Quality Infrastructure as Development Strategy

4.3.4 Contributions of Accreditation

Accreditation is supposed to lend credibility to the whole system of national quality infrastructure, by securing the adherence of the accredited institutions to the principles of transparency, objectivity and impartiality. Furthermore it assures their integration within the international quality system by secur-ing traceability of measurements to international standards and promotsecur-ing the world-wide acceptance of their service activities.

Accreditation thus most directly contributes to the IS functions ofKNOWL

-EDGE DIFFUSION by establishing and fortifying international linkages and to the function ofMARKET FORMATIONby enhancing the trust in the use value of national innovative products, particularly within foreign markets. It can yet be argued that it indirectly amplifies all the contributions of the other quality infrastructure elements to the IS.

products, the triggering of learning processes, the development of platforms for communication, and the capacity of economic systems to adapt to new mar-ket conditions and social demands. It is an institutional construct that increases the national innovation capabilities hence empowering societies to respond to emerging adversities, and supporting them while defining and accomplishing new economic, social and environmental objectives.

4.4.1 Building up a knowledge-based economy

A quality infrastructure contributes to the capacity of NIS to absorb and dif-fuse knowledge and technologies, and therefore to the success of development strategies aiming at productive activities that yield higher economic returns.

Bringing and adapting more effective production processes or technologies to new contexts is the most elementary form of innovation, however this is es-pecially relevant in societies that lack the capacity to create new-to-the-world technologies and processes. Besides, once the national producers are capable of incorporating the knowledge that is created by national and international in-novative actors, the benefits associated with better processes and technologies are effectively spread throughout a country’s productive system. Moreover, as this knowledge is used by a higher number of agents, this shall lead to more innovations than what could be expected if only a reduced amount of players would have access to it.

The national metrology institutes and the creation of standards play a vital role stimulating the development and diffusion of knowledge. Metrology, on the one hand, is responsible for the development and dissemination of the nec-essary instruments and procedures to cope with the measuring and calibration requirements associated with the utilization of new technologies. The formula-tion of standards, on the other hand, provides the informaformula-tion concerning the technical or process-related specifications implied in a specific innovation.

Therefore, a quality infrastructure can serve as a means to enable local firms to comprehend and integrate new technologies and processes, thus enhancing the technological upgrading of firms and facilitating their entrance into new economic activities. This is a vital step in order to strengthen the innovation capability of a society, and therefore to continuously support the development of value chains that imply a higher number of partnerships, levels of trust be-tween firms, and complexity in terms of the production processes, which shall, in turn, yield higher economic returns.

Government policy plays an important role here. On the creation of plat-forms for discussion and creation of standards, a government can orient eco-nomic actors and the elements of quality infrastructure into a specific research direction that is supportive of those that are considered the strategic economic sectors. It also has the role of directing the activities of metrological institutes so that they can address the demands posed by the creation of new standards or technical regulations.

The gradual formation of such innovative markets leads to the production of goods with higher value added, and helps economies to advance into sec-tors that face less international competition. For development this is relevant because it represents the empowerment of local firms in the international con-text. This has consequences, for instance, in the power relations between na-tional firms and foreign investors, raising the economic returns of the nana-tional production factors.

Economies with high exposure to a reduced number of production activities or foreign markets are more vulnerable to a few commodities and respective international prices, availability and cost of inputs, and the economic situation in the targeted foreign markets. Quality infrastructure can be used in order to support the diversification of the economic activities by giving technical sup-port to local companies to join new sectors, and to improve the integration of the local economy in global value chains and markets (Wipplinger et al., 2006;

The World Bank, 2008).

4.4.2 Better integration in global value chains

Integrating in global value chains often represents a difficult mission for coun-tries whose productive systems lack credibility with foreign producers, or when their measurement units, procedures or standards differ from their eco-nomic partners. Yet it represents an opportunity for countries to foster the upgrading of their productive system. In this respect, a quality infrastructure can be used as strategic tool in order to bring into the national economy the dynamics associated with global value chains.

If a development policy has the objective to integrate a certain sector in an existing global value chain, it is first necessary to guarantee the harmonization of local measurement procedures and units with international measurement standards. For this, it is necessary to provide to national producers the ade-quate metrological technologies and calibration services. Lastly, it is crucial to demonstrate to foreign producers that the local companies can provide reliable

goods and services. The establishment of independent and transparent accred-itation institutes and their integration in regional accredaccred-itation organizations is one of the most effective ways of leveraging trust of possible foreign partners in the national production system.

Another possible development strategy may be the creation of new regional value chains in order to reap the benefits associated with the fact that differ-ent countries vary in their characteristics in terms of human capital, access to inputs, areas of specialization and know-how. In order to create new re-gional/global value chains, standardization can play the role of a forum where the interests of the various economies are discussed, leading to the definition of the expectations regarding process-related and physical properties of the traded goods and services across countries. The advantage of developing these new networks based on the idiosyncrasies of the various economies is related with the possibility of establishing new forms of cooperation between coun-tries that share some common challenges. On the one hand, it provides the opportunity of participating in new economic activities. On the other, it em-powers the region in trade negotiations at the world scale.

Attracting foreign direct investment (FDI) can also be sometimes regarded as a means of integrating global value chains and hereby fostering the men-tioned upgrading of the national productive structure. This is often an objec-tive of policymakers because optimally it brings more funds for investment in the national productive system, technical knowledge and technologies that may trigger virtuous development processes.

In order to attract FDI, economic systems have to provide the conditions so that foreign technologies and procedures can be applied in the local context, and guarantee that the goods are able to address the requisites of foreign mar-kets. The adequate management of quality elements is necessary, especially because FDI only contributes positively to development processes if a signifi-cant share of the economic returns is received by national production factors.

The more prepared a national production system is to receive foreign tech-nologies, to cope with foreign regulation, and to demonstrate to the foreign trading partners the reliability of its products and services, the more attractive this economy will be to foreign investors, and the higher the returns for the national production factors.

4.4.3 Increased benefits from trading in global markets

Markets worldwide often impose a set of conditions for the goods traded through standards or technical regulations. These regulations may be simi-lar at a global scale or vary from country to country. Reaching foreign markets requires from firms the capacity to adapt to the imposed specificities. When an IS is able to address these demands cost effectively, it successfully overcomes these barriers to trade. Metrology and accreditation bodies play an important role for the accomplishment of this objective.

Metrology promotes the accuracy of measurement instruments, traceability of measurement units and procedures (by integrating them in the international measurement system), and therefore local firms are able to develop goods that correspond to the specified foreign regulations, and be confident that the out-comes of their productive processes will indeed correspond to the demands imposed by such regulations. Cost-effectiveness on the adaptation capacity of local firms to the various regulatory frameworks is vital for competitiveness in global markets. If metrological institutes are not able to keep responding to the multiple and growing demands in foreign markets, local companies, even if they are capable of producing at lower costs than their foreign competitors, will lose competitiveness in the global markets in this process of adapting to the various requisites, and hindering the export capacity of a sector or even of the whole productive system.

The national accreditation bodies, namely when they belong to regional or-ganizations or agreements, increase the trust of foreign markets on the national quality system, hence facilitating the opening of those markets and reducing the transaction costs (especially those associated with the verification by the targeted market of whether the products conform to the norms imposed by a standard or technical regulation). This element of quality infrastructure is es-pecially important in the context of international trade. As long as a foreign buyer trusts in the certified good, he does not need to do new tests in order to assess the quality of the good (avoiding double testing) and contracts are more easily settled. It fosters the penetration in foreign markets by contributing to the reduction of transaction costs.

4.4.4 Consumer and environmental concerns

When policymakers aim at improving the working conditions, guaranteeing that trade follows certain rules, safeguarding specific environmental issues,

they can create incentives to firms to address such concerns through certifi-cation. As long as consumers share such preoccupations, they will be willing to pay a price premium for those products that answer to them. This is impor-tant not only at a national level but also in foreign markets. Foreign consumers, as well, have moral and environmental concerns that if policymakers and/or industries are able to respond and signalize, they will be able to differentiate their products from their competitors and reach higher demand curves, which yield higher economic returns. Quality infrastructure allows the creation of credibility goods, as explained in the previous section.

This approach can also serve as a means to strengthen the welfare system when certifications include issues related, for instance, to the health assistance of workers, their protection from the use of chemicals harmful to health, the guarantee of good housing conditions for temporary workers, the safeguard-ing of the incomes of small producers who have limited power against inter-mediaries, and so on.

This approach offers a tool to policymakers based on incentives and not on coercive means. This may sometimes be the most suitable way to respond to such social or environmental concerns, not putting at risk the viability of lo-cal firms. Finally, it is important to avoid asymmetries in the access to quality infrastructure services throughout the country, namely in what concerns the services that are to assess whether products and services conform to norms. If there are significant regional asymmetries, companies may be tempted to sell goods that do not have the desired quality to those regions that lack effective conformity assessment services, counteracting the developmental goals origi-nally intended with the introduction of such norms.