An institutional critique of recent attempts to measure technological capabilities across countries.

Author:James, Jeffrey

This paper will be guided by recognition of two points, both of which feature prominently in institutional economics, or, as it is sometimes called, institutionalism. The first point has to do with the centrality of technology to economic growth and development, while the second concerns the inappropriateness of technological and other concepts developed in rich countries for the very different circumstances prevailing in the poorer countries. Let us deal with each of these recognitions in turn.

For two of the best-known early proponents of institutionalism, Clarence Ayres and Thorstein Veblen, the role of technology in the dynamic processes of growth and development was nothing short of overridingly important. "Ayres," for example, "placed more emphasis on technology than on any other factor which contributed to economic development" (Cypher and Dietz 2004, 172). Indeed, "For Ayres, technological progress and economic development were virtually synonymous" (172). Writing at the turn of the century, Veblen was no less insistent on the importance of technology and technological change in the evolutionary process of cumulative change in the economy. He "emphasized the role of technological change, broadly defined to include both hardware and know-how. He stressed industrial arts to a point that bordered on determinism. The adage, necessity is the mother of invention, was reversed; invention had become the mother of necessity" (Clark and Juma 1990, 211). In the more recent "new institutional economics," moreover, some authors continue to emphasize the dominant role of technology in creating the potential for economic growth and development. To Douglass North, for example,

The second economic revolution which began in the second half of the nineteenth century was the systematic application of the modern scientific disciplines to technology and more broadly to the economic problems of scarcity. For those economies that could realize their potential the productivity implications have resulted in standards of well-being simply unimagined by prior generations. (North 1993, 4) By now, a large body of empirical evidence has confirmed that economic growth does indeed depend heavily on technological change (Denison 1962), but this evidence also points to wide variations in growth rates across countries. The focus of this paper on technological indices can thus be viewed as an attempt to understand why some countries are able to exploit the benefits of modern technology, while others plainly lack the ability to do so (most notably, but not exclusively, countries in sub-Saharan Africa).

Also heavily undergirding the paper is, as noted above, the recognition that concepts designed for the rich countries may be inappropriate to the conditions prevailing in the majority of poor countries that comprise the Third World. From our particular point of view, this problem has to do with technology concepts that are transferred, as is, from rich to poor countries. Irrespective of the specific concept at issue, however, this second recognition is usually based on a rejection of the claim to a "monoeconomics," an economics, that is to say, which purports to apply with equal relevance to countries at very different stages of development. Among the many development economists who reject this claim to a universally applicable form of economics, two of them warrant special mention for their well-known contributions that were published in the 1960s. In the Asian Drama (1968), Gunnar Myrdal presented a highly detailed and convincing account of the dangers involved in applying a "Western approach" to the development problems in South Asia. "Economic theorists," he argued, "more than other social scientists have long been disposed to arrive at general propositions and then postulate them as valid for every time, place and cultures" (6). Across a wide range of development issues, Myrdal showed how this line of thought can lead to problems of mismeasurement and policy errors in the countries belonging to South Asia. In a similar vein, an influential article written by Dudley Seers (1962) points out the implausibility of deriving general propositions from the experience of relatively few industrialized economies, which, seen from a global perspective, exhibit an exceptional range of characteristics. (The typical case, by contrast, is a poor, largely rural economy, whose characteristics are very much the rule, rather than the exception, at the global level). Seers suggested, accordingly, that those who focus (in, say, teaching) on the relatively unusual, developed countries need constantly to stress the limitations of what is, in effect, a very special case.

Technological Indices and the Rural Sector

If any general policy conclusion can be drawn from the need to meet the Millennium Development Goals (MDGs) by the year 2015, it is that attention will need to focus heavily on rural, rather than urban, areas of developing countries. Within the former sectors, moreover, it is equally clear that one will need to single out the poorest members, who tend to suffer most acutely from the problems that the MDGs seek to redress. (The Millennium Development Goals are to eradicate extreme poverty and hunger, achieve universal primary education, promote gender equality and empower women, reduce child mortality and improve maternal health, combat HIV/AIDS and other diseases, ensure environmental sustainability, and develop a global partnership for development).

It is not that these recognitions have been entirely lost on the development community. According to UNESCO, for example,

many, if not all, of the ... Millennium Development Goals require special attention to the situation of rural populations. In spite of rapid urbanization, three billion or 60 per cent of the people in developing countries ... still live in rural areas. Three quarters of the world's poor, those earning less than a dollar a day, live in rural areas. One in five children in the South still does not attend primary school and, while rural-urban statistics on education are scarce, many countries report that non-attendance in school, early dropout of students, adult illiteracy and gender inequality in education are disproportionately high in rural areas, as is poverty. (Emphasis added) As regards the necessity for rural policy to focus on particular disadvantaged groups, an influential figure in the field has suggested, for example, that

The productivity on small farms in developing countries must increase if the Millennium Development Goals for poverty and hunger are to be archived.... Increasing productivity, which reduces unit costs of production, can help poor farmers and farm workers out of poverty and hunger, generate employment and incomes in non-farm rural enterprises, and it can make available more food to poor consumers at lower prices. (Pinstrup-Andersen) Yet, in spite of these and other recognitions that could be cited, the required re-allocation of policy concern in favor of rural areas does not appear to be happening on anything like the scale that is needed in most developing countries. In fact, with regard to many policy areas, it is difficult to discern any movement at all (Eastwood and Lipton 2000). Nor, in the realm of data collection and measurement, does the pronounced degree of urban bias seem any less acute than it traditionally has been. Our concern in this paper is not with these large and important problems as a whole but rather with one recent strand of literature in the realm of technology and development that, thus far, has shown scant if any inclination to involve the sector with the most relevance to the MDGs. I am referring here to the urban and developed country bias embedded in recent attempts to measure the technological capabilities of developing countries, on the basis of indicators that are also, or more accurately, especially suited to the richest countries.) (2) The problem is thus not resident in the use of national level data per se. It resides rather in the choice of indicators that are used at this level to measure technology capabilities. If, for example, the country level data happened to be about fertilizer use, it would obviously refer more to rural than urban conditions. The problem is rather that the indicators used in recent attempts to measure national technological capabilities supply almost entirely information of the opposite kind. That I view this information as being mostly unhelpful is a matter of values and development perspectives, but even when they are evaluated on their own terms, these indicators perform poorly in discriminating among many poor countries, whose scores on indices such as patents, high-technology exports, and internet hosts tend to be zero or negligible. In other words, my problem is partly that the UNDP could better spend its time on indices that more closely accord with its mandate, but also that the goals of the TAI are themselves not met. These goals are best expressed in the words of the UNDP itself. Thus:

The design of the index reflects two particular concerns. First, to focus on indicators that reflect policy concerns for all countries, regardless of the level of technological development. Second, to be useful for developing countries. To accomplish this the index must be able to discriminate between countries at the lower end of the range. (UNDP 2001, 46; emphasis added) In expanded form, the criticisms that have just been espoused form the first part of the paper and they are advanced mainly toward one of the numerous indices now in existence: to wit, the Technology Achievements Index proposed by the UNDP (2001). I have chosen to focus on this particular index partly because it sits so oddly with the well-known emphasis of the UNDP on problems of human development that are disproportionately represented in rural rather than urban areas and from whom one may thus have expected some...

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