u l , the concept of dependence c o u l d be more a p p r o p r i a t e l y c o n c e p t u a l i z e d as interdependence. B r o o k f i e l d has a l s o been c r i t i c a l of w r i t e r s such as Frank who, a c c o r d i n g to him, have imposed too r i g i d frameworks of a n a l y s i s . Furthermore, he has argued that dependency w r i t e r s have been too concerned with the past and that t h i s has prevented a wider d i s s e m i n a t i o n of the ideas of these w r i t e r s . C l e a r l y , the c e n t r a l concepts of the p e r s p e c t i v e , such as underdevelopment, dependency, and d i s t o r t e d s t r u c t u r e need to be more f i r m l y d e f i n e d so that the i m p l i c a t i o n s of the p e r s p e c t i v e , i f not i t s p r e d i c t i o n s , can be s c i e n t i f i c a l l y e v a l u a t e d . C o n c l u s i ons T h i s chapter has i n d i c a t e d the major contours of the main t h e o r e t i c a l p e r s p e c t i v e s on T h i r d World i n d u s t r i a l i z a t i o n . The i n d u s t r i a l geography approach, which has borrowed most of i t s concepts from n e o c l a s s i c a l economics, has long s u f f e r e d from i t s narrow focus .on i n d u s t r i a l l o c a t i o n and from i t s 1 37 acceptance of s u p e r f i c i a l d e s c r i p t i o n and e x p l a n a t i o n as i t g o a l . Although i n d u s t r i a l geography i s now being r e v i t a l i z e d , as can be seen from the newer works in the e d i t e d volume by Hamilton and L i n g e , i t s t i l l r e p r e s e n t s a very p a r t i a l approach to T h i r d World i n d u s t r i a l i z a t i o n . The n e o c l a s s i c a l approach to T h i r d World i n d u s t r i a l i z a -t i o n , while much broader than i n d u s t r i a l geography, s t i l l suf-f e r s from many major problems. In p a r t i c u l a r , i t s b e l i e f in the e f f i c a c y of the market system, and of free t r a d e , d e s p i t e the demonstrated i n a b i l i t y of these systems, on t h e i r own, to lead to economic e q u a l i z a t i o n , i s a major hindrance to i t s use i n the d e v e l o p i n g c o u n t r i e s . A l s o , the n e o c l a s s i c a l approach, devoid of h i s t o r i c a l a n a l y s i s , tends to r e l y too much on cur-rent processes to e x p l a i n contemporary r e a l i t y . However, as we have p r e v i o u s l y noted, i t does posses a r e p e r t o i r e of concepts and t o o l s which can be used p r o f i t a b l y f o r an a n a l y s i s of T h i r d World i n d u s t r i a l i z a t i o n , p r o v i d e d the e x p l a n a t i o n s commonly advanced by n e o c l a s s i c a l economics are c r i t i c a l l y i n t e r r o g a t e d . M a r x i s t and dependency p e r s p e c t i v e s arose out of the inadequacies of the t r a d i t i o n a l approaches to the study of T h i r d World s o c i e t i e s , and they o f f e r many new i n s i g h t s i n t o T h i r d World problems. Both these p e r s p e c t i v e s are c r i t i c a l , and t h i s i s perhaps t h e i r f i r s t a t t r a c t i o n . They are s t r o n g l y h i s t o r i c a l , thus overcoming a major d e f i c i e n c y of contemporary analyses i n both i n d u s t r i a l geography and n e o c l a s s i c a l econo-mics. Both these p e r s p e c t i v e s a l s o r e c o g n i z e , much more than the other p e r s p e c t i v e s , the i n t e r r e l a t e d n e s s of s o c i a l and 1 38 economic systems, and they thus p r o v i d e more fundamental expla-nations of phenomena. However, these two p e r s p e c t i v e s s u f f e r from d e f i c i e n c i e s as w e l l . Dependency adopts, on the whole, a very p e s s i m i s t i c , and e m p i r i c a l l y u n j u s t i f i a b l e p o s i t i o n on the q u e s t i o n of T h i r d World i n d u s t r i a l i z a t i o n . While i t p r o v i d e s a very powerful c r i t i q u e ^ ' o f c o n v e n t i o n a l wisdom, i t o f f e r s few a l t e r n a t i v e s other than a s o c i a l i s t t r a n s f o r m a t i o n . Many s o c i a l s c i e n t i s t s are f r u s t r a t e d with the performance of c a p i t a l i s m i n the T h i r d World, but they would not be prepared to accept that the s a l v a -t i o n l i e s i n a s o c i a l i s t t r a n s f o r m a t i o n , e s p e c i a l l y as " s o c i a l -l y transformed" s t a t e s so f a r have not l e d to s o c i a l j u s t i c e and freedom f o r workers, even with the great s a c r i f i c e s of l i f e and freedom they have f r e q u e n t l y e n t a i l e d . Thus, i t appears that none of the p e r s p e c t i v e s d i s c u s s e d in t h i s chapter a f f o r d s a s a t i s f a c t o r y p e r s p e c t i v e from which to study T h i r d World i n d u s t r i a l i z a t i o n . They a l l c o n t a i n e l e -ments that can be combined, however, to gain i n s i g h t s i n t o i n d u s t r i a l i z a t i o n in d e v e l o p i n g c o u n t r i e s , and t h i s i s the approach the t h e s i s adopts. From i n d u s t r i a l geography, one can take a u s e f u l set of concepts r e l a t i n g to i n d u s t r i a l l o c a t i o n , i n e r t i a , and movement, as w e l l those r e l a t i n g to s p a t i a l l i n k -ages among business e n t e r p r i s e s , such as those of i n f o r m a t i o n , s e r v i c e s , goods and p e o p l e . One can a l s o adopt a systems t h i n k -ing now being p o p u l a r i z e d i n i n d u s t r i a l geography. To these can be added an a r r a y of economic concepts developed i n n e o c l a s s i c a l economics r e l a t i n g to i n d u s t r i a l 1 3 9 o r g a n i z a t i o n and s t r u c t u r e — s u c h as i n d u s t r i a l s t r u c t u r e , orga-n i z a t i o n , trade p r a c t i c e s and p r o t e c t i o n , technology t r a n s f e r , and terms of t r a d e . These can be strengthened i f one were to view, l i k e n e o c l a s s i c a l economics, the i n d u s t r i a l i z a t i o n pro-cess as a whole, rather than studying only i t s components. S e l e c t e d elements from Marxism and dependency perspec-t i v e s would complete the proposed e c l e c t i c approach. A h i s t o r i -c a l component, with a s t r o n g l y c r i t i c a l a t t i t u d e would be h e a l t h y . So would be a concern f o r both i n t e r n a l and e x t e r n a l f a c t o r s r e l a t i n g to i n d u s t r i a l i z a t i o n . F i n a l l y , a concern for the labour p r o c e s s , so n e g l e c t e d in non-Marxist, non-dependency s t u d i e s , would be u s e f u l . These, then, comprise an approach that combines the s t r e n g t h s of the e x i s t i n g p e r s p e c t i v e s . C l e a r l y , given the many l i m i t a t i o n s of each of the major p e r s p e c t i v e s d i s c u s s e d , i t w i l l be h i g h l y u n d e s i r a b l e , to s t r a i t - j a c k e t an i n v e s t i g a t i o n of T h i r d World i n d u s t r i a l i z a t i o n i n t o any of these perspec-t i v e s . However, even though t h i s study i s not a t h e o r e t i c a l one, the f i n d i n g s of t h i s study w i l l enable these t h e o r e t i c a l approaches to be e v a l u a t e d . 1 40 Notes 1. The term "paradigm" i s d e f i n e d by Kuhn as " . . . u n i v e r s a l -l y r ecognized s c i e n t i f i c achievements that f o r a time p r o v i d e model problems and s o l u t i o n s to a community of p r a c t i s i o n e r s " (Kuhn, I 9 7 0 : v i i i ) . A paradigm, a c c o r d i n g to him, possesses two main c h a r a c t e r i s t i c s : (1) achievements are unprecedented and a t t r a c t s c i e n t i s t s from competing "modes of s c i e n t i f i c a c t i v i -t y " (Kuhn, 1970:10), and (2) i t i s r e l a t i v e l y open-ended so that many problems remain for adherents to s o l v e . Although Kuhn (1970:171-210) admits many l i m i t a t i o n s to h i s concept of the paradigm, the term has been widely used in the s o c i a l s c i e n c e s . In t h i s study, the terms "paradigm", " t h e o r e t i c a l approach", " t h e o r e t i c a l framework", and " p e r s p e c t i v e " are used synonymous-l y . 2. The term " t r a d i t i o n a l approaches" i s used here to r e f e r to the p r e v a i l i n g s o c i a l science paradigms i n o p p o s i t i o n to the r a d i c a l approaches—Marxism, dependency, r e a l i s m , and phenome-nology. 3. The- term " n e o c l a s s i c a l economics" i s used to r e f e r to contemporary non-Marxist economics g e n e r a l l y . 4. According to Gibson (1981:148), r e a l i s m " . . . i s , in o p p o s i t i o n to i d e a l i s m , the d o c t r i n e that there i s a world of p h y s i c a l t hings that e x i s t independently of our p e r c e p t i o n and c o g n i t i o n of them." Gibson (1981:148) goes on to e x p l a i n that r e a l i s m , as a form of e x p l a n a t i o n , attempts to seek deeper, u n d e r l y i n g , i f hidden causes of phenomena. See a l s o Keat and Urry (1975), s p e c i a l l y Chapter 2. 5. The preoccupation of i n d u s t r i a l geographers with i n d u s t r i a l l o c a t i o n a l analyses can e a s i l y be seen from the p l e t h o r a of i n d u s t r i a l l o c a t i o n a l s t u d i e s , as evidenced by the b i b l i o g r a p h y by F i s c h e r , Hanink, and Wheeler (1979) and s p e c i f i c s t u d i e s such as Chaudhuri (1978); Datta-Chaudhuri (1980); Eddison (1961); Economic Advisor to the Government of India (1944); Hamilton (1969); H i l l i n g (1964); Karan (1964); and Oneyemelukwe (1974) . 6. Most standard works in economic geography provide u s e f u l summaries of l o c a t i o n t h e o r i e s . S p e c i a l l y u s e f u l summaries and c r i t i q u e s of l o c a t i o n t h e o r i e s are to be found in Bale (1976); Ho l l a n d (1976); Massey (1979); and Smith (1981). Smith regards Ho l l a n d (1976) to be the best and most s u s t a i n e d c r i t i q u e of l o c a t i o n t h e o r i e s . 7. T h i s d i s c u s s i o n of t h e o r i e s of i n d u s t r i a l l o c a t i o n draws h e a v i l y on Smith (1981), Holland (1976), and Massey (1979). 8. Surplus value i s the excess of what the c a p i t a l i s t r e c e i v e s 141 for h i s commodity over what i s given to the worker f o r h i s work, and what i s used up in the way of machinery (see Marx, 1977:327). 9. About o n e - t h i r d of the world's p o p u l a t i o n l i v e s under communist governments ( G r i f f i n , 1981:221). 10. Oilman (1976:52) i n d i c a t e s , f o r i n s t a n c e , that the d i a l e -c t i c a l approach i t s e l f was based on Marx's search f o r r e l a t i o n -s h i p s : Besides a way of seeing t h i n g s , Marx's d i a l e c t i c i s a l s o h i s approach to the study of problems which c o n c e n t r a t e on l o o k i n g f o r r e l a t i o n s h i p s , not only between d i f f e r e n t e n t i t i e s but between the same one i n times p a s t , present and f u t u r e . 11. C h i l c o t e (1978:55) notes, f o r i n s t a n c e , t h a t : No u n i f i e d theory of dependency yet e x i s t s , but a v a r i e t y of t h e o r e t i c a l tendencies tend to c l u s t e r in the l i t e r -a t u r e on dependency. For u s e f u l reviews of dependency s t u d i e s , see the f o l l o w i n g : Armstrong and McGee (1985 [ f o r t h c o m i n g ] ) ; Bath and James (1976); B i e n e f e l d (1980, 1981); Booth (1975); Browett (1980, 1981); Cardoso (1972, 1977); Chase-Dunn (1975); C h i l c o t e (1978); Fagen (1977); Jackson et a l . (1979); O'Brian (1975); Palma (1981); Seers (Ed, 1981); V i l l a m i l (1979). 12. The term " d i s t o r t e d " i s used f r e q u e n t l y by dependency w r i t e r s , but i s r a r e l y d e f i n e d . The term i s used, i t appears, to r e f e r to d e v i a t i o n s observed i n developing c o u n t r i e s from the p a t t e r n of development in the now developed c o u n t r i e s . 1 42 CHAPTER 4 THE INCORPORATION OF FIJI INTO THE INTERNATIONAL SYSTEM The contemporary s t r u c t u r e and process of i n d u s t r i a l i z a -t i o n , indeed of any process i n F i j i , cannot be adequately understood without r e f e r e n c e to the manner in which i t s preca-p i t a l i s t s o c i a l formation was i n c o r p o r a t e d i n t o the i n t e r n a t i o -nal economic system, o r , i n W a l l e r s t e i n ' s t e r m i n o l o g y , i n t o the world system. As i t has been p o i n t e d out i n Chapter 3, both n e o c l a s s i c a l economists and i n d u s t r i a l geographers have o f t e n approached the i n d u s t r i a l i z a t i o n of developing c o u n t r i e s with-out an adequate and necessary understanding of the h i s t o r i c a l c ircumstances that have p o w e r f u l l y shaped the contemporary c h a r a c t e r of these s o c i e t i e s . T h i s chapter w i l l f i r s t sketch the nature of F i j i ' s i n c o r p o r a t i o n i n t o the i n t e r n a t i o n a l economic system, more d e t a i l s of which are prov i d e d i n s e v e r a l accounts (see, for i n s t a n c e , , A l i , 1977; B r i t t o n , 1980; B r o o k f i e l d , 1972; Legge, 1958; M o r r e l l , 1960; Narayan, 1976; Prakash, 1982; Samy, 1977); Ward, 1965). I t w i l l then examine the r e s u l t i n g c o l o n i a l r u l e , the development of the F i j i a n A d m i n i s t r a t i o n , and the e v o l u t i o n of F i j i ' s p l u r a l s o c i e t y . F o l l o w i n g t h i s , i t w i l l examine the development of the c a p i t a l i s t mode of pro d u c t i o n i n F i j i , and more s p e c i f i c a l l y , the development of F i j i ' s u r b a n - i n d u s t r i a l economy. I t w i l l a l s o examine the r o l e of the c o l o n i a l s t a t e i n F i j i ' s i n d u s t r i a l development. The nature and d i r e c t i o n of F i j i ' s development was c l o -143 s e l y shaped by powerful i n t e r n a t i o n a l f o r c e s and events. The f u t u r e of the whole South P a c i f i c was i r r e v o c a b l y changed with the establishment of penal settlement in Sydney, A u s t r a l i a , i n 1788 ( B r o o k f i e l d , 1972:20), and by the white settlement of New Zealand. Advances in marine technology, s p e c i a l l y the imminent completion of the Panama c a n a l , were to have a major impact on F i j i . Furthermore, the American C i v i l War, which by d i s r u p t i n g c o t t o n s u p p l i e s to Europe from the Southern S t a t e s s t i m u l a t e d c o t t o n production in new a r e a s , i n c l u d i n g F i j i , was a key f a c t o r i n the c o l o n i z a t i o n of F i j i .1 A l s o , with.the scramble for the major p a r t s of the world over, the South P a c i f i c repre-sented a l a s t f r o n t i e r , and i n t e r n a t i o n a l powers behaved o f t e n to f o r e s t a l l the a c t i o n s of o t h e r s . Contact With the World System Before we examine the nature of the contact between the p r e c a p i t a l i s t s o c i a l formation and the outside world, i t w i l l be u s e f u l to b r i e f l y note the nature of pre-contact indigenous F i j i a n s o c i a l f o r m a t i o n . The indigenous F i j i a n s o c i a l formation i s now b e l i e v e d to date from at l e a s t 1290 B.C. ( F r o s t , 1979:64). Between then and the e a r l y nineteenth c e n t u r y , when s u s t a i n e d contact with the West began, the indigenous F i j i a n s o c i a l formation had evolved i n t o one that can best he c l a s s i -f i e d as a n cient i n terms of Marx's scheme of human e v o l u t i o n (Marx, 1972C:5). There was some complexity in s o c i a l and p o l i -t i c a l o r g a n i z a t i o n , as evidenced by the appearance of r i n g f o r t i f i c a t i o n s - - w h i c h would have r e q u i r e d a complex s o c i a l and p o l i t i c a l o r g a n i z a t i o n to b u i l d - - , and by the presence of some 1 44 i r r i g a t i o n works. The s o c i e t y was a subsistence one, although exchange r e l a t i o n s were beginning to emerge (see, f o r i n s t a n c e , B r o o k f i e l d with H a r t , 1971; Couper, 1968; Roth, 1973; S a h l i n s , 1962; Thomson, 1908). The p o p u l a t i o n of F i j i j u s t p r i o r to contact with the West has been estimated to have been between 150,000 and 200,000 ( D e r r i c k , 1957:130). D i s c o v e r y , E x p l o r a t i o n , and Casual Contact Europeans f i r s t became aware of F i j i ' s e x i s t e n c e i n 1643 when Abel Tasman s i g h t e d i t (De R i c c i , 1875:219). However, i t was not u n t i l the beginning of the nineteenth century that s i g n i f i c a n t c o n t a c t between indigenous F i j i a n s and the West began. Sometime between 1800 and 1806, the s h i p Argo, c a r r y i n g s u p p l i e s to the N o r f o l k I s l a n d and Port Jackson, was wrecked in E a s t e r n F i j i ( D e r r i c k , 1950:37; see a l s o France, 1969:20). Some of the crew of Argo were taken o f f the ship by the n a t i v e s . While some of the s u r v i v o r s went onwards to Tonga, and thence perhaps to A u s t r a l i a , others p r e f e r r e d to stay among indigenous F i j i a n s and went to the l a r g e r i s l a n d s . They were the f i r s t Europeans to l i v e among indigenous F i j i a n s . These Europeans, s u r v i v o r s of other wrecks, and d e s e r t e r s from s h i p s , c o l l e c t i -v e l y known as beachcombers, c o n s t i t u t e d a s m a l l , but important agent of change i n the indigenous F i j i a n s o c i e t y . However, most of these people p r e f e r r e d the n a t i v e s o c i e t y because of the s t y l e of l i f e they c o u l d p r a c t i s e i n the i s l a n d s ; they were not men of h i g h c a l i b r e or s o c i a l s t a n d i n g , and they were not i n t e r e s t e d i n d r a s t i c a l l y changing the indigenous F i j i a n 1 45 2 s o c i e t y . They in f a c t l i v e d very much at the mercy of the indigenous F i j i a n c h i e f s . Far stronger agents of change were i n the o f f i n g . I n t e n s i f i c a t i o n i n Contact: the Merchant C a p i t a l Phase Contact between F i j i and the outside world i n t e n s i f i e d soon afterwards as sandalwood was d i s c o v e r e d along the South-west coast of the second l a r g e s t i s l a n d of F i j i , Vanua Levu (Figure 1.2). Sandalwood t r a d i n g began i n 1804 and reached i t s peak around 1808 and 1809 (Ward, 1965:19).3 As sandalwood t r a d i n g ended, l a r g e l y because of the r a p i d d e p l e t i o n of sanda-lwood t r e e s , a trade i n beche-de-mer developed, g a i n i n g momen-tum from 1829 onwards, and reaching i t s height i n 1840s (Der-r i c k , 1950:68; Ward, 1965:20).4 Both sandalwood and, to a much greater e x t e n t , beche-de-mer t r a d i n g introduced many changes to the indigenous F i j i a n s o c i e t y . Sandalwood t r a d i n g i n t r o d u c e d commercial economy to the s u b s i s t e n c e F i j i a n s o c i a l f o r m a t i o n . Indigenous F i j i a n s were a l s o i n t r o d u c e d to p a i d l a b o u r , and Europeans helped F i j i a n s i n the e v o l u t i o n of l a r g e r p o l i t i c a l u n i t s with the i n t r o d u c t i o n of muskets. Furthermore, v i s i t i n g ships a l s o bought food s u p p l i e s from indigenous F i j i a n s . The beche-de-mer trade continued on and o f f for a long time, and only d i e d out a f t e r 1879, when the new c o l o n i a l government of F i j i enacted s p e c i a l l e g i s l a t i o n to p r o t e c t i n d i -genous F i j i a n s , and which f o r c e d t r a d e r s to take out l i c e n s e s from the government. The beche-de-mer t r a d e r s were a l s o j o i n e d by w h a l e r s -whaling, i n f a c t had begun at roughly the same time as sandal-1 46 wood t r a d i n g , but the l u c r a t i v e n e s s of the l a t t e r had ensured that whaling d i d not become a major a c t i v i t y . With the competi-t i o n from sandalwood and beche-de-mer t r a d i n g no longer t h e r e , whaling became more important. In n e a r l y a l l c o l o n i e s , m i s s i o n a r i e s have preceded c o l o -n i z a t i o n , and F i j i i s no e x c e p t i o n . The f i r s t m i s s i o n a r i e s came to F i j i from T a h i t i in 1830 ( D e r r i c k , 1950:71), although the f i r s t European m i s s i o n a r i e s came i n 1 8 3 5 — W i l l i a m Cross and David C a r g i l l . They were soon j o i n e d by John Hunt, James C a l -v e r t , and Thomas Jagger. U n l i k e the beachcombers, the m i s s i o n a r i e s heralded a new kind of contact with the indigenous F i j i a n s o c i a l f o r m a t i o n . M i s s i o n a r i e s had an extremely low o p i n i o n of the indigenous F i j i a n s o c i a l system, and were committed to changing not only the r e l i g i o n of the indigenous F i j i a n s , but t h e i r whole way of l i f e . Upto now, however, the agents of change had not been' e i t h e r w i l l i n g or able to c h a l l e n g e the t r a d i t i o n a l s o c i a l f o r m a t i o n . A major attempt to r a d i c a l l y a l t e r the t r a d i t i o n a l s o c i a l f o r m a t i o n , and indeed to make indigenous F i j i a n s a s u b s e r v i e n t component of a new s o c i a l formation i n F i j i , was to come i n the 1860s from the p l a n t e r s . But before we examine t h a t , i t w i l l be u s e f u l to regress a l i t t l e to note the reac-t i o n s of indigenous F i j i a n s to t r a d i n g , and to the newly i n t r o -duced commercial economy, f o r t h e i r e a r l y r e a c t i o n c a s t s se-r i o u s doubt on the arguments of those, i n c l u d i n g the F i j i a n A d m i n i s t r a t i o n , who argued that indigenous F i j i a n s were e i t h e r 1 47 u n i n t e r e s t e d in the commercial economy, or c o u l d not deal with i t . As we have a l r e a d y seen, indigenous F i j i a n s had deve-loped a rudimentary t r a d i n g system both i n t e r n a l l y , and with other P a c i f i c c o u n t r i e s . Indigenous F i j i a n s , perhaps because of t h i s , took an e a r l y i n t e r e s t i n the commercial economy. T h e i r i n t e r e s t can be seen i n t h e i r w i l l i n g n e s s to provide labour when they considered the rewards u s e f u l , and i n t h e i r w i l l i n -gness to p a r t i c i p a t e i n the p r o d u c t i o n of commercial c r o p s . France (1969:26), n o t i n g the w i l l i n g n e s s on the part of i n d i g e -nous F i j i a n s to enter the commercial economy wrote: People came from d i s t a n c e s of up to a hundred miles to f i s h ; they brought t h e i r f a m i l i e s with them and b u i l t temporary s h e l t e r s i n areas c o n t r o l l e d by other c h i e f s to earn t h e i r trade goods. Although i n some cases the indigenous F i j i a n p a r t i c i p a t i o n was d i c t a t e d by the needs and wishes of the c h i e f s themselves, France (1969:26) argues that indigenous F i j i a n s d i d p a r t i c i p a t e as l a b o u r e r s even without the presence of c h i e f s . In the case of growing commercial c r o p s , Ward ( 1972:14) observes t h a t , indigenous F i j i a n s had traded yams (root c r o p ) , yaqona ( t r a d i t i o n a l s l i g h t l y i n t o x i c a t i n g d r i n k ) , p i g s , and t o r t o i s e s h e l l with Europeans. He f u r t h e r notes that indigenous F i j i a n s i n Macuata, near the scene of the e a r l i e s t sandalwood t r a d i n g , were growing p i n e a p p l e s and pumpkins "with some care" (Ward, 1972:116). Indigenous F i j i a n s , thus, were very much i n t e r e s t e d i n p a r t i c i p a t i n g i n the emerging commercial economy; moreover, they proved to be good t r a d e r s and p l a n t e r s . It i s 1 48 d i f f i c u l t to e x p l a i n how, h a l f a century l a t e r , the F i j i a n A d m i n i s t r a t i o n argued that indigenous F i j i a n s c o u l d not enter the commercial economy, and d i d i t s best to i n s u l a t e indigenous F i j i a n s from the commercial economy. European Settlement and E a r l y C a p i t a l i s t P r o d u c t i o n So f a r we have l a r g e l y examined the o p e r a t i o n of the merchant t r a d e r s , whose i n t e r e s t was to harvest e x i s t i n g natu-r a l r e s o u r c e s , such as sandalwood and beche-de-mer. T h i s phase gave way to one of r e s i d e n t c a p i t a l i s t p r o d u c t i o n as Europeans attempted to produce a g r i c u l t u r a l commodities. T h i s phase can be s a i d to date from 1850. Around t h i s time, as we have a l r e a d y seen, the beche-de-mer trade was at i t s h e i g h t . T h i s phase i s extremely important because i t represented the most s u s t a i n e d a t t a c k on the t r a d i t i o n a l s o c i a l f o r m a t i o n , and indigenous F i j i a n s came extremely c l o s e to being made su b s e r v i e n t to the European p o p u l a t i o n (see A l i , 1977; D e r r i c k , 1950; France, 1969; Macnaught, 1982; Narsey, 1979; Ward, 1948). Europeans i n A u s t r a l i a and New Zealand had s t a r t e d a g r i -c u l t u r a l a c t i v i t i e s , and so i t was n a t u r a l that when they came to F i j i — f o r a v a r i e t y of reasons, some of which i n c l u d e d escaping from penal i n s t i t u t i o n s - - t h e y were a t t r a c t e d to the l a n d . Land was e a s i l y o b t a i n a b l e i n i t i a l l y , and the weather was agreeable; thus i t i s not s u r p r i s i n g that the e a r l y s e t t l e r s turned t h e i r a t t e n t i o n to commercial a g r i c u l t u r e . As happens in a pioneer environment, a l a r g e number of a g r i c u l t u r a l a c t i v i t i e s were t r i e d (see, for i n s t a n c e , Stokes, 1 49 1969). The American C i v i l War, which had h a l t e d the supply of c o t t o n to Europe from the Southern s t a t e s , had c r e a t e d an e x c e l l e n t market f o r c o t t o n , and the c a p i t a l i s t s in F i j i were pois e d to f u l l y e x p l o i t the c o t t o n boom. F i j i had an extremely good c o t t o n growing environment, and the q u a l i t y of the cotton was very good.^ The cotton i n d u s t r y , indeed the whole c a p i t a l i s t enter-p r i s e in F i j i , p l a c e d three important demands on the p r e c a p i t a -l i s t s o c i a l formation--peace and s e c u r i t y f o r l i f e and proper-t y , which demanded an end to the inc e s s a n t warfare that had c h a r a c t e r i z e d the indigenous F i j i a n , s o c i e t y i n the nineteenth century; land; and l a b o u r . There was no escape f o r the i n d i g e -nous F i j i a n s from the f i r s t two. Although Europeans at t h i s time c l e a r l y saw F i j i as t h e i r s , and indigenous F i j i a n s as t h e i r main source of l a b o u r , they were w i l l i n g to import labour from elsewhere. Land a c q u i s i t i o n had s t a r t e d e a r l y and around 1840, i t became q u i t e f r e q u e n t . Large t r a c t s of land were "acquired" by Europeans, o f t e n at r i d i c u l o u s l y low p r i c e s , and always with d o u b t f u l l e g a l i t y . The system of land tenure among indigenous F i j i a n s , which Europeans d i d not understand, and the system of t r a n s a c t i o n , which indigenous F i j i a n s d i d not understand, set the stage f o r c o n f u s i o n and a major d e t e r i o r a t i o n i n r e l a t i o n s between indigenous F i j i a n s and Europeans. Europeans d i d not c o n s i d e r themselves p r o v i d i n g the a g r i c u l t u r a l labour f o r c e , p a r t l y because of t h e i r small num-b e r s , but mainly because of t h e i r b e l i e f i n t h e i r r a c i a l supe-1 50 r i o r i t y . T h i s a t t i t u d e i s w e l l i l l u s t r a t e d i n t h i s q u o t a t i o n from Moss i n France (1969:39): It must be at once understood that European labour i s not to be thought o f . The s u p e r i o r s t r e n g t h and energy of white men are wasted when the competition with t h e i r c o l o u r e d brethren i s merely as to who can best scrape a hole in the ground and drop a few seeds t h e r e i n . Nor does the p e c u l i a r kind of f i e l d labour o f f e r any o p p o r t u n i t y f o r s u p e r i o r s k i l l . White men c o u l d not l i v e with the food, c l o t h i n g and wages which make a n a t i v e comparatively comfortable and wealthy. Indigenous F i j i a n s were thus i n i t i a l l y a l s o looked upon as the source of labour f o r European p l a n t a t i o n s . However, i n t e r e s t e d as they were i n the i n i t i a l s t a g e s , indigenous F i j i a n s showed lack of i n t e r e s t i n p l a n t a t i o n type of e x p l o i t a -t i v e l a b o u r . Europeans, t o o , were c a u t i o u s to not of f e n d i n d i -genous F i j i a n c h i e f s and o b t a i n indigenous F i j i a n labour a g a i n s t t h e i r i n t e r e s t s . Europeans seemed w i l l i n g to solve the problem of labour supply through the im p o r t a t i o n of labour from the other i s -l a n d s . Labourers were brought i n to work on European p l a n t a -t i o n s from New Hebrides (now Vanuatu), Solomon I s l a n d s , and the Lin e I s l a n d s . Many of these l a b o u r e r s were r e c r u i t e d through q u e s t i o n a b l e means, which i n c l u d e d kidnapping. We can note that the problems with the labour trade i n the P a c i f i c , the r e c i -p i e n t s of which were Queensland i n A u s t r a l i a and F i j i , were among the reasons given f o r the acceptance by Great B r i t a i n of F i j i ' s o f f e r of c e s s i o n . A f t e r a p e r i o d of c o n t a c t with the world system, the o l d p o l i t i c a l s t a t e s were changing r a p i d l y . The i n i t i a l system of small p e t t y kingdoms, each no more than a combination of a few 151 t r i b e s , was being r e p l a c e d by p o l i t i c a l u n i t s c o n s i d e r a b l y l a r g e r than anything that had e x i s t e d p r e v i o u s l y (see B r i t t o n , 1980:256). The tendency towards the establishment of l a r g e r p o l i t i c a l u n i t s i s d i r e c t l y t r a c e a b l e to the i n t r o d u c t i o n of muskets and cannons, making l a r g e s c a l e a g g r e s s i o n p o s s i b l e , and of the presence of both beachcombers, who were w i l l i n g to hel p indigenous F i j i a n s use muskets and cannons, and to the w i l l i n g n e s s of sandalwood and beche-de-mer c a p t a i n s to h e l p indigenous F i j i a n c h i e f s i n t h e i r wars. T h i s change from i s o -l a t e d t r i b a l u n i t s to one of l a r g e u n i t s , one that Samy (1977) has r i g h t l y c a l l e d a t r a n s i t i o n a l phase i n indigenous F i j i a n h i s t o r y , was a l s o i n f l u e n c e d by the Tongan k i n g , King George, and h i s r e p r e s e n t a t i v e s i n F i j i . J u st p r i o r to c e s s i o n , some l a r g e t r i b a l u n i t s emer-ged. In V i t i Levu, the l a r g e s t i s l a n d of the F i j i group , u n i t s such as Bau, which was to l a t e r play a p i v o t a l r o l e in i n d i g e -nous F i j i a n h i s t o r y , Rewa, and V e r a t a . In Vanua Levu, the second l a r g e s t i s l a n d of the F i j i group, were Cakaudrove, Macuata, and Bua. Among the outer i s l a n d s , Lakeba was the most important p o l i t i c a l u n i t ( D e r r i c k , 1950:53). However, even at t h i s time there was no one strong u n i t t h a t had c o n t r o l over the o t h e r s ; on the c o n t r a r y , i t was a very f l u i d s i t u a t i o n as the u n i t s c o n s t a n t l y s h i f t e d t h e i r l o y a l t i e s . At t h i s time, however, both Europeans and n a t i v e c h i e f s were working to e s t a b l i s h l a r g e r , n a t i o n a l p o l i t i c a l u n i t s — i n sum to e s t a b l i s h a F i j i a n s t a t e . Europeans sought s e c u r i t y f o r t h e i r land t i t l e s , and s a f e t y f o r t h e i r l i f e and p r o p e r t y . They 1 52 a l s o sought c o n t r o l of the government, or at l e a s t a very major say i n i t as regards the supply of land and l a b o u r . The i n d i g e -nous F i j i a n c h i e f s , on the other hand were motivated by t h e i r attempts to e s t a b l i s h the hegemony of t h e i r own p o l i t i c a l u n i t s over the whole c o u n t r y . However, repeated attempts to e s t a b l i s h a v i a b l e " n a t i v e " government f a i l e d and F i j i was ceded to Great B r i t a i n i n 1874. The Cession of F i j i The idea of F i j i becoming a B r i t i s h P r o t e c t o r a t e or Crown Colony had been mooted by many people i n F i j i at l e a s t s i n c e r e s i d e n t c a p i t a l i s t a c t i v i t y s t a r t e d i n F i j i . Europeans wanted B r i t a i n to annex F i j i so t h a t there c o u l d be law and Order, and t h e i r a c t i v i t y c o u l d proceed i n an o r d e r l y f a s h i o n . They were f u r t h e r a f r a i d that one of the other powers, such as France, might annex F i j i , i n which case they stood to l o s e a great d e a l . ' Some Europeans a l s o thought that once c o l o n i z e d , they would develop F i j i as they had done i n A u s t r a l i a and New Zealand. There was an i n t e r e s t among indigenous F i j i a n c h i e f s i n c e s s i o n f o r a number of reasons. Cakobau was under pressure from the American government to meet h i s debts to i t ( f o r the nature of Cakobau's debts and the events l e a d i n g to the c e s s i o n of F i j i t o Great B r i t a i n , "see A l i , 1977; D e r r i c k , 1950; Mor-r e l l , 1960; Routledge, 1974). To r e l i e v e h i m s e l f of the debts, and to f o r e s t a l l what Cakobau c o n s i d e r e d the designs of Maafu and the Tongan King George, Cakobau o f f e r e d to cede F i j i to Great B r i t a i n under c e r t a i n c o n d i t i o n s , the c h i e f of which was 1 53 that Great B r i t a i n pay the American debt in c o n s i d e r a t i o n of the t r a n s f e r to i t of 200,000 a c r e s of l a n d . The B r i t i s h Consul of F i j i , who had worked c l o s e l y with Cakobau and suggested the c e s s i o n , Mr W T P r i t c h a r d p e r s o n a l l y took the o f f e r to Great B r i t a i n i n 1858 ( D e r r i c k , 1950:139). A f t e r i n i t i a l l y r e f u s i n g F i j i ' s o f f e r of c e s s i o n , B r i t a i n accepted the u n c o n d i t i o n a l c e s s i o n of F i j i to i t by the l e a d i n g c h i e f s of F i j i . C o l o n i a l i s m Even before F i j i was annexed, the B r i t i s h C o l o n i a l Of-f i c e had decided that F i j i would be a Crown Colony of a "very severe type" (Chapman, 1964:163). F i j i was expected to be s e l f f i n a n c i n g , and S i r Arthur Gordon, the f i r s t s u b s t a n t i v e gover-nor of F i j i , was advanced one hundred pounds in loan from the B r i t i s h government ( M o r r e l l , 1960:364). S i r Arthur Gordon was faced with two major problems at the o u t s e t of h i s a d m i n i s t r a t i o n : (1) how to govern the i n d i g e -nous p o p u l a t i o n so that they c o u l d avoid the kind of e x p l o i t a -t i o n that other indigenous p o p u l a t i o n s had faced in most p a r t s of the w o r l d , and at the same time economise in t h e i r adminis-t r a t i o n ; and (2) how to ensure the p r o s p e r i t y of F i j i so that i t c o u l d become s e l f - f i n a n e i n g and be as l i t t l e a d r a i n on B r i t i s h t r e a s u r y as p o s s i b l e . To accomplish the f i r s t t a s k , Gordon e s t a b l i s h e d the F i j i a n A d m i n i s t r a t i o n . The F i j i a n A d m i n i s t r a t i o n has been a c r i t i c a l i n s t i t u t i o n i n F i j i , and i s regarded as both the cause of the c u r r e n t problems of indigenous F i j i a n s , and of the 1 54 s u r v i v a l of the cu r r e n t indigenous F i j i a n way of l i f e . To ensure that F i j i was developed, Gordon was pressed by the p l a n t e r s f o r l a b o u r . N a t u r a l l y , given h i s strong c o n v i c t i o n regarding the indigenous F i j i a n s o c i e t y , and t h e i r r o l e i n F i j i , Gordon was going to s h i e l d indigenous F i j i a n s from the commercial economy. H i t h e r t o , some indigenous F i j i a n s had been employed on European p l a n t a t i o n s , but n e i t h e r indigenous F i -j i a n s nor Europeans were happy with the outcome. Labour had i n the past been brought i n from the other P a c i f i c i s l a n d s , as we have a l r e a d y seen, but the P a c i f i c i s l a n d labour .trade was under i n c r e a s i n g attack i n Great B r i t a i n . There a l s o problems with the p r o d u c t i v i t y of i s l a n d labour ( B r i t t o n , 1980:261). Governor Gordon proposed to supplement P a c i f i c i s l a n d labour with Indian indentured l a b o u r . Gordon was c l e a r l y attempting to p r o t e c t the indigenous p o p u l a t i o n from the e x p l o i t a t i o n of p l a n t a t i o n l a b o u r . The Indian indentured l a b o u r e r s were going to be a human subsidy fo r the p r o t e c t i o n and s u r v i v a l of indigenous F i j i a n s (Chapman, 1964; see a s i m i l a r statement i n Macnaught, 1982:2). The f i r s t batch of indentured l a b o u r e r s from India a r -r i v e d aboard the Leonidas i n 1879, and between then and 1916, when the importation of indentured l a b o u r e r s from India was p r o h i b i t e d , 60,537 indentured l a b o u r e r s were imported from India ( G i l l i o n , 1962:59). S i x t y percent of a l l indentured l a -bourers who came to F i j i made F i j i t h e i r new home ( G i l l i o n , 1962:136). The importance of the importation of indentured labou-1 55 r e r s from I n d i a , and the d e c i s i o n by the government to encou-rage them to stay back i n F i j i , and the d e c i s i o n of the labou-r e r s to take advantage of these p r o v i s i o n s , c r e a t e d the p l u r a l s o c i e t y of F i j i . The r a p i d growth of the I n d o - F i j i a n popula-t i o n , which by 1946 had surpassed the indigenous F i j i a n popula-t i o n , a l s o meant that a v o l a t i l e e t h n i c s i t u a t i o n had been c r e a t e d i n F i j i . However, the most s e r i o u s problems of the p l u r a l s o c i e t y in F i j i were created by the a c t i o n of the c o l o n i a l government. The F i j i a n A d m i n i s t r a t i o n c r e a t e d by the c o l o n i a l government had a h i g h l y f o s s i l i z i n g e f f e c t on the indigenous F i j i a n soc-i e t y , with a s t r o n g l y anti-change a t t i t u d e . While the F i j i a n A d m i n i s t r a t i o n d i d do a s e r v i c e to the indigenous F i j i a n popu-l a t i o n i n the i n i t i a l stage by p r o t e c t i n g t h e i r land r i g h t s , and r e p r e s e n t i n g the i n t e r e s t s of the p o p u l a t i o n , i t s f a i l u r e to a d j u s t to change, caused p a r t l y by the s e l f - i n t e r e s t e d a c t i o n s of indigenous F i j i a n c h i e f s who were at the helm of the F i j i a n A d m i n i s t r a t i o n , meant that almost d e l i b e r a t e l y the gove-rnment was keeping the indigenous F i j i a n s from the most dynamic s e c t o r of F i j i s o c i e t y - - t h e cash economy. While indigenous F i j i a n s were c i r c u m s c r i b e d i n t h e i r d e a l i n g s with the c a p i t a l i s t s e c t o r , the p o s t - i n d e n t u r e Indo-F i j i a n p o p u l a t i o n was a c t i v e l y inducted i n t o the c a p i t a l i s t economy as the main source of l a b o u r . In f a c t u n t i l very recen-t l y , indigenous F i j i a n s were regarded as the p r o v i d e r s of l a n d , I n d o - F i j i a n s as the source of l a b o u r , and Europeans were regar-ded as the source of c a p i t a l and management. As a r e s u l t of 1 56 government p o l i c y , supposedly in the i n t e r e s t of indigenous F i -j i a n s , the European p o p u l a t i o n was allowed to dominate the c a p i t a l i s t s e c t o r , and I n d o - F i j i a n s were g e n e r a l l y unhampered i n t h e i r attempts to improve t h e i r p o s i t i o n in the c a p i t a l i s t s e c t o r from being simply the source of l a b o u r . The Development of C a p i t a l i s t E n t e r p r i s e in F i j i We have a l r e a d y noted the nature of the e a r l y c a p i t a l i s t e n t e r p r i s e i n F i j i - - s a n d a l w o o d t r a d i n g , beche-de-mer t r a d i n g , w haling, and the procurement of s u p p l i e s f o r s h i p s . The more r e s i d e n t commercial e n t e r p r i s e i n F i j i took the form of t r a d i n g s u pplying the European p o p u l a t i o n with t h e i r r e q u i r e -ments, and most of t h i s was c a r r i e d on from Levuka. France (1969:28) estimates that there were from f o r t y to f i f t y t r a d e r s i n Levuka i n 1850. T h i s was supplemented with commercial f a r -ming, which had been e s t a b l i s h e d by r e s i d e n t t r a d e r s and mis-s i o n a r i e s . These e a r l y r e s i d e n t commercial t r a d e r s and farmers tr a d e d i n food s u p p l i e s and coconut o i l with v i s i t i n g t r a d i n g s h i p s (France, 1969:36). Even at the time of sandalwood and beche-de-mer trading-, many sh i p s were under i n s t r u c t i o n s to p i c k up any item of commercial v a l u e . T h i s encouraged the development of both commercial farming, and the s a l e of s u b s i s -tence produce. Moves toward more permanent and l a r g e - s c a l e a g r i c u l t u r e were made in F i j i by Robert Swanston and Dr Isaac Brower when they purchased l a r g e t r a c t s of land i n Serua and Ra f o r f a r -ming, and introduced sheep farming. By 1863, 270 l b s of wool was being exported, but the experiment d i e d out soon as the 157 sheep began d y i n g , and the p l a n t a t i o n was s o l d to the Bua government i n 1866 (France, 1969:37). However, as we have a l r e a d y seen, at t h i s time i n t e r n a l and e x t e r n a l c o n d i t i o n s were making F i j i an important c o t t o n growing r e g i o n . As was to become true of almost a century of •development in F i j i , e x t e r n a l c o n d i t i o n s , over which F i j i had no c o n t r o l , p o w e r f u l l y shaped the a g r i c u l t u r a l h i s t o r y of the country.- Cotton soon became an important p l a n t a t i o n crop (see, for i n s t a n c e , Roth [ E d ] , 1936:87). The c o t t o n boom l a s t e d through the 1860s. P l a n t e r s , mainly from A u s t r a l i a and New Zealand, engaged i n small s c a l e p l a n t a t i o n p r o d u c t i o n of c o t t o n . Labour, as we have alr e a d y seen, was obtained from the P a c i f i c i s l a n d s , although the " n a t i v e " governments we have r e f e r r e d to made many p r o v i s i o n s designed to supply European p l a n t e r s with indigenous F i j i a n p l a n t a t i o n l a b o u r . Cotton p r o d u c t i o n expanded q u i c k l y , and became the domi-nant export of F i j i (see Ward, 1965:23). However, j u s t as the co t t o n i n d u s t r y had grown i n response to an e x t e r n a l f a c t o r , the American C i v i l War, the demise of the i n d u s t r y was a l s o brought about by events over which F i j i had no c o n t r o l . The c e s s a t i o n of h o s t i l i t i e s i n the United States of America i n 1865 meant that the market that F i j i had been t a k i n g advantage of slowly d i s a p p e a r e d . Furthermore, the s t a r t of the Franco-P r u s s i a n War l e d to the c o l l a p s e of the market f o r F i j i ' s South Sea I s l a n d c o t t o n (Stokes, 1969:387). In response to these market c a t a s t r o p h e s , the co t t o n i n d u s t r y c o l l a p s e d as suddenly 1 58 as i t had grown, although i t s f i n a l d e a t h - k n o l l was sounded by the sugar cane i n d u s t r y . The Emergence of the C o l o n i a l Sugar R e f i n i n g Company L i m i t e d (CSR) and the Rise of Large Scale C a p i t a l A f t e r the f a i l u r e of the c o t t o n i n d u s t r y , and a l s o of the c o f f e e i n d u s t r y due to d i s e a s e problems, sugar pr o d u c t i o n caught on q u i c k l y . L i k e the other crops before i t , sugar cane was being produced by a l a r g e number of s m a l l - s c a l e European p l a n t a t i o n s . A l a r g e number of small m i l l s were e r e c t e d to crush sugar cane. However, the nature of the sugar i n d u s t r y , indeed of the e n t i r e c o u n t r y , was to change with the a r r i v a l of the A u s t r a l i a n m u l t i n a t i o n a l g i a n t , the CSR. A f t e r the c o l l a p s e of the cotton i n d u s t r y , and faced with the task of running a s e l f - f i n a n c i n g a d m i n i s t r a t i o n i n F i j i , the new c o l o n i a l government began d e s p e r a t e l y to estab-l i s h a sound a g r i c u l t u r a l base f o r the c o l o n y . Because of the d i f f i c u l t i e s with c o t t o n and c o f f e e , the sugar i n d u s t r y was chosen. The government was convinced that the colony needed l a r g e amounts of c a p i t a l to p r o p e r l y e s t a b l i s h the sugar indus-t r y ; the government d i d not think that the c a p i t a l - s t a r v e d small p l a n t e r s i n F i j i had the necessary c a p i t a l . Thus the C o l o n i a l S e c r e t a r y , T h u r s t o n , went to A u s t r a l i a to " i n t e r e s t " the CSR to come to e s t a b l i s h a sugar i n d u s t r y i n F i j i . The CSR agreed to come and to spend a l a r g e amount of money in F i j i under c e r t a i n c o n d i t i o n s — l a r g e t r a c t s of cheap l a n d , and assu-rance of a good and cheap supply of labour ( M o r r e l l , 1960:384). These were the p u b l i c l y known aspects of the agreement, of 159 c o u r s e . I t i s i n c o n c e i v a b l e that a m u l t i n a t i o n a l l i k e the CSR would not have exacted other i n f o r m a l promises, such as t a k i n g the i n t e r e s t s of the company i n t o account in the government's development p o l i c y . Because of a slump i n the F i j i a n sugar i n d u s t r y and the d e c i s i o n by the Penang Sugar Company in 1926 to s e l l i t s opera-t i o n s to the CSR, (see Narsey, 1979; Ward, 1965:37; W o l l i n and Roberts, 1973), the CSR achieved a monopoly not only i n the sugar i n d u s t r y , but given the country's dependence on the sugar i n d u s t r y , i n the e n t i r e economy. The monopoly of the CSR of the F i j i sugar i n d u s t r y , and of the colony's emerging economy i s the key to the understanding of the contemporary nature of F i j i s o c i e t y . I t impinges s t r o n g l y on the course of i n d u s t r i a l development in F i j i . The CSR c o u l d have become an important v e h i c l e of f u r -ther development in F i j i by r e i n v e s t i n g i t s p r o f i t s in F i j i . As Balassa (1981:4) e x p l a i n s , the primary s e c t o r g e n e r a l l y pro-vid e s the i n v e s t i b l e funds f o r i n d u s t r i a l i z a t i o n . However, the CSR regarded F i j i as i t s s a t e l l i t e o p e r a t i o n s , and was not i n t e r e s t e d i n expanding i t s o p e r a t i o n s beyond the sugar indus-t r y , even i f r e t u r n s on such investment were h i g h . We know that the primary reason why the CSR came to F i j i i n the f i r s t i n s t a -nce was to p r o t e c t i t s A u s t r a l i a n i n t e r e s t s . In the words of E. W. Knox, the founder of the CSR h i m s e l f : 1 60 Sugar w i l l be produced in F i j i soon which w i l l come i n t o c o m p e t i t i o n with o u r s , i t i s a q u e s t i o n whether i t w i l l not be b e t t e r for us to take a share i n the development of the i n d u s t r y and the p r o f i t s that w i l l be r e a l i s e d (quoted i n W o l l i n and Roberts, 1973:74; my emphasis; see a l s o U t r e c h t , 1980:223). Thus the CSR was c l e a r l y not going to work in the i n t e r e s t s of the F i j i sugar i n d u s t r y - - i t s A u s t r a l i a n i n t e r e s t s were more important. In order to argue that the CSR c o u l d have l e d to the f u r t h e r development of F i j i , i n c l u d i n g an i n c r e a s e i n indus-t r i a l i z a t i o n , we have to show that the CSR d i d make s u b s t a n t i a l p r o f i t s t h a t i t c o u l d have i n v e s t e d i n F i j i ; that i t repat-r i a t e d these p r o f i t s to A u s t r a l i a ; and that i t c o u l d have used i t in F i j i to d i v e r s i f y i t s a c t i v i t i e s . The CSR has been most s e c r e t i v e about i t s a c t i v i t i e s i n F i j i , and was able to escape pressure from the p u b l i c to pub-l i s h i t s accounts because of i t s monopoly of the sugar indus-t r y . I t i s known that the CSR d i d threaten the government with withdrawal from F i j i when i t was d i s s a t i s f i e d with government p o l i c y . When the CSR faced a labour shortage, f o r i n s t a n c e , one of the o f f i c i a l s of the CSR t o l d the government that i f " . . . adequate labour was not forthcoming, he would advise h i s compa-ny to t r a n s f e r a l l i t s i n t e r e s t s to some more favourable quar-te r " (quoted i n Narsey, 1979:80). Thus i t i s e n t i r e l y c o n c e i -vable t h a t the CSR would have used s i m i l a r t h r e a t s to maintain the c o n f i d e n t i a l i t y of i t s a c c o u n t s . However, without the help of accounts p u b l i s h e d by the company, Narsey, working with data from the CSR o p e r a t i o n s i n A u s t r a l i a , and with whatever fragme-ntary data that e x i s t , concludes that the CSR made a " f o r t u n e " 161 in i t s F i j i o p e r a t i o n s . Narsey (1979:98) claims that between 1914 and 1923 a l o n e , the CSR made a s u p e r p r o f i t ( i . e . p r o f i t s over and above a "normal" p r o f i t ) of 13 m i l l i o n S t e r l i n g pounds. What i s even more i n t e r e s t i n g i s the f a c t that t h i s was n e a r l y four times the p r o f i t of 3.7 m i l l i o n S t e r l i n g pounds the company made in i t s much l a r g e r A u s t r a l i a n o p e r a t i o n s . The CSR c o u l d r e p a t r i a t e i t s p r o f i t s to A u s t r a l i a under F i j i laws, and i t d i d so. However, i t i s well-known that m u l t i -n a t i o n a l c o r p o r a t i o n s f r e q u e n t l y make use of t r a n s f e r p r i c i n g to e x t r a c t a d d i t i o n a l p r o f i t s to t h e i r host s o c i e t i e s . We know that the CSR d i s p l a y e d f i n a n c i a l i n g e n u i t y i n i t s F i j i opera-t i o n s , and we c o u l d argue that the company, so ingenious i n other matters, would not have r e f r a i n e d from engaging in t h i s p r a c t i c e . However, we do not have to r e l y on c o n j e c t u r e a l o n e . Narsey (1979:100) examines the p r i c e s the CSR r e c e i v e d from i t s r e l a t e d companies in A u s t r a l i a and New Zealand and those pre-v a i l i n g on the world markets and shows that the l a t t e r were much higher than the CSR p r i c e s , suggesting the p r a c t i c e of t r a n s f e r p r i c i n g . F i n a l l y , we have to examine whether the CSR c o u l d have expanded i t s o p e r a t i o n s in F i j i . We know that the government was prepared to accommodate the CSR i n F i j i to a very l a r g e extent; c e r t a i n l y much more than the government i n A u s t r a l i a was prepared to do (Narsey, 1979). Furthermore, other a c t i v i -t i e s were being developed in F i j i , p o i n t i n g to t h e i r f e a s i b i l i -t y . Indeed, given that most of the e a r l y a c t i v i t i e s were gran-ted e i t h e r n a t u r a l or government-sanctioned monopoly, there 1 62 would not be much reason to doubt the commercial a t t r a c t i o n of new a c t i v i t i e s i n F i j i f o r the CSR. Furthermore, the d i v e r s i f i -c a t i o n experience of the F i j i Sugar C o r p o r a t i o n , the company formed by the F i j i government t o take over the o p e r a t i o n s of the CSR s u b s i d i a r y i n F i j i , the South P a c i f i c Sugar M i l l s L i m i t e d , which has a l r e a d y d i v e r s i f i e d i n t o i n d u s t r i a l and commercial a l c o h o l , and which i s p l a n n i n g to undertake packa-ging of f e r t i l i z e r i n the near f u t u r e , as w e l l as to manufac-ture p a r t i c l e board, c l e a r l y demonstrates the p o t e n t i a l the CSR had to expand i t s o p e r a t i o n s i n t o sugar m i l l i n g r e l a t e d a c t i v i -t i e s . The CSR, however, was committed to i t s expansion program-me in A u s t r a l i a , and used p r o f i t s i t made in F i j i to expand i t s o p e r a t i o n s in A u s t r a l i a . In sum, the CSR d i d l e a d the sugar i n d u s t r y f o r a hun-dred years in F i j i . One can argue that the f o r e i g n exchange generated in t h i s i n d u s t r y formed the b a s i s f o r the economic development of F i j i . However, the b e n e f i t s of the sugar indus-t r y arose mostly from the p r i c e s p a i d to the farmers by the CSR; from wages pai d to l a b o u r e r s ; and from taxes p a i d to the government. In the case of the f i r s t two, the CSR p a i d the lowest p o s s i b l e wages and p r i c e s f o r cane; c e r t a i n l y much lower than i t d i d in A u s t r a l i a , where the government was much more i n t e r e s t e d i n the development of the sugar cane farmers, not the m i l l e r s (Narsey, 1979). Thus where the b e n e f i t s were ac-c r u i n g to F i j i , these were minimal. Since p r o f i t s represented a major source of f u t u r e development, t h e i r r e p a t r i a t i o n to Aus-t r a l i a d e p r i v e d the people of F i j i of the o p p o r t u n i t y to u t i -1 63 l i z e them for development. The development of the sugar i n d u s t r y as a monopoly of the CSR was a most important, perhaps the dominant element of the e v o l u t i o n of c a p i t a l i s t e n t e r p r i s e s i n F i j i . However, we have to review the other s a l i e n t p o i n t s of the emerging c a p i t a -l i s t e n t e r p r i s e in F i j i - - o t h e r a g r i c u l t u r a l c r o p s , p a r t i c u l a r l y c oconuts, the mining s e c t o r , and the commercial t r a d i n g s e c t o r . The e v o l u t i o n of the u r b a n - i n d u s t r i a l s e c t o r w i l l be the focus of a s e c t i o n of i t s own. Although the sugar i n d u s t r y emerged e a r l y as the premier and u n r i v a l l e d a g r i c u l t u r a l i n d u s t r y of F i j i , the copra indus-t r y has ranked second in most y e a r s . The beginnings of the copra i n d u s t r y go back to the e a r l y days of commercial enter-p r i s e i n F i j i - - w e have a l r e a d y seen that coconut o i l was being s u p p l i e d to sandalwood and beche-de-mer ship s i n the 1840s and 1850s. L i k e most other a g r i c u l t u r a l c r o p s , the l a r g e s c a l e commercial growing of coconuts was i n i t i a l l y undertaken on foreign-owned p l a n t a t i o n s . Some of these p l a n t a t i o n s were owned by the major commercial i n t e r e s t s in F i j i , such as the Carpen-t e r and the Burns P h i l p groups, and some was being produced by small s c a l e indigenous F i j i a n farmers. The m i l l i n g o p e r a t i o n s were owned by these two l a r g e t r a d i n g companies. The copra i n d u s t r y i n F i j i has, on the whole, not shown major growth because of d i s e a s e , low world p r i c e s , and h o r t i c u l t u r a l prob-lems. The other important component of the emerging c a p i t a l i s t economy was the mining i n d u s t r y , which expanded from 1930 1 64 onwards ( D e r r i c k , 1957:172). Here t o o , the f o r e i g n ownership of the i n d u s t r y meant that the b e n e f i t s to the F i j i a n people from the i n d u s t r y were not as great as they would have been with l o c a l ownership. The mining i n d u s t r y was c o n t r o l l e d — i s in f a c t even today c o n t r o l l e d — b y the Emperor Gold Mining Company L i -mited (EGM) of A u s t r a l i a . Even though most of the surplus generated i n the mining i n d u s t r y was. r e p a t r i a t e d to A u s t r a l i a , the EGM d i d expand i t s o p e r a t i o n s i n t o the timber i n d u s t r y . The d i s t r i b u t i v e system of F i j i , the other main compo-nent of the economy, began l a r g e l y as a foreign-owned and f o r e i g n - o r i e n t e d system that c a t e r e d to the i n t e r e s t s and re-quirements of the European p o p u l a t i o n . The i n t e r n a l and exter-nal trade of F i j i was, f o r a long time, dominated by the Burns P h i l p and Carpenter group of companies. In the area of l o c a l t r a d e , these firms have faced some competition from I n d o - F i j i a n owned f i r m s , but in the export s e c t o r , the f o r e i g n firms have continued to be dominant. The' i n f l u e n c e and c o n t r o l of j u s t a few f o r e i g n firms i n the F i j i economy has been so p e r v a s i v e that a group of concerned F i j i and A u s t r a l i a n c i t i z e n s p u b l i s -hed a book e n t i t l e d F i j i : A Developing A u s t r a l i a n Colony (Roko-tuivuna et a l . , 1973), s t r e s s i n g the d e l e t e r i o u s e f f e c t s of t h i s domination. U n t i l F i j i ' s independence, f o r e i g n c a p i t a l was dominant in almost a l l aspects of F i j i economy. Belshaw (1964:19) e s t i -mated that the CSR and the EGM c o n t r o l l e d 70 percent of F i j i ' s e xports and 20 percent of the domestic output. Manufacturing was almost completely i n the hands of f o r e i g n f i r m s : 1 65 The ownership of the l a r g e r , l e a d i n g manufacturing (and export) i n d u s t r i e s i s almost e n t i r e l y i n the hands of e x p a t r i a t e firms . . . (Ward, 1971:141). The Development of the U r b a n - I n d u s t r i a l Economy The core of economic development to date has been, as we have seen i n Chapter 2, the i n d u s t r i a l s e c t o r . In t h i s s e c t i o n we review the development of the u r b a n - i n d u s t r i a l sector of F i j i . The bulk of the e a r l y i n t e r a c t i o n between indigenous F i j i a n s and Europeans had centred on Vanua Levu and Ovalau, and a f t e r the i n i t i a l c ontact a small group of European p l a n t e r s and r e s i d e n t t r a d e r s had e s t a b l i s h e d a settlement i n Levuka i n the 1860s. Although we do not have r e l i a b l e f i g u r e s f o r the e a r l y growth of Levuka, we know that the white p o p u l a t i o n of F i j i , most of whom probably l i v e d i n Levuka, numbered 400 i n 1866 and had i n c r e a s e d to 2000 in 1870, four years before F i j i was ceded to Great B r i t a i n (France, 1969:38; De R i c c i , 1875:190). When F i j i was ceded to Great B r i t a i n , the government of F i j i adopted Levuka as the f i r s t c a p i t a l of F i j i . However, Levuka's l i m i t a t i o n s as the c a p i t a l of the country became q u i c k l y apparent. Levuka, being l o c a t e d on an extremely narrow s t r e t c h of land f a c i n g the harbour, and enclosed by rugged and s h a r p l y r i s i n g mountains, had l i m i t e d scope f o r expansion. Moreover, Levuka was l o c a t e d on a very small i s l a n d , and f u t u r e economic expansion was c l e a r l y going to take p l a c e on the two main i s l a n d s of the c o u n t r y — V i t i Levu and Vanua Levu. 1 66 Given these c i r c u m s t a n c e s , i t i s not s u r p r i s i n g that both the s e t t l e r s and the government were e x p l o r i n g a l t e r n a t i v e s i t e s for F i j i ' s c a p i t a l . Many s i t e s were c o n s i d e r e d , and Suva e v e n t u a l l y won the wrangle. In 1877 the government announced i t s i n t e n t i o n to make Suva the c a p i t a l of F i j i (Whitelaw, 1967:16). Suva was proclaimed a town on 2 J u l y 1881 and i n October 1882 the Governor and h i s a d m i n i s t r a t i o n moved to Suva ( D e r r i c k , 1943:207). As settlement expanded and the economy developed, other urban c e n t r e s developed in F i j i . In the areas where sugar cane m i l l s were e s t a b l i s h e d , m i l l and market towns developed: Lauto-ka (1929), Ba (1936), R a k i r a k i ( s t i l l u n i n c o r p o r a t e d ) , Nausori (1931), Navua ( s t i l l u n i n c o r p o r a t e d ) , and Labasa (1939) (Bakker and Walsh, 1976:16). In other sugar cane growing areas market towns developed: Sigatoka (1959), Nadi (1946) ( a l s o an a i r p o r t town), and Tavua ( s t i l l u n i n c o r p o r a t e d ) . Savusavu (1969) deve-loped as a port town s e r v i n g the copra i n d u s t r y and Vatukoula ( s t i l l unincorporated) developed as a mining and company town. On the Southeast V i t i Levu, T a i l e v u developed l a r g e l y as a s e r v i c e town f o r l i v e s t o c k farmers. The l a s t town i n c o r p o r a t e d i n F i j i was Lami. Lami had grown as a suburb of Suva and was i n c o r p o r a t e d a f t e r the l a s t census. The emphasis on a g r i c u l t u r a l development c a t e r i n g to the i n t e r n a t i o n a l markets, and the n e g l e c t of manufacturing, toget-her with meagre r e t u r n s to the farmers, meant that urban cen-t r e s d i d not develop a p r o d u c t i v e economic base but developed i n s t e a d , as has happened in most other T h i r d World c o u n t r i e s , 1 67 as s e r v i c e c e n t r e s . However, even without the p r o d u c t i v e base, except f o r sugar and copra p r o c e s s i n g , the urban p o p u l a t i o n of F i j i grew s t e a d i l y , slowly before the Second World War, and r a p i d l y s i n c e . Suva grew i n t o a premier c i t y in the South P a c i f i c , although mainly as an a d m i n i s t r a t i v e and c o l o n i a l c i t y (see Bellam, 1970 and McGee, 1967 f o r d i s c u s s i o n s of the con-cept of the c o l o n i a l c i t y ) . From i t s o r i g i n s as a Town Board, Suva became a m u n i c i p a l i t y in 1910 ( S c o t t , 1940:15), and ac-hieved the s t a t u s of a c i t y i n October 1953 (Whitelaw, 1967: 17) . Even though the v a l i d i t y of the census data to t r a c e the growth of urban s o c i e t y i n F i j i i s v i t i a t e d by un c l e a r and f r e q u e n t l y changing urban boundaries, census data do p r o v i d e a rough b a s i s f o r a s c e r t a i n i n g the general trend i n urban popula-t i o n growth i n F i j i from 1911 onwards, when the census f o r the f i r s t time made s p e c i f i c r e f e r e n c e to the urban p o p u l a t i o n . The growth of urban p o p u l a t i o n i n F i j i d u r i n g t h i s p e r i o d i s summa-r i z e d i n Table 4.1. Of the f a i r l y small e a r l y urban p o p u l a t i o n of F i j i (1911), i t i s i n t e r e s t i n g that although Europeans comprised the s i n g l e l a r g e s t category of urban p o p u l a t i o n , both indigenous F i j i a n s and I n d o - F i j i a n s comprised 19 percent each of the t o t a l urban p o p u l a t i o n . The presence of these two e t h n i c groups i s i n t e r e s t i n g because the e a r l y towns.were c l e a r l y seen by Euro-g peans as p l a c e s of European settlement o n l y . By the 1930s, s i g n i f i c a n t changes had taken p l a c e i n the urban p o p u l a t i o n . The I n d o - F i j i a n p r o p o r t i o n had almost doubled 1 68 TABLE 4.1 URBAN POPULATION GROWTH IN F I J I , 1911-1966 Year Urban Popu- P r o p o r t i o n of Share of Urban Popu-l a t i o n T o t a l Popula- t ion by E t h n i c Groups3 t i o n (Percent) Euro- Indigenous Indo-pean F i j i a n F i j ian 1911 5770b 4 26 1 9 19 1 936 1 2 2 1 8° 6 1 4 23 39 1 946 25530d 1 0 8 29 42 1 956 60370 1 7 7 26 52 1 966 159259 33 1 4 30 56 SOURCE: C a l c u l a t e d from Censuses of F i j i , 1911-1966. The row percentages may not add to 100 because the other components of the p o p u l a t i o n are not i n c l u d e d . These i n c l u d e " H a l f - c a s t e s " , P o l y n e s i a n s , Chinese, and "Others". ^Does not i n c l u d e Suva Suburb. Excludes suburban Suva and the settlement of Nasea but i n c l u d e s Namoli. d Excludes Suva suburbs. Includes p e n - u r b a n a r e a s . to 39 p e r c e n t , the indigenous F i j i a n p r o p o r t i o n had i n c r e a s e d most s l u g g i s h l y to 23 p e r c e n t , and the p r o p o r t i o n represented by Europeans had dropped to 14 p e r c e n t . These p a t t e r n s have to be r e l a t e d to the f a c t that the European p o p u l a t i o n had always been n u m e r i c a l l y s m a l l ; the importance of Europeans c l e a r l y l a y i n t h e i r s u p e r i o r economic and p o l i t i c a l power. The indigenous F i j i a n p o p u l a t i o n had been d e c r e a s i n g u n t i l 1921 as an aftermath of t h e i r contact with Europeans. In a d d i t i o n , the indigenous F i j i a n s o c i a l o r g a n i z a -1 69 t i o n , now b o l s t e r e d by the F i j i a n A d m i n i s t r a t i o n , s t r o n g l y p r e s s u r e d indigenous F i j i a n s to remain i n v i l l a g e s . For i n s t a n c e , u n t i l 1966, indigenous F i j i a n s c o u l d not leave t h e i r v i l l a g e s without the permission of the v i l l a g e a u t h o r i t i e s ( C o n n e l l and C u r t a i n , 1980: 5 ) . Under the F i j i a n A d m i n i s t r a -t i o n , a l l adu l t indigenous F i j i a n s had s o c i a l o b l i g a t i o n s to the c h i e f s and the v i l l a g e (Burns, Watson, and Peacock, 1960:33). In a d d i t i o n to t h i s , the c o l o n i a l a d m i n i s t r a t i o n was f i r m l y of the view that towns were not f o r indigenous F i j i a n s . The I n d o - F i j i a n p o p u l a t i o n , however, was not encumbered by a r e s t r i c t i v e a d m i n i s t r a t i o n ; indeed, for a long time, many Indo-F i j i a n settlements d i d not have a d e f i n e d a d m i n i s t r a t i v e s e t u p , and were i n s t e a d l e f t to the mercy of the C o l o n i a l Sugar R e f i -ning Company L i m i t e d (see A l i , 1976; Anderson, 1974; G i l l i o n , 1962, 1977; Mayer, 1963, 1973). So the I n d o - F i j i a n p o p u l a t i o n was f r e e to move i n t o urban c e n t r e s where they were both needed and t o l e r a t e d , provided they kept t h e i r d i s t a n c e from areas of European s e t t l e m e n t . The town was, i n i t i a l l y at l e a s t , the white man's prese-r v e , where the economy, p o l i t i c s , and s o c i a l s t r a t i f i c a t i o n p l a c e d him at the apex of the urban s o c i e t y . Even though o r d i -nances f o r segregation were only mooted and never promulgated (C o n n e l l and C u r t a i n , 1980:6), an e f f e c t i v e s e g r e g a t i o n deve-loped anyway. 9 The 1956 census reported an urban p o p u l a t i o n of 60,370 ( c a l c u l a t e d from McArthur, 1958:57), now making i t 17 percent 170 of the p o p u l a t i o n . T h i s i n t e r c e n s a l p e r i o d marks a r a p i d i n -crease i n the p r o p o r t i o n of urban p o p u l a t i o n made up by Indo-F i j i a n s , now reaching j u s t over h a l f the urban p o p u l a t i o n , while the European p o p u l a t i o n almost h e l d i t s p o s i t i o n (now 7 p e r c e n t ) . The indigenous F i j i a n share of the urban p o p u l a t i o n stood at 26 percent ( c a l c u l a t e d from McArthur, 1958:57; Table 4.1). The dramatic i n c r e a s e i n the urban p o p u l a t i o n i n F i j i between 1946 and 1956 was the r e s u l t of the ex t e n s i o n of the boundary of Suva from one square mile to s i x square m i l e s (Nayacakalou, 1963:33). The expanded boundary i n c l u d e d the p r e v i o u s l y suburban p o p u l a t i o n , and si n c e I n d o - F i j i a n s had been the p r i n c i p a l r e s i d e n t s of the suburbs, the exte n s i o n of the boundary d r a m a t i c a l l y i n c r e a s e d the I n d o - F i j i a n urban popula-t i o n (by 381 p e r c e n t ) . To t h i s should be added the very high r a t e of n a t u r a l p o p u l a t i o n i n c r e a s e of the I n d o - F i j i a n popula-t i o n i n t h i s p e r i o d . Between 1946 and 1956, f o r i n s t a n c e , the I n d o - F i j i a n p o p u l a t i o n i n c r e a s e d by 41 percent compared with the 33 percent i n c r e a s e in the n a t i o n a l p o p u l a t i o n ( c a l c u l a t e d from the two c e n s u s e s ) , and we know that a f t e r 1936 mi g r a t i o n from I n d i a had l a r g e l y stopped (McArthur, 1967:43). The 1966 census i n d i c a t e d a major i n c r e a s e i n urban p o p u l a t i o n , although s i n c e there were so many boundary changes, census data are u s e f u l only f o r e s t a b l i s h i n g the broad p a t t e r n s of change. The t o t a l urban p o p u l a t i o n had in c r e a s e d t o 159,259, and now comprised 33 percent of the p o p u l a t i o n . Of t h i s , F i -j i a n s comprised 30 p e r c e n t , I n d o - F i j i a n s 56 p e r c e n t , and a l l 171 o t h e r s , i n c l u d i n g Europeans, 14 percent ( c a l c u l a t e d from Zwart, 1968: 1-3; see Table 4.1 a l s o ) . Urban c e n t r e s i n F i j i , much l i k e those i n other c o l o -n i e s , were not indigenous to the s o c i e t y . Moreover, the e a r l y Europeans, and the government c l e a r l y d i d not see any major r o l e f o r the two major e t h n i c groups of F i j i - - i n d i g e n o u s F i -j i a n s and I n d o - F i j i a n s - - i n the urban system. Towns were a r t i -f i c i a l c r e a t i o n s of the a d m i n i s t r a t i o n designed to f a c i l i t a t e c o n t r o l of the c o u n t r y , and the production and e x t r a c t i o n of raw m a t e r i a l s . Food s u p p l i e s from the h i n t e r l a n d reached urban d w e l l e r s , and r u r a l p o p u l a t i o n r e c e i v e d t h e i r mostly overseas-d e r i v e d goods and s e r v i c e s from the towns. While market p l a c e s d i d encourage the s a l e of produce of the h i n t e r l a n d , the pro-duce represented the only major r u r a l input i n t o the urban system, other than l a b o u r . Most of the requirements of the urban p o p u l a t i o n were obtained from overseas. The formal d i s -t r i b u t i o n system of F i j i was r e l a t i v e l y b i a s e d toward the overseas sources of supply not only because of the non-produc-t i o n of the many items i n q u e s t i o n , but a l s o because of the overseas ownership and c o n t r o l of the firms i n v o l v e d i n d i s t r i -b u t i o n . The economic base of the urban system thus comprised l a r g e l y non-productive a c t i v i t i e s , such as t r a d i n g , p r o v i s i o n of s e r v i c e s , and a d m i n i s t r a t i o n . T h i s can e a s i l y be seen from Table 4.2 which p r e s e n t s the economic s t r u c t u r e of urban cen-t r e s i n F i j i i n 1976. The main manufacturing i n the urban c e n t r e s i n i t i a l l y 1 72 TABLE 4.2 ECONOMICALLY ACTIVE URBAN POPULATION AGED 15 YEARS AND OVER BY INDUSTRIAL CLASSIFICATION, 1976 Industry Economically A c t i v e Population Number Percent A g r i c u l t u r e , f o r e s t r y & f i s h i n g 5336 7 Mining & q u a r r y i n g 1 345 2 Manufacturing 8878 1 2 E l e c t r i c i t y , gas & water 1 1 22 2 Construct ion 6349 9 Wholesale, r e t a i l , h o t e l s and r e s t a u r a n t s 1 1 439 1 6 T r a n s p o r t , communications & storage 5921 8 Fi n a n c e , insurance & r e a l e s t a t e 2874 4 Community, s o c i a l & p e r s o n a l s e r v i c e s 20299 28 Industry not s t a t e d 7859 1 1 T o t a l 71422 99 SOURCE: Lodhia, 1977:530-533. Percentages have been c a l c u l a t e d by the author. was, of c o u r s e , sugar cane and copra m i l l i n g . As we have a l r e a -dy noted, the sugar m i l l s d i d not d i v e r s i f y i n t o a u x i l i a r y i n d u s t r i e s . Some resource p r o c e s s i n g i n d u s t r i e s d i d develop, however. In the 1860s, there were two co t t o n g i n n e r i e s , which continued to operate u n t i l 1930 ( D e r r i c k , 1957:88). There were boat b u i l d i n g f a c i l i t i e s in Levuka as e a r l y as 1860s. Copra m i l l i n g f a c t o r i e s were e s t a b l i s h e d i n Suva, which continue to operate even today. There were a l s o c o f f e e d r y i n g f a c i l i t i e s . Most of t h e s e , however, r e l a t e d to the need to reduce the bulk 1 73 of a g r i c u l t u r a l crops p r i o r to t h e i r e x p o r t . In a l l c a s e s , they represented no more than minimal p r o c e s s i n g of a g r i c u l t u r a l produce, and there was no instance of a u x i l i a r y i n d u s t r i e s t a k i n g advantage of the major m i l l i n g o p e r a t i o n s . A new p a t t e r n i n the development of manufacturing emer-ged in the 1930s with the development of some manufacturing to c a t e r to the l o c a l demand. Thus we have the beginning of the i m p o r t - s u b s t i t u t i o n i n d u s t r i a l i z a t i o n that was to become so important l a t e r in F i j i . An e a r l y example of t h i s was in the d a i r y i n d u s t r y , where a " . . . small but f u l l y equipped b u t t e r f a c t o r y " was b u i l t i n T a i l e v u in 1922 ( D e r r i c k , 1957:98). A l a t e r development i n the d a i r y i n d u s t r y l e d to the e s t a b l i s -hment of another b u t t e r f a c t o r y i n Navua by the F i j i P a s t o r a l Company L i m i t e d ( D e r r i c k , 1957:98). A beer manufacturing p l a n t was set up in 1957 by a s u b s i d i a r y of the gi a n t A u s t r a l i a n C a r l t o n Brewery ( V u n i v a l u [ E d ] , 1957:82). T h i s f i r m has main-t a i n e d i t s monopoly of the beer p r o d u c t i o n ever s i n c e , even though i t s monopoly was u n s u c c e s s f u l l y c h a l l e n g e d i n the 1970s. In the 1960s, many more i n d u s t r i e s were e s t a b l i s h e d . Many of them were i n areas which enjoyed n a t u r a l p r o t e c t i o n because of F i j i ' s d i s t a n c e from other c e n t r e s of p r o d u c t i o n , and the bulky nature of the f i n i s h e d p r o d u c t s . Soft d r i n k s represented one of the n a t u r a l l y p r o t e c t e d i n d u s t r i e s — a n o t h e r was beer. The making of cement i s another example, but s l i g h t l y d i f f e r e n t because the company asked f o r government p r o t e c t i o n before d e c i d i n g to e r e c t the f a c t o r y . The cement making venture i s a l s o i n t e r e s t i n g because i t i n v o l v e d a j o i n t e f f o r t by the 174 main t r a d i n g companies in F i j i ( F i j i Government, 1959). Later in the 1960s, as in the 1970s, i m p o r t - s u b s t i t u t i n g i n d u s t r i e s sprang up i n a wide range of areas--from f u r n i t u r e to garment manufacture. The a c t u a l content and nature of the manufacturing s e c t o r on the eve of independence i s i n d i c a t e d by an examination of the census of i n d u s t r i e s f o r 1968, the cove-rage of which was not r e s t r i c t e d by the s i z e of employment of establishments ( F i j i Bureau of S t a t i s t i c s , 1970:2).1 0 The main f e a t u r e s of the manufacturing s e c t o r i n 1968 are summarized in Table 4.3. There were 310 e s t a b l i s h m e n t s i n the manufacturing s e c t o r i n 1968, p o i n t i n g to a major development of the manufac-t u r i n g s e c t o r i n the 1960s. The dominant component of the manufacturing s e c t o r was food p r o c e s s i n g , l e d by sugar and copra p r o c e s s i n g . Food p r o c e s s i n g i n d u s t r i e s accounted for 47 percent of the t o t a l manufacturing employment and 69 percent of the gross output. The other major i n d u s t r i e s r e l a t e d to sawmil-l i n g and i t s r e l a t e d f u r n i t u r e and u p h o l s t e r y . On the whole then, the manufacturing s e c t o r had grown, but was l a r g e l y c o n f i n e d to the p r o c e s s i n g of the primary sector output. I m p o r t - s u b s t i t u t i n g i n d u s t r i e s had begun to develop but s t i l l remained nascent. The C o l o n i a l State and I n d u s t r i a l i z a t i o n C o l o n i a l i s m has been seen as both condemning the pros-pect of i n d u s t r i a l i z a t i o n in the c o l o n i e s , as w e l l as p r o v i d i n g the i n f r a s t r u c t u r e and i n s t i t u t i o n a l base f o r i n d u s t r i a l i z a t i o n (on the former, see any of the dependency s t u d i e s ; on the TABLE 4.3 THE STRUCTURE OF THE MANUFACTURING SECTOR OF FIJI, 1968: NUMBER OF ESTABLISHMENTS, EMPLOYEES, AND GROSS OUTPUT Manufacturing Sub-Group Establishments Employees Gross Output (F$) Number Percent Number Percent Amount Percent Meat 25 8 270 3 941297 2 Bakery products 17 5 325 3 1337523 2 Other foods, including prepared animal feeds 16 5 4934 47 43274038 69 Drinks and tobacco 14 5 405 4 4162603 7 Tailoring 23 7 322 3 432014 1 Footwear 11 4 31 <1 64883 <1 Sawmilling, window and door frames, plywood, hardboard, and particle board 47 15 714 8 1673532 3 Curios 9 3 108 1 154788 <1 Wooden furniture and upholstery 56 18 728 8 1352807 2 Paper and paper boards, printing, publishing and 1294959 allied industries 21 7 489 5 2 Paints, varnishes, lacquers, soap and cleansing preparations 6 2 212 2 1729262 3 Rubber and plastic products 6 2 93 1 170158 <1 Cement; ready-mixed and concrete blocks 11 4 285 3 1986244 3 Furniture and fixtures of metal, electroplating, structural metal products 20 6 358 4 1263941 2 Agricultural and industrial machinery, including repairs and renovations 18 6 414 4 1786346 3 Ships and boats 8 3 156 2 548331 1 Items not elsewhere classified 2 1 102 1 127814 <1 Total 310 101 9406 99 62300540 100 SOURCE: Calculated from data in F i j i Bureau of Statistics, 1970: 36. aThese figures have been grossed-up to take account of non-response to the Bureau's census. 1 76 l a t t e r , see Myrdal, 1971). In t h i s s e c t i o n , we s h a l l examine whether c o l o n i a l i s m hindered or helped i n d u s t r i a l i z a t i o n in F i j i . It i s u s e f u l to note at the outset that F i j i represents a s p e c i a l case of c o l o n i a l i s m i n that F i j i , or rather the c h i e f s of F i j i , o f f e r e d to cede F i j i to Great B r i t a i n , and second, the nature of the p r e c a p i t a l i s t indigenous F i j i a n s o c i a l formation meant that F i j i d i d not possess extensive household i n d u s t r y that c o l o n i a l i s m c o u l d d e s t r o y . In other words, u n l i k e the case in A s i a , for i n s t a n c e , there was no scope f o r the d e i n d u s t r i a l i z a t i o n of F i j i . Furthermore, the small s i z e of F i j i meant that i t was never economically essen-t i a l f o r B r i t a i n i n the way that some of the l a r g e r c o l o n i e s were. T h i s may have l i m i t e d the scope f o r c o l o n i a l e x p l o i t a -t i o n . In the p e r i o d l e a d i n g to World War I I , the prospects f o r i n d u s t r i a l i z a t i o n i n F i j i can be s a i d to have been s e v e r e l y l i m i t e d . The colony had a low standard of l i v i n g , thus not po s s e s s i n g a good home market f o r i n d u s t r i a l i z a t i o n . Although the case of other c o u n t r i e s , such as Hong Kong and Singapore, has shown that a home market i s not e s s e n t i a l to i n d u s t r i a l i z a -t i o n , i n that the export markets can overcome the market res-t r a i n t s imposed by small domestic market, a growing domestic market had been a key i n g r e d i e n t i n the i n d u s t r i a l i z a t i o n of most c o u n t r i e s i n the world, both developed and d e v e l o p i n g . Furthermore, F i j i d i d not have a labour f o r c e that was e i t h e r educated or used to i n d u s t r i a l d i s c i p l i n e . Indeed, a major part 1 77 of the po p u l a t i o n d i d not p a r t i c i p a t e i n the c a p i t a l i s t s e c t o r at a l l . The c o l o n i a l government can be f a u l t e d f o r c r e a t i n g an a d m i n i s t r a t i o n in F i j i f o r indigenous F i j i a n s that was h o s t i l e to the c a p i t a l i s t s e c t o r i n s o f a r as indigenous F i j i a n s were concerned. However, from the labour point of view, F i j i was not adequately prepared f o r i n d u s t r i a l i z a t i o n . I n f r a s t r u c t u r e was a l s o l a c k i n g . The f i n a n c i a l system was rudimentary; most o f t e n f i n a n c e was a v a i l a b l e only through s u r p l u s e s c r e a t e d by one's e n t e r p r i s e s , as happened with the t r a d i n g companies, or from parent companies, as happened with foreign-owned f i r m s . During t h i s p e r i o d , then, i t would have been u n r e a l i s t i c to expect F i j i to have become i n d u s t r i a l i z e d . What could have been expected was the development of p r o c e s s i n g i n d u s t r i e s — a n d t h i s d i d take place i n the case of n e a r l y a l l the major a g r i c u -l t u r a l p r o d u c t s . A f t e r World War I I , however, F i j i c o u l d have developed more manufacturing i n d u s t r i e s than i t d i d . The standard of l i v i n g had improved, and the p o p u l a t i o n had grown r a p i d l y , p r o v i d i n g a reasonable home market. A b a s i c i n f r a s t r u c t u r e had been c r e a t e d , and the p o p u l a t i o n had become educated. W r i t i n g in 1964, Belshaw (1964:116) commented on the s k i l l of the p o p u l a t i o n : " . . . there can be few a g r i c u l t u r a l l y - b a s e d Colo-n i a l t e r r i t o r i e s which have such a s k i l l e d p o p u l a t i o n . " The c o l o n i a l government d i d encourage i n d u s t r i a l i z a t i o n , but t h i s was mainly a g r i c u l t u r e - b a s e d i n d u s t r i e s . I t a l s o e s t a -b l i s h e d the A g r i c u l t u r a l and I n d u s t r i a l Loans Board in 1952 1 78 (Burns, Watson, and Peacock, 1960:100). It i s d i f f i c u l t to a s c e r t a i n how much of the Board's l e n d i n g went to the manufac-t u r i n g s e c t o r because a l l n o n - a g r i c u l t u r a l a c t i v i t i e s were c l a s s e d " i n d u s t r i a l " . But the government d i d e s t a b l i s h a system of f i n a n c i n g p o t e n t i a l manufacturing development of the coun-t r y . The government had a l s o attempted to promote the develo-pment of manufacturing in F i j i with the passage of the Protec-ted I n d u s t r i e s Ordinance of 1947 (Burns, Watson, and Peacock, 1960:100; - F i j i Government, 1947). The P r o t e c t e d I n d u s t r i e s Ordinance, 1947 ( F i j i Gover-nment, 1947:3) made p r o v i s i o n s Where [ i f ] the Governor in C o u n c i l i s s a t i s f i e d that the development of any i n d u s t r y or proposed i n d u s t r y i n the Colony i s i n i n the p u b l i c i n t e r e s t and that such i n d u s t r y cannot be developed or undertaken unless a f f o r d e d protec-t i o n from c o m p e t i t i o n , he may by order d e c l a r e such i n d u s t r y to be a p r o t e c t e d i n d u s t r y . . . P r o t e c t i o n was given from c o m p e t i t i o n from other sources of domestic p r o t e c t i o n , and was granted f o r f i v e years in the f i r s t i n s t a n c e , and c o u l d be renewed at the end of f i v e years a f t e r review by the government at i n t e r v a l s of not more than two y e a r s . There was no l i m i t to the l e n g t h of p r o t e c t i o n granted ( F i j i Government, 1947:4). In r e t u r n f o r t h i s protec-t i o n , the government r e s e r v e d the r i g h t to a u d i t accounts of the firms concerned and to f i x p r i c e s of t h e i r p r o d u c t s . The passage of the Ordinance does i n d i c a t e an i n t e r e s t on the part of the c o l o n i a l government to help develop manufac-t u r i n g i n F i j i . However, the Burns Commission r e p o r t e d in 1960 179 (Burns, Watson, and Peacock, 1960:100) We understand, however, that only three p r o t e c t e d indus-t r i e s were e s t a b l i s h e d under t h i s Ordinance, tuna f i s h i n g , candlenut o i l and b u t t e r manufacture, and that a l l three f a i l e d (my emphasis). Without i n f o r m a t i o n on the number of a p p l i c a t i o n s f o r protec-t i o n under the Ordinance, i t i s d i f f i c u l t to e x p l a i n the low degree of coverage under the Ordinance. The c o l o n i a l government a l s o attempted to encourage the development of manufacturing through f i n a n c i a l i n c e n t i v e s o f -f e r e d through the income tax a c t . As e a r l y as 1940, an allowan-ce of 20 percent was permitted on machinery and p l a n t f o r i n d u s t r i a l and a g r i c u l t u r a l purposes i n a d d i t i o n to the normal d e p r e c i a t i o n allowances (Burns, Watson, and Peacock, 1960: 100). The Commerce and I n d u s t r i e s O f f i c e of the c o l o n i a l gove-rnment was prepared to o f f e r a d v i c e and a s s i s t a n c e to those seeking to e s t a b l i s h manufacturing i n d u s t r i e s . The c o l o n i a l government a l s o introduced and developed the s o c i a l i n f r a s t r u c t u r e that p r o v i d e d the b a s i s f o r the l a t e r development of manufacturing. The government developed educa-t i o n , a key requirement of i n d u s t r i a l i z a t i o n . F i j i showed a r a p i d development of education that was much b e t t e r than most other c o l o n i e s . Of a group of t h i r t y - n i n e c o l o n i e s examined by Huxley and Deane (1944:12), f o r i n s t a n c e , F i j i had the second highest r a t e of p u p i l s , i n school per hundred p e o p l e . We have alre a d y noted Belshaw's (1964:116) o b s e r v a t i o n of the high l e v e l of s k i l l of the p o p u l a t i o n of F i j i i n the 1960s. Furthermore, the c o l o n i a l s t a t e a l s o l a i d the foundation 180 of F i j i ' s l e g a l and f i n a n c i a l systems without which l a t e r i n d u s t r i a l i z a t i o n would have faced many d i f f i c u l t i e s . The previous d i s c u s s i o n does suggest an i n t e r e s t on the p a r t of the c o l o n i a l government to encourage the i n d u s t r i a l i z a -t i o n of F i j i . However, even i f the government d i d enact l e g i s -l a t i o n and evince an i n t e r e s t i n the i n d u s t r i a l i z a t i o n of F i j i , t h i s in i t s e l f i s not s u f f i c i e n t to support the case of an e f f e c t i v e r o l e of the s t a t e in F i j i ' s i n d u s t r i a l i z a t i o n . For one t h i n g , we know that e i t h e r because of apathy on the part of the p o t e n t i a l manufacturers, or because of some shortcoming of the government scheme, only three manufacturing establishments were a s s i s t e d under the P r o t e c t e d I n d u s t r i e s Ordinance. Moreover, while on the one hand the c o l o n i a l government was responding to the need f o r i n d u s t r i a l i z a t i o n , the bulk of the c o l o n i a l p o l i c y as regards the export s e c t o r , the most c r u c i a l s e c t o r in terms of f u r t h e r i n d u s t r i a l i z a t i o n of F i j i , m i l i t a t e d a g a i n s t f u r t h e r i n d u s t r i a l i z a t i o n . Since the export earnings were c o n t r o l l e d by m u l t i n a t i o -n a l c o r p o r a t i o n s , i n d u s t r i a l i z a t i o n c o u l d only be proceeded with in F i j i i f a s u b s t a n t i a l p o r t i o n of the s u r p l u s generated i n the a g r i c u l t u r a l s e c t o r remained in F i j i . The government d i d not , however, ensure that t h i s happened. Indeed, i t f r e q u e n t l y s i d e d with the CSR a g a i n s t the workers and the f a r m e r s — y e t i t was the income a c c r u i n g to these farmers and workers that was the main b e n e f i t of the sugar i n d u s t r y as f a r as F i j i was concerned. In f a c t , the government went so f a r as to work hand in hand with the CSR to sow the seeds of d i s u n i t y among both 18-1 farmers and workers so as to prevent workers and farmers from r e a l i z i n g a more adequate r e t u r n on t h e i r l a b o u r .1 1 Conclusions T h i s chapter has reviewed how F i j i was inducted i n t o the i n t e r n a t i o n a l economic and p o l i t i c a l system. F i j i was at a r e l a t i v e l y low l e v e l of development p r i o r to i t s contact with the world system. For i n s t a n c e , i t s a g r i c u l t u r a l and warfare t e c h n o l o g i e s were much i n f e -r i o r to those found i n A s i a and A r a b i a at a much e a r l i e r d a t e . The indigenous F i j i a n s o c i a l formation was, to be su r e , being changed as a r e s u l t of contact with Tonga p r i o r to i t s contact with the West, but the changes r e l a t e d mainly to a higher l e v e l of p o l i t i c a l o r g a n i z a t i o n , r a t h e r than the adoption of more complex technology. In the p e r i o d from the beginning of the nineteenth century to c e s s i o n i n 1874, the indigenous F i j i a n s o c i a l forma-t i o n was i n a s t a t e of f l u x , and many asp e c t s of " t r a d i t i o n a l " indigenous F i j i a n way of l i f e had been deeply touched by Euro-peans. The notion of n a t i o n a l kingdoms had been planted by Europeans, whose members prov i d e d both the technology and per-sonnel a s s i s t a n c e that brought about l a r g e s c a l e kingdoms. New farming and warfare t e c h n o l o g i e s were a l s o i n t r o d u c e d . The c a p i t a l i s t system of pr o d u c t i o n had been i n t r o d u c e d , and c a p i -t a l i s t r e l a t i o n s of p r o d u c t i o n , although by no means dominant, had been nonetheless i n t r o d u c e d . The e a r l y indigenous F i j i a n s had proved adept at e n t e r i n g the commercial economy. 182 With the c e s s i o n of F i j i to Great B r i t a i n i n 1874, i t became an unusual c o l o n y . The absence of a major manufacturing economy meant that there was no scope f o r i t s d e s t r u c t i o n . The land area of F i j i was l i m i t e d , and thus i t was not looked upon as a source of a g r i c u l t u r a l e x p l o i t a t i o n , although i t s e x c e l -l e n t c o t t o n and sugar cane p o t e n t i a l was not l o s t on the En-g l i s h . N e i t h e r was F i j i p e r c e i v e d as a major market for manufa-c t u r e d goods from Great B r i t a i n which might have m i l i t a t e d a g a i n s t F i j i ' s own i n d u s t r i a l development. The c o l o n i a l government undertook two major p r o j e c t s the e f f e c t s of which are s t i l l r e v e r b e r a t i n g in F i j i even today. It i n t r o d u c e d indentured l a b o u r e r s from India to work i n the p l a n t a t i o n s . And i t d e v i s e d a r i g i d separate a d m i n i s t r a t i o n for indigenous F i j i a n s which was almost d o g m a t i c a l l y against the i n t r o d u c t i o n of indigenous F i j i a n s i n t o the commercial economy. The mixture of European p o l i t i c a l power and c a p i t a l , and Indo-F i j i a n labour and subsequently p e t t y c a p i t a l , while indigenous F i j i a n s c o n t r o l l e d the land presented most economic o p p o r t u n i -t i e s to Europeans and I n d o - F i j i a n s . At the same time, a l a r g e l y indigenous F i j i a n - l e d F i j i a n A d m i n i s t r a t i o n s t r a i n e d to c o n t a i n the indigenous F i j i a n s from e n t e r i n g the c a p i t a l i s t s e c t o r . The c o l o n i a l government d i d not d i r e c t l y i n h i b i t the development of manufacturing in F i j i . Indeed, i t promulgated ordinances designed to h e l p F i j i ' s i n d u s t r i a l i z a t i o n . However, the o v e r a l l p o l i c y of the government to a l i g n i t s e l f f i r m l y with foreign-owned m u l t i n a t i o n a l s , had important consequences f o r the p a t t e r n of i n d u s t r i a l i z a t i o n i n F i j i . 1 83 Notes 1. Cooper (1979:32) m a i n t a i n s , f o r i n s t a n c e , that One of the keys to an understanding of the beginnings of c o l o n i a l i s m in the Western P a c i f i c i s the American C i v i l War. T h i s c o n f l i c t d i s r u p t e d the supply of c o t t o n to B r i t i s h i n d u s t r y and l e d to the investment of c o n s i -derable amounts of c a p i t a l i n t o c o tton p r o d u c t i o n in s e v e r a l p a r t s of the w o r l d , most notably B r i t i s h India and Egypt but a l s o A u s t r a l i a and F i j i . In the l a t t e r two c o u n t r i e s cotton was produced on -plantations which r e q u i r e d s u p p l i e s of cheap, u n s k i l l e d labour . . . 2. Of the e a r l y whites in F i j i , W i l l i a m s and C a l v e r t (1859: 3) wrote: No thought of improving and c o n s o l i d a t i n g the power thus won seems to have been e n t e r t a i n e d by the w h i t e s . Had such d e s i r e possessed them, the a b s o l u t e government of the e n t i r e group lay w i t h i n t h e i r reach; but t h e i r ambition never rose beyond a l i f e of i n d o l e n c e , and an u n r e s t r a i n e d g r a t i f i c a t i o n of t h e i r v i l e s t p a s s i o n s . 3. On the sandalwood t r a d e , see Munro (1973); Shineberg (1967); Ward (1965). 4. The best sources on the beche-de-mer t r a d i n g are D e r r i c k (1950); France (1969); Ward (1965, 1972). 5. See, for i n s t a n c e , Ward (1948:189). 6. A good i n d i c a t i o n of the European p o s i t i o n v i s - a - v i s F i -j i a n s can be gauged from the statement in The F i j i Times, then the mouthpiece of the p l a n t e r s : Already the Anglo-Saxon has f i r m l y p l a n t e d h i s foot here, and so c e r t a i n l y must remain here. The whites can do without n a t i v e s , but F i j i can never again be f r e e of the white man. Her d e s t i n y i s s e a l e d , and as sure as the American I n d i a n s , the New Zealanders, the A u s t r a l i a n s have had to give way to the s u p e r i o r r a c e , so s u r e l y must the F i j i a n f o l l o w i n the same c o u r s e . F i j i must become the home of a white r a c e , i t s o r i g i n a l i n h a b i -t a n t s are no doubt doomed (quoted in A l i , 1977:9). 7. Gordon, for i n s t a n c e , argued that without Indian l a b o u r , . . . the pressure which would be brought to bear upon the Government to consent to measures intended to coerce the n a t i v e p o p u l a t i o n of t h i s Colony i n t o an i n v o l u n t a r y s e r v i t u d e , or at a l l events to wink at p r a c t i c e s not c o n s i s t e n t with f a i r d e a l i n g (quoted i n Chapman, 1 84 1964:217). 8. Ali (1977:12) notes, for instance, that Europeans were concerned with the influx of non-Europeans into Suva. See also Anderson (1974); Britton (1980); Connell and Curtain (1980). 9. This figure excludes the population of Suva's suburbs and surrounding rural areas. 10. The f i r s t census of industries of F i j i was undertaken in 1963, but "for various reasons" was not published. Similarly, the results of the 1969 census were not published. The census for 1968 is believed to be the earliest available for our purposes. The census covered a l l establishments in the manufac-turing, mining, and construction sectors, although here we will use only manufacturing sector data. 11. These attempts are excellently analysed in Narsey (1979). 185 CHAPTER 5 FIJI'S CONTEMPORARY MANUFACTURING ECONOMY: STRUCTURE AND ORGANIZATION Th i s chapter d e s c r i b e s and analyses the manufacturing economy of F i j i in terms of i t s place in the n a t i o n a l economy, i t s s t r u c t u r e and i t s o r g a n i z a t i o n . It w i l l draw on fieldwork survey data as w e l l as documentary s o u r c e s , e s p e c i a l l y the F i j i Bureau of S t a t i s t i c s ' Census of I n d u s t r i a l P r o d u c t i o n . The L e v e l and S i g n i f i c a n c e of Manufacturing Production F i j i ' s i n d u s t r i a l s e c t o r c o n t r i b u t e d 12 percent to i t s GDP i n c u r r e n t p r i c e s i n 1981, the l a t e s t year for which data are a v a i l a b l e , while the c o n t r i b u t i o n of the manufacturing se c t o r to F i j i a n GDP was 10 percent i n the same year (both c a l c u l a t e d from F i j i Bureau of S t a t i s t i c s , I984b:7~8). In i n t e -r n a t i o n a l terms the l e v e l of i n d u s t r i a l i z a t i o n i n F i j i (see e a r l i e r d i s c u s s i o n concerning the measurement of the l e v e l of i n d u s t r i a l i z a t i o n ) i s not high and the manufacturing s e c t o r appears to make a l i m i t e d c o n t r i b u t i o n to the n a t i o n a l economy. It i s , however, more important than i t s c o n t r i b u t i o n to the GDP might suggest. The manufacturing s e c t o r i s the country's second l a r g e s t employer of wage and s a l a r y e a r n e r s , employing 17 percent of a l l wage and s a l a r y earners i n 1982 ( c a l c u l a t e d from F i j i Bureau of S t a t i s t i c s , 1984c:11). However, the importance of the i n d u s t r i a l s e c t o r goes beyond a l l these q u a n t i t a t i v e i n d i c a t o r s . It c o n t a i n s F i j i ' s key export i n d u s t r i e s of sugar cane, coconut, f i s h , and lumber. Sugar alone ( i n c l u d i n g molas-186 ses) accounted f o r 65 percent of F i j i ' s t o t a l domestic merchan-d i z e exports i n 1983 ( c a l c u l a t e d from F i j i Bureau of Sta-t i s t i c s , 1984a:58-60), while i t s c o n t r i b u t i o n ( i n c l u d i n g molas-ses) to domestic merchandize exports was 81 percent in 1983 ( c a l c u l a t e d from F i j i Reserve Bank, 1984: 143-144). The manufacturing s e c t o r i s c r i t i c a l to F i j i ' s economy in other ways t o o . As the search f o r a b e t t e r standard of m a t e r i a l l i v i n g i s the main aim of development planning i n F i j i , as indeed anywhere e l s e , r a i s i n g p r o d u c t i v i t y i s the c h i e f means of a c h i e v i n g t h i s . The manufacturing sector has h i s t o r i c a l l y and g l o b a l l y been the leader i n r a i s i n g p r o d u c t i v i t y at a l l l e v e l s . As elsewhere then, the manufacturing s e c t o r in F i j i i s being seen as a c a t a l y s t f o r change i n the r e s t of the economy. Innovations adopted, or o r i g i n a t e d , in t h i s s e c t o r are o f t e n adopted in the other s e c t o r s , i f only to ensure the s u r v i v a l of these s e c t o r s . Improvements in a g r i c u l t u r e r e s u l t i n g from the i n t r o d u c t i o n of food p r o c e s s i n g i s a case i n p o i n t . For c o u n t r i e s such as F i j i , which wish to e x p l o i t t h e i r a g r i c u l t u r a l and n a t u r a l resource advantages as a major develo-pment s t r a t e g y , manufacturing, s p e c i a l l y food p r o c e s s i n g , i s c r i t i c a l i n i n c r e a s i n g n a t i o n a l value added and i n overcoming problems of s e a s o n a l i t y and storage of many t r a d i t i o n a l f o o d s . Moreover, downstream p r o c e s s i n g of a g r i c u l t u r a l produce a l s o improves the b a r g a i n i n g p o s i t i o n of F i j i as foods are p r o t e c t e d a g a i n s t p e r i s h a b i l i t y . F i n a l l y , F i j i has been u r b a n i z i n g r a p i d -l y (Chandra, 1980a, 1981; Walsh, 1977,1978) and processed foods can s i g n i f i c a n t l y a i d F i j i ' s attempts to reduce i t s high import 187 dependency i n food. The convenience of imported processed foods i s an important reason f o r t h e i r consumption and long-term s o l u t i o n s to d e c r e a s i n g food dependency i n F i j i w i l l succeed only i f l o c a l l y produced foods are a v a i l a b l e i n proce-ssed forms. I n d u s t r i a l S t r u c t u r e Types of Manufacturing A c t i v i t i e s A general i n d i c a t i o n of the nature of manufacturing in F i j i with respect to output i s given in Table 5.1. There i s an overwhelming domination of ISIC 31 (manufacture of food, beverages and tobacco) i n the i n d u s t r i a l s t r u c t u r e . In 1981, although ISIC 31 accounted f o r only 17 percent of a l l manufac-t u r i n g e s t a b l i s h m e n t s , i t engaged 47 percent of the manufactu-r i n g labour f o r c e , and produced 62 percent of manufacturing value added and 72 percent of manufacturing gross output ( c a l -c u l a t e d from Table 5.1). It i s by f a r the most important compo-nent of F i j i a n i n d u s t r i a l s t r u c t u r e . The manufacture of f a b r i -cated metal p r o d u c t s , machinery and equipment (ISIC 38) and the manufacture of wood and wood p r o d u c t s , i n c l u d i n g f u r n i t u r e (ISIC 33), are almost equal but a poor second. Basic i r o n and s t e e l i n d u s t r i e s (ISIC 37) are m i s s i n g , while a l l the other ISIC groups are present i n sm a l l e r degrees of development. Within ISIC 31 and indeed i n manufacturing in F i j i as a whole, sugar cane m i l l i n g i s the dominant a c t i v i t y . Thus sugar m i l l i n g accounted f o r 55 percent of ISIC 31 value added and 34 percent of n a t i o n a l manufacturing value added i n 1981 (Tables 5.1 and 5.2). T h i s i s not very s u r p r i s i n g given that the sugar 188 TABLE 5.1 THE STRUCTURE OF MANUFACTURING IN F I J I , 1981 ISIC Industry E s t a b l i s h m e n t s a Labour'3 No. % No. % 3111- Butchering & meat packing 8 2 1 57 1 3112-3114 D a i r y , f r u i t , f i s h 1 2 2 739 6 3115 E d i b l e & coconut o i l 4 1 206 2 3116 Rice & f l o u r m i l l i n g 7 1 263 2 3117 Bakery products 1 2 2 493 4 3118 Sugar m i l l i n g 4 1 2870 24 3119 C o n f e c t i o n e r y 1 0 2 206 2 3121 & 31 22 Mi s c e l l a n e o u s food 1 3 3 1 73 1 31 33 & 31 40 B e e r , c i g a r e t t e s , tobacco 4 1 375 3 31 34 No n - a l c o h o l i c d r i n k s 1 1 2 235 2 3220 T e x t i l e s and c l o t h e s 1 06 21 954 8 3240 Footwear 8 2 36 -331 1 Sawmi11ing 40 8 896 7 3312 & 3319 C u r i o s and a r t i f a c t s 1.2 2 1 04 1 3320 F u r n i t u r e & up h o l s t e r y 73 1 4 448 4 3418 Paper products 8 2 1 84 2 3420 P r i n t i n g & p u b l i s h i n g 31 6 806 7 3521 Paint 4 1 1 00 1 3523, 3525, Soap, t o i l e t r i e s , 3529 chemical products 1 2 2 202 2 3558 Retreading & f l i p f l o p s 8 2 1 35 1 3560 P l a s t i c s 1 6 3 1 90 2 3698 Cement & concrete 1 0 2 419 3 3812-3813 Metal f u r n i t u r e & f i x t u r e s 1 0 2 255 2 3818 F a b r i c a t e d metal products 37 7 632 5 3822 A g r i c u l t u r a l machi-nery & equipment 18 4 213 2 3828 Repair and maintenance of i n d u s t r i a l machin. 3 1 16 -3838 E l e c t r i c a l equipment 4 1 58 -189 TABLE 5.1 (Continued) 3841 Boat & s h i p b u i l d i n g 5 1 332 3 3843 Bus b u i l d i n g 7 1 271 2 3908 M i s c e l l a n e o u s prods. 14 3 114 1 T o t a l 511 102 12082 100 SOURCE: F i j i Bureau of S t a t i s t i c s , 1984b:12-15. Percentages have been c a l c u l a t e d by the author. The number of establishments here i n c l u d e s non-responding e s t a b l i s h m e n t s . ^Labour fo r c e comprises employees, working p r o p r i e t o r s and unpaid family members. in d u s t r y has dominated the F i j i a n s o c i o - p o l i t i c a l system for 2 more than a c e n t u r y . W r i t i n g on the eve of F i j i ' s independen-ce , Ward (1971:141), f o r i n s t a n c e , had noted that "The manufac-t u r i n g s e c t o r i s dominated both i n terms of numbers employed and i n value added by sugar m i l l i n g . " The overwhelming importance of sugar i n the F i j i a n eco-nomy, and of sugar m i l l i n g in the manufacturing s e c t o r , needs to be borne i n mind throughout t h i s study because minor changes in t h i s sub-sector can d r a s t i c a l l y a f f e c t the manufacturing se c t o r as a whole. F i j i , l i k e many other mono-culture economies, has been t r y i n g to d i v e r s i f y i t s economic base, e s p e c i a l l y a f t e r i t gained independence. T h i s has meant not only the development of a l t e r n a t i v e a g r i c u l t u r a l crops and the promotion of t o u r i s m , but 3 a l s o the development of non-resource p r o c e s s i n g manufacturing. 190 TABLE 5.2 THE CONTRIBUTION OF ISIC GROUPS TO VALUE ADDED AND GROSS OUTPUT IN F I J I , 1981 ISIC Industry % of Value Added % of Gross Output 3111 Butchering & meat packing 1 1 3112-3114 D a i r y , f r u i t , f i s h 8 8 3115 E d i b l e & coconut o i l 3 3 3116 Rice & f l o u r m i l l i n g 3 6 3117 Bakery products 3 2 3118 Sugar m i l l i n g 34 39 31 19 Confect ionery 1 1 3121-3122 Mi s c e l l a n e o u s food 1 2 3133 & 3140 B e e r , c i g a r e t t e s , tobacco 7 9 31 34 Non-a l c o h o l i c d r i n k s 1 1 3220 T e x t i l e s and c l o t h e s 3 2 3240 Footwear - -331 1 Sawmilling 6 4 3312 & 331 9 Curios and a r t i f a c t s _ _ 3320 F u r n i t u r e & upholstery 1 1 3418 Paper products 2 1 3420 P r i n t i n g & p u b l i s h i n g 5 2 3521 Paint 1 1 3523, 3525, Soap, t o i l e t r i e s , 3529 chemical products 2 2 3558 Retreading & f l i p f l o p s - 1 3560 P l a s t i c s 2 1 3698 Cement & concrete 5 3 3812-381 3 Metal f u r n i t u r e & f i x t u r e s ,2 1 3818 F a b r i c a t e d metal products 4 5 3822 A g r i c u l t u r a l machi-nery & equipment 1 -3828 Repair and maintenance of i n d u s t r i a l machin. _ — 191 TABLE 5.2 (Continued) 3838 E l e c t r i c a l equipment 3841 Boat & s h i p b u i l d i n g 1 1 3843 Bus b u i l d i n g 1 1 3908 M i s c e l l a n e o u s prods. 1 1 T o t a l 99 99 SOURCE: C a l c u l a t e d from data i n F i j i Bureau of S t a t i s t i c s , l984b:42-43. However, although the manufacturing sector has become more d i v e r s i f i e d , resource p r o c e s s i n g s t i l l remains the back-bone of the manufacturing s e c t o r , as indeed i t remains the backbone of the country (Table 5.3). While c o n f i r m i n g the dominance of primary resource pro-c e s s i n g , and of sugar m i l l i n g and coconut o i l m i l l i n g i n F i j i a n m anufacturing, Table 5.3 a l s o b r i n g s out two other major p o i n t s . F i r s t , the non-processing i n d u s t r i e s have assumed s i g -n i f i c a n c e , accounting f o r 41 percent of manufacturing employ-ment and 29 percent of manufacturing value added. T h i s t e s t i -f i e s to the major development of i m p o r t - s u b s t i t u t i n g l i g h t consumer goods manufacturing encouraged by the government in the 1970s. Second, p r o c e s s i n g of primary products other than sugar and coconuts now accounts f o r more than 50 percent of t o t a l p r o c e s s i n g value added , t e s t i f y i n g again to the develop-ment of a g r i c u l t u r a l and f i s h e r y a l t e r n a t i v e s to the sugar and coconut i n d u s t r i e s that have dominated the F i j i a n economy since the i n t r o d u c t i o n of cash economy in the middle of the nine-teenth c e n t u r y . 1 92 TABLE 5.3 THE STRUCTURE OF MANUFACTURING PRODUCTION BY VALUE ADDED ($F000 IN 1972 CONSTANT PRICES) AND EMPLOYMENT, 1978 Value Added Employment T o t a l manufacturing( TM) T o t a l primary resource i n d u s t r i e s (TPRI) Percent of TM 39114 27824 71 1 2288 7210 59 T o t a l non-primary resource i n d u s t r i e s Percent of TM 11290 29 5078 41 Sugar and coconut o i l Percent of TM Percent of TPRI 34 48 32 54 Other primary resource i n d u s t r i e s Percent of TM Percent^ of TPRI 1 4453 37 52 3345 27 46 SOURCE: F i j i C e n t r a l Planning O f f i c e , 1980:181. S t a t i s t i c s r e l a t i n g to the primary resource i n d u s t r i e s have been computed by the aut h o r . The dominance of resource p r o c e s s i n g i n F i j i i s , s i m i l a r to other former c o l o n i e s , p a r t l y a r e s u l t of c o l o n i a l p o l i c i e s aimed at dev e l o p i n g the primary s e c t o r and p a r t l y the r e s u l t of the comparative advantage that F i j i e n j o y s . We have a l r e a d y noted i n Chapter 4 the lack of a strong i n t e r e s t on the part of Great B r i t a i n to a c t i v e l y develop the i n d u s t r i a l s e c t o r i n F i j i . F i j i enjoys a century of a g r i c u l t u r a l experience and has ample good a g r i c u l t u r a l land with a t r o p i c a l c l i m a t e . I t i s l o g i c a l then that i t e x p l o i t these advantages i n preference to dev e l o p i n g an i n d u s t r i a l s e c t o r based on imported raw mate-r i a l s , technology and c a p i t a l . 1 93 The l i t e r a t u r e on manufacturing in the T h i r d World has p a i d some a t t e n t i o n to whether manufacturing output c a t e r s to mass consumption goods or to luxury goods consumption. Amin (1974a: 14) i n p a r t i c u l a r has charged that T h i r d World manufac-t u r i n g i n c a p i t a l i s t c o u n t r i e s has c a t e r e d to luxury goods, and that t h i s has been one of the reasons for i n d u s t r i a l i z a t i o n i n these c o u n t r i e s not p r o g r e s s i n g very f a r . Table 5.4 summarizes the main output of the e s t a b l i s h m e n t s covered i n the survey of manufacturers in F i j i i n 1983. The most commonly produced items, i n terms of the number of e stablishments i n the survey sample, were garments, f u r n i -t u r e , p r i n t e d m a t e r i a l s , a g r i c u l t u r a l implements, sawn timber, raw sugar and molasses, and cement p r o d u c t s . Most of these items are widely consumed by the p o p u l a t i o n of F i j i rather than by the e l i t e . The manufacturing s e c t o r of F i j i has not, t h u s , been geared to the p r o d u c t i o n of luxury goods along the l i n e s argued by Amin (1974a). The Nature of Manufacturing So f a r we have reviewed the s t r u c t u r e of manufacturing through the examination of the manufacturing s e c t o r output i n terms of ISIC sub-groups. Here we w i l l look at i t i n terms of what i s i n v o l v e d i n the manufacturing p r o c e s s , r a t h e r than i n output terms. One of the q u e s t i o n s i n the Survey of Manufactu-r e r s i n F i j i recorded the nature of the manufacturing a c t i v i t y and the r e s u l t s are presented i n Table 5.5. The data e s t a b l i s h the absence of s u b s t a n t i a l assembly-type manufactu-194 TABLE 5.4 THE MOST IMPORTANT OUTPUT OF THE ESTABLISHMENTS INTERVIEWED Product Number of Percent of E s t a b l i s h m e n t s3 T o t a l No. of E s t a b . Garment 1 5 1 4 F u r n i t u r e 8 8 P r i n t e d m a t e r i a l , i n c l u d i n g s t a t i o n e r y , e x c e r c i s e books and envelopes 7 7 A g r i c u l t u r a l implements 4 4 Sawn timber 4 4 Raw sugar and molasses 4 4 Cement products 4 4 Boats 3 3 Syrupped ginger 3 3 Ice cream 2 2 Bakery products 2 2 M i l l e d r i c e 2 2 P a i n t 2 2 P l a s t i c products 2 2 S o f t d r i n k s 2 2 Retread t y r e s 2 2 Vegetable o i l 2 2 Coachworks 2 2 J o i n e r y products 2 2 Soap and detergents 2 2 Confect ionery 2 2 Gem j e w e l l e r y 2 2 P o r t l a n d cement 1 1 V e n t i l a t i o n ducting Manhole covers Umbrella Corrugated i r o n Dressed chicken Wine C i g a r e t t e s Canned tuna S p l i t peas B o t t l e d milk T i s s u e paper F l o u r and sharps R e i n f o r c i n g metal rods PVC p i p e s Incence s t i c k I n d u s t r i a l a l c o h o l Tea Cured tobacco Cooking u t e n s i l s 1 95 TABLE 5.4 (Continued) Keys 1 S h e l l j e w e l l e r y 1 Motor seat covers 1 Boat covers 1 Footwear 1 Aluminium window and doors 1 O f f i c e machinery 1 Not a v a i l a b l e 3 SOURCE: Survey of Manufacturers in F i j i , 1983. The l i s t of products are arranged i n order of t h e i r importance i n terms of the number of es t a b l i s h m e n t s in the survey sample. The t o t a l of t h i s column adds to more than 100 because of rounding. T o t a l 1 08 TABLE 5.5 THE NATURE OF MANUFACTURING IN FIJI , 1983 Manufacturing C h a r a c t e r i s t i c s Number of Estab l i s h m e n t s Percent Fabr i c a t ion P r o c e s s i n g of primary products Assembly, b o t t l i n g , packaging P r i n t i n g and p u b l i s h i n g Repair and/or i n s t a l l a t i o n Other 48 27 1 1 6 8 8 44 25 10 6 7 7 T o t a l 108 99 SOURCE: Survey of Manufacturers i n F i j i , 1983. 196 r i n g , i n c l u d i n g blending and packaging, in F i j i . Of course, F i j i has not been a major r e c i p i e n t of f o r e i g n investment i n the major t r a n s n a t i o n a l i z a t i o n of c a p i t a l in the l a s t couple of decades, p a r t i c u l a r l y i n e l e c t r o n i c s a s s e m b l y — p r o b a b l y because of i t s r e l a t i v e l y high labour c o s t s (more on the labour fo r c e c o s t s w i l l be found in Chapter 6 ) . Moreover, the F i j i gover-nment has been f a r from w i l l i n g or able to pr o v i d e a low cost d o c i l e labour fo r c e on which these assembly-type operations are u s u a l l y based and which the more a u t o c r a t i c governments a l l over the world have been able to p r o v i d e . The data do show the importance of resource p r o c e s s i n g , which, as we have seen, has been the foundation of F i j i ' s i n d u s t r i a l i z a t i o n . Table 5.5 i n d i c a t e s that f o r a small economy, F i j i has developed i t s manufacturing sector to a stage where i t has c e r t a i n depth, and that i t s o p e r a t i o n s are not l i m i t e d to assembly and packaging, even though these are not e n t i r e l y absent. Number and S i z e of Establishments According to the number of e s t a b l i s h m e n t s , there i s a preponderance of small establishments in F i j i (Tables 5.6 and 5.7). The 1981 census of i n d u s t r i a l p r o d u c t i o n shows that 29 percent of a l l manufacturing establishments engaged l e s s than f i v e p e o p l e , while 20 percent of a l l e s t a b l i s h m e n t s i n the survey of manufacturers i n F i j i with known number of people engaged (.101) had l e s s than f i v e people. I f we desig n a t e estab-lishments with l e s s than 10 people as s m a l l , then 51 percent of the establishments a c c o r d i n g to the 1981 census of i n d u s t r i a l p r o d u c t i o n and 33 percent a c c o r d i n g to the survey of manufactu-1 97 TABLE 5.6 NUMBER OF PERSONS ENGAGED BY MANUFACTURING ESTABLISHMENTS IN F I J I , 1981 ISIC Siz e of Establishments by Number of Persons Engaged3 0 - 4 5 - 9 1 0 - 1 9 2 0 - 4 9 5 0 - 9 9 1 00 + 3 1 1 1 0 1 0 3 1 0 3 1 1 2 - 3 1 1 4 0 0 2 3 1 3 3 1 1 5 0 0 1 3 1 0 3 1 1 6 0 1 2 2 2 0 3 1 1 7 1 0 0 3 3 1 31 18 0 0 0 0 0 4 3 1 1 9 0 3 2 1 0 1 3 1 2 1 - 3 1 2 2 4 2 3 2 1 0 3 1 3 3 / 3 1 4 0 1 0 0 1 0 2 31 34 0 4 1 3 1 0 3 2 2 0 54 10 4 12 2 1 3 2 4 0 1 2 1 0 0 0 331 1 2 8 2 5 3 2 3 3 1 2 / 3 3 1 9 2 2 0 0 1 0 3 3 2 0 2 3 1 4 1 3 5 0 0 341 8 1 2 1 1 0 1 3 4 2 0 5 6 6 4 1 3 3 5 2 1 0 0 1 3 0 0 3 5 2 3 / 3 5 2 5 / 3 5 2 9 3 2 0 3 1 0 3 5 5 8 3 0 3 1 1 0 3 5 6 0 • 0 6 5 0 1 0 3 6 9 8 2 1 3 2 0 2 3 8 1 2 / 3 8 1 3 2 1 0 2 1 1 3 8 1 8 3 1 2 1 0 7 1 1 3 8 2 2 3 5 1 4 1 0 3 8 2 8 1 0 1 0 0 0 3 8 3 8 0 0 2 1 0 0 3 8 4 1 1 0 1 1 0 2 3 8 4 3 o - 1 0 2 0 1 3 9 0 8 2 3 5 1 0 0 T o t a l 1 1 4 8 6 6 9 7 5 2 3 2 5 SOURCE: F i j i Bureau of S t a t i s t i c s , 1984b:12-13. Persons engaged comprise employees, working p r o p r i e t o r s and unpaid f a m i l y members. 1 98 TABLE 5.7 DISTRIBUTION OF PERSONS ENGAGED IN MANUFACTURING ESTABLISHMENTS, 1983 S i z e of Labour Force Number of Establishments Percent 0-4 21 20 5-9 1 4 1 3 10-14 6 6 15-19 6 6 20-49 20 19 50-99 22 21 1 00 + 1 5 14 Unknown 4 — T o t a l 1 08 99 SOURCE: Survey of Manufacturers i n F i j i , 1983. r e r s in F i j i were s m a l l . The d i f f e r e n c e between the census f i n d i n g s and those of the survey of manufacturers i n F i j i n o t w i t h s t a n d i n g , the small s c a l e of F i j i a n manufacturing i s c l e a r . However, l a r g e manufacturing establishments do form an important component of the i n d u s t r i a l s t r u c t u r e . Thus 14 per-cent of a l l the e s t a b l i s h m e n t s i n the sample of the survey of manufacturers i n F i j i engaged 100 or more persons, and 35 percent had 50 or more pe o p l e . The importance of these l a r g e e s t a b l i s h m e n t s i s i n d i c a t e d a l s o by the mean number of persons engaged per establishment of 82 i n the survey of manufacturers i n F i j i . Although there are d i s c r e p a n c i e s between the f i n d i n g s of the census of i n d u s t r i a l p r o d u c t i o n and those of the survey of manufacturers i n F i j i , these stemming p a r t l y from the 77 per-199 cent response rate of the census and from the f a c t that my survey sample was weighted by a composite index d e r i v i n g from the number of est a b l i s h m e n t s , t h e i r c o n t r i b u t i o n to gross output and t h e i r c o n t r i b u t i o n to t o t a l employment, there i s no doubt about the f a c t that l a r g e e stablishments form an impor-tant component of the manufacturing system, p a r t i c u l a r l y with regard to t o t a l employment and gross output. The c o n t r i b u t i o n of establishments to employment and gross output with d i f f e r e n t labour f o r c e s i z e s are given i n Table 5.8. The o v e r a l l employment and gross output c o n t r i b u t i o n of small establishments i s s u r p r i s i n g l y s m a l l . Table 5.8 con-f i r m s the o v e r a l l importance of l a r g e e stablishments engaging 100 or more pe o p l e . It a l s o u n d e r l i n e s the need to examine the t o t a l employment and gross output c o n t r i b u t i o n s of v a r i o u s s i z e d e stablishments r a t h e r than the number of e s t a b l i s h m e n t s . Number and S i z e of Firms Since the F i j i census of i n d u s t r i a l p r o d u c t i o n data are c o l l e c t e d and reported upon on the establishment r a t h e r than the f i r m , i t i s d i f f i c u l t to a c c u r a t e l y gauge the number of fi r m s in the manufacturing s e c t o r . Based on my f i e l d w o r k , I would estimate some 600 f i r m s i n the manufacturing s e c t o r . A c c o r ding to the survey of manufacturers i n F i j i , the overwhelming m a j o r i t y of the firms (76 percent) were one-establishment f i r m s . While t h i s t e s t i f i e s to the presence of small f i r m s i n the manufacturing s e c t o r , there were nonethe-l e s s , almost a qu a r t e r of the firms with more than one e s t a b l i s h m e n t . Eight percent had two e s t a b l i s h m e n t s , 12 percent 200 TABLE 5.8 LABOUR FORCE SIZE AND CONTRIBUTION TO EMPLOYMENT AND GROSS OUTPUT, 1983 Labour Force S i z e % of Employment % of Gross Output 0-4 1 _a 5-9 1 1 10-14 1 1 15-19 1 1 20-49 8 6 50-99 19 1 1 100 + 69 80 T o t a l 100 100 SOURCE: Survey of Manufacturers i n F i j i , 1983. "-" i n d i c a t e s a c o n t r i b u t i o n of l e s s than one p e r c e n t . had three e stablishments and 5 percent had four e s t a b l i s h m e n t s . The average number of establishments per f i r m was 1.45. In f a c t some of the o p e r a t i o n s are much l a r g e r than i s i n d i c a t e d above, since the survey of manufacturers i n F i j i c o l l e c t e d data on the b a s i s of firms r a t h e r than e n t e r p r i s e s r e p r e s e n t i n g h o l d i n g companies and s u b s i d i a r i e s and m i n o r i t y share companies. As w i l l become c l e a r when we d i s c u s s some of the l a r g e r firms in the coming pages, many firms are part of q u i t e l a r g e e n t e r p r i s e s with an o c t o p u s - l i k e hold on the F i j i a n economy. These m u l t i - p l a n t firms are some of the l a r g e s t i n F i j i . The l a r g e s t manufacturing f i r m , indeed of any k i n d , i s the state-owned F i j i Sugar C o r p o r a t i o n (FSC), which accounted f o r 24 percent of manufacturing labour f o r c e , 34 percent of manufa-201 c t u r i n g value added and 39 percent of manufacturing gross output i n 1981 (Table 5.1). The FSC has r e c e n t l y e s t a b l i s h e d a s u b s i d i a r y , South P a c i f i c D i s t i l l e r i e s L i m i t e d , and has plans to branch out i n t o f e r t i l i z e r bagging and i n d u s t r i a l c h e m i c a l s . It had major plans for the manufacture of e t h a n o l i n the wake of the 1972-1973 energy c r i s i s , but appears now to have dropped those p l a n s . It has a l s o been i n v e s t i g a t i n g the p o s s i b l e manu-f a c t u r e of p a r t i c l e boards from sugar cane r h i n d . The longest e s t a b l i s h e d manufacturing e n t e r p r i s e s in F i j i have been foreign-owned t r a d i n g houses, mainly the Car-penter group and Burns P h i l p (South Sea) Company L i m i t e d . Singh and Choo (1981:492) have noted that i n M a l a y s i a , the major t r a d i n g companies moved i n t o manufacturing a f t e r independence, p a r t l y to p r o t e c t t h e i r markets. One can see a s i m i l a r develop-ment in F i j i , where the above-named giant t r a d i n g companies have moved s t r o n g l y i n t o m a n u f a c t u r i n g . The Carpenter group had some p r o c e s s i n g i n t e r e s t s from the beginning of i t s o p e r a t i o n s in F i j i , with i t s copra and coconut o i l m i l l , but i t has moved i n t o a number of new areas s i n c e independence. I t i s c u r r e n t l y engaged i n a wide range of manufacturing and other a c t i v i t i e s in the F i j i a n economy, as shown in Fi g u r e 5.1. The group s t r u c t u r e does not r e f l e c t the f u l l extent of the company's involvement i n the F i j i a n economy as many minor i n t e r e s t s i n manufacturing and other a c t i v i t i e s are not i n -cluded i n the group s t r u c t u r e . As the 1973 study of the F i j i a n p o l i t i c a l economy showed (Rokotuivuna et a l . , 1973), the group had an o c t o p u s - l i k e involvement i n the F i j i a n economy. 202 FIGURE 5.1 THE STRUCTURE OF THE CARPENTER SOUTH PACIFIC GROUP, 1983 W.R.Carpenter(South P a c i f i c ) L t d Carpenters F i j i L t d M o r r i s Hedstrom } Carpenters Motors } Carptrac Carpenters Shipping & Transport Carpenter S t e e l Co. L i m i t e d Dominion Property Trust Ltd(68.5%) I n d u s t r i a l and Marine E n g i n e e r i n g Ltd(35%) M o r r i s Hedstrom Samoa Ltd(88.3%) Mo r r i s Hedstrom Tonga Ltd(92.6%)F M o m s Hedstrom L t d Dominion R e n t a l s L t d Taubmans P a i n t s F i j iJfi Ltd(50%) Samoa P a i n t s Ltd(80%) \ A g r i c u l t u r e & ^ I s l a n d I n d u s t r i e s M.H. B u i l d e r s Merchants SOURCE: W.R.Carpenter (South P a c i f i c ) L i m i t e d , 1983:2. 203 The 1982 t r a d i n g revenue of the group was $101,906,700 (W.R.Carpenter [South P a c i f i c ] L i m i t e d , 1983:10), e a s i l y making i t the l a r g e s t f o r e i g n c o r p o r a t i o n i n the cou n t r y , and the second l a r g e s t c o r p o r a t i o n a f t e r the F i j i Sugar C o r p o r a t i o n . Some idea of the magnitude of the company in the F i j i a n economy cane be obtained i f we r e a l i z e that i n 1982, the company's t r a d i n g revenue was almost 10 percent of F i j i ' s GDP. Burns P h i l p (South Sea) L i m i t e d i s the other l a r g e m u l t i n a t i o n a l engaged i n F i j i a n manufacturing. L i k e the Carpen-t e r group, Burns P h i l p i s f i r s t and foremost a t r a d i n g corpora-t i o n . We can gain some idea of i t s e x t e n s i v e involvement i n the F i j i a n economy from F i g u r e 5.2. Since 1980 the f i r m has been r e s t r u c t u r i n g i t s o p e r a t i o n s , reducing i t s merchandizing and moving more s t r o n g l y i n manufacturing (see, f o r i n s t a n c e , P a c i - f i c I s l a n d s Monthly, 55 [11]:35-37; T a y l o r , 1983a:49-50). It has a l s o been a c t i v e i n takeover of companies i n F i j i . I t has ac q u i r e d the c o n t r o l l i n g i n t e r e s t i n a la r g e h o t e l c h a i n , V i t i Investments, which has given i t a f o o t h o l d i n the Solomon Isl a n d s and i t has a l s o a c q u i r e d the bankrupt C a s t l e Trading Company, a food p r o c e s s i n g o p e r a t i o n in which the government had a major s h a r e h o l d i n g . I t has a l s o b a t t l e d with another A u s t r a l i a n m u l t i n a t i o n a l , Pioneer ready-mix group i n Pioneer's attempted takeover of the cement manufacturing monopoly, F i j i I n d u s t r i e s L i m i t e d (The F i j i Times, 18 A p r i l , 1981:3). In i t s purchase of C a s t l e T r a d i n g , Burns P h i l p seems to have followed a common emerging p r a c t i c e by fi r m s i n F i j i to take a gover-nment or semi-government body i n t o p a r t n e r s h i p by t a k i n g the 204 FIGURE 5.2 GROUP STRUCTURE OF BURNS PHI LP (SOUTH SEA) COMPANY LIMITED Burns P h i l p & Company L i m i t e d Burns P h i l p (South Sea) Company L i m i t e d Wrought I ron & Steel Const. Ltd. Armstrong & Spr i n g -h a l l (Samoa) L t d . Burnmoore T r a v e l I n d u s t r i e s L t d . Corrie & Co. Ltd. Of f ice Equipment Ltd. Southwest Pac i f i c Container Line Industr i a l and Marine Engineering Ltd. Grace Expressly F i j i L t d . John Lysaght (SP) Ltd Naviti Investments Ltd. South Sea Towage L t d . F i j i I n d u s t r i e s L t d . Mutual Rental Cars ( F i j i ) L t d . SOURCE: Burns Philp (South Sea) Company Limited, 1983 205 N a t i o n a l Marketing A u t h o r i t y as a p a r t n e r . The f u t u r e opera-t i o n s of the f i r m , however, are u n c e r t a i n as i t i s rumoured that i t i s s e l l i n g a l a r g e p a r t of i t s o p e r a t i o n s to the Native Land Development C o r p o r a t i o n , the commercial arm of the Native Land T r u s t Board (see I s l a n d B u s i n e s s , March 1984:52-53 and The F i j i Times, 1 June, 1984:1). The two major l o c a l f i r m s a c t i v e i n F i j i a n manufacturing are Punja and Sons L i m i t e d and Motibhai and Company L i m i t e d . Punja and Sons L i m i t e d , i n the words of the f i r m i t s e l f , . . . i s a p r i v a t e , l i m i t e d l i a b i l i t y Company engaged in manufacturing, w h o l e s a l i n g and r e t a i l t r a d e . As well as t h i s , i t has three s u b s i d i a r y companies, Ocean Soaps L i m i t e d i n Lautoka, Dominion Hotels L i m i t e d , near Nadi A i r p o r t and F l o u r M i l l s of F i j i L i m i t e d i n Suva" (Punja and Sons L i m i t e d , 1983:4). Punja and Sons L i m i t e d ' s turnover i s not a v a i l a b l e since the f i r m , being p r i v a t e , does not have to f i l e r e p o r t s with the R e g i s t r a r of Companies. However, we know that one of i t s s u b s i -d i a r i e s , the F l o u r M i l l s of F i j i L i m i t e d , had a turnover of $15,347,101 in 1982 ( F l o u r M i l l s of F i j i L i m i t e d , 1983:6). Together with the h o l d i n g company and other s u b s i d i a r i e s , my estimate i s that the Punja group has an annual turnover in excess of $F50 m i l l i o n , making i t the country's l a r g e s t l o c a l company a f t e r the F i j i Sugar C o r p o r a t i o n and the country's f o u r t h or f i f t h l a r g e s t company o v e r a l l . M o t ibhai and Company L i m i t e d , which was a p r i v a t e l y owned f a m i l y company u n t i l i t went p u b l i c i n 1973, i s now recognized as a major t r a d i n g and manufacturing company. The corporate s t r u c t u r e of the f i r m i s given i n F i g u r e 5.3. Although u n l i k e Punja and Sons L i m i t e d , Motibhai and 206 FIGURE 5.3 THE CORPORATE STRUCTURE OF MOTIBHAI AND COMPANY LIMITED Kum Kum L i m i t e d Becharbhai Holdings L i m i t e d M otibhai and Company L i m i t e d F i j i Fo'ods L i m i t e d Motibhai and Co (Aust) Pty L t d Ronson (Aust) Pty Ltd SOURCE: Motibhai and Company L i m i t e d , 1982 and an i n t e r -view with Mr Mahendra P a t e l , E x c e c u t i v e D i r e c t o r , M o t i b h a i and Company L i m i t e d . Company L i m i t e d i s s t i l l l a r g e l y a t r a d i n g company, i t has d i v e r s i f i e d i t s i n t e r e s t s , and has i n c r e a s e d i t s manufacturing a c t i v i t i e s with the takeover of F i j i Foods L i m i t e d and i t s a c q u i s i t i o n of Ronson (Aust) Pty L i m i t e d , a manufacturer of l i g h t consumer e l e c t r i c a l goods. The company a l s o t r i e d unsuc-c e s s f u l l y to takeover the l i q u i d a t e d C a s t l e Trading Company L i -mited, i n d i c a t i n g i t s d e s i r e to expand i t s manufacturing a c t i -v i t i e s . Concentrat ion C o n c e n t r a t i o n has been a s i g n i f i c a n t theme i n the analy-s i s of i n d u s t r i a l s t r u c t u r e (Devine, Jones, Lee, and Tyson, 1974; Green, 1980; Sherman, 1974). One can get a crude p i c t u r e of c o n c e n t r a t i o n i n F i j i ' s manufacturing s e c t o r by examining the 207 d i s t r i b u t i o n of establishments in ISIC groups summarized in Table 5.1. We can examine c o n c e n t r a t i o n at two l e v e l s . For the manufacturing sector as a whole, one c o r p o r a t i o n , the FSC, as we have al r e a d y seen, accounts f o r an overwhelming share of manufacturing value added and employment. Thus there i s t h i s extreme domination of the manufacturing sector by t h i s corpora-t i o n , a legacy l a r g e l y i n h e r i t e d from the CSR. I f we were to add the f i v e major manufacturing c o r p o r a t i o n s i n F i j i - C a r p e n t e r group, Burns P h i l p , Punja and Sons L i m i t e d , Motibhai and Sons L i m i t e d and P a c i f i c Lumber Company L i m i t e d — p r o b a b l y more than t h r e e - q u a r t e r s of the t o t a l manufacturing value added o r i g i -nates from these c o r p o r a t i o n s . Thus o v e r a l l , there i s a high degree of c o n c e n t r a t i o n i n the manufacturing s e c t o r i n F i j i . At the i n d i v i d u a l i n d u s t r y l e v e l , there i s a l s o a very high l e v e l of c o n c e n t r a t i o n . C o n c e n t r a t i o n i s u s u a l l y measured by the c o n c e n t r a t i o n r a t i o which " . . . i s the share of an i n d u s t r y ' s output, value added or a s s e t s accounted for by a small number of the l a r g e s t firms i n the i n d u s t r y " (Green, 1980:40). U s u a l l y four firms are used i n the index. The census data do not enable the computation of concen-t r a t i o n r a t i o s for the i n d u s t r y groups, but we can get a rough idea of c o n c e n t r a t i o n through an examination of the d i s t r i b u -t i o n of establishments summarized i n Table 5.1. I f we c l a s s l e v e l s of c o n c e n t r a t i o n as very high i f four or fewer e s t a b l i s -hments account for the output of the i n d u s t r y group, as high i n the case of f i v e to e i g h t e s t a b l i s h m e n t s , f a i r l y h igh i f there 208 are nine to 20 e s t a b l i s h m e n t s , f a i r l y low i f there are 21 to 50 estab l i s h m e n t s and low i f there are in excess of 50 e s t a b l i s -hments i n an ISIC group, using a s l i g h t l y m o d i f i e d v e r s i o n of an index used by Rosenbluth (Green, 1980:45), the f o l l o w i n g l e v e l s of c o n c e n t r a t i o n emerge. Of the 30 f o u r - d i g i t i n d u s t r y groups on which census data are r e p o r t e d , only two have low l e v e l s of c o n c e n t r a t i o n , namely, f u r n i t u r e and u p h o l s t e r y and, t e x t i l e s and c l o t h e s (Table 5.9). These a r e , of c o u r s e , t r a d i -t i o n a l l y a t o m i s t i c i n d u s t r i e s , p a r t i c u l a r l y i n dev e l o p i n g coun-t r i e s where the informal s e c t o r i s s t r o n g l y present i n these a c t i v i t i e s . In r e a l i t y the l e v e l of c o n c e n t r a t i o n i s much higher than i s suggested by the f i g u r e s as we have been l o o k i n g at establishments r a t h e r than f i r m s , and we know that some of these establishments are owned by the same f i r m s . Not only i s the i n d u s t r i a l s t r u c t u r e h i g h l y concen-t r a t e d , but there i s a strong presence of monopolies and o l i g o -p o l i e s . In f a c t , we can c h a r a c t e r i z e the e n t i r e manufacturing s e c t o r i n F i j i - a s a combination of monopolies and o l i g o p o l i e s . I t i s not very u s e f u l to examine the presence of monopolies and o l i g o p o l i e s at the f o u r - d i g i t i n d u s t r y groups given the product d i v e r s i t y w i t h i n them. They are b e t t e r i l l u s t r a t e d at the product l e v e l , and are summarized i n Table 5.10. Of the 96 products i d e n t i f i e d i n Table 5.10, 27 percent were produced by firms enjoying monopoly i n p r o d u c t i o n and another 30 percent had o l i g o p o l i s t i c p r o ducers. Thus more than h a l f of the products i d e n t i f i e d had • e i t h e r m o n o p o l i s t i c or o l i g o p o l i s t i c market s t r u c t u r e . T h i s c o r r o b o r a t e s the e a r l i e r 2 0 9 TABLE 5 . 9 THE LEVEL OF CONCENTRATION IN FIJIAN MANUFACTURING, 1981 ISIC Industry L e v e l of Co n c e n t r a t i o n 3 1 1 1 Butchering & meat packing High 3 1 1 2 - 3 1 1 4 D a i r y , f r u i t & f i s h F a i r l y high 3 1 1 5 E d i b l e and coconut o i l Very high 3 1 1 6 Rice £< f l o u r m i l l i n g High 3 1 1 7 Bakery products F a i r l y high 3 1 1 8 Sugar m i l l i n g Very high 3 1 1 9 Confect ionery F a i r l y high 3 1 2 1 - 3 1 2 2 M i s c e l l a n e o u s food F a i r l y high 3 1 3 3 & 3 1 4 0 B e e r , c i g a r e t t e s tobacco Very high 31 34 N o n - a l c o h o l i c d r i n k s F a i r l y high 3 2 2 0 T e x t i l e s and c l o t h e s Low 3 2 4 0 Footwear High 331 1 Sawmilling F a i r l y low 3 3 1 2 & 3 3 1 9 C u r i o s and a r t i f a c t s F a i r l y high 3 3 2 0 F u r n i t u r e Si u p h o l s t e r y Low 3 4 1 8 Paper products High 3 4 2 0 P r i n t i n g and p u b l i s h i n g F a i r l y low 3 5 2 1 P a i n t Very high 3 5 2 3 , 3 5 2 5 Soap, t o i l e t r i e s & 3 5 2 9 Si chemical products F a i r l y high 3 5 5 8 Retreading and f l i p - f l o p s High 3 5 6 0 P l a s t i c s F a i r l y high 3 6 9 8 Cement and concrete products F a i r l y high 3 8 1 2 - 3 8 1 3 Metal f u r n i t u r e Si f i x t u r e s F a i r l y high 3 8 1 8 F a b r i c a t e d metal products except machinery and equipment F a i r l y low 3 8 2 2 A g r i c u l t u r a l machinery and equipment F a i r l y high 3 8 2 8 Repairs and maintenance of i n d u s t r i a l machinery Very High 3 8 3 8 E l e c t r i c a l equipment Very high 210 TABLE 5.9 (Continued) 3841 3843 3908 Boat & s h i p b u i l d i n g & r e p a i r i n g Bus bu i l d i n g " M i s c e l l a n e o u s products High High F a i r l y high SOURCE: Computed from data i n F i j i Bureau of S t a t i s t i c s , 1984b:12-13. TABLE 5.10 PRESENCE OF MONOPOLIES AND OLIGOPOLIES IN FIJIAN MANUFACTURING Product Monopoly O l i g o p o l y (1 firm) (2-3 firms) Competitive (>3 firms) A g a r b a t t i A g r i c u l t u r a l implements Aluminium frames Animal feeds Boat b u i l d i n g Bran and p o l l a r d Bakery products Butter Candles Canned tuna Canned f r u i t j u i c e Cans Cement,portland Cement products Cheese C h i c k e n , f r o z e n , f r e s h C i g a r e t t e Coachworks Concrete blocks Concrete ready-mix Confect ionery Corrugated i r o n C u r t a i n s Detergents E n g i n e e r i n g Envelope E x c e r c i s e books F i b r e g l a s s canopies F i s h meal F i s h , f r e s h and frozen x x x x x x x x x x x x X X X X X X X X X X 21 1 TABLE 5.10 (Continue F l o u r x Frozen f r u i t pulp x F u e l tanks F u r n i t u r e Garments Ginger G i f t items Glue Gold and gem j e w e l l e r y Hammer Handles, door I c e , i n d u s t r i a l Ice cream Ice cream cones I n d u s t r i a l a l c o h o l x Ink x J o i n e r y Keys Kit c h e n exhaust systems x Lighthouse Machinery Manhole covers Mesh wire Metal drums M i l k , b o t t l e d x M i l k , powdered M i r r o r s Molasses x Motor v e h i c l e seat covers Oars O f f i c e machinery Paint Paper packaging Peas, s p l i t Peas, f l o u r P l a s t i c items Polythene bags Pots and pans x P r i n t i n g and p u b l i s h i n g Putty x Raincoats x R e i n f o r c i n g rods Retread t y r e s S h e l l j e w e l l e r y Sharps x Soap 212 TABLE 5.10 (Continued) Souvenirs X Spices X S p i r i t s X S t e e l cargo t r a y s X Sugar X Taupulines X Tea X Thinners X Timber mouldings X Timber, sawn X T i s s u e paper X Tobacco, tinned X Tobacco, cured X Toothpaste X Umbrella X Upholstery X Vanaspati o i l X Vegetable o i l X Water pumps X Water tanks X Wine X T o t a l 26 29 41 SOURCE: L i s t of products from Survey of Manufacturers in F i j i , knowledge of the l o c a l s i t u a t i o n of the author as w e l l as from the d i r e c t o r y of manufacturing firms maintained by the author. o b s e r v a t i o n n o t i n g the very high l e v e l s of c o n c e n t r a t i o n i n F i j i a n m a nufacturing. The high degree of c o n c e n t r a t i o n i s to be expected i n a small market where producers are h e a v i l y dependent on the domestic market. Economies of s c a l e demand p l a n t s of c e r t a i n s i z e and t h i s p r e c l u d e s the e x i s t e n c e of numerous p l a n t s . The i n c i d e n c e of an o l i g o p o l i s t i c market s t r u c t u r e i s not c o n f i n e d to s m a l l developing markets. Canada i s an example of a developed s m a l l market country with a o l i g o p o l i s t i c indus-t r i a l s t r u c t u r e (Green, 1980:13). 213 The high i n c i d e n c e of monopolies and o l i g o p o l i e s i s p a r t l y e x p l a i n e d by the a b i l i t y of the p i o n e e r i n g firms to e r e c t high entry b a r r i e r s , the main one of which i s t h e i r a b i l i t y to wage p r i c e wars on new ent r a n t s and to f o r c e them out . Sometimes, though, the c a p i t a l r e q u i r e d i s i t s e l f a s i g n i -f i c a n t entry b a r r i e r . Thus when I asked the d i r e c t o r of a l a r g e e n g i n e e r i n g f i r m whether he feared the entry of other firms i n h i s l i n e of o p e r a t i o n s , he answered with a d e f i n i t e no, saying that few fi r m s would have the c a p i t a l r e q u i r e d . To some e x t e n t , the government has prov i d e d p r o t e c t i o n to monopolies, p a r t i c u l a r l y where i t s own e n t e r p r i s e s have been concerned, and where l a r g e amounts of c a p i t a l are needed. As an example of the l a t t e r , the government gave the owners of F l o u r M i l l s of F i j i L i m i t e d a guarantee that no other f l o u r m i l l would be allowed to be set up i n F i j i w i t h i n ten years of the fir m ' s e s t a b l i s h m e n t . In r e t u r n , the government obtained the r i g h t to determine product p r i c e s i n c o n s u l t a t i o n with the f i r m . Now that the agreement has e x p i r e d , the government has yet to make a f i r m p o l i c y on the m i l l even though there have been rumours that another m i l l might be e s t a b l i s h e d . The case of the F i j i Sugar Cor p o r a t i o n i s an example where the government has permanently barred any other entrant p a r t l y on the grounds of economies of s c a l e arid p a r t l y because i t s own e n t e r p r i s e i s i n v o l v e d . In f a c t , there i s a growing tendency f o r the government to c l e a r l y mark-out areas where government e n t e r p r i s e s are a c t i v e and where others w i l l not be allowed to o p e r a t e . There are however, some monopolies which 214 have been e s t a b l i s h e d without government p r o t e c t i o n , i . e . , p u r e l y on market f o r c e s a l o n e . The C a r l t o n Brewery L i m i t e d and F i j i I n d u s t r i e s L i m i t e d are good examples of t h i s . An attempt to break the beer monopoly r e s u l t e d in the c l o s u r e of the new company, which was bought out by C a r l t o n Brewery L i m i t e d . Given F i j i ' s unpleasant experience with the monopoly of the CSR for more than a century i n the sugar i n d u s t r y , and by exten-s i o n , i n the r e s t of the economy, there i s an understandable apprehension abo.ut monopolies. However, there has been a marked r e l u c t a n c e on the part of the government in f o r m u l a t i n g a c l e a r p o l i c y on monopolies. To be sure the government has r e f e r r e d to the need to r e g u l a t e monopolies, and the d e s i r a b i l i t y of wide ownership in manufacturing. For i n s t a n c e , the Investment Guide issued by the M i n i s t r y of Commerce and Industry i n 1980 ex-p l a i n s that permission f o r takeover by f o r e i g n firms of l o c a l firms w i l l be withheld i f i t w i l l l e a d to a monopoly ( F i j i M i n i s t r y of Commerce and I n d u s t r y , 1980:9). However, the gover-nment decided not to accept the recommendations of the United Nations Regional Development Team, which noted that there was much evidence of monopoly power i n F i j i , that i t e s t a b l i s h a Monopolies Commission ( United Nations Development Programme, 1977:51 ) . T h i s seems i n e x p l i c a b l e s i n c e the manufacturers themselves are known to support the establishment of such a commission. Mr Ken Roberts, the D i r e c t o r of F E C A — t h e recog-n i z e d v o i c e of the p r i v a t e s e c t o r i n F i j i — i n d i c a t e d to me i n an i n t e r v i e w that FECA was i n favour of such a commission. However, the government may f i n d i t hard to move in t h i s 215 d i r e c t i o n now that the i s s u e of d u p l i c a t i o n i n the manufactu-r i n g s e c t o r has become a much p u b l i c i z e d t o p i c . The government has in f a c t commissioned a study of d u p l i c a t i o n i n the manufac-t u r i n g s e c t o r , and pl a n s to evolve p o l i c i e s on i n t e r n a l market compe t i t i o n based on the f i n d i n g s of the c o n s u l t a n t . In the meanwhile, the Economic Development Board, which reviews a l l pro p o s a l s f o r f o r e i g n investment, as we l l as a l l a p p l i c a t i o n s seeking government a s s i s t a n c e , has been r e j e c t i n g a p p l i c a t i o n s where i t f e a r s excess c a p a c i t y ( F i j i Trade and Investment News, March 1984:1). V e r t i c a l and H o r i z o n t a l I n t e g r a t i o n Firms f r e q u e n t l y improve both t h e i r economies of s c a l e and market power through h o r i z o n t a l l y and v e r t i c a l l y i n t e g r a -t i n g t h e i r o p e r a t i o n s . To what extent and i n which ways firms achieve t h i s i n F i j i i s the concern of t h i s s e c t i o n . V e r t i c a l i n t e g r a t i o n can be achieved i n a number of ways. Firms could have i n t e r n a l d i v i s i o n s r e s p o n s i b l e for va-r i o u s stages of the p r o d u c t i o n p r o c e s s . On the other hand, firms c o u l d achieve t h i s through e i t h e r p a r t i a l or f u l l owner-s h i p of firms producing the components needed i n the production of a good. A question i n the survey of manufacturers i n F i j i asked f i r m s i f they h e l d shares i n other manufacturing firms as an i n d i c a t i o n of t h e i r v e r t i c a l i n t e g r a t i o n , assuming that they would have i n t e r e s t s i n f i r m s i n products r e l a t e d to t h e i r own p r o d u c t i o n . Twenty of the firms or 20 percent of the 98 firms fo r which data were a v a i l a b l e answered that they had. In f a c t 216 the degree of i n t e g r a t i o n i s more than t h i s as even i f the the fir m s themselves d i d not have shares i n other manufacturing f i r m s , t h e i r owners probably d i d on an i n d i v i d u a l b a s i s . The shareholding w i t h i n the manufacturing s e c t o r encom-passes v a r i o u s types of commercial t i e - i n s , some of which may not s t r i c t l y be v e r t i c a l i n t e g r a t i o n . V e r t i c a l i n t e g r a t i o n i s most i n t e n s i v e among the l a r g e s t c o r p o r a t i o n s . In the case of the Carpenter group, f o r i n s t a n c e , I n d u s t r i a l and Marine Engi-n e e r i n g L i m i t e d can purchase i t s s t e e l from the Carpenter S t e e l Company L i m i t e d , p a i n t s from Taubmans P a i n t s and most of i t s hardware requirements from M o r r i s Hedstrom, a l l r e l a t e d group companies (Figure 5.1). Burns P h i l p group has a s i m i l a r l y high degree of v e r t i c a l i n t e g r a t i o n ( F i g u r e 5.2). Among the l o c a l f i r m s , we can mention that the Punja group produces i t s own p l a s t i c c o n t a i n e r s f o r the o i l b o t t l i n g d i v i s i o n , as we l l as i t s own o i l f o r the soap and detergent d i v i s i o n . Attempts at v e r t i c a l i n t e g r a t i o n a r e , however, not l i -mited to the l a r g e s t f i r m s . The s m a l l e r , more p r o g r e s s i v e firms are forming c o r p o r a t i o n s producing needed s u p p l i e s , o f t e n i n p a r t n e r s h i p with other l o c a l or f o r e i g n i n v e s t o r s . An e x c e l l e n t example of t h i s i s F l e x i b l e Packaging ( F i j i ) L i m i t e d , in which two medium-sized f i r m s , Maganlal Jiwa and Sons L i m i t e d and Lees T r a d i n g Company L i m i t e d h o l d o n e - t h i r d share each. Both these f i r m s r e c e i v e t h e i r packaging m a t e r i a l s f o r t h e i r c o n f e c t i o n e r y and bakery products r e s p e c t i v e l y from t h i s j o i n t l y - o w n e d f i r m . Moreover, v e r t i c a l i n t e g r a t i o n i s not l i m i t e d to i n t e r -f i r m l i n k s i n the manufacturing s e c t o r a l o n e . T h i r t e e n percent 217 of the firms i n t e r v i e w e d had o p e r a t i o n s i n the primary s e c t o r (Table 5.11). Examples would i n c l u d e n e a r l y a l l the major firms i n v o l v e d i n primary produce p r o c e s s i n g . The FSC has i n h e r i t e d a c e n t u r y - o l d system of c l o s e s u p e r v i s i o n of cane production from the CSR. The tobacco monopoly, the C e n t r a l Manufacturing Compa-ny L i m i t e d , as we have seen i n the s e c t i o n on c o n c e n t r a t i o n , has a fully-owned s u b s i d i a r y to handle the supply of cured tobacco. TABLE 5.11 PARTICIPATION OF FIJIAN MANUFACTURING FIRMS IN NON-MANUFACTURING ACTIVITIES IN F I J I , 1983 A c t i v i t y P a r t i c i p a t i o n Yes No Number % Number Primary p r o d u c t i o n 13 13 90 87 R e t a i l i n g 30 29 73 71 Wholesaling 31 30 72 70 Transport 4 4 99 96 Other 10 10 91 90 SOURCE: Survey of Manufacturers in F i j i , 1983. T h i s backward l i n k a g e with the a g r i c u l t u r a l s e c t o r i s c r u c i a l i n F i j i g iven the absence of l a r g e - s c a l e i n d u s t r i a l a g r i c u l t u r e . In f a c t n e a r l y a l l the major p r o c e s s o r s of primary produce i n F i j i have backward l i n k s with the s e c t o r . We have al r e a d y seen the example of F i j i Sugar C o r p o r a t i o n . We can add the case of the N a t i o n a l Marketing A u t h o r i t y , which has strong 218 l i n k s with the farmers, and has manufacturing i n t e r e s t s i n a number of e n t e r p r i s e s . Many primary produce processors appear to make a point of i n v o l v i n g the N a t i o n a l Marketing A u t h o r i t y because of i t s l i n k s with the a g r i c u l t u r a l s e c t o r . We can a l s o see the i n c r e a s i n g trend of the Native Land Development Corpo-r a t i o n to enter p r o c e s s i n g i n d u s t r i e s based on i t s land-owner r e l a t i o n s h i p s . In f a c t , i t would appear that there i s very l i t t l e scope in F i j i f o r processors that do not have c l o s e involvement of e i t h e r producers or t h e i r o r g a n i z a t i o n s in t h e i r o p e r a t i o n s , or who do not themselves produce a s u b s t a n t i a l share of the a g r i -c u l t u r a l i n p u t s . Firms have a l s o achieved h o r i z o n t a l i n t e g r a t i o n of t h e i r a c t i v i t i e s by engaging i n r e l a t e d or m a r g i n a l l y r e l a t e d a r e a s . To gauge the extent of h o r i z o n t a l i n t e g r a t i o n , firms were asked i f they undertook the f o l l o w i n g a c t i v i t i e s i n both F i j i and abroad and t h e i r answers are summarized i n Table 5.11. Given the c l o s e r e l a t i o n s h i p between marketing and manu-f a c t u r i n g , i t i s not s u r p r i s i n g that the l a r g e s t number of non-manufacturing a c t i v i t i e s being undertaken by manufacturers are found i n r e t a i l i n g and w h o l e s a l i n g . T h i s has come about, as has alr e a d y been e x p l a i n e d , from the e v o l u t i o n from the d i s t r i b u -t i v e t rades to manufacturing. The involvement i n primary produ-c t i o n i s an attempt to v e r t i c a l l y i n t e g r a t e the manufacturing p r o c e s s . Many reasons have been advanced f o r i n t e g r a t i o n i n the manufacturing s e c t o r , i n c l u d i n g r e d u c t i o n i n o v e r a l l o p e r a t i n g 219 c o s t s and the a b i l i t y to guarantee the supply and q u a l i t y of components (Howe, 1978:104-110). The need to ensure the r e l i a -b i l i t y and q u a l i t y of components i s not of importance i n F i j i , and so the major reason has to be the d e s i r e to obtain a gre a t e r market power and to i n c r e a s e the o v e r a l l f l e x i b i l i t y i n meeting c o m p e t i t i o n . The prevalence of h o r i z o n t a l i n t e g r a t i o n i s to be ex-p l a i n e d by very l i m i t e d scope i n any one a c t i v i t y in F i j i , given i t s small domestic market, the d e s i r e to meet competition through a whole network spanning many s e c t o r s , and the d e s i r e to share r i s k . Another reason f o r the p r e v a l e n c e of widespread h o r i z o n t a l i n t e g r a t i o n i s the undeveloped nature of the F i j i economy when most of the p i o n e e r i n g firms e n t e r e d F i j i , thus e n a b l i n g them to enter d i v e r s e l u c r a t i v e areas without competi-t i o n . By most accounts, even from these f i r m s themselves, e a r l y r e t u r n s on c a p i t a l were extremely good. Now t h a t the market i s in the process of change, one would expect changes l e a d i n g to the d i v e s t i n g by these p i o n e e r i n g companies of i n t e r e s t s not c l o s e l y l i n k e d to t h e i r o v e r a l l economic i n t e r e s t s i n F i j i , and t h i s has i n f a c t a l r e a d y s t a r t e d to happen with the pioneer companies l i k e the Carpenter group and Burns P h i l p both d i v e s -t i n g themselves of l i n e s of a c t i v i t y meeting the toughest competition from other f i r m s . T h i s has been p a r t i c u l a r l y true in merchandizing. Mergers and Takeovers Mergers and takeovers are a major component of the dynamics of the i n d u s t r i a l s t r u c t u r e , p a r t i c u l a r l y of change i n 220 ownership and i n l e v e l s of c o n c e n t r a t i o n . I n t e r n a t i o n a l l y , mergers and takeovers have i n c r e a s e d l e v e l s of c o n c e n t r a t i o n (Devine, Jones, Lee, and Tyson, 1974:92; Green, 1980:54). In developing c o u n t r i e s , takeovers have assumed another dimension. Many dependency w r i t e r s have argued that m u l t i n a t i o n a l corpora-t i o n s enter the developing c o u n t r i e s through takeover and the-reby reduce n a t i o n a l ownership of economic a c t i v i t y ( L a l l , 1980:41).4 There are no data on takeovers and mergers in F i j i except those reported in the media. There i s i n f a c t a N a t i o n a l Takeover Committee that a d v i s e s the M i n i s t e r of Finance i n cases i n v o l v i n g f o r e i g n firms e i t h e r t a k i n g over l o c a l f i r m s , or t a k i n g s u b s t a n t i a l shares in l o c a l f i r m s . But there i s no data a v a i l a b l e from t h i s source. Enough d a t a , however, has been c o l l e c t e d from the media and t h i s , together with the author's f a m i l i a r i t y with the s i t u a t i o n , w i l l enable a b r i e f d i s c u s s i o n h e r e . The most s t r i k i n g f e a t u r e of the entry of f o r e i g n firms in F i j i i s that they e i t h e r e s t a b l i s h new o p e r a t i o n s or enter as j o i n t v e n t u r e s . Only i n rare circumstances do they takeover l o c a l f i r m s . T h i s being s a i d , however, one must add that recen-t l y f o r e i g n f i r m s , both based i n F i j i and o v e r s e a s , have been engaged i n s i g n i f i c a n t takeover a c t i v i t y . In a well-known re-cent c a s e , General Foods of New Zealand, i t s e l f a s u b s i d i a r y of the g i a n t American General Foods C o r p o r a t i o n , has taken over the s u c c e s s f u l F i j i o p e r a t i o n s of Chutes Chicken L i m i t e d . Anot-her s u b s i d i a r y of General Foods of New Zealand was reported to be n e g o t i a t i n g the takeover of the l o c a l l y - o w n e d F l o u r M i l l s of 221 F i j i L i m i t e d , although nothing has m a t e r i a l i z e d yet (see, f o r i n s t a n c e , F i j i Sun, 7 October, 1983:2). In other c a s e s , f o r e i g n f i r m s have taken over t h e i r share of f a i l i n g l o c a l f i r m s . Burns P h i l p , f o r i n s t a n c e , a c q u i r e d the N a v i t i Resorts L i m i t e d , a major locally-owned h o t e l chain with i n t e r e s t s i n Solomon I s -5 lands (The F i j i Times, 4 J u l y , 1981:16). S i m i l a r l y , an Austra-l i a n m u l t i n a t i o n a l attempted to take over the only cement manufacturing f i r m i n F i j i , ^although in t h i s instance i t s attempt was f o i l e d by the Burns P h i l p group. A major element i n the takeover a c t i v i t y has been the a c q u i s i t i o n of f a i l i n g f i r m s , and i n most cases l o c a l firms have succeeded in a c q u i r i n g t h e s e . For i n s t a n c e , when the foreign-owned F l o u r M i l l s of F i j i was embroiled i n a court case i n v o l v i n g a l l e g e d dishonest accounting p r a c t i c e s , i t was ac-q u i r e d by the F i j i Development Bank.and the Unit Trust of F i j i which l a t e r s o l d the m a j o r i t y s h a r e h o l d i n g to Punja and Sons L i m i t e d . Mergers are rare in F i j i . The two c e l e b r a t e d cases i n v o l v e f o r e i g n f i r m s , C e n t r a l Manufacturing L i m i t e d and i n another case the Carpenter group and Burns P h i l p . In the case of C e n t r a l Manufacturing L i m i t e d the s i t u a t i o n was as f o l l o w s . In the l a t e r part of 1950, two f o r e i g n f i r m s , F i j i Tobacco Company L i m i t e d , owned by B r i t i s h American Tobacco Company L i m i t e d of United Kingdom and W.D. and H.O. W i l l s ( A u s t r a l i a ) L i m i t e d , and Ca r r e r a s L i m i t e d , wholly owned by the giant Roth-mans I n t e r n a t i o n a l L i m i t e d , again of United Kingdom, began the manufacture of c i g a r e t t e s i n F i j i . However, n e i t h e r f i r m was 222 operating to f u l l c a p a c i t y i n the small market, and so in 1972, the o p e r a t i o n s of the two firms were merged, and two new firms were c r e a t e d . C e n t r a l Manufacturing L i m i t e d was c r e a t e d to handle the manufacture of c i g a r e t t e s and tobacco, while another f i r m , a fully-owned s u b s i d i a r y of C e n t r a l Manufacturing L i -mited, Southern Development L i m i t e d , was e s t a b l i s h e d to handle the growing and c u r i n g of tobacco for the manufacturing opera-t i o n s . The merger thus c r e a t e d a monopoly (Mr Peter Raju, personal communication). In the other c a s e , the two d i f f e r e n t o p e r a t i o n s of the Carpenter group and Burns P h i l p , Carpenters I n d u s t r i a l and B i s h L i m i t e d r e s p e c t i v e l y , were competing in the small domestic market. A f t e r a general r e s t r u c t u r i n g by both f i r m s , the two o p e r a t i o n s were merged i n t o the I n d u s t r i a l and Marine L i m i t e d , which has emerged as the only major p r i v a t e s e c t o r marine and e n g i n e e r i n g f i r m in F i j i (see, f o r i n s t a n c e , The F i j i Times, 23 October, 1981:12). The merger may a l s o have been prompted by the f e e l i n g i n F i j i then that the government was going to r e l i n q u i s h i t s ship b u i l d i n g and r e p a i r o p e r a t i o n s .6 In both c a s e s , mergers r e s u l t e d i n i n c r e a s e d market c o n c e n t r a t i o n , but perhaps t h i s was i n e v i t a b l e i n a small domestic market. F i j i i s a maritime n a t i o n , and a l a r g e and c o m p e t i t i v e marine e n g i n e e r i n g f i r m i s probably necessary to meet i n t e r n a t i o n a l c o m p e t i t i o n . However, the government should evaluate these mergers to ensure that undue market power i s not c r e a t e d or enhanced through mergers and t a k e o v e r s . In the case of the merger r e s u l t i n g i n the establishment of C e n t r a l Manufa-223 c t u r i n g L i m i t e d , there was no s c r u t i n y by the government, p a r t l y because laws d e a l i n g with exchange c o n t r o l and ownership had not evolved p r o p e r l y . In the case of the Carpenters and Burns P h i l p merger, however, I am not s u r e . In a l l of these c a s e s , however, the e x i s t e n c e of a Monopolies Commission, or some s i m i l a r r e g u l a t o r y agency would have been extremely use-f u l . One f a c t o r l i m i t i n g takeover a c t i v i t y i n F i j i has been the predominance of the p r i v a t e l i m i t e d l i a b i l i t y companies. As has a l r e a d y been noted, there are only a handful of p u b l i c c o r p o r a t i o n s , and although there i s a small stock exchange now, stock t r a d i n g i s not widespread. There are some i n d i c a t i o n s , however, that i n f u t u r e more l o c a l p r i v a t e l i m i t e d l i a b i l i t y companies w i l l turn p u b l i c , f o l l o w i n g the s u c c e s s f u l example of Motibhai and Company L i m i t e d . In the survey of manufacturers in F i j i , f o r i n s t a n c e , the d i r e c t o r of a very s u c c e s s f u l f i r m i n d i c a t e d t h a t h i s d i r e c t o r s were d i s c u s s i n g the p o s s i b i l i t y of t u r n i n g t h e i r company p u b l i c . T h i s , and the pressure by the government on long e s t a b l i s h e d f o r e i g n f i r m s to r e l e a s e some of t h e i r shares to the l o c a l people i s expected to make more companies p u b l i c , and w i l l encourage more stock t r a d i n g . I t may a l s o i n c r e a s e takeovers i n F i j i . F a c t o r U t i l i z a t i o n How i n d u s t r i a l i s t s combine the main f a c t o r s of produc-t i o n , labour and c a p i t a l i s a c e n t r a l theme i n i n d u s t r i a l ana-l y s e s . There are a number of ways of measuring the v a r y i n g 224 i n t e n s i t i e s of the usage of these two f a c t o r s (see, f o r i n s t a n -c e , Hoffman and Weber, 1976:111-135), and none of these mea-sures i s unanimously agreed upon (Kendrick, 1977; Zohar, 1982; Moomaw, 1983). T h i s study w i l l use the f o l l o w i n g i n d i c e s of f a c t o r usage in t h i s a n a l y s i s : gross output per person engaged; value added per person engaged; value added l e s s employee compensa-t i o n per employee; gross c a p i t a l stock to gross output; and c a p i t a l stock to s u r p l u s . T r a d i t i o n a l l y , p r o d u c t i v i t y i s mea-sured per hour of work, but t h i s i s not p o s s i b l e in the case of F i j i because hourly data are not c o l l e c t e d i n the census of i n d u s t r i a l p r o d u c t i o n . T h i s has r e s u l t e d p a r t l y from a lack of . . . . 7 p r o d u c t i v i t y consciousness i n F i j i u n t i l now. The c a p i t a l to gross output r a t i o s , which give a general i n d i c a t i o n of the o v e r a l l c a p i t a l i z a t i o n in the manufacturing s e c t o r , i s presented i n Table.5.12. On the whole, as might be expected i n a developing c o u n t r y , the manufacturing s e c t o r i s not very c a p i t a l i n t e n s i v e , the o v e r a l l c a p i t a l to gross output r a t i o being .3737. T h i s i s c o n s i d e r a b l y l e s s than r a t i o s of u n i t y or only s l i g h t l y l e s s i n manufacturing i n d u s t r i e s i n developed c o u n t r i e s (Green, 1980:201). There i s c o n s i d e r a b l e v a r i a t i o n i n c a p i t a l i n t e n s i t y among the ISIC groups, the cement and concrete i n d u s t r i e s r e g i s t e r i n g the h i g h e s t r a t i o s and f i r m s r e p a i r i n g and m a i n t a i n i n g i n d u s t r i a l machinery r e g i s -t e r i n g the lowest r a t i o s . Another measure of c a p i t a l i n t e n s i t y i n manufacturing i s c a p i t a l to labour r a t i o , and t h i s i s i n c l u d e d i n Table 5.12. 225 TABLE 5.12 CAPITAL TO OUTPUT RATIO AND CAPITAL TO PERSON ENGAGED IN FIJIAN MANUFACTURING, 1981 ISIC Industry K/Output Ratio C a p i t a l per person engaged 3111 Butchering and meat packing .6196 1 0408 3112- 3114 Dai ry , f r u i t & f i s h .2402 1 0640 3115 E d i b l e & coconut o i l .1982 1 0947 3116 Rice & f l o u r m i l l i n g .2099 1 9821 3117 Bakery products .2398 4284 3118 Sugar m i l l i n g .491 5 27609 3119 C o n f e c t i o n e r y .4435 6607 3121- 31 22 Mi s c e l l a n e o u s food .1055 5671 31 33-31 40 Beer, c i g a r e t t e s & tobacco .2601 25677 31 34 No n - a l c o h o l i c d r i n k s . 3579 5004 3220 T e x t i l e s & c l o t h e s .2399 1725 3240 Footwear .6726 4222 331 1 Sawmilling .5423 9833 3312- 3319 C u r i o s & a r t i f a c t s .5848 3846 3320 F u r n i t u r e & up h o l s t e r y .1950 2065 3418 Paper products .4050 1 1897 3420 P r i n t i n g & p u b l i s h i n g .2106 2540 3521 P a i n t s .1285 5840 3523, 3525 & 3529 Soap, t o i l e t r i e s & chemicals . 1647 7287 3558 Retreading & f l i p - f l o p s .4201 7267 3560 P l a s t i c products .3183 9995 3698 Cement & concrete products .9682 32050 3812- 381 3 Metal f u r n i t u r e & f i x t u r e s .1239 2086 3818 F a b r i c a t e d metal products .1892 5894 3822 A g r i c u l t u r a l machinery & equipment .4593 2995 226 TABLE 5.12 (Continued) 3828 Repair & maintenance of i n d u s t r i a l machinery 3838 E l e c t r i c a l equipment .0492 1000 3841 Boat & s h i p b u i l d i n g .2707 3443 3843 Bus b u i l d i n g .0951 852 3908 M i s c e l l a n e o u s products.1894 3474 T o t a l .3737 12633 SOURCE: C a l c u l a t e d from F i j i Bureau of S t a t i s t i c s , 1984b:14-15; 30-31; 34-35. The o v e r a l l low c a p i t a l i n t e n s i t y i s supported by an average of $12633 in f i x e d c a p i t a l per person engaged in manufacturing. The most c a p i t a l i n t e n s i v e i n d u s t r i e s are sugar m i l l i n g , f l o u r m i l l i n g , beer and c i g a r e t t e manufacturing, and cement indus-t r i e s . F a c t o r u t i l i z a t i o n i s a l s o f r e q u e n t l y c o n s i d e r e d in terms of t h e i r p r o d u c t i v i t y . There are three b a s i c n o t i o n s of p r o d u c t i v i t y - t o t a l or g l o b a l f a c t o r p r o d u c t i v i t y , t a k i n g i n t o account a l l the major inputs i n t o p r o d u c t i o n ; labour p r o d u c t i v i -t y ; and c a p i t a l p r o d u c t i v i t y (Zohar, 1982:4). The census data enable us to c a l c u l a t e both labour and c a p i t a l p r o d u c t i v i t y and the r e s u l t s are summarized i n Table 5.13, which i n c l u d e s the value added per person engaged, and value added per d o l l a r of employee compensation. Without v a l i d data f o r other c o u n t r i e s , of c o u r s e , one cannot a p p r o p r i a t e l y p l a c e F i j i ' s i n d u s t r i a l p r o d u c t i v i t y . However, we can observe that the highest r e t u r n s on employee 227 TABLE 5.13 VALUE ADDED PER PERSON ENGAGED AND PER DOLLAR OF EMPLOYEE COMPENSATION, 1981 ISIC Industry Value Value Added Value Added Per Person Added Per ($000) $ of Compen-s a t i o n 3111 Butchering and meat packing 1019 6490 2 .06 3112-31 14 D a i r y , f r u i t & f i s h 7538 10200 2 .34 3115 E d i b l e & coconut o i l 2981 1 4471 3 .38 3116 Rice & f l o u r m i l l i n g 2385 9068 2 .06 3117 Bakery products 2351 4769 1 .72 31 18 Sugar m i l l i n g 31 306 10908 2 .63 3119 Confect i o n e r y 662 321 3 2 .05 3121-3122 M i s c e l l a n e o u s food 1 087 6231 3 .08 3133-3140 Beer, tobacco & c i g a r e t t e s 61 28 16341 2 .83 31 34 No n - a l c o h o l i c d r i n k s 1211 51 53 1 .88 3220 T e x t i l e s & c l o t h e s 2404 2520 2 . 1 4 3240 Footwear 50 1 389 1 .16 331 1 Sawmilling 5403 6030 1 .18 3312-331 9 Cur i o s & a r t i f a c t s 294 2827 3 .03 3320 F u r n i t u r e & up h o l s t e r y 1 1 98 2674 1 .37 3418 Paper products 1 975 10734 2 .33 3420 P r i n t i n g & p u b l i s h i n g 41 52 5151 1 .34 3521 P a i n t s 1315 1 31 50 2 .48 3523,3525 Soap, t o i l e t r i e s & 3529 & chemicals 1897 9391 1 .92 3558 Retreading & f l i p - f l o p s 455 3370 1 .17 3560 P l a s t i c 2083 1 0963 2 .41 3698 Cement & concrete products 4843 11558 2 .15 3812-3813 Metal f u r n i t u r e & f i x t u r e s 1 146 4494 1 .22 228 TABLE 5.13 (Continued) 3818 3822 3828 3838 3841 3843 3908 T o t a l F a b r i c a t e d metal products Agr i c u l t u r a l machinery & equipment Repair & maintenance of i n d u s t r i a l machinery E l e c t r i c a l equipment Boat & s h i p b u i l d i n g Bus b u i l d i n g M i s c e l l a n e o u s products 4087 6467 517 2427 83 5188 339 . 5845 1298 3910 681 2513 503 4412 91382 7563 1.81 1.81 1 .28 1.16 0.68 1 .24 2.96 2.05 SOURCE: C a l c u l a t e d from F i j i Bureau of S t a t i s t i c s , 1984b:14-15; 42-43. compensation are obtained in the e d i b l e and coconut o i l group, sugar m i l l i n g , m i s c e l l a n e o u s foods, beer, c i g a r e t t e and tobacco manufacturing, p a i n t , c u r i o and a r t i f a c t and miscellaneous products manufacturing. The presence of c u r i o s and a r t i f a c t s i s s u r p r i s i n g , given that i t i s expected to be a low c a p i t a l i z e d i n d u s t r y . Value added per person can- be high f o r a number of reasons, the most important of which would i n c l u d e c a p i t a l i n t e n s i t y , s k i l l l e v e l s , management e f f i c i e n c y , and the command of higher s e l l i n g p r i c e s . A pearson c o r r e l a t i o n a n a l y s i s of value added per person engaged by establishments and the l e v e l of market c o n t r o l and c a p i t a l i n t e n s i t y r e v e a l that both the l a t t e r were s t r o n g l y and p o s i t i v e l y r e l a t e d to the former: the 229 l e v e l of market c o n t r o l showed a p o s i t i v e c o r r e l a t i o n of 0.46 with the value added per person engaged ( s i g n i f i c a n t at .006) and the l e v e l of c a p i t a l i n t e n s i t y had a high l e v e l of c o r r e l a -t i o n of .70 ( s i g n i f i c a n t at .000) with value added per person engaged. Since employee compensation comprises a major share of value added, i t i s perhaps u s e f u l to examine employee p r o d u c t i -v i t y by l o o k i n g at value added l e s s employee compensation. We can c a l l t h i s e x t r a - l a b o u r income of the f i r m s . The summary of employee c o n t r i b u t i o n to e x t r a - l a b o u r income i s presented i n Table 5.14. We can note that e d i b l e o i l s , m i scellaneous foods, c u r i o s and a r t i f a c t s , sugar, beer, c i g a r e t t e s , and m i s c e l l a -neous products a l l have retur n s of over $1.50 per d o l l a r of employee compensation. I t i s a l s o remarkable that the b o a t b u i l -ding i n d u s t r y l o s e s 32 cents per d o l l a r of employee compensa-t i o n , and t h i s may be r e l a t e d to the accounting p r a c t i c e s of the government s h i p y a r d , a major component of t h i s i n d u s t r y . F i n a l l y , while s t i l l on f a c t o r u t i l i z a t i o n , i t i s wor-thwhile to look at the share of the value added a c c r u i n g to workers; the r e s u l t s are summarized in Table 5.15. The o v e r a l l share of 48.83 cents i s q u i t e high f o r a de v e l o p i n g c o u n t r y , as Zohar (1982:35) r e p o r t s that the labour share of manufacturing value added i n Canada was 49.1 cents per d o l l a r i n 1977. These f i n d i n g s i n d i c a t e that wage l e v e l s i n F i j i are high and that workers r e c e i v e a r e l a t i v e l y high p r o p o r t i o n of the income they generate. Having examined the s t r u c t u r e of the manufacturing sec-230 TABLE 5.14 VALUE ADDED LESS EMPLOYEE COMPENSATION PER EMPLOYEE, 1981 ISIC Industry Value Added Value Added Less Compensation Less Per Employee Compensation Per $ of Compensation 3111 Butchering and meat packing 3671 1 . 06 31 12- 3114 D a i r y , f r u i t & f i s h 5889 1 . 34 3115 E d i b l e & coconut o i l 10189 2. 38 3116 Rice & f l o u r m i l l i n g 4778 1 . 06 3117 Bakery products 2023 0. 72 31 1 8 Sugar m i l l i n g 6764 1 . 63 3119 Confect ionery 1 794 1 . 05 3121- 31 22 M i s c e l l a n e o u s food 441 2 2. 08 3133- 31 40 Beer, c i g a r e t t e s & tobacco 1 0599 1 . 83 31 34 N o n - a l c o h o l i c d r i n k s 2498 0. 88 3220 T e x t i l e s & c l o t h e s 1 561 1 . 1 4 3240 Footwear 219 0. 16 331 1 Sawmi11ing 971 0. 18 3312- 3319 Cu r i o s & a r t i f a c t s 1 990 2. 03 3320 F u r n i t u r e & uph o l s t e r y 873 - 0. 37 3418 Paper products 6291 1 . 33 3420 P r i n t i n g & p u b l i s h i n g 1 347 0. 34 3521 P a i n t s 7850 1. 48 3523, 3525 & 3529 Soap, t o i l e t r i e s & chemicals 4604 0. 92 3558 Retreading & f l i p - f l o p s 500 0. 1 7 3560 P l a s t i c products 6703 1. 41 3698 Cement & concrete products 6263 1. 15 3812- 381 3 Metal f u r n i t u r e & f i x t u r e s 829 0. 22 3818 F a b r i c a t e d metal products 3109 0. 81 3822 A g r i c u l t u r a l machinery & equipment 1 262 0. 81 231 TABLE 5 . 1 4 (Continued) 3828 Repair Sc maintenance of i n d u s t r i a l machinery 1200 0 . 2 8 3838 E l e c t r i c a l equipment 810 0 . 1 6 3841 Boat & s h i p b u i l d i n g - 1 8 2 4 - 0 . 3 2 3843 Bus b u i l d i n g 502 0 . 2 4 3908 M i s c e l l a n e o u s products 3364 1.96 T o t a l 4026 1 .05 SOURCE: C a l c u l a t e d from F i j i Bureau of S t a t i s t i c s , 1 9 8 4 : 1 4 - 1 5 ; 4 2 - 4 3 . TABLE 5 . 1 5 LABOUR SHARE OF MANUFACTURING VALUE ADDED IN F I J I , 1981 ISIC Industry Labour Share (%) 3111 Butchering and meat packing 48 3 1 1 2 - 3 1 1 4 D a i r y , f r u i t & f i s h 43 3115 E d i b l e & coconut o i l 30 3116 Rice Sc f l o u r m i l l i n g 49 3117 Bakery products 58 3118 Sugar m i l l i n g 38 3119 C o n f e c t i o n e r y 49 3 1 2 1 - 3 1 2 2 .Miscellaneous food 32 3 1 3 3 - 3 1 4 0 Beer, c i g a r e t t e s & tobacco 35 3134 N o n - a l c o h o l i c d r i n k s 53 3220 T e x t i l e s Sc c l o t h e s 47 3240 Footwear 86 3311 Sawmilling 84 3 3 1 2 - 3 3 1 9 C u r i o s & a r t i f a c t s 33 3320 F u r n i t u r e & u p h o l s t e r y 73 3418 Paper products 43 3420 P r i n t i n g & p u b l i s h i n g 75 3521 P a i n t s 40 3 5 2 3 , 3 5 2 5 Soap, t o i l e t r i e s & & 3529 chemicals 52 3558 Retreading S< f l i p - f l o p s 85 3560 P l a s t i c products 41 3698 Cement Sc concrete products 46 232 TABLE 5.15 (Continued) 381 2-3813 3818 3822 3838 3841 3843 3908 3828 Metal f u r n i t u r e & f i x t u r e s F a b r i c a t e d metal products A g r i c u l t u r a l machinery & equipment Repair & maintenance of i n d u s t r i a l machinery E l e c t r i c a l equipment Boat & s h i p b u i l d i n g Bus b u i l d i n g M i s c e l l a n e o u s products 78 86 1 46 80 34 82 55 55 T o t a l 49 SOURCE: C a l c u l a t e d from F i j i Bureau of S t a t i s t i c s , l984b:42-43. t o r , we can now turn to i t s o r g a n i z a t i o n . We s h a l l d i s c u s s the o r g a n i z a t i o n of F i j i a n manufacturing in terms of ownership and l e g a l forms of f i r m o r g a n i z a t i o n . O r g a n i z a t i o n of the I n d u s t r i a l Economy It i s u s e f u l to begin t h i s s e c t i o n by n o t i n g that a l -though F i j i i s i s a c a p i t a l i s t d e veloping c o u n t r y , the s t a t e has been p l a y i n g an i n c r e a s i n g l y l a r g e r o l e s i n c e independence not only i n r e g u l a t i n g and g u i d i n g economic a c t i v i t y , but a l s o in d i r e c t economic p r o d u c t i o n . The r o l e of the s t a t e i n F i j i a n i n d u s t r i a l i z a t i o n i s the subject of another c h a p t e r , so here we w i l l simply note the extent of p u b l i c ownership in the manufac-t u r i n g s e c t o r . S t a t e e n t e r p r i s e s have become important instruments of T h i r d World i n d u s t r i a l i z a t i o n , as L a i (1980:211) p o i n t s out: 233 Public enterprises play a significant role in the indus-tr i a l i z a t i o n process in many developing countries . . .In recent years there has been a resurgence of public enterprises in manufacturing, particularly in o i l - r i c h countries and those seeking to increase local ownership of manufacturing firms. As we shall see, this is very much the case in F i j i . Census data do not enable us to examine public ownership in the manufacturing sector, although as we will soon see, it does enable a discussion of foreign and local ownership. In the survey of manufacturers in F i j i , an attempt was made to gauge the extent of public direct participation in the manufacturing sector in two different ways. F i r s t , on the form of company organization, the respondents were asked to indicate if the firm was a statutory organization, a common form of public sector undertakings in F i j i . Second, and perhaps the more useful indicator, the survey questionnaire recorded the percent of paid-up shares held by the state. In terms of the type of firms, statutory bodies were few--three of the 104 firms in the sample. However, this statistic is inadequate for a number of reasons. F i r s t , the number of establishments, as we have alrea-dy seen, is not an accurate indicator of importance and second, the state participates in the manufacturing sector through agencies other than statutory bodies—such as public corpora-tions in which it may hold majority shares, as in the case of the F i j i Sugar Corporation, or minority shares, as i t has done in the case of Pacific Fishing Company Limited and in many other firms. Some indication of the extent of the involvement of the State in the manufacturing sector is given by the fact that its 234 sha r e , based on i t s s h a r e h o l d i n g , of the t o t a l f i r m gross output in my sample was 48 percent--an extremely high f i g u r e f o r a c a p i t a l i s t c o u n t r y . A d m i t t e d l y , t h i s i s more because of i t s ownership of the F i j i Sugar C o r p o r a t i o n , which i s , as we have seen, the l a r g e s t s i n g l e c o r p o r a t i o n i n F i j i . Given t h i s l a r g e s t a t e presence i n F i j i a n manufactur-i n g , i t i s worthwhile to i n d i c a t e here that the s t a t e i s commit-ted to p r i v a t e e n t e r p r i s e i n F i j i , and i t s purchase of F i j i Sugar C o r p o r a t i o n arose out of the d e s i r e of the CSR to leave F i j i , and the i n a b i l i t y of any other f i r m to purchase such a l a r g e u n d e r t a k i n g . The s t a t e was not a w i l l i n g buyer of the CSR a s s e t s (see more on t h i s i n Chapter 9 ) . The census enables us to look at f o r e i g n and l o c a l ownership i n the manufacturing s e c t o r . In 1981, the l a t e s t year f o r which data are a v a i l a b l e , foreign-owned firms accounted f o r 27 percent of a l l people engaged i n the s e c t o r , 40 percent of compensation to l a b o u r , 32 percent of the gross output, 18 percent of the t o t a l book value of f i x e d c a p i t a l a s s e t s , 36 percent of value added and 32 percent of o p e r a t i n g s u r p l u s ( c a l c u l a t e d from F i j i Bureau of S t a t i s t i c s , 1984b:17,33,37,45). Thus, on the whole, f o r e i g n f i r m s comprise approximately one t h i r d of the manufacturing s e c t o r i n F i j i . T h i s i s i n marked c o n t r a s t to Papua New Guinean manufacturing, where Jackson (1981:566) r e p o r t e d that i n 1978, 85 percent of a l l shares i n the manufacturing s e c t o r were foreign-owned. While manufacturing i n F i j i i s by no means dominated by l o c a l f i r m s , i t does i n d i c a t e a s i g n i f i c a n t growth i n l o c a l 235 ownership i n the sector s i n c e independence. Belshaw (1964:19) and Ward (1971) had both noted that the two foreign-owned g i a n t s i n F i j i , Emperor Gold Mines L i m i t e d (EGM) and CSR, together with the Carpenter and Burns P h i l p groups had con-t r o l l e d not only the bulk of manufacturing, but the whole economy. Belshaw (1964:19) had estimated that the CSR and EGM had c o n t r o l l e d 70 percent of F i j i ' s e xports by value and 20 percent of domestic o u t p u t . Ward (1971:141) had noted, for i n s t a n c e , that The ownership of the l a r g e r , l e a d i n g manufacturing (and export) i n d u s t r i e s i s almost e n t i r e l y in the hands of e x p a t r i a t e f i r m s and these have i n e v i t a b l y been the main growth p o i n t s in the economy. The much l a r g e r degree of l o c a l ownership i n the manu-f a c t u r i n g s e c t o r has r e s u l t e d from a number of f a c t o r s . Perhaps the s i n g l e most important short-term reason has been the d e c i -s i o n by the s t a t e to a c q u i r e the a s s e t s of the CSR. On the other hand, there has been a r a p i d growth of l o c a l firms which have entered manufacturing. Most of these firms have emerged from d i s t r i b u t i v e t r a d e s — g e n e r a l merchandizing as w e l l as the s a l e of d u t y - f r e e goods i n the r a p i d l y expanding t o u r i s t sec-t o r . The r a p i d development of l o c a l f i r m s from small beginnings to major h o l d i n g s i n the manufacturing s e c t o r i s e x e m p l i f i e d by f i r m s such as Punja and Sons L i m i t e d and Motibhai and Company L i m i t e d . The r a p i d growth of l o c a l ownership i n the manufactu-r i n g s e c t o r i s a l s o to be e x p l a i n e d by the growth of the ownership p o l i c i e s by the government, which s t r o n g l y encourages l o c a l ownership i n the manufacturing s e c t o r . L o c a l ownership 236 has a l s o been given a major impetus by the i n c r e a s i n g d i r e c t p a r t i c i p a t i o n by the s t a t e in manufacturing. The r a p i d growth of the l o c a l firms i s a l s o to be seen as part of the changed p o l i t i c a l economy of F i j i , where f o r e i g n f i r m s have l o s t t h e i r p r e v i o u s a d v a n t a g e s — e n j o y e d during c o l o n i a l i s m and e a r l y post-independence. I n c r e a s i n g l y , i t i s the l o c a l firms that are c o u r t i n g the p o l i t i c a l e l i t e , and t h i s i s a hidden, but power-f u l e x p l a n a t i o n of the r i s e of l o c a l firms i n F i j i . Another reason f o r the growing importance of l o c a l l y -owned fi r m s i n F i j i a n manufacturing has been a slow-down in the inflow of f o r e i g n investment in F i j i from i t s peak j u s t a f t e r independence ( C a r s t a i r s and Prasad, 1981:45). Not only has f o r e i g n d i r e c t p r i v a t e investment d e c l i n e d s i n c e the e a r l y 1970s, but f o r e i g n firms i n F i j i have been attempting to d i v e s t themselves of t h e i r h o l d i n g s . These processes have r e s u l t e d i n the l ocally-owned firms becoming more important in the economic l i f e of F i j i . A f t e r d e a l i n g with ownership in the manufacturing sec-t o r , l e t us now review forms of o r g a n i z a t i o n employed in the manufacturing s e c t o r . The informal s e c t o r , however, d e f i n e d , forms a major part of the urban economies of the developing c o u n t r i e s , i n c l u d i n g manufacturing (see, .for i n s t a n c e , Brom-ley and G e r r y , 1979; Cook, 1984; Gerry, 1974,1979; Ki n g , 1979; S c o t t , 1979). S u r p r i s i n g l y , the i n f o r m a l s e c t o r has only a l i m i t e d e x i s t e n c e i n F i j i a n manufacturing. Since the census of i n d u s t r i a l production does not i n c l u d e them, i t i s not p o s s i b l e to p r o v i d e a q u a n t i t a t i v e assessment of the importance of the 237 i n f o r m a l s e c t o r in F i j i a n manufacturing. We can , however, d e r i v e some evidence from the 1976 p o p u l a t i o n census, which c o l l e c t e d i n f o r m a t i o n on "self-employed" people, d e f i n i n g a self-employed as . a person who works on h i s / h e r own account. Such a person n e i t h e r employs others f o r wages not i s so employed, but h i s / h e r family may work in the business in return f o r t h e i r upkeep rather than for r e g u l a r wages (Lodhia, 1977:47). In 1976, there were 1313 self-employed people i n manufacturing, and they comprised 10 percent of the economically a c t i v e per-sons 15 years of age and over engaged in manufacturing ( c a l c u -l a t e d from L o d h i a , 1977:449-450 and F i j i Bureau of S t a t i s t i c s , 1982b:102). Thus the informal s e c t o r forms a r e l a t i v e l y minor part of the manufacturing labour f o r c e . Moreover, the manufac-t u r i n g s e c t o r accounted for only f i v e percent of self-employed g people i n F i j i . These obse r v a t i o n s lend support to my conten-t i o n that the i n f o r m a l sector of the type normally a s s o c i a t e d with developing c o u n t r i e s i n A s i a i s a r e l a t i v e l y i n s i g n i f i c a n t component of F i j i a n manufacturing. They a r e , however, not excluded from the study. I f we use self-employment i n the manufacturing s e c t o r as an i n d i c a t o r of i n f o r m a l i t y , then such establishments were present i n the survey sample. However, the re s t of the study w i l l not focus on the i n f o r m a l sector as such. The most common l e g a l forms of o r g a n i z a t i o n i n the manufacturing s e c t o r are i n d i c a t e d i n Table 5.16, which i n d i -c a t e s the r e l a t i v e l y l i t t l e c o n t r i b u t i o n i n terms of numbers of f i r m s , of the unincorporated s e c t o r , again an i n d i c a t i o n of the 238 TABLE 5.16 LEGAL FORMS OF ORGANIZATION OF MANUFACTURING FIRMS IN F I J I , 1983 Form Number Percent Unincorporated 24 23 Sole P r o p r i e t o r s h i p 1 8 1 7 P a r t n e r s h i p 6 6 Incorporated 77 74 P r i v a t e L i m i t e d L i a b i l i t y Company 65 63 P u b l i c L i m i t e d L i a b i l i t y Company 7 7 S t a t u t o r y O r g a n i z a t i o n 3 3 L i m i t e d L i a b i l i t y Cooperative 2 2 Other 3 3 T o t a l 1 04 100 SOURCE: Survey of Manufacturers in F i j i , 1983. r e l a t i v e absence of the in f o r m a l s e c t o r . The importance of the unin c o r p o r a t e d s e c t o r , comprising sole p r o p r i e t o r s h i p s and p a r t n e r s h i p s , i s even l e s s than i s suggested by the f i g u r e s , as t h e i r c o n t r i b u t i o n to value added and employment i s even smal-l e r . For i n s t a n c e , the survey of manufacturers i n F i j i data i n d i c a t e d that the un i n c o r p o r a t e d s e c t o r c o n t r i b u t e d only three percent to the sample labour f o r c e . Their c o n t r i b u t i o n to t o t a l c a p i t a l stock in 1981 was s i m i l a r l y low, as was t h e i r c o n t r i b u -t i o n to manufacturing value added (two and three percent respe-c t i v e l y ; c a l c u l a t e d from F i j i Bureau of S t a t i s t i c s , I984b:37,45) . In terms of the number of establishments i n the survey of manufacturers i n F i j i , the p r i v a t e l i m i t e d l i a b i l i t y company i s the dominant l e g a l form of company o r g a n i z a t i o n ; i t accounts 239 for 63 percent of a l l firms i n the survey. Moreover, i t s con-t r i b u t i o n of 48 percent to the manufacturing labour f o r c e i n the sample i s the l a r g e s t of any s i n g l e form of o r g a n i z a t i o n . Although very small in terms of number of f i r m s , the p u b l i c l i m i t e d l i a b i l i t y company i n c l u d e s the l a r g e s t manufac-t u r i n g f irms in F i j i , l e d by the F i j i Sugar C o r p o r a t i o n and i n c l u d i n g firms l i k e Motibhai and Company L i m i t e d , F i j i Indus-t r i e s L i m i t e d , F l o u r M i l l s L i m i t e d , Burns P h i l p L i m i t e d and the Carpenter group. As we have noted, t h i s form of ownership and o r g a n i z a t i o n i s favoured by the s t a t e , and given the success of Motibhai and Company L i m i t e d , other family firms may go p u b l i c . It i s i n t e r e s t i n g that the d i r e c t o r of one of the most succes-s f u l f a m i l y firms i n d i c a t e d that h i s f i r m was c o n s i d e r i n g t u r n i n g p u b l i c . Were t h i s to happen, many other p r i v a t e family firms may go t h i s r o u t e . Moreover, the pressure by the gover-nment on l o n g - e s t a b l i s h e d foreign-owned c o r p o r a t i o n s to o f f e r some of t h e i r shares to the l o c a l p u b l i c may hasten t h i s pro-c e s s . C onclusions T h i s chapter has presented an o u t l i n e of the s t r u c t u r e and o r g a n i z a t i o n of F i j i a n manufacturing. It showed that the manufacturing s e c t o r i n F i j i shows the perva s i v e i n f l u e n c e of c o l o n i a l i s m , small domestic market and recent p u b l i c p o l i c i e s , s p e c i a l l y a f t e r independence. The i n f l u e n c e of c o l o n i a l i s m can r e a d i l y be seen i n the presence of I n d o - F i j i a n s , whom the B r i t i s h government brought to F i j i to meet labour requirements. It i s e q u a l l y r e v e a l e d i n the presence of A u s t r a l i a n and New 240 Zealand c a p i t a l in the manufacturing s e c t o r . The r e l a t i v e abse-nce of an i n d u s t r i a l p o l i c y i n F i j i u n t i l independence i s yet another i n d i c a t i o n of the i n f l u e n c e of c o l o n i a l i s m on F i j i a n i n d u s t r i a l i z a t i o n . The smallness of the domestic market, and the home-market o r i e n t a t i o n of the bulk of manufacturing f o s t e r e d s i n c e independence, have f o r c e d extremely high l e v e l s of concen-t r a t i o n i n the s e c t o r . The s e c t o r , however, i s i n a f l u x , with two opposing t e n d e n c i e s . At one l e v e l , where the amount of c a p i t a l needed i s not too l a r g e , new, mainly l o c a l firms have s u c c e s s f u l l y penetrated the entry b a r r i e r s and have increased c o m p e t i t i o n . In many c a s e s , f o r e i g n firms have r e l i n q u i s h e d these l o w - c a p i t a l areas and moved i n t o h i g h - c a p i t a l a r e a s . At another l e v e l , though, the l a r g e s t c o r p o r a t i o n s are a l l engaged in c o n s o l i d a t i n g t h e i r p o s i t i o n s , o f t e n through takeovers of firms in t r o u b l e . The a c q u i s i t i o n by l o c a l f i r m s i s not formal-l y c o n t r o l l e d , although i t i s known that the government uses in f o r m a l means to intervene where i t wishes. Takeovers by f o r e i g n f i r m s are more c l o s e l y s c r u t i n i z e d , and the M i n i s t e r of Finance i s advised on the course of a c t i o n to take by the Takeover Committee. The government's i n d u s t r i a l i z a t i o n p o l i c i e s , which have grown more e l a b o r a t e with the l a s t two development p l a n s , are now s i g n i f i c a n t l y a f f e c t i n g the course of i n d u s t r i a l i z a t i o n , s p e c i a l l y with regard to product mix, l e v e l of c o m p e t i t i o n , ownership, and to a l e s s e r e x t e n t , l o c a t i o n . Moreover, the s t a t e ' s own presence in the s e c t o r has a marked i n f l u e n c e on 241 the r e s t of the s e c t o r . I n d u s t r i a l d e c i s i o n s of the FSC, f o r i n s t a n c e , are o f t e n i n t e r p r e t e d by the r e s t of the sector as what the government w i l l or w i l l not a l l o w . It would have become c l e a r that F i j i a n manufacturing has some d i s t i n g u i s h i n g f e a t u r e s that set i t apart from most of the developing c o u n t r i e s . F i r s t , the informal s e c t o r i s r e l a t i v e l y small and i n s i g n i f i c a n t . I t s small s i z e may be broadly r e l a t e d to the r e l a t i v e l y h i g h standards of l i v i n g i n F i j i , and the s t r i n g e n t l i c e n s i n g and r e g u l a t o r y system F i j i has maintained from the beginning of c o l o n i a l i s m . It may a l s o be due to the absence of an indigenous i n f o r m a l system, and to the presence of a h i g h l y l i t e r a t e p o p u l a t i o n o r g a n i z i n g t h e i r businesses f o r m a l l y to take advantage of government a s s i s t a n c e . The second f e a t u r e that d i s t i n g u i s h e s F i j i a n manufactu-r i n g from most of the d e v e l o p i n g c o u n t r i e s i s the high degree of l o c a l ownership i n the s e c t o r . The i n c r e a s e in l o c a l owner-s h i p i n the s e c t o r has been very r a p i d s i n c e independence, and d e r i v e s from three b a s i c s o u r c e s . One of the most important i s the presence in F i j i of a w e l l - o r g a n i z e d t r a d i n g c a s t e , the members of which came t o F i j i to be t r a d e r s . The c o n t r i b u t i o n of t h i s G u j a r a t i group to the increase i n l o c a l ownership in the manufacturing s e c t o r has been most s i g n i f i c a n t . The second important source has been the i n c r e a s i n g l e v e l of government d i r e c t p a r t i c i p a t i o n i n manufacturing, perhaps t r i g g e r e d by i t s p r o f i t a b l e a c q u i s i t i o n of the CSR a s s e t s . The t h i r d f a c t o r has been the government i n d u s t r i a l p o l i c y . F i n a l l y , we have seen that the output of the manufactu-242 r i n g s e c t o r i s c l o s e l y r e l a t e d to the b a s i c needs of the l o c a l p o p u l a t i o n . I t i s , t h u s , not an e n c l a v e , s p e c i a l i z i n g i n the p r o d u c t i o n of luxury items for the e l i t e as claimed by Amin (1974a:14) when he maintains that when a domestic market does develop i n p e r i p h e r a l s o c i a l f o r m a t i o n s , i t i s ( r e l a t i v e l y ) b i a s e d a g a i n s t the demand f o r mass consumption goods and ( r e l a t i v e l y ) i n favour of the demand for ' l u x u r y ' goods. As we have seen, the i n d u s t r i a l s t r u c t u r e i s dominated by the food and beverage s e c t o r , which produce items consumed by the p o p u l a t i o n at l a r g e . 243 Notes 1. Food, beverages, and tobacco accounted for 16.4 percent of F i j i ' s t o t a l imports by value i n 1984 ( c a l c u l a t e d from data i n F i j i M i n i s t r y of F i n a n c e , I984b:42). In previous years t h i s percentage has been h i g h e r . In 1975, for i n s t a n c e , the propor-t i o n was 19 percent of the t o t a l imports (see F i j i Bureau of S t a t i s t i c s , I984a:6l). On food dependency in the P a c i f i c , see McGee (1975). 2. The f o l l o w i n g are some of the important works on the sugar i n d u s t r y i n F i j i : Denning (1970); Moynagh (1981); Narsey (1977); P o t t s (1973); United Nations Development Advisory Team for the South P a c i f i c (1974); Ward (1971); Ward (1965); Shephard ( 1 945) . 3. For reviews of attempts at d i v e r s i f i c a t i o n i n F i j i , see: Chandra and Gunasekera (1982); F i j i C e n t r a l Planning O f f i c e (1975, 1980). 4. Fi e l d h o u s e (1981) has an i n t e r e s t i n g d i s c u s s i o n on the entry of U n i l e v e r i n India i n 1922 and i t s subsequent develop-ment . 5. The m o t i v a t i o n behind the Burns P h i l p takeover of N a v i t i Investments L i m i t e d may have been to gain entry i n t o Solomon I s l a n d s , where N a v i t i Investments L i m i t e d had a s u b s i d i a r y , Solomon I s l a n d s Investments L i m i t e d - - a l a r g e t r a d i n g company (The F i j i Times, 4 J u l y , 1981:16). In 1980, an a p p l i c a t i o n by the Burns P h i l p group to extend i t s o p e r a t i o n s to Solomon Isl a n d s had been r e j e c t e d by the Solomon I s l a n d government (The F i j i Times, 29 October, 1980:5). 6. Some i n d i c a t i o n of t h i s e x p e c t a t i o n can be seen from a j o i n t statement by d i r e c t o r s of B i s h L i m i t e d and Carpenters Indus-t r i a l : " . . . a strong s h i p b u i l d i n g , marine and general engi-neering i n d u s t r y c o u l d , in c o - o p e r a t i o n with the government, form a v i t a l part of the economy" (The F i j i Times, 23 October, 1981:12) . 7. There has been a recent i n c r e a s e i n the awareness of produ-c t i v i t y i n F i j i , although i t i s narrowly seen as work p r o d u c t i -v i t y . F i j i has r e c e n t l y become a member of the Asian P r o d u c t i -v i t y O r g a n i z a t i o n . 8. In the census r e p o r t , the F i j i Bureau of S t a t i s t i c s i n -cludes employers i n the self-employed c a t e g o r y , thus making i t l e s s u s e f u l as a surrogate f o r the in f o r m a l s e c t o r . However, data used here do not i n c l u d e employers. 244 CHAPTER 6 THE MANUFACTURING SECTOR OF FIJI: CHARACTERISTICS OF MANUFACTURING FIRMS AND ESTABLISHMENTS The last chapter attempted to answer the f i f t h of the ten questions posited at the beginning of the thesis by exami-ning the structure and organization of the manufacturing sector of F i j i . This chapter w i l l answer the sixth question: What are the other salient c h a r a c t e r i s t i c s of the manufacturing sector in F i j i in terms of the h i s t o r i c a l background of manufacturing firms, c h a r a c t e r i s t i c s of i n d u s t r i a l plant, u t i l i z a t i o n of machinery, marketing arrangements, and the nature of manufactu-ring employment? In answering t h i s question, th i s chapter w i l l deepen our analysis of the structure and organization of F i j i a n manufacturing. Most of the data used in thi s chapter are de-rived from the survey of manufacturers in F i j i , d e t a i l s of which have already been provided in Chapter 1. Where other data are used, these are indicated in the text. H i s t o r i c a l Background of Firms It i s useful to know the h i s t o r i c a l background of manu-facturing firms for a number of reasons. F i r s t , the h i s t o r i -cal information may enable a better interpretation of the evolution of the structure of manufacturing as well as help explain the contemporary behavior of manufacturing firms. Second, the information on the formation of the firms can provide data to evaluate some of the prevail i n g views concer-ning company formation in developing countries, s p e c i a l l y the 245 r o l e of takeovers i n s t a r t i n g businesses i n developing coun-t r i e s . Given the recent development of manufacturing in F i j i , i t i s not s u r p r i s i n g that i t comprises businesses o r i g i n a t i n g in the other s e c t o r s of the economy. A major p o r t i o n of the manufacturing output i s d e r i v e d from firms o r i g i n a t i n g i n the d i s t r i b u t i v e s e c t o r . Many of these manufacturing firms a r e , moreover, s t i l l h e a v i l y i n v o l v e d i n the d i s t r i b u t i v e s e c t o r . For i n s t a n c e , 49 percent of the f i r m s on which useable data are a v a i l a b l e had a r e t a i l i n g o p e r a t i o n run e i t h e r by the f i r m i t s e l f , or by a r e l a t e d f i r m (Survey of Manufacturers i n F i j i , 1983). The t r a d i n g o r i g i n s and indeed, e x t e n s i v e c u r r e n t l i n k s of manufacturing f i r m s with the d i s t r i b u t i v e s e c t o r appears to be a common fe a t u r e of manufacturing firms i n developing coun-t r i e s . Evans (1979:108), in h i s study of the B r a z i l i a n manufac-t u r i n g s e c t o r w r i t e s , f o r i n s t a n c e , that . . . one of the common f e a t u r e s of the l a r g e s t B r a z i l i a n economic groups i s that they moved i n t o i n d u s t r y v i a commerce. If they had c a p i t a l , l i k e Othon Bezerra de Melo, they c o u l d begin with t h e i r own s t o r e s ; i f they d i d n ot, l i k e Severino P e r e i r a da S i l v a , they worked in other people's s t o r e s . Whether one began from t e x t i l e s or f o o d s t u f f s , i t was n a t u r a l to move from expanding commercial o p e r a t i o n s to manufacturing. We can deepen out understanding of the h i s t o r y of the c u r r e n t manufacturing firms through an examination of a few case s t u d i e s . Presented below are h i s t o r i e s of three represen-t a t i v e manufacturing firms i n F i j i - - t h e Burns P h i l p group rep-r e s e n t i n g the l a r g e , foreign-owned manufacturing f i r m s , the Motibhai and Company L i m i t e d , r e p r e s e n t i n g the medium s i z e d 246 lo c a l l y - o w n e d manufacturing f i r m s , and Cheer I n d u s t r i e s L i m i t e d r e p r e s e n t i n g the small s i z e d locally-owned manufacturing f i r m s . Unless otherwise i n d i c a t e d , most of the data f o r these accounts come from i n t e r v i e w s with r e p r e s e n t a t i v e s of these f i r m s . As w i l l become c l e a r , F i j i a n manufacturing firms have c l o s e p a r e l -l e l s with manufacturing firms i n B r a z i l as has j u s t been des-c r i b e d . Burns P h i l p1 Burns P h i l p (South Sea) Company L i m i t e d , to which we r e f e r r e d i n Chapter 5, i s one of the o l d e s t and l a r g e s t t r a d i n g companies in F i j i . A s u b s i d i a r y of the A u s t r a l i a n company, Burns P h i l p and Company L i m i t e d of Sydney, i t was formed in F i j i in 1921 (Burns P h i l p [South Sea], 1976:2). Along with three other A u s t r a l i a n m u l t i n a t i o n a l s — t h e Carpenter group, Emperor Mining group, and the CSR (already r e f e r r e d to i n Chapter 4) — i t has exerted a dominant i n f l u e n c e on F i j i ' s 2 economy (and perhaps p o l i t i c s ) t o d a t e . L i k e the Carpenter group, the Burns P h i l p group s t a r t e d i n F i j i as a t r a d i n g e n t e r p r i s e with t r a d i n g o p e r a t i o n s i n other P a c i f i c i s l a n d s , s p e c i a l l y i n Papua New Guinea and New Hebrides (now Vanuatu). In F i j i , the group s t o r e s extended to n e a r l y a l l the major centres of settlement u n t i l i t began to r a t i o n a l i z e i t s operations i n F i j i a few years ago. Apart from t r a d i n g , the group has had i n t e r e s t s in n e a r l y a l l the major s e c t o r s of the economy. I t s p e r v a s i v e i n f l u e n c e in the F i j i economy has a l r e a d y been d i s c u s s e d i n the p r e v i o u s c h a p t e r . In Chapter 4 we mentioned the formation of the cement 247 making monopoly, F i j i I n d u s t r i e s L i m i t e d , in which the Burns P h i l p and Company L i m i t e d , the parent company of the F i j i s u b s i d i a r y , was to have " s u b s t a n t i a l " shares ( F i j i Government, 1959:1). T h i s was the beginning of a s e r i o u s i n t e r e s t on the part of the company to enter manufacturing. The company c o n s o l i d a t e d i t s stakes i n the manufacturing s e c t o r of F i j i through the purchase i n the l a t e 1960s of the ope r a t i o n s of Cope Allman L i m i t e d . The purchase gave the Burns P h i l p i n t e r e s t s i n copra m i l l i n g , b i s c u i t m a n ufacturing, soap and detergent manufacturing, and p l a s t i c c o n t a i n e r manufactu-r i n g . The company has enlarged i t s manufacturing i n t e r e s t s s i n c e . I t moved i n t o f u r n i t u r e making, s p e c i a l l y f o r r e t a i l i n g by the f i r m , but has encountered s t i f f c o m p e t i t i o n from small locally-owned firms ( f o r a b r i e f account of the f u r n i t u r e i n d u s t r y i n F i j i , see T a y l o r , 1984). As a r e s u l t , i t has suspe-nded work i n metal f u r n i t u r e , and now c o n c e n t r a t e s only on wood f u r n i t u r e . As noted i n Chapter 5, i t has r e c e n t l y taken over the bankrupt C a s t l e Trading Company L i m i t e d , i n which the F i j i government had some s h a r e h o l d i n g , and has i n d i c a t e d i t s i n t e -r e s t i n vent u r i n g i n t o other manufacturing a c t i v i t i e s as i t r a t i o n a l i z e s i t s F i j i o p e r a t i o n s . The c u r r e n t manufacturing i n t e r e s t s of the group have been examined i n the previous c h a p t e r , and w i l l not be repeated h e r e . T h i s s e c t i o n i s de s i g -ned to show how a m u l t i n a t i o n a l c o r p o r a t i o n that came to F i j i as a t r a d i n g company i n the e a r l y part of t h i s c e n t u r y , became one of the l e a d i n g t r a d i n g companies, indeed one of the two or three l a r g e s t companies i n F i j i , and i n the 1960s, and e s p e c i a -248 l l y s i n c e 1970, has moved s t r o n g l y i n t o manufacturing. The main reasons for the group's i n t e r e s t i n manufactu-r i n g r e l a t e to three main f a c t o r s . F i r s t , the group has found that with the r a p i d development of l o c a l l y - o w n e d firms i n the d i s t r i b u t i v e s e c t o r , and t h e i r a b i l i t y to operate with lower overhead and other c o s t s , i t s p r o f i t a b i l i t y i n the mer-chandize s e c t o r has d e c l i n e d s i g n i f i c a n t l y . T h i s has been spe-c i a l l y t rue i n the case of mass consumption items, where the s m a l l e r supermarkets have been able to s u c c e s s f u l l y c h a l l e n g e the major r e t a i l e r s . T h i s recent comment by the new Chief E x e c u t i v e of Burns P h i l p (South Sea) Company L i m i t e d , Mr Andrew T u r n b u l l , w e l l i l l u s t r a t e s the c o m p e t i t i o n o l d e r , long-e s t a b l i s h e d m u l t i n a t i o n a l t r a d i n g firms are f a c i n g from lo c a l l y - o w n e d f i r m s : If you go anywhere in the i s l a n d s you w i l l see family r e t a i l shops which can knock spots o f f us i n terms of r e t u r n s upon money i n v e s t e d simply because they have got a whole f a m i l y working i n t h e r e . They don't have any b i g s a l a r i e s to meet. They j u s t want to l i v e and, i n the course of time, the f a m i l y becomes wealthy. We cannot cope with that (quoted in P a c i f i c I s l a n d Monthly") 55 [ 1 1 ] : 37; emphasis added). Thus the Burns P h i l p ' s merchandize d i v i s i o n has been performing w e l l below i t s other d i v i s i o n s . The company has i n f a c t , t r i e d to r a t i o n a l i z e i t s F i j i o p e r a t i o n s by c u t t i n g down i t s r e t a i -l i n g o p e r a t i o n s . Second, the government has been p r o v i d i n g major tax and other a s s i s t a n c e to the manufacturing s e c t o r (which w i l l be examined in d e t a i l i n Chapter 9 ) . The Burns P h i l p group, which had a l r e a d y a v a i l e d i t s e l f of o p p o r t u n i t i e s i n the other sec-249 t o r s , was c l e a r l y t a k i n g advantage of the government's f i n a -n c i a l i n c e n t i v e s and i t s heavy p r o t e c t i o n of the l o c a l manufac-t u r i n g o p e r a t i o n s . Data on the p r o f i t a b i l i t y of manufacturing s e c t o r a c t i v i t i e s r e l a t i v e to -the other s e c t o r s are not a v a i l a -b l e , but the widespread e x i s t e n c e of monopolies and o l i g o p o l i e s (see Chapter 5), would no doubt have provided a strong incen-t i v e to the group to enter manufacturing. Thus the manufactu-r i n g s e c t o r was not only an o u t l e t for c a p i t a l when the group began to get out of h i g h l y c o m p e t i t i v e areas such as r e t a i l i n g and w h o l e s a l i n g , but i t was a l s o a very p r o f i t a b l e avenue, thanks to government p o l i c i e s . • . 3 Motibhai and Company L i m i t e d L i k e most other I n d o - F i j i a n firms now a c t i v e in manufac-t u r i n g i n F i j i , the r o o t s of Motibhai and Company were n o u r i s -hed i n the d i s t r i b u t i v e s e c t o r . In f a c t , the case of Motibhai and Company L i m i t e d p r o v i d e s an e x c e l l e n t example of a f i r m making a s u c c e s s f u l t r a n s i t i o n from being an i n f o r m a l s e c t o r f i r m to being a m u l t i n a t i o n a l f i r m , a l b e i t a small one, with investments i n F i j i and A u s t r a l i a . Motibhai and Company L i m i t e d o r i g i n a t e d from a small f a m i l y business s t a r t e d i n 1931 i n Naikumbukumbu, Ba, by the founder of the* present company, an uncle of the present Execu-t i v e D i r e c t o r , Mr Mahendra Motibhai P a t e l . Rural s t o r e s of t h i s kind were, and s t i l l a r e , an important ch a i n i n the d i s t r i b u -t i o n system in F i j i (see, for i n s t a n c e , B a xter, 1977; Chandra, 1979). The s t o r e became a p r o f i t a b l e o p e r a t i o n , and the s u r p l u s was used to b u i l d a modern s t o r e complex in Ba town—a complex 250 that s t i l l remains an important p a r t of the company's present o p e r a t i o n s . In 1946, the f i r m became a p a r t n e r s h i p of two brot h e r s - - t h e uncle who s t a r t e d the f i r m , and Mr Mahendra Motibhai's f a t h e r . P r o f i t s from the two o p e r a t i o n s were used to a c q u i r e r e a l e s t a t e . A c q u i s i t i o n of r e a l e s t a t e has been one of the most common investments by business e n t e r p r i s e s i n many develo-ping c o u n t r i e s , and was a t t r a c t i v e i n the case of F i j i because of i t s s e c u r i t y and steady income. Furthermore, f r e e h o l d land being at a premium because of i t s f i x e d a creage,4 r e a l e s t a t e investments a c q u i r e d an even g r e a t e r a t t r a c t i o n . The f i r s t r e a l e s t a t e investment by the f i r m was i n the heart of today's c a p i t a l c i t y , Suva—Cumming S t r e e t . Here the f i r m p r o v i d e s something of a m i r r o r on what was happening widely i n F i j i — r u r a l s u r p l u s was being siphoned to the urban c e n t r e s , and surplus from- the sma l l e r urban c e n t r e s was being siphoned o f f to the l a r g e r , o f t e n the l a r g e s t urban c e n t r e , Suva. The second major r e a l e s t a t e investment made by the company was, not s u r p r i s i n g l y , i n the second l a r g e s t urban c e n t r e i n F i j i , Lautoka. The f i r m thus showed a very good understanding, of the s p a t i a l dynamics of the F i j i economy, and t h i s no doubt p a r t l y c o n t r i b u t e d to the f i r m ' s r a p i d growth. In the 1950s and 1960s, the f i r m , with the a d d i t i o n of new d i r e c t o r s from among the c h i l d r e n of the founders, began to expand. With i n t e r e s t s i n merchandizing and r e a l e s t a t e , the f i r m expanded i n t o automotive business by o b t a i n i n g the e x c l u -s i v e d i s t r i b u t i o n r i g h t s f o r F i a t brand automotive p r o d u c t s . 251 The main reason for the a c q u i s i t i o n of the f r a n c h i s e , e x p l a i n e d Mr P a t e l , was to give the emerging company i n t e r n a t i o n a l expe-r i e n c e . With the F i a t f r a n c h i s e , the f i r m obtained many other e x c l u s i v e agencies for the i m p o r t a t i o n and d i s t r i b u t i o n of automotive p a r t s . However, f o r v a r i o u s reasons, i n c l u d i n g the e x i s t e n c e then of a two-line t a r i f f system with a preference fo r imports from commonwealth c o u n t r i e s , the F i a t venture f a i l e d . The key element in the f i r m ' s e x p a n s i o n — i n d e e d i n the expansion of most I n d o - F i j i a n f i r m s according to Mr Patel--was the a r r i v a l i n F i j i of the Bank of Baroda. The Bank of Baroda, an Indian government bank, i n t r o d u c e d a new dimension in the f i n a n c i a l system of the c o u n t r y . Before the a r r i v a l of the Bank of Baroda, the other f o r e i g n banks would only advance money on a y e a r - t o - y e a r b a s i s . T h i s had p l a c e d a major c o n s t r a i n t on the expansion of l o c a l businesses as expansion c o u l d only be f i n a n -ced from s u r p l u s e s generated by the firms themselves. The Bank of Baroda showed a gr e a t e r i n t e r e s t i n f i n a n c i n g l o c a l busines-s e s , and i n t r o d u c e d long term f i n a n c i n g for these b u s i n e s s e s . T h i s made i t p o s s i b l e for f i r m s l i k e Motibhai and Company L i m i t e d , and many o t h e r s , to expand beyond the s u r p l u s e s gene-r a t e d by them. Faced with the p r o v i s i o n of these c r e d i t f a c i l i -t i e s by the Bank of Baroda, the o t h e r , more e s t a b l i s h e d banks began to., i n t r o d u c e the same f a c i l i t i e s . The i s s u e of adequate c r e d i t for the development of manufacturing i n developing c o u n t r i e s , and indeed f o r the deve-lopment of indigenous e n t e r p r i s e deserves f u r t h e r comment. I t 252 i s very l i k e l y that in c o l o n i a l F i j i , the c o l o n i z e d p e o p l e , that i s , the l o c a l businessmen, had much gr e a t e r d i f f i c u l t y i n o b t a i n i n g c r e d i t f o r t h e i r businesses than d i d European busine-5 s s e s . T h i s would have r e s u l t e d both from the f a c t that l o c a l businessmen were non-whites i n a r a c i a l l y conscious and r a c i a l -l y - based c o l o n i a l system, and because the method of running b u s i n e s s e s by the l o c a l people would have d i f f e r e d from the methods Europeans were used t o . Furthermore, i t i s a l s o p o s s i b -l e that the foreign-owned banks c o u l d have been under pressure from the l e a d i n g f o r e i g n and European businesses not to advance funds to these emerging f i r m s , f o r they were c l e a r l y r e c o g n i z e d as t h e i r f u t u r e c o m p e t i t o r s . Data c o l l e c t e d f o r t h i s study do not p r o v i d e answers for these p o s s i b i l i t i e s beyond the f a c t that had the Bank of Baroda not come to F i j i , the development of l o c a l businesses would most l i k e l y have been s e r i o u s l y c o n s t r a i n e d . Towards the c l o s e of the l a s t decade, the Motibhai and Company L i m i t e d s u c c e s s f u l l y tendered f o r the d u t y - f r e e l i q u o r c o n c e s s i o n at the Nadi I n t e r n a t i o n a l A i r p o r t , and won the duty-f r e e goods concession soon a f t e r w a r d s . Since the f i r m had d i f f i c u l t y i n o b t a i n i n g many of the i n t e r n a t i o n a l l y a c c e p t a b l e goods f o r i t s c o n c e s s i o n , i t soon began to to accumulate e x c l u -s i v e agencies f o r d u t y - f r e e goods. At the time of the i n t e r -view, Mr P a t e l i n d i c a t e d that h i s company had more than one hundred e x c l u s i v e agencies c o v e r i n g some of the l e a d i n g brand names i n duty f r e e goods. I t i s s i g n i f i c a n t that many of the brand names were p r e v i o u s l y h e l d by the l a r g e r foreign-owned 253 f i r m s . The g r a n t i n g of the d u t y - f r e e concession c l e a r l y estab-l i s h e d the f i r m as a l e a d i n g d i s t r i b u t o r of duty-free goods, and the company has used i t s p o s i t i o n to accumulate as many l e a d i n g brands under i t s d i s t r i b u t o r s h i p as i t c o u l d . I t has a l s o used to advantage i t s other connections i n both the duty-f r e e t r a d i n g s e c t o r , and in the d i s t r i b u t i v e sector g e n e r a l l y - -where i t has been a c t i v e f o r more than h a l f a c e n t u r y . In a major development for the f i r m , indeed for f a m i l y -owned firms i n F i j i , Motibhai and Company Li m i t e d became a p u b l i c company in 1975. The company f l o a t e d 300,000 o n e - d o l l a r shares, of which 100,000 shares were su b s c r i b e d t o . Most of these shares were a c q u i r e d by i n s t i t u t i o n s or c o r p o r a t i o n s r e p r e s e n t i n g indigenous F i j i a n s . In f a c t , Mr Motibhai e x p l a i n e d that h i s f i r m i s e s p e c i a l l y i n t e r e s t e d i n p a r t i c i p a t i o n by indigenous F i j i a n s , and that he i s c o n s i d e r i n g making a f u r t h e r o f f e r i n g to indigenous F i j i a n s in the near f u t u r e . When the o f f e r of the shares was made, f l o a t i n g shares on the l o c a l market had not become accepted--thus the reason for the accep-tance of only o n e - t h i r d of the shares o f f e r e d . However, those who d i d purchase the shares have done extremely well out of the s u b s c r i p t i o n , as the f i r m has p a i d d i v i d e n d s in excess of 20 percent i n most y e a r s . In j u s t f i v e y e a r s , the new owners of the shares would have recovered the cost of t h e i r purchase, and can s t i l l r e a l i z e a c a p i t a l gain on t h e i r s h a r e s . It may be an a p p r o p r i a t e p l a c e to mention that the f i r m of Motibhai and Company L i m i t e d has been c l o s e l y i n v o l v e d with the l e a d e r s h i p of the present government, and Mr Mahendra 254 Motibhai P a t e l i s regarded by most people in F i j i as a c l o s e f r i e n d and c o n f i d a n t e of the Prime M i n i s t e r , Ratu S i r Kamisese Mara.6 Mr P a t e l admits t h i s c o n n e c t i o n , but argues that there i s nothing wrong with i t . The f i r m has a l s o begun manufacturing a beauty l o t i o n , the name of which, according to Mr P a t e l , was suggested by the Prime M i n i s t e r , and the raw m a t e r i a l s for which are d e r i v e d from Lakeba, the home base of the Prime M i n i s t e r . It i s a l s o a p p r o p r i a t e to mention that Mr P a t e l was accused of being i n v o l v e d i n the l a s t general e l e c t i o n s because he commissioned a report f o r the r u l i n g A l l i a n c e p arty that recommended very q u e s t i o n a b l e t a c t i c s f o r winning the l a s t g eneral e l e c t i o n . The a l l e g a t i o n s were i n v e s t i g a t e d by a Royal Commission, which found that the report had indeed been commis-sioned by the A l l i a n c e p arty through Mr P a t e l , but that there was no evidence that the t a c t i c s recommended had been used d u r i n g the e l e c t i o n (see White, 1983). The Motibhai and Company L i m i t e d d i d not enter manufac-t u r i n g u n t i l 1981, when i t a c q u i r e d the F i j i Foods L i m i t e d , a company that was set up with B r i t i s h c a p i t a l , and with substa-n t i a l F i j i government s h a r e h o l d i n g . The Motibhai group turned around the bankrupt f i r m w i t h i n a y e a r . In the same y e a r , the Motibhai and Company L i m i t e d f o l l o w e d another l o c a l l y - b a s e d company in becoming m u l t i n a t i o -n a l . I t a c q u i r e d the o p e r a t i o n s of Ronson P r o p r i e t a r y L i m i t e d of A u s t r a l i a . The new o p e r a t i o n s include both manufacturing of Ronson p r o d u c t s , and i t s marketing c h a i n . The purchase of the Ronson o p e r a t i o n s gave the f i r m a f o o t h o l d i n the much l a r g e r 255 A u s t r a l i a n market and provided i t with a d d i t i o n a l i n t e r n a t i o n a l e x p e r i e n c e . It a l s o p r o v i d e d the f i r m with an o p p o r t u n i t y to c o n s o l i d a t e i t s F i j i o p e r a t i o n s with the b e n e f i t of a much l a r g e r t o t a l o p e r a t i o n . The company a l s o began to pack B u s h e l l ' s Tea, for long the l e a d i n g tea brand in F i j i , under l i c e n c e . The o p e r a t i o n t e s t i f i e s to the e f f o r t of a m u l t i n a t i o n a l to p r o t e c t i t s market p o s i t i o n against other l o c a l l y - p a c k a g e d tea brands, such as Punja's Ceylon Tea, through l o c a l packing under l i c e n c e . It e q u a l l y r e f l e c t s the i n t e r n a t i o n a l c o l l a b o r a t i v e approach of Motibhai and Company L i m i t e d . The entry of Motibhai i n t o manufacturing was no doubt prompted by the o p p o r t u n i t y o f f e r e d by the purchase of a bank-rupt company, but i t goes beyond t h i s . I t s a r c h - r i v a l , Punja and Sons L i m i t e d , had a l r e a d y been i n manufacturing for some time, and had c o n s i d e r a b l y expanded i t s o p e r a t i o n s . Motibhai and Company was not to be l e f t b ehind. Furthermore, i t was r e a l i z i n g , as were many other b u s i n e s s e s , that with government p r o t e c t i o n , and the e x i s t e n c e of monopolies and o l i g o p o l i e s , the manufacturing sector promised good r e t u r n s . In any c a s e , the company had e x c e l l e n t rapport with the government m i n i s t e r s and other p o l i t i c i a n s , which would come handy in a business environment th a t was becoming i n c r e a s i n g l y p o l i t i c i z e d . Thus t h i s s e c t i o n on the Burns P h i l p and Motibhai and Company L i m i t e d amply demonstrates the t r a d i n g o r i g i n s of manu-f a c t u r i n g f i r m s in F i j i . The g e n e r a l e v o l u t i o n of the firms as o u t l i n e d here i s r e p r e s e n t a t i v e of most l o n g e r - e s t a b l i s h e d 256 manufacturing e n t e r p r i s e s in F i j i , and c l e a r l y underscores the recency of the i n t e r e s t i n manufacturing i n F i j i ' . 7 Cheer I n d u s t r i e s L i m i t e d The case of Cheer I n d u s t r i e s L i m i t e d i s i n t e r e s t i n g i n that i t i l l u s t r a t e s how many manufacturing e n t e r p r i s e s are now being e s t a b l i s h e d by people not o r i g i n a t i n g i n the d i s t r i b u t i v e s e c t o r . Mr Joe Cheer, the p r i n c i p a l owner of the f i r m ( h i s wife owns the other f i f t y percent of the shares i n the company) had worked from 1959 to 1971 f o r the Northern F u r n i t u r e L i m i t e d , a l a r g e foreign-owned maker of high q u a l i t y f u r n i t u r e i n Lautoka, F i j i . A f t e r l e a v i n g the Northern F u r n i t u r e i n 1971, Mr Cheer worked f o r the gian t t o u r i s t c o r p o r a t i o n , Southern H o t e l and Development L i m i t e d (see Rokotuivuna et a l . , 1973:31-38 f o r an account of t h i s i n t e r e s t i n g company) i n Navua, F i j i . However, at t h i s time, Mr Cheer's former s u p e r i o r at Northern F u r n i t u r e approached him to form a company c a l l e d A.W.A.J. Wood Products L i m i t e d with two A u s t r a l i a n n a t i o n a l s . The then Chief Engineer of the F i j i Sugar C o r p o r a t i o n had 25 percent of the shares i n the new company. In 1974, Mr Cheer and another partner in the business bought the i n t e r e s t s of the other s h a r e h o l d e r . The company expanded o p e r a t i o n s r a p i d l y , s p e c i a l l y i n e n g i n e e r i n g , and grossed more than one m i l l i o n d o l l a r s i n 1980. In 1981, however, the other shareholder bought Mr Cheer's shares, and Mr Cheer formed the Cheer I n d u s t r i e s L i m i t e d with h i s wife as the other s h a r e h o l d e r . Although the f i r m i s not very l a r g e , with a t o t a l emplo-257 yment i n 1983 of t h i r t y - t h r e e p e o p l e , and a gross output of approximately $F270,000, i t appears to be set f o r r a p i d expan-s i o n . Mr Cheer i n d i c a t e d that h i s firm's gross output had doubled i n 1983, a p e r i o d during which most companies found d i f f i c u l t to even maintain t h e i r e x i s t i n g l e v e l of output. The h i s t o r i c a l background of t h i s company i s very i n t e -r e s t i n g f o r a number of reasons. F i r s t , i t shows how emplo-yees of large foreign-owned firms use these firms for s k i l l f o r m a t i o n , and then branch out on t h e i r own. I t may i n d i c a t e an important c o n t r i b u t i o n towards indigenous e n t r e p r e n e u r i a l deve-lopment by f o r e i g n m u l t i n a t i o n a l s , a l b e i t u n c o n s c i o u s l y . The h i s t o r y of t h i s f i r m a l s o shows how f o r e i g n n a t i o n a l s i n F i j i , o f t e n i n good j o b s , seek out promising l o c a l p a r t n e r s f o r t h e i r ventures (Mr Cheer i s a Rotuman F i j i a n ) . Although F i j i ' s laws allow f o r a 100 percent foreign-owned manufacturing f i r m , the government has made i t known that i t p r e f e r s j o i n t v e n t u r e s , and has i n d i c a t e d i t s w i l l i n g n e s s to use f o r e i g n exchange r e g u l a t i o n s to ensure some degree of l o c a l ownership i n new v e n t u r e s . It a l s o shows how some e x p a t r i a t e employees with t h e i r high s a l a r i e s f i n d i t u s e f u l to provide e q u i t y f o r new manufacturing v e n t u r e s — a n important i n d i c a t i o n that r e t u r n s i n these a c t i v i t i e s are a t t r a c t i v e , f o r otherwise they c o u l d i n -vest t h e i r surplus i n t h e i r own c o u n t r i e s , or i n higher-y i e l d i n g investments i n F i j i i t s e l f . Data were a l s o gathered on how manufacturing firms i n t e -rviewed had been formed, and i n d i c a t e that t a k e o v e r s , which have played an important method of entry of f o r e i g n c a p i t a l i n 258 manufacturing i n other developing c o u n t r i e s , has been very i n s i g n i f i c a n t i n the case of F i j i - - o n l y 5 percent of the 104 firms interviewed had been so formed. The r e s t were formed p r i m a r i l y as new v e n t u r e s , almost e q u a l l y by people a l r e a d y i n business i n F i j i — p r i m a r i l y i n d i s t r i b u t i o n - - a n d those f o r whom manufacturing represented the f i r s t commercial e n t e r p r i s e . I t would appear, then, that takeover i s not a major way f o r the entry of f o r e i g n c a p i t a l i n the manufacturing sector in F i j i . T h i s may be r e l a t e d to the f a c t that g i v e n F i j i ' s e a r l y stage of i n d u s t r i a l i z a t i o n , there i s as yet no need to r e s o r t to takeover as there are many areas where new ventures can be s t a r t e d . It may a l s o be r e l a t e d to the f a c t t h a t , on the whole, the government i s committed to i n c r e a s i n g the l e v e l of l o c a l ownership in the manufacturing s e c t o r , and may have used the t h r e a t of f o r e i g n exchange r e s t r i c t i o n s to wade o f f p o t e n t i a l t a k e o v e r s . Although there i s no law r e l a t i n g to takeovers i n F i j i , and firms are f r e e to takeover o t h e r s , the government has powers under the C e n t r a l Monetary Act to r e f u s e to allow f o -r e i g n exchange t r a n s f e r s where i t does not c o n s i d e r a takeover to be i n the n a t i o n a l i n t e r e s t . As we saw i n the l a s t c h a p t e r , there i s a N a t i o n a l Takeover Committee tha t a d v i s e s the M i n i s -t e r of Finance on what measures, i f any, he should take i n the case of t a k e o v e r s . As the l a s t chapter i n d i c a t e s too, takeovers are becoming more common, and may w e l l become more important i n the f u t u r e . A d d i t i o n a l data on the h i s t o r y of the firms i s presented i n Table 6.1, which r e i n f o r c e s our comments i n Chapter 4 on the 259 TABLE 6.1 THE HISTORY OF MANUFACTURING FIRMS IN F I J I : DATA FROM THE SURVEY OF MANUFACTURERS IN F I J I , 1983 Pe r i o d When Firm Formed Number of Firms Percent Before 1945 3 3 1945-1949 7 7 1950-1954 3 3 1955-1959 4 4 1960-1964 1 5 1 5 1965-1969 1 0 1 0 1970-1974 23 23 1975-1959 22 22 1980-1983 1 4 1 4 Not A v a i l a b l e 3 T o t a l 1043 101 SOURCE: Survey of Manufacturers i n F i j i , 1983. aA l t h o u g h 108 es t a b l i s h m e n t s were i n t e r v i e w e d , only 104 f i r m s were r e p r e s e n t e d — t h a t i s , some firms owned more than one e s t a b l i s h m e n t . slow development of manufacturing i n the c o l o n i a l p e r i o d . I t a l s o p r o v i d e s q u a n t i t a t i v e support f o r our argument that the 1960s marked a spurt of i n d u s t r i a l i z a t i o n i n F i j i . Furthermore, i t p o i n t s to the r o l e independence has played i n F i j i ' s indus-t r i a l development—59 percent of the int e r v i e w e d manufacturing f i r m s with complete data were formed e i t h e r i n the year when F i j i gained p o l i t i c a l independence, or s u b s e q u e n t l y — a l t h o u g h F i j i has been an independent country f o r only fourteen years ( t h i r t e e n years i n 1983 when f i e l d w o r k was undertaken) whereas i t was a colony f o r n i n e t y - s i x y e a r s . T h i s general h i s t o r i c a l p i c t u r e of the development of 260 manufacturing i n F i j i i s supported by data gathered from the 8 o f f i c e of the R e g i s t r a r of Companies, summarized in Table 6.2. The data i n Table 6.2 bear out our assessment of the r o l e i n independence in F i j i ' s manufacturing development—48 percent of the n i n e t y firms in the sample were formed e i t h e r i n 1970 or subsequently. Both Tables 6.1 and 6.2 provide strong support for the argument that c o l o n i a l i s m was an era of slow manufactu-r i n g development, and that independence has p r o v i d e d an impor-tant impetus to i n d u s t r i a l i z a t i o n i n developing c o u n t r i e s . In p a r t i c u l a r , the data provide s t r o n g support f o r G r i f f i n ' s p o s i -t i o n that Without d e c o l o n i z a t i o n there probably would have been no development economics, or development s t u d i e s and p o s s i b l y not much development e i t h e r ( G r i f f i n , 1981:221; emphasis i n s e r t e d ) . P o l i t i c a l independence c o u l d have encouraged the develo-pment of manufacturing i n F i j i i n two main ways. F i r s t , given the experience with p o s t - c o l o n i a l p o l i c i e s elsewhere, which almost without e x c e p t i o n , i n v o l v e d high l e v e l s of p r o t e c t i o n to domestic manufacturing from i m p o r t s , f i r m s , s p e c i a l l y multina-t i o n a l f i r m s , may have moved to p r o t e c t t h e i r markets by being the f i r s t to begin manufacturing and thus be granted p r o t e c t i o n in the domestic market. F i e l d h o u s e (1981:59) argues, f o r i n s t a -nce, i n the case of U n i l e v e r i n I n d i a , that when t a r i f f s came, i t became c l e a r to U n i l e v e r that " . . . l o c a l manufacture was e s s e n t i a l to save the e s t a b l i s h e d market f o r U n i l e v e r brands." Another major impact of p o l i t i c a l independence i n F i j i was that the government began to formulate some p o s i t i v e p o l i -c i e s f o r the development of m a n u f a c t u r i n g — b y p r o v i d i n g , f o r 261 TABLE 6.2 THE PERIOD OF INCORPORATION OF MANUFACTURING FIRMS IN F I J I : DATA FROM THE REGISTRAR OF COMPANIES Perio d When Firm Formed Number of Firms Percent Before 1945 1 1 1945-1949 2 2 1950-1954 2 2 1955-1959 4 4 1960-1964 1 3 1 4 1965-1969 16 18 1970-1974 25 28 1975-1959 22 24 1980-1983 5 6 T o t a l 90 99 SOURCE: Survey of Company Records i n F i j i , 1983. i n s t a n c e , f i n a n c i a l i n c e n t i v e s to new i n d u s t r i e s . I n d u s t r i a l P l a n t and Operating C h a r a c t e r i s t i c s F e a s i b i l i t y S t u d i e s Modern business p r a c t i c e c a l l f o r sound planning and f e a s i b i l i t y s t u d i e s p r i o r to the establishment of manufacturing u n i t s . A q u e s t i o n i n the survey of manufacturers in F i j i asked whether and what kind of f e a s i b i l i t y s t u d i e s had been underta-ken p r i o r to the establishment of the manufacturing e n t e r p r i s e s being i n t e r v i e w e d . The r e s u l t s are summarized i n Table 6.3. A f a i r l y l a r g e number of the establishments had been s t a r t e d with no f e a s i b i l i t y study of any kind (40 p e r c e n t ) . Many of these establishments were small s c a l e , and manufacturers f r e q u e n t l y s a i d that there were other people i n v o l v e d i n the production of 262 TABLE 6.3 THE DEGREE AND NATURE OF FEASIBILITY STUDIES IN MANUFACTURING ESTABLISHMENTS IN FIJI Nature of F e a s i b i l i t y Number of Percent Study Establishments No f e a s i b i l i t y study 43 40 F u l l - s c a l e f e a s i b i l i t y 40 37 S e m i - f e a s i b i l i t y 15 14 Other 9 8 No i n f o r m a t i o n a v a i l a b l e 1 T o t a l 108 99 SOURCE: Survey of Manufacturers i n F i j i , 1983 the items i n q u e s t i o n , and that they appeared to be making p r o f i t s . T h i s i n d i c a t e d that they too c o u l d make p r o f i t s . The s l i g h t l y more than o n e - t h i r d of the establishments r e p o r t i n g f u l l - s c a l e f e a s i b i l i t y s t u d i e s were i n v a r i a b l y the l a r g e r f i r m s , and represented the more recent e s t a b l i s h m e n t s . Firms t h a t had borrowed from the F i j i Development Bank or those that had borrowed from the commercial banks, or those that had sought a s s i s t a n c e from the government, have had to prepare f e a s i b i l i t y s t u d i e s , and t h i s may p a r t l y r e f l e c t the prevalence of f e a s i b i l i t y s t u d i e s i n these i n s t a n c e s . F i n a l l y , most f o -r e i g n i n v e s t o r s r o u t i n e l y undertake f e a s i b i l i t y s t u d i e s , and s i n c e f o r e i g n investment i s present i n the manufacturing sec-t o r , t h i s may a l s o e x p l a i n the importance of f e a s i b i l i t y s t u -d i e s . Some establishments r e p o r t e d that they had been formed a f t e r what has here been c a l l e d s e m i - f e a s i b i l i t y s t u d i e s . T h i s 2 6 3 meant that the firms concerned had undertaken some c o n s u l t a -t i o n , u s u a l l y with f r i e n d s or r e l a t e d companies, and the owners had undertaken f o r e i g n t r a v e l to seek out p o s s i b i l i t i e s . A tendency not to undertake proper f e a s i b i l i t y s t u d i e s , combined with inadequate f e a s i b i l i t y study e x p e r t i s e a v a i l a b l e w i t h i n F i j i (see F o r s y t h e , 1984), has l e d to much p u b l i c i z e d d u p l i c a t i o n in some product l i n e s i n the manufacturing s e c t o r i n F i j i . In f a c t the issue of d u p l i c a t i o n i n the manufacturing s e c t o r i n F i j i assumed such prominence in 1983 that the gover-nment appointed a s p e c i a l c o n s u l t a n t to r e p o r t on i t , and to suggest p o s s i b l e government p o l i c i e s r e l a t i n g to d u p l i c a t i o n . The S e t t i n g up of Establishments and I n i t i a l Machinery In the overwhelming m a j o r i t y of the cases (82 p e r c e n t , N=107), establishments i n t e r v i e w e d had been set up by firms owning them. In most cases t h i s meant having the b u i l d i n g s e r e c t e d , but i n some cases b u i l d i n g s were l e a s e d . Nearly 16 percent of the establishments had been a c q u i r e d as going con-c e r n s . The data here support the o b s e r v a t i o n made e a r l i e r that the i n c i d e n c e of takeover as a form of entry i n t o the manufac-t u r i n g s e c t o r in F i j i has not been very s i g n i f i c a n t to date. The b u i l d i n g s housing the p l a n t and machinery were, in about two-thirds of the c a s e s , designed f o r manufacturing. It i s s i g n i f i c a n t , however, that i n o n e - t h i r d of the c a s e s , b u i l -dings used as f a c t o r i e s were not designed f o r t h e i r c u r r e n t use. T h i s has meant not only a lower l e v e l of worker s a f e t y and comfort, but sub-optimal work o r g a n i z a t i o n . As we w i l l see 264 l a t e r i n t h i s c h a p t e r , many manufacturers i n d i c a t e d that they c o u l d i n c r e a s e t h e i r output through an improved b u i l d i n g com-p l e x . T h i s i s s p e c i a l l y so in the case of newly e s t a b l i s h e d garment manufacturing f a c t o r i e s , which, because of t h e i r hasty establishment to meet a r a p i d l y growing overseas market, have been e s t a b l i s h e d mostly i n warehouses. These firms represent a l a t e n t f o r c e in i n d u s t r i a l m o b i l i t y as often surrounding l o t s have been taken up, and the land c o s t s are p r o h i b i t i v e l y high compared with those i n the new i n d u s t r i a l e s t a t e s , or in the o u t l y i n g suburban a r e a s . Many T h i r d World c o u n t r i e s have f r e q u e n t l y r e l i e d on second-hand machinery f o r the establishment of t h e i r f a c t o r i e s . T h i s has had both advantages, i n that lower c a p i t a l c o s t s are e n t a i l e d , and disadvantages because of t h e i r frequent break-downs, and the d i f f i c u l t y of adequately s e r v i c i n g them in c o u n t r i e s not possessing an adequate t e c h n i c a l base. The o l d e r machinery has f r e q u e n t l y been a major o b s t a c l e to e f f i c i e n c y both because of t h e i r more frequent down-time, and because of t h e i r t e c h n o l o g i c a l o b s o l e s c e n c e . Second-hand machinery has been important i n the nascent manufacturing s e c t o r s of c o u n t r i e s i n the South P a c i f i c . F a i r -b a i r n (1971), for i n s t a n c e , noted i n t h i s p i o n e e r i n g study that second-hand machinery was a prominent feature of the manufactu-r i n g s e c t o r of Western Samoa. Table 6.4 presents data on the i n i t i a l machinery for the est a b l i s h m e n t s i n t e r v i e w e d . A very s u b s t a n t i a l degree of second-hand machinery does e x i s t i n F i j i . However, new 265 TABLE 6.4 INITIAL MACHINERY OF MANUFACTURING ESTABLISHMENTS IN FIJI Kind of Number of Percent Machinery Establishments Combination of new and second-hand 33 38 New 30 34 Second-hand 25 28 Not a p p l i c a b l e (no machinery, establishment acquired) 16 M i s s i n g 4 T o t a l 108 100 SOURCE: Survey of Manufacturers in F i j i , 1983. machinery, and a combination of new and second-hand machinery have been important as w e l l . O v e r a l l , second-hand machinery has not been as important a s , f o r i n s t a n c e , i n Western Samoa. The general impression of the F i j i a n manufacturing s e c t o r i s that i t uses modern, up-to-date machinery. In t h i s r e s p e c t , i t may be somewhat u n l i k e many other developing c o u n t r i e s . F o rsythe (1984) has r e c e n t l y submitted a report to the F i j i government concerning technology c h o i c e and c o n t a i n i n g a d v i c e on p o s s i b l e p o l i c y i n i t i a t i v e s . As part of the r e p o r t , Forsythe examines the e x i s t i n g manufacturing s e c t o r technology in F i j i , and i t w i l l be u s e f u l f o r t h i s study to d i s c u s s some of h i s f i n d i n g s as they r e l a t e to manufacturing technology. Forsythe (1984:260-271) prov i d e s a u s e f u l c a t e g o r i z a t i o n of the ki n d of technology being used i n the manufacturing s e c t o r . He found that i n a sample of s i x t y - f i v e firms that 266 p r o v i d e d useable data to him, 6 percent of the firms used the best technology a v a i l a b l e — t e c h n o l o g y regarded by the indus-t r i a l i z e d c o u n t r i e s as s t a t e - o f - t h e - a r t . The f i r m s were in the food and d r i n k , and tobacco sub-groups, and i n the more recen-t l y e s t a b l i s h e d p l a s t i c s sub-group ( F o r s y t h e , 1984:271). A s u b s t a n t i a l number (45 percent) used c o n v e n t i o n a l technology--technology u s u a l l y u t i l i z e d by firms in developed c o u n t r i e s , but technology that was a step behind the "best technology". Thus more than h a l f of the firms were using technology that was c u r r e n t i n the i n d u s t r i a l i z e d c o u ntries,. implying that the F i j i a n manufacturing s e c t o r i n c o r p o r a t e s modern, up-to-date technology. S i g n i f i c a n t l y , only 9 percent of the firms used labour i n t e n s i v e modern technology, while only 8 percent used " t r a d i t i o n a l " t e c h n o l o g y . F o r s y t h e ' s f i n d i n g s confirm the c o n c l u s i o n i n Chapter 5 using c a p i t a l i n t e n s i t y data that F i j i ' s manufacturing s e c t o r i s c a p i t a l i n t e n s i v e . F o r s y t h e ' s c h a r a c t e r i z a t i o n of the manufacturing sector of F i j i i s worth quoting here: . . . i t i s c l e a r that i n a b s o l u t e terms F i j i ' s manufact-u r i n g s e c t o r i s dominated by users of f a i r l y c a p i t a l -i n t e n s i v e , r e c o g n i z a b l y "modern" technology. Labour-i n t e n s i v e , j o b - c r e a t i n g technology i s not widely used . . . ( F o r s y t h e , 1984:272; o r i g i n a l emphasis). Most manufacturing e s t a b l i s h m e n t s in F i j i are r e l a t i v e l y c a p i t a l i n t e n s i v e , as we have a l r e a d y mentioned. The answer to the q u e s t i o n on the replacement value of machinery and p l a n t , summarized i n Table 6.5, p r o v i d e s a d d i t i o n a l support to the impression of c a p i t a l i n t e n s i t y i n F i j i ' s manufacturing s e c t o r . The mean replacement value of machinery per establishment was 267 TABLE 6.5 THE REPLACEMENT COST OF (NEW) MACHINERY IN MANUFACTURING ESTABLISHMENTS IN F I J I , 1983 Cost ($F000) Number of Establishments Percent <10 1 3 1 4 10- 49 18 19 50- 89 1 1 1 2 90- 1 29 9 1 0 1 30- 1 69 2 2 170- 209 3 3 210- 249 0 -250- 289 3 3 290- 499 3 3 500- 999 9 1 0 1 000-1999 7 7 2000- 4999 8 9 >4999 8 9 Not a v a i l a b l e 14 — T o t a l 1 08 101 SOURCE: Survey of Manufacturers i n F i j i , 1983. $4,864,457, a high f i g u r e f o r a developing c o u n t r y , and i n d i c a -t i v e of the entry b a r r i e r s faced by small businesses t r y i n g to enter the manufacturing s e c t o r . However, the mean value of replacement cost of machinery i s p a r t i a l l y d i s t o r t e d by the extremely h i g h c o s t s of machinery replacement i n the country's l a r g e s t manufacturing e s t a b l i s h m e n t s — t h e four sugar m i l l s . The sugar m i l l s , f o r i n s t a n c e , put the replacement cost of t h e i r machinery at very c l o s e to a hundred m i l l i o n d o l l a r s . Table 6.5 does i n d i c a t e the presence of small manufacturers, with r e p l a -cement c o s t of machinery of l e s s than $F10,000. Most of these e s t a b l i s h m e n t s are i n t a i l o r i n g , which has continued to be a fam i l y c o n c e r n , f u r n i t u r e making, and h a n d i c r a f t manufacturing. 268 On the whole data in Table 6.5 p o i n t to a mixture of d i f f e r e n t types of manufacturing that comprise the manufacturing system of F i j i - - f r o m small h a n d i c r a f t manufacturers, a l b e i t small in number , to very l a r g e , complex and extremely c a p i t a l i n t e n s i v e sugar m i l l s . The manufacturing s e c t o r , on the whole, leans towards being c a p i t a l i n t e n s i v e and modern, although given the market o r i e n t a t i o n , and the small domestic market, e s t a b l i s -hments, tend to be s m a l l . These f i n d i n g s are supported by those of Forsythe (1984). The firms were a l s o asked to i n d i c a t e how they had made t h e i r machinery purchase d e c i s i o n , f o r i t i s an important, perhaps c r i t i c a l t e c h n o l o g i c a l d e c i s i o n that a f f e c t s the p e r f o -rmance, even s u r v i v a l of the f i r m s . The responses are summa-r i z e d in Table 6.6, which a l s o r e i n f o r c e s the impression of much d i v e r s i t y i n the manufacturing sector i n F i j i . On the one extreme, a l a r g e number of firms employed an i n d i v i d u a l - b a s e d t e c h n o l o g i c a l decision-making. The owner, or a s e n i o r partner f r e q u e n t l y decided what types of machinery are r e q u i r e d , where they are to be purchased, and on what c o n d i t i o n s . In some c a s e s , these i n d i v i d u a l s t r a v e l i n t e r n a t i o n a l l y to examine a range of o p t i o n s ; i n others they decide on the b a s i s of t h e i r own knowledge, or on the advice of v i s i t i n g machinery salesmen. Thus in some cases t h e i r d e c i s i o n s are a p p a r e n t l y w e l l i n f o r -med, but i n others they are n o t . However, no matter how w e l l informed, the widespread tendency towards i n d i v i d u a l - b a s e d t e c h n o l o g i c a l decision-making leaves a l o t of scope f o r techno-l o g i c a l s u b - o p t i m a l i t y with respect to the kind of technology 269 TABLE.6.6 THE NATURE OF MACHINERY PURCHASE DECISION AMONG FIJIAN MANUFACTURERS, 1983 Purchase D e c i s i o n No of Estab-lishments Percent (N=91) D e c i s i o n made through a combination of processes 38 42 D e c i s i o n made by an i n d i v i d u a l , u s u a l l y owner of f i r m 33 37 D e c i s i o n made by a group appointed w i t h i n the f i r m 9 1 0 D e c i s i o n made with the h e l p of r e l a t e d f i r m 8 9 D e c i s i o n based on overseas c o n s u l t a n t s ' recommendations 3 3 Not a p p l i c a b l e or not a v a i l a b l e 1 7 — T o t a l 108 101 SOURCE: Survey of Manufacturers i n F i j i , 1983. purchased, the o r i g i n of purc h a s e , and p r i c e s p a i d . For a l a r g e number of f i r m s , the t e c h n o l o g i c a l d e c i s i o n -making c o n s i s t e d of a combination of m e t h o d s — u s i n g the ser-v i c e s of l o c a l machinery a g e n t s , r e l i a n c e on machinery broc-hures, use of the s e r v i c e s of v i s i t i n g salesmen, mostly from New Zealand, and on advice from f r i e n d s . There i s very l i t t l e evidence of p r o f e s s i o n a l c o n s u l t a n t input i n t o t e c h n o l o g i c a l decision-making in F i j i - - o n l y 3 per-cent of the fi r m s employed p r o f e s s i o n a l overseas c o n s u l t a n t s . S l i g h t l y more common than employing overseas c o n s u l t a n t s was the p r a c t i c e of r e c e i v i n g d i r e c t i v e s and advice from parent or r e l a t e d f i r m s . T h i s happened almost e x c l u s i v e l y i n the case of 270 foreign-owned s u b s i d i a r i e s . Together with the use of f o r e i g n c o n s u l t a n t s , then, a small number of firms do r e l y on p r o f e s -s i o n a l c o n s u l t a n t i n p u t . However, the input of the parent companies c o u l d be disadvantageous as these firms would not have the advantage of d e t a i l e d l o c a l knowledge, and i n some cases seem to be o f f - l o a d i n g t h e i r d i s c a r d e d machinery. Some cases of t h i s were encountered in the survey. E s t a b l i s h m e n t s were a l s o asked how they a c q u i r e d the p r o d u c t i o n t e c h n o l o g i c a l know-how; the r e s u l t s are summarized in Table 6.7. By f a r , the m a j o r i t y of the establishments had been set up on the b a s i s of personnel w i t h i n the f i r m . T h i s happened mostly in low-technology a r e a s , where the owners had done a p p r e n t i c e s h i p s b e f o r e , e i t h e r o u t s i d e the present manufa-c t u r i n g o p e r a t i o n , or i n the f a m i l y b u s i n e s s . In some c a s e s , c h i l d r e n of the owners had been sent f o r f u r t h e r education i n s p e c i f i c a r e a s , and they were mainly r e s p o n s i b l e f o r s e t t i n g up new o p e r a t i o n s . In many c a s e s , the i n i t i a l know-how was d e r i v e d from the l a r g e foreign-owned o p e r a t i o n s , such as the CSR, Carpenter group, Burns P h i l p , and Emperor Gold M i n i n g . The c o n t r i b u t i o n of m u l t i n a t i o n a l s to the d i s s e m i n a t i o n of know-how has not been adequately acknowledged in the development l i t e r a -t u r e ; i n the case of F i j i , they played an important r o l e in the d i s s e m i n a t i o n of l o w - l e v e l s k i l l s that helped i n the formation of many loc a l l y - o w n e d manufacturing e s t a b l i s h m e n t s . In the t e c h n o l o g i c a l l y more complex forms of manufactu-r i n g , overseas personnel had to be brought i n to set up the o p e r a t i o n s , and to t r a i n l o c a l s t a f f i n t h e i r p l a c e . In these 271 TABLE 6.7 THE ACQUISITION OF THE PRODUCTION KNOW-HOW IN MANUFACTURING IN FIJI D e r i v a t i o n of Number of Percent Know-how Establishments Derived from personnel w i t h i n the f i r m 45 43 Through recruitment of overseas personnel 1 7 1 6 Through a combination of overseas personnel and personnel w i t h i n the f i rm 1 6 1 5 Through l o c a l personnel o u t s i d e the f i r m 6 6 Through l i c e n c e 7 7 Other 1 4 1 3 Not a v a i l a b l e 3 — T o t a l 108 100 SOURCE: Survey of Manufacturers i n F i j i , 1983. c a s e s , the firms had no major t e c h n o l o g i c a l c a p a b i l i t y in these a r e a s , and r e l i e d completely on overseas p e r s o n n e l . However, given the very much higher cost of f o r e i g n p e r s o n n e l , and the s t r i n g e n t immigration r e g u l a t i o n s governing the o b t a i n i n g of work permits by n o n - n a t i o n a l s , most of the f o r e i g n personnel work f o r short p e r i o d s , and t r a i n l o c a l s t a f f to r e p l a c e them. The l o c a l s t a f f i n F i j i have become capable of ha n d l i n g complex manufacturing machinery, and given the e a r l y t r a i n i n g , they are abl e to run and maintain modern manufacturing equipment. In the case of the F i j i Sugar C o r p o r a t i o n , f o r i n s t a n c e , which i s the l a r g e s t manufacturing f i r m i n F i j i , a l l i t s s t a f f are l o c a l , i n c l u d i n g a l l the c h i e f e n g i n e e r s . The c o n s t r u c t i o n of the 272 P a c i f i c I s l a n d s ' l a r g e s t timber treatment p l a n t in Suva recen-t l y e n t i r e l y by l o c a l engineers and workmen (The F i j i Times, 13 December, 1980:24) a l s o i l l u s t r a t e s the high degree of t e c h n i -c a l c a p a c i t y workers in F i j i have, developed. However, most la r g e manufacturers maintain c o n t a c t s with overseas t e c h n i c a l s p e c i a l i s t s i n the case of problems that they cannot handle l o c a l l y . In almost an equal number of f i r m s , there were some people with some c a p a b i l i t y in the a r e a , and they were helped by overseas p e r s o n n e l . The i s s u e of i n d u s t r i a l l i c e n s i n g has f i g u r e d prominen-t l y i n the l i t e r a t u r e on i n d u s t r i a l i z a t i o n i n developing coun-t r i e s . Many m u l t i n a t i o n a l s are changing t h e i r p a t t e r n of inves-tment i n developing c o u n t r i e s from d i r e c t investment to l i c e n -s i n g t h e i r i n d u s t r i a l technology. However, the nature of the manufacturing s e c t o r i n F i j i - - w h i c h i s p r i m a r i l y geared to the p r o d u c t i o n of standard g o o d s — d o e s not c a l l f o r i n d u s t r i a l l i c e n s i n g . However, there were seven establishments that had been e s t a b l i s h e d on the b a s i s of i n d u s t r i a l l i c e n s i n g . L i c e n s i n g has been used by d e v e l o p i n g c o u n t r i e s to ac-q u i r e access to s o p h i s t i c a t e d technology without having to spend l a r g e amounts of money on r e s e a r c h and development. In the case of F i j i , u n f o r t u n a t e l y , l i c e n s i n g i s being used mainly to a c q u i r e packaging r i g h t s to brand name food p r o d u c t s . A good example i s the use of l i c e n s i n g by the Motibhai and Company L i m i t e d to pack B u s h e l l s Tea. The f a c t that one does not need l i c e n s i n g to ensure the maintenance of q u a l i t y i s shown by the 273 success of Punja's Ceylon Tea, which i s being packaged by Punja and Sons L i m i t e d without the use of l i c e n s e d technology. Simi-l a r l y , the f i r m of Magan L a i Jiwa and Sons L i m i t e d , a major c o n f e c t i o n e r y manufacturer, has achieved e n v i a b l e growth and export performance through i n d i g e n o u s l y designed and produced c o n f e c t i o n e r y . These examples i n d i c a t e that l i c e n s i n g i n t e c -h n o l o g i c a l l y simple areas may be l o s i n g F i j i v a l u a b l e f o r e i g n exchange simply for the a c q u i s i t i o n of brand names. The gover-nment c o u l d examine the issue of l i c e n s i n g , and request that l i c e n s i n g be used to a c q u i r e t e c h n o l o g i c a l know-how in s t a t e -o f - t h e - a r t technology, r a t h e r than f o r the a c q u i s i t i o n of brand names. Forsythe (1984) p r o v i d e s some a d d i t i o n a l data on the choice of technology, and i t w i l l be u s e f u l to report h i s f i n d i n g s . He found t h a t , not s u r p r i s i n g l y , most of the machine-ry i s imported from developed c o u n t r i e s (only 24 percent of the firms i n h i s sample had purchased any machinery from developing c o u n t r i e s , e s p e c i a l l y I n d i a and Taiwan) ( F o r s y t h e , 1984:274). It i s i n t e r e s t i n g that most of the firms purchasing machinery from de v e l o p i n g c o u n t r i e s were locally-owned f i r m s . T h i s may be due to the c u l t u r a l connections to India of many of the manufa-c t u r e r s , but i t may a l s o i n d i c a t e the r e a d i n e s s of l o c a l l y -owned companies to examine sources i n d e v e l o p i n g c o u n t r i e s , where many c o u n t r i e s have now a c q u i r e d the c a p a b i l i t y to pro-v i d e standard technology at c o m p e t i t i v e p r i c e s , and i n some ca s e s , i n more a p p r o p r i a t e forms. F o r s y t h e ' s f i n d i n g s on who chooses technology c o n f i r m 274 our f i n d i n g s . He ( F o r s y t h e , 1984:275) r e p o r t s that i n the case of locally-owned f i r m s , 80 percent of them " . . . reported that f i n a l , s u b s t a n t i v e , r e s p o n s i b i l i t y l a y with the owner." Capacity U t i l i z a t i o n C apacity u t i l i z a t i o n i s a major concern of economists and governments because high c o s t c a p i t a l equipment l y i n g i d l e r e presents wastage of scarce and v a l u a b l e f o r e i g n exchange. In developing c o u n t r i e s , low c a p a c i t y u t i l i z a t i o n r a t e s are com-mon, and t h i s study attempted to measure the rate at which machinery was being used i n F i j i . Part of t h i s study's i n t e r e s t in c a p a c i t y u t i l i z a t i o n a l s o stemmed from the major i n t e r e s t at the time of the f i e l d w o r k w i t h i n F i j i i n the i s s u e of d u p l i c a -t i o n i n the manufacturing s e c t o r . Given the d i f f i c u l t y of measuring c a p a c i t y and c a p a c i t y u t i l i z a t i o n , one must use the r e s u l t s c a u t i o u s l y . There was no attempt to measure the use of machinery over i t s t o t a l poten-t i a l use i n terms of 365 days i n a y e a r . T h i s approach has been used by r e s e a r c h e r s , and r e p r e s e n t s a comprehensive measurement of the use of machinery (see, f o r i n s t a n c e , B a u t i s t a , Hughes, et a l . , 1981). However, t h i s study used the concept of f e a s i b l e c a p a c i t y . F e a s i b l e c a p a c i t y was used as l a i d out i n the UNIDO's Manual f o r the P r e p a r a t i o n of I n d u s t r i a l F e a s i b i l i t y S t u d i e s (UNIDO, 1 978a:63-64) : T h i s c a p a c i t y i s a c h i e v a b l e under normal working c o n d i t i o n s t a k i n g i n t o account not only the i n s t a l l e d equipment and t e c h n i c a l c o n d i t i o n s of the p l a n t , such as normal stoppages, downtime, h o l i d a y s , maintenance, t o o l changes, d e s i r e d s h i f t p a t t e r n s and i n d i v i s i b i l i t i e s of major mach-ines to be combined, but a l s o the management system 275 a p p l i e d . Thus the f e a s i b l e normal c a p a c i t y i s the number of u n i t s produced during one year under the above c o n d i t i o n s . The only d i f f e r e n c e was that t h i s study d i d not seek the output in p h y s i c a l terms, but t r i e d to o b t a i n a monetary f i g u r e be-cause of the d i f f i c u l t y of coding d i v e r s e u n i t d a t a . The study asked a few q u e s t i o n s designed to enable an a n a l y s i s of c a p a c i t y u t i l i z a t i o n . In the f i r s t i n s t a n c e , a very general i n d i c a t i o n of the c a p a c i t y u t i l i z a t i o n rate was ob-t a i n e d with the q u e s t i o n : "Is i t p o s s i b l e to increase the output of t h i s establishment over i t s p r e v i o u s year's output using the same machinery and management system?" An overwhel-ming m a j o r i t y (93 percent) of the e s t a b l i s h m e n t s i n d i c a t e d that they c o u l d . T h i s i n d i c a t e d , from the o u t s e t , that the l e v e l of c a p a c i t y u t i l i z a t i o n was not very h i g h , or that in any c a s e , there was scope for more i n t e n s i v e use of a v a i l a b l e machinery. But how much? It was planned to examine the l e v e l of c a p a c i t y u t i l i z a -t i o n i n two d i f f e r e n t ways. In the f i r s t c a s e , c a l l e d method A, the response of the establishments to q u e s t i o n s on the gross output of the e s t a b l i s h m e n t s , and t h e i r p o t e n t i a l f e a s i b l e c a p a c i t y were used to compute the degree of c a p a c i t y u t i l i z a -t i o n . The r e s u l t s of t h i s a n a l y s i s are presented in Table 6.8. The mean l e v e l of c a p a c i t y u t i l i z a t i o n i n the case of seventy-seven establishments s u p p l y i n g useable data was 62 p e r c e n t , i n d i c a t i n g the e x i s t e n c e of s u b s t a n t i a l over c a p a c i t y in the manufacturing s e c t o r i n F i j i . A c cording to Table 6.8, only 13 percent of the establishments were using t h e i r machinery ninet y 276 TABLE 6.8 THE DEGREE OF CAPACITY UTILIZATION IN FIJIAN ESTABLISHMENTS USING METHOD A Ca p a c i t y U t i l i z a t i o n L e v e l Number of Establishments Percent 100-90 1 0 1 3 89-80 1 2 1 6 79-70 10 1 3 69-60 1 5 1 9 59-50 9 12 49-40 3 4 39-30 10 1 3 29-20 3 4 19-10 5 7 Not a v a i l a b l e 31 — — T o t a l 1 08 101 SOURCE: Survey of Manufacturers in F i j i , 1983. percent or more of the c a p a c i t y , and only 29 percent were using t h e i r machinery to t h e i r 80 percent or more c a p a c i t y . F u r t h e r -more, j u s t more than a tenth of the establishments had c a p a c i t y u t i l i z a t i o n l e v e l s below 30 p e r c e n t . Firms are f r e q u e n t l y h e s i t a n t to supply f i n a n c i a l d a t a , and an attempt was made to de v i s e an a l t e r n a t i v e , n o n - f i n a n c i a l way to check the l e v e l of c a p a c i t y u t i l i z a t i o n . E s t a b l i s h m e n t s were asked by what percentage they c o u l d i n c r e a s e t h e i r output over the previous y e a r . T h i s data was used to compute the l e v e l of u t i l i z a t i o n i n two ways. F i r s t , the raw data was used to work backwards to c a l c u l a t e the l e v e l of c a p a c i t y u t i l i z a t i o n (method B); the r e s u l t s are presented i n Table 6.9. Second, the data was used to compute p o t e n t i a l c a p a c i t y by m u l t i p l y i n g 277 TABLE 6.9 THE DEGREE OF CAPACITY UTILIZATION IN FIJIAN ESTABLISHMENTS USING METHOD B Capacity U t i l i z a t i o n L e v e l Number of E s t a b l i shments Percent 100-90 1 5 1 6 89-80 18 1 9 79-70 1 0 1 1 69-60 1 9 20 59-50 8 9 49-40 5 5 39-30 9 1 0 29-20 4 4 19-10 5 5 Not a v a i l a b l e 1 5 — — T o t a l 1 08 99 SOURCE: Survey of Manufacturers i n F i j i , 1983. the percentage i n c r e a s e data with the gross output f i g u r e to give a new p o t e n t i a l c a p a c i t y f i g u r e ; t h i s was then used with a c t u a l gross output data to c a l c u l a t e the l e v e l of c a p a c i t y u t i l i z a t i o n . The mean l e v e l of u t i l i z a t i o n u s i n g method C was 63 p e r c e n t , extremely c l o s e to the f i g u r e of 62 percent i n the case of method A. F i n a l l y , the mean l e v e l of c a p a c i t y u t i l i z a -t i o n u sing method B i s 65 p e r c e n t , again q u i t e c l o s e to the two prev i o u s f i g u r e s . A l l these measurements i n d i c a t e the f a i r l y low l e v e l of c a p a c i t y u t i l i z a t i o n i n F i j i a n m a nufacturing. Some i n d i c a t i o n of the f a c t that c a p a c i t y u t i l i z a t i o n l e v e l s i n F i j i have been low for some time i s p r o v i d e d by the report of the Indian Techno-Economic Survey Team i n 1969 (In-dian Techno-Economic Survey Team, 1969:46,47), which i n d i c a t e d 278 that a coconut d e f i b r i n g p l a n t in Taveuni, set up in 1967, was o p e r a t i n g to only 25 percent of i t s c a p a c i t y , and the country's only p a s s i o n f r u i t f a c t o r y was o p e r a t i n g to only 65-70 percent of i t s c a p a c i t y . Reasons f o r these low l e v e l s of c a p a c i t y u t i l i z a t i o n were a l s o e l i c i t e d from f i r m s ; these are summarized in Table 6.10. Since the overwhelming m a j o r i t y of the establishments i n d i c a t e d inadequate market demand due to over c a p a c i t y i n t h e i r product l i n e s , the f i n d i n g s support the view that there i s widespread over c a p a c i t y i n the manufacturing s e c t o r . We have to remember, however, that F i j i has been f a c i n g an e x t r e -mely d i f f i c u l t f i n a n c i a l s i t u a t i o n s i n c e the onset of 1980s, and that 1983 was a s p e c i a l l y d i f f i c u l t y e a r . These c o n d i t i o n s may a l s o e x p l a i n the low l e v e l s of c a p a c i t y u t i l i z a t i o n , a l -though there i s no doubt that there i s s u b s t a n t i a l over c a p a c i -ty i n the manufacturing s e c t o r . The reasons f o r d u p l i c a t i o n i n the manufacturing s e c t o r are complex, but the two main ones are the small s i z e of the domestic market and the l i m i t e d development of export produc-t i o n . The g e n e r a l t h r u s t of government p o l i c i e s , and the nature of manufacturers themselves ( s u b s i d i a r i e s of m u l t i n a t i o n a l s mainly i n t e r e s t e d i n the p r o t e c t e d domestic market, and the lack of management ma t u r i t y among locally-owned firms) has meant that there i s an almost s u i c i d a l emphasis by firms on the domestic market thus r e s u l t i n g i n d u p l i c a t i o n . The second major reason has been, of c o u r s e , one of s c a l e . Most machinery has been designed and produced f o r much l a r g e r p r o d u c t i o n runs 279 TABLE 6.10 REASONS GIVEN BY MANUFACTURERS FOR THE LOW DEGREE OF CAPACITY UTILIZATION IF CAPACITY COULD BE INCREASED BY 25 PERCENT OR MORE Reason Number of Establishments Percent Inadequate market demand due to o v e r c a p a c i t y in p a r t i c u l a r product l i n e 50 79 Teething problems of new op e r a t i o n s 4 6 Low l e v e l of worker s k i l l 3 5 Management d i f f i c u l t i e s 2 3 Problems of supply and q u a l i t y of raw m a t e r i a l s 2 3 Seasonal demand of output 1 2 Machinery problem 1 2 Not a p p l i c a b l e as pr o d u c t i o n cannot be in c r e a s e d by 25 percent or more 24 --Not a v a i l a b l e 21 T o t a l 1 08 1 00 SOURCE: Survey of Manufacturers in F i j i , 1983 than F i j i can absorb, and F i j i has been too small a buyer of machinery to be able to persuade machinery manufacturers to s c a l e down the s i z e of machinery to s u i t F i j i ' s c i r c u m s t a n c e s . Furthermore, although as UNIDO (1984) has shown i n a recent important review of s c a l e economies, p l a n t s with smaller s i z e s have become f e a s i b l e i n recent y e a r s , the t e c h n o l o g i c a l search procedures of most manufacturers, save perhaps a few, are not adequate'enough to b r i n g these advances to t h e i r a t t e n -t i o n . T h i s c o u l d be one of a number of economic p e n a l t i e s to f i r m s , and u l t i m a t e l y to the economy of F i j i , of inadequate t e c h n o l o g i c a l decision-making. 280 Data were a l s o c o l l e c t e d on whether firms a n t i c i p a t e d other firms e n t e r i n g p r o d u c t i o n i n t h e i r own l i n e of goods. Almost a m a j o r i t y (47 percent) s a i d they d i d not think so; 39 percent a n t i c i p a t e d the entry of other f i r m s , while 14 percent were not s u r e . Asked i f the e s t a b l i s h m e n t s would o b j e c t to the opening of other e n t e r p r i s e s i n t h e i r l i n e of goods, 69 percent of the establishments s a i d they would, with 31 percent saying no. The data here c o u l d imply that most manufacturers f e e l that there i s enough c a p a c i t y i n the manufacturing s e c t o r , and t h e r e f o r e new c a p a c i t y was not needed. However, a l a r g e number of firms a l s o i n d i c a t e d t h a t they d i d not t h i n k that there was s e r i o u s d u p l i c a t i o n in the manufacturing s e c t o r ; t h i s would i n d i c a t e that most businessmen do not wish to see i n c r e a s e d c o m p e t i t i o n in t h e i r l i n e of p r o d u c t i o n , and t h i s would appear to be a n a t u r a l r e a c t i o n of a group geared to p r o f i t s . If the f i r m s d i d not o b j e c t to the s t a r t i n g of other e s t a b l i s h m e n t s i n t h e i r l i n e of p r o d u c t i o n , asked how many u n i t s they thought should be enough f o r F i j i , the bulk of them (44 percent) i n d i c a t e d that only one was enough—an eloquent testimony to two p o s s i b l e general impressions: that the market i s enough only f o r one f i r m , or that manufacturers in F i j i , l i k e manufacturers elsewhere, p r e f e r to have monopolies. A f u r t h e r 32 percent of the firms c o n s i d e r e d the market c o u l d support two f i r m s ; thus t h r e e - q u a r t e r s of the firms answering the q u e s t i o n c o n s i d e r the F i j i market s u i t a b l e f o r monopolies or o l i g o p o l i e s o n l y . 281 To gauge the breadth of the v i s i o n of the manufacturers in t h e i r responses to the q u e s t i o n on d u p l i c a t i o n , they were asked what range of f a c t o r s they had c o n s i d e r e d i n responding to the q u e s t i o n on how many firms should there be in F i j i i n t h e i r product l i n e s . Most firms had c o n s i d e r e d the domestic market, the f i r m ' s s a l e s r e c o r d , and the p o t e n t i a l domestic market. The emphasis on the domestic market i s a n a t u r a l prog-r e s s i o n from the inward lo o k i n g p o l i c i e s f ollowed by the gover-nment, and which has encouraged the firms i n F i j i to c o n s i d e r the domestic market only in t h e i r o p e r a t i o n s . N a t u r a l l y , then, s u b s t a n t i a l l y fewer manufacturers had c o n s i d e r e d e i t h e r the e x i s t i n g or p o t e n t i a l export markets. Although the small number of responses (28) to t h i s q u e s t i o n c a l l s f o r c a u t i o n in i n t e r -p r e t a t i o n , there i s l i t t l e doubt of the negative impact the inward l o o k i n g i m p o r t - s u b s t i t u t i o n p o l i c i e s have had on the manufacturers in narrowing t h e i r h o r i z o n s to the domestic mar-ke t . Thus most of t h e i r d e c i s i o n s , complaints and a s p i r a t i o n s r e l a t e to the s m a l l , and c l e a r l y inadequate domestic market. Many of these firms are no doubt being f o r c e d to examine the prospects of e x p o r t i n g , not only because of i n c e n t i v e s being provided to e x p o r t i n g , and the very favourable terms of e n t r y being allowed under a i d and trade agreements, such as the SPARTECA, but because e x p o r t i n g may be t h e i r s a l v a t i o n i n ensuring t h e i r s u r v i v a l . I n c r e a s i n g l y , for i n s t a n c e , some of the l a r g e r f i r m s , faced with i n t e n s e c o m p e t i t i o n i n the domes-t i c market from the low cost locally-owned companies, are t h i n k i n g of using exports to save t h e i r o p e r a t i o n s . 282 Marketing i n the Manufacturing Sector Manufacturing geographers and others studying i n d u s t r i a -l i z a t i o n i n the T h i r d World have g r o s s l y n e g l e c t e d the marke-t i n g aspect of the f i e l d , although Hamilton (1978:12) has urged micro s t u d i e s of market a r e a s . T h i s study aims to f i l l a lacuna in i n d u s t r i a l geography rese a r c h through an examination of the marketing arrangements i n the F i j i a n manufacturing s e c t o r . The Supply of Raw M a t e r i a l s A general i n d i c a t i o n of the procurement p a t t e r n of manu-f a c t u r i n g raw m a t e r i a l s i s prov i d e d by the F i j i Bureau of S t a t i s t i c s ' census of i n d u s t r i a l p r o d u c t i o n . In 1981, the l a -t e s t year on which data are a v a i l a b l e , most of the raw mate-r i a l s were purchased d i r e c t l y from overseas by manufacturers i n the case of imported raw m a t e r i a l s , or from producers i n the case of d o m e s t i c a l l y produced raw m a t e r i a l s — t h e f i g u r e being 80 percent and 97 percent r e s p e c t i v e l y ( c a l c u l a t e d from data i n the F i j i Bureau of S t a t i s t i c s , 1984b:18-19). There i s v i r t u a l l y no d i f f e r e n c e i n the tendency to purchase d i r e c t l y by whether the f i r m s are i n c o r p o r a t e d (and t h e r e f o r e l a r g e ) or unincorpo-r a t e d (and t h e r e f o r e s m a l l ) . There i s a d i f f e r e n c e , however, i n the p urchasing p a t t e r n s of locally-owned and foreign-owned f i r m s . Foreign-owned f i r m s purchase 88 percent of t h e i r impor-ted raw m a t e r i a l s d i r e c t l y , s u b s t a n t i a l l y higher than the manu-fa c t u r i n g - w i d e f i g u r e of 80 p e r c e n t . Furthermore, foreign-owned firms purchased only 95 percent of t h e i r d o m e s t i c a l l y produced raw m a t e r i a l s d i r e c t l y from the p r o d u c e r s — s l i g h t l y below the 283 manufacturing-wide f i g u r e of 97 p e r c e n t . Locally-owned f i r m s , however, purchased only 75 percent of t h e i r overseas raw mate-r i a l s d i r e c t l y , a much lower f i g u r e than both the manufacturing--wide f i g u r e , and that f o r the foreign-owned f i r m s . Locally-owned firms purchased 97 percent of t h e i r domes-t i c raw m a t e r i a l s from producers d i r e c t l y , the same as the manufacturing-wide f i g u r e and higher than that of foreign-owned firms ( a l l data c a l c u l a t e d from F i j i Bureau of S t a t i s t i c s , 1984b:20-21). There seems to be, t h u s , a major d i f f e r e n c e in the case of the procurement of raw m a t e r i a l s by the ownership of f i r m s . The foreign-owned f i r m s , being l a r g e , and having be t t e r connec-t i o n s o verseas, r e l y much more on d i r e c t purchases of raw m a t e r i a l s — a n d thus probably d e r i v e c o st advantages over the locally-owned f i r m s — w h i c h because of t h e i r smaller s i z e s , are f r e q u e n t l y unable to purchase d i r e c t l y . I t i s more d i f f i c u l t to e x p l a i n why foreign-owned f i r m s purchase d i r e c t l y from produ-c e r s in F i j i l e s s than do loca l l y - o w n e d f i r m s , but t h i s c o u l d be r e l a t e d to the f a c t that they r e l y on r e l a t e d s u b s i d i a r i e s to undertake purchasing f o r them. The a c t u a l arrangements f o r the procurement of raw mate-r i a l s are summarized i n Table 6.11. Most firms in F i j i (57 percent) purchase t h e i r raw m a t e r i a l s on the open m a r k e t — t h a t i s , they are not t i e d to long-term c o n t r a c t u a l purchasing o b l i g a t i o n s . These firms are ab l e to take advantage of changing p r i c e movements, although they do face d i f f i c u l t i e s i f p r i c e s i n c r e a s e . A s u b s t a n t i a l number of firms have long-term purcha-284 TABLE 6.11 ARRANGEMENTS FOR THE SUPPLY OF RAW MATERIALS TO MANUFACTURING ESTABLISHMENTS IN FIJI Marketing Arrangement Number of Establishments Percent On the sport buying on the open market 59 57 Long-term purchasing arrangement, non-c o n t r a c t u a l 22 21 C o n t r a c t u a l arrangements 9 9 Combination of open market and long-term 5 5 Head o f f i c e of the parent company 1 1 L a r g e l y own raw m a t e r i a l s 7 7 Not a v a i l a b l e 5 T o t a l 108 1 00 SOURCE: Survey of Manufacturers i n F i j i , 1983. s i n g arrangements (n e a r l y 30 p e r c e n t ) . In most of these c a s e s , however, the arrangement i s not c o n t r a c t u a l — a l t h o u g h ^ in 9 percent of the c a s e s , there were c o n t r a c t u a l marketing arrange-ments. The marketing arrangements engaged i n by the manufactu-r e r s f o r the supply of i n d u s t r i a l raw m a t e r i a l s does provide them with the f l e x i b i l i t y to a d j u s t to new s u p p l i e r s and chan-ging p r i c e s . Marketing the Output A wide v a r i e t y of marketing arrangements are to be found f o r the d i s t r i b u t i o n of manufactured output, summarized i n Table 6.12. The d i r e c t consumer o r i e n t a t i o n of the bulk of 285 TABLE 6.12 THE ARRANGEMENTS FOR THE MARKETING OF MANUFACTURED OUTPUTS IN FIJI Marketing Arrangement Number of Estab-1i shments Percent Custom-made 35 32 Wholesaled by producer 27 25 Marketed by r e l a t e d f i r m 10 9 Combination of custom made, wholesaled by producer, and marketed . by r e l a t e d f i r m 9 8 R e t a i l e d by the producer 9 8 Exported by the f i r m 9 8 Marketed by u n r e l a t e d f irms 6 6 Purchased o u t r i g h t by r e l a t e d f i r m ( s ) 3 3 T o t a l 108 99 SOURCE: Survey of Manufacturers in F i j i , 1983. F i j i ' s manufacturing i s emphasized—32 percent of a l l e s t a b l i s -hments marketed t h e i r output through custom-made procedure. A m a j o r i t y of the firms undertake t h e i r own r e t a i l i n g and whole-s a l i n g , again an i n d i c a t i o n of an emerging manufacturing sys-tem, where s p e c i a l i z e d marketing arrangements have not yet developed. A few e s t a b l i s h m e n t s ' output i s bought in t h e i r e n t i r e t y by r e l a t e d f i r m s - - i n many i n s t a n c e s , these e s t a b l i s -hments were set up to supply these r e l a t e d f i r m s . The wides-pread tendency to handle t h e i r own d i s t r i b u t i o n probably re-s u l t s from the c l o s e l i n k e x i s t i n g between manufacturers and r e t a i l e r s and w h o l e s a l e r s , and a l s o from a d e s i r e to e x p l o i t a l r e a d y e x i s t i n g t r a d i n g networks. The a b i l i t y to market one's 286 own output may be necessary to s u r v i v e in some areas of manufa-c t u r i n g where there i s f i e r c e c o m p e t i t i o n . In some ways, t o o , the tendency to handle one's own d i s t r i b u t i o n has been the r e s u l t of l e s s - t h a n - f r i e n d l y a t t i t u d e of f o r e i g n t r a d i n g compa-ni e s towards products of competing locally-owned f i r m s . The d i r e c t involvement of the manufacturers was a l s o assessed by asking firms how much of t h e i r output they r e t a i l e d themselves. About 35 percent of the establishments r e t a i l e d a l l t h e i r output ( t h i s i n c l u d e s custom-made i t e m s ) , while a f u r t h e r 10 percent r e t a i l e d more than 50 percent of t h e i r output, but l e s s t h a n ' t h e i r e n t i r e o u t p u t . As against t h i s , 44 percent of the e stablishments d i d not r e t a i l any p o r t i o n of t h e i r output, and a f u r t h e r 12 percent r e t a i l e d from 1 to 20 percent of t h e i r output. The data here a l s o p o i n t to.a wide d i v e r s i t y i n the kind of manufacturing a c t i v i t i e s i n F i j i ; some, l i k e f u r n i t u r e makers, and t a i l o r i n g e s t a b l i s h m e n t s r e t a i l n e a r l y a l l t h e i r output, while o t h e r s , such as f l o u r m i l l e r s , cement makers, do not r e t a i l any of t h e i r o u t p u t . The marketing arrangements of F i j i a n manufacturers em-phasize the consumer o r i e n t a t i o n of F i j i a n manufacturing--something that has a l r e a d y been pointed out i n Chapter 5. The kind of manufacturing i n F i j i i s i n sharp c o n t r a s t to manufac-t u r i n g i n developed c o u n t r i e s . Karaska (1978:33) p o i n t s o u t , for i n s t a n c e , that the m a j o r i t y of the firms in the United Sta t e s produce for other f i r m s r a t h e r than for f i n a l demand. A major s t r a t e g y adopted by the F i j i government, to be covered i n more d e t a i l i n Chapter 9, has been to encourage 287 F i j i a n manufacturers to export t h e i r output. The Economic Deve-lopment Board, since i t s creation in 1981, has mounted a s i g n i -f i c a n t campaign to get manufacturers to export thei r output. The survey attempted to gauge how many firms were planning to begin exporting their output in the near f u t u r e . The response was ant ic ipated to indicate the extent to which the support offered by the Economic Development Board was having an impact on the manufacturers. Of the s i x t y - s i x establishments not expo-r t i n g any of their output, 49 percent of them were not planning to export their output in the near future , while 44 percent were planning to do so. Some 8 percent of the establishments were not sure about t h e i r plans to export. The large number of establishments considering exporting some of t h e i r output in the near future would appear to indicate that the government's export drive is making s i g n i f i c a n t progress. The high degree of competition in the domestic market in some product l i n e s , and the e f f o r t s of the government with f i n a n c i a l and other a s s i s t a -nce, and the opportunit ies offered by the trade agreements are no doubt a l l contr ibut ing to the export consciousness in F i j i a n manufacturing. Manufacturers were also asked i f they knew of the p r o v i -sions of the two most important a i d and trade agreements that o f f e r new opportunit ies to F i j i a n manufacturers—the LOME con-vention signed between European Economic Community countries and A f r i c a n , Caribbean, and P a c i f i c c o u n t r i e s , and SPARTECA--the South P a c i f i c Aid and Regional Trade and Economic Coopera-t i o n Agreement. Only 70 percent of the establishments indicated 288 that they knew of the p r o v i s i o n s of at l e a s t one of these agreements. While t h i s f i g u r e i n d i c a t e s that most manufacturers in F i j i know about the o p p o r t u n i t i e s being o f f e r e d by these trade agreements, the 30 percent that d i d not know i m p l i e s the government has a major task at hand in d i s s e m i n a t i n g informa-t i o n to manufacturers about export o p p o r t u n i t i e s . Most of the e s t a b l i s h m e n t s not aware of the p r o v i s i o n s of these agreements were owned by small f i r m s , and the data may i n d i c a t e that the government's flow of i n f o r m a t i o n does not adequately reach the smaller f i r m s . A r e l a t e d q u e s t i o n probed the use of SPARTECA or LOME by manufacturers. P u b l i c debate i n F i j i has i n d i c a t e d divergent views on the value of these agreements, with the government arguing that these agreements have provided s u b s t a n t i a l oppor-t u n i t i e s , while o t h e r s , i n c l u d i n g the F i j i Manufacturers' Asso-c i a t i o n , have argued that the b e n e f i t s from these agreements have been much exaggerated. Nearly one q u a r t e r of the e s t a b l i s -hments in the sample were using the trade agreements, implying that these trade agreements were having some impact on F i j i ' s export d r i v e . A f u r t h e r q u e s t i o n asked i f f i r m s p r e s e n t l y using the trade agreements c o u l d have exported without these agreeme-n t s — t h a t i s to what extent these agreements o f f e r e d new export o p p o r t u n i t i e s , and to what extent they simply p r o v i d e d a s s i s t a -nce to f i r m s a l r e a d y e x p o r t i n g . Nearly t h r e e - t e n t h s of the e s t a b l i s h m e n t s c o u l d not have exported without the p r o v i s i o n s of the agreements, while i n the case of the o t h e r s , they simply i n c r e a s e d the volume of t h e i r e x p o r t s . The data here support 289 the view that the trade agreements have o f f e r e d new o p p o r t u n i -t i e s to F i j i a n manufacturers, and that many firms have become ex p o r t e r s that c o u l d not have done so without the p r o v i s i o n s of these agreements. The l i t e r a t u r e on T h i r d World i n d u s t r i a l i z a t i o n has emphasized the advantages and disadvantages endowed upon T h i r d World trade i n manufactures through the involvement of m u l t i n a -t i o n a l c o r p o r a t i o n s (see for i n s t a n c e , Frank, 1980; L a l l , 1980; R i e d e l , 1975; UNCTC, 1979, 1983a,b). A q u e s t i o n in the survey of manufacturers in F i j i attempted to f i n d out whether there were r e s t r i c t i o n s on the s u b s i d i a r i e s of overseas companies regar-ding e x p o r t i n g . There were r e s t r i c t i o n s p l a c e d on firms i n F i j i i n the case of nine establishments concerning e x p o r t s . T h i s i s a very small number, but i t does show the tendency of m u l t i n a -t i o n a l c o r p o r a t i o n s to impose r e s t r i c t i o n s on t h e i r s u b s i d i a -r i e s . It f u r t h e r shows that the s t r u c t u r e of ownership and o r g a n i z a t i o n of the manufacturing sector can powerfully shape the export performance and p r o s p e r i t y of c o u n t r i e s . Nearly a l l the r e s t r i c t i o n s encountered r e l a t e d to t e r r i t o r i a l r i g h t s , with r i g h t s to p a r t i c u l a r a r e a s , and withdrawal of r i g h t s i n other a r e a s . The net impact of such agreements or r e s t r i c t i o n s i s u n c l e a r , as under these c o n d i t i o n s , F i j i - b a s e d s u b s i d i a r i e s of overseas m u l t i n a t i o n a l s were given market " t e r r i t o r i e s " , something they might not have otherwise had. In any c a s e , the f i n d i n g s show that e x t e r n a l l y - i m p o s e d r e s t r i c t i o n s to e x p o r t i n g are present i n F i j i , a l b e i t i n a small number of e s t a b l i s -hments, and the government may wish to monitor these agreements 290 i f i n f u t u r e such agreements are not to s e r i o u s l y c o n s t r a i n F i j i ' s attempts to promote exports of manufactured goods. Marketing Problems It i s s i g n i f i c a n t that 51 percent of the establishments with v a l i d response (N=103) s a i d that they had no marketing problems. Coming from manufacturers themselves,, t h i s i s a major statement of the degree of h e a l t h i n t h i s s e c t o r as regards marketing. Of those that had problems (N=51), the l a r g e s t number by f a r complained of " p r i c e wars" (43 p e r c e n t ) . The only two other i d e n t i f i a b l e problems were bad c r e d i t (14 percent) and v a r i a b i l i t y in i n t e r n a t i o n a l p r i c e s ( a f f e c t i n g c h i e f l y e x p o r t e r s of processed primary p r o d u c t s ) . The widespread complaint of " p r i c e wars" appears to go beyond what could be c a l l e d the tendency of manufacturers, l i k e most i n t e r e s t groups attempting to e x t r a c t concessions from the government, to complain. In p a r t i c u l a r , coupled with the f i n -dings e a r l i e r i n the c h a p t e r , and personal communication with many manufacturers, t h i s i n f o r m a t i o n does i n d i c a t e a problem of d u p l i c a t i o n i n the manufacturing s e c t o r that i s c a u s i n g dama-ging p r i c e wars. Of c o u r s e , one c o u l d argue that t h i s i s p r e c i -s e l y the process that weeds out i n e f f i c i e n t u n i t s , but in the case of a small economy with l i m i t e d r e s o u r c e s , such an expen-s i v e process of market r a t i o n a l i z a t i o n may not be the most a p p r o p r i a t e method f o r ensuring r a t i o n a l i z a t i o n . A s e r i o u s degree of d u p l i c a t i o n a l s o breeds i n v e s t o r r e s i s t a n c e , both l o c a l and overseas, and t h i s may be negating the gains made by 291 the e f f o r t s of the government to a t t r a c t more investment i n the manufacturing s e c t o r . Manufacturing Labour Force The labour p r o c e s s , meaning the arrangements under which workers exchange t h e i r labour power, in the manufacturing sec-t o r has f r e q u e n t l y been ignored by both i n d u s t r i a l geographers and i n d u s t r i a l economists. In part t h i s may have been the r e s u l t of using n e o c l a s s i c a l economics, which by i t s n a t u r e , p l a c e s l e s s emphasis on the labour p r o c e s s . To some e x t e n t , as we have noted in Chapter 3, the Marxist p e r s p e c t i v e s on indus-t r i a l a n a l y s i s have: p a r t l y overcome t h i s d e f i c i e n c y . In t h i s s e c t i o n we w i l l examine aspects of the labour process i n the manufacturing s e c t o r — t h e p a t t e r n of employment, s i z e of the labour f o r c e , c h a r a c t e r i s t i c s of the labour f o r c e , and degree of u n i o n i z a t i o n . Given the importance of e t h n i c i t y i n F i j i (see, f o r i n s t a n c e , A l i , 1980; L a i , 1982; M i l n e , 1981; Norton, 1977), we w i l l a l s o examine the e t h n i c composition of the manu-f a c t u r i n g labour f o r c e . The P a t t e r n of Employment The manufacturing s e c t o r i n F i j i i s not based on f a m i l y , unpaid l a b o u r , as i s the case i n a l a r g e number of developing c o u n t r i e s — a s i s common i n some other s e c t o r s of the F i j i a n economy i t s e l f . The percentage of p r o p r i e t o r s (meaning owners of u n i n c o r p o r a t e d businesses; once i n c o r p o r a t e d , owners become pa i d employees) was very low i n the survey of manufacturers in F i j i . P r o p r i e t o r s , where they d i d work f o r t h e i r manufacturing 292 e s t a b l i s h m e n t s , p r e f e r r e d to work f u l l - t i m e : 13 percent of the esta b l i s h m e n t s had f u l l - t i m e p r o p r i e t o r o p e r a t i v e s and 11 per-cent had f u l l - t i m e p r o p r i e t o r non-operatives a g a i n s t no i n s t a n -ce of part-time p r o p r i e t o r o p e r a t i v e , and only 3 percent of a l l e s t a b l i s h m e n t s having part-time non-operative p r o p r i e t o r s . S ince the establishments with p r o p r i e t o r s working f o r t h e i r u n i t s tend to be unincorporated f i r m s , the tendency towards f u l l - t i m e work i n d i c a t e s a well-known fear in small businesses a g a i n s t t r u s t i n g p a i d o u t s i d e employees with the o p e r a t i o n s of the manufacturing e s t a b l i s h m e n t s , s p e c i a l l y with f i n a n c i a l a f f a i r s . Most of these establishments with p r o p r i e t o r s working t h e i r e s tablishments were in f u r n i t u r e making, h a n d i c r a f t s , t a i l o r i n g and footwear and represent t y p i c a l f a m i l y operated economic u n i t s i n F i j i . Unpaid family members have played a major r o l e i n manu-f a c t u r i n g establishments i n many developing c o u n t r i e s , and they have a l s o been important i n F i j i ' s a g r i c u l t u r e and d i s t r i b u -t i o n . In manufacturing, however, unpaid f a m i l y labour on a f u l l - t i m e b a s i s i s almost absent; unpaid f a m i l y labour i s used on a part-time b a s i s : 4 percent of the esta b l i s h m e n t s used p a r t - t i m e unpaid f a m i l y labour as o p e r a t i v e s , while another 2 percent used them as n o n - o p e r a t i v e s . Given the importance of uninc o r p o r a t e d firms i n the manufacturing s e c t o r , the degree of p a r t i c i p a t i o n of unpaid f a m i l y labour appears to be low, and there may be some under-statement h e r e . However, there i s no doubt that there i s a tendency towards the use of non-family l a b o u r , or p a i d f a m i l y 293 l a b o u r . Most manufacturing establishments i n F i j i r e l y , then, on pa i d employees. As we have seen i n Chapter 5, the average establishment employs only a small number of workers--we w i l l not pursue the qu e s t i o n of s i z e h e r e . Instead, we w i l l d i s c u s s the issue of the composition of the labour f o r c e . The manufacturing labour f o r c e in F i j i i s predominantly male. At the time of the l a s t p o p u l a t i o n census (1976), 86 percent of the people aged f i f t e e n years and over, and engaged in the manufacturing s e c t o r were male ( c a l c u l a t e d from data i n Henry, 1979:34). Women employed i n the manufacturing s e c t o r are mainly i n a d m i n i s t r a t i v e and c l e r i c a l p o s i t i o n s ; very few are o p e r a t i v e s . However, i n some s e c t o r s , such as t a i l o r i n g and garment manufacturing, women comprise the main workforce. I n c i -d e n t a l l y , the garment workers are among the l e a s t p a i d workers in the manufacturing s e c t o r in F i j i . The age s t r u c t u r e of the manufacturing labour f o r c e i n F i j i i s not a v a i l a b l e . However, the age s t r u c t u r e of the manu-f a c t u r i n g s e c t o r i s not expected to be d i f f e r e n t from that of pa i d workers i n g e n e r a l , and we can u t i l i z e the data f o r p a i d employees provided by the F i j i Bureau of S t a t i s t i c s ' (1984c) survey of employment. The pai d labour fo r c e of F i j i i s d i s t i n -guished by a marked absence of very young p e r s o n s — p e r s o n s under the age of f i f t e e n years comprised only one-tenth of one percent of the t o t a l p a i d labour f o r c e i n 1982 (Table 6.13). The m a j o r i t y of the workers are bunched around twenty to t h i r t y - n i n e years of age. O v e r a l l , the labour f o r c e i s young, 294 TABLE 6.13 THE AGE STRUCTURE OF EMPLOYEES IN F I J I , 1982 Age Group (Yrs) Number Percent <15 41 0.1 15 -19' 1 957 2.9 29-29 24745 36.9 30-39 1 921 5 28.7 40-49 10932 16.3 50-59 4595 6.9 >59 636 0.9 Age not a v a i l a b l e 4875 7.3 T o t a l 66996 100.0 SOURCE: F i j i Bureau of S t a t i s t i c s , 1984C:6. Percentages have been c a l c u l a t e d by the author. and the i n e v i t a b l e investment in t h e i r t r a i n i n g i s bound to pay d i v i d e n d to manufacturers as the young workers reach m a t u r i t y . In terms of e t h n i c i t y , the manufacturing sector labour f o r c e i s 59 percent I n d o - F i j i a n , a c c o r d i n g to the l a s t popula-t i o n census (Henry, 1979:46). The survey of manufacturers i n F i j i i n d i c a t e s that I n d o - F i j i a n s comprise 56 percent of the manufacturing labour f o r c e , , while indigenous F i j i a n s make 35 percent of the labour f o r c e . The remaining 9 percent of the labour f o r c e comprises a mixture of Europeans, people of mixed e x t r a c t i o n , Chinese, Rotumans, and other P a c i f i c I s l a n d e r s . The mean ho u r l y wage ( t h i s does not i n c l u d e s a l a r i e s ) of manufacturing workers i n 1982 was $1.40 ( F i j i Bureau of S t a t i s -t i c s , 1984C:30). T h i s was only m a r g i n a l l y above the average d a i l y wage for F i j i as a whole (102 percent of the n a t i o n a l a v e r a g e ) . I t i s i n t e r e s t i n g to note that the r e l a t i v e p o s i t i o n 295 of wages in the manufacturing s e c t o r has d e t e r i o r a t e d s l i g h t l y from 111 percent of the average n a t i o n a l wage l e v e l i n 1960 to 102 percent in 1982 ( c a l c u l a t e d from data in F i j i Bureau of S t a t i s t i c s , 1984C:30). The r e l a t i v e wages in the manufacturing s e c t o r (Table 6.14) do not appear to be low; i n f a c t only c o n s t r u c t i o n and e l e c t r i c i t y ( e l e c t r i c i t y i s a monopoly in F i j i ) have s i g n i f i c a -q n t l y higher l e v e l s than manufacturing. Thus these f i n d i n g here do not support the view of the F i j i Employment and Development M i s s i o n that manufacturing i s a low wage se c t o r i n F i j i ( F i j i Employment and Development M i s s i o n , I984:xxxiv). T h i s i s not to say that there are not some s e c t o r s of the manufacturing s e c t o r that pay low wages. The l e v e l of wages vary c o n s i d e r a b l y w i t h i n the manufac-t u r i n g sector (on the b a s i s of data in F i j i Bureau of S t a t i s -t i c s , 1984C:33). I t v a r i e s enormously among fi r m s as w e l l , as case s t u d i e s l a t e r in t h i s chapter w i l l show. In terms of ISIC groups, the highest p a i d wage workers were in r e p a i r and renno-v a t i o n of e l e c t r i c a l equipment group, c l o s e l y f o l l o w e d by wor-kers i n s h i p b u i l d i n g group, and i n the cement i n d u s t r y ( F i j i Bureau of S t a t i s t i c s , 1984C:33). The lowest wage r a t e s pre-v a i l e d i n the c o n f e c t i o n e r y i n d u s t r y , footwear i n d u s t r y , and i n the garment i n d u s t r y . The f i n d i n g s here support the comments made e a r l i e r i n t h i s study on the garment i n d u s t r y having one of the lowest r a t e s of pay i n F i j i a n manufacturing, a p o i n t a l s o made by the F i j i Employment and Development M i s s i o n ( 1 9 8 4 : x v i i i ) . TABLE 6.14 HOURLY MEAN WAGES OF WAGE EARNERS BY INDUSTRY GROUPS IN CENTS, 1960-1982 Year Agriculture Mining Manufacturing Electricity Construction Commerce Transport Service All Industries 1960 15.88 20.50 23.13 22.63 19.75 19.75 23.25 21.50 20.88 1961 16.50 22.88 23.75 25.38 19.50 18.50 23.63 23.00 21.63 1962 16.25 22.13 23.13 21.75 19.63 18.50 23.13 22.38 21.25 1963 17.75 22.63 24.88 24.38 20.00 20.63 23.38 22.63 22.00 1964 18.75 19.13 25.37 23.88 22.88 18.62 20.13 20.13 22.30 1965 18.50 24.00 24.75 25.50 21.38 23.00 22.88 22.00 22.88 1966 20.13 24.75 26.63 28.00 25.75 24.25 23.38 22.88 24.50 1967 20.25 24.83 27.50 29.13 26.75 23.63 24.63 23.38 25.13 1968 19.75 29.63 28.50 34.75 28.00 26.38 27.88 27.75 27.50 1969 22.25 29.75 30.50 30.13 30.00 27.38 27.63 29.75 29.00 1970 24.60 32.89 31.83 31.59 33.86 29.35 31.48 32.34 30.91 1971 26.65 34.45 33.61 37.38 36.01 30.89 35.76 37.73 34.05 1972 29.93 38.34 40.20 37.37 40.13 38.63 42.29 39.04 38.55 1973 38.96 49.45 47.25 52.81 51.43 50.61 51.37 50.60 49.69 1974 56.07 63.28 60.24 62.68 63.27 61.37 66.03 63.66 61.22 1975 62.20 64.44 77.32 80.12 79.57 70.95 79.37 74.45 74.62 1976 62.83 90.89 82.95 90.22 89.46 81.79 88.04 80.96 83.48 1977 72.00 87.62 85.90 99.58 96.27 86.10 96.16 89.52 88.90 1978 83.42 90.24 101.30 112.28 102.60 90.66 105.85 99.25 98.65 1979 86.04 91.49 106.02 117.77 108.66 98.13 113.82 103.66 106.00 1980 93.00 105.00 119.00 127.00 117.00 111.00 122.00 121.50 116.00 1981 78.00 106.00 132.00 137.00 130.00 128.00 132.00 130.50 127.00 1982 77.00 116.00 140.00 162.00 150.00 129.00 147.00 138.00 137.00 SOURCE: Fij i Bureau of Statistics, 1984c:30. 297 An attempt was made to r e l a t e the wages pa i d to workers to two f a c t o r s hypothesized to a f f e c t the l e v e l of wages i n F i j i : the l e v e l of market c o n t r o l measured by the degree of c o n c e n t r a t i o n i n the ISIC groups, and the degree of c a p i t a l i n t e n s i t y of e s t a b l i s h m e n t s . Pearson c o r r e l a t i o n analyses re-vea l e d a moderate p o s i t i v e c o r r e l a t i o n c o e f f i c i e n t of .52 with the degree of market c o n t r o l and of .53 with the degree of c a p i t a l i n t e n s i t y (both s i g n i f i c a n t at .002). Thus the l e v e l of wages paid are g e n e r a l l y r e l a t e d to both the c a p i t a l i n t e n s i t y and the l e v e l of market c o n t r o l . Given that F i j i competes with the r e s t of the developing world f o r f o r e i g n investment and for the s a l e of i t s p r o d u c t s , i t i s u s e f u l to r e l a t e F i j i ' s l e v e l of wages to the l e v e l of wages i n other developing c o u n t r i e s , s p e c i a l l y i n Southeast A s i a , a major a l t e r n a t i v e d e s t i n a t i o n of A u s t r a l i a n investment that had t r a d i t i o n a l l y come to F i j i . U t recht (1980:212) pro-v i d e s the wage c o s t s i n s e l e c t e d developing c o u n t r i e s , repro-duced i n Table 6.15. As the data i n d i c a t e , F i j i ' s monthly wage in 1976 (Table 6.14) was approximately $US130, c o n s i d e r a b l y higher than those p r e v a i l i n g in Asian c o u n t r i e s , and was only m a r g i n a l l y below those p r e v a i l i n g i n L a t i n America. F i j i a n wages s i n c e 1976 have not d e c l i n e d r e l a t i v e to other developing c o u n t r i e s , and F i j i thus has d i f f i c u l t y i n competing f o r f o r e i g n investment. As we w i l l see l a t e r , the high c o s t of labour was one of the main reasons why i n t e r n a t i o n a l c o n s u l t a n t s n e a r l y unanimously ad-v i s e d the government against the establishment of export proce-298 TABLE 6.15 AVERAGE WAGES IN MANUFACTURING IN SELECTED DEVELOPING COUNTRIES, 197 6 ($US) Country Wage Le v e l Braz i 1 Indonesia Mexico P h i l i p p i n e s Singapore South Korea T h a i l a n d $160 per month $27 per month $194.60 per month $44.20 per month $0.65 per hour $91.50 per month $35.00 per month Source: U t r e c h t , 1980:212. s s i n g zones along the l i n e s done i n other low labour cost developing c o u n t r i e s (see Chapter 9 ) . fo r c e i s an important one i n the development l i t e r a t u r e as w e l l as i n p u b l i c debate i n F i j i — a s indeed i n many developing and some developed c o u n t r i e s . F i j i i s perhaps unusual among develo-ping c o u n t r i e s in having a high degree of u n i o n i z a t i o n of the labour f o r c e g e n e r a l l y , and i n the importance of the r o l e played by trade u n i o n s . The p o s i t i o n of the unions may have been strengthened by the f a c t that some of the l e a d i n g p o l i t i -c i a n s of F i j i today have been a c t i v e i n the union movement; top labour l e a d e r s have f i g u r e d i n the government's c a b i n e t f o r at l e a s t a decade. Furthermore, most of the l a r g e foreign-owned f i r m s , from where u n i o n i z a t i o n spread to the other f i r m s , had, in most c a s e s , monopolies, and thus c o u l d a f f o r d to maintain a u n i o n i z e d , and happy labour f o r c e because they c o u l d always pass the i n c r e a s e d c o s t s to the consumers. Because the consu-The question of u n i o n i z a t i o n of the manufacturing labour 299 mers d i d not have much c h o i c e , the firms were able to o f f e r the workers high wages without i n j u r i n g t h e i r p r o f i t a b i l i t y . Data from the survey of manufacturers in F i j i p r o v i d e a d e f i -n i t e measurement of the degree of u n i o n i z a t i o n i n the manufac-t u r i n g labour f o r c e . In terms of the number of manufacturing e s t a b l i s h m e n t s , the m a j o r i t y of the establishments--69 p e r c e n t — w e r e not u n i o n i z e d . Most of these non-unionized firms are r e c e n t l y formed, l o c a l l y - o w n e d f i r m s . However, determining the extent of u n i o n i z a t i o n through an examination of the number of establishments g i v e s a very m i s l e a d i n g i m p r e s s i o n . I t i s more meaningful to look at what p r o p o r t i o n of the e n t i r e manufacturing labour f o r c e i s union-i z e d . The 69 percent of the establishments that employed non-union labour f o r c e employed only 22 percent of the t o t a l manu-f a c t u r i n g labour f o r c e . Thus 78 percent of the manufacturing labour f o r c e of the e s t a b l i s h m e n t s surveyed was u n i o n i z e d . There are four major i s s u e s r e l a t i n g to u n i o n i z a t i o n of the manufacturing labour f o r c e i n F i j i . F i r s t , the trend in the l e v e l of u n i o n i z a t i o n ; second, the r e l a t i o n s h i p between f o r e i g n and l o c a l ownership and the l e v e l of u n i o n i z a t i o n ; t h i r d , the r e l a t i o n s h i p between the s i z e of o p e r a t i o n s and the l e v e l of u n i o n i z a t i o n ; and f o u r t h , the r e l a t i o n s h i p between u n i o n i z a t i o n and the l e v e l of wages. We have j u s t seen that the m a j o r i t y of the workers in the manufacturing s e c t o r are u n i o n i z e d , even i f the m a j o r i t y of the manufacturing e s t a b l i s h m e n t s are not. However, we need to note that there i s a t r e n d , e s p e c i a l l y marked s i n c e the begin-300 ning of the severe economic r e c e s s i o n since the beginning of the 1980s, towards both the establishment of non-unionized firms and of the d e - u n i o n i z a t i o n of e x i s t i n g u n i o n i z e d f i r m s . T h i s trend i s a l s o noted by T a y l o r (1983a, 1984) and has been emphasized by the F i j i Employment and Development M i s s i o n (FEDM, 1984). The d i l u t i o n of union base in the manufacturing s e c t o r i s s t r o n g l y r e l a t e d to the r a p i d i n c r e a s e i n unemploy-ment in the 1980s, and has been helped by the government's recent stand that unions should moderate t h e i r wage and bene-f i t s c l a i m s . T a y l o r (1984:193-194) has argued that foreign-owned firms i n F i j i are g e n e r a l l y u n i o n i z e d and pay much higher l e v e l s of wages than locally-owned firms which are u s u a l l y non-u n i o n i z e d . The FEDM has a l s o i n d i c a t e d that locally-owned f i r m s tend to have a non-unionized labour f o r c e (FEDM, 1984:288). Data from the Survey of Manufacturers i n F i j i corrobo-r a t e these arguments. A pearson c o r r e l a t i o n a n a l y s i s i n d i c a t e s a r e l a t i v e l y high negative (-.4769 s i g n i f i c a n t at .000 l e v e l ; n=96) c o r r e l a t i o n between the degree of l o c a l ownership of manufacturing firms and the degree of u n i o n i z a t i o n of the labour f o r c e . A l t e r n a t e l y , there was a r e l a t i v e l y strong p o s i -t i v e c o r r e l a t i o n (.4769 s i g n i f i c a n t at .000 l e v e l ; n=96) bet-ween the degree of f o r e i g n ownership in firms and the degree of labour f o r c e u n i o n i z a t i o n . Many manufacturing firms with non-unionized labour f o r -ces are doing t h e i r utmost to prevent t h e i r workers from orga-n i z i n g themselves. The FEDM (1984:288) r e p o r t s that " . . . 301 many . . . v i n d i c a t i v e l y suppress a l l attempts at union o r g a n i -s a t i o n . " A t y p i c a l example of what happens when workers attempt to organize themselves i s provided by what happened in the case of a s u c c e s s f u l company in Ba. The workers at the firm,, which i s a s u c c e s s f u l manufacturer, decided to u n i o n i z e the e x i s t i n g l a -bour f o r c e . Soon, a l a r g e number of the workers, among whom were the main o r g a n i z e r s , were l a i d o f f because the company claimed that there was inadequate demand f o r i t s p r o d u c t s . The workers, i t c l a i m e d , would be c a l l e d up as demand grew. To most people the a c t i o n s of the company i n d i c a t e d a w e l l known prac-t i c e of d e a l i n g with attempts to u n i o n i z e w o r k e r s — g e t t i n g r i d of the o r g a n i z e r s and i n t i m i d a t i n g workers. C o r r e l a t i o n t e s t s were a l s o conducted to determine whet-her there was a s t a t i s t i c a l l y s i g n i f i c a n t r e l a t i o n s h i p between the s i z e of firms and the l e v e l of u n i o n i z a t i o n of the labour f o r c e . A moderate p o s i t i v e c o r r e l a t i o n of 0.3053 ( s i g n i f i c a n t at the .003 l e v e l ; n=77) suggests that indeed the l a r g e r the manufacturing f i r m s , the more l i k e l y i t i s that the labour f o r c e w i l l be u n i o n i z e d . T h i s f i n d i n g , and that r e l a t i n g to the r a p i d growth of locally-owned s m a l l - s c a l e manufacturing opera-t i o n s i n F i j i r e i n f o r c e our o b s e r v a t i o n of an i n c r e a s e of firms with non-unionized labour f o r c e s i n F i j i a n manufacturing. F i n a l l y , T a y l o r has s t r o n g l y argued-that the wages of non-unionized l a b o u r e r s are very much lower than those of firms with a u n i o n i z e d labour f o r c e . He argues, f o r i n s t a n c e , that 302 In g e n e r a l , hourly wages p a i d in small locally-owned firms are l e s s than h a l f and as l i t t l e as only one f i f t h of the wages p a i d in comparable l a r g e r , l o c a l l y -owned and foreign-owned o r g a n i s a t i o n s ( T a y l o r , I983a:52). In a d e t a i l e d a n a l y s i s of the F i j i a n labour f o r c e , the FEDM has shown that wages p a i d i n non-unionized manufacturing s e c t o r s were indeed lower than those i n u n i o n i z e d s e c t o r s (FEDM, 1984:241). However, the divergence i n the wages of these two groups of workers was not as much as T a y l o r (I983a:52) has argued. The non-unionized manufacturing s e c t o r wages have ran-ged from 90 percent of the average n a t i o n a l manufacturing wage in 1970 to a low of 69 percent i n 1975 and 1980. The FEDM pl a c e s the c u r r e n t l e v e l of non-unionized manufacturing s e c t o r wages at 69 percent of the n a t i o n a l average manufacturing wage (FEDM, 1984:241). The r a p i d i n c r e a s e i n F i j i i n the number fi r m s with non-un i o n i z e d labour f o r c e s has c r e a t e d a major u n c e r t a i n t y among foreign-owned and l a r g e l o c a l l y - o w n e d f i r m s . There was a c o n s i -s t e n t complaint from foreign-owned firms d u r i n g f i e l d w o r k r e l a -t i n g to the r a p i d i n c r e a s e i n the number of s m a l l , l o c a l l y -owned firms paying low wages. The longer e s t a b l i s h e d , frequen-t l y l a r g e r foreign-owned f i r m s have to pay much higher union wages. Moreover, the smaller non-unionized firms save some money because they f r e q u e n t l y do not provide a d d i t i o n a l bene-f i t s . The l a r g e r f i r m s are r a p i d l y being c h a l l e n g e d by these s m a l l e r f i r m s . The l a r g e r f i r m s are attempting to r e s t r u c t u r e t h e i r o p e r a t i o n s and s h i f t i n t o c a p i t a l i n t e n s i v e a r e a s , where l o c a l f i r ms are much l e s s l i k e l y to c h a l l e n g e them, and some are a l s o e x t r i c a t i n g themselves from F i j i a l t o g e t h e r (see, for 303 i n s t a n c e , T a y l o r , 1984:194). The government i s ambivalent on the i s s u e , although i t has decided to l e g i s l a t e a minimum wage for the manufacturing s e c t o r . We can deepen out understanding of the labour process i n the manufacturing s e c t o r through three case s t u d i e s of the labour f o r c e . These three e s t a b l i s h m e n t s have been chosen ran-domly, and the data come from employee r e c o r d s , and are as r e l i a b l e as can be claimed f o r any data i n F i j i . Because of the c o n f i d e n t i a l i t y of the d a t a , however, the source of the i n f o r -mation cannot be i n d i c a t e d . Firm A Firm A, i n footwear manufacturing i n Suva, employed twenty-one people, 38 percent (or 8 people) of them female. A l l were over seventeen years of age, and the labour fo r c e was not u n i o n i z e d . The labour f o r c e c o n s i s t e d of l a b o u r e r s (13), machi-n i s t s ( 6 ) , c l e r k ( 1 ) , and salesman/driver ( 1 ) . The average wage per hour was f i f t y - f i v e c e n t s , and the range was from f o r t y cents to n i n e t y c e n t s . The wage r a t e s are f or 1983, and repre-sent wages c o n s i d e r a b l y l e s s than n a t i o n a l wages. The average per hour wage i n manufacturing i n F i j i i n 1982, a year e a r l i e r , was $F1.40 ( c a l c u l a t e d from data i n F i j i Bureau of S t a t i s t i c s , 1984:78). The payment of t h i s low wage (39 percent of the n a t i o n a l average) i s p o s s i b l e because of the absence of a Wages Order f o r the manufacturing s e c t o r , although as noted p r e v i o u s -l y , one has been g a z e t t e d . The pay s t r u c t u r e was worked out through i n d i v i d u a l 304 b a r g a i n i n g , although given the low wages, and the absence of u n i o n i z a t i o n , there i s doubt whether there c o u l d have been meaningful ba r g a i n i n g f o r wages. There seems to be wide v a r i a -t i o n w i t h i n the same job c l a s s i f i c a t i o n s , with m a c h i n i s t s , f o r i n s t a n c e , r e c e i v i n g s i x t y cents ( 2 ) , s i x t y - f i v e c e n t s , f i f t y cents ( 2 ) , and f o r t y c e n t s . T h i s p r o f i l e of the labour f o r c e i s t y p i c a l of many locally-owned small s c a l e manufacturing enter-p r i s e s i n F i j i . Firm B Firm B, employing t h i r t y - t w o p e o p l e , was a non-union f i r m as w e l l . The m a j o r i t y of the labour f o r c e (89 percent) was female. The d i s t r i b u t i o n of the labour f o r c e i n v a r i o u s jobs i s presented in Table 6.16. The average wage p a i d by t h i s f i r m was a l s o s u b s t a n t i a l l y below the n a t i o n a l average. In f a c t , the garments manufacturing s e c t o r , to which t h i s f i r m belonged, has been widely known to o f f e r some of the worst working c o n d i t i o n s in F i j i . Not s u r p r i s i n g l y , wages pai d to white c o l l a r workers are s u b s t a n t i a l l y higher than those paid to manual workers. Firm C Firm C represents the l a r g e r u n i o n i z e d manufacturing f i r m s . I t employed 137 people in 1983, a l l but two of whom were males. A union agreement covered the blue c o l l a r workers, while the s t a f f had n e g o t i a t e d t h e i r own s a l a r i e s and c o n d i t i o n s i n d i v i d u a l l y . 305 TABLE 6.16 JOB CLASSIFICATION OF FIRM B'S LABOUR FORCE, 1983 Job C l a s s i f i c a t i o n Employees Wage per Hour Number Percent Pro d u c t i o n manager 1 3 1 .00 Designer 1 3 1 .25 C u t t e r 1 3 0.75 Supervi sor 2 6 1 .00 M a c h i n i s t 20 63 0.58 T y p i s t 1 3 1 .00 Accounts c l e r k s 2 6 1 .56 Salesman 2 6 1.14 Dr i v e r 1 3 1 .00 Packer 1 3 0.62 T o t a l 32 99 0.77 SOURCE: C o n f i d e n t i a l . Where more than one employee was encountered, the data were averaged. The data on employees are summarized i n Table 6.17. The c o n t r a s t s with firms A and B are immediately o b v i o u s . Firm C i s l a r g e , and employs people whose tasks have been broken down i n c o n s i d e r a b l e d e t a i l . The average wage l e v e l of $F1.80 i s more than three times the wage p a i d by f i r m A, and more than twice that p a i d by f i r m B. As i n d i c a t e d b e f o r e , these wages had been n e g o t i a t e d by the N a t i o n a l Union of Commercial and F a c t o r y Workers. T h i s l a r g e f i r m a l s o employed a l a r g e number of " c a s u a l " workers who worked an average of only ten days i n a month. These c a s u a l workers comprised 37 percent of the f u l l - t i m e 306 TABLE 6.17 THE EMPLOYMENT PATTERN IN A LARGE MANUFACTURING FIRM IN FIJI Job C l a s s i f i c a t i o n Number of Percent Wage per Employees ($F) Stock c l e r k 3 2 2.00 Other c l e r k 1 0 7 2.12 R e c e p t i o n i s t 1 1 1 .60 Tea boy 1 1 1 .59 Purchasing o f f i c e r 1 1 3 . 53 Salesman 2 2 1 .56 Dr i v e r 2 2 1 .52 D e l i v e r y boy 2 2 1 .54 Di s p a t c h boy 3 2 1 .54 Carpenter 3 2 1 .65 F i t t e r / m a c h i n i st 2 2 2.63 E l e c t r i c i a n 2 2 2.40 Welder 1 1 1 .53 Fa c t o r y worker*3 18 1 3 1 .54 Foreman 1 7 1 2 2.39 Boilerman 3 2 1 .57 Machine boy 6 4 1 .58 Machine operator 1 3 9 1 .63 Pr i n t e r 2 2 1 .56 Packer, s e a l e r , l a b e l l e r 26 1 9 1 .57 Sup e r v i s o r 1 1 3.84 E l e v a t o r boy 2 2 1 .59 Q u a l i t y c o n t r o l l e r 1 1 2. 52 Bleacher 3 2 1 .53 Leading hand 2 2 1 .69 C u t t e r 1 1 1 .67 Cleaner 1 1 1 .62 Rake boy 1 1 NA Baker and a s s i s t a n t baker 4 3 1 .66 Cu t t e r boy 2 2 1 .65 Labourer 1 1 1 .53 T o t a l 137 105 1.80 SOURCE: C o n f i d e n t i a l . Where more than one employee i s p r e s e n t , the data r e p r e s e n t s the average wage. bI n some c a s e s , such as t h i s , c a t e g o r i e s have been c o l l a p s e d to preserve the anonymity of the f i r m concerned. 307 r e g u l a r employees of the f i r m , and i n d i c a t e s the importance of c a s u a l employees in the labour process in F i j i . Casual workers have o f t e n been used by companies a l l over the world in the p l a c e of f u l l - t i m e workers to escape paying many worker b e n e f i t s , such as superannuation, and h o l i -day e n t i t l e m e n t . However, i t i s d i f f i c u l t to a c c u r a t e l y analyse, the s i g n i f i c a n c e and i m p l i c a t i o n s of t h i s l a r g e c a s u a l employee component without f u r t h e r d a t a , as i t could represent a mecha-nism used by the company to r e t a i n people on i t s p a y r o l l who otherwise would be l a i d o f f given the very d i f f i c u l t economic s i t u a t i o n f a c i n g F i j i i n 1983. The Future Plans The survey of manufacturers gathered i n f o r m a t i o n on the fu t u r e plans of manufacturers i n F i j i . The responses are summa-r i z e d i n Table 6.18. The m a j o r i t y of the establishments that plan to i n c r e a s e t h e i r output i n d i c a t e t h e i r c o n s i d e r a b l e f a i t h i n the a b i l i t y of the F i j i a n economy to become buoyant once a g a i n . I t a l s o undermines the general impression of d u p l i c a t i o n i n the manufacturing s e c t o r , as does the very small number of est a b l i s h m e n t s that p l a n to e i t h e r to reduce t h e i r output, c l o s e o p e r a t i o n s or cease o p e r a t i o n s i n F i j i a l t o g e t h e r . The firms i n d i c a t e d a number of ways they planned to in c r e a s e t h e i r output. T h i s q u e s t i o n was i n c l u d e d to i n d i c a t e i n d i r e c t l y the degree of excess c a p a c i t y in the manufacturing s e c t o r — i f there was excess c a p a c i t y , most of the methods of i n c r e a s i n g output being examined by manufacturers would not 308 TABLE 6.18 THE FUTURE INTENTIONS OF MANUFACTURING ESTABLISHMENTS IN FIJI Intent ion Number of Percent E s t a b l i shments Increase output 77 73 Retain present l e v e l of output 1 5 1 4 Not sure 8 8 Reduce output 3 3 Close or s e l l establishment 1 1 Leave F i j i 1 1 Not a v a i l a b l e 3 T o t a l 1 08 1 00 SOURCE: Survey of Manufacturers i n F i j i , 1983. in v o l v e the use of a d d i t i o n a l machinery. The response by firms are summarized i n Table 6.19. The data i n d i c a t e that i n 59 percent of the c a s e s , establishments i n d i c a t e d that a d d i t i o n a l machinery was planned to be purchased to i n c r e a s e output. Thus the 41 percent of the firms that i n d i c a t e d that they co u l d i n c r e a s e t h e i r output through other means supports the f i n d i n g s r e ported e a r l i e r i n t h i s chapter that there i s a s u b s t a n t i a l degree of o v e r c a p a c i t y i n the manufacturing s e c t o r i n F i j i . C o n c l u s i o n s The f i n d i n g s of t h i s chapter both r e i n f o r c e the f i n d i n g s of Chapter 5 and extend them. The d i v e r s i t y of the F i j i a n manufacturing s e c t o r emerges c l e a r l y — s o m e manufacturing opera-309 TABLE 6.19 METHODS OF INCREASING FUTURE OUTPUT IN FIJIAN MANUFACTURING ESTABLISHMENTS Proposed Method Number of Estab l i s h m e n t s Percent machinery, l a b o u r e r s and A d d i t i o n a l labour and a d d i t i o n a l machinery A d d i t i o n a l l a b o u r e r s , no a d d i t i o n a l machinery Just a d d i t i o n a l no a d d i t i o n a l B e t t e r b u i l d i n g B e t t e r b u i l d i n g a d d i t i o n a l l a b o u r e r s Combination of a d d i t i o n a l machinery, a d d i t i o n a l l a b o u r e r s , and b e t t e r b u i l d i n g M o d i f i c a t i o n to machinery A d d i t i o n a l s h i f t B e t t e r b u i l d i n g and a d d i t i o n a l machinery Use overtime A d d i t i o n a l l a b o u r e r s and improved management T r a i n i n g and a d d i t i o n a l machinery A d d i t i o n a l machinery and a d d i t i o n a l s h i f t Improved t r a i n i n g and work procedure B e t t e r arrangement f o r raw m a t e r i a l supply No i n c r e a s e planned or data not a v a i l a b l e 1 7 1 0 1 0 5 3 4 2 2 2 1 1 1 2 1 43 26 1 5 1 5 8 5 6 3 3 3 2 2 2 3 2 T o t a l 108 101 SOURCE: Survey of Manufacturers in F i j i , 1983. 310 t i o n s are q u i t e l a r g e , such as sugar m i l l i n g , f l o u r m i l l i n g , cement making, while most other o p e r a t i o n s are medium and small s c a l e . Most of the e a r l i e r manufacturing e s t a b l i s h m e n t s were e s t a b l i s h e d without adequate f e a s i b i l i t y s t u d i e s . To some ex-tent t h i s r e s u l t e d from the f a c t that f e a s i b i l i t y s t u d i e s were not as common in the past as they are now, and from the f a c t that i n most c a s e s , new manufacturing ventures were being e s t a b l i s h e d in areas where no competition e x i s t e d , thus remo-ving a major requirement of f e a s i b i l i t y s t u d i e s . However, most of the n e w l y - e s t a b l i s h e d manufacturing ventures have had f e a s i -b i l i t y s t u d i e s done, i f only to s a t i s f y the government, from which most manufacturers have sought a s s i s t a n c e , and the banks from which money had to be borrowed. The lack of adequate f e a s i b i l i t y s t u d i e s , compounded by the lack of an even rudimen-t a r y f e a s i b i l i t y c a p a b i l i t y w i t h i n F i j i , has c r e a t e d some prob-lems i n the manufacturing s e c t o r , i n c l u d i n g those of over-c a p a c i t y , and i n a p p r o p r i a t e machinery. The o r i g i n of most manufacturing f i r m s in the d i s t r i b u -t i o n s e c t o r i s unmistakable. Indeed, many of the l e a d i n g manu-f a c t u r i n g firms i n F i j i today are a l s o very c l o s e l y i n v o l v e d in many other s e c t o r s of the F i j i a n economy. What i m p l i c a t i o n s the o r i g i n of the manufacturing f i r m s , and t h e i r c u r r e n t major i n t e r e s t s i n other s e c t o r s of the economy have f o r the manufac-t u r i n g s e c t o r i s d i f f i c u l t to say without data on the u l t i m a t e d e s t i n a t i o n of the s u r p l u s generated in the manufacturing sec-t o r . I t i s not c l e a r , f o r i n s t a n c e , whether manufacturing i s 31 1 regarded as a s a t e l l i t e o p e r a t i o n by firms with major i n t e r e s t s in other s e c t o r s of the economy. The data i n t h i s chapter u n e q u i v o c a l l y i n d i c a t e the e x i s t e n c e of excess i n d u s t r i a l c a p a c i t y . The data c o n f i r m the i n t u i t i v e f e e l i n g s of the manufacturers, and the f i n d i n g s of Forsythe (1984) that the manufacturing s e c t o r in F i j i has developed a s e r i o u s degree of d u p l i c a t i o n . Part of the explana-t i o n of the excess c a p a c i t y l i e s i n the tendency not to under-take f e a s i b i l i t y s t u d i e s , and i n the absence of c l e a r gover-nment p o l i c i e s on the s t r u c t u r e and o r g a n i z a t i o n of the manufa-c t u r i n g s e c t o r . As we saw i n Chapter 5, the United Nations Development Programme (UNDP, 1977) had recommended the establishment of a Monopolies Commission i n F i j i . The gover-nment c o u l d have enlarged i t s concern, and formulated c l e a r p o l i c i e s on i n d u s t r i a l s t r u c t u r e and o r g a n i z a t i o n - - a n d thus on mechanisms f o r the r e g u l a t i o n Of c a p a c i t y i n the manufacturing s e c t o r . Not only d i d the government not act on the recommenda-t i o n s , i t s own a c t i o n s c o n t r i b u t e d to the c r e a t i o n of excess c a p a c i t y . Most manufacturing e s t a b l i s h m e n t s i n F i j i have sought government a s s i s t a n c e , and have used c a p i t a l from the governme-nt-owned F i j i Development Bank. Both the Bank, and the Business and I n d u s t r i a l Development Committee, the o r g a n i z a t i o n within the government that d e a l t with the a p p l i c a t i o n s f o r government a s s i s t a n c e to new manufacturing f i r m s , d i d not c a l l f o r f e a s i -b i l i t y s t u d i e s , and o f t e n granted a s s i s t a n c e without regard to the e x i s t i n g c a p a c i t y i n the branches new a s s i s t a n c e was being sought. F i n a l l y , to some e x t e n t , d u p l i c a t i o n has a l s o r e s u l t e d 312 from the i n c r e a s i n g p o l i t i c i z a t i o n of business i n F i j i , an environment in which sound economic advice g i v e s way to short-term p o l i t i c a l , and personal c o n s i d e r a t i o n s . Most of the manufacturing es t a b l i s h m e n t s in F i j i are not u n i o n i z e d . However, as we saw i n Chapter 5, the number of establishments i s a poor i n d i c a t o r of the s i g n i f i c a n c e of a phenomenon. In terms of the number of people engaged in the manufacturing s e c t o r , the m a j o r i t y are u n i o n i z e d — i n fa c t a l -most f o u r - f i f t h s of the people engaged in the manufacturing s e c t o r . The two f i n d i n g s are very i n t e r e s t i n g . F i r s t , the preponderance of non-union e s t a b l i s h m e n t s i n d i c a t e s the impor-tance of non-union f i r m s . In f a c t , i t appears that most of the newly e s t a b l i s h e d manufacturing f i r m s are non-union. Given the deep economic r e c e s s i o n in F i j i , i t i s l i k e l y that in the f u t u r e , more non-union firms w i l l emerge, and i t w i l l become more d i f f i c u l t to u n i o n i z e e x i s t i n g non-union f i r m s . On the other hand, the l a r g e r and o l d e r manufacturing firms are a l l u n i o n i z e d . Most of these firms now cannot become non-union, and the issue of union versus non-union firms has aroused c o n s i d e r a b l e c o n t r o v e r s y i n F i j i . Notwithstanding the g e n e r a l l y higher labour p r o d u c t i v i t y of u n i o n i z e d labour f o r c e , the l a r g e r firms are now f a c i n g newer, non-union firms that are able to o f f e r c o n s i d e r a b l e p r i c e c o m p e t i t i o n . Given that the consumers in F i j i are not h i g h l y demanding of q u a l i t y , o f t e n the higher q u a l i t y of the products of the u n i o n i z e d firms do not f e t c h the premiums that c o u l d o f f s e t the p r i c e c o m p e t i t i o n . Most of the l a r g e r , u n i o n i z e d f i r m s thus f e e l that unless the 313 government c l a r i f i e s i t s p o s i t i o n with respect to non-union f i r m s , they w i l l be h e s i t a n t to make f u r t h e r investments i n F i j i . F i n a l l y , most manufacturers appear c o n f i d e n t that F i j i ' s economy w i l l once again become buoyant, and plan to expand t h e i r o p e r a t i o n s . However, one needs to sound a note of ca u t i o n here, because a r e p r e s e n t a t i v e of one of F i j i ' s l a r g e s t f o -reign-owned firms t o l d me that the company f e e l s that i t i s trapped i n F i j i , and that the company would l i k e to e x t r i -cate themselves from F i j i . For the moment, because of the very l a r g e amounts of money concerned, they cannot f i n d s u i t a b l e buyers. I f t h i s i s t r u e , and i t c o u l d be, then the prospects f o r r a p i d growth in the manufacturing s e c t o r , indeed, i n the whole economy, are somewhat d o u b t f u l . L i k e so many th i n g s i n F i j i , the prospects f o r manufacturing development i n F i j i w i l l depend a l o t on the a b i l i t y of the government to provide an environment that p r o j e c t s s e c u r i t y of c a p i t a l , p o l i t i c a l s t a b i -l i t y , and that avoids the growing tendency to intervene in the business s e c t o r on an ad-hoc b a s i s . 314 Notes 1. The only p u b l i s h e d account of the o p e r a t i o n s of the Burns P h i l p (South Sea) L i m i t e d i n F i j i , apart from i t s annual re-p o r t s , are to be found i n Rokotuivuna et a l . (1973:50-54), and in Winkler (1982). 2. During the l a s t general e l e c t i o n i n F i j i (1982), for i n s t a n -c e , the Burns P h i l p group was a l l e g e d to have provided the s e r v i c e s of one of i t s s e n i o r employees, Mr I s i m e l i Bose, to head the r u l i n g A l l i a n c e p a r t y ' s campaign d i r e c t o r a t e . 3. T h i s account of the development of Motibhai and Company L i m i t e d i s based l a r g e l y on an i n t e r v i e w with Mr Mahendra Motibhai P a t e l , the E x e c u t i v e D i r e c t o r of the company, on 18 November, 1983. Unless otherwise i n d i c a t e d , a l l information comes from that i n t e r v i e w . 4. Of F i j i ' s t o t a l land area of 4,521,800 a c r e s , 83.06 percent i s owned communally by indigenous F i j i a n s . T h i s land i s not a l i e n a b l e to non-indigenous F i j i a n s , and cannot be openly traded even among indigenous F i j i a n s . Nearly 9 percent of the land i s owned by the crown, and only 8 percent i s f r e e h o l d land subject to f r e e and open t r a d i n g (Prasad, 1982:3). Freehold l a n d , because i t i s f i x e d i n acreage, and because i t can be f r e e l y and openly t r a d e d , commands c o n s i d e r a b l e premium in F i j i . 5. Some i n d i c a t i o n of the e a r l y d i f f i c u l t i e s faced by Indo-F i j i a n businesses i s i l l u s t r a t e d by the f a c t that in the e a r l y t w e n t i e t h c e n t u r y , a r e g u l a t i o n s t i p u l a t e d that commercial books had to be kept in e i t h e r indigenous F i j i a n language or in E n g l i s h ( G i l l i o n , 1977:36). Indigenous F i j i a n s were not encou-raged t o , nor d i d they, p a r t i c i p a t e i n the commercial economy of the colony then. The s t i p u l a t i o n was c l e a r l y aimed a g a i n s t I n d o - F i j i a n b u s i n e s s e s . 6. The I s l a n d Business (September 1981:23) d e s c r i b e s Mr Mahen-dra Motibhai P a t e l as . . . one of F i j i ' s most prominent businessmen and a con-f i d a n t e of the Prime M i n i s t e r , Ratu S i r Kamisese Mara. 7. T h i s account of Cheer I n d u s t r i e s L i m i t e d i s based on an i n t e r v i e w with Mr Cheer i n 1983. 8. We should note that the data from the R e g i s t r a r of Companies have a higher r e l i a b i l i t y as they were obtained from company rec o r d s ; data i n Table 6.1 were obt a i n e d from the f i r m s themse-l v e s . 9. The s a l a r y l e v e l of the manufacturing s e c t o r in 1982 was even b e t t e r because i t was the second highest i n the c o u n t r y , 315 only after a much higher figure for the construction industry. The construction industry in F i j i has been able to command high wages because of its close links with the expanding tourist industry, and because of the expanded government large scale projects, such as the building of the Monasavu and Vaturu dams. 316 CHAPTER 7 FIJI'S CONTEMPORARY MANUFACTURING SECTOR: INTERNAL AND EXTERNAL LINKAGES The i n t e r r e l a t i o n s h i p s between growth i n manufacturing and that i n other s e c t o r s of the economy are c r i t i c a l f o r i n d u s t r i a l i z a t i o n as we l l as f o r o v e r a l l development (Bacha, 1980: 259). Introduct ion We have a l r e a d y seen that h i s t o r i c a l l y the process of i n d u s t r i a l i z a t i o n has been at the heart of the development p r o c e s s . The manufacturing s e c t o r has e x e r c i s e d a powerful i n f l u e n c e on the e n t i r e economy through l i n k s w i t h i n the manu-f a c t u r i n g s e c t o r , and those between i t and the r e s t of the economy. One of the major problems of i n d u s t r i a l i z a t i o n i n the T h i r d World has been s a i d to be the lack of l i n k a g e s both w i t h i n the manufacturing s e c t o r , and between i t and the n a t i o -nal economy (Best, 1980:185). The manufacturing sector freque-n t l y operates as an en c l a v e , with minimal backward and forward l i n k a g e s with the r e s t of the economy (Rweyemamu, 1973:105). Th i s i s e s p e c i a l l y so where there i s a heavy c o n c e n t r a t i o n of f o r e i g n c a p i t a l , and i n the case of export p r o c e s s i n g zones. L i n k s w i t h i n the manufacturing s e c t o r can be seen in many ways, but perhaps the most c r i t i c a l i s the consumption of the output of one i n d u s t r y by f i r m s w i t h i n i t , and by firms in other i n d u s t r i e s . The more use there i s of the output of one i n d u s t r y by other i n d u s t r i e s , the more complex i s the indus-t r i a l system, and the more p o t e n t i a l there i s f o r i n d u s t r i a l 317 growth b e n e f i t t i n g the r e s t of the economy. We w i l l examine l i n k s w i t h i n the manufacturing s e c t o r i n t h i s c o n t e x t . Ordina-r i l y , t h i s would be done with the use of an i n t r a - i n d u s t r y input-output t a b l e . However, s i n c e i n the case of F i j i no such t a b l e i s a v a i l a b l e , we w i l l use the n a t i o n a l input-output t a b l e and supplement i t with a d d i t i o n a l d a t a . Intra-Manufacturing L i n k s i n F i j i A general i n d i c a t i o n of the o v e r a l l degree of i n t r a -manufacturing l i n k s can be obtained by examining the p r o p o r t i o n of raw m a t e r i a l s used by the manufacturing s e c t o r that i s produced in F i j i . I t i s important to note that t h i s i n i t s e l f w i l l not i n d i c a t e the degree of i n t r a - m a n u f a c t u r i n g l i n k a g e s , s i n c e the raw m a t e r i a l s c o u l d be obtained from o u t s i d e the manufacturing s e c t o r . However, i t does give an i n d i c a t i o n of p o t e n t i a l i n t r a - m a n u f a c t u r i n g l i n k s . Only s l i g h t l y more than one-half (59 percent) of the raw m a t e r i a l s by value consumed by the manufacturing s e c t o r i n F i j i i n 1981 was d e r i v e d from F i j i ( c a l c u l a t e d from F i j i Bureau of S t a t i s t i c s , 1984b:19). Thus the manufacturing s e c t o r does have a high scope f o r i n t r a -manuf a c t u r ing l i n k a g e s on the face of i t . However, the predomi-nance of the sugar and copra i n d u s t r i e s i n the manufacturing s e c t o r in F i j i , and the extremely high degree of l o c a l purchase of raw m a t e r i a l s by these two i n d u s t r i e s (being resource proce-s s i n g i n d u s t r i e s ) , d i s t o r t s the o v e r a l l p i c t u r e of the procure-ment of raw m a t e r i a l s . If we d i s r e g a r d these two i n d u s t r i e s , we f i n d that only 25 percent of the raw m a t e r i a l requirements of 318 the manufacturing sector was s a t i s f i e d by F i j i sources ( c a l c u -l a t e d from F i j i Bureau of S t a t i s t i c s , 1984b:18-19). T h i s would i n d i c a t e very l i m i t e d i n t r a - m a n u f a c t u r i n g l i n k a g e s i n F i j i i f sugar and copra i n d u s t r i e s are excluded. What the l a t t e r f i g u r e a l s o i n d i c a t e s i s that l i n k a g e s are much great e r i n the re s o u r c e - p r o c e s s i n g i n d u s t r i e s , and that i m p o r t - s u b s t i t u t i n g i n d u s t r i e s have e s t a b l i s h e d l i m i t e d l i n k a g e s with the r e s t .of the manufacturing s e c t o r . T h i s l a s t point i s important, given the part i m p o r t - s u b s t i t u t i o n i n d u s t r i e s have played i n F i j i ' s i n d u s t r i a l s t r a t e g y since independence, and w i l l be r e t u r n e d to l a t e r . The low degree of usage of l o c a l raw m a t e r i a l s by the manufacturing sector i s a l s o confirmed by data gathered during the survey of manufacturers i n F i j i . Table 7.1 presen t s the percentages of the f i r s t and second most important raw mate-r i a l s used by manufacturing establishments interviewed that were d e r i v e d from F i j i . In the case of both the most important raw m a t e r i a l and the second-ranking raw m a t e r i a l , the percen-tages of l o c a l procurement were q u i t e low. Thus, data so f a r suggest l i m i t e d i n t r a - m a n u f a c t u r i n g l i n k a g e s i n F i j i . The best q u a n t i t a t i v e measurement.of the degree and of d i r e c t i o n of in t r a - m a n u f a c t u r i n g l i n k a g e s i s through the use of manufacturing sector input-output t a b l e s . F i j i does not possess d e t a i l e d i n t r a - m a n u f a c t u r i n g input-output t a b l e s , but use can be made of the n a t i o n a l input-output t a b l e , which d i v i d e s the manufacturing sector i n t o seventeen groups. The s t r u c t u r e and d i r e c t i o n of i n t r a - m a n u f a c t u r i n g input-output r e l a t i o n s are 319 TABLE 7.1 PERCENT OF FIRST AND SECOND MOST IMPORTANT RAW MATERIALS DERIVED FROM FIJ I Percent Number of lishments Estab- Percent Most Important Raw M a t e r i a l Second Most Important Raw M a t e r i a l Most Important Raw M a t e r i a l Second Most IMport-ant Raw Ma t e r i -a l 0 57 1- 25 3 26- 50 2 51- 75 2 76- 99 3 100 38 Not a v a i l a b l e 3 51 2 2 1 1 1 9 32 54.3 2.9 1 .9 1 .9 2.9 36.2 67. 1 2.6 2.6 1 .3 1 .3 25.0 T o t a l 108 108 100. 1 99.9 Mean 41 29 SOURCE: Survey of Manufacturers i n F i j i , 1983. presented i n Table 7.2, and the data r e i n f o r c e our e a r l i e r o b s e r v a t i o n that there was a low degree of l i n k a g e s i n the manufacturing s e c t o r . For i n s t a n c e , only 5.1 percent of the output of the manufacturing s e c t o r i n 1980 (Table 7.2) was used as i n t e r m e d i a t e goods f o r the f u r t h e r p r oduction of goods i n F i j i . On the whole, the resource p r o c e s s i n g i n d u s t r i e s , such as sugar m i l l i n g , coconut o i l m i l l i n g , and sawmilling possess more l i n k s with other manufacturing groups than do import-s u b s t i t u t i n g manufacturing a c t i v i t i e s , such as c i g a r e t t e manu-TABLE 7.2 INTOA-MANUFACTURING LINKAGES IN FIJI, 1980: USE OF INPUTS IN SF000; FACTOR COST IN 1980 PRICES Source Manufacturing Destination Manufacturing Activities Activities Fish Sugar Coconut Rice Dairy Meat Fruit & Cigarettes Beer Flour Canning Milling Oil Milling Prod. Proc. Vegetable Milling Fish canning Sugar milling 836 Coconut o i l 171.3 211.4 3166 Rice milling Dairy products Meat processing 1.0 0.2 Fruit and vegetable processing ;f'> Cigarettes Beer Flour milling Bakery products Miscellaneous foods 105.8 42.3 Sawmilling , 50.7 Concrete products Other non-resource manufacturing 0.2 72.3 432.0 6.8 85.2 0.8 84.0 17.2 1573.1 2.6 Other resource-based manufacturing Capital goods Total 3796 178451 15346 10906 11898 2322 11485 16328 16283 12061 TABLE 7.2 (Continued) INTRA-MANUFACTURING LINKAGES IN FIJI, 1980: USE OF INPUTS IN F$000 FACTOR COST IN 1980 PRICES Source Manufacturing Destination Manufacturing Activities Activities ' Bakery Miscellan- Sawmilling Concrete Other Non- Other Resource Capital Total • % Used as Products eous Foods Products Resource Manufacturing Goods Output Intermed-Manufacturing iate Pro-ducts in Manufactu-ring Fish canning 40.9 3796 1.1 Sugar milling 82.6 681.1 178451 0.9 Coconut oil 48.1 1.8 0.8 126.8 15346 24.3 Rice milling 55.1 10906 0.5 Dairy products 11898 — Meat processing 28.8 2322 1.3Fruit and vegetable processing 11485 — Cigarettes 16328 — Beer 16283 — Flour milling 1963.8 5.2 0.6 12061 16.3Bakery products 11112 — Miscellaneous foods 12095 1.2Sawmilling 9.5 3809.9 61.8 19.4 2926.0 1376.1 18169 45.4 Concrete products 907.4 6.8 316.0 12102 10.2 Other non-resource manufacturing 261.3 100.9 10.1 118.6 133.4 139.0 799.4 35974 10.7 Other resource-based manufacturing 35.5 29.2 10.7 18836 0.4 Capital goods 490.5 36645 1.3 Total 1112 12095 18169 12102 35974 18836 423709 5.1 . SOURCE: Data supplied by the F i j i Central Planning Office, 1984. Percentages have been calculated by the author. NOTE: Blanks indicate an absence of input use, and dashes in the last column indicate an absence of intra-manufacturing use of the output of the particular manufacturing group. 322 f a c t u r i n g , beer brewing, concrete product manufacture, and f l o u r m i l l i n g . Thus the i m p o r t - s u b s t i t u t i n g manufacturing, which dominated the development of manufacturing in F i j i from the l a t e 1960s and i n the 1970s--really u n t i l now--has not made a major c o n t r i b u t i o n to the economy in terms of e i t h e r purcha-s i n g inputs from other manufacturing u n i t s w i t h i n F i j i , or supplying t h e i r output for the f u r t h e r manufacture of goods. Since the input-output data has aggregated the manufac-t u r i n g s e c t o r , i t w i l l be h e l p f u l to view the i n t e r n a l l i n k a g e s of the manufacturing s e c t o r i n more d e t a i l s c h e m a t i c a l l y . F i g u r e 7.1 combines data from Table 7.2 with a d d i t i o n a l i n f o r -mation from the census of i n d u s t r i e s and fieldwork to schemati-c a l l y present the i n t r a - m a n u f a c t u r i n g l i n k a g e s of F i j i a n manu-f a c t u r i n g . F i g u r e 7.1 confirms the low degree of intra-manufac-t u r i n g l i n k a g e s . Most of the l i n k a g e s are one-to-one, common in manufacturing systems at low l e v e l s of development. Perhaps the sugar and coconut o i l m i l l i n g and timber i n d u s t r i e s are the only manufacturing i n d u s t r i e s i n F i j i that come any where near being b a s i c i n d u s t r i e s around which other manufacturing indus-t r i e s have developed. Manufacturing and the N a t i o n a l Economy I n d u s t r i a l i z a t i o n i s being promoted i n developing coun-t r i e s because i t i s argued that i t can provide employment f o r the burgeoning p o p u l a t i o n s of the T h i r d World, and thus p r o v i d e much needed r e l i e f from very high l e v e l s of underemployment and unemployment. I n d u s t r i a l i z a t i o n i s a l s o seen as using n a t i o n a l -ly-produced raw m a t e r i a l s , and other i n p u t s , such as energy, FIGURE 71 INTERNAL LINKAGES WITHIN THE INDUSTRIAL SECTOR -3 Bus Building Sawmilling Curios & Artifacts Electrical Equipment Boat, Ship Building and Repair 7T=~ Furniture S Upholstery Paint Office Machinery Structural Metal Products Agricultural Machinery Retreading & Flip-Flop CO co 324 banking and l e g a l s e r v i c e s , and thus making a u s e f u l c o n t r i b u -t i o n to the development of these s o c i e t i e s . I n d u s t r i a l i z a t i o n i s a l s o expected to earn f o r e i g n exchange through exports of i t s o utput, or at l e a s t save f o r e i g n exchange through i t s s u b s t i t u t i o n of p r e v i o u s l y imported goods, s p e c i a l l y i n consu-mer goods. F i n a l l y , the i n d u s t r i a l s e c t o r i s seen as the source of i n n o v a t i o n i n p r o d u c t i o n t e c h n i q u e s , management, and marke-t i n g that d i f f u s e to the r e s t of the economy, and r a i s e the p r o d u c t i v i t y of the e n t i r e economy. In sum, i n d u s t r i a l i z a t i o n i s looked upon as h e l p i n g t r a n s f o r m T h i r d World s o c i e t i e s q u i c k l y . Many c r i t i c s of T h i r d World i n d u s t r i a l i z a t i o n , ' and many governments of these c o u n t r i e s themselves, have argued that these b e n e f i t s of i n d u s t r i a l i z a t i o n are not n e c e s s a r i l y being r e a l i z e d i n T h i r d World c o u n t r i e s . In p a r t i c u l a r , the employ-ment g e n e r a t i o n c a p a c i t y , or tendency, of the manufacturing s e c t o r i n the T h i r d World has been s e r i o u s l y and widely ques-t i o n e d (UNIDO, 1979b:12). In t h i s s u b s e c t i o n , we s h a l l examine how the manufactu-r i n g s e c t o r i n F i j i r e l a t e s to the r e s t of the economy, and to what extent i t b e n e f i t s F i j i . Our f i n d i n g s c o u l d be of conside-r a b l e use as the F i j i government i s c u r r e n t l y p l a n n i n g to i n t e n s i f y i t s e f f o r t s to i n d u s t r i a l i z e F i j i . M anufacturing and the N a t i o n a l Economy: A Synoptic View The l i n k a g e s between the manufacturing s e c t o r and the r e s t of the economy can be examined i n terms of input-output 325 r e l a t i o n s . We can f i r s t see what happens to the output of the manufacturing sector (Table 7.3). O v e r a l l , we have a l r e a d y noted that the manufacturing sector i n F i j i i s h i g h l y consum-p t i o n o r i e n t e d — o n l y 21.2 percent of the output of the types of manufacturing i n c l u d e d i n Table 7.3 was used as inputs i n t o other economic s e c t o r s i n F i j i . Thus the o v e r a l l l i n k a g e w i t h i n the manufacturing s e c t o r in F i j i i s not very s t r o n g l y deve-loped . The d i r e c t i o n of the movement of manufactured goods i n the r e s t of the economy i s summarized i n Table 7.4, and i n d i -c a t e s , as does Table 7.2, that the manufacturing s e c t o r i s not c l o s e l y l i n k e d with the r e s t of the F i j i a n economy. As would be expected, the resource p r o c e s s i n g manufacturing a c t i v i t i e s have strong backward l i n k a g e s with the primary s e c t o r , and some manufacturing s e c t o r s have strong forward l i n k a g e s with the h o t e l i n d u s t r y (Table 7.4). A u s e f u l i n d i c a t o r of the t o t a l extent of an a c t i v i t y ' s l i n k with the r e s t of the economy i s the output m u l t i p l i e r (see I s a r d , 1975; S c h a f f e r with the a s s i s t a n c e of Laurent et a l . , 1976 f o r d i s c u s s i o n s of m u l t i p l i e r s ) . The output m u l t i p l i e r s of the seventeen manufacturing groups i d e n t i f i e d i n the F i j i a n n a t i o n a l input-output t a b l e are presented in Table 7.5. The wide v a r i a t i o n i n the output m u l t i p l i e r s , ranging from 1.44352 in the case of f l o u r m i l l i n g to 3.85781 i n the case of f r u i t and vegetable p r o c e s s i n g , i n d i c a t e s a wide v a r i a t i o n i n the s t r e n g t h of the r e l a t i o n s h i p between the manufacturing s e c t o r and the r e s t of the economy. TABLE 7.3 THE DISPOSAL OF THE OUTPUT OF THE MANUFACTURING SECTOR, 1980 ($F000) AT FACTOR COST Type of Manufacturing Disposal of Output Intermediate Use Private Consumption Government Consumption Government Investment Fish canning 42 350 . 0 0 Sugar milling . 1665 2379 0 0 Coconut oil 3730 5621 0 0 Rice milling 274 10570 0 0 Dairy products 474 10683 0 0 Meat processing 311 784 0 0 Fruit & vegetable processing 8785 2 0 0 Cigarettes 4390 10816 0 0 Beer 3222 10957 0 0 Flour milling 2072 9038 0 0 Bakery 218 9048 0 0 Miscellaneous foods 4576 6495 0 0 Sawnilling 13689 60 0 0 Concrete products 11465 0 0 0 Other non-resource manufacturing 11290 13863 0 0 Other resource manufacturing 3762 10735 0 230 Capital goods 19652 5 2066 387 - Total 89617 104278 2066 671 TABLE 7.3 (Continued) THE DISPOSAL OF THE OUTPUT OF THE MANUFACTURING SECTOR, 1980 ($F000) AT FACTOR COST Type of Manufacturing Private • Investment Stock Export Re-export Tourist Output % of Total Output Consumption Used as Interme-diate Goods Fish canning 0 94 3210 0 0 3696 1.1 Sugar processing 0 -5460 179867 0 0 178451 0.9 Coconut oil 0 -550 6545 0 0 15346 24.3 Rice milling 0 21 41 0 0 10906 2.5 Dairy products 0 544 0 0 197 11898 4.0 Meat processing 0 885 130 0 212 2322 13.4 Fruit and vegetable processing 0 0 2698 0 0 11485 76.5 Cigarettes 0 93 71 0 958 16328 26.9 Beer 0 1232 30 0 842 16283 19.8 Flour milling 0 50 901 0 0 12061 17.2 Bakery 0 918 928 0 0 11112 2.0 Miscellaneous foods 0 353 671 0 0 12095 37.8 Sawmilling 0 337 4083 0 0 18169 75.3 Concrete products 0 480 157 0 0 12102 94.7 Other non-resource manufacturing 0 9150 656 0 1015 35974 31.4 Other resource-based manufacturing 1050 1103 869 0 1087 18836 20.0 Capital goods 3993 10118 424 0 0 36645 53.6 Total 5043 19368 201281 0 4311 423709 21.2 SOURCE: Data supplied by the Fij i Central Planning Office, 1984. TABLE 7.4 THE LINKS GF THE MANuTACTURING SECTOR WITH THE NATIONAL ECONOMY: INPUT AND OUTPUT RELATIONS, FACTOR COST ($F000), 1980 PRICES Source Manufacturing Activity Destination Sectors Mixed Fruit & Root Coconut Ginger Cocoa Tobacco Cane Dairy Live- Rice Other Fores. Agric. Vegetable Crops Growing Growing Growing Growing Growing stock Growing Agric. Growing Fish canning Sugar milling Coconut oil Rice milling Dairy processing Meat processing Fruit & vegetable processing Cigarettes Beer Flour milling Bakery products Miscellaneous foods Sawnilling Concrete products Other non-resource manufacturing Other resource-based manufacturing Capital goods 0.3 209.8 86.5 3690.6 37.9 29.9 7.6 10.7 16. 44.3 1.5 47.4 19.1 7.6 63.7 0.2 2.1 67.1 TABLE 7.4 (Continued) THE LINKS OF THE MANUFACTURING SECTOR WITH THE NATIONAL ECONOMY: INPUT AND OUTPUT RELATIONS, FACTOR COST ($F0CO), 1980 PRICES Source Manufacturing Destination Sectors Activity Fishing Fishing Mining Quarr- Elect. Water Bldg. Constr. Distribution Hotel Land Local Export ing Trans. Fish canning 1.1 Sugar milling 1.1 62.6 Coconut oil 3.8 Rice milling 55.0 Dairy processing 348.1 Meat processing 0.2 234.4 Fruit & vegetable processing 6170.0 Cigarettes 4150.3 Beer 2969.8 Flour milling 0.1 2.8 28.3 Bakery products 0.5 92.2 Miscellaneous foods 1.0 4.1 350.5 Sawmilling 149.9 2653.7 2441.1 90.4 3.7 Concrete products 10.0 58.4 4571.7 5564.0 7.9 6.4 Other non-resource manufacturing 14.7 0.1 9.5 0.4 78.2 11.9 619.1 2570.0 476.5 143.3 1094.0 Other resource-based manufacturing • 788.5 2447.2 1.5 245.6 103.4 Capital goods 14787.1 1077.0 3146.3 24.3 TABLE 7.4 (Continued) THE LINKS OF THE MANUFACTURING SECTOR WITH THE NATIONAL ECONOMY: INPUT AND OUTPUT RELATIONS, FACTOR COST ($FOOO), 1980 PRICES Source Manufacturing Activity Destination Sectors Water Air Commerce Business & Business Governmen t Education Health Other Transport Transport Insurance Services Administ. Services Fish canning Sugar milling 1.7 Coconut oil Rice milling 76.3 31.2 42.6 13.8 Dairy processing 74.7 10.5 15.3 25.4 Meat processing Fruit & vegetable 0.6 15.0 5.8 8.4 16.5 processing 2615.0 Cigarettes 239.7 Beer 252.2 Flour milling 4.1 51.1 5.5 7.8 2.7 Bakery products 2.6 77.5 14.8 20.6 10.0 Miscellaneous foods 11.2 37.7 12.3 18.1 15.7 Sawmilling 17.5 32.7 8.3 Concrete products 8.5 7.8 Other non-resource manufacturing 298.3 108.5 620.2 549.5 464.2 100.2 139.1 23.3 Other resource-based manufacturing Capital goods 4.0 1.9 35.2 SOURCE: Data supplied by the F i j i Central Planning Office, 1984. 331 TABLE 7.5 THE OUTPUT MULTIPLIERS OF MANUFACTURING ACTIVITIES IN F I J I , 1980 Manufacturing A c t i v i t y M u l t i p l i e r Rank F i s h canning 1.71 16 Sugar m i l l i n g 3.54 3 Coconut o i l 3.42 4 Rice m i l l i n g 3.57 2 D a i r y products 2.95 7 Meat p r o c e s s i n g 1 .83 15 F r u i t & vegetable p r o c e s s i n g 3.86 1 C i g a r e t t e s 2.42 13 Beer 3.33 5 F l o u r m i l l i n g 1 .44 17 Bakery 2.71 1 1 M i s c e l l a n e o u s foods 2.95 8 Sawmi11ing 3.10 6 Concrete products 2.89 10 Other non-resource manufacturing 2.02 14 Other resource-based manufacturing 2.90 9 C a p i t a l goods 2.67 1 2 SOURCE: Data s u p p l i e d by the F i j i C e n t r a l Planning O f f i c e , 1984. The data in Table 7.5 c o r r o b o r a t e our e a r l i e r observa-t i o n that resource p r o c e s s i n g i n d u s t r i e s i n F i j i are c l o s e l y l i n k e d with the r e s t of the economy. Thus sugar m i l l i n g , coconut o i l m i l l i n g , r i c e m i l l i n g , f r u i t and vegetable p r o c e s s i n g , and s a w m i l l i n g have the highest output m u l t i p l i e r s of manufacturing a c t i v i t i e s . Furthermore, the m u l t i p l i e r s of these a c t i v i t i e s are a l s o among the highest i n the economy. Thus a resource-based manufacturing s t r a t e g y , as the E i g h t h Development Plan has f o l l o w e d (see Chapter 9 f o r more d e t a i l s on government p o l i c i e s on i n d u s t r i a l i z a t i o n ) , appears to be a sound development s t r a t e g y . However, the case of f i s h canning 332 c a l l s f o r c a u t i o n , for i t has the second-lowest degree of l i n k a g e with the r e s t of the economy. Our e a r l i e r o b s e r v a t i o n that i m p o r t - s u b s t i t u t i n g i n d u s t r i e s in F i j i have weak l i n k s with the r e s t of the economy i s a l s o borne out by the data i n Table 7.5. F l o u r m i l l i n g i s an e x c e l l e n t case in p o i n t . However, Table 7.5 i n d i c a t e s that l o n g - e s t a b l i s h e d i m p o r t - s u b s t i t u t i o n i n d u s t r i e s , e x e m p l i f i e d by beer manufacturing, can develop strong l i n k s with the r e s t of the economy given s u f f i c i e n t time. The low degree of input-output r e l a t i o n s between the manufacturing s e c t o r and the r e s t of the economy i s not s u r p r i s i n g . Murti (1979:143), using the 1972 input-output t a b l e has w r i t t e n of the n a t i o n a l economy: The r e s u l t s i n d i c a t e no strong inter-dependence in the economy. T h i s i s f u r t h e r i l l u s t r a t e d by the f a c t that more than 75 percent of domestic production went to f i n a l consumption in 1972. In g e n e r a l , s e c t o r a l i n t e r -dependence i s uneven and tends to be concentrated on [ s i c ] a few s e c t o r s . The lack of any g r e a t e r degree of i n t e r a c t i o n between the manufacturing s e c t o r and the r e s t of the economy i s l a r g e l y the r e s u l t of F i j i ' s small domestic market, which has precluded the development of c a p i t a l goods i n d u s t r i e s , and of i n d u s t r i e s s u p p l y i n g intermediate goods to other i n d u s t r i e s . Where l o c a l , i n t e r m e d i a t e products were a v a i l a b l e , perhaps as by-products of resource p r o c e s s i n g , these have been used. Indeed, given the very h i g h l e v e l s of p r o t e c t i o n provided to domestic manufactu-r i n g i n F i j i , i t would have been both uneconomical and adminis-t r a t i v e l y i mpossible to use imported inputs i n t h e i r p l a c e . 333 Manufacturing and Employment Some aspects of the employment provided by the manufac-t u r i n g s e c t o r i n F i j i have al r e a d y been covered in Chapters 5 and 6. In 1982, the l a t e s t year for which data are a v a i l a b l e , the manufacturing s e c t o r employed 13,522 people. T h i s represen-ted 17 percent of a l l p a i d employment in F i j i i n 1982, thus making manufacturing an important source of p a i d employment in F i j i ( c a l c u l a t e d from F i j i Bureau of S t a t i s t i c s , 1984c:11). Only community, s o c i a l , and personal s e r v i c e s group employed more people than manufacturing i n 1982. We can extend our d i s c u s s i o n of employment i n the manu-f a c t u r i n g s e c t o r by examining the growth of employment i n the manufacturing s e c t o r over the l a s t decade. F i g u r e 7.2 summa-r i z e s the growth in employment i n the manufacturing s e c t o r from 1971 to 1982. During t h i s p e r i o d , employment i n the manufactu-r i n g s e c t o r i n c r e a s e d s u b s t a n t i a l l y from 10,120 to 15,413 i n 1980, an inc r e a s e of 52 percent over the ten y e a r s . However, employment i n the manufacturing s e c t o r f e l l to 13,522 i n 1982 because of the r e c e s s i o n i n the F i j i a n economy a l r e a d y r e f e r r e d t o . What i s even more s i g n i f i c a n t , given the tendency of manu-f a c t u r i n g in many developing c o u n t r i e s to account f o r a s h r i n -king share of t o t a l employment, i s that manufacturing i n c r e a s e d i t s share of t o t a l p a i d employment from 17.8 percent i n 1971 to 19.2 percent i n 1980, a f t e r which i t decreased to 17.3 percent in 1982 ( c a l c u l a t e d from F i j i Bureau of S t a t i s t i c s , I984a:76). Since i n d u s t r i a l i z a t i o n i s seen i n terms of s t r u c t u r a l change in the economy l e a d i n g to a higher degree of employment and 334 FIGURE 7-2 EMPLOYMENT IN MANUFACTURING IN FIJI, 1971-1982 (OOO) 16 15 14 13 12 II 10 0 J • . • • • • • J ' 1971 1972 19731974 1975 1976 1977 197 8 1979 19801981 1982 SOURCE" . Fiji Bureau of Statistics, 1984a : 7 6 335 output i n the manufacturing s e c t o r , the employment recor d of the manufacturing s e c t o r i n d i c a t e s the progress of i n d u s t r i a l i -z a t i o n in F i j i s i n c e independence to 1980. The i n c r e a s e i n employment in the manufacturing s e c t o r was the f i f t h i n percen-tage terms of the nine i n d u s t r y groups examined in F i g u r e 7.2, and h i g h e st of the p r o d u c t i v e s e c t o r s . I t s i n c r e a s e i n terms of numbers was the second-highest; only community, s o c i a l , and p e r s o n a l s e r v i c e s generated more employment than manufacturing in t h i s p e r i o d . Since i n the case of the l a t t e r , the i n c r e a s e in government bureaucracy s i n c e independence has been the major f a c t o r , the employment g e n e r a t i n g record of manufacturing i s remarkable. The data so f a r have d e a l t with only d i r e c t employment c r e a t e d i n the manufacturing s e c t o r . The manufacturing s e c t o r a l s o c r e a t e s employment in the other s e c t o r s i n d i r e c t l y . The magnitude of the employment g e n e r a t i o n c a p a b i l i t y of the manu-f a c t u r i n g s e c t o r i s presented i n Table 7.6, which i n d i c a t e s that the manufacturing s e c t o r generates a s u b s t a n t i a l number of i n d i r e c t jobs in the t o t a l economy--1.10 jobs are c r e a t e d i n d i r e c t l y f o r every d i r e c t j o b . I f we use t h i s to the manufac-t u r i n g s e c t o r employment data f o r 1982, we can say that in a d d i t i o n to the 13,522 people who were d i r e c t l y employed in the manufacturing s e c t o r , there were another 14,874 manufacturing-generated jobs i n the other s e c t o r s of the F i j i economy. Manufacturing and the Gross Domestic Product The manufacturing s e c t o r c o n t r i b u t e d 10 percent to the GDP at c u r r e n t f a c t o r cost i n 1981, making i t an important 336 TABLE 7.6 DIRECT AND INDIRECT EMPLOYMENT LINKAGES IN FIJI ECONOMY Industry D i r e c t Employment Rank D i r e c t & Rank (Employees per I n d i r e c t $10 M i l l i o n Output Employment (Employees per $10 M i l l i o n Output Quarrying 578 1 1 1 006 1 5 Sugar 358 15 1 488 7 Coconut o i l 52 23 261 1 1 Rice m i l l i n g 214 18 586 21 Dairy p r o d u c t i o n 1 46 19 370 23 Meat 1 30 20 534 22 F r u i t & vegetable products 63 21 ' 2091 3 C i g a r e t t e s 609 1 0 695 1 9 Animal feeds 59 22 1211 12 Beer 245 16 882 1 6 Bakery products 721 7 866 1 7 Mi s c e l l a n e o u s foods 432 1 4 1 052 1 4 Sawmi11ing 1 1 35 4 1 738 5 Concrete products 571 1 2 1 272 1 1 Other non-resource based manufact-uring 616 9 1 190 1 3 Other resource-based manufact-uring 1 1 97 3 1 403 9 C a p i t a l goods 242 1 7 704 18 E l e c t r i c i t y 447 1 3 612 20 Water 1 571 2 1 752 4 B u i l d i n g 1606 1 2099 2 Other cons-t r u c t i o n 617 8 1 353 1 0 D i s t i l l i n g 945 6 1 472 8 Hotels 1042 5 1 522 6 Average 591 1240 6 SOURCE: F o r s y t h , 1982:2. 3 3 7 component of the economy ( c a l c u l a t e d from F i j i Bureau of S t a t i -s t i c s , l984b:7-8). It i s i n t e r e s t i n g to note that the manufac-t u r i n g s e c t o r ' s c o n t r i b u t i o n t o the the GDP i s much lower than i t s c o n t r i b u t i o n to p a i d employment. The reasons f o r the d i s -crepancy are d i f f i c u l t to e x p l a i n , although i t c o u l d i n d i c a t e a lower p r o d u c t i v i t y i n the manufacturing s e c t o r than in other s e c t o r s of the economy, and almost c e r t a i n l y i s r e l a t e d to l o s s e s s u s t a i n e d i n some i n d u s t r y groups, such as s h i p b u i l d i n g . The c o n t r i b u t i o n of manufacturing to the GDP from 1950 to 1970, the eve of independence, i s presented i n Table 7.7. The c o n t r i b u t i o n of manufacturing to the GDP at constant 1968 f a c t o r c o s t i s a v a i l a b l e from 1972 to 1978. The share of manu-f a c t u r i n g i n the GDP over t h i s p e r i o d shows a very modest increase from 10.88 percent i n 1972 to 11.28 percent i n 1978 ( c a l c u l a t e d from F i j i Bureau of S t a t i s t i c s , 1981b:8). Given the general s t a t e of n a t i o n a l s t a t i s t i c s , however, the increase appears too small to i n d i c a t e a d e f i n i t e i n c r e a s e . Thus i t appears that i n the 1970s, the manufacturing se c t o r remained stagnant i n terms of i t s r e l a t i v e c o n t r i b u t i o n to the GDP. Since i n d u s t r i a l i z a t i o n i m p l i e s a s t r u c t u r a l change in the economy, with manufacturing s e c t o r ' s share i n the GDP i n c r e a s i n g r e l a t i v e to those of other economic s e c t o r s , the data i n d i c a t e a lack of any s i g n i f i c a n t i n d u s t r i a l i z a t i o n i n F i j i i n the 1970s. T h i s i s i n marked c o n t r a s t with what hap-pened i n a l a r g e number of d e v e l o p i n g c o u n t r i e s that achieved s i g n i f i c a n t i n c r e a s e s i n i n d u s t r i a l i z a t i o n . The i n c r e a s i n g share of p a i d employment i n the manufac-TABLE 7.7 GROSS DOMESTIC PRODUCT AT FACTOR COST BY ECONOMIC SECTOR, 1950-1970 IN CURRENT PRICES ($F MILLION) WITH PERCENTAGE SHARE IN PARENTHESIS Sector Period 1950 1953 1957 1963 1965 1970 Primary Sector Agriculture, forestry, and fishing Mining and quarrying Secondary Sector Manufacturing & processing Construction, electricity, and water Transport & communications Tertiary Sector Government services Other services 15.9 (44) 1.9 ( 5) 3.9 (11) 2.0 ( 6) 1.0 ( 3) 3.3 ( 9) 8.0 (22) 26.0 (51) 29.2 (48) 44.6 (41) 40.6 (34) 1.5 ( 3) 1.9 ( 3) 1.8 ( 2) 2.2 ( 2) 4.6 ( 9) 6.3 (10) 13.3 (12) 14.9 (12) 2.7 ( 5) 4.3 ( 7) 6.8 ( 6) 8.0 ( 7) 1.9 ( 4) 2.4 ( 4) 7.8 ( 7) 6.8 ( 6) 3.4 ( 7) 3.5 ( 6) 5.9 ( 5) 8.5 ( 7) 10.7 (21) 13.5 (22) 28.3 (26) 40.1 (33) 54.7 (29) 2.4 ( 1) 23.1 (12) 16.7 ( 9) 14.8 ( 8) 13.3 ( 7) 63.5 (34) GDP 36.0 (101) 50.8 (100) 61.1 (100) 108.5 (99) 121.1 (101) 188.0 (100) SOURCE: F i j i Central Planning Office, 1970: 4; 1980: 1 (for 1970 data). Percentages have been calculated by the author. Includes commerce, tourism, real estate, and property ownership. 339 turing sector, and at the same time i t s almost stagnant share of the GDP implies, as we have already noted, a lack of produc-t i v i t y increase in the manufacturing sector. This i s indeed the case. Data compiled by the F i j i Employment and Development Mission (1984:514), and presented in Table 7.8, c l e a r l y show that real worker productivity in the manufacturing sector has, in the majority of the cases where a trend can be i d e n t i f i e d , decreased. F a l l i n g worker productivity, or stagnant worker produc-t i v i t y has c l e a r l y resulted from over capacity in the manufac-turing sector that we have already noted in the previous chap-t e r , and the i n a b i l i t y or unwillingness of firms to reduce their workforces. High leve l s of protection provided to domes-t i c manufacturing in the past has meant that firms were not f i n a n c i a l l y affected by f a l l i n g or stagnant worker productivity, and this may have allowed them to retain their labour force size despite f a l l i n g levels of production. Despite the stagnation in the manufacturing sector, however, there i s l i t t l e doubt of the importance of the sector because of i t s c r i t i c a l role in foreign exchange earnings. Most of F i j i ' s main exports depend on the manufacturing sector to retain their quality and competitiveness on the world markets. Manufacturing and the U t i l i t i e s Sector Another major contribution of the manufacturing sector to the national economy l i e s in i t s use of energy, gas and water. In 1981, for instance, the manufacturing sector used $8,201,000 worth of petroleum products from the u t i l i t i e s sec-340 TABLE 7.8 REAL OUTPUT PER WORKER IN SOME MANUFACTURING INDUSTRIES IN F I J I , SELECTED YEARS Industry P r o d u c t i v i t y by Year O v e r a l l Trend 1975 1979 1980 Coconut o i l (tonnes) 122. 1 87. 6 80. 7 Decrease Rice & f l o u r (tonnes) 317. 1 312. 2 207. 3 Decrease Stockfeed (tonnes) 575. 0 562. 9 460. 0 Decrease Beer (m e g a l i t r e s ) 1 52. 0 1 36. 0 1 24. 0 Decrease C i g a r e t t e s & tobacco (tonnes) 3. 2 3. 8 3. 7 Unclear Cement & concrete (tonnes) 1 60. 2 245. 5 242. 4 Increase Soap & other chemicals (tonnes) 24. 5 30. 3 29. 0 Unclear Sugar & molasses (000 tonnes) 97. 9 1 43. 9 1 47. 4 Increase Soft d r i n k s (000 l i t r e s ) 10. 7 31 . 8 19. 8 Unclear Sawmi11ing (000 c u b i c metres) 1 35. 3a 185. 2 204. 2 Inc rease SOURCE: F i j i Employment and Development M i s s i o n , 1984:514. aData i s f or 1976. Data f o r the other i n d u s t r i e s were not a v a i l a b l e , or were a v a i l a b l e f o r e a r l y 1970s o n l y . For the three i n d u s t r i e s f o r which data were a v a i l a b l e f o r the e a r l y 1970s, two showed decreased r e a l worker p r o d u c t i v i t y . 341 t o r ; t h i s represented almost 3.5 percent of the value of the raw m a t e r i a l expenditure of the manufacturing s e c t o r (see F i -gure 7.3). In a d d i t i o n , the s e c t o r consumed $5,207,000 worth of e l e c t r i c i t y ( a l l c a l c u l a t e d or otherwise d e r i v e d from F i j i Bureau of S t a t i s t i c s , 1984b:19). A f u r t h e r $375,000 was spent on water s u p p l i e s . Thus the manufacturing s e c t o r has been making a major use of the products of the u t i l i t i e s s e c t o r . Although in the past t h i s was a mixed b l e s s i n g i n that petro-leum imports placed a heavy s t r a i n on the f o r e i g n exchange p o s i t i o n of the c o u n t r y , with the recent opening of the Monasa-vu h y d r o e l e c t r i c p r o j e c t , the use of e l e c t r i c i t y w i l l a i d the F i j i economy more than in the p a s t . Indeed, the government w i l l r e l y on s a l e s of e l e c t r i c i t y to meet i t s l a r g e debts r e l a t e d to the development of h y d r o e l e c t r i c power. Manufacturing and Government Revenue The manufacturing s e c t o r i s the second l a r g e s t c o n t r i b u -to r to a l l tax p a i d by companies; i n 1980, i t s tax c o n t r i b u t i o n of $7,990,304 was 28 percent of a l l tax p a i d by f i r m s ( c a l c u -l a t e d from F i j i Department of Inland Revenue, 1983:25). The manufacturing se c t o r a l s o c o n t r i b u t e d 8 percent of the t o t a l revenue c o l l e c t e d by the F i j i Department of I n land Revenue. Furthermore, the manufacturing s e c t o r ' s share of a l l tax p a i d by firms i n F i j i has i n c r e a s e d from 24 percent i n 1976. T h i s i s , of c o u r s e , only the d i r e c t tax c o n t r i b u t i o n ; the 13,522 people d i r e c t l y employed by the manufacturing sec-t o r , and 14,874 people i n d i r e c t l y employed by the s e c t o r i n 1982 a l s o made a s u b s t a n t i a l c o n t r i b u t i o n to the tax revenue of 342 FIGURE 7-3 SOME OF THE MAJOR INPUTS INTO THE MANUFACTURING S E C T O R , 1981 Insurance, Postage & Telephone, Rent, Advertising, Office Stationery, Accounting Q Legal Costs SOURCE '. Fiji Bureau of Stat ist ics, 1984b". 14-15; 18-19; 2 2 - 2 3 343 the c o u n t r y , although since tax revenue data are not broken down by t h e i r sector of o r i g i n , i t i s not p o s s i b l e to c a l c u l a t e e x a c t l y how much of the i n d i v i d u a l tax comes from the manufac-t u r i n g s e c t o r . It i s not unreasonable to assume that since the manufacturing sector accounts for almost one f i f t h of the p a i d employment in F i j i that i t s tax c o n t r i b u t i o n i n the area of i n d i v i d u a l tax revenue would be around o n e - f i f t h . L i k e most other formal s e c t o r a c t i v i t i e s in F i j i , though, the manufacturing sector has a l s o been drawing on government funds in a d d i t i o n to c o n t r i b u t i n g to i t . The formal h e l p given to the manufacturing s e c t o r i s not very l a r g e s i n c e the t o t a l revenue c o s t to the government in 1980 of such a s s i s t a n c e was $2,330,528. Of t h i s $720,040 went to the h o t e l i n d u s t r y . T h i s l e f t the remaining $1,610,488 to be a l l o c a t e d to a l l firms i n F i j - i , and manufacturing s e c t o r c o u l d not have r e c e i v e d more than h a l f of t h i s . Thus the manufacturing sector makes a major net c o n t r i b u t i o n to government revenue. The Manufacturing Sector and T r a i n i n g The manufacturing sector f i r m s provide a s i g n i f i c a n t degree of a s s i s t a n c e towards t r a i n i n g i n F i j i . The l a r g e r employers have t h e i r own t r a i n i n g programs--some in-house while in the case of others in r e l a t e d overseas firms or e x t e r n a l i n s t i t u t i o n s . Furthermore, a l l f i r m s i n F i j i c o n t r i b u t e to a t r a i n i n g fund in F i j i . The F i j i N a t i o n a l T r a i n i n g C o u n c i l (FNTC), which was e s t a b l i s h e d i n 1973 as a r e s u l t of the F i j i N a t i o n a l T r a i n i n g A c t , Caption 93 ( F i j i N a t i o n a l T r a i n i n g Coun-c i l , I983:v), c o l l e c t s a levy of 1 percent of the gross p a y r o l l 344 from a l l f i r m s . On the compensation of employees of $47,781,000 in 1981 ( F i j i Bureau of S t a t i s t i c s , I984b:46), the c o n t r i b u t i o n to n a t i o n a l t r a i n i n g funds would have been $477,810. Apart from c o n t r i b u t i n g to the n a t i o n a l t r a i n i n g funds of the FNTC, and conducting t h e i r own t r a i n i n g , many manufacturing firms p r o v i d e other a s s i s t a n c e to both the FNTC and the F i j i I n s t i t u t e of Technology i n mounting s p e c i a l i z e d courses ( F i e l d w o r k , 1983). Manufacturing and F o r e i g n Exchange Many developing c o u n t r i e s have p l a c e d the s a v i n g of f o r e i g n exchange through import s u b s t i t u t i o n , or e a r n i n g of f o r e i g n exchange through exports as a major r a t i o n a l e f o r i n d u s t r i a l i z a t i o n . Of the two, i t i s r e l a t i v e l y more s t r a i g -htforward to measure the f o r e i g n exchange e a r n i n g s , and we can do t h i s f i r s t . We have al r e a d y seen that the manufacturing se c t o r as a whole, l a r g e l y because of the dominance of resource p r o c e s s i n g i n F i j i a n manufacturing, has a high export o r i e n t a -t i o n (Table 7.9). The a c t u a l f o r e i g n exchange earnings of the manufacturing sector can seen from Table 7.10. In 1982, the l a t e s t year f o r which data are a v a i l a b l e , the manufacturing se c t o r c o n t r i b u t e d $159,296,820 i n f o r e i g n exchange e a r n i n g s ; t h i s was 88 percent of the t o t a l domestic exports of F i j i i n 1982. There i s no q u e s t i o n , then, of the importance of the manufacturing sector i n terms of i t s f o r e i g n exchange genera-t i o n . Before we proceed f u r t h e r , however, we should note that s i n c e p r o c e s s i n g i n d u s t r i e s comprise the bulk of the manufactu-345 TABLE 7.9 THE OUTPUT AND EXPORT ORIENTATION OF THE MANUFACTURING SECTOR, 1980 Manufacturing Output ( $ M i l l i o n ) E x p o r t3 Percent-Sub-Category 1980 P r i c e s ( $ M i l l i o n ) age of . 1980 P r i c e s Output Exported Meat & milk p r o c e s s i n g 18.606 0.644 3.5 F i s h p r o c e s s i n g 15.098 15.914 105.4b Coconut o i l 12.667 6.750 53.3 Sugar m i l l i n g 188.165 180.000 95.7 Sawmi11ing 19.454 8. 1 02 41.6 Cement 6.052 0.552 9.1 Other resource based i n d u s t r i e s 42. 1 1 9 0.597 1 .4 Other non resource based i n d u s t r i e s 101.298 3.369 3.3 T o t a l 403.459 215.459 53.5 SOURCE: C a l c u l a t e d from data i n F i j i C e n t r a l Planning O f f i c e , 1980:347-348. Excludes r e - e x p o r t s . ^ T h i s s i t u a t i o n c o u l d r e s u l t from the export from h e l d from a pr e v i o u s y e a r . r i n g s e c t o r , and s i n c e a l l primary produce has been p r o c e s s e d , at l e a s t p a r t i a l l y , p r i o r to e x p o r t , one i s t a l k i n g of manufac-t u r i n g s e c t o r exports when one i s t a l k i n g of the exports of F i j i . The only exceptions r e l a t e to the mining s e c t o r , which i s not very s i g n i f i c a n t now, and the export of f r e s h a g r i c u l t u r a l produce, such as f r u i t s of v a r i o u s k i n d s . A g a i n , these too have not been very s i g n i f i c a n t (Table 7.10). On the b a s i s of t h i s , one can say that the whole development of F i j i , at l e a s t u n t i l the 1960s, when tou r i s m emerged an an important earner of 346 TABLE 7.10 EXPORTS OF THE MANUFACTURING SECTOR, 1982 Item3 Export ($F) Beef 52299 Cheese 1 06377 F i s h , frozen 1 3954 Beche-de-mer 120863 F i s h - d r i e d , s a l t e d , i n b r i n e 1 18056-F i s h , canned 9129790 F l o u r and sharps 174719 Prepared c e r e a l s 783569 B i s c u i t s 871243 D e s s i c a t e d coconut 94845 Jams, f r u i t j e l l i e s etc 43214 F r u i t j u i c e s , i n c l u d i n g p a s s i o n f r u i t j u i c e 304782 P a s s i o n f r u i t pulp 102883 Ginger i n b r i n e 496597 Other f r u i t , prepared or preserved 122636 Raw sugar 125076490 Molasses 5081711 Sugar c o n f e c t i o n e r y not c o n t a i n i n g cocoa 420554 Cocoa beans 122647 Tea 95854 C h i l l i e s , d r i e d 63035 G i n g e r , powdered or d r i e d 47957 Curry powder 30780 Tumeric 18407 R e s i d u a l s from working of c e r e a l s 23500 Pet food 1210847 P o u l t r y and animal feed 181 96 Ice cream 27340 Other food p r e p a r a t i o n s 1 0963 Beer 23448 A l c o h o l s p i r i t s 41 1 94 C i g a r e t t e s and tobacco products not elsewhere c l a s s i f i e d 41316 Raw h i d e s and s k i n s 134903 Timber 1642574 Waste paper and paper board etc 29301 Yaqona 92991 Soyabean o i l 20723 Coconut o i l , crude 6166718 G l y c e r o l 31 078 P a i n t s and enamel 465062 347 TABLE 7.10 (Continued) Dentr i f ices 192215 Soap and household washing preparations 361691 Plastic materials 42097 Veneer and plywood 2397053 Joinery 58390 Table lamps etc 13332 Other artifacts of wood 1 1 077 Paper bags and packaging 36467 Copy and excercise books etc 410425 Other paper stationery 76689 Toilet paper 34723 Other paper products 50697 Sacks and bags for packaging 13701 Portland cement 10367 Metal sheets and plates 587794 Windows and doors of metal 1 44805 Metal containers 102507 Metal wire 33926 Nails 485277 Builders' indoor sanitary ware etc of aluminium 58002 Small boats 54332 Furniture and parts thereof 52644 Travel goods 34715 Clothing 4221 7 Printed books, brochures etc 54787 Articles for the conveyance or packaging of goods 34566 Other articles of plastic 55968 Fil i n g cabinets etc 42216 Jewellery of precious metal 79468 Brooms 47352 Matches 203974 Total 159296820 SOURCE: F i j i Bureau of St a t i s t i c s , 1983c:146-172. aThe order in which items are presented follows the order in which appeared in the trade report. ^Excludes exports of less than $F10,000. 348 f o r e i g n exchange and source of employment, has l a r g e l y been based on the manufacturing s e c t o r . However, the manufacturing s e c t o r comprises both re-source p r o c e s s i n g i n d u s t r i e s as w e l l as i m p o r t - s u b s t i t u t i n g i n d u s t r i e s . The export p r o p e n s i t i e s of these two groups of i n d u s t r i e s are q u i t e markedly d i f f e r e n t . The former by t h e i r nature have high export o r i e n t a t i o n - - t h e y are simply the l a s t l i n k i n the c h a i n of the primary i n d u s t r y geared to the world markets. A key q u e s t i o n concerns the degree of f o r e i g n exchange earnings or savings of the non-resource based i m p o r t - s u b s t i t u -t i n g i n d u s t r i e s . A r e c a l c u l a t i o n of Table 7.10 i n d i c a t e s that the i m p o r t - s u b s t i t u t i n g i n d u s t r i e s earned only $6,170,443 or 4 percent of the t o t a l f o r e i g n exchange earned by the manufactu-r i n g s e c t o r as a whole i n 1982. Thus we c o u l d conclude t h i s s u b s e c t i o n by n o t i n g t h a t although the manufacturing s e c t o r i s the earner of s u b s t a n t i a l f o r e i g n exchange, both i n absolute and r e l a t i v e terms, most of the f o r e i g n exchange i s earned by the h i g h l y export o r i e n t e d resource p r o c e s s i n g i n d u s t r i e s , which are r e a l l y s p e c i a l i s t i n d u s t r i e s set up to s e r v i c e the export a g r i c u l t u r a l i n d u s t r y . The i m p o r t - s u b s t i t u t i n g indus-t r i e s have entered e x p o r t i n g (Table 7.11), but t h e i r c o n t r i b u -t i o n to date has been minimal i n terms of f o r e i g n exchange e a r n i n g s . More s i g n i f i c a n t than the c u r r e n t small s i z e of the exports of i m p o r t - s u b s t i t u t i n g manufacturing i s t h e i r d i s a p p o i -n t i n g export r e c o r d . In the case of cement and c i g a r e t t e s , exports have n e a r l y stopped from promising l e v e l s i n 1970 349 TABLE 7.11 THE EXPORT PERFORMANCE OF IMPORT-SUBSTITUTING MANUFACTURING IN F I J I , 1970-1983 Year Exports of Commodities Cement Bakery Products C i g a r e t t e s P a i n t s (000 tonnes) (000 kg) (000 Kg) (000 l i t r e ; 1 970 1 1 716 67 1 64 1 971 24 913 67 1 68 1 972 1 4 893 54 186 1 973 1 2 786 28 241 1974 1 5 1 074 1 1 177 1 975 1 2 724 5 1 23 1 976 10 752 8 1 1 6 1 977 8 671 17 151 1 978 1 0 744 9 1 54 1 979 3 940 6 1 37 1980 2 827 6 1 24 1 981 1 848 5 1 09 1 982 0 787 3 1 93 1 983 2 1 003 9 229 SOURCE: F i j i Bureau of S t a t i s t i c s , 1981b:56-57; 1984a:59-60. (Table 7.11). In the case of bakery products and p a i n t s , export performance has been e r r a t i c , although they have recorded minor gains over t h e i r p o s i t i o n i n 1970. The export performance of i m p o r t - s u b s t i t u t i n g manufacturing i n F i j i i s symptomatic of the l e t h a r g i c performance of the manufacturing s e c t o r i n F i j i gene-r a l l y i n the 1970s. However, the i m p o r t - s u b s t i t u t i n g i n d u s t r i e s were not set up to earn f o r e i g n e x c h a n g e — t h e y were set up to save f o r e i g n exchange, so i t i s b e t t e r to t r y to gauge t h e i r f o r e i g n exchan-ge s a v i n g s . We can determine the success of these i n d u s t r i e s i n saving f o r e i g n exchange by n o t i n g the volume of imports i n 350 those c a t e g o r i e s where these i n d u s t r i e s are a c t i v e . Some i n d i -c a t i o n of the success of the i m p o r t - s u b s t i t u t i n g i n d u s t r i e s i n saving f o r e i g n exchange i s given i n Table 7.12. We can see a s i g n i f i c a n t r e d u c t i o n i n the i m p o r t a t i o n of food items, some of which has been met by i m p o r t - s u b s t i t u t i n g food i n d u s t r i e s ; i n beverages and tobacco, i n which F i j i has become almost s e l f -s u f f i c i e n t ; i n animal and vegetable o i l s ; and i n the case of manufactured and miscellaneous manufactured goods. In the case of both manufactured goods, and i n the case of miscellaneous goods, there has been a s i g n i f i c a n t and steady d e c l i n e in imports from 1974 to 1982. The f a c t that these import reduc-t i o n s have not been a r e s u l t of a general r e d u c t i o n i n imports i s i n d i c a t e d both by the t o t a l import data presented in Chapter 1, and by the i n c r e a s e i n the imports of f u e l and l u b r i c a n t s , and machinery and t r a n s p o r t e quipment—areas i n which import-s u b s t i t u t i n g i n d u s t r i e s in F i j i have not developed. These d a t a , then, i n d i c a t e a major r o l e i m p o r t - s u b s t i t u t i n g i n d u s t r i e s have had i n c o n s e r v i n g f o r e i g n exchange in F i j i . T h i s s e c t i o n would not be complete without a c o n s i d e r a -t i o n of the consumption of f o r e i g n exchange by the manufactu-r i n g s e c t o r , f o r i t i s p o s s i b l e that while an i n d u s t r y saves f o r e i g n exchange through the non-importation of consumer goods, the i n d u s t r y may i t s e l f use more f o r e i g n exchange then the import of f o r e i g n consumer goods would have e n t a i l e d ( B a l a s s a , 1981:3). The i m p o r t - s u b s t i t u t i n g i n d u s t r i e s c o u l d spend f o r e i g n exchange through the import of machinery and c a p i t a l goods needed to produce t h e i r output, i n importing the raw m a t e r i a l s TABLE 7.12 COMPOSITION OF IMPORTS BY SITC SECTIONS (PERCENTAGE) Section 1974 1975 1976 1977 1978 1979 1980 1981 1982 Food 18.8 17.4 18.2 19.1 20.0 15.7 14.2 14.2 14.9 Beverages and tobacco 1.3 1.4 1.4 1.6 1.2 1.2 0.8 0.8 0.8 Crude materials 1.5 0.9 0.7 0.8 0.8 1.0 0.7 0.8 0.8 Fuels, lubricants etc 15.7 17.4 16.0 19.2 15.9 18.4 23.0 25.6 28.8 Animal and vegetable oils 1.6 1.6 1.4 1.5 1.5 1.3 1.1 1.1 1.1 Chemicals 6.7 7.5 6.1 7.2 7.4 7.0 6.7 6.9 7.4 Manufactured goods 20.4 17.9 18.0 18.2 19.2 19.1 18.7 16.5 16.6 Machinery and transport equipment 16.1 20.2 20.8 18.3 19.5 22.5 22.6 21.8 17.2 Miscellaneous manufactured articles 15.5 12.9 13.9 11.0 11.1 10.4 8.8 8.8 9.8 Commodities not elsewhere classified 2.4 2.8 3.5 3.1 3.4 3.4 3.6 3.5 2.6 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 u> cn H Value ($F Million) 219.3 221.0 238.0 281.0 300.0 393.0 459.0 540.0 475.6 SOURCE: F i j i Bureau of Statistics, 1983c:xii. 352 fo r t h e i r i n d u s t r i e s , in engaging overseas c o n s u l t a n t s , paying r o y a l t i e s , borrowing from abroad, and i n r e p a t r i a t i n g t h e i r p r o f i t s . The issue of the net f o r e i g n exchange ear n i n g s by i n d u s t r i e s in F i j i has become important, and has been i n v e s t i -gated i n the case of the t o u r i s t i n d u s t r y by B r i t t o n (1979). The manufacturing s e c t o r i n F i j i has t r a d i t i o n a l l y used l a r g e amounts of f o r e i g n exchange. The f i r s t input-output t a b l e fo r F i j i (Dommen, 1970) i n d i c a t e d , f o r i n s t a n c e , that the manufacturing s e c t o r ( e x c l u d i n g the sugar and coconut o i l indu-s t r i e s , which had been c l a s s e d with the primary s e c t o r ) , impor-ted 62 percent of the ba s i c i n p u t s , amounting to the expendi-ture of $8,820,000 (Dommen, 1970:input-output t a b l e , no page). The manufacturing s e c t o r i n c u r r e d a f u r t h e r c o s t of $5,438,000 in the import of c a p i t a l goods. The t o t a l f o r e i g n exchange cost of the manufacturing sector was $14,258,000. Thus f o r the export e a r n i n g s , i n c l u d i n g t o u r i s t e x p e n d i t u r e , of $14,260,000, the manufacturing s e c t o r i n c u r r e d the cost of a l t o g e t h e r $14,258,000 in f o r e i g n exchange. Thus i n the e a r l y days of the i m p o r t - s u b s t i t u t i n g i n d u s t r i a l i z a t i o n of F i j i , the manufactu-r i n g s e c t o r was a major d r a i n on the f o r e i g n exchange resources of F i j i . The c u r r e n t p i c t u r e , , however-, should have changed dras-t i c a l l y , with the use of more domestic r e s o u r c e s , and the purchase of more do m e s t i c a l l y - p r o d u c e d f i n i s h e d goods. In 1981, the manufacturing s e c t o r spent $F98,159,000 on imported raw m a t e r i a l s ; as we have seen, t h i s was only 41 percent of a l l raw m a t e r i a l s purchased by the manufacturing s e c t o r i n that y e a r . 353 We do not know how much f o r e i g n exchange was consumed by the manufacturing s e c t o r on imports of c a p i t a l goods, and s e r v i c e s , on r o y a l t i e s , i n r e p a t r i a t i o n of p r o f i t s , and' payments of l o a n s . The main f o r e i g n exchange c o s t s of the main manufactu-r i n g groups i d e n t i f i e d i n the input-output t a b l e f o r F i j i for 1980 (imports of goods and s e r v i c e s ) are presented in Table 7.13. Table 7.13 c l e a r l y e s t a b l i s h e s a d i s t i n c t i o n between resource p r o c e s s i n g manufacturing a c t i v i t i e s , such as sugar and coconut o i l m i l l i n g , f r u i t and vegetable p r o c e s s i n g , and p u r e l y i m p o r t - s u b s t i t u t i n g manufacturing a c t i v i t i e s , such as c i g a r e t -tes manufacturing, beer brewing, and the manufacture of con-c r e t e p r o d u c t s . The former g e n e r a l l y earn s u b s t a n t i a l amounts of f o r e i g n exchange f o r l i t t l e expenditure of f o r e i g n exchange, while the l a t t e r consume l a r g e amounts of f o r e i g n exchange per d o l l a r of export income. Although one has to remember that i m p o r t - s u b s t i t u t i n g manufacturing does save f o r e i g n exchange, the data c l e a r l y e s t a b l i s h the very poor export performance of i m p o r t - s u b s t i t u t i n g manufacturing, and t h e i r high f o r e i g n ex-change c o s t s per d o l l a r of f o r e i g n exchange earned. Manufacturing and Innovation The manufacturing s e c t o r has long been regarded as the source of i n n o v a t i o n i n s o c i e t y . Thomas (1974:179), f o r i n s t a n -ce , argues that one of the c r i t i c a l a t t r i b u t e s of i n d u s t r i a l i -z a t i o n i s the spread of i n d u s t r i a l techniques to the r e s t of 354 TABLE 7.13 FOREIGN EXCHANGE COSTS OF MANUFACTURED EXPORTS IN F I J I , 1980' Manufacturing Value of Imports Exports Foreign A c t i v i t y of Goods and (000F$) Exchange S e r v i c e s (2) Cost of (1) $1 of Export (1/2) F i s h canning 694 321 0 0.22 Sugar p r o c e s s i n g 5201 179867 0.03 Coconut o i l 1 530 6545 0.21 Rice m i l l i n g 819 41 19.98 Dairy products 2896 0 2896.00 Meat p r o c e s s i n g 1485 1 30 1 1 .42 F r u i t & vegetable p r o c e s s i n g 525 2698 0.19 C i g a r e t t e s 6028 71 84.90 Beer 2538 30 84.60 F l o u r m i l l i n g 5709 901 6.34 Bakery products 2768 928 2.98 M i s c e l l a n e o u s foods 2490 671 3.71 Sawmi11ing 2706 4083 0.66 Concrete products 1 731 1 57 11.03 Other non-resource manufacturing 1 5488 656 23.61 Other resource manufacturing 4385 869 5.05 C a p i t a l goods 11141 424 26.28 T o t a l 681 1 4 201281 0.34 SOURCE: C a l c u l a t e d from data s u p p l i e d by the F i j i C e n t r a l Planning O f f i c e , 1 984. The c o s t s i n c l u d e d here are imports of non-competitive goods, imports of c o m p e t i t i v e goods, imports of s e r v i c e s , and c o s t s of f u e l . I t does not i n c l u d e the cost of e l e c t r i c i t y , however, which has been l a r g e l y d e r i v e d from imported petroleum, 355 the economy. In t h i s s e c t i o n we can d i s c u s s whether t h i s has happened in F i j i . The more i n t e g r a t e d the manufacturing s e c t o r i s with the r e s t of the economy, the more scope there i s of i n d u s t r i a l innovations permeating to the r e s t of the economy. Techniques from the manufacturing s e c t o r , such as the need f o r increased p r o d u c t i v i t y , r e g u l a r i t y i n the q u a l i t y and supply of goods, and i n c r e a s i n g labour s p e c i a l i z a t i o n , have a l l d i f f u s e d to the r e s t of the economy. In many i n s t a n c e s , firms i n the manufacturing s e c t o r have been a c t i v e i n other s e c t o r s as w e l l , such as d i s t r i b u t i o n and a g r i c u l t u r e , and the d i f f u -s i o n of these techniques has been e a s i e r . The d i s t r i b u t i o n system in F i j i has adopted more modern forms of r e t a i l i n g , such as supermarketing and warehousing. In a g r i c u l t u r e , there has been a development of commercial p l a n t a t i o n s run by, i n many ca s e s , the same firms that are a c t i v e i n p r o c e s s i n g the output of these p l a n t a t i o n s . The c o f f e e p l a n t a t i o n s run by the Carpen-t e r ( F i j i ) L i m i t e d are good examples; while coconut p l a n t a t i o n s run by both the Carpenter and Burns P h i l p group of companies are f u r t h e r examples. The p l a n t a t i o n s aim f o r the production of good q u a l i t y , c o m p e t i t i v e l y p r i c e d output that meets i n t e r n a -t i o n a l c o m p e t i t i o n . S i m i l a r l y , a major part of the a g r i c u l t u r a l system of F i j i i s under the a c t i v e s u r v e i l l a n c e and guidance of the N a t i o n a l Marketing A u t h o r i t y , which has adopted a q u a l i t y -based p r i c i n g formula. Furthermore, the N a t i o n a l Marketing A u t h o r i t y i s c l o s e l y a s s o c i a t e d with some major p r o c e s s o r s of a g r i c u l t u r a l produce, such as the C a s t l e T r a d i n g Company, and the T r o p i c a l Foods L i m i t e d . The requirements of the manufactu-356 r i n g o p e r a t i o n s are being t r a n s m i t t e d to the a g r i c u l t u r a l sys-tem. In some c a s e s , other manufacturers maintain very a c t i v e s u p e r v i s i o n of the p r o d u c t i o n of produce--South P a c i f i c Foods L i m i t e d , f o r i n s t a n c e , s u p p l i e s i t s own-grown p l a n t i n g m a t e r i a l to the farmers, s u p p l i e s f e r t i l i z e r , c l o s e l y oversees the main-tenance of the p a s s i o n f r u i t farms, and c o l l e c t s the f r u i t i t s e l f (see Chandra and Prasad, 1978:60-64). Then, f i n a l l y , there has been the h i s t o r i c a l case of the CSR's c l o s e s u p e r v i -s i o n of the sugar cane i n d u s t r y , which has r e s u l t e d in the development of a c o m p e t i t i v e sugar i n d u s t r y i n F i j i . Another inno v a t i o n that has spread to the r e s t of the economy has been the u n i o n i z a t i o n of l a b o u r . Unions were born from the e a r l y sugar m i l l s and cane farms, and the e a r l y m u l t i -n a t i o n a l f i r m s , and they q u i c k l y spread to the r e s t of the c o u n t r y . Unions now play a major r o l e in F i j i , where they are s t r o n g l y represented in most t r i p a r t i t e forums. C o n c l u s i o n s T h i s chapter has attempted to d e s c r i b e and analyse the l i n k a g e s both w i t h i n the manufacturing s e c t o r i t s e l f , and bet-ween i t and the r e s t of the n a t i o n a l economy. Data presented i n t h i s chapter c l e a r l y show that l i n k a g e s , both w i t h i n the manu-f a c t u r i n g s e c t o r , and between i t and the r e s t of the economy, are not w e l l developed. Resource p r o c e s s i n g manufacturing a c t i -v i t i e s tend to be b e t t e r i n t e g r a t e d with the r e s t of the econo-my than p u r e l y i m p o r t - s u b s t i t u t i n g manufacturing--mainly on account of the very s i g n i f i c a n t raw m a t e r i a l input i n t o these a c t i v i t i e s from the primary s e c t o r . I m p o r t - s u b s t i t u t i n g manufa-357 c t u r i n g has developed mainly on imported raw m a t e r i a l s , and t h e i r output has been extremely f i n a l product o r i e n t e d - - t h u s l e a v i n g l i t t l e p o t e n t i a l f o r f o r g i n g l i n k s with the r e s t of the economy. The lack of in t r a - m a n u f a c t u r i n g l i n k a g e s i s mainly the r e s u l t of the small s i z e of the domestic market of F i j i , which has p r e c l u d e d , f o r s c a l e reasons, the development of interme-d i a t e goods i n d u s t r i e s . To some extent a l s o , the manufacturing system r e f l e c t s the recency of i t s development—as we noted i n Chapter 4. As the manufacturing system d e v e l o p s , the scope f o r intra-manufac-t u r i n g l i n k s and those with the r e s t of the economy w i l l i n -c r e a s e . T h i s i s , to some e x t e n t , already happening, with the development o f , for i n s t a n c e , p l a s t i c c o n t a i n e r manufacturing, and the s e t t i n g up of s t e e l r o l l i n g m i l l s . T h i s trend w i l l most l i k e l y r e c e i v e a boost from m u l t i n a t i o n a l firms as they estab-l i s h j o i n t ventures with F i j i companies because the overseas markets that m u l t i n a t i o n a l s can guarantee can overcome the c o n s t r a i n t s of the domestic market s i z e . D e s p i t e the absence of stro n g l i n k s with the r e s t of the economy, there i s l i t t l e doubt that the manufacturing s e c t o r forms an important, even c r i t i c a l p a r t of the n a t i o n a l economy because the s e c t o r covers most of F i j i ' s main e x p o r t s . As we have seen elsewhere i n the study, these exports form the econo-mic backbone of the F i j i a n economy. In terms of employment t o o , the manufacturing remains an important s e c t o r . The c h a l l e n g e f o r the government i s to .ensure that the s e c t o r can develop 358 more l i n k s with the r e s t of the economy. 359 CHAPTER 8 THE CONTEMPORARY MANUFACTURING ECONOMY OF F I J I : LOCATION As our d i s c u s s i o n i n Chapter 3 i n d i c a t e d , the l o c a t i o n of manufacturing has been the core of i n d u s t r i a l geography u n t i l r e c e n t l y . Given t h i s c e n t r a l i t y of l o c a t i o n a l a n a l y s i s in i n d u s t r i a l geography, and the i n c r e a s i n g r e a l i z a t i o n by many governments of the importance of i n d u s t r i a l l o c a t i o n i n r e g i o -nal p l a n n i n g (see, for i n s t a n c e , Chaudhuri, 1978; K u k l i n s k i , 1978), i t has been decided to t r e a t the l o c a t i o n of manufactu-r i n g a c t i v i t i e s i n F i j i i n a chapter by i t s e l f . While there have been i n d u s t r i a l censuses i n F i j i s i n c e 1969, very l i t t l e data e x i s t on the s p a t i a l dimensions of the manufacturing s e c t o r . Even now, the census does not repor t any data by l o c a t i o n . While t h i s omission may have been understan-dable i n the p a s t , i t i s p e r p l e x i n g in the l i g h t of the avowed r e g i o n a l p l a n n i n g p o l i c i e s of the government at l e a s t s i n c e the Seventh Development P l a n , c o v e r i n g the p e r i o d 1976 to 1980 ( F i j i C e n t r a l Planning O f f i c e , 1975; on the e v o l u t i o n of r e g i o -n a l p l a n n i n g i n F i j i , see Chandra and Gunasekera, 1982). T h i s chapter w i l l begin with a d i s c u s s i o n of the l o c a -t i o n of manufacturing a c t i v i t i e s i n F i j i , u s ing a v a r i e t y of a l t e r n a t i v e ways of examining manufacturing l o c a t i o n . I t w i l l a l s o examine the major f a c t o r s i n the l o c a t i o n of manufacturing e s t a b l i s h m e n t s i n F i j i , manufacturing l o c a t i o n a l s t a b i l i t y and change,1 and p u b l i c p o l i c i e s - r e l a t i n g to the l o c a t i o n of manu-f a c t u r i n g e s t a b l i s h m e n t s . 360 The L o c a t i o n of Manufacturing A c t i v i t i e s in F i j i Even though the F i j i Bureau of S t a t i s t i c s ' data i n the census of i n d u s t r i e s do not enable a d e s c r i p t i o n of the l o c a -t i o n of manufacturing a c t i v i t i e s i n F i j i , the data i n i t s employment surveys can be used to l o c a t e manufacturing a c t i v i -t i e s in F i j i . A u s e f u l source of employment data i s the F i j i Bureau of S t a t i s t i c s ' q u a r t e r l y r e p o r t s on employment, although we need to bear i n mind some of the f o l l o w i n g l i m i t a t i o n s of 2 the Bureau's d a t a . F i r s t , the employees are a l l o c a t e d to the p o s t a l address of e s t a b l i s h m e n t s , not to the l o c a t i o n of the establishments themselves. However, i n most c a s e s , there i s c o n s i d e r a b l e congruence between the two, so the data are not s e v e r e l y compromised. Second, i t i s u n c l e a r what s p a t i a l u n i t s the Bureau i s u s i n g , because i t mentions both d i s t r i c t s and urban c e n t r e s . Urban c e n t r e s can mean areas enclosed by town, c i t y , or unincorporated town boundaries, or may i n c l u d e p e r i -urban a r e a s . Furthermore, i t i s u n c l e a r what the d i s t r i c t boundaries a r e . Despite these l i m i t a t i o n s , t h i s i s the only a v a i l a b l e i n f o r m a t i o n and i s presented i n Figure 8.1. The predominance of Suva i n the manufacturing system i s c l e a r l y evident — i t c o n t a i n e d 38 percent of a l l manufacturing sector employees in 1979 ( F i j i Bureau of S t a t i s t i c s , 1980a: 10) , although i t contained only 20 percent of the n a t i o n a l popula-t i o n -in 1976 ( c a l c u l a t e d from L o d h i a , 1 977:71, 75). Combined with employees i n nearby N a u s o r i , Suva's share of manufacturing employment r i s e s to 42 p e r c e n t . The importance of Lautoka as the second-ranking manufacturing c e n t r e i n F i j i i s not s u r p r i -FIGURE 8-1 M A N U F A C T U R I N G E M P L O Y M E N T IN FIJI, 1979 TAVEUNI OVALAU u% Levuka rovou son Legend . Urban Centres SOURCE .FIJI BUREAU OF STATISTICS, I9800M0 K M 20 40 60 80 362 s i n g as i t i s F i j i ' s only other c i t y . Labasa and Ba are the only other s i g n i f i c a n t c e n t r e s of manufacturing i n F i j i ; the others are a l l r e l a t i v e l y i n s i g n i f i c a n t . A d d i t i o n a l data gathered during fieldwork that shows the d i s t r i b u t i o n of manufacturing establishments i n F i j i are used in F i g u r e 8.2 to demonstrate the dominance of Suva in F i j i ' s manufacturing economy. The data from the survey of manufacturers i n F i j i can be used to provide yet another p e r s p e c t i v e on the l o c a t i o n of manufacturing establishments i n F i j i : the d i s t r i b u t i o n of gross manufacturing output of e s t a b l i s h m e n t s (Figure 8.3). No matter how one examines the s p a t i a l d i s t r i b u t i o n of manufacturing in F i j i , the predominant p o s i t i o n of Suva in F i j i ' s manufacturing system i s e v i d e n t . Since Suva's domination of F i j i ' s manufacturing s e c t o r i s so g r e a t , and i t s domination of the urban system even g r e a t e r , i t w i l l be u s e f u l to broaden our d i s c u s s i o n here to i n c l u d e an examination of Suva's primacy in F i j i ' s urban system, and the mechanisms that l e d to to Suva's assumption of such a dominance. ... 4 The Primacy of Suva i n F i j i ' s Urban System Primacy i s a d i s t i n g u i s h i n g f e a t u r e of many T h i r d World urban systems (Gugler and Flanagan, 1977; McGee, 1967), and F i j i i s no e x c e p t i o n . Suva i s a primate c i t y (Chandra, 1980a, 1981; Walsh, 1977, 1978). In 1976, Suva's p o p u l a t i o n of 117,828 was four times that of the second ranking urban c e n t r e i n F i j i , Lautoka (Table 8.1). Suva c o n t a i n e d n e a r l y 60 percent of the t o t a l urban p o p u l a t i o n , and 20 percent of the n a t i o n a l popula-365 TABLE 8 . 1 FIJI'S URBAN HIERARCHY, 1976 Urban Centre Populat ion Rank Expected D e v i a t i o n Current P o p u l a t i o n Pop as % of Expected Pop Suva 117827 1 __ Lautoka 28847 2 58914 30067 49 Nadi 12995 3 39276 26281 33 Labasa 12956 4 29457 1 6501 44 Nausor i 12821 5 23565 1 0744 54 Ba 9173 6 1 9638 1 0465 47 Vatukoula 6425 7 1 6832 1 0407 38 RakiRaki 3755 8 1 4728 1 0973 26 Sigatoka 3635 9 1 3092 9457 28 Levuka 2764 10 1 1 783 9019 23 Navua 2568 1 1 10712 8.144 24 Savusavu 2295 1 2 9819 7524 23 Tavua 21 44 1 3 9064 6920 24 Korovou 290 1 4 8416 81 26 3 SOURCE: C a l c u l a t e d from data i n Chandra, 1980a:146. t i o n . I t a l s o accounted f o r 55 percent of a l l workers i n F i j i aged f i f t e e n years or more ( c a l c u l a t e d from L o d h i a , 1977:317). Furthermore, Suva and i t s en v i r o n s consumed n e a r l y two-thirds of the t o t a l e l e c t r i c i t y s a l e s i n F i j i i n 1983 ( F i j i Bureau of S t a t i s t i c s , I984a:26). F i n a l l y , Suva ( i n c l u d i n g neighbouring Nausori) accounts f o r 37 percent of the Gross Domestic Product (GDP), and 69 percent of the GDP d e r i v e d from banking and other f i n a n c i a l intermediary f u n c t i o n s ( F i j i C e n t r a l Planning O f f i c e , 1980:335) and an even higher p r o p o r t i o n (72 percent) of the t o t a l turnover of a l l s e r v i c e e s t a b l i s h m e n t s in the country ( c a l c u l a t e d from F i j i Bureau of S t a t i s t i c s , 1980b:100, 117). The primacy of Suva i s a l s o r e f l e c t e d i n and c o n t r i b u t e d 366 to the p a t t e r n of urban growth between 1966 and 1976, during which p e r i o d Suva absorbed the bulk of the increase in F i j i ' s urban p o p u l a t i o n : i t s p o p u l a t i o n i n c r e a s e d by 46.8 p e r c e n t , and accounted f o r 63.4 percent of a l l i n c r e a s e in urban p o p u l a t i o n . Combined with neighbouring N a u s o r i , i t accounted for n e a r l y 70 percent of the t o t a l i n c r e a s e i n the n a t i o n a l urban p o p u l a t i o n . I t s p e r i - u r b a n area' i n c r e a s e d i t s p o p u l a t i o n by over 100 per-c e n t , at n e a r l y twice the r a t e of i n c r e a s e of the other p e r i -urban a r e a s . In absolute terms, the i n c r e a s e in the p o p u l a t i o n of Suva's peri- u r b a n area was s i x t e e n times the combined i n -crease of a l l other p e r i - u r b a n a r e a s . Suva's primacy i s deeply rooted i n the h i s t o r i c a l pat-t e r n of development i n F i j i , which, being c o l o n i a l , emphasized the development of only a few a r e a s . Moreover, F i j i ' s exports of commodities have not generated enough s u r p l u s for the gover-nment to undertake s i g n i f i c a n t e q u a l i z a t i o n programs. It i s e q u a l l y the r e s u l t of other f a c t o r s . F i r s t , most Europeans have t r a d i t i o n a l l y been co n c e n t r a t e d i n Suva, the p r o p o r t i o n of them l i v i n g i n Suva ranging from 44 percent i n 1901 to 63 percent in 1976 ( c a l c u l a t e d from v a r i o u s c e n s u s e s ) . As Europeans made most of the major p o l i t i c a l and economic d e c i s i o n s i n F i j i u n t i l F i j i ' s independence i n 1970, i t i s not too unexpected that Suva r e c e i v e d most a t t e n t i o n from these a d m i n i s t r a t o r s . Second, the market economy i t s e l f i n c r e a s i n g l y magnified Suva's a t t r a c t i v e -ness f o r new investment once the f i r s t economic a c t i v i t i e s had been l o c a t e d t h e r e . In a d d i t i o n , being the c a p i t a l c i t y , Suva has developed 367 as F i j i ' s show-case to the o u t s i d e world. I t boasts of having hosted such meetings as the Commonwealth Heads of Governments, and the C o u n c i l of M i n i s t e r s of the Lome Convention. As the c a p i t a l c i t y , Suva a l s o gained from the s i g n i f i c a n t increase i n post-independence government bureaucracy. A l s o , as the l o c a t i o n of most of the j o b s , the u n i v e r s i t y , most other post-secondary i n s t i t u t i o n s , and the seat of the most v i b r a n t c u l t u r a l commu-n i t y in the c o u n t r y, i t has a t t r a c t e d the most educated and e n t e r p r i s i n g people of the c o u n t r y . As the s i t e of the gover-nment machinery, Suva has a l s o a t t r a c t e d the most dynamic s e c t o r s of the e c o n o m y — c o n s u l t a n t s , banks, e t c . to the c i t y . F o r e i g n i n v e s t o r s have a l s o been a t t r a c t e d to the c i t y f o r the access i t provides to the p o l i t i c a l machinery. To these advantages must be added two f u r t h e r f a c t o r s . The indigenous F i j i a n e l i t e , p a r t i c u l a r l y government adminis-t r a t o r s and p o l i t i c i a n s , have long regarded Southeast V i t i Levu ( c o n t a i n i n g Suva) as t h e i r area of i n f l u e n c e , i n a d d i t i o n to E a s t e r n F i j i . Norton (1977:47-72) shows c o n v i n c i n g l y that i n d i -genous F i j i a n l e a d e r s h i p has been dominated by Southeast and E a s t e r n F i j i , with marginal p a r t i c i p a t i o n of Western F i j i . Moreover, Western indigenous F i j i a n s have t r a d i t i o n a l l y c h a l l e n -5 ged the a u t h o r i t y of the establishment c h i e f s . Given the t e n s i o n which r e s u l t e d from t h i s c h a l l e n g e , i t i s u n l i k e l y that those i n power would have fav o u r a b l y looked upon Western areas as d i v e r s i o n p o i n t s f o r investment, as p r o s p e r i t y i n the West c o u l d have s e r i o u s l y c h a l l e n g e d the indigenous F i j i a n e s t a b l i s -hment. Indeed, i n the l a s t e l e c t i o n , some Western indigenous 368 F i j i a n s formed the Western United Front with the view to h e l -ping defeat the c u r r e n t government (see L a i , 1982). In a d d i t i o n , the f a c t that Lautoka, as the second l a r -gest town and thus the most l i k e l y candidate f o r d i v e r t e d investment was a l a r g e l y "Indian town" may a l s o have played a part i n the continued growth of Suva, although the i n i t i a l l o c a t i o n of economic a c t i v i t i e s in Suva, and the "snowballing" e f f e c t of these e a r l y investments have undoubtedly been the major f a c t o r s . Given the dominant p o s i t i o n of Suva in the F i j i a n urban system, and the u n d e r l y i n g reasons f o r that prominence, manufa-c t u r i n g has i n c r e a s i n g l y g r a v i t a t e d towards Suva—sometimes, as i n the e a r l y p e r i o d of i n d u s t r i a l i z a t i o n , almost as the only p o s s i b l e i n d u s t r i a l l o c a t i o n , and l a t e r as a p r o f i t a b l e indus-t r i a l l o c a t i o n . In the next s e c t i o n , we w i l l review the main l o c a t i o n a l f a c t o r s in F i j i a n manufacturing. The C h i e f L o c a t i o n a l F a c t o r s i n F i j i a n Manufacturing T r a d i t i o n a l l y , a number of important l o c a t i o n a l f a c t o r s have been recognized i n i n d u s t r i a l geography. There a r e , of c o u r s e , many l e v e l s at which i n d u s t r i a l l o c a t i o n s can be c o n s i -dered. Although t h i s chapter i s p r i m a r i l y concerned with l o c a -t i o n w i t h i n F i j i , that i s , with i n t r a - c o u n t r y l o c a t i o n , i t w i l l be u s e f u l to f i r s t examine why F i j i i s c o n s i d e r e d as a l o c a t i o n fo r manufacturing investment by f o r e i g n i n v e s t o r s i n the f i r s t p l a c e . T h i s d i s c u s s i o n i s v a l u a b l e not only because f o r e i g n investment i n F i j i i s an important component of the country's 369 manufacturing s e c t o r , but a l s o because the government has f o r -mulated c e r t a i n s t r a t e g i e s for a t t r a c t i n g f o r e i g n investment tha t can be evaluated a g a i n s t the f i n d i n g s of t h i s s e c t i o n . As our d i s c u s s i o n r e v e a l e d i n Chapter 2, m u l t i n a t i o n a l c o r p o r a t i o n s have been i n c r e a s i n g s t e a d i l y s i n c e the l a s t war and have c u r r e n t l y assumed a c r i t i c a l l y l a r g e r o l e in i n t e r n a -t i o n a l p r o d u c t i o n , t r a d e , and p o l i t i c s . Without g e t t i n g i n v o l -ved i n the many debates concerning why m u l t i n a t i o n a l s have become so dominant in the world system, we can note some of the important reasons why, once a m u l t i n a t i o n a l has made a d e c i s i o n to i n v e s t o f f s h o r e , i t w i l l be a t t r a c t e d to a p a r t i c u l a r coun-t r y among competing c o u n t r i e s . A country may be a t t r a c t i v e to m u l t i n a t i o n a l s i n t e r e s t e d in i n v e s t i n g in manufacturing s e c t o r s for a number of reasons. The market s i z e i s o b v i o u s l y extremely important. Blackbourn (1974:251), for i n s t a n c e , r e p o r t s that i n h i s study of 105 American firms i n Europe, almost two - t h i r d s of the sample i n d i c a t e d that the s i z e of the domestic market was the d e c i s i v e f a c t o r . The importance of market s i z e i s a l s o i n d i c a t e d by the tendency, al r e a d y observed in Chapter 2, of most f o r e i g n inves-tment to be c o n c e n t r a t e d in g e o g r a p h i c a l l y l a r g e c o u n t r i e s , such as B r a z i l , I n d i a ; i n c o u n t r i e s with l a r g e p o p u l a t i o n s , such as India and Indonesia; and i n c o u n t r i e s with r e l a t i v e l y h i g h l e v e l s of per c a p i t a income, such as the newly i n d u s t r i a -l i z i n g c o u n t r i e s . A l l these c o u n t r i e s p r o v i d e l a r g e markets. The l a t e s t m a n i f e s t a t i o n of the l u r e of l a r g e domestic markets f o r f o r e i g n c a p i t a l has been the dramatic growth of f o r e i g n 370 c a p i t a l i n China since i t decided to open i t s doors to f o r e i g n c a p i t a l and technology. In the same study, Blackbourn (1974:251) noted the impo-rtance of labour c o s t s i n a t t r a c t i n g f o r e i g n investment. Again, labour cost d i f f e r e n t i a l s have p l a y e d a l a r g e part i n e x p l a i -ning the d i f f e r e n t i a l investments by f o r e i g n c a p i t a l in deve-l o p i n g c o u n t r i e s . The key " b e n e f i c i a r i e s " of the new i n t e r n a -t i o n a l d i v i s i o n of labour have been low labour cost c o u n t r i e s of Southeast A s i a . The nature of the s t a t e i n developing c o u n t r i e s has a l s o been very important i n determining the flow of f o r e i g n c a p i t a l . The a b i l i t y of the s t a t e to guarantee the s e c u r i t y of c a p i t a l has been of paramount importance. Furthermore, the a b i l i t y of the s t a t e to cr e a t e an investment environment conducive to r a p i d accumulation--through i t s p r o v i s i o n of low cost l a b o u r , s u p p r e s s i o n , in many i n s t a n c e s , of the r i g h t s of the workers to determine terms f o r the s a l e of l a b o u r , t o l e r a t i o n of i n e q u a l i -t i e s , and the p r o v i s i o n of generous f i n a n c i a l p a c k a g e s — h a s been e q u a l l y important. On the whole, f o r e i g n c a p i t a l has shown a p r o p e n s i t y f o r d i c t a t o r i a l governments i n the T h i r d World. The i n f l u e n c e of i n c e n t i v e s i n a t t r a c t i n g f o r e i g n inves-t o r s , as we have alr e a d y reviewed i n Chapter 2, has been widely commented upon. Lim (1980:176) s t a t e s , f o r i n s t a n c e , that tax i n c e n t i v e s are not instrumental i n a t t r a c t i n g f o r e i g n inves-tment. These i n c e n t i v e s may e x c e r c i s e , however, a marginal i n f l u e n c e i n i n t e r n a t i o n a l l o c a t i o n a l d e c i s i o n - m a k i n g — i n cases where a l t e r n a t i v e l o c a t i o n s o f f e r roughly the same a t t r a c t i o n , 371 the nature of the i n c e n t i v e s may prove to be the d e c i s i v e f a c t o r . In the survey of manufacturers in F i j i , foreign-owned firms were asked why they had decided to i n v e s t in F i j i . A l -though q u e s t i o n n a i r e s by t h e i r nature cannot e l i c i t the whole range of e x p l a n a t i o n s f o r phenomena, a u s e f u l range of reasons were advanced by manufacturers. Good economic o p p o r t u n i t i e s , meaning an a t t r a c t i v e r e t u r n on investments, was given as the s i n g l e most important reason (Table 8.2). C l o s e l y f o l l o w i n g behind was the f a c t that markets were p r o t e c t e d from overseas c o m p e t i t i o n . C l e a r l y , then, the government had created a c l i -mate y i e l d i n g high r e t u r n s on c a p i t a l f o r f o r e i g n firms because of i t s p r a c t i c e of p r o v i d i n g high l e v e l s of p r o t e c t i o n to domestic p r o d u c t i o n . Another reason f o r the a t t r a c t i o n - of f o r e i g n c a p i t a l to F i j i was that some major companies had decided to invest t h e r e . In many i n s t a n c e s , these firms r e i n v e s t e d t h e i r p r o f i t s i n F i j i i t s e l f , p a r t l y to escape t a x a t i o n . T h i s expanded the presence of f o r e i g n c a p i t a l in the c o u n t r y . This i l l u s t r a t e s the advan-tage of h i s t o r i c a l d e c i s i o n s - - s i n c e the e a r l y m u l t i n a t i o n a l s , such as the Carpenter and Burns P h i l p groups had chosen F i j i as t h e i r main focus of investment i n the South P a c i f i c , F i j i b e n e f i t t e d from t h e i r subsequent expansion. Simple i n e r t i a would have prevented these f i r m s from going to the other newer South P a c i f i c l o c a t i o n s . The other reasons c i t e d by the f i r m s f o r choosing to inv e s t i n F i j i are a l l t h i n l y spread. The l a s t reason i s i n t e -372 TABLE 8.2 REASONS WHY FOREIGN INVESTMENT WAS MADE IN FIJI Reason Number Percent Good economic o p p o r t u n i t i e s 7 28 Parent f i r m was a l r e a d y here 6 24 Guaranteed markets 5 20 Only c l i m a t i c a l l y a p p r o p r i a t e country i n the area 2 8 Needed o f f - s h o r e o p e r a t i o n s , F i j i was s u i t a b l e of the South P a c i f i c i s l a n d c o u n t r i e s 1 4 Owner was already working i n F i j i 1 4 Government i n v i t e d the f i r m to in v e s t i n F i j i 1 4 Small amounts of c a p i t a l are enough 1 4 Shares were o f f e r e d at a t t r a c t i v e p r i c e s 1 4 T o t a l 25 1 00 SOURCE: Survey of Manufacturers i n F i j i , 1983. r e s t i n g i n that i t i n d i c a t e s that some f o r e i g n firms i n . F i j i that wish to s e l l t h e i r shares they may be o f f e r i n g these to other m u l t i n a t i o n a l s , r a t h e r than to other l o c a l f i r m s . Howe-v e r , i t a l s o i n d i c a t e s that even though some firms want to d i v e s t of t h e i r i n t e r e s t s in F i j i , there are other m u l t i n a t i o -nal f i r m s that c o n s i d e r F i j i to be an ac c e p t a b l e investment l o c a t i o n . There are a number of reasons that the response from firms do not adequately b r i n g out, but which, n o n e t h e l e s s , were important, and which emerged to some degree from i n f o r m a l i n t e r v i e w s with foreign-owned f i r m s . The a b i l i t y of the gover-nment to provide p o l i t i c a l s t a b i l i t y s i n c e independence has been an important f a c t o r i n a t t r a c t i n g and r e t a i n i n g f o r e i g n 373 investment in F i j i . Security of capital is a prime considera-tion in any investment decision-making, even though this may not often emerge from questionnaire interviews. Another reason for F i j i ' s attraction to foreign inves-tment is the fact in the South Pacific, F i j i is the only loca-tion that provides any sizeable market. F i j i ' s population is not only the second largest among the South Pacific island countries, it also has the highest per capita income of a l l the island countries, save for the unusual case of Nauru. The tendency of foreign investment to go to areas with relatively high per capita income, and adequate infrastructure is well known. An added recent reason that makes location in F i j i attractive to foreign investors is that F i j i has access to the developed country markets. Through the SPARTECA, Fijian manufa-cturers can export several types of manufactured goods to Australian and New Zealand duty-free. Similarly, Fijian manufa-cturers can enter the markets of countries belonging to •the European Economic Community as a result of the Lome II conven-tion. Furthermore, F i j i , like most other developing countries, can obtain advantageous entry for its products into developed country markets through the Generalized System of Preferences.^ These trade and aid agreements have added another important dimension to F i j i ' s attraction to foreign capital. Although a l l of these advantages relating to trade and aid agreements are also enjoyed by the other island South Pacific countries, F i j i , for some of the reasons already mentioned, is currently the 374 most a t t r a c t i v e l o c a t i o n of any i s l a n d South P a c i f i c c o u n t r y . F i n a l l y , although wage r a t e s i n F i j i are higher than those p r e v a i l i n g i n the other South P a c i f i c i s l a n d c o u n t r i e s , and i n the c o u n t r i e s of Southeast A s i a , . F i j i has other advan-tages compared to the other i s l a n d c o u n t r i e s , such as an E n g l i s h - s p e a k i n g labour f o r c e that i s used to i n d u s t r i a l work. Furthermore, F i j i a n wages are very much lower than in both A u s t r a l i a and New Zealand. Most f o r e i g n f i r m s , having decided to make F i j i t h e i r investment l o c a t i o n , seem to be happy with t h e i r d e c i s i o n . Asked i f the firms were happy with t h e i r d e c i s i o n to i n v e s t in F i j i , 81 percent s a i d that they were, while only 19 percent s a i d that they were unhappy. Firms that were unhappy with t h e i r d e c i s i o n were d i s s a t i s f i e d with the rate of r e t u r n on t h e i r c a p i t a l — w h i c h r e l a t e d to the presence of s e r i o u s d u p l i c a t i o n i n t h e i r l i n e of p r o d u c t i o n - - , being stuck in an unfavourable l o c a t i o n because of the i n s i s t e n c e of the government in a j o i n t - v e n t u r e o p e r a t i o n , and with the government's d e c i s i o n to support locally-owned firms as a g a i n s t foreign-owned f i r m s i n government procurement. On the whole, then, F i j i has been reasonably s u c c e s s f u l in the past i n a t t r a c t i n g and r e t a i n i n g f o r e i g n investment i n manufacturing. Whether i t w i l l continue to be a b l e to do so i n the 1980s, however, remains to be seen. Having decided to l o c a t e i n F i j i , l o c a t i o n a l d e c i s i o n -making must de a l with the i s s u e of where to l o c a t e the manufac-t u r i n g e s t a b l i s h m e n t s . In a study of i n t r a - c o u n t r y l o c a t i o n a l 375 decision-making of American firms i n Europe, Blackbourn (1974:254) r e p o r t s that " . . . labour p o o l , labour c o s t s and access to market were the primary c o n s i d e r a t i o n s . " The presence 7 of s o c i a l overhead c a p i t a l , and s p e c i a l l y of a good transpor-t a t i o n system, i s a l s o very important (Datta-Chaudhuri, 1980:237, 248). If manufacturing i s concerned with resource p r o c e s s i n g , the l o c a t i o n of the resource may a l s o exert a powerful i n f l u e n c e on l o c a t i o n . Other l o c a t i o n a l f a c t o r s that can be important are the access to p o l i t i c a l and a d m i n i s t r a t i v e machinery, an important f a c t o r in modern business where the s t a t e i s a p e r v a s i v e i n f l u e n c e . The l o c a t i o n of the o r i g i n a l b usiness may a l s o exert an important i n f l u e n c e on the l o c a t i o n of subsequent p l a n t s s i n c e firms have f r e q u e n t l y i n v e s t e d hea-v i l y i n f i x e d c a p i t a l . Of c o u r s e , the r e l a t i v e importance of f a c t o r s of l o c a t i o n depend to some extent on the socio-economic c o n f i g u r a t i o n of a p a r t i c u l a r s o c i e t y , as we w i l l l a t e r see i n t h i s s e c t i o n . In F i j i , we have to examine f a c t o r s of l o c a t i o n at two l e v e l s . F i r s t , at the n a t i o n a l l e v e l , the q u e s t i o n of where to l o c a t e manufacturing establishments i s almost c e r t a i n l y determined by the a v a i l a b i l i t y of s u i t a b l e i n f r a s t r u c t u r e , which in most cases narrows the l o c a t i o n to the main urban c e n t r e s ; by the a v a i l a b i l i t y of manpower, which again pushes fi r m s to the urban c e n t r e s ; by a c c e s s i b i l i t y to markets, which again leads firms to the l a r g e s t urban c e n t r e ( s ) , and to the a v a i l a b i l i t y of i n d u s t r i a l l a n d . In p r a c t i c a l terms, t h i s means that manufacturing has to be l o c a t e d i n the main urban c e n t r e s 376 of Suva, Lautoka, Ba, N a d i , and Labasa--areas that meet a l l these c r i t e r i a (see Table 8.1). Given Suva's l a r g e p o p u l a t i o n , p r o v i d i n g both manpower and markets wit h i n easy reach, and i t s s t a t u s as the c a p i t a l c i t y , together with i t s c o n c e n t r a t i o n of most of the i n f r a s t r u c t u r e , i t i s understandable why most manufacturers have l o c a t e d i n Suva. We have seen the e v o l u t i o n of some of the elements of the mass market in F i j i i n Chapter 1. A c r i t i c a l component of the development of the mass market in F i j i has been a r a p i d i n c r e a s e i n d i s p o s a b l e income as evidenced by a growing per c a p i t a income. The l a r g e s t c o n c e n t r a t i o n of purchasing power in F i j i i s i n Suva. It c o n t a i n s not only the l a r g e s t c o n c e n t r a t i o n of p o p u l a t i o n in F i j i — i t accounted f o r 20 percent of the n a t i o n a l p o p u l a t i o n at the time of the l a s t c e n s u s — i t a l s o c o n t a i n s the w e a l t h i e s t s e c t i o n of the p o p u l a t i o n . In import-s u b s t i t u t i o n i n d u s t r i a l i z a t i o n , where the o r i e n t a t i o n of manu-f a c t u r i n g i s p r i m a r i l y towards the p r o d u c t i o n of consumer goods, as i s the case i n F i j i , the the market i s extremely important. As Kerr and S p e l t (1960:13) noted two decades ago: Ton f o r t o n , f r e i g h t charges on most manufactured goods exceed those on m a t e r i a l s . The average manufacturer i s , t h e r e f o r e , more s e n s i t i v e to the a c c e s s i b i l i t y of h i s p o t e n t i a l market than to the source of h i s m a t e r i a l s , a n d i t f o l l o w s that f o r a l a r g e number of i n d u s t r i e s , the market i s the d e c i d i n g f a c t o r i n the s e l e c t i o n of a l o c a t i o n . Another c r i t i c a l f a c t o r i n i n d u s t r i a l l o c a t i o n i n F i j i , given s p e c i a l l y the absence of p r i v a t e development of indus-t r i a l l a nd u n t i l r e c e n t l y , has been the development of gover-o nment i n d u s t r i a l e s t a t e s . The temporal sequence of the develo-377 pment of these industrial estates has powerfully shaped the location of manufacturing establishments in F i j i at two levels--in terms of which urban centres have received manufac-turing investment, and in terms of where within a particular urban centre manufacturing development has taken place. Given its central importance, it will be useful for us to examine the development of industrial estates in F i j i . The distribution of government-developed industrial estates is shown in Figure 8.4. Of the currently nine indus-9 t r i a l estates in F i j i , it is pertinent to note that four (44 percent in terms of numbers) industrial estates representing 36 percent of the total zoned area, and 71 percent of the total developed area are in Suva. Furthermore, 64 percent of the national cost of development of industrial estates between 1970 and 1980 was incurred in Suva (calculated from unpublished data supplied by the Ministry of Economic Planning and Development, 1983). Here, then, is one of the powerful explanations of manufacturing locations in Suva--the most resources being ex-panded on industrial estates in Suva i t s e l f . But there is another closely related factor ensuring the development of manufacturing establishments in Suva. This is the fact that the f i r s t industrial estates developed were a l l in Suva. This meant that for firms contemplating locating anywhere in F i j i , unless they had extremely pressing reasons for locating elsewhere (such as the influence of location of owners; ownership of freehold properties), Suva was almost the only possible location. As we have already seen, Suva had many SOURCE Unpublished data from the Ministry of Economic and Development, 1983-379 other a t t r a c t i o n s as a l o c a t i o n ; combined with the p r o v i s i o n of i n d u s t r i a l e s t a t e s , i t s preeminence was a s s u r e d . Since F i j i ' s independence i n 1970, i n d u s t r i a l e s t a t e s have been developed i n other urban a r e a s . Now most of the major urban c e n t r e s i n F i j i have at l e a s t one i n d u s t r i a l e s t a t e , and thus there i s more scope for the d i s p e r s a l of i n d u s t r i a l a c t i -v i t y . The second l e v e l at which l o c a t i o n a l f a c t o r s have to be viewed i n F i j i i s the urban c e n t r e , where a m u l t i p l i c i t y of micro f a c t o r s determine i n d u s t r i a l l o c a t i o n . The s p e c i f i c l o c a -t i o n a l reasons were e l i c i t e d from e s t a b l i s h m e n t s and are prese-nted in Table 8.3. It i s important to emphasize that the response from establishments r e f e r s to micro l o c a t i o n a l f a c -t o r s . The o v e r a l l importance of i n d u s t r i a l e s t a t e s i n determi-ning i n d u s t r i a l l o c a t i o n i n F i j i , e s p e c i a l l y i n the i n i t i a l stages of i n d u s t r i a l i z a t i o n , i s s t i l l v a l i d . The s i n g l e most important reason given for l o c a t i o n was the p r i o r ownership of p r o p e r t i e s by the owners. In most i n s t a n c e s , these were locally-owned f i r m s . Thus in the case of locally-owned manufacturing e s t a b l i s h m e n t s , the residence of the owners w i l l l a r g e l y determine the l o c a t i o n of p l a n t s . T h i s tendency can be seen very widely in F i j i — Punja and Sons, f o r i n s t a n c e , has planned most of i t s manufacturing es t a b l i s h m e n t s in Lautoka, the home town of the f i r m . S i m i l a r -l y , most l o c a l manufacturers i n Suva, that have branched from d i s t r i b u t i o n , have l o c a t e d t h e i r manufacturing establishments in Suva. S i m i l a r l y , i n Labasa, the f i r m of Gurubachan Singh and 380 TABLE 8.3 REASONS FOR CHOICE OF LOCATION OF MANUFACTURING ESTABLISHMENTS IN F I J I , 1983 Reason Number of Establishments Percent Owner(s) a l r e a d y had propert y Only s u b - d i v i s i o n or i n d u s t r i a l zone a v a i l a b l e at the time Customer a c c e s s i b i l i t y Large t r a c t of suburban land ava i l a b l e Reasonable p r i c e of property or reasonable rent Proximity to port Land given by government or l o c a t i o n r e q u i r e d by government Right s i z e of property F r e e h o l d land Not congested Good s u b d i v i s i o n Sea frontage Close to power supply Raw m a t e r i a l l o c a t i o n Not a v a i l a b l e or prope r t y a c q u i r e d 19 1 3 9 6 5 4 4 3 2 2 1 1 1 32 25 1 7 1 2 8 8 7 5 5 4 3 3 1 1 1 T o t a l 1 08 100 SOURCE: Survey of Manufacturers i n F i j i , 1983. Company L i m i t e d has e s t a b l i s h e d a number of manufacturing u-n i t s , a l l i n Labasa. T h i s tendency to l o c a t e manufacturing e s t a b l i s h m e n t s i n the area where the owner was born, or where he/she has other i n t e r e s t s , i s a w e l l recognized f e a t u r e of i n d u s t r i a l l o c a t i o n in the T h i r d World. Onyemelukwe (1974:479) argues, f o r i n s t a n -c e , that i n the case of N i g e r i a , " . . . there i s thus a common 381 tendency for p r i v a t e i n v e s t o r s to set up t h e i r i n d u s t r i a l p l a n t s i n the urban c e n t r e where they r e s i d e at the time the e n t e r p r i s e i s contemplated". T h i s tendency i s not l i m i t e d to the T h i r d World, however. North (1974:239), in a study of l o c a t i o n a l decision-making i n B r i t a i n , found that f i r m s c r e a t e d by new entrepreneurs " . . . i n v a r i a b l y l o c a t e d i n the areas where t h e i r founders p r e v i o u s l y l i v e d and worked." The reasons f o r the tendency to l o c a t e i n areas from which owners come occurs for s e v e r a l r easons. F i r s t , owners are attached to these a r e a s . Second, owners have a d e t a i l e d knowle-dge of the a r e a , and thus f e e l they can best succeed in t h e i r own a r e a s . T h i r d , many owners are merely expanding t h e i r opera-t i o n s , and, as shown i n Table 8.3, own p r o p e r t i e s where the new establishments can be s i t u a t e d . F i n a l l y , i n most c a s e s , the owners, or t h e i r immediate f a m i l y run the manufacturing u n i t s . There i s thus a strong pressure to keep e s t a b l i s h m e n t s as c l o s e as p o s s i b l e to keep the f a m i l y t o g e t h e r . T h i s i s not to say the p r i v a t e i n v e s t o r s w i l l never l o c a t e away from t h e i r home base; i f the reasons are s u f f i c i e n t l y p r e s s i n g , or i n c e n t i v e s s u f f i -c i e n t l y s t r o n g , they w i l l . Thus Punja and Sons L i m i t e d , f o r i n s t a n c e was p l a n n i n g , at the time of 1983 f i e l d w o r k , to estab-l i s h a copra f a c t o r y i n Savusavu--well away from i t s home base. It was prepared to do t h i s because any other l o c a t i o n would have been unacceptable to the copra p r o d u c e r s , and because i t would hope to b e n e f i t from government co n c e s s i o n s f o r i n v e s t i n g in a r e l a t i v e l y poor a r e a , and i n c i d e n t a l l y an area earmarked by the government as a r e g i o n a l growth c e n t r e . 382 Not s u r p r i s i n g l y , the second most s i g n i f i c a n t micro l o c a t i o n a l determinant was the a v a i l a b i l i t y of only one indus-t r i a l s u b d i v i s i o n or i n d u s t r i a l zone when the establishment i n qu e s t i o n was being e s t a b l i s h e d . T h i s f i n d i n g t o o , r e i n f o r c e s our e a r l i e r o b s e r v a t i o n that i n d u s t r i a l e s t a t e s have exerted a major i n f l u e n c e on i n d u s t r i a l l o c a t i o n in F i j i . The importance of customer a c c e s s i b i l i t y i s ex p l a i n e d by the importance of consumer o r i e n t a t i o n of manufacturing, and r e l a t e s p a r t i c u l a r l y to t a i l o r i n g and f u r n i t u r e making. The remaining reasons are d i v e r s e ; the impression that emerges from Table 8.3, and from interviews with manufacturers, i s that i n d u s t r i a l l o c a t i o n choice has been s e v e r e l y l i m i t e d i n the past and that many firms have not undertaken l o c a t i o n a l ana-l y s e s to determine t h e i r best l o c a t i o n . Of cou r s e , i n an e n v i -ronment i n which f e a s i b i l i t y s t u d i e s are o f t e n absent and f r e q u e n t l y inadequate, i t may be i n a p p r o p r i a t e to expect l o c a -t i o n a l a n a l y s e s . L o c a t i o n a l S t a b i l i t y and M o b i l i t y i n F i j i Manufacturing establishments i n F i j i have been f a i r l y s t a b l e i n t h e i r l o c a t i o n (Table 8.4). The establishments are i n the main r e l a t i v e l y new at t h e i r l o c a t i o n s , 46 percent being l e s s than ten years o l d . Only 4 percent of them had been at the cu r r e n t l o c a t i o n f o r one year or l e s s , t e s t i f y i n g to an absence of l o c a t i o n a l f l u x . There are some establishments that have been o p e r a t i n g f o r long p e r i o d s ; these are mainly sugar and copra m i l l s . 383 TABLE 8.4 NUMBER OF YEARS AT CURRENT LOCATION OF MANUFACTURING ESTABLISHMENTS Number of Years Number of Establishments Percent <5 24 23 5- 9 24 23 10-14 25 24 15-19 1 2 1 1 20-24 7 7 25-29 3 3 30-34 2 2 35-39 2 2 40-44 0 0 45-49 1 1 50-54 0 0 55-59 0 0 60-64 0 0 65-69 0 0 70-74 0 0 >74 5 5 Not a v a i l a b l e 3 — *— 1 08 101 SOURCE: Survey of Manufacturers i n F i j i , 1983. Manufacturing establishments were a l s o asked how many l o c a t i o n a l moves they had made s i n c e t h e i r e s t a b l i s h m e n t . The m a j o r i t y of manufacturing establishments (60 pe r c e n t ) had not made any move from where they were f i r s t e s t a b l i s h e d . Those that had moved, (N=42), the overwhelming m a j o r i t y (86 percent) had undertaken only one move. These f i n d i n g s r e i n f o r c e the impression that there has been c o n s i d e r a b l e s p a t i a l s t a b i l i t y among manufacturing e s t a b l i s h m e n t s . T h i s i s understandable, of co u r s e , given the r e l a t i v e l y recent o r i g i n of most manufactu-r i n g f i r m s i n F i j i , and the l a r g e c o s t s o f t e n i n v o l v e d i n 384 i n d u s t r i a l m o b i l i t y . The f a c t that there has been l o c a t i o n a l s t a b i l i t y in the manufacturing s e c t o r does not mean that the s t a b i l i t y w i l l c o n t i n u e . Indeed, s t a b i l i t y i n the past may i n d i c a t e l o c a t i o n a l adjustments have probably been postponed, and that l o c a t i o n a l adjustments w i l l most l i k e l y f o l l o w . T h i r t y percent of the esta b l i s h m e n t s i n d i c a t e d that l o c a t i o n a l moves were planned in the next f i v e y e a r s , while 65 percent d i d not plan a l o c a t i o n a l change. Six percent of the est a b l i s h m e n t s were unsure of t h e i r l o c a t i o n a l i n t e n t i o n . The data i n d i c a t e that a major l o c a t i o n a l adjustment i s indeed i n the o f f i n g . Most of the proposed changes r e s u l t from a p e r i o d of ad-hoc growth on the part of f i r m s , which are now moving to r a t i o n a l i z e t h e i r o p e r a t i o n s . Thus 40 percent of the est a b l i s h m e n t s planning to r e l o c a t e w i t h i n the next f i v e years s a i d t h e i r move was motivated by expansion of t h e i r o p e r a t i o n s . The l a r g e r l o t s now r e q u i r e d by these expanded o p e r a t i o n s are not a v a i l a b l e at the present s i t e s , as a l l the a d j o i n i n g s i t e s have been taken up. In any c a s e , the extremely high land c o s t s i n b u i l t - u p i n d u s t r i a l areas probably preclude attempts to buy a d j o i n i n g l a n d . For the remaining 60 percent of the f i r m s , the reasons f o r planning a l o c a t i o n a l change v a r i e d w i d e l y . These i n c l u d e d the purchase of p r o p e r t i e s by the f i r m s and d e s i r e to move i n t o them ( i n the case of small f i r m s ) ; move to l o c a t i o n s with g r e a t e r consumer a c c e s s i b i l i t y (mainly f u r n i t u r e makers and t a i l o r s ) ; being f o r c e d out of r e s i d e n t i a l a r e a s ; the d e s i r e to move from n a t i v e l e a s e l o c a t i o n s to o t h e r s , p r e f e r a b l y f r e e -385 h o l d ; and avoidance of f l o o d ( i n N a d i ) . Nearly one-half (45 percent) of the establishments con-templating r e l o c a t i n g d i d not know where they would move t o . T h i s high f i g u r e of "not sure" e s t a b l i s h m e n t s i s i n d i c a t i v e both of the g e n e r a l l y low l e v e l of l o c a t i o n e v a l u a t i o n a b i l i t y of the e s t a b l i s h m e n t s , and of the nature of i n d u s t r i a l land a v a i l a b i l i t y i n F i j i . With i n d u s t r i a l land being made a v a i l a b l e through a combination of p r i v a t e e n t e r p r i s e and government a g e n c i e s , most establishments are not sure where the most s u i t a b l e and cheap l o t s w i l l become a v a i l a b l e . For those that knew where they planned to move, n e a r l y always the new l o c a t i o n was a suburban o n e , . f r e q u e n t l y i n emer-ging i n d u s t r i a l e s t a t e s . In Nadi, Namaka, and Navutu in Lautoka were popular d e s t i n a t i o n s , mostly because these new areas o f f e r the only a v a i l a b l e l o t s in t h e i r r e s p e c t i v e a r e a s , and because they o f f e r p r o s p e c t s of l a r g e l o t s . Within Suva i t s e l f , planned moves were to Walu Bay, Kalabo, and Vatuwaqa. Again, the l a s t two represent new i n d u s t r i a l e s t a t e s -- and thus the only p o s s i b l e c h o i c e s . It becomes q u i t e c l e a r that most establishments are p l a n n i n g to remain i n the same area; they are merely changing t h e i r s i t e s as i t were. In only one case the planned movement was to d i s t a n t l o c a t i o n - - from Suva to a r u r a l area i n C o l o - i -Suva. P u b l i c P o l i c i e s on L o c a t i o n Although l o c a t i o n a l changes are p r i m a r i l y p r i v a t e i n v e s -tment d e c i s i o n s , and r e s u l t mainly from business d e c i s i o n s , 386 the s t a t e p l a y s an important r o l e in l o c a t i o n a l d e c i s i o n -making. The p r o v i s i o n of i n d u s t r i a l land i s a major manufactu-r i n g l o c a t i o n a l mechanism used by governments i n developing c o u n t r i e s , which the F i j i a n government has implemented. But the s t a t e can a l s o i n f l u e n c e i n d u s t r i a l l o c a t i o n in many other ways, and thus p u b l i c p o l i c y i s an important component of manufacturing l o c a t i o n a l a n a l y s i s . Although the r o l e of the s t a t e in the, manufacturing s e c t o r g e n e r a l l y w i l l be d e a l t with in Chapter 9, i t w i l l be nonetheless a p p r o p r i a t e to d i s c u s s p u b l i c p o l i c y on l o c a t i o n h e r e . Even though the F i f t h Development Plan ( F i j i C e n t r a l Planning O f f i c e , 1966:4) c a l l e d f o r the establishment of indus-t r i e s o u t s i d e the a g r i c u l t u r a l s e c t o r , and although a t t e n t i o n was c a l l e d to the p r o c e s s i n g of raw m a t e r i a l s and the c r e a t i o n of l i g h t i n d u s t r i e s , the plan d i d not regard manufacturing as a major development t o o l , nor d i d i t lay down a comprehensive i n d u s t r i a l p o l i c y . The S i x t h Development Plan (1971-1975) presented a more developed p o l i c y on i n d u s t r i a l i z a t i o n . Given the major emphasis of the Plan on the r e d u c t i o n of income i n e q u a l i t i e s i n F i j i (see, f o r i n s t a n c e , the preface by the Prime M i n i s t e r , Ratu S i r Kamisese Mara, s p e c i a l l y page i i i ) , i t i s to be expected that the planners were aware of the heavy c o n c e n t r a t i o n of manufac-t u r i n g i n Suva: " I n d u s t r i a l development . . . i s almost wholly concentrated i n a l i m i t e d number of urban c e n t r e s , p r i n c i p a l l y Suva" ( F i j i C e n t r a l Planning O f f i c e , 1970:79). The S i x t h Development Plan a r t i c u l a t e d the government's 387 nascent r e g i o n a l development i d e a s : "Government i s i n c r e a s i n g l y conscious of the need to spread the b e n e f i t s of economic deve-lopment beyond the p r i n c i p a l urban c e n t r e s " ( F i j i C e n t r a l Plan-ning O f f i c e , 1970 :81) . In what c o u l d have been F i j i ' s f i r s t major l o c a t i o n a l p o l i c y , the plan d e c l a r e d t h a t : . . . i n d u s t r i a l f a c i l i t i e s need to be i n c r e a s i n g l y l o c a t e d w i t h i n the c o n s t r a i n t s of e f f i c i e n t o p e r a t i o n out-side the two main c e n t r e s , Suva and Lautoka, i n order to provide new sources of income and employment i n the small e r urban areas ( F i j i C e n t r a l Planning O f f i c e , 1970:81). U n f o r t u n a t e l y , however, the plan remained at the l e v e l of "should l o c a t e " . It d i d not pr o v i d e mechanisms f o r ensuring the d i s p e r s a l of i n d u s t r i a l l o c a t i o n . In f a c t , i t s p o l i c y on i n d u s t r i a l e s t a t e s , as we have seen i n p r e v i o u s d i s c u s s i o n , r e i n f o r c e d economic c o n c e n t r a t i o n i n Suva. I t was l e f t to the Seventh Development Plan (1976-1980) to i n t r o d u c e the f i r s t manufacturing l o c a t i o n a l p o l i c i e s . In p a r t , t h i s r e s u l t e d from the high p r i o r i t y accorded to r e g i o n a l development p l a n n i n g i n t h i s p l a n . Declared the p l a n n e r s : " . . . Government has made r e g i o n a l development the p r i n c i p a l o b j e c t i v e of the Seventh Development Plan" ( F i j i C e n t r a l Plan-ning O f f i c e , 1975:52). The above c l a i m i s c l e a r l y inaccu-r a t e given t h a t the government had not even presented a c o n s i s -tent o u t l i n e of r e g i o n a l development. Indeed, the U n i t e d Na-t i o n s Development Programme Team had not yet submitted t h e i r recommendations on the establishment of r e g i o n a l p l a n n i n g sys-tem i n F i j i (see- a d i s c u s s i o n on r e g i o n a l development i n F i j i in Chandra and Gunasekera, 1982). However, the plan d i d present 388 s p a t i a l l y - s e n s i t i v e i n c e n t i v e s to manufacturers, which are o u t l i n e d i n Table 8.5. Although an attempt i s made to encourage the d i s p e r s a l of manufacturing a c t i v i t i e s , given Suva's major a t t r a c t i o n to manufacturing, the i n c e n t i v e s f o r the other l o c a -t i o n s were c l e a r l y inadequate. As Hamilton (1967:410) observed some time ago, "The power of a l o c a l i t y to hold an i n d u s t r y . . . g r e a t l y exceeds i t s o r i g i n a l power to a t t r a c t . The new l o c a -l i t y must not only e x c e l the o l d , but i t must e x c e l i t by a margin enough to more than o f f s e t the r e s i s t i n g power of the ma t r i x . " The E i g h t h Development Plan (1981-1985) d i d not present any refinement on the l o c a t i o n a l p o l i c i e s of the e a r l i e r plan because the government was undertaking a general review of the i n c e n t i v e package. Although the government c l a i m s that r e g i o n a l development i s a b a s i c element of the l a t e s t plan (see, f o r i n s t a n c e , development o b j e c t i v e s on page 5 ) , the government d i d not i n c l u d e l o c a t i o n a l d e c e n t r a l i z a t i o n of manufacturing as one of the major o b j e c t i v e s f o r the manufacturing s e c t o r . The best e v a l u a t i o n of the government's p o l i c i e s f o r changing the e x i s t i n g manufacturing l o c a t i o n to a more d i s p e r -sed p a t t e r n i s the e x i s t i n g manufacturing l o c a t i o n . T h i s , as we have seen, i s most h e a v i l y c o n c e n t r a t ed i n the Suva urban a r e a . Another t e s t of the i n f l u e n c e of the government's l o c a t i o n a l p o l i c i e s i s the l o c a t i o n of new investment i n manufacturing approved by the Economic Development Board. Of the f i f t e e n manufacturing p r o p o s a l s approved i n 1982, and f o r which the Board p r o v i d e d p u b l i s h e d d a t a , twelve had s u f f i c i e n t informa-t i o n on t h e i r l o c a t i o n . Of these twelve manufacturing f i r m s , 67 389 TABLE 8.5 LOCATIONALLY-CONSCIOUS CONCESSIONS POLICY TOWARDS THE MANUFACTURING SECTOR, 1976-1980 L o c a t i o n Import S u b s t i t u t i o n Export Ori e n t e d Manufactur ing Tax T a r i f f Tax T a r i f f R e l i e f R e l i e f R e l i e f R e l i e f Greater 3-5yrs m a t e r i a l f r e e 5-8yrs mater i a l Suva Tax equipment Tax fr e e Concess- 10% Concess- equipment ion ion 1 0% Rest of V i t i 5-8yrs m a t e r i a l 5-8yrs m a t e r i a l Levu Tax f r e e Tax fr e e Concess- equipment Concess- equipment ion 1 0% ion 5% Outside V i t i 1 Oyrs m a t e r i a l 1 Oyrs ma t e r i a 1 Levu Tax f ree Tax free Concess- equipment concess- equipment ion 5% ion f r e e SOURCE: F i j i C e n t r a l Planning O f f i c e , 1975:122. percent had t h e i r l o c a t i o n i n Suva (data i n The Economic Development Board of F i j i , 1983:7-8). Thus the o v e r a l l dominan-ce of Suva i n manufacturing appears to be c o n t i n u i n g unabated. Furthermore, the four f i r m s that l o c a t e d away from Suva were a l l l o c a l l y - o w n e d firms and, given our f i n d i n g s e a r l i e r in t h i s chapter concerning l o c a t i o n a l decision-making of locally-owned f i r m s , were probably l o c a t i n g away from Suva not because of the r e g i o n a l development p o l i c i e s of the government, but because these f i r m s had t h e i r main o p e r a t i o n s i n these a r e a s . One would have to conclude that the r e g i o n a l d i s p e r s a l p o l i c i e s of the government are not having a major impact on the manufacturing 390 s e c t o r . C o n c l u s i o n s The c u r r e n t l o c a t i o n of manufacturing a c t i v i t y in F i j i i s h i g h l y uneven, and i s almost e n t i r e l y concentrated in the main i s l a n d of V i t i Levu. Within V i t i Levu, most manufacturing a c t i v i t i e s have been c o n f i n e d to the Suva-Nausori area and, to a much l e s s e r e x t e n t , i n Lautoka. The only major i n d u s t r i a l a c t i v i t i e s o u t s i d e Suva have been those in resource p r o c e s s i n g where the bulky nature of raw m a t e r i a l s make a r e s o u r c e - o r i e n -ted l o c a t i o n p r o f i t a b l e (such as sugar m i l l s , p a s s i o n f r u i t f a c t o r y , f i s h c a n n e r y ) , and where locally-owned establishments have been l o c a t e d near the home base of the owners. Thus the l o c a l ownership of manufacturing a c t i v i t i e s has been a powerful f a c t o r i n whatever r e g i o n a l spread of manufacturing there i s i n F i j i . A major e x p l a n a t i o n f o r the c o n c e n t r a t i o n of manufactu-r i n g i n Suva s p e c i a l l y , and i n only a few urban p l a c e s , i s the l a i s s e z - f a i r e a t t i t u d e of the c o l o n i a l government that allowed market f o r c e s to r e i n f o r c e Suva's a t t r a c t i o n to new i n d u s t r i e s . Suva's i n i t i a l advantage of being the premier port and c a p i t a l c i t y , was extended to a supply of a good labour p o o l , e x t e r n a l economies i n terms of l i n k a g e s with other f i r m s , and the prese-nce of a major c o n c e n t r a t i o n of p o p u l a t i o n — i m p o r t a n t given the consumption goods o r i e n t a t i o n of F i j i a n manufacturing. P u b l i c p o l i c y f o c u s s i n g on the l o c a t i o n of manufacturing a c t i v i t i e s was mooted i n the S i x t h Development P l a n , but was 391 only implemented in the Seventh Development Plan. However, the incentives provided to locate away from Suva were clearly inadequate as most firms have continued to locate in Suva. Given the major advantage of a location in Suva, incentives designed to encourage location away need to be substantial. Because of the weakness of the incentives, i t cannot be said that the government has been serious about dispersing manufac-turing a c t i v i t i e s . Given that manufacturing in F i j i , like economic ac t i v i -ties generally, has been getting increasingly more bureaucra-tized and po l i t i c i z e d , there is a strong locational pull to-wards Suva. Thus the government may, in some ways, be undercut-ting its own declared policy of the decentralization of econo-mic activity in F i j i . Finally, there has been very limited locational choice in F i j i in the past. Industrial estates were extremely impor-tant, given that many firms did not have sufficient resources to locate in areas not fully serviced with roads, power and other infrastructure. However, the fact that until recently, industrial estates were limited to those provided by the gover-nment left manufacturing l i t t l e choice. Certainly within an urban area, it is usually not possible for manufacturing to choose from alternative sites. Location also does not appear to have been given much consideration by the firms themselves, specially with regard to the future land needs. And in many instances, the prior ownership of a property determines where an activity is to be located. A l l these have led to a major 392 s u b - o p t i m a l i t y in the l o c a t i o n of manufacturing a c t i v i t i e s i n F i j i and F i j i i s l i k e l y to see a major l o c a t i o n a l adjustment by manufacturers i n the near f u t u r e . 393 Notes 1. Locational change i s used here in the sense used by North(1974:213): ". . . a l l those decisions that amount to a change in the locational arrangement of a firm's a c t i v i t i e s " . These include factory extensions, factory closures, company takeovers, mergers, relocations, branch establishment, and i n i t i a l locations. 2. The F i j i Bureau of S t a t i s t i c s publishes a much more compre-hensive Annual Employment Survey. However, for some inexplicab-le reason, the only locational data in the annual survey are aggregated to the le v e l of the four administrative d i v i s i o n s - - a far too gross an areal breakdown of employment. 3. An attempt to update these data proved unsuccessful because the F i j i Bureau of S t a t i s t i c s does not report data by these units any more. Given the emphasis of the government on regio-nal planning, this move i s both inexplicable and unhelpful. 4. The discussion in th i s section draws heavily on my paper on urbanization in Fiji(Chandra, 1985 [forthcoming]) which pro-vides a much more detailed analysis of urbanization in F i j i . On urbanization in F i j i , see Bakker (1977); Chandra (1980a, 1981); Walsh (1977, 1978); Whitelaw (1966). 5. Most indigenous F i j i a n protests against the c o l o n i a l system, and against the c h i e f l y establishment have come from Western F i j i . The wars of Colo were the e a r l i e s t manifestation of the Western F i j i a n protest. The major individual to challenge both the c o l o n i a l government, and the c h i e f l y system in F i j i around the middle of the twentieth century, Mr Apolosi Ranawai, also came from Western F i j i . F i n a l l y , as we have already noted, the Western United Front was formed by the landowning groups in Western F i j i to fight the current government, and formed an a l l i a n c e with the opposition party during the last general elections to attempt to unseat the government (on the Western United Front during the las t e l e c t i o n s , see L a i , 1982). 6. Detailed information on the various aid and trade agreements af f e c t i n g F i j i can be found in The Economic Development Board of F i j i (1983b). 7. Here the d e f i n i t i o n of s o c i a l overhead c a p i t a l provided by Datta-Chaudhuri (1980:237) i s being used: Social overhead c a p i t a l comprises a l l those basic industries l i k e power, transport, or communications which must precede the more quickly y i e l d i n g , d i r e c t l y produc-t i v e investments and which constitutes the framework of infrastructure and the overhead costs of the company as a 394 whole. 8. On industrial estates in developing countries, see Chi (1981, 1982); UNIDO (1978b). 9. This number excludes Tauvegavega in Ba, an industrial estate that has been rezoned for residential use. 10. Suva is here taken to include the nearby town of Lami. 395 CHAPTER 9 THE STATE AND INDUSTRIALIZATION IN FIJI One of the great misconceptions of c o n v e n t i o n a l econo-mic theory i s that businessmen are induced to perform t h e i r f u n c t i o n s by purchases of t h e i r goods and s e r v i c e s , as though the vast p r o d u c t i v e tasks performed i n market-o r i e n t e d systems c o u l d be motivated s o l e l y by exchange r e l a t i o n s between buyers and s e l l e r s . On so slender a foundation no great p r o d u c t i v e system can be e s t a b l i s h e d . What i s r e q u i r e d i n a d d i t i o n i s a set of governmentally pr o v i d e d inducements in the form of market and p o l i t i c a l b e n e f i t s . And because market demands themselves do not spontaneously s p r i n g up, they too have to be nurtured by governments. Governments in market o r i e n t e d systems have always been busy with these a c t i v i t i e s (Lindblom, 1977:173 as quoted i n Crouch, 1979:38). Regardless of a m b i g u i t i e s i n i t s r e l a t i o n to the n a t i o n a l b o u r g e o i s i e , the c e n t r a l i t y of the s t a t e to accumulation on the p e r i p h e r y i s i n c o n t r o v e r t i b l e . Imperialism as a process and m u l t i n a t i o n a l s as o r g a n i z a t i o n s concentrate accumulation at the c e n t r e of the i n t e r n a t i o n a l system. The l o c a l owning c l a s s has f a i l e d to achieve domination over l o c a l i n d u s t r y even in the most advanced p e r i p h e r a l c o u n t r i e s . Unless the s t a t e can enforce a p r i o r i t y on l o c a l accumulation and push l o c a l i n d u s t r i a l i z a t i o n e f f e c t i v e l y , there i s no e f f e c t i v e sponsor for p e r i p h e r a l i n d u s t r i a l i z a t i o n (Evans, 1979:43). Intr o d u c t ion As the i n t r o d u c t o r y d i s c u s s i o n i n Chapter 2 i n d i c a t e d , the s t a t e has become an important agent i n the economic systems of both developed and developing c o u n t r i e s , whether the p o l i t i -c a l p h i l o s o p h i e s of these governments are s o c i a l i s t or c a p i t a -l i s t (see, i n a d d i t i o n , Crouch, 1979; Evans, 1979; Sobhan, 1979). The s t a t e has been p a r t i c u l a r l y a c t i v e i n manufacturing, a s e c t o r t h a t i s both c a p i t a l i n t e n s i v e and c r u c i a l f o r long-term development. F i j i i s no e x c e p t i o n i n that the s t a t e has been important i n p r o v i d i n g an o v e r a l l business investment 396 environment for economic a c t i v i t y , in providing wide-ranging f i n a n c i a l as well as i n f r a s t r u c t u r a l assistance to the manufac-turing sector, and f i n a l l y , in undertaking di r e c t manufacturing production. The state has been c r u c i a l in establishing an a l l i a n c e between i t s e l f , the private sector c a p i t a l i s t s , and the orga-nized labour movement through the creation of the T r i p a r t i t e Forum.1 This forum has attempted to s t a b i l i z e i n d u s t r i a l r e l a -tions in the country, while also attempting to move manufactu-rers along paths that they would, in the absence of such a machinery, not wish to t r a v e l . This a l l i a n c e has been an impor-tant attempt by the state to move towards i t s integrative role in the economy. Many aspects of i n d u s t r i a l organization, structure, and location that we have discussed in Chapters 5 through 8 are at least p a r t i a l l y the result of state p o l i c i e s , and i t is impor-tant thus to investigate the role of the state in F i j i a n indus-t r i a l i z a t i o n . This chapter w i l l trace the evolution of indus-t r i a l p o l i c i e s in F i j i , seen mainly through the various develo-pment plans, examine the nature and extent of the state's di r e c t p a r t i c i p a t i o n in the manufacturing sector, and discuss an evaluation of the investment environment and government apparatus by manufacturers. The l a t t e r w i l l form the basis for recommendations for enhancing p o s s i b i l i t i e s for i n d u s t r i a l i z a -tion in F i j i to be considered in the concluding section of the th e s i s , Chapter 10. 397 The E v o l u t i o n of Government P o l i c i e s on I n d u s t r i a l i z a t i o n The best view of the e v o l u t i o n of s t a t e p o l i c i e s towards the manufacturing s e c t o r i s a f f o r d e d by an examination of the development p l a n s , although other major developments, such as the establishment of the C e n t r a l Monetary A u t h o r i t y i n 1973 ( C e n t r a l Monetary A u t h o r i t y , 1983:4) or the Income Tax Act of 1974 ( F i j i Government, 1975:33-149) w i l l a l s o be reviewed as they c o n s t i t u t e important p o l i c y statements on i n d u s t r i a l i z a -t i o n . Since we have a l r e a d y reviewed the r o l e of the c o l o n i a l s t a t e in F i j i a n i n d u s t r i a l i z a t i o n (see Chapter 4 ) , we w i l l b egin our a n a l y s i s of the e v o l u t i o n of the government's manufa-c t u r i n g p o l i c i e s with the S i x t h Development P l a n , c o v e r i n g the p e r i o d 1971 to 1975 ( F i j i C e n t r a l Planning O f f i c e , 1970). The S i x t h Development Plan s t i l l viewed manufacturing, which had dropped i t s share of the GDP from 12.4 percent to 10.9 percent d u r i n g the F i f t h Development P l a n , as a minor component of F i j i ' s economy ( F i j i C e n t r a l Planning O f f i c e , 1970:138), and one that was not a key element of the development s t r a t e g y ( F i j i C e n t r a l Planning O f f i c e , 1970:139). However, the government d i d recognize the growing impor-tance of the manufacturing s e c t o r and formulated a set of p o l i c i e s f o r i t . The g i s t of government's approach to the manufacturing sector i s summed up i n t h i s statement: The i n d u s t r i a l s e c t o r i s of growing importance to the F i j i economy. While i t i s not seen as a key component i n a development s t r a t e g y , i t i s s t i l l expected to c o n t r i b u t e s i g n i f i c a n t l y towards the Plan o b j e c t i v e s , e s p e c i a l l y the optimal use of a v a i l a b l e human and p h y s i c a l resources and the red u c t i o n of income d i s p a r i t i e s ( F i j i 398 C e n t r a l Planning O f f i c e , 1970:139). The plan argued that keeping i n mind i n t e r n a t i o n a l com-p e t i t i o n as a major f a c t o r , and the small domestic market of F i j i , F i j i should concentrate on a narrow range of manufactu-r i n g and p r o c e s s i n g a c t i v i t i e s which had moderate s c a l e econo-mies, some export p o t e n t i a l , e s p e c i a l l y in the P a c i f i c B a s i n , and which c o u l d enhance value-added to p r e s e n t l y e x p l o i t e d and p o t e n t i a l l y exportable domestic resources ( F i j i C e n t r a l Plan-ning O f f i c e , 1970:139). The Plan c o n s i d e r e d , as d i d a l l c o l o n i a l plans in F i j i , that manufacturing was r e a l l y an area for the p r i v a t e s e c t o r , with only i n d i r e c t government a c t i o n ( C e n t r a l Planning O f f i c e , 1970:140). The s t a t e would upgrade manpower t r a i n i n g , c r e a t e favourable investment c l i m a t e , o f f e r c o n c e s s i o n s , develop indu-s t r i a l e s t a t e s , and provide a range of e x t e n s i o n s e r v i c e s , much l i k e i t s a g r i c u l t u r a l e xtension s e r v i c e s . The S i x t h Development Plan was a major advance on the e a r l i e r p l a n s , and o f f e r e d , at l e a s t i n i t s views, some new p o s i t i o n s . It c l e a r l y h i n t e d toward an export o r i e n t a t i o n i n the economy, and was s e n s i t i v e to the need to i n j e c t dynamism in the manufacturing s e c t o r , as can be seen from t h i s s t a t e -ment : High p r i o r i t y has been given to new export i n d u s t r i e s and a c t i v i t i e s both to generate more domestic incomes d i r e c t l y and to t r y to secure a growing volume of f o r e i g n exchange. Moreover, i m p o r t - s u b s t i t u t i n g product-ion has to assume a much more dynamic r o l e ( F i j i C e n t r a l Planning O f f i c e , 1970:13). The Plan marked F i j i ' s f i r s t major attempt at s h i f t i n g the o r i e n t a t i o n of manufacturing i n F i j i through i t s p r o p o s a l 399 to p rovide a s s i s t a n c e to and promote export o r i e n t e d manufactu-r i n g ( F i j i C e n t r a l Planning O f f i c e , 1970:70-71). I t a l s o abo-l i s h e d , i n 1970, an e x i s t i n g export tax of 2 percent except for sugar and coconut o i l , the country's p r i n c i p a l exports ( F i j i C e n t r a l Planning O f f i c e , 1970:70). The government intended to promote i m p o r t - s u b s t i t u t i n g i n d u s t r i a l development in areas where export p o t e n t i a l was present: F i j i ' s i n d u s t r i a l development programme g i v e s emphasis to encouraging manufacturing which, while having an i m p o r t - s u b s t i t u t i n g r o l e , w i l l a l s o have an export p o t e n t i a l ( F i j i C e n t r a l Planning O f f i c e , 1970:70). And i t s i g n a l l e d thie major r o l e exports were to p l a y i n F i j i ' s l a t e r i n d u s t r i a l development: As i n d u s t r i a l development progresses and output of manufactured goods i n c r e a s e s , F i j i w i l l c o n c e n t r a t e on s e c u r i n g an i n c r e a s i n g o u t l e t f o r her manufactures in the more c o m p e t i t i v e markets of the developed c o u n t r i e s as w e l l as in the markets of other l e s s developed c o u n t r i e s ( F i j i C e n t r a l P l a n n i n g , 1970:70). The change i n a t t i t u d e in F i j i toward export i s i n t e r e s -t i n g as there has been a change i n t e r n a t i o n a l l y , marked from the mid 1960s, towards an export o r i e n t a t i o n i n manufacturing in a l a r g e number of developing c o u n t r i e s (see, f o r i n s t a n c e , Donges, 1983). In Taiwan and Korea, for i n s t a n c e , a marked export o r i e n t a t i o n was s i g n a l l e d i n the 1958-1961 p e r i o d , when the whole i n c e n t i v e s t r u c t u r e was overhauled ( B a l a s s a , 1971:61; see a l s o Ho, 1978 and Kuo, 1981). However, the government's emphasis on exports i n the plan were not t r a n s l a t e d i n t o a c t u a l p o l i c i e s . Even though the export tax of 2 percent was a b o l i s h e d , a d d i t i o n a l i n c e n t i v e s were needed to encourage producers to e x p o r t , s p e c i a l l y as 400 these producers enjoyed high levels of protection, both t a r i f f and quantitative. This last point needs amplification. In a situation where incentives clearly favoured production for the domestic market, the export incentives were inadequate, for given the inertia relating to any existing activity, a markedly attrac-tive set of export incentives were needed not only to overcome the imbalance in subsidies, but to compensate for a l l the other d i f f i c u l t i e s of exporting--greater quality controls, major financial outlays for export promotion, and the exposure to much greater levels of risk than experienced in the domestic market. The decision to repeal the export tax was more symbolic than real, and was simply not enough to change the course of manufacturing in F i j i . F inally, in retrospect, the Plan's hopes for a contribu-tion to "optimal" use of human and physical resources, and reduction of income disparities were clearly unattainable through the manufacturing sector which was being supported by high levels of t a r i f f protection, and which, at least in the short term, has been found to exacerbate income inequalities, rather then ameliorate them (see, for instance, Evans'[1979] analysis of the Brazilian case). Although income inequalities in F i j i did not reach Latin American proportions, the Seventh Development Plan admitted that l i t t l e progress had been made in reducing income inequalities ( F i j i Central Planning Office, 1975:3). When the government established the Central Monetary 401 A u t h o r i t y (CMA) in F i j i i n 1973, an a d d i t i o n a l element of the i n d u s t r i a l p o l i c y was l a i d down. Although u n l i k e c o u n t r i e s such as Singapore, that had i n s t i t u t e d l i c e n s i n g of manufacturing firms (Tan and Hock, 1982:281), no l i c e n s i n g was r e q u i r e d of businesses i n F i j i , e i t h e r l o c a l l y - owned or f o r e i g n owned, f o r e i g n i n v e s t o r s now had to make r e f e r e n c e to the CMA f o r exchange purposes and the CMA was able to induce f o r e i g n f i r m s to comply with CMA g u i d e l i n e s . The two key elements of the CMA involvement i n the manufacturing s e c t o r were in cases where a f o r e i g n i n v e s t o r wished to a c q u i r e an i n t e r e s t i n an e x i s t i n g company in F i j i , and where an overseas i n v e s t o r wished to takeover a company i n c o r p o r a t e d in F i j i . These requests are examined by a Takeover Committee convened by the CMA (EDB:1983c:7). The CMA has, then, introduced an ownership e l e -ment i n the manufacturing p o l i c i e s , although a c l e a r government p o s i t i o n on the ownership i n the manufacturing s e c t o r had not been i n u n d a t e d by t h i s time. One can perhaps mention here that the CMA i n F i j i has been s t r o n g l y committed to f o r e i g n investment, and i s g e n e r a l l y f i n a n c i a l l y c o n s e r v a t i v e . T h e r e f o r e , i t has not taken a c l e a r or s t r o n g stand on these i s s u e s , and takeovers have been r o u t i -nely a l l o w e d . Furthermore, given the i n c r e a s i n g i n t e r n a t i o n a l indebtedness of F i j i , i t w i l l not be s u r p r i s i n g i f the CMA comes under i n c r e a s i n g pressure from i n t e r n a t i o n a l a g e n c i e s , such as the World Bank and the I n t e r n a t i o n a l Monetary Fund, to a b s t a i n from- i n t e r f e r i n g with the a c t i v i t i e s of m u l t i n a t i o n a l f irms i n F i j i . 402 The government had an o p p o r t u n i t y to s o l i d i f y i t s export o r i e n t a t i o n i n manufacturing when the new Income Tax Act was passed i n 1974. The Act set out a s s i s t a n c e to the commercial s e c t o r i n schedules three and f i v e . Under the new A c t , where e n t e r p r i s e s were deemed to a s s i s t the economic development of F i j i by the M i n i s t e r of F i n a n c e , exemptions from tax were granted ( F i j i Government, 1975:70). Exemptions were to be for f i v e years i n i t i a l l y , with the p r o v i s i o n t h a t : . . . such p e r i o d may be extended with the a u t h o r i t y of the M i n i s t e r and upon such c o n d i t i o n s as he t h i n k s f i t by a p e r i o d not exceeding three years i n respect of the o p e r a t i o n s of approved e n t e r p r i s e i n such area or areas as the M i n i s t e r may d i r e c t . . . ( F i j i Government, 1975: 143). The tax exemption r e l a t e d to p r o f i t s or gains of $F5,000 per annum o r , i f g r e a t e r , 15 percent of the smaller of the p a i d up e q u i t y c a p i t a l of the company or of the t o t a l f i x e d c a p i t a l investment of the company ( F i j i Government, 1975:144). Fu r t h e r -more, l o s s e s i n c u r r e d by the approved e n t e r p r i s e c o u l d be c a r r i e d forward f o r s i x years a f t e r the e x p i r y of the tax exemption p e r i o d . The government a l s o set out export i n c e n t i v e s ( i n the f i f t h s c h e d u l e ) . A l l export p r o d u c t s , except sugar and c o p r a , were e l i g i b l e , but the t o t a l export s a l e s had to be more than $F5,000. In a graded system, a rebate of one-half of the tax chargeable on export p r o f i t s f o r the year during which the approval was given and f o r subsequent two y e a r s , and for the subsequent f i v e y e a r s , a deduction from such p r o f i t s of the d i f f e r e n c e between the p r o f i t s a t t a i n e d by the export of the 403 approved product for the f i s c a l year and the mean export pro-f i t s for the s a i d product(s) f o r the three immediately prece-ding years ( F i j i Government, 1975:148). The export i n c e n t i v e was e n v i s i o n e d f o r seven y e a r s . The p r o v i s i o n s of the Income Tax Act (1974) d i d provide some a s s i s t a n c e to the manufacturers attempting to e x p o r t . However, the i n c e n t i v e s were i n s u f f i c i e n t given that high l e v e l of p r o t e c t i o n made the l o c a l market a more p r o f i t a b l e and easy o p t i o n . Some firms were attempting to e x p o r t , but t h e i r main market remained F i j i and t h e i r export performance was, as already shown i n Chapter 7, e r r a t i c and, almost without excep-t i o n , d e t e r i o r a t e d over the 1970 to 1983 p e r i o d (Table 7.11). Furthermore, the over-valued F i j i a n d o l l a r , a t t r i b u t a b l e to the i m p o r t ^ s u b s t i t u t i o n p o l i c i e s of the government, meant that whatever export p o t e n t i a l F i j i a n manufacturers had was not f u l l y u t i l i z e d . The Seventh Development Plan (1976-1980) evidenced a more developed government p o l i c y on i n d u s t r i a l i z a t i o n . The plan continued the p h i l o s o p h i c a l emphasis on e x p o r t s , rather than production j u s t f o r the l o c a l market ( F i j i C e n t r a l Planning O f f i c e , 1975:6). I t i n d i c a t e d the government's d e s i r e to o r i e n -t a t e i n d u s t r i a l expansion i n the f u t u r e towards employment c r e a t i o n , e a r n i n g or saving f o r e i g n exchange, and the p r o v i s i o n of a market f o r produce from r u r a l a r e a s . S p e c i a l emphasis was to be given to food p r o c e s s i n g as a counterpart to the a g r i c u l -t u r a l development programmes ( F i j i C e n t r a l Planning O f f i c e , 1975:13). 404 I n d u s t r i a l development i n F i j i , a c c ording to the p l a n , was based on three long-term g o a l s : 1. To ensure s t a b l e growth 2. To i n c r e a s e i t s employment a b s o r p t i v e q u a l i t y and 3. To " . . . provide a base f o r v i a b l e long-term involvement which can earn reasonable r e t u r n s and at the same time s a t i s f y the needs of the consumer" ( F i j i C e n t r a l Planning O f f i c e , 1975:119). The Seventh Development Plan i n d i c a t e d , f o r the f i r s t time, that s u b s t a n t i a l import s u b s t i t u t i o n was not envisaged. I n s t e a d , . . . with the d e s i r e of a v o i d i n g unproductive and i n e f f i c i e n t i n d u s t r i a l i z a t i o n , supported by high p r i c e s , p o l i c y i s d i r e c t e d more i n t o such areas as p r o c e s s i n g of l o c a l a g r i c u l t u r a l products f o r export ( F i j i C e n t r a l Planning O f f i c e , 1975:15). The government was thus becoming aware of the i l l - e f f e c t s of an inward-looking i n d u s t r i a l i z a t i o n much as most other c o u n t r i e s were d o i n g . The Plan i n c l u d e d e x p l a n a t i o n s on the types of indus-t r i e s that the government would s u p p o r t , investment i n c e n t i v e s , ownership, and on l o c a t i o n . Some i n d i c a t i o n of the types of i n d u s t r i e s that i t would support has already been g i v e n . The government promised to ensure a t t r a c t i v e and rewar-ding r e t u r n s on overseas investment ( F i j i C e n t r a l Planning O f f i c e , 1975:120). F o r e i g n investment was welcomed, s p e c i a l l y in areas where l o c a l s l a c k e d e x p e r t i s e . Some a r e a s , where l o c a l c a p a b i l i t y was w e l l e s t a b l i s h e d , f o r e i g n investment was not welcome. 405 The government i n d i c a t e d i t s w i l l i n g n e s s to i n c r e a s e l o c a l p a r t i c i p a t i o n i n the manufacturing s e c t o r , and encouraged j o i n t ventures between overseas and l o c a l i n v e s t o r s . Concessions were to be r e l a t e d to the degree of l o c a l e q u i t y , and the amount of l o c a l borrowing was r e l a t e d to l o c a l e q u i t y in new companies ( F i j i C e n t r a l Planning O f f i c e , 1975:120). Where no immediate l o c a l buyers c o u l d be i d e n t i f i e d , the F i j i Development Bank would t e m p o r a r i l y hold the shares on behalf of l o c a l owners. To promote f u r t h e r l o c a l p a r t i c i p a t i o n i n the manufacturing s e c t o r , the government promised to set up a Unit Trust of F i j i ( F i j i C e n t r a l Planning O f f i c e , 1975:120). The government a l s o i n d i c a t e d i t s d e s i r e to promote the presence of indigenous F i j i a n s i n the manufacturing s e c t o r . In the t o u r i s t and a g r i c u l t u r a l s e c t o r s , l a n d h o l d i n g indigenous F i j i a n s have a c q u i r e d i n t e r e s t s i n companies in r e t u r n f o r l e a s i n g t h e i r l a n d , and the government i n d i c a t e d i t s i n t e n t i o n to promote t h i s i n the manufacturing s e c t o r ( F i j i C e n t r a l Planning O f f i c e , 1975:121). Towards the end of the Seventh Development Plan p e r i o d , the government appointed the F i n a n c i a l Review Committee (FRC), which was given a wide-ranging mandate To undertake a comprehensive review of the present i n c i d e n c e of t a x a t i o n ( d i r e c t and i n d i r e c t as w e l l as charges for s e r v i c e s ) and the l e v e l and trend of govern-ment ex p e n d i t u r e , and to recommend changes i n t a x a t i o n and expenditure p o l i c i e s and s t r a t e g i e s which would lead to gre a t e r economic development (with p a r t i c u l a r r e f e r e n c e to a g r i c u l t u r e , secondary i n d u s t r i e s , t o u r i s m , import s u b s t i t u t i o n and exports) and s o c i a l advancement (Aidney, I 9 7 9 a : i i ) . The wide-ranging recommendations of the FRC co n t a i n e d 406 s e v e r a l suggestions regarding i n d u s t r i a l i z a t i o n . The FRC noted that F i j i was beginning to face a major unemployment problem, and that " . . . unless there was dramatic growth in employ-ment o p p o r t u n i t i e s F i j i faced the prospect of massive unemplo-yment" (Aidney, 1979a:8). It f u r t h e r argued that " A g r i c u l t u r e alone cannot be expected to s o l v e the unemployment dilemma. I n d u s t r i a l employment o p p o r t u n i t i e s a l s o must be i n -creased" (Aidney, I979a:9). The Committee recommended that the government should promote investment, both l o c a l and f o r e i g n , more f o r c e f u l l y . T h i s c o u l d best be done, i t i n d i c a t e d , through the e s t a b l i s -hment of an Economic Development Board (Aidney, I979a:70), and through the c r e a t i o n of an export p r o c e s s i n g zone (Aidney, I979a:70). It f u r t h e r urged a c l e a r e r e n u n c i a t i o n of government p o l i c i e s on f o r e i g n investment, and an easing of some of the r e s t r i c t i o n s on f o r e i g n investments such as those r e l a t i n g to l o c a l borrowing. It a l s o recommended a b e t t e r export i n c e n t i v e system, and suggested a range of t a r i f f i n c r e a s e s to encourage import s u b s t i t u t i o n (Aidney, 1979a:116). However, i t urged that where government prov i d e d p r o t e c t i o n to a b u s i n e s s , " . . . i t should a l s o impose some c o n t r o l on p r i c e s charged f o r the b u s i n e s s ' products" (Aidney, 1979a:114). The recommendations of the FRC were f a r - r a n g i n g , but there was no compulsion on the p a r t of the government to imple-ment the recommendations. However, as we w i l l see i n the coming pages, the government d i d i n c o r p o r a t e many of the recommenda-t i o n s i n t o the E i g h t h Development P l a n . 407 The government had a l s o convened a t r i p a r t i t e forum-sponsored conference to examine investment in F i j i i n 1979. The t r i p a r t i t e forum, a c o - o p e r a t i v e body of employers, gover-nment, and employees, had asked f o r such a c o n f e r e n c e . The seminar, which took place from 19 to 23 March 1979, f e a t u r e d government speakers, speakers from the employers' and emplo-yees' groups in the forum, speakers from the U n i v e r s i t y of South P a c i f i c , and an i n t e r n a t i o n a l team of renowned develop-ment t h i n k e r s that i n c l u d e d P r o f e s s o r Dudley Seers, P r o f e s s o r Lee Soo Ann, P r o f e s s o r Paul S t r e e t e n , P r o f e s s o r Mohammed S a d l i , and Dr I.G. P a t e l ( F i j i Government, I 9 7 9 : v - v i ) . The conference d i d not reach a consensus on the r e l a t i v e importance of p r i v a t e versus p u b l i c investment i n F i j i , and c e r t a i n l y d i d not review the flow of investment i n F i j i . I t d i d provide an o p p o r t u n i t y to government m i n i s t e r s and bureaucrats to l i s t e n t o both overseas and l o c a l speakers, and a chance to the p u b l i c to ask questions on the government's investment p o l i c i e s . However, the d e l i b e r a t i o n s of the conference were not followed up by the government with p o l i c y i n i t i a t i v e s . The E i g h t h Development Plan (1981-1985) was the most comprehensive and e x p l i c i t development plan of F i j i . The gover-nment showed that the scope of i t s i n d u s t r i a l p o l i c y was c o n s i -derably wider now, and covered areas such as i n c e n t i v e s and other a s s i s t a n c e , export o r i e n t a t i o n , ownership, technology c h o i c e , and i n d u s t r i a l l o c a t i o n . We should remember, however, that the government's p o l i -408 c i e s f o r the manufacturing s e c t o r , as indeed of a l l s e c t o r s , were formulated and have to be viewed w i t h i n the framework of i t s l a r g e r development s t r a t e g y of the p l a n , which the plan ex-p l a i n e d as f o l l o w s : The b a s i c s t r a t e g y i n DP8 i s one of c o n s i d e r a b l e investment in i n c r e a s i n g and d i v e r s i f y i n g primary se c t o r output in the e a r l y years of the Plan coupled with more primary s e c t o r p r o c e s s i n g i n the l a t t e r p art of the DP8 p e r i o d ( F i j i C e n t r a l Planning O f f i c e , 1980:22). In the manufacturing s e c t o r , the government proposed s e l e c t i v e i n d u s t r i a l expansion, r e c o g n i z i n g the l i m i t e d poten-t i a l f o r import s u b s t i t u t i o n , and encouraging manufacturing r e q u i r i n g l o c a l r e s o u r c e s . I t proposed s e l e c t i v e s u b s i d i e s based on employment and value added performance, and temporary p r o t e c t i o n f o r i n f a n t i n d u s t r i e s ( F i j i C e n t r a l Planning O f f i c e , 1980:24). More s p e c i f i c a l l y , the government set four main objec-t i v e s f o r t h i s s e c t o r f o r the p e r i o d 1981-1985: 1. To strengthen and broaden the i n d u s t r i a l base through expansion and d i v e r s i f i c a t i o n of export commodities, and grea-te r i n t e r n a l market development through i m p o r t - s u b s t i t u t i o n and other i n d u s t r i e s 2. To achieve s p a t i a l e q u i t y through the establishment of i n d u s t r i e s with s i g n i f i c a n t backward and forward l i n k a g e s i n F i j i and through i n c r e a s i n g l o c a l c o n t r o l and p a r t i c i p a t i o n 3. To emphasize labour a b s o r p t i o n 4. To ensure the i n d u s t r i a l s e c t o r c o n t r i b u t e s s i g n i f i c a n t l y to F i j i ' s economic growth ( F i j i C e n t r a l P l a n n i n g O f f i c e , 1980:182). 409 The government a l s o c a t e g o r i z e d i n d u s t r i e s in three c l a s s e s , and drew up a h i e r a r c h y of p r i o r i t i e s . In the high p r i o r i t y category A were i n c l u d e d i n d u s t r i e s based on primary commodities that produced i n p u t s r e q u i r e d by the primary and other s e c t o r s . In the p r i o r i t y category B, were grouped indus-t r i e s based on imported raw m a t e r i a l s producing e s s e n t i a l items for the domestic market. The low p r i o r i t y category C i n c l u d e d a l l other i n d u s t r i e s , but s p e c i a l l y those producing what i t c o n s i d e r e d to be n o n - e s s e n t i a l items. A l s o , the government aimed to encourage the development of small and medium s c a l e i n d u s t r i e s (needing upto $F100,000 in i n i t i a l t o t a l f i x e d c a p i t a l i n v e s t m e n t ) . It i n d i c a t e d , however, that i t would encourage l a r g e s c a l e i n d u s t r i e s where t h i s was f e a s i b l e and n e c e s s a r y . The government promised to a l s o evaluate t e c h n o l o g i c a l aspects of i n d u s t r i a l investment to c o - o r d i n a t e i t e f f e c t i v e l y with n a t i o n a l development o b j e c t i v e s . The major emphasis of the E i g h t h Development Plan was on r e g i o n a l development, and i n d u s t r i a l expansion was expected to c o n t r i b u t e to r e g i o n a l development. S e l e c t i v e i n c e n t i v e s were to be used f o r t h i s . F o r e i g n investment was to be encouraged, but more care-f u l l y s c r u t i n i z e d than before; attempts, to i n c r e a s e l o c a l par-t i c i p a t i o n were to be made. Where l o c a l c a p a c i t y e x i s t e d , p r e f e r e n c e was to be accorded to them. The government promised to continue to grant a s e r i e s of i n c e n t i v e s f o r i n d u s t r i a l expansion, d e s c r i b e d below, which are 410 being r e v i s e d at the moment. The government has been l i b e r a l (to use the DP7's own word) towards i n d u s t r i a l i n v e s t o r s , both f o r e i g n and l o c a l . New i n d u s t r i a l ventures are o f f e r e d a wide range of tax and duty c o n c e s s i o n s . The government a l s o p r o v i d e s , i n many c a s e s , a measure of p r o t e c t i o n from competitive imports, ranging from in c r e a s e d t a r i f f on imports to banning of t h e i r i m p o r t a t i o n . The government a l s o assures f o r e i g n i n v e s t o r s u n r e s t r i c -ted r e p a t r i a t i o n of both p r o f i t s and c a p i t a l , and c o n s t i t u t i o -n a l l y p r o t e c t s f o r e i g n companies from e x p r o p r i a t i o n . The s p e c i f i c i n c e n t i v e s provided are as f o l l o w s : (a) freedom to manage; (b) import duty c o n c e s s i o n s ; (c) tax incen-t i v e s ; (d) c a r r y forward of l o s s e s ; (e) d e p r e c i a t i o n allowan-ces; ( f ) conversion to more e f f i c i e n t energy economy; and (g) export i n c e n t i v e s . In a d d i t i o n , i n v e s t o r s are provided t e c h n i -c a l advice through the I n d u s t r i a l Promotions D i v i s i o n of the M i n i s t r y of Economic Planning and Development. A l s o marketing i n f o r m a t i o n i s provided to manufacturers. During the E i g h t h Development p e r i o d the government had s i x major programmes for t h i s s e c t o r : 1. Improvement and expansion of government extension s e r v i c e s : to c o n s i s t of g a t h e r i n g of information on r e l e v a n t t o p i c s and s u p p l y i n g these to i n d u s t r i a l i s t s , and s e t t i n g up of a P r o j e c t E v a l u a t i o n Unit 2. Trade promotion and marketing. The government promised to c r e a t e a n a t i o n a l export trade a u t h o r i t y and to attempt to n e g o t i a t e b i l a t e r a l and m u l t i l a t e r a l agreements 41 1 3. Development of s m a l l , medium and cottage s c a l e i n d u s t r i e s 4. Development of r u r a l and urban i n d u s t r i a l areas 5. The c r e a t i o n of an I n d u s t r i a l Free Zone 6. Other government s e r v i c e s - - t o ensure f a i r t r a d i n g , p r o t e c -t i o n of consumer r i g h t s and i n t e r e s t s . Since the p u b l i c a t i o n of the E i g h t h Development P l a n , the government has undertaken a number of i n i t i a t i v e s that have e i t h e r changed or f u r t h e r developed i t s manufacturing p o l i c i e s . F i r s t , i t e s t a b l i s h e d the Economic Development Board of F i j i i n 1980. Second, i t commissioned three s t u d i e s - - o n employment and development i n F i j i , on d u p l i c a t i o n in the manufacturing s e c t o r , and on investment i n c e n t i v e s . A l l these w i l l p o w e r f u l l y shape the i n d u s t r i a l s t r a t e g y of the government i n the N i n t h Development P l a n , which i s c u r r e n t l y being prepared. F i n a l l y , the government appears to have decided not to e s t a b l i s h an export p r o c e s s i n g zone i n F i j i , c o n t r a r y to i t s s t a t e d i n t e n -t i o n i n the E i g h t h Development P l a n . The Economic Development Board of F i j i (EDB) was c r e a t e d i n 1980 with wide-ranging powers ( F i j i Government, 1980). As we have a l r e a d y seen, the EDB was mooted i n the Report of the Finance Review Committee (see Aidney, I979a:70), and i t was modelled on the Economic Development Board of Singapore ( f or a d i s c u s s i o n of the EDB i n Singapore, see Tan and Hock, 1982). The Board has been given wide-ranging r e s p o n s i b i l i t y . A ccording to the EDB, i t p r o v i d e s the f o l l o w i n g types of s e r v i c e s : (a) export promotion; (b) o r g a n i z a t i o n of trade f a i r s ; (c) the p r o v i s i o n of i n f o r m a t i o n on, and p o l i c y input 412 i n t o i n c e n t i v e s t r u c t u r e , investment p o l i c y , and p r i o r i t y areas; (d) the establishment of g u i d e l i n e s r e g a r d i n g f o r e i g n investment; (e) s e c r e t a r i a t to the Business and I n d u s t r i a l Development Committee; ( f ) i d e n t i f i c a t i o n of l o c a l and overseas j o i n t - v e n t u r e p a r t n e r s ; (g) o r g a n i z a t i o n of investment semi-nars; (h) p r e p a r a t i o n of i n d u s t r i a l p r o f i l e s on v i a b l e pro-j e c t s ; and ( i ) p r o v i s i o n of info r m a t i o n and other a s s i s t a n c e r e q u i r e d by i n v e s t o r s (EDB, 1983C:1; see a l s o , F i j i Government, 1980). The EDB has a l s o been p u b l i s h i n g a monthly p u b l i c a t i o n e n t i t l e d F i j i Investment and Trade News, which i s a v a i l a b l e f r e e of charge and i s d i s t r i b u t e d w i d e l y . Given the short p e r i o d of e x i s t e n c e of EDB, i t i s not p o s s i b l e to evaluate i t s a c t i v i t i e s at l e n g t h . We can note that the EDB has c o - o r d i n a t e d a study of d u p l i c a t i o n on the manufac-t u r i n g s e c t o r of F i j i , has produced a number of p u b l i c a t i o n s seeking to promote f o r e i g n investment i n F i j i , and has underta-ken trade f a i r s i n both F i j i and abroad. In g e n e r a l , as i t w i l l be shown l a t e r in t h i s c h a p t e r , the EDB i s f a v o u r a b l y viewed by the p r i v a t e s e c t o r , and i t has made a major e f f o r t to conduct investment propaganda f o r F i j i . No doubt, there are s t i l l areas where improvements are needed, and the government has been conducting i n t e r n a l exer-c i s e s designed to improve the e f f e c t i v e n e s s of the EDB. The FEDM re p o r t a l s o c o n t a i n s an e v a l u a t i o n of the EDB, and o f f e r s suggestions f o r f u t u r e o p e r a t i o n s (FEDM, 1984). F i j i can l e a r n a great d e a l from the experience of comparable o p e r a t i o n s i n 413 other c o u n t r i e s , such as that of I r i s h Development Agency, with which the F i j i EDB has maintained c o n t a c t s . In a comprehensive study of the I r i s h Development Agency, the United States-based T e l e s i s c o n s u l t i n g group found that only 30 percent of the jobs approved by the I r i s h Development Agency between 1970 and 1978 ". . . a c t u a l l y e x i s t on the ground in 1981" ( I r i s h B u s i n e s s , 1981:6). The c o n s u l t a n t s a l s o noted that i n d u s t r i e s a t t r a c t e d by the I r i s h Development Agency were g e n e r a l l y l o w - l i n k a g e , l o w - s k i l l f i r m s , with a minimum commitment to re s e a r c h and development. The I r i s h government d i d not formulate i n d u s t r i a l p o l i c i e s w i t h i n which an agency such as the I r i s h Development Agency c o u l d have o p e r a t e d . There was v i r t u a l l y no monitoring of f i r m s once a s s i s t a n c e had been granted. In the case of the Economic Development Board of F i j i , the government must c l e a r l y formulate p o l i c i e s f o r i t to f o l -low, although given the experience of the Board, i t should have an input i n t o the f o r m u l a t i o n of p u b l i c p o l i c y . Furthermore, the Board must c l o s e l y monitor the performance of firms a f t e r p r o v i d i n g them with a s s i s t a n c e , s p e c i a l l y with regard to emplo-yment c r e a t i o n . So f a r , we have concerned o u r s e l v e s with the r o l e of the s t a t e i m p l i e d by Lindblom's q u o t a t i o n at the head of t h i s c h a p t e r . However, i n a d d i t i o n to p r o v i d i n g the necessary c o n d i -t i o n s f o r accumulation, and g u i d e l i n e s , r e g u l a t i o n s , and pres-sures to minimize the necessary discordance between the p r i v a t e s u r p l u s l o g i c of the manufacturers and the requirements of F i j i as a c o u n t r y , the s t a t e has another o p t i o n — d i r e c t p a r t i c i p a -414 t i o n i n the manufacturing s e c t o r . The State i n D i r e c t Production i n the Manufacturing Sector Although not on the same s c a l e or with the same commit-ment as i n other developing c o u n t r i e s , such as B r a z i l (see Evans, 1979), the government of F i j i has been, nonetheless, becoming i n c r e a s i n g l y i n v o l v e d d i r e c t l y in the economy of F i j i . In the main, however, the government has maintained i t s commit-ment to the p r i v a t e sector-based c a p i t a l i s t development. The contemporary p a t t e r n of the government's d i r e c t par-t i c i p a t i o n i n the manufacturing i s presented i n Table 9.1. On the whole, the h o l d i n g s of the c e n t r a l government in the manu-f a c t u r i n g sector are not s i g n i f i c a n t i n terms of numbers of e s t a b l i s h m e n t s ; however, the ownership of the F i j i Sugar Corpo-r a t i o n makes the government the owners of the l a r g e s t manufac-t u r i n g f i r m in F i j i . The presence of the s t a t e i n d i r e c t manufacturing i s , moreover, much more than the data i n Table 9.1 i n d i c a t e . There are a number of government i n s t i t u t i o n s , such as the Native Land T r u s t Board, the Native Land Development C o r p o r a t i o n , the F i j i Development Bank, and the U n i t T r u s t of F i j i , a l l of which hold shares in manufacturing f i r m s . The a c t u a l h o l d i n g s of these i n s t i t u t i o n s are not a v a i l a b l e ; however, we know that the NLDC has m a j o r i t y shareholding i n the l a r g e s t s a wmilling compa-ny in F i j i , P a c i f i c Lumber Company L i m i t e d . Furthermore, the Great C o u n c i l of C h i e f s has agreed to purchase s u b s t a n t i a l s h a r e h o l d i n g s in the beer monopoly, the C a r l t o n Brewery L i -415 TABLE 9.1 PARTICULARS OF GOVERNMENT EQUITY IN THE MANUFACTURING SECTOR, 1983 Name of Firm C a p i t a l Invested Rewa Rice L i m i t e d 956,224 F i j i Sugar C o r p o r a t i o n L i m i t e d I5,099,650a P a c i f i c F i s h i n g Company L i m i t e d 450,000 F i j i Can Company L i m i t e d 90,000 T o t a l 16,595,874 SOURCE: F i j i M i n i s t r y - o f F i n a n c e , 1984: Appendix 9. These shares were a c t u a l l y a c q u i r e d f o r $10,000,000. mited, and the p o r t l a n d cement monopoly, F i j i I n d u s t r i e s L i -mited (The F i j i Times, 8 November, 1984:3). If these share a c q u i s i t i o n s come through, the NLDC w i l l become a major compo-nent of the manufacturing s e c t o r , and c o n s i d e r a b l y i n c r e a s e the government's d i r e c t involvement in the manufacturing s e c t o r . As at October, 1983, the F i j i Development Bank held 3 shares i n the f o l l o w i n g manufacturing firms : F i j i C i t r u s Pro-duct L i m i t e d (a p u b l i c company), F i j i I n d u s t r i e s L i m i t e d (pub-l i c company), F l o u r M i l l s of F i j i L i m i t e d ( p u b l i c company), and Standard Concrete L i m i t e d (a p r i v a t e company). The F i j i Develo-pment Bank's h o l d i n g s are designed to be short-term, as i t d i v e s t s i t s e l f of the shares when F i j i owners can be found. The involvement of the government, then, i n d i r e c t p r o d u c t i o n i n the manufacturing s e c t o r i s s i g n i f i c a n t , and goes w e l l beyond 4 1 6 h o l d i n g s by the c e n t r a l government i t s e l f . The involvement of the government i n d i r e c t manufactu-r i n g p r o d u c t i o n grew out of circumstances beyond i t s c o n t r o l . The most s i g n i f i c a n t government h o l d i n g i n the manufacturing s e c t o r , the FSC, r e s u l t e d from the d e c i s i o n of the CSR to withdraw from F i j i f o l l o w i n g the Denning Award which the CSR 4 contended made i t s o p e r a t i o n s i n F i j i " u n p r o f i t a b l e " . Given the s i z e of the c a p i t a l r e q u i r e d , the i n d u s t r y c o u l d not e a s i l y be taken over by the p r i v a t e s e c t o r . There was c o n s i d e r a b l e pressure on the government to take the i n d u s t r y over, conside-r i n g the • unpleasant h i s t o r y of i n d u s t r y , and the n a t i o n a l importance of the sugar i n d u s t r y to F i j i . The government's p o s i t i o n i n 1973, at the time of takeover of the CSR op e r a t i o n s was put t h i s way by Qarase, then the Deputy S e c r e t a r y of Finan-c e , i n 1979: It would be tr u e t o say that Government was a r e l u c t a n t buyer of the CSR sh a r e s . F u r t h e r p r o s p e c t s , a c c o r d i n g to e x p e r t s , d i d not look good commercially. T h i s was an in s t a n c e of government's i n t e r v e n t i o n to p r o t e c t a v i t a l i n d u s t r y — n o t an investment seen to be f i n a n c i a l l y p r o f i t a b l e but rather as s o c i o - e c o n o m i c a l l y unavoidable (Qarase, 1979:29). The a c q u i s i t i o n of the CSR shares a l s o r e s u l t e d i n the a c q u i s i -t i o n of Rewa Rice L i m i t e d . For the most p a r t , the c e n t r a l government, has not gone i n t o d i r e c t manufacturing investment. In many i n s t a n c e s , i t s shares i n companies, such as i n the case of P a c i f i c F i s h i n g Company L i m i t e d , have been granted i n r e t u r n f o r r i g h t s and con c e s s i o n s granted to these f i r m s (Qarase, 1979:30). Whereas the d i r e c t h o l d i n g s of the c e n t r a l government 417 have not i n c r e a s e d s u b s t a n t i a l l y in the l a s t decade, those of i t s f i n a n c i a l i n s t i t u t i o n s , such as the F i j i Development Bank, and i t s other i n s t i t u t i o n s , such as the Native Land Development Board, have inc r e a s e d s u b s t a n t i a l l y . In the case of the former, i t i s mainly due to two reasons. F i r s t , where worthwhile pro-j e c t s are i d e n t i f i e d by F i j i n a t i o n a l s , and where i n s u f f i c i e n t e q u i t y e x i s t s , the F i j i Development Bank i s d i r e c t e d to take a short-term e q u i t y p o s i t i o n i n the new company f o r the short term. This e q u i t y i s then s o l d back to the owners once t h e i r f i n a n c i a l p o s i t i o n improves, or to other F i j i n a t i o n a l s . Se-cond, the F i j i Development Bank buys shares in foreign-owned firms on the stock exchange, or even p r i v a t e l y , and then re-l e a s e s them for s a l e to F i j i - o w n e d firms or to F i j i n a t i o n a l s . The Bank has become, in s h o r t , an important instrument for the government in i t s attempt to both i n c r e a s e the l o c a l ownership in the manufacturing s e c t o r and to increase the presence of indigenous F i j i a n s in the manufacturing s e c t o r . In the case of the Native Land Development Board, the main m o t i v a t i o n behind i t s involvement i s to increase the presence of indigenous F i j i a n s i n the manufacturing s e c t o r . C u r r e n t l y , indigenous F i j i a n s , although almost e q u a l l y represe-nted i n n e a r l y a l l walks of l i f e in F i j i (FEDM, I 9 8 4 : x x i i i ) , and c l e a r l y dominant p o l i t i c a l l y , are p o o r l y represented i n the commercial s e c t o r . The government has been making a concerted e f f o r t to promote the presence of indigenous F i j i a n s i n the commercial s e c t o r through the p r o v i s i o n of s o f t loans and the p r o v i s i o n of business advice and a s s i s t a n c e through the Busi -418 ness Opportunity and Management S e r v i c e . The government seems to have reached the c o n c l u s i o n that indigenous F i j i a n s f i n d i t d i f f i c u l t to enter commerce i n d i v i d u a l l y . T h e r e f o r e , there i s an emphasis on t h e i r p a r t i c i p a t i o n through i n s t i t u -t i o n s , such as the Native Land Development Board, that they c o l l e c t i v e l y own. Of c o u r s e , the present government i s h i g h l y committed to the maintenance of the communal way of l i f e of indigenous F i j i a n s , f o r on t h i s depends the g r i p of the present l e a d e r s on the p o p u l a t i o n , and the government may, for t h i s reason too, not push i n d i v i d u a l e f f o r t s i n t o the commercial s e c t o r too much. The p r i v a t e s e c t o r i n F i j i has c o n s i s t e n t l y opposed the involvement of the government in the economy. The a t t i t u d e of the p r i v a t e s e c t o r i s w e l l encapsulated i n t h i s remark by Mr Don Aidney, then P r e s i d e n t of the F i j i Employers' C o n s u l t a t i v e A s s o c i a t i o n , at the 1979 investment seminar: "Unless there are e x t r a o r d i n a r y c i r c u m s t a n c e s , Governments should not enter d i r e -c t l y i n t o commercial a c t i v i t i e s " (Aidney, 1979b:161). On the whole, the a c q u i s i t i o n of the CSR o p e r a t i o n s i n F i j i by the government c o u l d be seen as a r i s i n g out of e x t r a o r -d i n a r y c i r c u m s t a n c e s . However, the i n c r e a s i n g involvement i n the manufacturing s e c t o r , and i n the economy g e n e r a l l y , of the F i j i Development Bank and the Native Land Development Board go w e l l beyond " e x t r a o r d i n a r y c i r c u m s t a n c e s " , although i t i s too e a r l y to judge what impact t h i s i s a l r e a d y h a v i n g , or w i l l have on investment i n F i j i by p r i v a t e c a p i t a l , both l o c a l and f o -r e i g n . 419 Since t h i s study comes almost at the end of the present development plan p e r i o d (1981-1985), and given that a s i g n i f i c a n t chasm e x i s t s between the d e c l a r a t i o n of p o l i c i e s , and the manner and the q u a l i t y of t h e i r e x e c u t i o n , i t w i l l be u s e f u l to evaluate the success or otherwise of the government's p o l i c i e s on i n d u s t r i a l i z a t i o n . The government d i d not set out to d r a m a t i c a l l y increase the rate of i n d u s t r i a l i z a t i o n i n F i j i . Indeed, a l l the develop-ment plans emphasized that the i n d u s t r i a l s e c t o r was not looked upon as a major development s e c t o r . Thus the modest growth i n the manufacturing s e c t o r that we have seen cannot be s a i d to i n d i c a t e that the government has f a i l e d i n i t s p o l i c i e s . Howe-v e r , even as the manufacturing s e c t o r has grown, i t s r e l a t i v e share of the t o t a l economic a c t i v i t i e s i n the country has not shown any s i g n i f i c a n t improvement over the l a s t decade. The government promised to in c r e a s e the share of l o c a l ownership i n the manufacturing s e c t o r . In t h i s s u b s t a n t i a l progress has been made. Not only has the l o c a l ownership grown with the p a r t i c i p a t i o n of the government i n the manufacturing s e c t o r , but many lo c a l l y - o w n e d firms have become important manufacturers as w e l l . Even here, though, one c o u l d note that the l o c a l ownership i n the manufacturing has i n c r e a s e d i n an environment i n which f o r e i g n investment has shown a marked d e c l i n e , and i n which e x i s t i n g f o r e i g n investment i n F i j i has been s h r i n k i n g through the e x t r i c a t i o n of f o r e i g n c a p i t a l from F i j i . The g r e a t e s t f a i l u r e of the government's manufacturing 420 p o l i c i e s has been i t s i n a b i l i t y to chart out an e x p o r t - o r i e n t e d manufacturing p o l i c y f o r F i j i . We e a r l i e r saw that the S i x t h Development Plan s i g n a l l e d an export o r i e n t a t i o n i n the gover-nment p o l i c y ( F i j i C e n t r a l Planning O f f i c e , 1970:13). We a l s o saw that the government in the Seventh Development Plan was becoming aware of the i l l - e f f e c t s of high l e v e l s of p r o t e c t i o n given i n d i s c r i m a t e l y to domestic production ( F i j i C e n t r a l Plan-ning O f f i c e , 1975:15). For most of the p e r i o d u n t i l perhaps the beginning of the 1980s, e s p e c i a l l y i n the c r e a t i o n of the Economic Develop-ment Board, the government's i n t e n t i o n s on export promotion remained i n a c t i v e . Moreover, the government i n c r e a s e d the l e -v e l s of p r o t e c t i o n to l o c a l manufacturing beginning with 1974 to what the government sponsored FEDM report has c a l l e d "dange-r o u s l y h i g h l e v e l s " ( F i j i Employment and Development M i s s i o n , I984:xxxiv, 508). Furthermore, the government, i n s t e a d of en-couraging c o m p e t i t i o n i n the manufacturing s e c t o r , reduced i t even f u r t h e r with the in c r e a s e d use of l i c e n s i n g and quotas. The FEDM notes, f o r i n s t a n c e , that whereas between 1970 and 1974, only three items were r e s t r i c t e d through import l i c e n c e s , about one hundred items became s u b j e c t to import l i c e n c e con-t r o l between 1975 and 1981 (FEDM, 1984:510). Thus i t i s very c l e a r t h a t the government's development plans were i n d i c a t i n g one t r e n d i n p u b l i c p o l i c y while the government's a c t u a l beha-v i o r was almost c o n t r a r y to i t . On technology c h o i c e the government has had no r e a l p o l i c y , although i t d i d commission and r e c e i v e a report on 421 technology i s s u e s in 1984 ( F o r s y t h e , 1984). In any c a s e , i t has been suggested that given the r e l a t i v e lack of success of c o u n t r i e s much be t t e r endowed with t e c h n i c a l manpower, such as I n d i a , which d i d have a comprehensive technology p o l i c y , i n developing an a p p r o p r i a t e mix of technology, there i s no guara-ntee that even i f such a p o l i c y e x i s t e d in F i j i , i t would have worked (see the comments of S a d l i i n F i j i Government, 1979:20). The government has a l s o been attempting to c r e a t e an i n s t i t u t i o n a l framework f o r r a p i d i n d u s t r i a l i z a t i o n . There i s general agreement that the i n s t i t u t i o n s i n the p a s t , e s p e c i a l l y the Business and I n d u s t r i a l Development Committee, have not performed s a t i s f a c t o r i l y . The f a i l u r e of the BIDC i s widely recognized even w i t h i n the government bureaucracy. The .gover-nment has, however, str e a m l i n e d the operations of the BIDC, and has c r e a t e d new i n s t i t u t i o n s , such the EDB, to r e c t i f y the s i t u a t i o n . Provided the government can more c l e a r l y guide the work of the EDB, and r e t a i n o v e r a l l r e s p o n s i b i l i t y f o r p o l i c y f o r m u l a t i o n , the EDB w i l l no doubt make a major c o n t r i b u t i o n to s t i m u l a t i n g investment i n F i j i , s p e c i a l l y i n manufacturing. F i n a l l y , the government has been unable to decide on c r i t i c a l i s s u e s q u i c k l y and then to make a p o l i t i c a l and admi-n i s t r a t i v e commitment to c a r r y out i t s p o l i c i e s . The i s s u e of an export p r o c e s s i n g zone (EPZ) i n F i j i p r o v i d e s a c l a s s i c case of t h i s i n a b i l i t y . As we have a l r e a d y seen, the idea of an EPZ was f a s h i o n a b l e i n F i j i i n the 1970s—the F i n a n c i a l Review Committee r a i s e d i t i n t h e i r r e p o r t , and Qarase mentioned i t i n h i s paper at the 1979 investment seminar. As we a l s o saw, the 422 E i g h t h Development Plan adopted the c r e a t i o n of an EPZ as one of i t s major o b j e c t i v e s . However, the F i j i Employment and Development Mi s s i o n ' s r e p o r t i n 1984 s t i l l p r o v i d e s advice to the government on whether to e s t a b l i s h an Export P r o c e s s i n g Zone or not! This c l e a r l y i n d i c a t e s that the government, four years a f t e r d e c l a r i n g that one of i t s major o b j e c t i v e s f o r the manufacturing sector was the establishment (not the e x p l o r a t i o n of the p o s s i b i l i t y ) of an export p r o c e s s i n g zone, had not made up i t s mind. However, the s i t u a t i o n i s even more u n d e s i r a b l e than t h i s sequence of events i n d i c a t e s . The government i n f a c t began to examine the p o s s i b i l i t y of an export p r o c e s s i n g zone as e a r l y as J u l y , 1973 when the c a b i n e t reviewed a paper by the then M i n i s t e r of Commerce, Industry and C o - o p e r a t i v e s , Mr Moha-5 mmed Ramzan. The whole i s s u e of export p r o c e s s i n g zone was r a i s e d i n the f i r s t p l a c e because an A u s t r a l i a n s y n d i c a t e had a p p l i e d to undertake an e x p l o r a t o r y study of the v i a b i l i t y of export p r o c e s s i n g zones in Suva and Lautoka. The government decided that i t c o u l d i t s e l f examine the f e a s i b i l i t y of such export p r o c e s s i n g zones i n F i j i . The d i s c u s s i o n paper, which urged speedy government a c t i o n , argued t h a t : An i n d u s t r i a l f r e e trade- zone which would be able to a t t r a c t c o m p e t i t i v e i n d u s t r i e s and f u l l f l e d g e d assembly p l a n t s from A u s t r a l i a , New Zealand, Japan and N. America with a l r e a d y e s t a b l i s h e d market o u t l e t s would r a d i c a l l y s t i m u l a t e the present r a t e of economic growth i n the c o u n t r y , increase employment o p p o r t u n i t i e s f o r our surplus labour and b r i n g new s k i l l s and technology of modern i n d u s t r i a l know-how to our s h o r e s . In g e n e r a l , the development of i n d u s t r i a l f r e e trade zones i n Suva and Lautoka would e s t a b l i s h F i j i as a s t r a t e g i c commercial entrepot i n the S. P a c i f i c Region. 4 2 3 Two years l a t e r , P.A. Management Consultants L i m i t e d of New Zealand submitted a report to the government on the pro-posed o b j e c t i v e s of the proposed export p r o c e s s i n g zones. S t i l l two years l a t e r , the Commonwealth Fund f o r T e c h n i c a l Co-opera-t i o n was approached by the government f o r advice on the i s s u e , which i n turn appointed the m u l t i n a t i o n a l accounting f i r m of Coopers and Lybrand A s s o c i a t e s L i m i t e d t o , i n a s s o c i a t i o n with the B r i t i s h f i r m of S i r Alexander Gibb and P a r t n e r s , i n v e s t i -gate i n d e t a i l the establishment of an i n d u s t r i a l f r e e zone. S t i l l two years l a t e r , at the request of the Prime M i n i s t e r , S i r Kamisese Mara, who had j u s t v i s i t e d South Korea, two Korean experts were made a v a i l a b l e to review the e s t a b l i s -hment of export p r o c e s s i n g zones i n F i j i . The government would, however, s t i l l support the idea i n p r i n c i p l e o n l y , something that i t had al r e a d y done with the submission of the repo r t from the Commonwealth Fund f o r T e c h n i c a l C o - o p e r a t i o n . Because the report from the Commonwealth Fund f o r Tec-h n i c a l Co-operation and the Korean re p o r t were somewhat d i v e r -gent i n t h e i r views and the proposed s i t e f o r a proposed zone, the government asked f o r a t h i r d study and requested the United Nations I n d u s t r i a l Development O r g a n i z a t i o n to review the s i -t u a t i o n , and to make recommendations to the government. The study by the United Nations I n d u s t r i a l Development O r g a n i z a t i o n suggested a compromise between the two e a r l i e r s t u d i e s , and recommended major improvements i n the nature of i n c e n t i v e s p r o v i d e d , bureaucracy, and export promotion. I t recommended a p i l o t p r o j e c t to e s t a b l i s h the v i a b i l i t y of an 424 export p r o c e s s i n g zone. Later the government commissioned the A u s t r a l i a n c o n s u l t a n t team of Pak-Poy and Kneebone C o n s u l t i n g Group in 1982 to f u r t h e r i n v e s t i g a t e the i s s u e . A f t e r reviewing the i s s u e s , the group recommended that the funds that would otherwise be used for the c r e a t i o n of an export p r o c e s s i n g zone should be used to promote the exports of resource-based indus-t r i e s . A l l t h i s i n f o r m a t i o n might have been expected to be s u f f i c i e n t to r e s o l v e the i s s u e s . However, the government asked the F i j i Employment and Development M i s s i o n , appointed i n 1982, to f u r t h e r a d v i s e i t . The M i s s i o n ' s r e p o r t , r e l e a s e d at the end of 1984 r e j e c t e d the idea of an export p r o c e s s i n g zone in F i j i as i n a p p r o p r i a t e to i t s "high labour cost s i t u a t i o n " . Thus i n 1984, eleven years a f t e r the i s s u e had f i r s t been f o r m a l l y r a i s e d i n the c a b i n e t , the government had not made a f i r m d e c i s i o n on an important aspect of manufacturing p o l i c y . In a s i t u a t i o n where F i j i ' s chances of success were being q u i c k l y eroded by the r a p i d i n t r o d u c t i o n of export proce-s s i n g zones i n other p a r t s of the world (see, f o r i n s t a n c e , S a l i t a and J u a n i c o , 1983) , t h i s delay was extremely harmful f o r a more d i v e r s i f i e d i n d u s t r i a l p o l i c y . The State and the Manufacturing S e c t o r : E v a l u a t i o n s by Manufacturers So f a r , we have mainly examined the government's p o l i -c i e s regarding the manufacturing s e c t o r and i t s d i r e c t p a r t i c i -p a t i o n i n the manufacturing s e c t o r . An important e v a l u a t i o n of government p o l i c i e s , and of the o p e r a t i o n of the government 425 bureaucracy, i s the manufacturing sector i t s e l f . The study attempted to e l i c i t from manufacturers an e v a l u a t i o n of the s t a t e ' s p o l i c i e s on manufacturing, and of the advancement of the manufacturing s e c t o r . These f i n d i n g s are presented i n t h i s s e c t i o n . We should remember that these e v a l u a t i o n s are by manufacturers themselves, and t h e i r p r e s e n t a t i o n here does not imply an endorsement of these views. The p o s i t i o n of the author w i l l be apparent in the d i s c u s s i o n of the r e s u l t s . It i s a l s o important to keep in mind that two r e l a t e d but d i f f e r e n t i s s u e s are being d i s c u s s e d h e r e . The f i r s t issue d e a l s with government p o l i c y and the second with government bureaucracy, s p e c i a l l y the bureaucracy's i n t e r f a c e with the manufacturing s e c t o r . The Investment Climate in F i j i A c e n t r a l i s s u e i n the q u e s t i o n of f u r t h e r investment i n F i j i i s the p e r c e p t i o n by the p r i v a t e s e c t o r of F i j i as an investment l o c a t i o n . T h i s p e r c e p t i o n not only guides t h e i r own economic b e h a v i o r , a f f e c t i n g , f o r i n s t a n c e , t h e i r expansion, but i t a l s o c o u l d a f f e c t investment by p o t e n t i a l i n v e s t o r s . For i n s t a n c e , p o t e n t i a l A u s t r a l i a n i n v e s t o r s i n F i j i a n manufactu-r i n g w i l l , i n most i n s t a n c e s , seek advice from some of the long standing A u s t r a l i a n f i r m s i n F i j i before committing t h e i r funds to F i j i . Although the i s s u e of the investment c l i m a t e has been d i r e c t e d mainly at f o r e i g n i n v e s t o r s , the i s s u e i s e q u a l l y important f o r locally-owned f i r m s as they develop the a b i l i t y to i n v e s t i n other c o u n t r i e s . Some f i r m s , such as Motibhai and Company L i m i t e d , Lees T r a d i n g Company L i m i t e d , and S t i n s o n Pearce Company L i m i t e d , have a l r e a d y i n v e s t e d i n other coun-426 t r i e s , and many others may f o l l o w s u i t . Manufacturers were asked whether they thought F i j i had a good investment c l i m a t e . Of the n i n e t y - n i n e manufacturing firms that p r o v i d e d a v a l i d response, 61 percent i n d i c a t e d that F i j i had a good investment c l i m a t e , while 25 percent i n d i c a t e d that they d i d not think that i t had, and 10 percent were u n c e r t a i n . A small number (4 percent) p r o v i d e d c o n d i t i o n a l answers. The one-quarter that d i d not thin k that F i j i had an a t t r a c t i v e investment c l i m a t e represent a moderate disenchantment with the investment s i t u a t i o n in F i j i , and would r e q u i r e a t t e n t i o n by the government i f i t i s to succeed in l u r i n g more investment both i n t o F i j i , and i n t o the manufacturing s e c t o r . The reasons f o r the e v a l u a t i o n s by manufacturers are presented i n Tables 9.2 and 9.3. In the main, three reasons accounted f o r much of the s a t i s f a c t i o n with F i j i ' s investment c l i m a t e : F i j i ' s developing n a t u r e , g i v i n g manufacturers nume-rous o p p o r t u n i t i e s ; an a t t r a c t i v e r e t u r n on c a p i t a l ; and p o l i -t i c a l s t a b i l i t y that has allowed accumulation to proceed wit-hout d i s r u p t i o n s or worries of s e c u r i t y of c a p i t a l and inve s -tments. These three f a c t o r s accounted f o r the response from n e a r l y t h r e e - q u a r t e r s ' of the fi r m s that f a v o u r a b l y e v a l u a t e d F i j i ' s investment c l i m a t e . The government can c e r t a i n l y c l a i m c r e d i t f o r ensuring an adequate return on c a p i t a l and the p r o v i s i o n of p o l i t i c a l s t a b i l i t y . F i j i i s r e l a t i v e l y u n p a r e l l e d among d e v e l o p i n g c o u n t r i e s i n i t s adherence to b a s i c democratic values s i n c e independence, not a mean achievement i n an i n t e r -n a t i o n a l system that saw more and more p o s t - c o l o n i a l s o c i e t i e s 427 TABLE 9.2 REASONS FOR INDICATING FIJI HAS A GOOD INVESTMENT CLIMATE3 Reasons Number Percent P l e n t y of scope for development because of the developing, nature of the country 1 3 28 Adequate r e t u r n on c a p i t a l 1 1 23 P o l i t i c a l s t a b i l i t y and a t t r a c t i v e taxat ion 10 21 Small c a p i t a l can f i n d investment 3 6 Good government i n c e n t i v e s 2 4 Good government p r o t e c t i o n from imports 2 4 Major i n d u s t r i e s have a good f u t u r e 2 4 Not too much i n t e r n a l c o m p e t i t i o n 1 2 C r e d i t supply i s good 1 2 Government has good c a p i t a l works programme 1 2 S k i l l e d labour 1 2 T o t a l 47 98 SOURCE: Survey of Manufacturers i n F i j i , 1983. Respondents with u n c e r t a i n or c o n d i t i o n a l responses may be i n c l u d e d i n these f i g u r e s . succumb to a u t o c r a t i c systems. There seems to be an o v e r a l l c o n f i d e n c e i n the government's commitment to democracy, a l -though the 1982 general e l e c t i o n s i n t r o d u c e d , f o r the f i r s t time, some doubts about the i m p a r t i a l i t y of the e l e c t o r a l process (see White, 1983). Moreover, the r e a l t e s t of the commitment to democracy w i l l come i f the o p p o s i t i o n p a r t i e s unseat the c u r r e n t government, and as F i j i f a c e s severe econo-mic problems r e s u l t i n g from low r e t u r n s to the main primary e x p o r t s , an i n c r e a s i n g l y l a r g e entry to the labour f o r c e , and 428 TABLE 9.3 REASONS BEHIND A NEGATIVE EVALUATION OF FIJI'S INVESTMENT CLIMATE9 Reason Number Percent Market too small and l i m i t e d scope 4 1 1 Unions too powerful 4 1 1 Good o p t i o n s taken up 3 9 Too much d u p l i c a t i o n 2 6 U n c e r t a i n f u t u r e for f o r e i g n investment 2 6 Economic u n c e r t a i n t i e s 2 6 I n c e n t i v e s not i n t e r n a t i o n a l l y a t t r a c t i v e 2 6 Inadequate a t t e n t i o n to i n d u s t r i a l land 2 6 Problems with major i n d u s t r i e s 2 6 Inadequate r e t u r n s on c a p i t a l 1 3 N a t u r a l d i s a s t e r s are frequent 1 3 Bureaucracy slow 1 3 R e s t r i c t i o n s on borrowing 1 3 C o r r u p t i o n in government 1 3 Lack of f i r m long term p o l i c y 1 3 Duty on intermediate goods 1 3 Tendency of l a b o u r e r s to leave a f t e r t r a i n i n g 1 3 Larger business favoured 1 3 Inadequate p r o t e c t i o n 1 3 Lack of government i n t e r e s t 1 3 Government favours purchasing from l o c a l f i rms 1 3 T o t a l 35 103b SOURCE: Survey of Manufacturers i n F i j i , 1983. Respondents who were u n c e r t a i n , or those with c o n d i t i o n a l responses may be included in these f i g u r e s . bDue to rounding. 429 an i n c r e a s i n g l y burdensome f o r e i g n debt (on f o r e i g n debt of F i j i , see a d i s c u s s i o n in FEDM, 1984:388-401). Furthermore, the present leader of the c o u ntry, Ratu S i r Kamisese Mara, who has e f f e c t i v e l y l e d F i j i from 1968 onwards, w i l l probably r e t i r e i n the near f u t u r e , and the country's p o l i t i c a l i n s t i t u t i o n s w i l l be f u l l y t e s t e d as F i j i makes a t r a n s i t i o n to another l e a d e r . In an extremely and i n c r e a s i n g l y c o m p e t i t i v e world market f o r f o r e i g n c a p i t a l , these f a c t o r s w i l l no-doubt exert a powerful i n f l u e n c e on the investment d e c i s i o n s of both f o r e i g n and l o c a l e n t r e p r e n e u r s . The reasons f o r not regarding F i j i as having a good investment c l i m a t e are d i v e r s e . The most important problem c i t e d was that of i n d u s t r i a l r e l a t i o n s . Eleven percent of the respondents f e l t that unions had become too p o w e r f u l , while one respondent f e l t that there was too much labour m o b i l i t y among the workers. The unions are indeed a powerful f o r c e i n F i j i , but as the FEDM report makes c l e a r , they have not, u n t i l the 1980s, d i s t o r t e d the wage r a t e s (FEDM, I 9 8 4 : x v i ) . A major a v e r s i o n to unions appears to r e l a t e to "having to deal with unions", rather than t h e i r a b i l i t y to e x t r a c t high wages and b e t t e r b e n e f i t s , although the l a t t e r i s not unimportant. The second set of reasons were r e l a t e d to the small market of F i j i , and the f a c t that good or easy o p t i o n s i n manufacturing had a l r e a d y been taken up. Both these reasons, however, i n d i c a t e a general weakness in the manufacturing sec-t o r — e n t r e p r e n e u r s s t i l l view t h e i r operations i n terms of the 430 domestic market, r a t h e r than t a k i n g exports i n t o account a l s o . Furthermore, although good o p t i o n s have been taken up, the good entrepreneur always seeks out p r o f i t a b l e and v i a b l e avenues f o r investment. Manufacturers a l s o found inadequate a t t e n t i o n had been p a i d to making a v a i l a b l e i n d u s t r i a l land i n s u f f i c i e n t q u a n t i -ty and i n r e q u i r e d s i z e s . Although the government has underta-ken the development of i n d u s t r i a l e s t a t e s (see Chapter 8 ) , i t appears that i n d u s t r i a l land has not been r e a d i l y a v a i l a b l e to manufacturers i n a p p r o p r i a t e s i z e s . There was a c l e a r p r e f e r e n -ce among manufacturers f o r f r e e h o l d l a n d , and, to a l e s s e r e x t e n t , crown l a n d . The remaining reasons are a l l t h i n l y spread, and cover many a r e a s . Of importance here i s the lack of a long term p o l i c y f o r t h i s s e c t o r by the government. T h i s c r i t i c i s m i s p a r t l y v a l i d as u n t i l r e c e n t l y , the government has had a reac-t i v e as opposed to an a c t i v e p o l i c y and even now, no c l e a r , d e f i n i t e p o l i c y f o r the se c t o r e x i s t s . Moreover, the government has a l s o s h i f t e d i t s p o s i t i o n on some a s p e c t s , such as that on export p r o c e s s i n g zones. The c r i t i c i s m of the bureaucracy i s s i m i l a r l y v a l i d in so f a r i t r e l a t e s to the past performance of the agencies such as the BIDC. The problem with the government bureaucracy i s a very r e a l one. The FEDM re p o r t n otes, f o r in s t a n c e that many p a r t s of the c i v i l s e r v i c e seem to be l o s i n g t h e i r e f f e c t i v e -ness (FEDM, 1984:40).^ Furthermore, there i s at present no-mechanism to i d e n t i f y and e f f e c t i v e l y d e a l with incompetence in 431 the c i v i l s e r v i c e . The c i v i l s e r v i c e has a l s o been weakened due to e x c e s s i v e m o b i l i t y of s e n i o r c i v i l s e r v a n t s . A remark by the c o n t r o l l e r of the government s h i p y a r d , Mr. A. T. Naigulevu that during h i s short stay at the s h i p y a r d , three permanent s e c r e t a -r i e s had changed i n h i s m i n i s t r y w e l l i l l u s t r a t e s the s i t u a -t i o n . As the FEDM notes t o o , " R e c e n t l y , v i r t u a l l y every Perma-nent S e c r e t a r y ' s post changed hands w i t h i n one 18 month p e r i o d " (FEDM, 1984:42). The s i t u a t i o n i n the M i n i s t r y of Commerce and I n d u s t r y , and l a t e r i n the M i n i s t r y of Economic Planning and Development, of c l o s e relevance to our study, i s t y p i c a l . The s i t u a t i o n i s w e l l put by the government i t s e l f : Ratu E p e l i Kanimaiwai [ p r e v i o u s l y Permanent Secr e t a r y of F i j i a n A f f a i r s and Rural Development] took over as Permanent S e c r e t a r y on 16 January 1981 but was subse-quently t r a n s f e r r e d as Permanent S e c r e t a r y of Tourism, Transport and C i v i l A v i a t i o n and Mr. P. Goundar, the D i r e c t o r of Trade and I n d u s t r i e s became a c t i n g S e c r e t a r y for Commerce and I n d u s t r y . Mr. Goundar was l a t e r posted as Commissioner Nor t h e r n , and Mr. N.B. Raniga, the former Deputy Permanent R e p r e s e n t a t i v e and C o u n s e l l e r [ s i c ] at the F i j i M i s s i o n t o the Uni t e d N a t i o n s , assumed duty as Permanent S e c r e t a r y f o r Commerce and Industry in e a r l y December, 1981 ( F i j i M i n i s t r y of Commerce and In d u s t r y , 1983:1). We can note f u r t h e r that the p o s i t i o n changed hands again i n 1983. Furthermore, the government's p o l i c i e s f a v o u r i n g i n d i g e -nous F i j i a n s i n the top p o s i t i o n s i n the c i v i l s e r v i c e has produced an unhealthy environment among c i v i l s e r v a n t s . Mis-t r u s t and u n c e r t a i n t y at the top echelons of the c i v i l s e r v i c e do l i t t l e to h e l p F i j i ' s economic development i n an i n c r e a s i n -g l y harsh economic s i t u a t i o n . I n d u s t r i a l i z a t i o n , and develop-ment are p a r t of the ge n e r a l F i j i s o c i e t y . Problems pl a g u i n g 432 F i j i s o c i e t y in general are i n e x t r i c a b l y r e l a t e d to i n d u s t r i a -l i z a t i o n and unless these are adequately addressed, the scope for r e a l l y s a t i s f a c t o r y growth both i n i n d u s t r i a l i z a t i o n and development g e n e r a l l y w i l l become har d e r . There i s a b e l i e f among manufacturers that there i s i n c r e a s i n g c o r r u p t i o n i n F i j i . While i n general the c i v i l s e r v i c e in F i j i remains much l e s s c o r r u p t than those i n many T h i r d World s o c i e t i e s , those knowledgeable on such matters argue--and the author's own o b s e r v a t i o n s lead him to agree with . . 7 them--that c o r r u p t i o n i s on the i n c r e a s e i n F i j i . F i n a l l y , many manufacturers, s p e c i a l l y i n i n f o r m a l i n t e -r v i e w s , i n d i c a t e d t h e i r b e l i e f that the economy was being i n -c r e a s i n g l y p o l i t i c i z e d . Manufacturers f e l t that there were new h u r d l e s i n the way of expansion of those firms e i t h e r not f i r m l y a l i g n e d with the government, or those a s s o c i a t e d with the o p p o s i t i o n p a r t y . There i s a l s o a widespread b e l i e f that f i r m s a s s o c i a t e d with the government p o l i t i c a l l y , such as Moti-bhai and Company L i m i t e d , have "done extremely w e l l " . Such a p e r c e p t i o n of the business environment, whether wholly c o r r e c t or not, does not h e l p the government's attempt to i n c r e a s e the economic commitment of F i j i c i t i z e n s to F i j i , or to a t t r a c t worthwhile f o r e i g n investment to F i j i . The Role of F o r e i g n C a p i t a l i n F i j i i n the Future There has been a major change i n the degree of f o r e i g n ownership i n the F i j i economy s i n c e independence (see, f o r i n s t a n c e , C a r s t a i r s and Prasad, 1981). A q u e s t i o n i n the survey of manufacturers i n F i j i asked manufacturers what p a t t e r n of 433 investment they foresaw in F i j i in the next five years. The majority of them (54 percent) indicated that they believed that local capital would increase its share of the total new inves-tment in manufacturing in F i j i , while only 19 percent felt that foreign capital would increase i t s share of the total new investment in the manufacturing sector in F i j i in the next five years. Nearly one-fifth (18 percent) of the respondents were unsure of how the future pattern of investment would go. The findings clearly bring out the belief among manufac-turers of the relative dilution of foreign capital in Fijian manufacturing. This is significant because it may indicate that the government's current practice of spending large sums of money to attract foreign capital should be revised, placing more emphasis on local capital. The results also illustrate what has been called the marginalization of foreign firms in the Pacific. Many of the leading multinationals of the Pacific, such as the Carpenter and Burns Philp groups, which have been active in the Pacific for very long periods, have begun to extricate themselves from F i j i and the South Pacific generally. This process, which was most visibly illustrated with the withdrawal of the Colonial Sugar Refining Company Limited in 1973 from F i j i , is now being continued by the two companies mentioned (Taylor, 1983a,b, 1984). The wide-ranging re-organization of both the groups, with their reduced retai-ling operations, has also produced a much leaner presence in the country. The willingness of the Burns Philp group to s e l l a major portion of their shares to the Native Land Development 434 C o r p o r a t i o n i s an example of t h e i r d e s i r e to e x t r i c a t e themsel-ves from F i j i on favourable terms. Furthermore, these firms are themselves being m a r g i n a l i z e d because of t a k e o v e r s . The Carpen-te r group, f o r i n s t a n c e , has been taken over by the G r i f f i t h group of A u s t r a l i a . The new h o l d i n g company may not be that i n t e r e s t e d i n r e t a i n i n g the South P a c i f i c i s l a n d o p e r a t i o n s . A report by the A u s t r a l i a n investment c o n s u l t a n t company of W i l -l i a m T i l l e y , Hudson, Evans and Company, for i n s t a n c e , i n d i c a t e s t h a t : Companies op e r a t i n g in the P a c i f i c I slands do not appear c o n f i d e n t of s a t i s f a c t o r y p r o f i t a b i l i t y being achieved from F i j i i n the near f u t u r e , and t h i s area holds the key to investment i n the r e g i o n . It i s not expected that the South P a c i f i c w i l l a t t r a c t much a d d i t i o n a l investment from A u s t r a l i a n companies (W i l l i a m T i l l e y , Hudson, Evans and Company, 1978 : i i ) . A comment by the new C h i e f E x e c u t i v e O f f i c e of Burns P h i l p (South Sea) Company L i m i t e d , Mr Andrew T u r n b u l l , may a l s o provide a glimpse of a l a c k of i n t e r e s t i n the P a c i f i c by these pioneer companies as new managements take over: I don't have a great background in the i s l a n d s , and on my f i r s t v i s i t there I have to say that I was not i n i t i a l l y g r e a t l y impressed by what I saw (quoted in P a c i f i c I s l a n d s Monthly, 1984, 55[113:37). Furthermore, Mr T u r n b u l l ' s f o l l o w i n g comment seems to corrobo-r a t e the p o s i t i o n of W i l l i a m T i l l e y , Hudson, Evans and Company quoted e a r l i e r : Burns P h i l p i s moving i n t o [new] areas and i n v e s t i n g most in areas where i t w i l l achieve maximum r e s u l t s . At present A u s t r a l i a i s o f f e r i n g t h a t maximum re t u r n (quoted in P a c i f i c I s l a n d s Monthly") 1 984 , 55 (1 1 ) : 37; my emphasis). 435 The E f f e c t i v e n e s s of Government P o l i c i e s on I n d u s t r i a l i z a t i o n The manufacturers interviewed f o r the survey of manufac-t u r e r s in F i j i were asked i f they c o n s i d e r e d the government's p o l i c i e s f o r the manufacturing s e c t o r were e f f e c t i v e . Among those who responded with c l e a r "yes" or "no" (71), 52 percent s a i d that they c o n s i d e r e d the government's p o l i c i e s f o r the manufacturing sector not e f f e c t i v e . The data thus i n d i c a t e that major doubts e x i s t among manufacturers concerning the e f f e c t i v e n e s s of the government's i n d u s t r i a l p o l i c i e s . Reasons f o r not c o n s i d e r i n g the gover-nment's p o l i c i e s f o r the manufacturing s e c t o r e f f e c t i v e are summarized i n Table 9.4. By f a r the most important s i n g l e reason f o r the d i s s a t i s f a c t i o n with government p o l i c y was the p e r c e p t i o n of d u p l i c a t i o n i n the manufacturing s e c t o r . As i n d i -cated i n our e a r l i e r d i s c u s s i o n , there i s a major problem of d u p l i c a t i o n i n the manufacturing s e c t o r , and the government has begun to de a l with the problem. The problem of lack of c o - o r d i n a t i o n i n the manufactu-r i n g s e c t o r p o l i c y making, the second-ranking reason f o r d i s s a -t i s f a c t i o n with government p o l i c i e s , i s r e a l enough as we have seen o u r s e l v e s from the major discordance between the d e c l a r e d i n t e n t i o n s of the development plans and the a c t u a l a c t i o n s of the government. Some of the remaining reasons c i t e d i n Table 9.4 r e i n f o r c e the e a r l i e r d i s c u s s i o n of government p o l i c i e s , and need not be examined i n d e t a i l here. 436 TABLE 9.4 REASONS WHY THE GOVERNMENT'S MANUFACTURING POLICIES ARE CONSIDERED INEFFECTIVE Reason Number Percent D u p l i c a t i o n i n the manufacturing s e c t o r 1 1 32 Lack of c o - o r d i n a t i o n i n p o l i c i e s 6 18 No o v e r a l l , c l e a r " v i s i o n " 5 1 5 Too much bureaucracy 2 6 Inadequate p r o t e c t i o n 2 6 No r e g u l a t i o n of standards 1 3 Too high t a x a t i o n l e v e l 1 3 Inadequate i n c e n t i v e s 1 3 Lack of e x p e r t i s e i n the government 1 3 Problems with non-union labour 1 3 Too much p r o t e c t i o n 1 3 D i s c r i m i n a t i o n 1 3 Government i s p a r t i s a n i n a s s i s t a n c e 1 3 T o t a l 34 101 SOURCE: Survey of Manufacturers i n F i j i , 1983. Assessment of Government Departments and S e r v i c e s An attempt was made to q u a n t i t a t i v e l y measure the pe r f o -rmance of government departments that most o f t e n deal with the manufacturing s e c t o r . The answers would i n d i c a t e areas where changes are needed, and provide h e l p i n a s s e s s i n g the success or otherwise of the government's i n d u s t r i a l i z a t i o n p o l i c i e s . I t i s i n t e r e s t i n g that n e a r l y a l l the main government departments were p o s i t i v e l y e v a l u a t e d by the manufacturers (Table 9.5). I t i s worth n o t i n g that the worst r a t i n g was f o r the o l d M i n i s t r y of Commerce and I n d u s t r y . T h i s would be in l i n e with what i s g e n e r a l l y f e l t by the p u b l i c , and even widely 437 TABLE 9.5 EVALUATION OF GOVERNMENT DEPARTMENTS AND SEMI -GOVERNMENT ORGANIZATIONS BY MANUFACTURERS, 1983 I n s t i t u t i o n Dealt With? E v a l u a t i o n i f Dealt With Yes No (Percent) Score on the s c a l e : (1) Very good, to (5) Very bad Business Opportunity and Management A s s i s t a n c e 7 93 2. 1 25 Customs Department 84 1 6 2.247 Inland Revenue 96 4 2.096 Economic Development Board 55 45 2.161 F i j i Development Board 48 53 2.234 M i n i s t r y of Commerce and I n d u s t r y3 59 41 2.698 M i n i s t r y of Economic Pl a n n i n g and Development 41 59 2.342 SOURCE: Survey of Manufacturers i n F i j i , 1983. The M i n i s t r y of Commerce and Industry was the pre-decessor of the c u r r e n t M i n i s t r y of Economic Planning and Development, c o n s t i t u t e d in the aftermath of the 1982 general e l e c t i o n s . acknowledged w i t h i n the government i t s e l f . The o l d m i n i s t r y , and the o l d BIDC d i d not e f f e c t i v e l y deal with the manufactu-r i n g s e c t o r . It i s a l s o i n t e r e s t i n g that the M i n i s t r y of Econo-mic Pl a n n i n g and Development r e c e i v e s an improved r a t i n g — t e s -timony to the government's a b i l i t y to improve the bureaucracy. On the whole, the data i n d i c a t e that manufacturers are s a t i s -438 f i e d with the government departments and other bodies i n v o l v e d i n the promotion of i n d u s t r i a l i z a t i o n i n F i j i . It' should be apparent, however, that manufacturers made a d i s t i n c t i o n bet-ween the government bureaucracy, which they c l e a r l y regard as implementing p o l i c i e s , and the government p o l i c i e s themselves. They found the l a t t e r to be u n s a t i s f a c t o r y , and as we have o u r s e l v e s seen, the nature of government.policy making leaves much to be d e s i r e d . A s i m i l a r attempt was made to gauge the awareness of the main s e r v i c e s provided by the government to manufacturers, the degree of t h e i r u t i l i z a t i o n by manufacturers, and the evalua-t i o n of these s e r v i c e s . On the whole, the f i n d i n g s (Table 9.6) i n d i c a t e that manufacturers are aware of most of the s e r v i c e s and a s s i s t a n c e provided to the s e c t o r . However, new ser-vices', such as the p r o v i s i o n of market i n f o r m a t i o n by the Economic Development Board, or i t s a s s i s t a n c e with f e a s i b i l i t y s t u d i e s , or i t s a s s i s t a n c e with e x p o r t i n g , were not g e n e r a l l y w e l l known. Thus there i s a need f o r a b e t t e r d i s s e m i n a t i o n of inf o r m a t i o n to the manufacturing s e c t o r , s p e c i a l l y to the smal-l e r manufacturers. The l a r g e r manufacturers a r e , on the whole, very aware of the v a r i o u s kinds of government a s s i s t a n c e and s e r v i c e s . I t would be u s e f u l i f the Economic Development Board o f f i c i a l s c o u l d a c t u a l l y v i s i t manufacturers. Given that the number of manufacturers i s not very l a r g e , one or two extension o f f i c e r s would be enough. T h i s would ensure that the sm a l l e r manufacturers b e n e f i t from government i n i t i a t i v e and give the Board f i r s t hand experience of the problems faced by the manu-439 f a c t u r e r s . Many manufacturers expressed t h e i r wish f o r t h i s type of s e r v i c e , for they t o l d the author that they found that TABLE 9.6 THE AWARENESS, USE, AND EVALUATION BY MANUFACTURERS OF KEY GOVERNMENT SERVICES TO THE MANUFACTURING SECTOR, 1983 S e r v i c e or A s s i s t a n c e Aware of? Used? Evalu-a t i o n Yes No Yes No (1)= (Percent) (Percent) Very good; (5)= Very bad Duty draw-back on machinery and intermediate goods 81 1 9 60 40 2. 1 54 Income tax i n c e n t i v e s 77 23 49 51 2. 478 S p e c i f i c p r o t e c t i o n a s s i stance 82 1 8 51 50 2. 717 EDB's h e l p with f e a s i b i l i t y s t u d i e s 53 47 10 90 2. 556 EDB's he l p with market in f o r m a t i o n 56 44 19 81 2. 263 EDB's he l p with exports 53 47 10 90 2. 455 Government's t e c h n i c a l a s s i s t a n c e 53 47 8 92 1 . 750 Government-sponsored trade missions 75 25 , 34 66 1 . 886 F i j i N a t i o n a l T r a i n i n g C o u n c i l t r a i n i n g 84 1 6 45 55 2. 1 67 F i j i I n s t i t u t e of Technology t r a i n i n g 68 32 29 71 2. 464 Government I n d u s t r i a l e s t a t e s 78 22 22 78 2. 188 SOURCE: Survey of Manufacturers i n F i j i , 1983. 440 through the i n t e r v i e w , they had l e a r n t much about the nature of s e r v i c e s p r o v i d e d by the government, and that they had never been v i s i t e d by anybody from government to t a l k about t h e i r o p e r a t i o n s and problems. To some e x t e n t , the EDB i s attempting to meet t h i s need though i t s investment seminars i n the v a r i o u s towns in F i j i , but t h i s goes only part of the way towards meeting the needs of the smaller manufacturers. The data i n d i c a t e that many of the government s e r v i c e s are not being u t i l i z e d by manufacturers. Although part of t h i s i s no doubt due to lack of awareness of these s e r v i c e s , and the a p p l i c a b i l i t y of the programs, some of t h i s i s p a r t l y the r e s u l t of a hig h l e v e l of c y n i c i s m on the part of manufacturers with regard to government a s s i s t a n c e . T h i s was s p e c i a l l y so with the sm a l l e r manufacturers. The s m a l l e r firms f e l t that the government c a t e r s mainly to the l a r g e r f i r m s . While t h i s i s not the government p o l i c y , i t does happen that the l a r g e r firms have b e t t e r p o l i t i c a l and a d m i n i s t r a t i v e c o n t a c t s with the government, and thus are more able to u t i l i z e government s e r v i c e s , while the smaller manufac-t u r e r s , s p e c i a l l y those l o c a t e d away from Suva, do not have t h i s a c c e s s , and are thus not as able to use these s e r v i c e s . I f the government genuinely means to d i s p e r s e economic a c t i v i t y i n F i j i , i t w i l l have to demonstrate to manufacturers that those l o c a t e d away from Suva are not at a disadvantage with r e s p e c t to access to government bureaucracy. Otherwise, the economic advantages of l o c a t i n g i n Suva w i l l be magnified with the access i t p r o v i d e s to government machinery. 441 The o v e r a l l assessment of government s e r v i c e s i s p o s i -t i v e . The government's t e c h n i c a l a s s i s t a n c e was e v a l u a t e d very p o s i t i v e l y , although t h i s c o n c l u s i o n i s unquestionably a f f e c t e d by the f a c t that a very small number of manufacturers (8) used t h i s s e r v i c e . Most of these firms were s m a l l , and found the f r e e a s s i s t a n c e p r o v i d e d by the government u s e f u l . The l a r g e r f i r ms do not u s u a l l y depend on the government to s o l v e t h e i r t e c h n i c a l problems because of the very rudimentary nature of the government t e c h n i c a l s e r v i c e . Government sponsored trade missions were r a t e d very h i g h l y . The EDB has made a major e f f o r t to mount trade missions and d i s p l a y s both in F i j i i n d i f f e r e n t p a r t s , and overseas and the data here i n d i c a t e the very p o s i t i v e c o n t r i b u t i o n t h i s aspect of the EDB's work has had on the manufacturing s e c t o r . C o n c l u s i o n s T h i s chapter has provided an account of the government p o l i c i e s r e l a t i n g to the manufacturing s e c t o r , i n d i -cated the l e v e l of government's d i r e c t p a r t i c i p a t i o n i n the manufacturing s e c t o r , and examined the e v a l u a t i o n s by the manu-f a c t u r i n g of government p o l i c i e s . , s e r v i c e s , and departments. Government p o l i c i e s on i n d u s t r i a l i z a t i o n have undergone steady e v o l u t i o n . Today they can be s a i d to c o n t r i b u t e a r e l a t i v e l y coherent statement on the nature of i n d u s t r i e s f a -voured, types of ownership, kinds of a s s i s t a n c e , l o c a t i o n of manufacturing e s t a b l i s h m e n t s and f o r e i g n exchange c o n t r o l . Looked at i n i n t e r n a t i o n a l terms, the e v o l u t i o n of manufactu-r i n g p o l i c i e s i n F i j i was r e c e n t , although one needs to remem-442 ber that F i j i gained i t s p o l i t i c a l independence only i n 1970. Although comprehensive, government p o l i c i e s towards the manufacturing s e c t o r , as i n d i c a t e d by development p l a n s , were not w e l l c o - o r d i n a t e d . We have a l r e a d y seen that the government c a l l e d f o r i n c r e a s e d c o m p e t i t i o n i n the manufacturing s e c t o r in the development plans on the one hand, and proceeded to under-mine i t s d e c l a r e d p o l i c y by g r a n t i n g very high l e v e l s of prote-c t i o n to domestic i n d u s t r y , thereby reducing the l e v e l of c o m p e t i t i o n i n the s e c t o r . The r e a l f a i l u r e of government p o l i c i e s towards the manufacturing s e c t o r l i e s i n i t s i n a b i l i t y to monitor the performance of the p r o t e c t e d i n d u s t r i e s g e n e r a l l y , and to phase out p r o t e c t i o n a f t e r an i n t e r i m p e r i o d . I n t e r n a t i o n a l experien-ce has shown that c o u n t r i e s with u n d i s c i p l i n e d p r o t e c t i o n to domestic i n d u s t r y produce a s l u g g i s h manufacturing s e c t o r . T h i s i s what has happened in F i j i . The f a i l u r e to evaluate f i r m s r e c e i v i n g high l e v e l s of p r o t e c t i o n was of course symptomatic of a general f a i l u r e of the government to monitor firms r e c e i v i n g a s s i s t a n c e from i t at a l l . The s t a t e of a f f a i r s , o f the main government m i n i s t r y i n v o l v e d i n the manufacturing s e c t o r , the M i n i s t r y of Commerce and I n d u s t r y , can be gauged by the f a c t that i t s f i r s t annual r e p o r t was produced and p u b l i s h e d i n 1983, c o v e r i n g the year 1981 ( p u b l i s h e d as F i j i M i n i s t r y of Commerce and I n d u s t r y , 1983). The only other government department that had not p u b l i -shed annual r e p o r t s f o r a l a r g e number of years i n F i j i was the M i n i s t r y of F i j i a n A f f a i r s and R u r a l Development, but i t at 443 l e a s t produced a combined report c o v e r i n g the p e r i o d 197 1 to 1979 (see F i j i M i n i s t r y of F i j i a n s A f f a i r s and Rural Develop-ment, 1980). Data in t h i s chapter i n d i c a t e that the government has a major presence i n the manufacturing s e c t o r , but that i t s involvement arose from very unusual circumstances caused by the d e c i s i o n of the CSR to withdraw from F i j i . The c e n t r a l gover-nment has not s i g n i f i c a n t l y i n c r e a s e d i t s d i r e c t p a r t i c i p a t i o n s i n ce the a c q u i s i t i o n of the CSR. I t s major new p a r t i c i p a t i o n w i l l be i n terms of a j o i n t venture with B r i t i s h Petroleum Company L i m i t e d to process p i n e , a major new resource based i n d u s t r y f o r F i j i . However, government-related o r g a n i z a t i o n s are planning to i n c r e a s e t h e i r presence i n the manufacturing s e c t o r . It i s d i f f i c u l t to a c c u r a t e l y gauge the impact of such an expanded r o l e , although i t w i l l c e r t a i n l y f u r t h e r p o l i t i c i z e the manufa-c t u r i n g s e c t o r . The nature of government presence i n F i j i does not make i t a c o r p o r a t i s t s t a t e such as i n B r a z i l and thus there i s lack of b u r e a u c r a t i c t e c h n o c r a t s i n F i j i on a l a r g e s c a l e . The r e l a t i v e l y low degree of s t a t e involvement seems c o n s i s t e n t with the p r o p o s i t i o n advanced by Sobhan (1979:26) : . . . p u b l i c e n t e r p r i s e has i t s o r i g i n s i n the circumstances of the c o l o n i a l r e l a t i o n s h i p and i t s t e r m i n a t i o n . In s o c i e t i e s where c o l o n i a l b o u r g e o i s i e has completely overshadowed and even f r u s t r a t e d the growth of a n a t i o n a l b o u r g e o i s i e , i t s withdrawal leads to a dramatic e s c a l a t i o n in the r o l e of the s t a t e s e c t o r . In these circumstances the s t a t e s e c t o r , of n e c e s s i t y has to extend i t s r o l e by t a k i n g over i n d u s t r i a l , commercial and f i n a n c i a l e n t e r p r i s e s abandoned by departed f o r e i g n owners. 444 In F i j i the c o l o n i a l r e l a t i o n s h i p was amicable, as seen in Chapter 4, and the government d i d not f e e l compelled, at inde^ pendence, to " e s c a l a t e " i t s involvement. Data on government s e r v i c e s and agencies i n d i c a t e t h a t , save i n s p e c i a l c a s e s , the departments and agencies are wel l p e r c e i v e d by the manufacturing s e c t o r . The d i s s e m i n a t i o n of in f o r m a t i o n of new and, to a l e s s e r degree, o l d e r p o l i c i e s , need to be improved to the smaller producers. T h i s i s indeed being done through the Economic Development Board's l o c a l inve-stment seminar s e r i e s . A c c o r d i n g to the EDB (1984b:1), these seminars were organized i n S i g a t o k a , Nadi, Lautoka, and Ba in A p r i l , 1984. The Chairman of the EDB, Mr J.S. Thomson himself l e d the seminars, which a l s o i n c l u d e d other members of the Board, as wel l s e n i o r members of i t s a d m i n i s t r a t i o n . These seminars w i l l g r e a t l y i n c r e a s e the awareness among manu-f a c t u r e r s of the s e r v i c e s p r o v i d e d by the government. As i n d i -c a ted e a r l i e r in the c h a p t e r , t h i s c o u l d be complemented with v i s i t s to manufacturing e s t a b l i s h m e n t s by o f f i c e r s from the government. These v i s i t s may, i n c i d e n t a l l y , improve the respon-se to the government's census of i n d u s t r i a l p r o d u c t i o n as w e l l - - t h e response to which has been poor from the smaller manufacturers. The p e r c e p t i o n of government departments and s e r v i c e s by manufacturers i s p o s i t i v e , although there are areas where im-provements along the l i n e s suggested c o u l d improve the aware-ness, use and the q u a l i t y of the s e r v i c e s . The data on the government departments and s e r v i c e s may appear to c o n t r a d i c t the 4 4 5 o p i n i o n of a l a r g e number of manufacturers that the gover-nment's i n d u s t r i a l p o l i c i e s are not e f f e c t i v e . However, as noted e a r l i e r , manufacturers have c l e a r l y made a d i s t i n c t i o n between government departments that implement p o l i c i e s , and the government's p o l i c y - m a k i n g . I t was with policy-making at the highest l e v e l s of the government that d i s s a t i s f a c t i o n mainly l a y . ' » In sum, the s t a t e i n F i j i i s moderately i n v o l v e d in the manufacturing s e c t o r d i r e c t l y , and has developed wide-ranging p o l i c i e s on the manufacturing s e c t o r . The performance of the v a r i o u s government departments and agencies has been found to have been adequate, although the o v e r a l l government p o l i c y f o r the manufacturing s e c t o r was judged by a l a r g e number of manu-f a c t u r e r s to have been i n e f f e c t i v e . 446 Notes 1. On the T r i p a r t i t e Forum, see our e a r l i e r d i s c u s s i o n of the labour process i n Chapter 6. The T r i p a r t i t e Forum was c r e a t e d in December 1976. The Forum " . . . seeks to reach common under-standing i n important matters of n a t i o n a l i n t e r e s t , such as i n d u s t r i a l r e l a t i o n s , job c r e a t i o n , greater flow of investment and general economic and s o c i a l development i n F i j i " ( F i j i Government, 1979:i). There are a number of sub-committees of the Forum, and the importance of the Forum can be gauged from the f a c t that the Prime M i n i s t e r c h a i r s the Forum meetings. The 1979 investment seminar, which i s r e f e r r e d l a t e r in t h i s chap-t e r , was f i r s t c a l l e d f o r i n the Investment Sub-Committee of the Forum ( F i j i Government, I 9 7 9 : i ) . 2. I wish to g r a t e f u l l y acknowledge that the I r i s h Business a r t i c l e on the I r i s h Development Agency was provided to me i n 1983 by Dr Manfred B i e n e f e l d , then head of the F i j i Employment and Development M i s s i o n . 3. The i n f o r m a t i o n on the shareholdings of the F i j i Develop-ment Bank was obtained c o n f i d e n t i a l l y . 4. For the most p a r t , the sugar i n d u s t r y i n F i j i evolved around a r b i t r a t i o n awards, normally of ten-year d u r a t i o n s , that governed the conduct of the i n d u s t r y . Lord Denning presented h i s award, known as the "Denning Award" in 1969, that allowed for an improved d i s t r i b u t i o n of the proceeds of the sugar i n d u s t r y i n the p r o p o r t i o n of 70 percent to the growers, and 30 percent to the m i l l e r s . The d e t a i l s of the award can be found in Denning (1970), and an a n a l y s i s of the award i s presented i n FEDM (1984) and Narsey (1979). 5. The source for the f o l l o w i n g pages i s c o n f i d e n t i a l . 6. The F i j i Employment and Development M i s s i o n r e f e r s to the F i j i a n c i v i l s e r v i c e as " . . . i n c r e a s i n g l y expensive and i n e f f i c i e n t " (FEDM, 1984:402). 7. For i n s t a n c e , Mr Mahendra Chaudhry, the General S e c r e t a r y of the l a r g e s t union i n the c o u n t r y , the P u b l i c S e r v i c e Asso-c i a t i o n , has argued i n a paper that " . . . c o r r u p t i o n has become l i k e a cancer i n F i j i " (quoted i n P a c i f i c I s l a n d s Monthly, 1984, 55[10]:9). An i n d i c a t i o n of the f a c t that c o r r u p t i o n i n F i j i may be on the r i s e i s given by the f a c t that a b i l l d e a l i n g with c o r r u p t i o n has r e p o r t e d l y been prepared by the government. 8. In a recent examination of the business s e c t o r of F i j i , T a y l o r (I983a:49) w r i t e s of a "dramatic disengagement and r e t r e a t from the I s l a n d s " by A u s t r a l i a n m u l t i n a t i o n a l c o r p o r a t i o n s . 447 CHAPTER 10 CONCLUSIONS In the i n t r o d u c t i o n , the t h e s i s set out four main sets of q u e s t i o n s that were designed to c o l l e c t i v e l y y i e l d a d e s c r i -p t i o n and a n a l y s i s of the manufacturing sector of F i j i , and a l l but one have been answered in q u e s t i o n s Chapters 2 to 9. T h i s f i n a l chapter of the t h e s i s w i l l summarize the main f i n d i n g s of the c h a p t e r s and place the f i n d i n g s i n t h e i r wider t h e o r e t i c a l c o n t e x t . F i n a l l y , there i s a b r i e f assessment of the f u t u r e p r o spects of F i j i a n i n d u s t r i a l i z a t i o n . F i j i was i n c o r p o r a t e d i n t o the i n t e r n a t i o n a l economic system i n i t i a l l y through trade beginning i n the e a r l y nine-teenth c e n t u r y , and through a c o l o n i a l r e l a t i o n s h i p with Great B r i t a i n from 1874 onwards, when F i j i was annexed by Great B r i t a i n at the request of the l e a d i n g c h i e f s of F i j i . The F i j i a n s o c i e t y p r i o r to Western contact was, as shown in Chap-ter 4, at a very low l e v e l of development. Manufacturing, though present at the household l e v e l , was not developed to the same degree as i n , f o r i n s t a n c e , A s i a or L a t i n America. Thus the p o t e n t i a l f o r d e - i n d u s t r i a l i z a t i o n i n F i j i was f a r more l i -mited compared to other developing c o u n t r i e s , such as In d i a (on d e - i n d u s t r i a l i z a t i o n i n developing c o u n t r i e s , see B a g c h i , 1982; Baran, 1973; B r o o k f i e l d , I975a:4; D u t t , 1949; UNIDO, 1980a:128). The c o l o n i a l government viewed F i j i as a primary product economy, complementing the manufacturing economy of 448 Great B r i t a i n , i n the same way that most c o l o n i e s were regarded (Baran, 1973; B r e t t , 1973; Cardoso, 1972:85), and most of i t s investment went to a g r i c u l t u r e . However, the c o l o n i a l gover-nment d i d p rovide some l e g i s l a t i o n to encourage the development of manufacturing a l t h o u g h , as we have seen in Chapter 4, the l e g i s l a t i o n was r a r e l y used. The c o l o n i a l s t a t e a l s o p r o v i d e d i n f r a s t r u c t u r e , such as roads, communications, and power, which could be s a i d to have l a i d the foundation f o r i n d u s t r i a l deve-lopment l a t e r . The c o l o n i a l government a l s o i ntroduced and developed systems of e d u c a t i o n , banking, and law that have been c r u c i a l to F i j i a n i n d u s t r i a l i z a t i o n . In a d d i t i o n , i t set up some o r g a n i z a t i o n s , such as the A g r i c u l t u r a l and I n d u s t r i a l Loans Board, that c o u l d have pro v i d e d a s s i s t a n c e to a s p i r i n g manufac-t u r e r s . However, the bulk of the loans went to the a g r i c u l t u r a l s e c t o r .1 The c o l o n i a l s t a t e l a i d the foundation f o r F i j i ' s l a t e r i n d u s t r i a l i z a t i o n . I t s e stablishment of economic i n f r a s t r u c -t u r e , s p e c i a l l y t r a n s p o r t a t i o n systems, energy, and s o c i a l i n f r a s t r u c t u r e , such as banking, l e g a l , and e d u c a t i o n a l systems were c r u c i a l to F i j i ' s i n d u s t r i a l i z a t i o n in the 1960s and a f t e r independence. The c o l o n i a l s t a t e , however, d i d not a c t i v e l y encourage the i n d u s t r i a l i z a t i o n of F i j i , and i t s c l o s e a s s o c i a t i o n with f o r e i g n c a p i t a l , s p e c i a l l y with the C o l o n i a l Sugar R e f i n i n g Company L i m i t e d , meant that i t i n h i b i t e d the development of F i j i a n manufacturing by not encouraging higher r e t u r n s to the farmers, and not making e f f o r t s to induce the CSR to 449 reinvest i t s p r o f i t s in F i j i . The contemporary manufacturing sector of F i j i i s small, but s i g n i f i c a n t part of the national economy. In 1982, i t s contribution to the GDP was 10 percent, and the sector employed 18 percent of the paid employees in the same year (see Chapter 5). As argued in Chapter 5, the manufacturing sector in F i j i i s far more important than these s t a t i s t i c s indicate, for a l l F i j i a n exports depend on the manufacturing sector--and exports have been the the main source of funds for economic development in F i j i . Furthermore, the manufacturing sector has been a source of innovation in the economy that has benefitted the entire economy. The F i j i a n manufacturing sector, though possessing many s i m i l a r i t i e s with the manufacturing sectors of other developing countries, has some distinguishing features. Informal sector manufacturing, so common in many developing countries, i s l a r -gely i n s i g n i f i c a n t in the case of F i j i . The reasons for this are many, but i t s r e l a t i v e l y high l e v e l of per capita income, a s t r i c t enforcement of business and building codes, and the absence of an indigenous t r a d i t i o n of informal economic a c t i v i -t i e s , are a l l important explanations. F i j i a n manufacturing developed primarily as a service industry to the country's a g r i c u l t u r a l sector, reducing the bulk of primary products exported. These i n i t i a l l y involved sugar and coconut o i l m i l l i n g , but later embraced sawmilling, dairy products manufacturing, and miscellaneous f r u i t and vege-table processing. In the 1960s, and spec i a l l y in the 1970s, 450 f o l l o w i n g independence, many i m p o r t - s u b s t i t u t i n g manufacturing e n t e r p r i s e s were e s t a b l i s h e d , c a t e r i n g almost e x c l u s i v e l y to the domestic market, and f r e q u e n t l y r e l y i n g almost t o t a l l y on imported raw m a t e r i a l s . The i n t r o d u c t i o n of i m p o r t - s u b s t i t u t i n g manufacturing in F i j i , and the attempts to expand the narrow economic base of the c o u n t r y , have s u b s t a n t i a l l y changed the manufacturing s t r u -c t u r e of F i j i . However, food p r o c e s s i n g s t i l l remains the major part of the manufacturing s e c t o r : i n 1981, 62'percent of the t o t a l manufacturing value added was in the food area ( c a l c u -l a t e d from Table 5.2). Within food p r o c e s s i n g , the importance of sugar m i l l i n g and coconut o i l m i l l i n g has d e c l i n e d , although sugar m i l l i n g remains the most important s i n g l e manufacturing a c t i v i t y i n F i j i , as shown in Chapter 5. The other important manufacturing a c t i v i t i e s r e l a t e to s a w m i l l i n g , p r i n t i n g and p u b l i s h i n g , and cement and concrete p r o d u c t s . Given the small s i z e of the domestic market of F i j i , i t i s not s u r p r i s i n g that manufacturing establishments are genera-l l y s m a l l . I f we regard establishments employing l e s s than ten people as s m a l l , then 51 percent of a l l manufacturing i n 1981 were s m a l l . The c o n t r i b u t i o n of these small e s t a b l i s h m e n t s to t o t a l gross output i s low. According to the survey of manufac-t u r e r s i n F i j i i n 1983, establishments employing l e s s than ten people produced about 2 percent of the t o t a l gross o u t p u t . The manufacturing s e c t o r , thus has many small e s t a b l i s h m e n t s , and a smaller number of l a r g e e s t a b l i s h m e n t s , but the l a r g e r e s t a b l i -shments produce the bulk of the manufacturing o u t p u t . 451 Most manufacturing f i r m s i n F i j i are one-establishment f i r m s . However, there are now a small number of companies i n F i j i , l a r g e l y foreign-owned but i n c l u d i n g l o c a l l y - o w n e d , that own m u l t i p l e manufacturing e s t a b l i s h m e n t s , and which are a l s o engaged in many other economic a c t i v i t i e s . While the dominance of some of these firms has d e c l i n e d from the l e v e l s in the ear-l y 1970s that l e d to a group of concerned i n d i v i d u a l s in F i j i to l a b e l them octopuses, t h e i r i n f l u e n c e in the manufacturing s e c t o r , and i n the economy g e n e r a l l y , i s s t i l l p e r v a s i v e . Given the small domestic market of F i j i and the extreme r e l i a n c e by many manufacturers, s p e c i a l l y those i n non-resource manufacturing, on the'domestic market, there i s a high l e v e l of c o n c e n t r a t i o n i n the manufacturing s e c t o r . Although the gover-nment has been a d v i s e d i n the past to i n s t i t u t e l e g i s l a t i o n to guide and moniter monopolies i n the economy, there i s yet no l e g i s l a t i o n d e a l i n g with c o n c e n t r a t i o n . While the government can use the powers of the Reserve Bank to p a r t i a l l y r e s t r i c t m o n o p o l i s t i c tendencies i n the economy by foreign-owned f i r m s , i t does not have s i m i l a r powers i n r e l a t i o n to locally-owned f i r m s . There i s a r e l a t i v e l y high degree of l o c a l ownership i n F i j i a n manufacturing. In 1981, for i n s t a n c e , foreign-owned f i r m s accounted f o r only 27 percent of a l l people engaged i n the manufacturing s e c t o r and 36 percent of value added (see Chapter 5 ) . While t h i s l e v e l may appear to be moderately h i g h , i t i s much lower than was the case p r i o r to independence. A s i g n i f i c a n t i n c r e a s e i n l o c a l ownership i n the manufacturing 452 s e c t o r has occurred because of the government's d e c i s i o n to a c q u i r e the o p e r a t i o n s of the CSR a f t e r i t decided to leave F i j i . Since the CSR o p e r a t i o n s represented the l a r g e s t manufac-t u r i n g o p e r a t i o n s i n F i j i , t h i s change of ownership made a s i g n i f i c a n t a l t e r a t i o n i n the o v e r a l l l e v e l of l o c a l ownership in the manufacturing s e c t o r . L o c a l ownership has a l s o increased because of the dynamic growth of some locally-owned f i r m s , a slow-down of f o r e i g n investment in manufacturing, and because a number of owners of foreign-owned businesses have become F i j i c i t i z e n s . Most manufacturing f i r m s in F i j i are e i t h e r i n c o r p o r a t e d p r i v a t e companies or are u n i n c o r p o r a t e d . G e n e r a l l y , manufactu-r i n g f i rms are i n c o r p o r a t e d — o n l y 23 percent of the firms i n the survey of manufacturers i n F i j i were u n i n c o r p o r a t e d . Most fi r m s a r e , t h u s , i n c o r p o r a t e d , and among these, the overwhel-ming m a j o r i t y are p r i v a t e f i r m s . There i s yet no major develop-ment of p u b l i c c o r p o r a t i o n s i n F i j i , although the recent c r e a -t i o n of the stock exchange i s l i k e l y to i n c r e a s e the incidence of p u b l i c c o r p o r a t i o n s . Most firms a c t i v e i n manufacturing in F i j i have evolved from t r a d i n g . T h i s i s true of both locally-owned and f o r e i g n -owned f i r m s . Moreover, these firms have r e t a i n e d a c t i v e i n t e -r e s t i n other f i e l d s , s p e c i a l l y in d i s t r i b u t i o n . T h i s p a t t e r n of e v o l u t i o n of manufacturing firms i s not p e c u l i a r to F i j i as Evans (1979) has shown almost e x a c t l y the same p a t t e r n in the case of B r a z i l . S i m i l a r l y , i n the case of Uganda, M o r r i s (1968):10) has shown that " The owning of a f a c t o r y by an 453 Indian u s u a l l y arose out of h i s e a r l i e r t r a d i n g i n t e r e s t s . " However, with i n c r e a s i n g education of new en t r e p r e n e u r s , many entrepreneurs are not doing t h e i r a p p r e n t i c e s h i p i n the d i s t r i -b u t i v e s e c t o r ; they are e n t e r i n g manufacturing d i r e c t l y . Some of the new entrepreneurs may have worked f o r other manufactu-r e r s , r ather than have been i n r e t a i l i n g or wholesaling opera-t i o n s . Most manufacturing firms have been s t a r t e d r e c e n t l y ; 58 percent of the firms in the survey of manufacturers in F i j i had been formed e i t h e r in 1970 or a f t e r w a r d s . T h i s r e i n f o r c e s the ob s e r v a t i o n made e a r l i e r in the study that manufacturing i n F i j i i s a r e l a t i v e l y recent phenomenon. Manufacturing i n F i j i has, on the whole, not c a t e r e d only to luxury p r o d u c t i o n . For the most p a r t , the output of the manufacturing s e c t o r has been consumed by a l l economic s t r a t a of s o c i e t y . In t h i s , F i j i ' s i n d u s t r i a l i z a t i o n may be d i f f e r e n t from that i n many other developing c o u n t r i e s , where there has been a much gr e a t e r emphasis on luxury consumer goods, such as the production of c a r s , e l e c t r o n i c equipment, and r e f r i g e r a -t o r s . The m a j o r i t y of the e a r l i e r manufacturing e s t a b l i s -hments in F i j i were set up without adequate, and i n many c a s e s , without any, f e a s i b i l i t y s t u d i e s . Even a l a r g e number of recent manufacturing establishments have been set up without f e a s i b i -l i t y s t u d i e s . The absence of f e a s i b i l i t y s t u d i e s , and i t s inadequacy i n many cas e s , have r e s u l t e d in a high degree of sub-optimal.ity i n the manufacturing s e c t o r . 454 Perhaps the most s e r i o u s r e s u l t of a l a c k of adequate f e a s i b i l i t y s t u d i e s i n the manufacturing s e c t o r has been the c r e a t i o n of o v e r - c a p a c i t y . The o v e r a l l l e v e l of p l a n t u t i l i z a -t i o n i n F i j i i s not h i g h ; the mean l e v e l of machinery u t i l i z a -t i o n i n F i j i i n 1983 was between 60 and 65 percent of " f e a s i b l e c a p a c i t y " . The conduct of adequate f e a s i b i l i t y s t u d i e s w i l l not n e c e s s a r i l y e l i m i n a t e o v e r - c a p a c i t y , because d i f f e r e n t f i r m s w i l l use d i f f e r e n t r a t e s of r e t u r n as adequate, but i t w i l l reduce i t . The manufacturing labour f o r c e i n F i j i i s l a r g e l y young, but has a marked absence of very young p e o p l e — p e o p l e aged under f i f t e e n years of age. The labour f o r c e i s a l s o predomina-n t l y male, as F i j i has not developed e x t e n s i v e garment or e l e c t r o n i c assembly o p e r a t i o n s — o p e r a t i o n s that g e n e r a l l y r e l y on female l a b o u r e r s . There i s a marked absence of unpaid f a m i l y labour i n the manufacturing s e c t o r — a g a i n a sharp c o n t r a s t with the s i t u a t i o n i n other developing c o u n t r i e s , e s p e c i a l l y i n Southeast A s i a . The F i j i a n manufacturing labour f o r c e i s h i g h l y unio-n i z e d in terms of the number of workers. The survey of manufac-t u r e r s r e v e a l e d that about t h r e e - q u a r t e r s of the manufacturing labour f o r c e was u n i o n i z e d . The f i n d i n g s a l s o revealed howe-v e r , that m a j o r i t y of the e s t a b l i s h m e n t s — 6 9 p e r c e n t — w e r e non-u n i o n i z e d . Thus a l a r g e number of small firms are not unio-n i z e d , and a small number of l a r g e firms are u n i o n i z e d . There has been a recent tendency f o r some formerly u n i o n i z e d firms to become d e - u n i o n i z e d , and for the c r e a t i o n of non-union manufac-455 t u r i n g e s t a b l i s h m e n t s (see FEDM, 1984). Given the pre s s u r e of unemployment, which has in c r e a s e d d r a m a t i c a l l y i n the l a s t four y e a r s , there w i l l be a d d i t i o n a l pressure on u n i o n i z e d l a b o u r , and F i j i i s l i k e l y to see more non-union manufacturing e s t a b l i -shments. Manufacturing wages i n F i j i are high r e l a t i v e to other s e c t o r s : only c o n s t r u c t i o n and e l e c t r i c i t y p a i d s i g n i f i c a n t l y higher wages than manufacturing i n 1982. The wage l e v e l s i n F i j i a r e , however, much higher than those i n other developing c o u n t r i e s as shown i n chapter 6. F i j i has no c o m p e t i t i v e edge against low wage Southeast A s i a n econo-mies. I t s wages, however, are lower than those i n A u s t r a l i a and New Zealand, i t s main source of f o r e i g n investment. F i j i , f u r thermore, w i l l be advantageous to firms because of i t s duty-f r e e e n t r y of a wide range of products i n t o A u s t r a l i a and New Zealand under the p r o v i s i o n s of SPARTECA, and to the European Community under the p r o v i s i o n s of Lome I I . T h i s , and i t s E n g l i -s h-speaking, h i g h l y l i t e r a t e labour f o r c e , w i l l be among i t s c h i e f a t t r a c t i o n s to f o r e i g n investment. The manufacturing s e c t o r in F i j i i s l a r g e l y geared to e i t h e r f i n a l demand goods p r o d u c t i o n for the domestic market, or f o r e x p o r t s . There i s very l i t t l e p r o d uction of intermediate goods t o be u t i l i z e d by other manufacturers. The degree of in t r a - m a n u f a c t u r i n g l i n k a g e s i s low, and e x i s t i n only a few s e c t o r s . Linkages with the r e s t of the economic s e c t o r s are p r i m a r i l y backward--and mainly i n the r e s o u r c e - p r o c e s s i n g a c t i v i t i e s , where the bulk of the raw m a t e r i a l s come from 456 domestic s o u r c e s . Resource p r o c e s s i n g i n d u s t r i e s have the h i g -hest degree of l i n k a g e with the r e s t of the economy. Import-s u b s t i t u t i n g manufacturing, which grew r a p i d l y in the 1960s and 1970s, has r e l i e d l a r g e l y on overseas sources of supply for raw m a t e r i a l s . However, d e s p i t e a low degree of l i n k a g e with the r e s t of the economy, the manufacturing s e c t o r i s important to F i j i ' s economy because i t i s an important source of employment, and because n e a r l y a l l of F i j i ' s merchandize exports r e l y on i t . As we have a l r e a d y seen, F i j i ' s economic development, at l e a s t to the 1960's, has been based on e x p o r t s . The manufacturing s e c t o r a l s o c o n t r i b u t e s s i g n i f i c a n t l y to government revenue, and a c t s as a source of i n n o v a t i o n f o r the r e s t of the economy. Manufacturing i n F i j i has a h i g h l y uneven d i s t r i b u t i o n . In terms of i s l a n d s , the bulk of manufacturing i s c o n c e n t r a t e d , as are p o p u l a t i o n and other economic a c t i v i t i e s , on V i t i Levu. Within V i t i Levu, most manufacturing i s concentrated i n the l a r g e r urban c e n t r e s and, c h i e f l y w i t h i n and around Suva. The only major manufacturing c o n c e n t r a t i o n o u t s i d e Suva occurs i n Lautoka, which as we have a l r e a d y noted, i s the country's second l a r g e s t urban c e n t r e . The main manufacturing a c t i v i t i e s l o c a t e d o u t s i d e Suva are i n r e s o u r c e - p r o c e s s i n g , such as the four sugar m i l l s ( t h a t , i n terms of output, employment and c a p i t a l investment are q u i t e l a r g e as shown in F i g u r e 8.3), s a w m i l l s , and f i s h canning i n Levuka. I m p o r t - s u b s t i t u t i n g manufacturing establishment have g e n e r a l l y been c o n f i n e d to Suva and, to a much l e s s e r e x t e n t , 457 Lautoka. The location of contemporary manufacturing a c t i v i t i e s in F i j i can be largely explained by the l a i s s e z - f a i r e attitude of the coloni a l government, which allowed Suva's i n i t i a l attrac-tion for investment—the a v a i l a b i l i t y of a good port, the seat of government, the presence of a ri c h hinterland, and a large settlement--to magnify i t s a t t r a c t i o n to further investment. It resulted also from the decision of the government to develop i n d u s t r i a l estates i n i t i a l l y in Suva i t s e l f . The presence of in d u s t r i a l estates in Suva, and their absence in other parts of F i j i , coupled with many economic advantages of locating in Suva, made Suva a prime choice for manufacturing investment. When the government did try to disperse manufacturing a c t i v i t y away from Suva, their attempts were feeble and largely ineffec-t i v e . However, there is a trend to locate manufacturing a c t i -v i t i e s in other areas, mainly because firms starting these manufacturing operations are based in these areas. Thus, for instance, there has been a steady growth of manufacturing a c t i v i t i e s in Lautoka, Ba, and Nadi urban areas, because succe-s s f u l trading companies in these areas have expanded their operations into manufacturing. Although data on the sp a t i a l variation in rates of compensation to workers are not av a i l a b l e , urban areas other than Suva seem to have lower rates of compensation, and t h i s , coupled with the a v a i l a b i l i t y of cheaper land in the newer urban areas may also be helping a sl i g h t decentralization of 458 manufacturing a c t i v i t i e s in F i j i . Every contemporary economic a c t i v i t y i n n e a r l y a l l coun-t r i e s i s a f f e c t e d to a great extent by the s t a t e . T r a d i t i o n a l -l y , the s t a t e has had a l a r g e l y r e g u l a t o r y and f a c i l i t a t o r y r o l e , but i n developing c o u n t r i e s the s t a t e p l a y s a s i g n i f i c a n t r o l e as a d i r e c t producer of goods. In F i j i the s t a t e has p l a y e d , and c o n t i n u e s to p l a y , both these r o l e s . Since independence s p e c i a l l y , the s t a t e has attempted to promote and guide the development of manufacturing in a v a r i e t y of ways. I n i t i a l l y , most of these e f f o r t s were in the form of income tax i n c e n t i v e s open to a l l i n v e s t o r s , not n e c e s s a r i l y l i m i t e d to manufacturers. Generous income tax ince-n t i v e s were p r o v i d e d . However, as the bureaucracy became more s o p h i s t i c a t e d , the scope of the government's manufacturing p o l i c i e s expanded. Instead of j u s t p r o v i d i n g f i n a n c i a l support and high l e v e l s of p r o t e c t i o n from imports, and i n many i n s t a n c e s , p r o t e c t i o n from domestic com p e t i t i o n f o r f i x e d p e r i o d s , government p o l i c i e s embraced an expanded range of a r e a s , which i n c l u d e d c r e d i t p o l i c i e s , ownership g u i d e l i n e s , type of t echnology, and l o c a -t i o n . However, government p o l i c i e s were not e f f e c t i v e l y co-o r d i n a t e d and i t was not unusual f o r development plans to point to one d i r e c t i o n and government a c t i o n s to p o i n t to opposite d i r e c t i o n s . The i s s u e of p r o t e c t i o n e x e m p l i f i e s t h i s lack of c o - o r d i n a t i o n in the government p o l i c i e s . The F i j i a n government has been p l a y i n g a major r o l e i n 459 d i r e c t manufacturing p r o d u c t i o n in F i j i s i n c e i t a c q u i r e d the a s s e t s of the CSR in 1973. Since the CSR was the country's l a r g e s t manufacturing f i r m , F i j i government became, with the a c q u i s i t i o n of CSR, a very major d i r e c t producer of manufac-tured goods. Although the state-owned FSC has expanded i t s o p e r a t i o n s to i n c l u d e a l c o h o l p r o d u c t i o n , and w i l l soon commen-ce f e r t i l i z e r bagging, and has thus i n c r e a s e d the government's d i r e c t r o l e i n the manufacturing s e c t o r , the magnitude of the s t a t e ' s d i r e c t manufacturing p r o d u c t i o n has not inc r e a s e d s i g -n i f i c a n t l y s i n c e the CSR a c q u i s i t i o n . The government, thus, has been r e l y i n g l a r g e l y on p r i v a t e e n t e r p r i s e f o r manufacturing p r o d u c t i o n . Where the government has become i n v o l v e d d i r e c t l y in p r oduction--such as i n the case of P a c i f i c F i s h i n g Company L i m i t e d — i t has a c q u i r e d m i n o r i t y s h a r e h o l d i n g as a r e s u l t of g r a n t i n g r i g h t s and p r i v i l e g e s to the j o i n t venture, not through e q u i t y i n f u s i o n . However, even as the c e n t r a l government on i t s own has not i n c r e a s e d i t s d i r e c t manufacturing r o l e , some of i t s s t a t u -t o r y o r g a n i z a t i o n s , such as the F i j i Development Bank, the Unit T r u s t of F i j i , and the Native land Development C o r p o r a t i o n , have s i g n i f i c a n t l y i n c r e a s e d t h e i r r o l e i n the manufacturing s e c t o r . Thus taken as whole, the s t a t e ' s r o l e i n d i r e c t manu-f a c t u r i n g p r o d u c t i o n has shown a modest i n c r e a s e s i n c e indepen-dence . Given that the presence of the s t a t e i n p a r t i c u l a r s e c t o r s imposes severe r e s t r a i n t s on p r i v a t e s e c t o r firms i n that l i n e of p r o d u c t i o n because of the a b i l i t y of the s t a t e 460 organizations to avoid penalities of uneconomic operations, and because of the ability of the government to pursue policies that help these corporations, and given that the major roles of the NLDC, the Unit Trust of F i j i , and the F i j i Development Bank are redistributive, the increasing role of the government in direct manufacturing production is introducing a major uncer-tainty in the sector. The f u l l implications of such a move by the government will only become apparent as the government c l a r i f i e s its intentions, lays down rules for the business behavior of its corporations, and indicates how generally i t intends to deal with the private sector. This f i r s t part of this chapter has summarized the salient findings of the study. What general conclusions can we draw from these findings? F i r s t , the market size of a country does influence a country's industrialization in some s i g n i f i -cant ways. To begin with, it can discourage a country from embarking on a serious industrialization program because the leaders feel that a country does not have a realistic chance of success. We have seen that most government plans in F i j i did not commit F i j i to a serious or sustained program of industria-l i z a t i o n . Industrialization was always secondary to the expan-sion of agriculture. While it cannot be proved that this stra-tegy resulted from the small size of the country, the numerous references in the development plans to the limited scope of manufacturing in F i j i due to its small size provide circumstan-t i a l evidence for this view. But perhaps more concretely, the small size of the 461 F i j i a n market has p r o h i b i t e d the development of c a p i t a l goods manufacturing, except i n a most rudimentary sense. The develop-ment l i t e r a t u r e regards the presence of these a c t i v i t i e s as c e n t r a l to an economic t r a n s f o r m a t i o n , f o r there i s a l i m i t to the degree of i n d u s t r i a l i z a t i o n p o s s i b l e with the pro d u c t i o n of f i n a l demand goods. Furthermore, the c a p i t a l goods s e c t o r i n t e g r a t e s the economy much more than does consumer durable goods manufacturing. F i n a l l y , the small s i z e of F i j i i s a f f e c t i n g F i j i ' s a t t r a c t i v e n e s s to f o r e i g n c a p i t a l . The small s c a l e of inves-tment needed in small c o u n t r i e s such as F i j i means that the major m u l t i n a t i o n a l f i r m s are not a t t r a c t e d to F i j i . Thus F i j i has to be content with smaller m u l t i n a t i o n a l s l a r g e l y from A u s t r a l i a and New Zealand. In many ways, these two c o u n t r i e s themselves are p e r i p h e r a l s o c i e t i e s , and thus t h e i r firms are not able to provide the same t e c h n i c a l , managerial and, most i m p o r t a n t l y , g l o b a l markets, that the l a r g e r m u l t i n a t i o n a l s from c o u n t r i e s such as the United S t a t e s , West Germany or Japan can. S i z e of a c o u n t r y , then, d e s p i t e i n d i c a t i o n s to the co n t r a r y i n recent l i t e r a t u r e (see, f o r i n s t a n c e , J a l a n [ E d ] , 1982), i s s i g n i f i c a n t l y a f f e c t i n g the nature and the r a t e of F i j i ' s i n d u s t r i a l i z a t i o n . Even though e x p o r t i n g can overcome some of the l i m i t a t i o n s of small s i z e , e s p e c i a l l y with respect to f i n a l demand goods, or with m u l t i n a t i o n a l involvement, with respect to component p r o d u c t i o n to some e x t e n t , e x p o r t i n g s t i l l w i l l not enable F i j i t o proceed to the second stage of indus-462 t r i a l i z a t i o n - - t o the production of c a p i t a l goods. Nor does i t make F i j i a major a t t r a c t i o n f o r f o r e i g n c a p i t a l . The study a l s o i l l u s t r a t e s the important r o l e of p u b l i c p o l i c i e s i n the development p r o c e s s . The development l i t e r a t u r e has r e c e n t l y s t r o n g l y emphasized the key r o l e determined, c l e a r , and pragmatic government p o l i c i e s play i n the develop-ment p r o c e s s . We have already r e f e r r e d to Blazk-Metzner's and Hughes' a s s e r t i o n about the c r i t i c a l r o l e of the p o l i c y frame-work in determining the development performance of c o u n t r i e s (Blazk-Metzner and Hughes, 1982:85; see a l s o B a l a s s a , 1981:2). Cody, Hughes, and Wall (1980:5) a l s o maintain the importance of p u b l i c p o l i c i e s : "The f o r m u l a t i o n of an e x p l i c i t i n d u s t r i a l i z a -t i o n s t r a t e g y has t h e r e f o r e been an important component of the i n d u s t r i a l i z a t i o n p r o c e s s " . In the case of F i j i , we have seen that an inadequately formulated i n d u s t r i a l p o l i c y , and lack of c o - o r d i n a t i o n i n government a c t i v i t i e s , have produced a high degree of over-c a p a c i t y i n the manufacturing s e c t o r . Furthermore, through the p r o v i s i o n of long p e r i o d s of unchecked p r o t e c t i o n , government p o l i c i e s can be s a i d to be d i r e c t l y r e s p o n s i b l e f o r the s l u g g i -shness i n the manufacturing s e c t o r as evidenced by a f a l l i n g export performance, and the f a i l u r e to achieve s i g n i f i c a n t i n c r e a s e s i n r e a l output per worker. A broader shortcoming of the government , which goes beyond i t s manufacturing p o l i c i e s , has been i t s f a i l u r e to generate among entrepreneurs and o r d i n a r y c i t i z e n s a sense of economic n a t i o n a l i s m . Most major achievements i n h i s t o r y have 463 been the r e s u l t of a sense of a commitment to a g o a l , a r e s u l t of c o l l e c t i v e w i l l . F i j i , with i t s unproductive emphasis on p e t t y e t h n i c p o l i t i c s , emphasizing the d i f f e r e n c e s among the e t h n i c groups rather than t h e i r commonalities, has not been able to produce a sense of c o l l e c t i v e i d e n t i t y and purpose. While these a t t r i b u t e s w i l l not n e c e s s a r i l y have solved a l l of F i j i ' s problems, they would have a c c e l e r a t e d i t s degree of i n d u s t r i a l i z a t i o n . We have a l s o seen that economic f o r c e s s t r o n g l y tend to c o n c e n t r a t e economic a c t i v i t i e s , and that many government p o l i -c i e s , perhaps u n w i t t i n g l y - - a s l o c a t i o n a l a n a lyses of p r o j e c t s in F i j i are r a r e — i n c r e a s e the c o n c e n t r a t i o n of economic a c t i -v i t i e s . A case in p o i n t has been the government's d e c i s i o n to e s t a b l i s h most of the e a r l y i n d u s t r i a l e s t a t e s i n Suva, thus adding to the c a p i t a l c i t y ' s a l r e a d y formidable a t t r a c t i o n to new investment. The f i n d i n g s of the study a l s o i n d i c a t e that when a government wishes to d i s p e r s e economic a c t i v i t i e s , that i s , to reverse or weaken the p u l l of market f o r c e s , i t must take s t r o n g , even d r a s t i c measures. Feeble attempts to r e d i r e c t economic a c t i v i t i e s simply do not work. T h i s study a l s o supports the widespread c r i t i c i s m of i m p o r t - s u b s t i t u t i n g i n d u s t r i a l i z a t i o n i n that manufacturing developed behind high w a l l s of p r o t e c t i o n e v e n t u a l l y becomes stagnant. In the case of F i j i , p r o t e c t i o n , which was meant to be s h o r t - t e r m , has become a permanent f e a t u r e of the manufactu-r i n g s e c t o r . Although the government has i n d i c a t e d i t s wish to reduce the l e v e l s of p r o t e c t i o n , and to thereby introduce some 464 dynamism in the manufacturing s e c t o r , these wishes have not been t r a n s l a t e d i n t o p o l i c i e s . I t i s important to note, however, that there would have been v i r t u a l l y no manufacturing i n F i j i without the p r o v i s i o n of high l e v e l s of p r o t e c t i o n i n the formative years of manufac-t u r i n g . High l e v e l s of p r o t e c t i o n were necessary both because F i j i c o u l d e a s i l y have been used as a dumping s i t e by other c o u n t r i e s , and because consumers had become h i g h l y l o y a l to imported brands of goods. I t i s a l s o w e l l known that any manu-f a c t u r i n g e n t e r p r i s e has t e e t h i n g problems, and p r o t e c t i o n f o r a p e r i o d provided a s h e l t e r e d environment to t i d e these prob-lems over. The major problem i n F i j i , as i n many other develo-ping c o u n t r i e s , was an i n a b i l i t y , or an u n w i l l i n g n e s s on the part of the government, to monitor the progress of manufac-t u r e r s , and to s c a l e down l e v e l s of p r o t e c t i o n a f t e r ari i n i t i a l p e r i o d . The Study i n a Wider T h e o r e t i c a l Context As noted i n the beginning of the t h e s i s , no study e-x i s t s , or should e x i s t , i n a vacuum. T h i s study began with a review of the major t h e o r e t i c a l approaches to the study of T h i r d World i n d u s t r i a l i z a t i o n , and was informed by a combina-t i o n of a l l the t h e o r e t i c a l approaches, f o r the idea of s t r a i t -j a c k e t i n g i t i n t o any one of the approaches i d e n t i f i e d was r e j e c t e d at the o u t s e t . I t w i l l be u s e f u l now to c o n s i d e r how the main f i n d i n g s of the study r e l a t e to these t h e o r e t i c a l approaches. More s p e c i f i c a l l y — d o the f i n d i n g s support these approaches, and 465 what changes to them are suggested? The study i l l u s t r a t e s , the author b e l i e v e s , the need to take a much broader approach to T h i r d World i n d u s t r i a l i z a t i o n than i n d u s t r i a l geography has t r a d i t i o n a l l y taken. The previous e x c l u s i v e focus of i n d u s t r i a l geography on l o c a t i o n , i f a p p l i e d to t h i s study, would have y i e l d e d a very l i m i t e d understanding of the manufacturing economy of F i j i , and an inadequate one at that because l o c a t i o n a l dynamics themselves i n v o l v e non-loca-t i o n a l f o r c e s . The study a l s o emphasizes the l i m i t a t i o n s of Western models of i n d u s t r i a l l o c a t i o n i n that some of the key determi-nants of manufacturing l o c a t i o n i n F i j i have been p a r t l y non-economic--such as the advantages of l o c a t i n g i n areas o f f e r i n g , maximum a d m i n i s t r a t i v e and p o l i t i c a l a c c e s s , and the tendency of new manufacturing e s t a b l i s h m e n t s to be l o c a t e d c l o s e to the home base of owners of these e s t a b l i s h m e n t s . In many advanced c a p i t a l i s t c o u n t r i e s , because ownership i s h i g h l y d i s p e r s e d , and o f t e n d i v o r c e d from management, t h i s l a t t e r c o n s i d e r a t i o n i s much l e s s important. The danger of seeking r a t i o n a l i z a t i o n s of l o c a t i o n a l decision-making when i n f a c t l o c a t i o n a l analyses have not been undertaken i s a l s o emphasized i n t h i s study. The F i j i a n case i l l u s t r a t e s that o f t e n l o c a t i o n a l d e c i s i o n s are by-products of investment d e c i s i o n s , and are not given much independent c o n s i -d e r a t i o n . T h i s supports Hamilton's (1974:6) argument that f o r many manufacturers l o c a t i o n has been a no n - i s s u e . On the whole, t h i s study emphasizes the l i m i t a t i o n s of 466 the t r a d i t i o n a l i n d u s t r i a l geography approach to T h i r d World i n d u s t r i a l i z a t i o n , and suggests a much wider, p o l i t i c a l economy approach. The n e o c l a s s i c a l economic approach p r o v i d e s a range of conceptual t o o l s for the d e s c r i p t i o n and a n a l y s i s of i n d u s t r i a -l i z a t i o n i n developing c o u n t r i e s . As noted at the beginning of the study, the approach taken to examine F i j i ' s i n d u s t r i a l i z a -t i o n was to use these concepts where u s e f u l and a p p r o p r i a t e without n e c e s s a r i l y a c c e p t i n g the whole n e o c l a s s i c a l mode of e x p l a n a t i o n . Three major f i n d i n g s of the study r e l a t e to the neoclas-s i c a l approach to T h i r d World i n d u s t r i a l i z a t i o n . The f i r s t i s that comparative advantage i s dynamic and changes over time. E a r l y F i j i a n comparative advantage l a y i n a g r i c u l t u r e , and F i j i s t i l l maintains a strong comparative advantage i n i t . However, at l e a s t s i n c e the 1960s, and s p e c i a l l y s i n c e the 1970s, F i j i has developed a range of manufacturing i n d u s t r i e s . Although the p r o v i s i o n of high l e v e l s of p r o t e c t i o n imply that f u l l compara-t i v e advantage has not been a t t a i n e d , the recent success of some F i j i a n manufacturers in e x p o r t i n g some manufactured goods to developed country markets does i n d i c a t e that comparative advantage i s being a c h i e v e d . In any ca s e , the F i j i a n case shows that comparative advantage i s dynamic and i s changing, and not s t a t i c as o f t e n i m p l i e d by n e o c l a s s i c a l economics. Second, there i s support f o r the n e o c l a s s i c a l p o s i t i o n that la c k of competition r e s u l t s i n s l u g g i s h n e s s i n an economy; c e r t a i n l y a lack of co m p e t i t i o n i n F i j i a n manufacturing can be 467 s a i d to have been a f a c t o r in i t s u n s a t i s f a c t o r y performance. However, the f i n d i n g s of the study, and t h e i r support of the n e o c l a s s i c a l p o s i t i o n with regard to the r o l e of competi-t i o n , do not e n t a i l support f o r t o t a l l y f r e e t r a d e , f o r with t o t a l l y f r e e trade i t i s h i g h l y l i k e l y that F i j i , indeed, most developing c o u n t r i e s , would not have developed much manufactu-r i n g at a l l . Support i s extended to the concept of. managed i n t r o d u c t i o n of competition i n F i j i a n manufacturing. F i n a l l y , the study p o i n t s to a major shortcoming of the n e o c l a s s i c a l approach to T h i r d World i n d u s t r i a l i z a t i o n in the l a t t e r ' s inadequate r e c o g n i t i o n of the important r o l e played i n the economy by the s t a t e . As we have seen, the nature and the rate of i n d u s t r i a l i z a t i o n i n F i j i have been r e l a t e d to the r o l e the s t a t e has played i n the manufacturing s e c t o r . In terms of methodology, t h i s study i l l u s t r a t e s the u s e f u l n e s s of the Marxist and dependency approaches, both of which urge proper h i s t o r i c a l a n a l y ses of contemporary phenome-na. We have argued, for i n s t a n c e , that contemporary manufactu-r i n g i n F i j i , indeed the e n t i r e F i j i a n development p r o c e s s , cannot be adequately understood without an examination of how F i j i was i n c o r p o r a t e d i n t o the i n t e r n a t i o n a l economic system, and, i n p a r t i c u l a r , how the C o l o n i a l Sugar R e f i n i n g Company L i m i t e d managed the sugar i n d u s t r y . Whether one agrees with the corpus of e x p l a n a t i o n of these two approaches or n o t , t h e i r emphasis on h i s t o r i c a l a n a l y s i s i s u s e f u l and can e a s i l y be u t i l i z e d by other approaches. The F i j i a n c o l o n i a l experience supports the view of 468 Warren and other orthodox M a r x i s t s that c o l o n i a l i s m was econo-m i c a l l y p r o g r e s s i v e . Because of F i j i ' s c o l o n i a l i n c o r p o r a t i o n i n t o the i n t e r n a t i o n a l economic system, i t was introduced to 2 c a p i t a l i s m and modern exchange economy. Furthermore, Great B r i t a i n helped develop commercial a g r i c u l t u r e and s p e c i a l l y the sugar i n d u s t r y . We have a l r e a d y noted that the sugar i n d u s t r y has been, and remains, the econo-mic backbone of the F i j i a n s o c i e t y . Foreign exchange gained through the exports of sugar has enabled F i j i to import goods and thus meet not only the requirements f o r consumer goods, but for c a p i t a l goods as w e l l . In a d d i t i o n , exports of primary products provided the necessary r i s e in p e r s o n a l income and su r p l u s needed f o r the development of manufacturing. As Balassa (1981:4) e x p l a i n s I n d u s t r i a l development g e n e r a l l y begins i n response to domestic demand generated i n the primary s e c t o r that a l s o p r o v i d e s i n v e s t i b l e funds for manufacturing i n d u s t r i e s . C o l o n i a l i s m a l s o i n t r o d u c e d a system of education that proved to be extremely u s e f u l i n i t s development e f f o r t a f t e r independence. In f a c t , one can argue, l i k e Myrdal (1971:52) that c o l o n i a l governments, through admittedly s e l f - i n t e r e s t , made investments i n i n f r a s t r u c t u r e that proved u s e f u l i n l a t e r development of these c o u n t r i e s . In the case of F i j i , the B r i t i s h empire a l s o proved an important source of guaranteed markets. The Commonwealth Sugar Agreement i n the 1930s proved c r i t i c a l to the s u r v i v a l of the sugar i n d u s t r y i n F i j i , and f o r many y e a r s , Great B r i t a i n bought a l l of F i j i ' s coconut i n d u s t r y p r o d u c t s . Thus to F i j i , 469 the c o l o n i a l r e l a t i o n s h i p e n t a i l e d major economic advantages. Given F i j i ' s small market and i t s low l e v e l of development p r i o r to c o l o n i a l i s m , the usual disadvantages of c o l o n i e s , such as d e - i n d u s t r i a l i z a t i o n , plunder and s u p e r - e x p l o i t a t i o n , were not encountered in F i j i . Thus F i j i ' s c o l o n i a l experience lead s one to suggest that there i s a need to place the c o l o n i a l r e l a t i o n s h i p s of c o u n t r i e s i n t h e i r i n d i v i d u a l c o n t e x t s , and that i n the case of some c o u n t r i e s , the c o l o n i a l system pro-vid e d a source of a p r o g r e s s i v e mode of p r o d u c t i o n , markets f o r primary produce, and of i n f r a s t r u c t u r e . These f i n d i n g s thus r e f u t e the more u n i v e r s a l view among dependency w r i t e r s that c o l o n i a l i s m hindered the development of c o l o n i e s everywhere. C l e a r l y , i t d i d in some i n s t a n c e s , but in the case of o t h e r s , such as F i j i , c o l o n i a l i s m proved economica-l l y u s e f u l i n the end. The study does support the dependency w r i t e r s , however, in i t s f i n d i n g s that e a r l y dependency on f o r e i g n c a p i t a l , i n F i j i ' s case t y p i f i e d by the CSR, l e d to r e p a t r i a t i o n of s u r p l u s and consequently to a l e s s e r degree of development than would have been the case with l o c a l c a p i t a l , or i f the s t a t e had been abl e to r e q u i r e or persuade the CSR to r e i n v e s t i t s s u r p l u s i n F i j i . The t h r e a t s by the CSR to leave F i j i , only some of which have been documented, a l s o i l l u s t r a t e the dangers of dependence on a narrow range of f o r e i g n c a p i t a l . The f i n d i n g s that more e f f o r t s have been made to i n d u s t r i a l i z e F i j i s i n c e indepe-ndence, and that the government has provided strong support to l o c a l c a p i t a l a l s o supports the view of dependency w r i t e r s t h a t 470 the ending of c o l o n i a l r e l a t i o n s h i p has been a p r e - r e q u i s i t e to development in the c o l o n i e s . The F i j i a n case a l s o p r o v i d e s evidence against Warren's p o s i t i o n that the c h i e f o b s t a c l e s to the T h i r d World develop-ment l i e w i t h i n them. While to some extent F i j i ' s problems in the manufacturing s e c t o r do l i e w i t h i n F i j i because of inade-quate and i n a p p r o p r i a t e p u b l i c p o l i c i e s , the sharply reduced demand and p r i c e s for i t s c h i e f exports of sugar, timber, f i s h , g o l d , and coconut o i l have brought about the domestic depres-s i o n that i s a d v e r s e l y a f f e c t i n g the manufacturing s e c t o r . Furthermore, i n t e r n a t i o n a l r e c e s s i o n has a l s o a f f e c t e d F i j i ' s t o u r i s t i n d u s t r y . Thus the i n t e r n a t i o n a l economy too a f f e c t s the i n d u s t r i a l i z a t i o n of F i j i , as i t s u r e l y does in the m a j o r i -ty of the T h i r d World. On the whole, there i s l i t t l e argument that F i j i has been, and s t i l l remains, a h i g h l y dependent c o u n t r y . I t s u f f e r s from n e a r l y every kind of dependency c o n c e i v a b l e : dependence on a narrow range of e x p o r t s ; dependence on f o r e i g n c a p i t a l and technology; dependence on f o r e i g n e x p e r t s ; dependence on f o -r e i g n m i l i t a r y p r o t e c t i o n . I t has r e c e n t l y become h e a v i l y inde-bted to the i n t e r n a t i o n a l f i n a n c i a l community, thus f u r t h e r i n c r e a s i n g i t s dependency. I t i s not e n t i r e l y , c l e a r , however, to what e x t e n t , and i n what ways, F i j i ' s dependence on the i n t e r n a t i o n a l economic system has thwarted i t s development. F l u c t u a t i o n s i n the i n t e r -n a t i o n a l markets have both helped and hindered development. Dependence on f o r e i g n c a p i t a l has meant a heavy outflow of 471 s u r p l u s , and dependence on f o r e i g n technology has meant a lac k of t e c h n o l o g i c a l m a n e u v e r a b i l i t y . However, there are two main is s u e s h e r e . F i r s t , given F i j i ' s small s i z e , there i s no a l t e r -n a t i v e to dependence on the i n t e r n a t i o n a l economic system. The r e a l issue i s one of management of dependence. Second, although f o r e i g n c a p i t a l has e n t a i l e d an outflow of s u r p l u s , the s u r p l u s would probably not have been c r e a t e d without the inflow of f o r e i g n investment in the f i r s t p l a c e . Thus f o r e i g n c a p i t a l has played an important r o l e i n generating these r e s o u r c e s . Moreo-v e r , as the F i j i a n s t a t e has grown and the bureaucracy has ma-t u r e d , f o r e i g n c a p i t a l has been induced to reduce the l e v e l of c a p i t a l outflow o r , i n any c a s e , there has been an increase i n the p r o p o r t i o n of surplus that remained i n F i j i - - t h r o u g h an i n c r e a s e d rate of e x t r a c t i o n of s u r p l u s by F i j i a n workers. Many c r i t i c i s m s of p e r i p h e r a l c a p i t a l i s t development s t i l l maintain t h e i r f o r c e i n F i j i , however, as i t faces a stagnant economy i n the 1980s. The dangers of a high l e v e l of dependence on the i n t e r n a t i o n a l economic system are p o w e r f u l l y brought home, and a dramatic d e c l i n e i n f o r e i g n investment has f o r c e d at l e a s t some people in F i j i to view f o r e i g n investment as a p r e c a r i o u s l i n k i n the development p r o c e s s . On the whole, then, the F i j i a n case p r o v i d e s both support and c r i t i c i s m . o f the dependency approach. How one views the F i j i a n case depends l a r g e l y on whether one i s t a k i n g a short-term or long-term view, and on how F i j i manages to r i d e over the present r e c e s s i o n . If i t bounces back to r e c o v e r y , the case fo r the dependency approach w i l l be c o n s i d e r a b l y weakened; i f 472 i t i s overtaken by i n c r e a s i n g unemployment and underemployment, i n c r e a s i n g f o r e i g n debt, and i n c r e a s i n g socio-economic inequa-l i t y , then the case f o r dependency approach w i l l be considerab-l y strengthened as i t r e l a t e s t o F i j i . T h i s i s perhaps an a p r o p r i a t e juncture to examine F i j i ' s p rospects f o r fu t u r e i n d u s t r i a l i z a t i o n . Prospects f o r the Future of I n d u s t r i a l i z a t i o n i n F i j i The f u t u r e prospects f o r i n d u s t r i a l i z a t i o n i n F i j i de-pend on two p a r a l l e l developments. P r i c e s f o r F i j i ' s main exports of sugar, coconut o i l , f i s h , lumber, and g o l d , and ginger w i l l have to improve b e f o r e the F i j i a n economy emerges from the present r e c e s s i o n . There i s l i t t l e that F i j i can do to br i n g t h i s about, f o r she i s n e i t h e r a p o l i t i c a l a c t o r of any consequence nor a producer of any s i g n i f i c a n t s i z e . Thus she, l i k e other most developing c o u n t r i e s , can only hope tha t deve-loped i n d u s t r i a l i z e d c o u n t r i e s improve t h e i r economic performa-nce. To some e x t e n t , the government of F i j i has been extremely prudent i n a r r a n g i n g long-term b i - l a t e r a l and m u l t i -l a t e r a l sugar agreements which have cushioned the economy from some of the impact of the reduced p r i c e of sugar i n the world open markets.3 The second p a r a l l e l development r e l a t e s to changes in p u b l i c p o l i c i e s and i n the performance of the manufacturing s e c t o r . The government i s p r e s e n t l y p r o v i d i n g maximum encoura-gement to manufacturers to e x p o r t , and there appears t o be some 473 encouraging developments, s p e c i a l l y w i t h i n the framework of SPARTECA. In terms of e x p o r t s , a major impediment may turn out to be the value of the F i j i a n d o l l a r . As i n d i c a t e d e a r l i e r , the F i j i a n d o l l a r has a p p r e c i a t e d a p p r e c i a b l y since the 1970s, and has shown only small d e p r e c i a t i o n a g a i n s t the US d o l l a r . I t s value i n 1984 a g a i n s t one A u s t r a l i a n d o l l a r was $F0.93, and a g a i n s t a New Zealand d o l l a r was only $F 0.68 ( c a l c u l a t e d from F i j i Bureau of S t a t i s t i c s , I984a:50). These are two of F i j i ' s major t r a d i n g c o u n t r i e s , s p e c i a l l y c o u n t r i e s to which F i j i i s attempting to i n c r e a s e the exports of her manufactured goods under the SPARTECA. The s t r e n g t h of the F i j i a n d o l l a r i t s e l f poses a major p r i c e disadvantage to F i j i a n manufacturers. The i s s u e of whether to devalue the F i j i a n d o l l a r has s e r i o u s r a m i f i c a t i o n s f o r the e n t i r e economy, and a l l these have to be c o n s i d e r e d , but i t appears that as long as the F i j i a n d o l l a r i s over-valued i n r e l a t i o n to the c u r r e n c i e s of i t s c l o s e t r a d i n g p a r t n e r s , the p r o s p e c t s f o r s i g n i f i c a n t l y i n c r e a s e d manufac-ture d goods exports w i l l be dim. The other s i g n i f i c a n t government i n i t i a t i v e that i s c a l l e d f o r i s the i n t r o d u c t i o n of dynamism in the manufacturing s e c t o r through the s e l e c t i v e and gradual r e d u c t i o n of p r o t e c -i i t i o n . There i s an urgent need to review the performance of firms that have been granted p r o t e c t i o n , and to reduce t h e i r l e v e l s of p r o t e c t i o n . It should a l s o be made c l e a r to new manufacturers that p r o t e c t i o n w i l l be provided f o r f i x e d and short p e r i o d s o n l y . i 474 Emphasis so f a r has been placed on improvements in the i n t e r n a t i o n a l economy and on changes in p u b l i c p o l i c i e s . Howe-v e r , manufacturers themselves w i l l remain the key p l a y e r s i n the manufacturing s e c t o r , f o r i t i s manufacturers themselves who, i n the f i n a l a n a l y s i s , determine the f a t e of business v e n t u r e s . While the government has been s u c c e s s f u l l y l o b b i e d by the p r i v a t e sector f o r s i g n i f i c a n t a s s i s t a n c e , the government i t s e l f can c a l l upon manufacturers to improve the performance of the s e c t o r . T h i s should be p o s s i b l e f o r the government given that the government i n t e r a c t s c l o s e l y with the p r i v a t e s e c t o r . The q u a l i t y of management i n the manufacturing s e c t o r can a l s o be improved. Although management problems in the manufacturing s e c t o r are r e l a t e d to the n a t i o n a l shortage of managerial c a p a c i t y i n F i j i , the manufacturing s e c t o r can, no n e t h e l e s s , attempt to improve i t s management s i t u a t i o n . The need f o r management upgrading i s most acute i n the case of small locally-owned f i r m s that have r e l i e d l a r g e l y on t h e i r f a m i l i e s f o r managerial f u n c t i o n s . The manufacturing s e c t o r must a l s o get more organized than i t i s c u r r e n t l y . While the F i j i Manufacturers' A s s o c i a t i o n r e p r e s e n t s a l a r g e number of manufacturers i n F i j i , there i s doubt whether i t i s regarded by a l l manufacturers as t h e i r r e p r e s e n t a t i v e . There have been some p u b l i c debate on the v o t i n g procedures of the F i j i Manufacturers A s s o c i a t i o n , f o r i n s t a n c e , and manufacturers i n Western F i j i have attempted to form t h e i r own l o c a l a s s o c i a t i o n . H i s t o r i c a l experience i n d i -475 cates that f o r the manufacturing s e c t o r to make a major c o n t r i -bution to the F i j i a n s o c i e t y , i t must be b e t t e r o r g a n i z e d , and aim to be more c o h e s i v e . Only then w i l l i t be ab l e to i n f l u e n c e government p o l i c i e s , and d e l i v e r on what the government expects from the manufacturing s e c t o r . A s t r o n g , cohesive manufacturing o r g a n i z a t i o n can a l s o h e l p educate i t s membership on many i s s u e s , as w e l l as undertake the many c o - o p e r a t i v e a c t i v i t i e s that are r e q u i r e d of manufacturers i f they are to s u c c e s s f u l l y penetrate export markets. If manufacturers themselves cannot r e s o l v e t h e i r d i f f e -rences and form a u n i t e d and strong o r g a n i z a t i o n , perhaps the s t a t e can i n i t i a t e some moves, perhaps through the Economic Development Board. So f a r we have looked at the o v e r a l l environment that w i l l determine the prospects f o r f u t u r e i n d u s t r i a l i z a t i o n i n F i j i . Let us now turn to the d i r e c t i o n that f u t u r e i n d u s t r i a l i -z a t i o n can t a k e . The c r i t i c i s m s of F i j i ' s i m p o r t - s u b s t i t u t i o n p o l i c i e s do not imply that import s u b s t i t u t i o n should be d i s c a -rded. It should not be. But i t should be b e t t e r managed, with l e s s r e l i a n c e on long-term, unmonitored p r o t e c t i o n . An examina-t i o n of the l a t e s t , 1983 trade r e p o r t i n d i c a t e s that there are s u b s t a n t i a l i m p o r t - s u b s t i t u t i o n p o s s i b i l i t i e s i n a g r i c u l t u r e -r e l a t e d manufacturing. For i n s t a n c e , i n 1983, F i j i imported $2,568,538 worth of beef p r o d u c t s , $7,026,163 worth d a i r y pro-d u c t s , $4,455,435 worth of canned f i s h , $7,541,006 worth of r i c e , $1,881,228 worth of t e a , $1,062,094 worth of unmanufac-tured t a b a c c o , and $2,084,894 worth of wood products ( F i j i 476 Bureau of S t a t i s t i c s , I984d:16, 17-20, 26, 31, 53). In a l l of t h e s e , manufacturing can be i n c r e a s e d i f F i j i can produce more of these commodities. Given that most of these commodities are a l r e a d y being produced i n the c o u n t r y , i t should be p o s s i b l e to increase the p r o d u c t i o n of these items, and thereby i n c r e a s e manufacturing output and employment while saving v a l u a b l e f o -r e i g n exchange at the same time. Furthermore, there w i l l be few imported inputs i n v o l v e d i n expanding the p r o d u c t i o n of these items. However, as noted e a r l i e r i n the t h e s i s , s u b s t a n t i a l progress i n resource p r o c e s s i n g i s being c o n s t r a i n e d by prob-lems of land t e n u r e . Short term land tenure of t h i r t y y e a r s , p r e s e n t l y c u r r e n t i n F i j i , may be a c c e p t a b l e to cane farmers trapped i n the i n d u s t r y , but few manufacturers w i l l be prepared to i nvest l a r g e amounts of money in resource p r o c e s s i n g indus-t r i e s witho.ut improved land t e n u r e . Problems of land tenure have s t a l l e d the development of l a r g e s c a l e p l a n t a t i o n a g r i c u l -t ure in F i j i , and resource a g r i c u l t u r a l p r o c e s s i n g i n d u s t r i e s r e q u i r e a p l a n t a t i o n mode of a g r i c u l t u r e that can provide c o n s i s t e n t l y high q u a l i t y of raw m a t e r i a l s and provide assured s u p p l i e s . In a d d i t i o n to the i s s u e of l e n g t h of land t e n u r e , problems of access to land w i t h i n the indigenous F i j i a n popula-t i o n i s a l s o h o l d i n g back a g r i c u l t u r a l development. Given that indigenous F i j i a n s own more than e i g h t - t e n t h s of a l l land i n F i j i , t h i s i s a s e r i o u s problem. B e t t e r access to indigenous F i j i a n l and by indigenous F i j i a n s can be improved w i t h i n the 477 framework of i n a l i e n a b i l i t y to other e t h n i c groups. The i n d i g e -nous F i j i a n land tenure was c o d i f i e d at the end of the l a s t c e n t u r y , and i t has not ad j u s t e d to the r a p i d l y changing c o n d i -t i o n s of indigenous F i j i a n s . There are a l s o p o s s i b i l i t i e s for f u r t h e r import s u b s t i -t u t i o n i n n o n - a g r i c u l t u r a l areas as w e l l . The Economic Develop-ment Board has prepared a l i s t of more than 300 product catego-r i e s that i t suggests merit f u r t h e r i n v e s t i g a t i o n as p o s s i b l e p r o j e c t s i n the manufacturing s e c t o r . The l i s t i s c l e a r l y based on a c e r t a i n l e v e l of import demand i n F i j i , and l a c k s any d e t a i l e d c o n s i d e r a t i o n of t h e i r f e a s i b i l i t y . Among the many p o s s i b l e manufacturing a c t i v i t i e s l i s t e d by the Economic Development Board, there a r e , without doubt, many that can be immediately undertaken in F i j i . G l a s s making i s one of them. The p o s s i b i l i t y of g l a s s making was i n v e s t i g a t e d i n the p a s t , and r e j e c t e d on account of the high energy c o s t s . However, given the i n s t a l l a t i o n of h y d r o e l e c t r i c i t y i n F i j i , and the consequent lower cost of energy p r o d u c t i o n , and given the important backward and forward l i n k a g e s of such as indus-t r y , the issue of f u e l c o s t s can be reopened with a view to perhaps p r o v i d i n g t h i s , and other e n e r g y - i n t e n s i v e manufactu-r i n g a c t i v i t i e s with cheaper e l e c t r i c i t y . Such a manufacturing a c t i v i t y w i l l a l s o h e l p the government's r e g i o n a l development s t r a t e g y , as i t w i l l have to l o c a t e c l o s e to the supply of raw m a t e r i a l s — i n r u r a l S i g a t o k a . The demand f o r g l a s s products i s th e r e : i n 1983 F i j i imported g l a s s products valued at $F2,380,101 ( F i j i Bureau of S t a t i s t i c s , I984d:67). 478 S i m i l a r l y , a major p o s s i b i l i t y f o r manufacturing e x i s t s in the footwear i n d u s t r y . An expanded footwear i n d u s t r y c o u l d not only supply the domestic market, which i n 1983 was worth $3,670,039 ( F i j i Bureau of S t a t i s t i c s , I984d:112), but i t c o u l d a l s o export to A u s t r a l i a and New Zealand under the SPARTECA. F i j i has r e c e n t l y e s t a b l i s h e d a tannery, and thus, u n l i k e other i m p o r t - s u b s t i t u t i n g manufacturing a c t i v i t i e s , footwear manufac-t u r i n g w i l l have a low import demand for raw m a t e r i a l s . Furthe-rmore, the new tannery has won p r a i s e from A u s t r a l i a n buyers for i t s high q u a l i t y . In f a c t , i f there i s a s u b s t a n t i a l i n -crease i n l i v e s t o c k production and i n d a i r y i n d u s t r y , as we have argued can happen, then footwear manufacturing w i l l become part of an i n t e g r a t e d manufacturing package i n v o l v i n g meat p r o c e s s i n g , d a i r y product manufacturing, leatherworks, and footwear manufacturing. The assembly of c y c l e s a l s o o f f e r s s u b s t a n t i a l prospects for import s u b s t i t u t i o n . An import demand of ne a r l y $1,000,000 c u r r e n t l y e x i s t s ( c a l c u l a t e d from F i j i Bureau of S t a t i s t i c s , I984d:l02, 120). A p p r o p r i a t e , small s c a l e t e c h n o l o g i e s can a l s o be a p p l i e d to t h i s v e n t u r e , and s u b s t a n t i a l l o c a l s o u r c i n g would be p o s s i b l e . These are only some of the c l e a r l y u s e f u l and v i a b l e p r o s pects f o r f u r t h e r import s u b s t i t u t i o n i n F i j i . I t i s not wi t h i n the scope of the t h e s i s to i n d i c a t e a l l i m p o r t - s u b s t i t u -t i o n p o l i c i e s , but we can suggest a few g u i d e l i n e s f o r the fut u r e expansion of these a c t i v i t i e s . We- have a l r e a d y i n d i c a t e d the need to grant only s h o r t -479 term p r o t e c t i o n to these a c t i v i t i e s , and to c a r e f u l l y monitor the performance of p r o t e c t e d i n d u s t r i e s . These i n d u s t r i e s should be a l s o evaluated f o r the kind of technology being proposed. Technology i s s u e s have not been evaluated by the government in the pa s t ; they c l e a r l y need to be addressed and the government has begun g i v i n g technology more a t t e n t i o n . There i s a tendency in F i j i f o r c a p i t a l - i n t e n -s i v e t e c h n o l o g i e s , but in some a r e a s , such as c y c l e manufac-t u r e , l o w - l e v e l , l a b o u r - i n t e n s i v e t e c h n o l o g i e s can be f e a s i b l e and u s e f u l . The raw m a t e r i a l s purchasing arrangements can a l s o be c a r e f u l l y examined. It i s important that new manufacturing establishments make an exhaustive check on p o s s i b i l i t i e s of l o c a l l y - p r o d u c e d i n p u t s . Although as we have seen components p r o d u c t i o n i s not developed in F i j i , some ba s i c component pr o d u c t i o n i s p r e s e n t . Present c a p i t a l goods manufacturers, for i n s t a n c e , can e a s i l y handle the production of many of the components r e q u i r e d f o r c y c l e manufacturing. And f i n a l l y , c a r e f u l a t t e n t i o n must be p a i d to the is s u e of c a p a c i t y i n p a r t i c u l a r product l i n e s . In the p a s t , i n d i s c r i m i n a t e g r a n t i n g of a s s i s t a n c e to new ventures has pro-duced unacceptably high l e v e l s of u n u t i l i z e d c a p a c i t y i n a number of branches. The government has r e c e i v e d a repo r t on the matter and can use the data as i t s guide to the degree of c a p a c i t y i n p a r t i c u l a r product l i n e s . I t can p e r i o d i c a l l y up-grade the data so that i t has at i t s d i s p o s a l up-to-date and ac c u r a t e data on the l e v e l s of c a p a c i t y u t i l i z a t i o n i n the 480 manufacturing sector. Given the present state of the manufacturing sector and the depressed state of the world economy, there should be no illusions about the d i f f i c u l t i e s that l i e ahead for F i j i ' s push for increased industrialization of its economy. However, if the international economic situation improves, if the suggested changes are made in public policies, if the government displays a high degree of commitment to economic development, then there are favourable prospects for the export of both processed agricultural commodities as well as for goods previously manu-factured for the domestic market such as furniture, boats and ships, garments, flour and bakery products, and paints. Im-proved prospects for the manufacturing sector will also depend on whether manufacturers themselves can overcome some of their organizational and managerial shortcomings, and whether a deg-ree of national consensus on basic economic issues can be rea-ched among employers, workers, and the government. 481 Notes 1. For i n s t a n c e , i n 1958, only 18 percent of the t o t a l loans made by the A g r i c u l t u r a l and I n d u s t r i a l Loans Board went to manufacturing ( c a l c u l a t e d from F i j i A g r i c u l t u r a l and I n d u s t r i a l Loans Board, 1959:4. In 1966, the p r o p o r t i o n was even lower--8 percent ( c a l c u l a t e d from F i j i A g r i c u l t u r a l and I n d u s t r i a l Loans Board, 1967:8). 2. B r e t t (1973:266) argues s i m i l a r l y i n the case of East A f r i c a - - t h a t c o l o n i a l i s m r e s u l t e d in East A f r i c a being connected with a complex system, although he notes at the same time that c o l o n i a l i s m l i m i t e d the scope of manufacturing development. 3. The p r i c e of a metric ton of sugar in 1982 in the open market was $US185 (UNCTAD, I983a:61). 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Suva: Government Printer. 516 APPENDIX 1 THE SURVEY OF MANUFACTAJRERS IN FIJI, 1983 QUESTIONNAIRE School of Social and Economic Development Department of Geography University of the South Pacific University of British Columbia Suva, F i j i Vancouver, Canada SURVEY OF MANUFACTURING ESTABLISHMENTS AND FIRMS IN FIJI, SEPTEMBER-DECEMBER, 1983 Rajesh Chandra CONFIDENTIAL Information obtained through these interviews will be kept confidential and used for my research purposes only. PART 1: IDENTIFICATION Case Number Card Number 1 Respondent's name ; Full name of the immediate firm owning the establishment Full address of the firm's headquarters PART 2: THE FIRM AND INVESTMENT CLIMATE, GOVERNMENT SERVICES, AND INDUSTRIALISATION POLICIES Investment Climate and Foreign Investment 1. Does F i j i currently enjoy a favourable investment climate? (1) yes (2) no (3) uncertain (4) other (explain) 2. Please explain why-Looking at the next five years, does your firm feel that (l) private foreign direct investment will increase its share of the total new investment in manufacturing in F i j i relative to local private investment (i.e. become proportionately more important than it is now) (2) local private investment will increase its share of the total new investment in manufacturing in F i j i relative to private foreign direct investment (3) it is unclear which will become more important (4) other (explain) 1-3 4 5-6 7 8-9 10 517 4. In the case of a foreign-owned firm, why did your firm choose F i j i as an investment location? 11-12 5. In the case of a foreign-owned firm, looking back, does your firm feel it was right in choosing Fiji? (1) yes (2) no (3) not sure (8) not applicable (i.e. it is a locally-owned firm) (9) missing 13 6. Why 14-15 7. In the case of all firms, is your firm planning to invest further in F i j i in the next 5 years? (1) yes (2) no (3) not sure (4) other (explain) 16 Government Services and Assistance 8. Which of the following government or semi-government bodies has your firm dealt with and what is your firm s evaluation of these bodies? Explain why if evaluation is good/very good or bad/very bad 17 18 Department or Agency Dealt with Evaluation (only if (1) yes dealt with) (1) very (2) no good (2) good (3) ok (4) bad (5) very bad (6) cannot assess (8) not used 19 20 Business Organisation and Management Advisory Services 21 22 Customs Department 23 Department of Inland Revenue 24 Economic Development Board 25 Fi j i Development Bank 26 Ministry of Commerce and Industry (before the 1982 elections) 27 28 Ministry of Economic Planning and Development (Department of Trade and Industry) 29 30 518 9. What assistance offered by the F i j i government or its agencies are you aware of and have used, and what is your assessment of the assistance? Provide an answer only if your firm has obtained the types of assistance listed. Explain why if evaluation is good/very good or bad/very bad Assistance Aware of Used Assessment (1) (1) yes (1) yes very good (2) (2) no (2) no good (3) ok (4) bad (5) very bad (6) cannot assess (8) not used Duty drawback on imports of machinery and raw materials Income tax incentives Protection Feasibility or pre-feasibility studies Technical advice on production Market information specific to your firm's activities Government sponsored trade missions or exhibitions Assistance with setting up overseas dis tributorships F.N.T.C. training F i j i Institute of Techno-logy training Industrial Estates 31 32 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 519 10. Are the government's policies to encourage and guide manufacturing in Fiji (1) effective (2) not effective (3) other (explain) 11. Why do you think so? 12. What three things in decreasing order of importance do you think the government should do to further develop manufacturing in Fiji? (1) most important : • (2) next • (3) next PART 3:THE FIRM—STRUCTURE AND ORGANIZATION Historical 13. When was this firm established in Fiji? year or (9999) not known 14. How was this business created? (l) established by owners previously not in business in any field in F i j i (2) established by owners already in business in F i j i (3) acquired through takeover (4) other (specify) Organization and Ownership of the Firm 15. Indicate whether the firm is: (1) private limited company (2) public limited company (3) sole proprietorship (4) partner-ship (5) statutory body (6) limited liability cooperative (7) other (explain) 16. Indicate the type of ownership: (l) F i j i owned (i.e. more than 50% of the paid up share capital in the case of an incorporated company or of the total book value of fixed capital assets of the firm in the case of an unincorporated firm held by or on behalf of Fi j i nationals (2) branch of a firm headquartered overseas (i.e. has no equity share capital and is controlled and/or supervised by an overseas headquarters (3) subsidiary of a firm headquartered overseas (i.e. either owned wholly by an overseas firm or when overseas firm controls more than 50% of the paid up share capital (4) subsidiary or branch of a subsidiary of a firm headquartered overseas (5) principal foreign-owned firm (6) other (explain) 17. For Fi j i owned firms, in the overall corporate system, is this firm (1) the only firm (2) the principal firm (3) a subsidiary of the principal firm (4) a subsidiary of a subsidiary (5) branch of the principal firm (6) a branch of a subsidiary (7) other (explain) 64 65-66 67-68 69-70 71-72 73-76 77 78 79 80 520 Case Number 1-3 Card Number 2 4 18. What proportion of the paid up share capital does the government hold? 5-7 19. Specify the percentage of the paid up share capital in the case of an incorporated company or of the total book value of fixed capital assets in the case of an unincorporated firm held by or on behalf of F i j i nationals at the end of 1982 -%. 8-10 20. If the firm is locally-owned, what ethnic group owns more than 50% of the paid up share capital in the case of an incorporated company or of the total book value of fixed capital assets in the case of unincorporated firm? (1) Chinese (2) Ethnic Fijians (3) European (4) Indo-Fijian (5) Part-European/Part-Fijian (6) other (explain) or (8) foreign-owned. 11 Size of the Firm 21. What is the total paid up share capital of the company in the case of an incorporated company? $F _ 1 2 - i7 22. What is the total book value of fixed capital assets of the firm in the case of an incorporated firm? $F _ 18_22 23. What was the gross output of the firm in 1982? $F 23-28 Additional Economic Activities 24. Indicate i f , in addition to manufacturing, the firm or related firm(s) in F i j i engage in the following activities in other establishments: 29 30 Firm Related firm(s) 31 32 primary production (1) yes (2) no (l) yes (2) no 33 retailing (l) yes (2) no (l) yes (2) no 34 wholesaling (l) yes (2) no (l) yes (2) no 35 transport (1) yes (2) no (1) yes (2) no 36 other (explain) (1) yes (2) no (1) yes (2) no 37 38 25. Indicate i f , in addition to manufacturing, the firm or related firm(s) engage in the following activities overseas: 39 40 Firm Related firm(s) 41 42 primary production (l) yes (2) no (1) yes (2) no 43 retailing (1) yes (2) no (1) yes (2) no 44 wholesaling (1) yes (2) no (1) yes (2) no 45 transport (1) yes (2) no (1) yes (2) no 46 other (explain) (1) yes (2) no (1) yes (2) no 47 48 26. Does this firm hold shares in any other manufacturing firm(s) in Fiji? (1) yes (2) no 49 27. If yes, which firm(s)?-521 PART 4: THIS ESTABLISHMENT 28. Give the location of each manufacturing establishment in F i j i owned . by the firm, its wholly owned subsidiaries or branches and indicate their main manufactured outputs Location 50-51 52-53 54-55 56-57 1. 58-61 2. 62-65 3. — 66-69 4. 70-73 29. Give the location in detail of the establishment being investigated 74-75 30. What is the establishment's ISIC group? 76-79 1-3 Card Number 3 4 Historical 31. How long has this establishment been operating at this location? number of years, or number of months if less than one year, or (9999) if not known 5-7 32. Was this establishment set up by this firm, or acquired as a going concern? (l) set up (2) acquired (3) other (explain) O (9999) not known 0 33. If set up by this firm, why was this location chosen? (88) not applicable (i.e. establishment was acquired) or explain 9-10 34. Give a short locational history of this establishment -1 11 35. Is a locational change planned in the next five years? (1) yes (2) no (3) not sure 12 36. If yes, explain why a locational change is planned, and where it is likely to be. Why? 13-14 522 Nature of Manufacturing Activities 37. Broadly characterize the nature of manufacturing activity: (1) assembly (2) bottling/blending/packaging (3) processing of primary products (4) fabrication/manufacture (5) repair/install-ation (6) printing/publishing (7) other (explain) 17 38. What are the five most important materials in descending order of monetary importance used by this establishment, and where do they originate? Input Percent Overseas Percent F i j i 18-19 20-21 22-23 24-25 26-27 Next Next — — Next. — . 28-30 31-33 34-36 37-39 40-42 Next 38. Under what arrangement does the establishment obtain its raw materials? 43 40. What problems does the establishment face with regard to raw materials supply? 44-45 41. What was the gross output of the establishment in 1982? $F 46-51 42. What were the major manufactured outputs of the establishment in detail, and where were they sold? Include only goods produced by your establishment. Output Sales % local % exported 52-54 55-57 58-60 61-63 Most important Next Next 64-66 67-69 70-72 73-75 Next Case Number 1-3 Card Number 4 4 TOTAL 5-7 8-10 I 1 523 Industrial Plant and Operating Characteristics 43. Was this establishment set up or acquired after (l) a full-scale feasibility study (2) a semi-feasibility study (3) without a full . or semi-feasibility study (4) other (explain) 44. Was the machinery (l) bought by your firm as second-hand machinery (2) as new machinery (3) a combination of new and second-hand (4) acquired when the establishment was acquired? (5) other (explain) 45. Was the building designed for your type of manufacturing? (l) yes (2) no (9) not known 46. What is the replacement cost of the machinery? $F 47. How did you decide where to buy the machinery, or what kind of machinery to buy? (l) engaged overseas consultants unrelated to the firm (2) obtained advice from parent or related firm(s) overseas (3) engaged person or persons within the firm to investi-gate and report on it (4) decision was taken on an individual basis without any of the above (5) engaged local consultants unrelated to the firm (6) obtained advice from parent or related firm(s) in Fi j i (7) other (explain) 48. How was the know-how of the production process acquired? (1) under licence from overseas from unrelated to this firm (2) under licence from overseas parent or related firm (3) acquired locally through hire of local personnel (4) acquired locally through personnel within the firm (5) acquired by hiring of overseas personnel (6) acquired by a combination of local and overseas personnel (7) other (explain) 49. What is the feasible normal capacity of the establishment's machinery per annum in monetary terms using the same machinery and management system and the normal shift patterns in your type of manufacturing? $F 50. Is it possible to increase the output of this establishment over its 1982 production using the same machinery and the management system? (l) yes (2) no (3) uncertain (4) other (explain) (9) n ot available 51. If yes by what percentage? (88) not applicable (i.e. cannot increase) or . % 52. If yes, how will it be possible to increase the output? 11 12 13 14-18 19 20 21-26 27 28-30 31-32 524 53. If the output can be increased by 25 percent or more, please explain the low capacity utilization 54. If the output of your establishment cannot be increased by more than 25%, is your firm planning to (l) increase the output of existing establishment(s) with additional machinery (2) establish additional unit(s) (3) reduce the establishments' output in view of the market constraints (4) other (explain) 55. Would your firm object to the establishment by other firms of additional units in your line of production? (1) yes (2) no (3) other (explain) 56. If no, how many units can the market sustain? (8) not applicable (i.e. answer is yes) or number 57. Please indicate which components of the market you had in mind when you answered question 56. present domestic market ( the present sale performance of your firms' product(s) ( potential domestic (additional domestic market including import substitution) ( existing export market ( potential export market ( any other (specify — • ) ( yes (2) no yes (2) no yes (2) no yes (2) no yes (2) no yes (2) no Marketing 58. What proportion of the goods and/or services produced by this establishment does the firm retail? % 59. Briefly describe the marketing arrangements concerning the output of this establishment? 60. If the establishment does not already export, is it planning to export in the next three years? (1) yes (2) no (3) not sure (8) not applicable (i.e. i t already exports) 61. Does the firm know of the provisions of LOME or SPARTECA? (1) yes (2) no 62. Is this establishment taking advantage of the provisions of LOME or SPARTECA? (1) yes (2) no 63. Could the firm have exported its output without the provisions of LOME or SPARTECA? (8) not applicable (i.e. firm does not export) or (1) yes (2) no 33-34 35 36 37-38 39 40 41 42 43 44 45-47 48 49 50 51 52 525 64. Do any intra-company obligations, or licensing or technical cooperation agreements restrict your access to overseas markets? (1) yes (2) no 65. If yes, explain 66. Have other establishments begun the manufacture in F i j i , in the last two years, of goods produced by this establishment? (1) yes (2) no 67. Does the establishment anticipate the entry, in the next two years, of other firms in the production in F i j i of goods produced by this establishment? (1) yes (2) no (3) not certain 68. Does your firm feel that there are more manufacturers in F i j i of goods produced by this establishment than the market can reasonably support (l) yes (2) no (3) not certain 69. If the answer is yes, how has i t affected your establishment? 70. How has your firm dealt with it? 71. What marketing problems does the establishment face? Explain Investment 72. Is the firm planning, in the next three years, to: (1) retain this establishment at its current output (2) reduce the output (3) increase the output (4) close or sell this establishment (5) pull out of manufacturing altogether (6) pull out of F i j i (7) other (explain) 73. If the firm is planning to increase the establishment's output, how is it planning to accomplish this? Please explain Case Number Card Number 53 54 55 56 57 58-59 60-61 62-63 64 65-66 1-3 4 526 Labour Process 74. What is the size and nature of the labour force of this establish-ment? Please indicate: Labour Force (Number) Total Number Operative Non-operative Full Part-Time time Full Part-Time time Working proprietor(s) (only in the case of unincorporated firms) Unpaid family members Employees (excluding working proprietors and unpaid family members 75. What proportion of the employees (i.e. those paid) are from each of the following ethnic groups? Indigenous Fijian % Indo-Fijian % Part European/Part Fijian % Other (explain) % 76. Is your firm (l) very happy (2) happy (3) unhappy (4) very unhappy with the workers of this establishment? (5) other (explain) 77. Are more than 50% of the employees of this establishment unionised? (1) yes (2) no Other Remarks Either write down here or attach sheet(s) 5-6 7-8 9-10 11-12 13-14 15-16 17-18 19-20 21-24 25-28 29-32 33-36 37-39 40-42 43-45 46-48 49 50 527 APPENDIX 2 • QUESTIONNAIRE USED FOR DATA IN THE OFFICE OF THE ADMINISTRATOR-GENERAL School of Social and Economic Development Department of Geography University of the South Pacific University of British Columbia Suva, F i j i Vancouver, Canada DATA FROM THE OFFICE OF THE ADMINISTilATOR-GENERAL SEPTEMBER-OCTOBER, 1983 Rajesh Chandra Case Number 1-3 4-9 Full Name of the Company 10-14 Nature of the Company (l) private (2) public 15 16-19 Return Being Used 20-23 Covering the Period Upto? Day Month Year 24-27 Address of the Registered Head Office of the Firm in Full 28-29 30-31 32-35 36-37 When Registered in Fiji? 38-41 Nominal Share Capital and How Divided? When Incorporated -•• 42-47 At Last Annual Return 48-53 Paid Up Share Capital and How Divided at Last Annual Return? 54-58 59-60 528 Particulars of Directors Name Nationality Usual Residential Other Business Address Occupation 61-62 63-64 Number of Shareholders ; 165-67 Particulars of Shareholders Name Nationality Full Address Occupation Value of Shares (Surname First) 168-69 70-71 72-73 Points of Interest-
Thesis/Dissertation
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Geography
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Industrialization in Fiji
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