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Chapter Five: 

The Diffusion of Technology

Main Idea: The process by which technology spreads from its point of origin is a complex process that depends upon number of economic, social and cultural factors.
 Diffusion from Country to Country
  • Ongoing technological advance requires (a) an infusion of ideas, tools and material from other places and (b) an ability to make good use of them.
  • The willingness of Europe and America to accept ideas, tools and material from other places accounts for their leadership in technological innovations. History shows that no nation that isolates itself will continue to advance technologically.
  • The "ability to make good use" of the ideas, tools and materials require an indigenous labor force with a broad range of skills Put another way, success depends upon the active participation of the recipients of the foreign technology.
  • The idea of appropriate technology questions the assumption that technologies of foreign origin are always a desirable means of development. Indeed, the adaptation of technology by poor, developing nations poses numerous dilemmas:
    • Many countries are poor in both skilled labor and capital, making it impossible to substitute one for the other.
    • The greatest needs is often the creation of jobs; yet, technology is often meant to be save labor.
    •  It is doubtful that the world could sustain the diffusion of technologies to all developing countries.
  • Technologies that are appropriate to the needs of the country (alternative technologies/ intermediate technologies) should:
    • increase employment
    •  redress maldistribution of wealth
    •  empower people
    •  create economic independence
    •  preserve the environment.

Business Firms and Technological Diffusion

  • The diffusion of technology is a learning process that depends upon individuals ("translators") who can make new knowledge understandable and useful.
  • A number of economic factors - especially the expectations of cost and potential benefits - influence the speed and extent of the diffusion of technology. Potential benefits are often difficult to assess. Obviously, companies will not invest in a technology unless they are reasonably sure that it will work as expected. This requires that uncertainties (inability to predict benefits) be reduced to risks (ability to formulate at least a rough probability of benefits).
  • Non-economic risks must also be considered. Just because a technology works it does not follow that people will buy it.
  • Technological diffusion can be restricted by the attitude of potential recipients. In particular, the NIH ("not invented here") attitude; that is, a suspicion of any technology that was not created and owned by the potential recipients.
  • Technological diffusion can also be restricted by the holders/inventors or the technology. However, since technological innovation requires the interchange of knowledge, efforts to restrict the diffusion of technology are rarely successful and may be counterproductive. The most important secret is that a technology exists. Knowing that a problem can be solved is often the most important step in its solution.
  • Patents can encourage or restrict innovation. A patent is a legal monopoly that confers exclusive use of an invention. Patents can be used to restrict competition, but in reality the public nature of the patent provides a great deal of information to others. This information can be used not to copy the invention, but as a basis for other possible solutions as well as improvements on the original invention. One cannot hold a "master patent" such as a patent for the automobile or the personal computer. 

Study Questions:

What two factors are needed for continuing technological innovation?

What is a patent?

How does a patent reward innovation?

What is meant by the term "master patent?"

What is meant by the phrase "appropriate or alternate technologies?"

What is NIH and how does it stifle technological innovation?

 Self Test