The role of standards in economic development
CENTURIES AGO, crafts people made products on a highly individualized
basis. Operating in cottage settings, they employed unique and highly
personalized design norms.
These design norms were the 'Standards' used by the crafts people to
produce their products. The strengths or weaknesses of these 'Standards'
were obtained one-on-one basis and used those inputs to improve the said
Standardization itself became pre-eminent with the dawn of the
industrial age. The concepts of interchangeable parts and division of
labour were first introduced in the United States.
Eli Whitney, inventor of the cotton gin, applied the concept to the
production of flintlock military rifles. Eli Whitney's work on the
development of interchangeable parts can be seen as the starting point
for the movement away from craft system to the standardization.
Military applications such as those continued to drive the
development and refinement of product standards and eventually quality
standards as well.
Application of Standards
Today in the industrial world, most of the manufacturing and service
organizations use standards in different areas.
For instance, production checks can be made easier by the
introduction of testing standards. Better operating scheduling,
reduction in idle time and set-up time and lowering scrap rates can be
achieved by introducing a process standard.
Purchasing of materials can also be simplified, if a material
standard is specified for the product to be manufactured.
Moreover the producer can introduce a quality standard for the
product, which would streamline the operational functions of the company
to achieve the expected level of quality. That would help the suppliers
to supply items to meet the set quality standard.
Whenever goods and services are exchanged, standards present a
'common langauge' and criteria for the assessment of goods and services.
Standards play a vital role in making sound decisions in accepting or
rejecting goods in the business and regulatory environment. Standards
increase the transparency of the market. Make the co-ordination of
operations planning easier and contribute to reducing costs.
Standardization particularly favours vertical specialization between
small and large companies a situation which is generally less pronounced
in developing than in industrialized countries.
This would contribute to small firms fully utilizing their often
considerable potential for expansion. They can achieve economies of
scale because they able to supply to large companies with standardized
National and International Standards
Each country has its own National Standards Body. For instance we
have Sri Lanka Standards Institution (SLSI) as our national standards
body. National Standards are developed by the said bodies considering
the needs of the country.
In Sri Lanka, Sri Lanka Standards Institution develops the national
standards and at present over thousand standards have been published
covering different industry sectors.
International Organisation for Standardization (ISO), International
Electro-technical Commission (IEC) and International Telecommunication
Union (ITU) develop international standards and those are available to
use at the national and regional levels to meet societal, market and
These international standards organizations assist in disseminating
best practices and new technologies, while avoiding new barriers to
The level of a national economy's technical knowledge is an important
measure of its state of development and rate of growth.
The one way of achieving the momentum for growth is by means of
transfer of technology which is made possible through standards. One of
the accepted facts is technological growth contributes of the growth of
One particular problem of developing countries lies in the fact that
there is too little diffusion of technical knowledge amongst the small
and medium-sized firms, which are key elements in the structure of the
Traditional and intermediate production techniques predominate in
such firms. Standards represent a compilation of technical and
technological knowledge and data, often bearing the results of many
years of research and development work.
Therefore standards can fulfil the functions of technology transfer
to the industry and in turn to the society.
Beyond the primary objectives of standards like rationalization,
specialization and quality assurance, the passing on of know-how to
achieve conformity with standards is becoming a side effect which should
not be underestimated.
Therefore application of Standards can make a crucial contribution to
relieving the problems of foreign trade for developing countries, and in
further improving their potential for entering into international
Benefits of standardization
Some of the benefits that can be achieved through standardization are
1. Direct network externalities
2. Market mediated effect: complementary goods become cheaper",
3. Thicker second-hand market;
4. Lower prices through competition of sellers.
5. Network Externalities in production.