Microfounding Nonhomothetic Technology From Continuous Technology Choice

Choice of Technology: Problems and Solutions

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In this article, we will discuss the problems and solutions of choice of technology.

Problems in the Choice of Technology:

(1) Scarcity of Capital:

Modern technology is an expensive technology. They require heavy doses of capital and skilled manpower. In underdeveloped countries there is the scarcity of both capital and skilled manpower.

So the adoption of new technology becomes difficult. According to Prof. Nurkse, "If capital is scarce, development of know-how alone would not facilitate economic growth. It is only with the help of capital that the benefits of know-how can be realized and the process of production developed."

(2) Problem of Utilization:

Technological development has been a very slow process in developed countries. Accordingly, their social, political and economic institutions have great difficulty in adopting the changing technological scenario in the country. However, in underdeveloped countries traditions and conventions still have a strong hold in the institutional set up of these countries.

The adoption of such a new technology is therefore not a smooth sailing process. People are so much tied to their conventional wisdom that they do not easily adopt themselves to the changed situations. Still, many would like to stick to the conventional methods of production. This creates many other problems.

(3) Illiteracy:

Majority of the population in underdeveloped countries is uneducated. It is difficult to acquaint them with new technology. Thus for the first task of the Govt, in underdeveloped countries is to generate enthusiasm among the common masses regarding new ways of doing things. This should be adopted specially in agricultural sector.

(4) Different Conditions:

Technology has been developed in developed countries to suit their needs and means. But, needs and means of underdeveloped countries differ as in developed countries. Accordingly many types of technology developed in advanced nations may not suit the underdeveloped world. Therefore, different conditions prevailing in both countries create many obstacles for the adoption of new technology.

(5) Problem of Obsolescence:

It has been observed that technology has developed very fast in developed countries that the existing techniques very soon become obsolete. When the new technology reaches the underdeveloped world, it is declared as of vintage variety in the developed countries.

The result is that the underdeveloped are never able to reap full benefits of the so called new technology. It is therefore desired that underdeveloped should develop their own technology themselves and avoid to import new technology.

(6) Lack of Able Innovators:

Discovery and adoption of new technology presupposes the existence of able innovators. They need lot of capital for the successful implementation of their programmes. But, there is not only the dearth of capital but also of the able innovators and entrepreneurs in underdeveloped countries.

(7) Capital Intensive:

In developed countries, technology is most capital intensive. Scarcity of labour results in high wage rate in these countries. In contrast with the abundance of their man-power, underdeveloped countries need labour intensive technology. Capital intensive technology would not be much suitable for them.

Suggestions :

Keeping in view the various difficulties regarding the adoption of new techniques, following suggestions are made:

(1) Use of Labor Intensive Techniques:

In their initial stages of growth underdeveloped countries should prefer to adopt labour- intensive techniques. Such techniques should be, as far as possible, indigenously developed. Technology should aim primarily at the maximization of employment opportunities in less developed countries.

(2) Co-ordination of Different Techniques:

Any particular technique cannot be solely successful in less developed countries. While developing new techniques, proper consideration be made to the existing cultural, and social environment in the country. Coordinating the various possible techniques, the one that accelerates the process of growth should be adopted. Moreover new technology should be compatible with the existing technology.

(3) Research:

In less developed countries suitable modifications may be made to adopt the technology of developed countries. This need 'research' at various levels of the adoption of new know-how. Thus, seeking the help of advanced countries. Govt., of under developed countries should open research centres with trained personnel who would facilitate the task of adoption of new technology. Special incentives may be given for outstanding research.

(4) Training Facilities:

The underdeveloped countries should provide maximum training facilities to its workers. This would facilitate the adoption of new technology. Engineering institutions should be opened in the country in large number.

(5) Minimum Costs:

Less developed countries should choose such techniques of production that marginal productivity of the factors in their alternative uses is equalised. In such a situation, costs of production would be minimum.

(6) Import of Technique:

Efforts should be made to import technology from abroad but only from those countries which assure of continuous maintenance of the hi-tech machinery and equipment.

(7) Maximum Surplus:

The underdeveloped countries should adopt such technology that generates maximum possible surplus. This would stimulate the capital formation and rate of growth.

(8) Appropriate Plants:

The under developed countries should invest in such plants that are within their limited means. They should not be over-enthusiastic to invest in large plants beyond their capacity.

These plants will adopt latest technologies which in turn help to raise production and absorb maximum trained persons. Prof. Nurkse argued that in their initial stages of growth, underdeveloped countries, should depend more on simple tools and implements rather than the modern ones.

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Source: https://www.economicsdiscussion.net/technology/choice-of-technology-problems-and-solutions/13165