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Catching Up or Marking Time? Technology Transfer and Market Fragmentation in Australia
Abstract
Australia was a latecomer to industrialisation, dependent on the importation of ‘foreign’ technology to help ‘catch up’. While such a strategy can lead to entrenched structural dependence, a dynamic variant of product cycle theory suggests that windows of opportunity for genuine catching up are created at times of transition to new technological systems or paradigms. Such conditions arose in Australia in the 1920s with the emerging shift from natural to synthetic materials. By studying the subsequent development of a local synthetic resin industry, this article highlights the way technology transfer processes can affect market structure and behaviour, and the cumulative effect of the resulting industrial weaknesses.
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Notes And References
For example, from Alexander Gerschenkron, Economic Backwardness in Historical Perspective, Harvard University Press, Cambridge, MA, 1962, to Moses Abramovitz, Thinking about Growth and Other Essays on Economic Growth and Welfare, Cambridge University Press, New York, 1989.
A well-known version is found in Andre Gunder Frank, Capitalism and Underdevelopment in Latin America, Monthly Review Press, New York, 1967.
For discussion of aspects of this debate see Jan Todd, Colonial Technology: Science and the Transfer of Innovation to Australia, Cambridge University Press, Melbourne, 1995, Ch. 1, and Jan Todd, ‘Science at the periphery: an interpretation of Australian scientific and technological dependency and development prior to 1914’, Annals of Science, 50, 1993, pp. 33–58.
See, for example, the use of Maddison's time series of productivity levels in Moses Abramovitz, ‘Catching up, forging ahead, and falling behind’, Journal of Economic History, XLVI, 2, 1986, pp. 385–406. Also Nicola Rossi & Gianni Toniolo, ‘Catching up, or falling behind? Italy's economic growth, 1895–1947’, Economic History Review, XLV, 3, 1992, pp. 537–563.
Carlota Perez & Luc Soete, ‘Catching up in technology: entry barriers and windows of opportunity’, in G. Dosi, C. Freeman, R. Nelson, G. Silverberg & L. Soete (eds), Technical Change and Economic Theory, Pinter, London, 1988, pp. 458–479. See also, Carlota Perez, ‘New technologies and development’, in Christopher Freeman & Bengt-Ake Lundvall (eds), Small Countries Facing the Technological Revolution, Pinter, London, 1988, pp. 85–97.
This concept belongs to a body of scholarship which takes as its starting point the evolutionary model of technological change expressed by Schumpeter. A seminal text was R. Nelson & S. Winter, An Evolutionary Theory of Economic Change, Harvard University Press, Cambridge, MA, 1982.
G. C. Hufbauer, Synthetic Materials and the Theory of International Trade, Duckworth, London, 1966, p. 3. See also, C. Freeman, The Economics of Industrial Innovation, Pinter, London, 1982, Ch. 3.
Henry Brunner, ‘Paint’, in T. Williams (ed.), History of Technology, Clarendon, Oxford, 1978, Vol. VI, Ch. 23.
Hedley Barry, ‘The future of natural resins’, Paint Technology, March-May, 1936, pp. 93–97; 131–135.
Charles R. Martens (ed.), Technology of Paints, Varnishes and Lacquers, Reinhold, New York, 1968, p. 7; US Tariff Commission, Synthetic Resins and their Raw Materials, Report No. 131, Washington DC 1938, p. 31.
Commonwealth Bureau of Statistics, Manufacturing Industry, Government Printer, Canberra 1927, 1955; E. P. Sandford, ‘The Australian paint industry in the 1950s’, The Australian Paint Journal, April, 1960, pp. 13–18.
Constructed from a range of data published by the Australian Bureau of Statistics on materials used in Australian manufacturing.
Calculated from Australian Bureau of Statistics, Manufacturing Commodities, Principal Articles Produced, Australia, Government Printer, Canberra, various years.
Australian Archives (AA), Series B1/1, Item 847, list of Hatrick customers, in papers re Tariff Board Enquiry into Cellulose Enamels, Lacquers and Varnishes … and Synthetic Resins Incorporated in Oil, 1937.
Tariff Board, Report on Synthetic Resins, Government Printer, Canberra, 1951, p. 5.
Details on the early years of the Hatrick and Slade companies come from Tariff Board, Report on Plastics Industry, Government Printer, Canberra, 1946, from internal notes and records held by Australian Chemical Holdings Ltd, and from interviews with personnel from both companies.
Tariff Board, Report on Synthetic Resins, Government Printer, Canberra, 1951, p. 7.
Tariff Board, Report on Synthetic Paint Resins, Government Printer, Canberra, 1955, p. 6.
1968 and 1975 figures from market survey results in the private records of Australian Chemical Holdings (ACH), the parent of Hatrick Chemicals.
Industries Assistance Commission, Report on Paints, Varnishes and Lacquers, Australian Government Publishing Service, Canberra, 1976, p. 5.
These and subsequent details on BALM have been constructed from a variety of archival and published sources, as well as interviews with industry personnel. The major archival sources are: (1) the series of files of ICI UK, London, relating to BALM, to glyptal resins, and to Australian policy; (2) the records of the Du Pont company held by the Hagley Museum and Library, Wilmington, USA, especially those relating to relations with ICI and BALM. The major published sources include United States v. Imperial Chemical Industries Ltd, 100 Federal Supplement 504, pp. 505–94; W. J. Reader, Imperial Chemical Industries. A History, Oxford University Press, London, 1970, 2 vols; W.S. Robinson & G. Blainey (eds), If I Remember Rightly, Cheshire, Melbourne, 1967; Graham D. Taylor & Patricia Sudnik, Du Pont and the International Chemical Industry, Twayne, Boston, 1984; David A. Hounshell & John Kenly Smith Jr, Science and Corporate Strategy: Du Pont R&D, 1902–1980, Cambridge University Press, New York, 1988.
Sources on Berger include Mary Peck, ‘Berger Paints-A Commercial History’, unpublished dissertation for MSc. Soc., University of New South Wales, 1988; Lewis Berger, The House of Berger, Sydney, Lewis Berger, 1956; interviews with former head of research, Bill Elliott, and other former technical staff, and miscellaneous papers from the Berger archives, held by Dulux.
Taubmans company minutes for die 1930s, in company archives. Also interviews with Taubman family members and former Taubmans chemists.
AA, Series A1732, Item 1769, Proceedings of Tariff Board Enquiry into Industrial Chemicals and Synthetic Resins, 1965, pp. 1228–1231.
AA, Series B1/1, Item 1769, Box 14, Analysis No. 36, alkyd resins’, December 1964.
Interview with former Manager of British Paints resin plant.
See Australian Chemical Industry Council (ACIC), Industrial Chemicals and Synthetic Resins. Submission to Tariff Board Enquiry, ACIC, Sydney, September 1964; Alex Hunter & L. R. Webb, ‘The chemical industry’, in Alex Hunter (ed.), The Economics of Australian Industry, Melbourne University Press, Melbourne, 1963, Ch. 9; T.G. Parry, ‘Plant size, capacity utilisation and economic efficiency: foreign investment in the Australian chemical industry’, in T.G. Parry (ed.), Australian Industry Policy, Longman Cheshire, Melbourne, 1982, pp. 127–154.
Used in the chemical industry, the ‘power rule’ expresses the typical relationship between capital charges and plant size. See ACIC, op cit., Ref. 27, Vol 1, pp. 31–45.
AA, Series B1/1, Item 1298, Comparative analyses of company data provided to Tariff Board Enquiry on Synthetic Paint Resins, 1954–5.
AA, Series A1732, Item 1298, Proceedings of Tariff Board Enquiry into Synthetic Paint Resins, 1955, p. 41.
Parry, Plant Size op. cit., Ref. 27, p. 141.
From production data provided to the Tariff Board Enquiry into Synthetic Resins, 1950, in AA, Series B1/1, Item 1129.
Typescript notes on the Hatrick company history held by ACH.
Shown, for instance, in Hatrick list of customers and prices provided to die Tariff Board Enquiry into Synthetic Resins, 1954–5, in AA, B1/1, Item 1128.
Australian Bureau of Statistics, Secondary Industries, 1959–60, Government Printer, Canberra, 1960.
AA, Series A1732, Item 1769, Proceedings, pp. 878–879; AA, Series B1/1, Item 1769, Box 14, ‘Alkyd Analysis’, December 1964.
For instance, firms use different accounting procedures, and products attract different levels of research funding at different points of their life cycle. Also, the low figure for Polymer runs counter to its commitment to in-house research and may partly be due to its policy of allocating funds to projects on an as-required basis, rather than by any standard annual budget.
Although these figures were not low by contemporary Australian industry standards (see Peter-Stubbs, Innovation and Research, Cheshire, Melbourne, 1968, Ch. 4), the corresponding figures for R&D as % of sales would be lower than those cited in Tables 4 and 5, and lower than many overseas companies at this time, e.g. Hoechst at 3.6%, Monsanto (USA) at 4–5%, Du Pont 5.3% (see AA, B1/1, 1769, boxes 13, 15). For Australian R & D by American-affiliated companies see Donald T. Brash, American Investment in Australian Industry, Australian National University Press, Canberra, 1966, Ch. VI, especially p. 152.
This also fits with 1980s figures showing the paint industry with a higher R & D intensity (2.7%) than the resin industry (1.7%). See Ralph Lattimore, ‘Research and development: hidden investment in Australian industry’, in Clive Hamilton (ed.), The Economic Dynamics of Australian Industry, Allen and Unwin, Sydney, 1991, pp. 173–195, see p. 175.
Dulux typescript internal summary, p. 2.
On Berger see Mary Peck, op. cit., Ref. 22, on Taubmans, Proceedings of Group Technical Conference, 1962, Taubmans Industries Ltd, Sydney, 1962.
On research effectiveness, see National Board of Employment, Education and Training, The Effects of Resource Concentration on Research Performance, Australian Research Council, Commissioned Report No. 25, Australian Government Publishing Service, Canberra, 1993. For a model of how scale might affect Australian R & D differentially, see S.K. Mitchell & R.E. Stonecash, ‘The role of economics of scale in Australian R&D’, Prometheus, 14, 2, 1996, pp. 152–167.
On this topic see ‘Addresses’ in Ian Wark Papers, Basser Library, Australian Academy of Science, Canberra.
In the 1950s, for instance, Hatricks had more success with their modified Wallkyd (wall alkyd), than Reichhold had with the original in the USA.
From a range of sources including Australian Department of Trade, Plastics Industry of Australia, Government Printer, Canberra, 1958; Hufbauer, op. cit., Ref. 7, and Martens, op. cit., Ref. 10.
Polymer research notebooks and reports, in ACH archives.
Sheldon Hochheiser, Rohm and Haas: History of a Chemical Company, University of Pennsylvania Press, Philadelphia, 1986, pp. 98–100.
Interviews with Hermon Slade and T. Willmott, former research employee.
Interviews with paint industry personnel.
AA, Series A1732, Item 1548, Proceedings of Tariff Board Enquiry into Resins of the Styrene and Acrylic Type, 1961. Also AA, A1732, 1769, Proceedings, 1964–66.
AA, Series B1/1, Item 1769, Box 14, ‘Analysis No. 55 (Acrylics)’ and ‘Analysis No. 65 (PVAs)’, February 1965. Table 6 includes commercial producers of PVAs, copolymers and/or acrylics. Acrylics could be used in solvent or emulsion form. At this time British Paints were making solvent-based acrylics and designing a plant for emulsion acrylics.
AA Series B1/1, Item 1769, Box 14, ‘Acrylic analysis’, Appendix, p. 3.
Industries Assistance Commission, Report on Chemical and Plastics Industries, Australian Government Publishing Service, Canberra, 1986, Vol. 1, p. 22.
For instance, Vernon Committee, Report of the Committee of Economic Enquiry, Canberra, 1965, Vol. 1, p. 213; Tariff Board, Annual Reports, 1963–64, p. 15; 1964–65, p. 11–12; Parry, ‘Plant Size’, op. cit., Ref. 27, pp. 142–145.