Countries are faced with selecting appropriate industries and technologies. Although the choice between requirements for more or less capital and special skills per worker is not the only choice to be made when making this selection, it is often a highly relevant one. The problem is being further complicated by the fact that industrially advanced countries are on the threshold of a second industrial revolution. Automation, transfer machines and the use of electronics are just beginning to be developed, and further revolutionary changes in technology and production techniques may occur. Unless appropriate choices are made, the present economic and social gap between the industrialized and the developing countries will become even larger.
[Developing countries] The rising pressure of unemployment seems to dictate that efforts should be made by developing countries to develop those industries and technologies which can provide the largest possible number of jobs, and require little capital. The application of large-scale, capital-intensive and automated technologies has increased the production of goods and services, including food, housing, automobiles, telephones, televisions, hospitals and universities. However, many of these products and services have only been available to a small elite, whereas large parts of the population continue to live in poverty. Large-scale denudation of forests and other environmental degradation has occurred in the process, the problem of unemployment remains far from solved and mass migrations due to large-scale technology have caused social disorientation and erosion of traditional cultural strengths of societies.
It has also been recognized that while it is possible to achieve better outcomes by selecting for development those industries with labour-intensive technologies, or industries in which different combinations of labour and capital intensity exist side by side, there are cases in which technological alternatives are not available, and where, if a particular industry is to be established at all, there is no other choice than to adopt a technology even though it may be a capital-intensive technology which employs relatively little labour. It is also true that often developing countries insist on the most up-to-date technology (or are obliged to use it by multinational enterprises willing to invest), although it may not, in fact, be appropriate to their objectives. The political dependence of the colonial era in many countries has been replaced by technological dependence.
Appropriate technology is an often-used slogan which itself inappropriately used lends itself to an emphasis on gadgets – too much emphasis on technique rather than on technological capability. The appropriate technology concept is not based on a critical assessment of the political and economic dynamics of the system into which it is to be introduced, especially if environmental dynamics are added to politics and economics.
There may be instances in which a capital-intensive technology would actually yield the best results, for example, where there are important spin-off effects on local industry, or where multinational enterprises produce in export industries or in industries in which no labour-intensive technology is available or could only be used with considerable increase in prices. In such cases, labour-intensive operations may have only a peripheral use, for example in material handling and transportation.