Appropriate Technologies for Third World Development

In organising a conference on industrial technologies appropriate for developing countries, the International Economic Association has two purposes in mind: to clarify the whole question, and to define what exactly is meant by appropriate technologies.

In surveying so extensive a literature as that concerning the question of appropriate technology in less-developed countries one is forced to be unusually selective. Addressed to over a hundred such nations the issues that have been raised in discussing this question are large in number. The topics that I shall be discussing in this paper will therefore reflect my bias.

Do appropriate technologies exist, or do they have to be created? If that question is to be answered, it is necessary to be very clear what one means by an appropriate technology. There is no question that there do exist in a large number of industries simple technologies, requiring only rather crude and elementary capital equipment. What is much less certain is that these simple technologies are, in the full sense, efficient technologies, appropriate to the needs of the country concerned.

In an age of remarkable technological feats, it is natural that great stress should be put on the search for technological solutions to the problems of less developed countries. In pursuing technologies suitable to the factor proportions, foreign exchange availabilities and skill levels of developing countries, it must not be forgotten that technology interacts in a complex variety of ways with other components of culture and society, and that these ‘externalities’ play a role in determining the appropriateness of particular techniques.

This paper aims to study some limited aspects of Japanese experience in the choice of industrial technologies from the 1870s to the 1950s, the period in which Japan was more or less in the stage of a developing economy. It is interesting to explore how far some of the Japanese experience is relevant to the problems of choice of industrial technologies in contemporary developing countries.

The biggest problem facing this author at least in tackling the topic assigned to him is to determine whether or not anything ‘appropriate’ can still be said about ‘appropriate technologies’. We have had in recent years quite a windstorm of discussion about adaptive, intermediate and/or appropriate technologies, all of which have had a good number of sensible things to say but not many of which have necessarily advanced us very far on the road either to enhanced theoretical or practical wisdom. I am not at all confident that this paper can do better.

The terminology differs somewhat but most of the discussion in literature centring around questions such as labour-versus capital-intensive techniques, industrialisation versus agricultural development, free trade versus protectionism for infant industry, import substitution versus export-oriented industrialisation, heavy industry versus light industry, and more recently modern versus appropriate technologies, all have ramifications, implicitly or explicitly, for defining an optimum factor mix. Conceptually the argument appears to be straightforward and simple. The factor endowments and hence relative-scarcity factor-price structures in developing countries are substantially different from those found in the highly industrialised developed countries. As a result, they should emphasise those activities which use more of the abundant factor (labour) and less of the scarce factor (capital). Thus, light industries, agriculture, export-oriented development strategies should be preferred. In fact, there ought to be two types of technologies for the two types of countries (developed and developing) using different mixes of factors of production for the manufacturing of the same product. This is dictated not only by efficiency but also by equity and income distribution considerations. For, by using higher doses of labour per unit of output not only the output is maximised, but also the level of unemployment is decreased and a more equitable distribution of income is attained. If this could be done, the solution would be ‘optimum’ in that both efficiency (output maximisation) and equity (employment maximisation) would be simultaneously achieved.

The mounting storm of literature on appropriate technology has centred either on the criteria for the choice of technology or on the impediments to the diffusion of these technologies. In contrast, little attention has been directed to the problems associated with the generation of appropriate technologies. It is this aspect of the subject which will be explored in this paper.

The particular problems of backward developing economies characterised by a relative shortage of manpower and a relative abundance of capital have not hitherto been the subject of systematic theoretical analysis. Most studies devoted to the effects of the introduction into developing countries of imported technologies are, indeed, based on the hypothesis that these economies have a structural surplus in terms of labour supply. The economic analysis is therefore focused on the problems of the distortions and constraints on the growth process brought about by the introduction of technologies that are inconsistent with factor endowments in those countries.

The notion of industrial technologies appropriate for developing countries can be meaningful only in so far as criteria have been spelt out for appraising the adequacy of existing or planned technology for coping with the particular problems of developing countries. But is it really possible to speak of problems common to all developing countries? Indeed, can these problems be defined in isolation from assumptions about the development strategy adopted? It seems clear that the problem of the choice of technology cannot be taken up without first answering the question ‘what kind of development?’.

It is said nowadays that commercial companies, and particularly multinational ones, are one of the most important routes via which technology is transferred to developing countries. What is often called into question, however, is how appropriate is a particular technology to the country concerned. What, in fact, is meant by ‘appropriate’ in this context?

It should be realised that the problem of choice of technology is not new. It has existed ever since man started to use tools. Moreover, economists should realise that the problem is not merely one of relative factor endowments, of relative prices and of economic constraints and obstacles. It also has to do with many elements that cannot be expressed in economic terms.

The multilateral financial agencies influence technologies in developing countries in a large number of ways, some conscious, many inadvertent, most peripheral. On balance, their influence on the appropriateness of the technologies adopted appears to have been beneficial, largely as a result of their insistence on operational efficiency.

This paper considers some of the views held about what aid donors can do to encourage the use of appropriate technology in the less developed countries (hereafter, ‘LDCs’) which they aid. In the first part we bring together in one piece a range of charges which have been made about the distorting effects of aid on technology in developing countries. This statement is presented as an Aunt Sally and we term it the ‘Naive View’ since we go on to discuss some of its omissions and misconceptions in an attempt to arrive at a more realistic view of the real power and influence of the aid donor. The second part of the paper restates the role of the donor with reference to the agents of technological choice, the decision centres in LDCs, and the means available to the foreign aid agency.

The attached paper is a slightly shortened version of Sections I and II of a proposal prepared by USAID for the Committee on International Relations of the United States House of Representatives. The proposal was unanimously approved by the Committee during the last week of July, 1976; the next step will be for AID to begin implementation of the Proposal.

The remarks which follow are not intended as a summary of the conference. I have selected points from the discussion which seemed to need further comment. These fall into a simple scheme. First, there are prefatory points about problems of definition: what is an ‘appropriate’ technology? Second there are some points about obstacles to the application of ‘appropriate technologies’ — the central concern of the conference.