Understanding Technology Development

In a general sense, most developing countries are inept at using industrial technologies.1 This ineptness may take one or more of several forms. Their enterprises may import and deploy technologies that are not appropriate to their countries’ endowments of labour or skills, or to their scales of production. They may not fully assimilate the technologies they have imported, so may not use them at ‘best-practice’ levels of technical efficiency. Individual enterprises may, moreover, differ widely in their relative efficiencies. This variation is also found in developed economies, but tends to be far more marked in developing ones, indicating that diffusion of knowledge is more limited and market competition more imperfect. Finally, they may not be able to upgrade the technologies they have mastered, or diversify into new technologies as conditions change. Thus, they may stay at the low value-added end of the industrial spectrum, falling behind world technological frontiers as others forge ahead.