Dies, moulds, and patterns: costly devices needed for deepening import substitutions

Abstract

Many developing countries now assemble most of the final products they use, but they still need to import most inputs. To escape this dependence, developing countries are focusing on ways to make more intermediate inputs domestically. But very expensive dies, moulds and castings patterns are required to make most rubber, glass, plastic or metallic components used as intermediate inputs. On the other hand, the machinery and equipment used together with the dies, moulds and patterns can make a wide range to products but are often underutilized. So, often only the dies, moulds, or patterns are needed to begin the production of various components. But, to protect their financial interests, multinational corporations (MNCs) often will not allow a developing country to use these key pieces of equipment without a comprehensive transfer of technology agreement. Hence, often either the developing countries remain import dependent for the components or cannot compete internationally due to their small domestic markets and the high cost of the dies, moulds and patterns, and hence high per-unit production costs. So, the costs for DMPs must be lowered to economically enable LDCs to deepen import substitution for currently imported intermediate components. These costs might be lowered by: (1) better negotiation with MNCs; (2) joint South-South purchase of DMPs; (3) aid supported guarantees to encourage firms to lend DMPs to LDCs (4) decreasing the number of makes, models, and designs for products; and, (5) improving and subsidizing the facilities to make DMPs locally. However, to implement these programmes, third world governments would need to perceive their objectives clearly and firmly confront the resistance from internal and external vested interests which benefit from the LCDs' continuing import dependence