Tuesday, September 28, 2010

A new paradigm for technology improvement in poor countries

In his book Induced Innovation: Technology, Institutions, and Development Hans Binswanger pointed out that technological innovation may not always be exogenous to economic systems, but may be induced by the economic system. (See also Technology, Growth, and Development: An Induced Innovation Perspective by Vern Ruttan.)

It seems to me that sometimes it is better to see invention as not induced by economic conditions, but rather something that results from opportunities provided by scientific advances or complementary technological advances. Years ago, in Microcomputers in Public Policy: Applications for Developing Countries I published a chapter describing the development of modern surgery, which required both the development of anesthesia techniques and antiseptic techniques as well as an understanding of anatomy and pathology as well as development of diagnostic techniques. When surgery became less lethal, society could begin to develop the suite of surgical technology as well as the cadre of surgeons and supporting personnel able to perform the variety of surgical techniques that the economy could call forth. However, it is seems to me less than useful to try to analyze the development of the preconditions for modern surgery as induced by the financial opportunities that would eventually develop to perform reimbursed surgery.

Indeed, many of the technologies that led to revolutionary social changes -- including the printing press, the steam engine, the railroad, the telephone, the computer -- were marked by radical underestimation of their eventual economic value.

It is increasingly recognized that technological innovation is a key to economic development. There is a circular causality. The introduction of new technologies, by increasing the efficiency of resource utilization, can drive increases in production. Simultaneously, the changes in resource values resulting from economic development often results in opportunities to increase productivity by shifting to alternative technologies better suited to the new factor prices. (Thus as pay for labor increases and/or capital becomes more available and thus the costs of capital decrease, firms will seek to substitute labor saving but more capital intensive technologies for labor intensive but capital saving technologies.)

Brian Arthur in his book, The Nature of Technology: What It Is and How It Evolves, makes the case that technology is cumulative, in the sense that a society can only successfully adopt a new technology if it already has certain technologies on which that new technology depends. In my commentary on Arthur's book, I sought to make the case that technology can be regarded as knowledge that is embodied in people, machinery, plant, and even supplies (such as intermediate goods). In that context, it is clear that a society can successfully incorporate a new technology only if it can successfully obtain the machines needed for its use/operation and also successfully develop or obtain the people, plant and supplies with the embodied knowledge necessary to operate that machinery.

Thus the readiness to adopt new technologies depends on the technologies that a society has already adopted. This in turn is closely correlated with the level of economic development of the society. Poor countries generally do not have the ability to adopt complex technologies that are a radical departure from their existing technological pattern. Economic development involves developing increasing technological capacity in a step by step process. On the other hand, the so called "tigers" have shown that that process can be accomplished in decades, under the right circumstances, rather than in the centuries it has take for the richest countries to achieve their current status.

I have spent quite a bit of time trying to understand how donor agencies could help developing countries on the path to rapid scientifically and technologically fueled development. The poorest countries not only have much smaller GDPs per capita, but tend to devote a much smaller portion of their GDPs to science and technology than do rich countries. Indeed, there is a strong correlation between the portion of GDP devoted to research and development (and thus to science and technology) and the per capita GDP.

I suspect that this correlation is in part an artifact of the way in which we define "science and technology" (as well as "research and development"). The definitions tend to focus on kinds of knowledge development activities that have evolved in rich societies, and to ignore the kinds that are more common in and appropriate to poor societies. The efforts to improve the technologies used in agriculture and crafts by poor people in poor countries might often not be termed either "science and technology" nor "research and development".

Donor agencies must, of course, help all developing nations to increase their capacity in modern science and technology, both because some aspects of modern S&T will be immediately useful in their development, and because that capacity will increasingly be needed as countries become richer and more technologically sophisticated.

However, we need a new paradigm for improvement of the technology of poor countries, including improving the general knowledge needed to apply their current technologies and new technologies appropriate to their development.  How do craftspeople producing goods in small workshops improve their productive techniques and how do we find ways to stimulate those improvements? How do the primary producers -- especially farmers, fishermen, and woodcutters as well as home-makers -- improve their productive technology and how do we find ways to stimulate such improvements.

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