Magazine article Economic Review

Modern Technology and Industrialization

Magazine article Economic Review

Modern Technology and Industrialization

Article excerpt

Industrial technololgies are both an outcome of the industrialization process and one of its main driving important factors which directly and indirectly change the context and modes of international industrial production, this being among the key determinants of the international division of labour. Given the accelerating pace of technological development in industry, there is an urgent need not only to identify incipient technological breakthrough but above all, at an early, to analyse their short and long-term implications for the world-wide industrialization process and to reassess the validity of crucial assumption underlying a developing countries current industrial strategies.

In doing so, it is important to put the technology dimension into perspective to recognise its essential yet only partial role in shaping industrial strategies. Developing countries in particularly are facing a multitude of adjustment pressure on their economies resulting from inter-related external factors such as financial constraints and uncertain ties changing trade policies of major trade partners; subsidization and other support measures for-industry in competing countries, large and unpredictable price fluctuations in world markets; exchange rate variation etc. It is in this overall context that the impact of new technological developments needs to be seen.

In the advanced industrialized countries, where technological developments in industry have been concentrated, new products are continuously introduced which either substitute or supplement existing products. New production processes are being applied which have higher productivity and/or different factor proportions, higher flexibility and different economies of scale. In place of some materials traditionally supplied by developing countries, new materials are being introduced. These innovations, in turn, lead to changes in production costs, quality, timing etc. and thus to changes in the competitive system both at the micro and at the macroeconomic level.

As a result, adjustment pressures on developing countries have increased and so may, with some notable exceptions, their technological dependence. Obviously, the pursuance of the industrialization process will force these countries to participate in one form or another in the international technological race, with the race accelerating in speed and in costs, many developing countries will face great difficulties to follow: only a few may succeed in keeping abreast in highly selected areas of technology. For the majority developing countries, new technologies will have to be acquired from abroad rather than developed domestically. Restricted property rights and high technology transfer prices will contrain this acquisition. …

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