Title

Technological capability, absorptive capacity and the development of the Nigerian textile industry

Date of Completion

January 1997

Keywords

Economics, General|Economics, Commerce-Business

Degree

Ph.D.

Abstract

Since achieving independence, many developing have sought to promote economic development and change. To this end, they have been implement various industrial development policies and programs. Despite the implementation of these policies, however, there has been no significant improvement in the industrial performance of many developing countries.^ This study examines the extent to which weak absorptive capacity has contributed to the poor performance of the Nigerian textile industry. Using survey data from a sample of 16 firms, and five criteria of absorptive capacity, the study finds evidence of abysmally weak absorptive capacity in the textile industry. Most of the sample mills, for instance, have invested marginally in human and institutional capital; the little investment in human capital has been in the acquisition of production and maintenance skills, which are hardly adequate for generating, or adapting to, technical change.^ To make up for their lack of investment in the relevant capabilities, most of the mills have fostered technological links that are critical and indispensable to their survival and ability to generate profit. The study finds that only a few of the firms can carry on successfully without the support of foreign technical partners and technology suppliers.^ Even though the R&D function has become important as an institutional locus for technical change, none of the mills undertakes R&D, or uses the services of the publicly funded industrial research institute. Given their lack of investment in scientific and engineering skills, the mills do not have the capacity to organize inhouse research, or recognize the usefulness of knowledge generated by research institutes.^ Contrary to conventional wisdom, the study finds that both external and internal factors are responsible for the low absorptive capacity in the textile industry. The suppliers of weaving technology have imposed restrictions on the use of their technologies-restrictions that prevent the mills from reverse engineering weaving equipment, and hence circumscribe their ability to develop absorptive capacity.^ On the domestic front, the Nigerian government has implemented policies that discourage the textile mills from developing absorptive capacity. One such policy is the overprotection of the textile industry, which has encouraged the mills to be complacent in developing absorptive capacity. ^