Conclusions

In this volume we have examined two comparative cases of technology borrowing and adaptation in the same industry with very similar initial conditions. We have seen that there are marked differences in behaviour which can be attributed to the nature of the sub-sectors, i.e. cotton spinning (a more continuous process) as opposed to cotton weaving (a more discrete process — at least initially). But most instructive are the differences across the two country situations under observation, Japan and India. As we would have expected, differences in relative factor prices, along with differences in market structure, clearly do have significant long-run implications for the strength and bias of innovations across countries. The price distortions commonly observed in developing countries are likely to result in both ‘inappropriate’ choices of technology and an ‘inappropriate’ direction for technology change. An important lesson to be learned from the historical experience of Japan is that the relative absence of deliberate market intervention policies — even after the end of tariff extraterritoriality — helped both to ensure an efficient choice of imported technology and to have it adapted in appropriate directions both during and after the labour surplus phase had come to an end.