Thursday, August 07, 2008

Appropriate Technology as a Public Good

I begin with a summary of the ideas of various kinds of goods derived from the concepts of rivalry and excludability.
Source of table: Legal Theory Lexicon

According to the online Concise Encyclopedia of Economics:
Public goods have two distinct aspects—"nonexcludability" and "nonrivalrous consumption." Nonexcludability means that nonpayers cannot be excluded from the benefits of the good or service. If an entrepreneur stages a fireworks show, for example, people can watch the show from their windows or backyards. Because the entrepreneur cannot charge a fee for consumption, the fireworks show may go unproduced, even if demand for the show is strong.

The fireworks example illustrates the "free-rider" problem. Even if the fireworks show is worth ten dollars to each person, no one will pay ten dollars to the entrepreneur. Each person will seek to "free-ride" by allowing others to pay for the show, and then watch for free from his or her backyard. If the free-rider problem cannot be solved, valuable goods and services, ones that people want and otherwise would be willing to pay for, will remain unproduced.

The second aspect of public goods is what economists call nonrivalrous consumption. Assume the entrepreneur manages to exclude noncontributors from watching the show (perhaps one can see the show only from a private field). A price will be charged for entrance to the field, and people who are unwilling to pay this price will be excluded. If the field is large enough, however, exclusion is inefficient because even nonpayers could watch the show without increasing the show's cost or diminishing anyone else's enjoyment. That is nonrivalrous competition to watch the show.
Inge Kaul wrote in Le Monde diplomatique:
What is a public good? This question can best be answered by looking at the counterpart, a private good. Private goods are typically traded in markets. Buyers and sellers meet through the price mechanism. If they agree on a price, the ownership or use of the good (or service) can be transferred. Thus private goods tend to be excludable. They have clearly identified owners; and they tend to be rival. For example, others cannot enjoy a piece of cake, once consumed.
In the current edition of The Economist one finds:
It is not simply that three-quarters of those living on less than $2 a day still depend in some way on commonly held resources. The concept of the commons is also spreading to new areas. Their essential feature is that they share one characteristic with private property and one with public goods. Like public goods, they are not “excludable”: the common resource is too extensive to keep people out very easily. But they are also “subtractable” (or “rivalrous”), like private property: if one person uses them, another’s access is diminished. (With a classic public good, such as street lighting, one person’s usage does not affect anyone else.) Many things other than rainforests or drylands share these attributes.
With respect to the fourth category, Manfred W. Fischer wrote:
Engineering knowledge may be perceived and even deliberately created as a non-rivalrous, partially excludable good.
Schumacher's Small is Beautiful
the bible of the AT movement

Appropriate Technololgy

Wikipedia provides the following:
Appropriate technology (AT) is technology that is designed with special consideration to the environmental, ethical, cultural, social and economical aspects of the community it is intended for. With these goals in mind, AT typically requires fewer resources, is easier to maintain, has a lower overall cost and less of an impact on the environment compared to industrialized practices. In developing nations, the term is usually used to describe simple technologies suitable for use in developing nations or less developed rural areas of industrialized nations. This form of appropriate technology usually prefers labor-intensive solutions over capital-intensive ones, although labor-saving devices are also used where this does not mean high capital or maintenance cost.
The Appropriate Technology movement generally focused on technologies that would be widely used by poor people, such as agricultural practices, fuel efficient cook stoves, simple health technologies or pedal operated mechanical devices. Appropriate technologies in this sense are often non-rivalrous, in that they are primarily a form of knowledge which can be applied by people with simple, readily available tools and materials. The intent of the movement was that the technology would be copyable, and thus not excludable.

Thus we can see that much of the appropriate technology for poor people in developing nations is best regarded as a public good.


It occurs to me that the public goods nature of this kind of appropriate technology suggests some problems:
  1. Modern society has found that invention is most efficient when institutionalized in specialized laboratories staffed by professional experts. Yet, for public goods such laboratories must be supported by governments. Unfortunately, the governments of those countries most in need of appropriate technologies to be used by and serve their poor are generally not adept at the funding of research, and have little political incentive to allocate their scarce R&D resources to the invention of technology to serve the poor.
  2. The poor themselves can be a powerful source of invention and technological innovation, so that the process can be "viral". For there to be widespread invention by the poor themselves, a climate needs to be propitious for such inventions. It seems to me that few countries seek to develop such climates. Thus the poor people themselves might be educated to understand technology and to have a technologically entrepreneurial attitude toward invention. They should also be able to profit from their inventions. and perhaps to obtain social as well as economic benefits from their work. In an ideal world, there should be resources made available to those seeking to develop an innovative technology to allow them to continue on their work. Again, few governments see the creation of these conditions as within their priorities.
  3. The spread of an appropriate technology is a process which also takes resources. They can be simple. For example, county fairs in the rural United States were sites in which farm inventions were displayed and the technology disseminated to others in the county. I would say American fast-food restaurant franchisers (McDonald's, Starbucks), recognizing that services for the spread of such technologies can be rivalrous and excludable, are successful in disseminating appropriate technology to large numbers of entrepreneurs, paying the costs of the dissemination using a business model that appropriates some of the benefits from the innovation for the parent firm to pay those costs. There are of course other models, but the creation of such systems for technology diffusion is as important as that for the promotion of invention, albeit one even less recognized by developing nation governments. It is also an area in which social innovators should be more active than they are, inventing new and better institutional mechanisms for the viral dissemination of technologies appropriate to the poor.
A Historical Note

Franklin's lightning rod
I am struck by the role of Benjamin Franklin (lightning rod, bifocals, Franklin stove) and Benjamin Thompson, Count Rumford (Rumford fireplace, Rumford stove, wax candle, coffee percolator, double boiler) in inventing and effectively disseminating appropriate technologies. Both apparently felt a real need to advance science, but also felt that their scientific efforts should yield simple technologies of wide utility. There seems to have been something in the North American colonial culture that led to the creation and empowerment of two such men (from a total population of only three million). That inventive spirit lived on in the United States in the lives of Eli Whitney, Thomas Edison, the Wright Brothers, Samuel Morse, and Henry Ford to name only the most famous. Indeed, even Abraham Lincoln held a U.S. patent; Henry David Thoreau invented a lead pencil. It would be interesting to see what historians and social scientists can tell us about the conditions in North America that were so conducive to the invention and dissemination of appropriate technologies and how those conditions might be replicated or approximated in poor countries today.


I strongly recommend that developing nations and donor agencies reemphasize the creation of conditions that are conducive to the creation and dissemination of simple technologies that can be used sustainablly by the poor to improve their lives. The effort should include both increased financing of research and dissemination of these technologies as public goods, and the development of policies and improvement of institutions that encourage viral processes for invention and spread of such technologies.

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