Theroleofappropriatetechnology

b.Theuseofappropriatetechnology
Newtechnologyisamajordrivingforceofeconomicgrowth,withvastpotentialsfor
economicandhumandevelopment.Rememberthatimprovedqualityofcapitalgoods
(embodiedtechnologicalchange)is
oneofthemostimportantfactorsbehindeconomicgrowth(pages297and438).

Themeaningofappropriatetechnology
Tobeeffective,technologiesmustbewellsuitedtoparticulareconomic,geographical,
ecologicalandclimateconditions.Appropriatetechnologyisatechnologythatsatisfies
theseconditions.

Differentfactorsupplies(labourandphysicalcapital)Developingcountriesare
characterisedbyrelativelylargequantitiesoflabour(muchofwhichisunemployedor
underemployed),whilephysicalcapitalisrelativelyscarceandcostlytoacquire.
Moreover,thecapacityofdevelopingcountriestoproduce,operateandmaintain
technologicallyadvancedequipment
islimited.Indevelopedcountries,labourisrelativelyscarceinrelationtomoreabundant
physicalcapital,andthereisalargecapacityforproducingandmaintaining
technologicallyadvancedmachinesandequipment.Therefore,developinganddeveloped
countrieshavedifferentneedswithrespecttothekindsofcapitalgoods/technologiesthat
arebestsuitedtotheirconditions.Developingcountriesneedcapitalgoodsand
technologiesthatmakeuseoftheirabundantlaboursuppliesandthatarerelatively
simpletoproduce,maintainandoperate.
Considerafarminalessdevelopedcountrywherethereiswidespreadrural
unemploymentandpoverty.2Traditionally,farminghasbeencarriedoutbyuseofa
primitivetechnologyinvolvingthespade,hoe,handsickleandstickplough.Thefarm
nowhastheopportunitytointroduceanewtechnology.Therearetwochoices:heavy
agriculturalmachinery,includingthetractor,orabullocktractiontechnology(theuseof
ploughspulledbyanimalsorbullocks).Boththesenewtechnologieswouldincreasethe
productivityoflabour.Whichoneshouldbeadopted?
Thetractortechnologyismoreexpensivetopurchase,andusesfarlesslabourtorun
comparedtothepreviousprimitivetechnology.Thismeansmany

Chapter17Topicsineconomicdevelopment465
oftheworkersonthefarmwilllosetheirjobsandtheirincome,withruralpoverty
increasing.Also,itcannotbeproduceddomesticallyandwillhavetobeimported;this
involvestheuseofscarceforeignexchangewithnegativeeffectsonthebalanceof
payments.
Thebullocktechnologyislessexpensivetopurchase.Itrequirestheuseofagreater
quantityoflabourforitsuse,soemploymentonthefarmwillincrease,leadingtoless
ruralunemploymentandunderemployment,creatingmoreincomeandreducingrural
poverty.Itcanbeproducedlocally,resultinginincreasedemploymentoutsidethefarm
aslocalworkersbegintomanufacturetheequipmentforthebullocktechnology.Locally
availableskillswillbeused,andmoreworkerscanbetrainedonthejobtoproducethe
newequipment.Therewillbenoneedforimportsandscarceforeignexchangewillbe
saved,withnonegativeeffectonthebalanceofpayments.
Clearly,thefarmshouldadoptthebullocktechnology.Wecanthereforemakea
distinctionbetweenthefollowingtwokindsoftechnology:

Labourusing(labourintensive)technologiesusemorelabourinrelationtocapital.They
resultinincreasesinlocalemploymentandtheuseoflocalskillsandmaterials,increases
inincomesandpovertyalleviation,andsaveontheuseofscarceforeignexchange.

Capitalusing(capitalintensive)technologiesusemorecapitalinrelationtolabour.In
developingcountrieswithlargesuppliesoflabourtheydisplaceworkersandincrease
unemployment,reduceincomesandthrowpeopleintopoverty,andrequireskilllevels
thatmaybecostlyanddifficulttoacquire,aswellastheuseofforeignexchangefor
imports.Mosttechnologicaladvancestendtobeofthecapitalusingtype,becausemost
researchandtechnologicaldevelopmentsoccurindevelopedcountriesthatfocusontheir
ownprioritiesandneeds.Thisposesseriousproblemsfordevelopingcountriesthat
mostlyrequirelabourusingtechnologiesandhavelimitedresourcesfordeveloping
technologieswellsuitedtotheirowneconomicandphysicalenvironments.Many
developingcountrieshaveattimestriedtocopyorimitatetheproductiontechniquesof
thedevelopedworld,resultingintheuseofinappropriatetechnologies,suchastractor
technologiesinagriculture,andcapitalintensivetechnologiesinindustry.Among3The
WorldBank,WorldDevelopmentIndicators.

466Section4:Developmenteconomics
thefailuresofgrowthanddevelopmentpolicies,amajoronewasthepushfor
industrialisationusingmodern,capitalusingtechnologiesintheformalsector,andthe
useofinappropriatetechnologiesinagriculture,contributingtounemploymentand

underemploymentandgrowthofurbaninformalsectorsaroundtheworld(seepage441).

Differentclimateandecologicalconditions
Manyofthetechnologiesdevelopedinrichcountriesarealsoinappropriatetothe
climates,geographyandecologicalconditionsofmanydevelopingcountries.Thisis
particularlyrelevanttotheneedsofagriculture,characterisedbydifferentclimatic
conditions,
soils,diseaseagentsandotheragronomicfactors.Agriculturaltechnologiesdevelopedfor
temperatezoneclimatesareoftennotwellsuitedtotropicalzoneswheremost
developingcountriesarelocated.

DifficultiesinthedevelopmentofappropriatetechnologiesAlthoughsome
economicallylessdevelopedcountrieshavesignificantlysteppeduptheirresearchand
development(R&D)(forexample,China,India,Brazil),mosttechnologicalinnovation
occursindevelopedcountries.Manydevelopingcountrieshaveveryfewresourcesto
devotetoR&Dandnewtechnologydevelopment.Whereasdevelopedcountriesspend
morethan2ofGDPonR&D(Swedenspends3.7,Finland3.5andJapan3.3),
manylowerincomecountriestypicallyspendlessthan0.5.3Takingintoaccounttheir
farlowerpercapitaGDPs,poorcountriesspendnexttonothinginabsoluteterms
comparedtothedevelopedworld.
Afurtherproblemisthattheprivatesectorindevelopingcountriesfacesfewincentives
toengageinR&D.Indevelopedcountriestheprivatesectorisresponsibleforover50
60ofR&Dexpenditures;however,inlowincomecountriestheprivatesector
contributionisverylow(from2toroughly20).Manydevelopedcountryfirms
produceandinnovateforlargemarkets,andtheexpectationoflargeprofitscreates
powerfulincentivestoinnovateinordertocompete,capturemarketsharesandtake
advantageofnewopportunities.Firmsindevelopingcountries,especiallyinthelower
incomeones,haveneithertheresourcesnorthemarketstosupportR&Dactivities.
Smallmarketsarerelatedtolowincomes,becausewhenpeopleliveonverylow
incomes,theirneedsforspecificgoodsandservicesdonotshowupinanymarketas
demand.Forexample,

R&Dinthepharmaceuticalsectorisconcentratedonmedicationstotreatrichcountry
diseasesforwhichtherearelargemarkets,whiletropicaldiseasesareignored.The
reasonissimple:oftotalworldpharmaceuticalsales,NorthAmerica,EuropeandJapan
accountfor88ofsales,whileAfrica,CentralandSouthAmericaandAsia(including

Australia)accountfor12ofsales.4