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39 Mlawa, H.M. "The Acquisition of Technology, Technological Capability and Technical Change: A Study of the Textile Industry in Tanzania." Ph.D. dies., Science Policy Research Unit, University of Sussex. 1983.
40 Monopolies Commission. Chlordiazepoxide and Diazepam. London: HMSO, 1973.
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46 National Research Council. The International Technology Transfer Process. Washington, D.C.: National Science Foundation, 1980.
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12 Technology choice and development
Ajit Bhalla
The 1950s and 1960s: Growth, investment
allocation, and technology choice
The 1970s: Technology, employment, and
basic needs
The 1980s: Macro issues, new technologies,
and capabilities
Prospects
for the 1990s
References
The debate on technology remains a hardy perennial, though new dimensions keep emerging. In the 1950s, the debate concentrated largely on technological determinism, i.e. there were few technological alternatives for producing a given well-defined product; product differentiation was considered to be the same thing as a new product. The paradigm of determinism was followed by that of technological pluralism, thanks to the growing empirical evidence that emerged in the late 1970s indicating the existence of a fairly wide technology choice, not only in peripheral and material handling but also in manufacturing proper. Studies done at the ILO World Employment Programme, at the Yale Economic Growth Center, and at the David Livingstone Institute of Overseas Development Studies at the University of Strathclyde - among others - all pointed towards considerable technical choice in consumer goods industries, and to a lesser extent in intermediate goods. It is true that empirical evidence for technology choice in capital goods industries requiring greater precision is less clear-cut. Yet even in these industries, examples of technological adaptations have been reported, although genuine alternative choices may not exist [64].
A new dimension to the technology choice issue has been added by the advent of newly emerging technologies like micro-electronics-based innovations, new materials, telecommunications, and new biotechnologies, etc. In many ways, these "new" technologies provide a superior alternative to existing conventional and automated technologies. In other cases, they provide a complement to the conventional and, perhaps to a lesser extent, traditional technologies. When the new technologies are superior to the existing ones, they will dominate and supersede the latter - a case of Schumpeter's "creative destruction" in the capitalist growth process. But Strassmann [63] has shown that the historical experience between 1850 and 1914 was one of old and new technologies coexisting without necessarily involving a replacement of the old by the new for several decades. In fact, it is this coexistence, and to some extent, combination - e.g. retrofitting- that has partly inspired the emergence of the concept of technology blending, discussed below.
Thus the recent technology debate has brought out into the open a dilemma facing the developing countries: what mix of new, conventional, and traditional technologies should they use? Another aspect of the dilemma is to determine an appropriate balance between importing new technologies (which most of them do not yet have the capacity to produce) and using conventional and indigenous technologies.
The developing countries will no doubt continue to be influenced by the technological advances being made in the industrialized countries. There is controversy as to whether developing countries (particularly those with a labour surplus) should use "high" technology, with its negative social and economic consequences like labour displacement and possible worsening of income inequalities. Some argue that using "high" technology will involve the developing countries in further technological dependence on the industrialized ones, thus hindering the process of indigenous capacity-building. Others argue that the developing countries cannot remain indifferent to the selection and utilization of high technology. For improved competitiveness in the international markets, it is imperative that these countries examine the feasibility of using these technologies on a selective basis.
Few developing countries today are both producers and consumers of high technology. This means that many of them will need to possess a capacity to develop new technologies in order to reduce their dependence on the industrialized countries. The fact that in general a few industrialized countries are the major sources of supply of these technologies creates a sellers' market in which the buyers (the developing countries) have a very weak bargaining position. Yet the international economic environment and the structural adjustment programmes that are being introduced in many developing countries lead to austerity in government spending. The first programmes to receive the cuts are likely to be R&D expenditures and scientific projects whose benefits are perceived to be essentially long term. Thus, under the circumstances, resort to imports of new technology is likely to be the only option for the third world.
I review the technology literature in an evolutionary perspective and group it into three phases: (1) the 1950s and 1960s, (2) the 1970s, and (3) the 1980s. In the first period, the emphasis on technology issues related mainly to investment allocation and growth-inducing influence of capital-intensive technologies through reinvestible surpluses. The 1960s also saw the beginnings of the appropriate technology concept as a reaction against the failure of heavy industrialization strategies to remove social ills like unemployment and poverty.
In the 1970s, attention therefore shifted to technology choice as an instrument of employment policy. The main concern was with technology choice and change in the context of generating employment, alleviating poverty, and satisfying basic needs. The issue of appropriate technology, which led to a long and rather sterile debate, really belongs to the class of technology choice and change issues. The protagonists of appropriate technology [54] simply highlighted the need to widen the set of technological options by developing alternative technologies in a labour-intensive direction that are more suited to the factor endowments of developing countries. This need to widen the choice also embraced such issues as choice of appropriate products and issues of consumer demand and income distribution.
In the 1980s, it was realized that too much emphasis on micro issues alone was misplaced. The issues of technology choice and transformation of developing countries needed to be placed in a macro perspective. This brought to the fore the importance of appropriate government policies to promote employment-generating technologies. The issue of the implementation of these technologies could not be left purely to the economists. Non-economic forces also influenced decision-making. This decade can therefore be associated with the macroeconomics and political economy of technology decisions, intersectoral linkages to promote technology improvements and reduce technology gaps between modern and informal sectors, and the emergence of new technologies.
In the final analysis, rational technology selection could not be made without the existence of national or indigenous technological capacity on the part of the producers and policy makers in developing countries. The subject of capability-building is therefore a major long-term goal of development of the third world.
The 1950s and 1960s: Growth, investment allocation, and technology choice
During the 1950s, 1960s, the issue of technology choice was secondary to that of maximizing growth. Therefore, technology choice was to be geared to the achievement of that objective. The choice invariably recommended was in favour of the most capital-intensive and advanced technology because it contributed to maximizing savings rates and investment. The reinvestible surpluses, it was assumed, would be higher with a capital-intensive technology than a labour-intensive one, because all profits (accruing from capital-intensive techniques) are saved, whereas most of the wages earned by labour are consumed. If a labour-intensive technology was chosen, additional employment would lead to a higher wage bill and higher consumption, thus reducing the reinvestible surplus.
The thinking along these lines of Dobb [17], Galenson and Leibenstein [26], and Sen [55, 56] dominated the development literature throughout the 1950s and the 1960s. The issue of technology choice was directly linked to the planning objectives. If growth was the major objective and capital the major constraint to development, then the choice of the most advanced technology was clear. If, on the other hand, the objective was to maximize employment or immediate output, the choice of labour-intensive technology might be rational.
During this period, empirical testing of the above hypotheses was not very fashionable. Only a few studies of a micro nature attempted to verify the validity of the assumptions that all profits are saved and all wages are consumed, and that capital-intensive techniques necessarily maximized reinvestible surplus. One such study on the textile spinning technology in India [4] estimated the orders of magnitudes of total reinvestment and total additional output and employment that could be obtained from a given initial investment made in alternative techniques. It came to the conclusion that while the factory technique (or the capital-intensive technique) maximized reinvestment, it did not maximize either output or employment. The traditional labour-intensive technique did not maximize reinvestment but it did maximize output and employment. These trade-offs between growth, output, and employment were to preoccupy scholars even until much later, well into the 1980s.
The 1970s: Technology, employment, and basic needs
Appropriate
technology
Appropriate
products
Technology
and employment
In the 1950s and 1960s, it was generally believed that rapid economic growth and industrialization in developing countries would automatically remove poverty through a "trickle down" effect on the poor and the underprivileged. Despite the tremendous influence of development thinkers, in actual practice the growth maximization strategies did not lead to any substantial trickle down to make any impact on the unemployment and poverty problem. Empirical evidence generated during the 1970s also showed that in many cases, at least in Africa, even the absolute standard of living of the poor had declined. The relatively new international programmes, like the ILO World Employment Programme, and the World Bank's anti-poverty programme during the MacNamara years, therefore advocated abandoning concern with GNP and growth per se. The emphasis was put instead on the broader-based development strategies that gave pride of place to employment generation, human capital formation, a more egalitarian income distribution, and the satisfaction of basic human needs. In other words, what became important during the 1970s was not simply what was to be produced but how it was to be produced and for whom.
This new orientation towards development also meant a reorientation of the analysis of technology choice and development. The criterion for choosing technology was no longer to be the reinvestible surplus of growth, but employment and income generation and reduction of inequalities besides output generation.
The early 1970s saw a major shift towards research on socioeconomic and employment implications of technology choice in developing countries. It also witnessed the emergence of the concept of appropriate technology.
Appropriate technology (AT) was defined differently by different people. It is not my purpose here to enter into a long discussion of the controversy on the subject. Suffice it to say that the concept emerged mainly as a reaction to the failure of the growth-maximizing strategy of development to alleviate the problems of unemployment and poverty. AT has been defined in terms of criteria and objectives: employment, basic needs and environment, etc.; and in terms of characteristics, i.e. simplicity? small scale of operation, labour intensity, low skill requirements, etc. The underlying premise of the AT concept is the limited relevance of the industrialized country technologies to the different factor endowments of developing countries. There are different ways in which existing technology can be adapted and made more appropriate to the developing country conditions. Three such ways have been discussed in the literature: downscaling of large-scale technology; upgrading of traditional technology; and adaptation of imported technology.
As conditions vary between developing countries, no single technology can be considered appropriate for all countries at a given moment and over a period of time. Endowments change over time, making some technologies less appropriate in future than others. Thus AT does not represent a particular tool kit of technologies, even though they are usually related to small-scale consumer goods production. Instead, it is more useful to consider some priority areas and sectors in which the needs for gradual technological transformation are greater than others. The development of appropriate and adapted technologies needs to be concentrated on these priority areas [7, 39]
The question of technology choice is closely linked with that of product choice and consumer demand. The argument for linking technology choice with product choice runs as follows. The basic goods and services consumed by low-income groups in a society (e.g. food, footwear? and clothing) tend to be more labour-intensive than those consumed by the rich (e.g. consumer durables). As goods for the masses are generally produced with simple labour-intensive techniques, a redistribution of income in favour of the poor should raise demand for these goods and thereby employment. This view presented in the ILO Comprehensive Employment Mission Report to Colombia [30] was further elaborated by James [32] and Stewart [59] and James and Stewart [35].
Empirical tests of the validity of the assumptions that the poor necessarily consume labour-intensive goods, and production of these goods will promote appropriate technology applications generating employment, were conducted on a variety of specific products and countries (e.g. soap in Barbados and Bangladesh, bicycles in Malaysia, metal household utensils in India, footwear in Ghana, furniture making in Kenya, and passenger transport in Pakistan [68]). These studies generally confirmed the above hypothesis of an increase in demand for labour-intensive goods resulting from redistribution. However, the evidence from these and other studies [45, 66, 32] is mixed. Although consumption of basic goods does rise, this does not necessarily raise employment substantially. This limited employment impact may be due to the fact that some basic products may use capital-intensive but cheap inputs like synthetic fibre. Secondly, the employment effects may be small because the macroeconomic studies are too aggregative. Taking the Indian sugar industry as an example, James [32] shows that combining crystal sugar (capital-intensive) and gur (labour-intensive) underestimates the effects of changes in income distribution. If they were taken separately, the positive employment effects would increase by 50 per cent.
Furthermore, in some cases even capital-intensive goods (e.g. Bata shoes produced with modern technology) may be more appropriate for the poor than the labour-intensive goods because the former are cheaper and more durable.