Technology Selection and Appropriate Technology

This paper provides a formal model of technology choice by a single region. Case studies have indicated that the technology acquired by LDCs often seem unsuitable, although the criteria for suitability are often unclear. The reasons which are presented for inappropriateness of the selection often rely more on political arguments then economic ones, or treat the recipient country as a passive actor in the whole process. Can a technology actively selected by a recipient country ever by inappropriate, assuming factor cost ratios represent true relative values? A model presented by Evenson and Bingswanger (1978) indicates that a technology developed in one economic or physical environment may be 'appropriate' to a second, very different environment if the second environment can generate a very limited range of technological possibilities on its own. Ranis (1978) has emphasized the importance of information on technological alternatives flowing smoothly and accurately within the system and the need to acquire capacity for adaptive research. Both these approaches recognize the importance of indigenous research capacity, although Ranis accords more emphasis to friction and proper incentives within the system. Barring policy and management problems, their conclusions appear to be that technology choice will be efficient--the appearance of inappropriateness stems from the lack of explicit recognition of the constraints on technology generation in the system. The model presented below builds on the early models of rational technology selection of Evenson- Binswanger and Ranis. It shares common elements with the Evenson-Binswanger model and may be regarded as a generalization of their model. It goes further, however, in several crucial aspects. It allows the extent of both adaptive and independent research to be choice variables in the technology acquisition decision. It allows for selection out of a continuum of technologies which differ in the environments for which they were designed. It allows for limits to the extent to which technologies can be adapted across environments and allows for losses because of incomplete adaption. The public goodnature of research plays a critical role in determining the efficiency of resource allocation as well. The model presented immediately below is couched in terms relating to agricultural technology. A reason for first presenting a model of agricultural technology selection is that many of the conceptual issues possess more intuitive natural interpretations. A second section will consider the impact of market structure on the development of technology, and a third section will broaden the basic model of agricultural technology development to one which encompasses certain types of fixed capital investment. A fourth section discusses testing of the model.