Some observations on the economic framework for optimum LDC utilization of technology

Secondly, the changing relative importance of these two processes in a time-phased historical context is brought out, as the typical labor surplus developing country moves from import substitution through the export substitution sub-phase of growth. The empirical record of historical Japan, along with that of contemporary Korea and Taiwan, is examined in this context -- both at the macro and micro levels. It is found that technology assimilation, especially during the export substitution phase when relative price signals are comparatively less distorted, can be extremely important in terms of both output mix and technology change. The same kind of evidence on technological flexibility seems to emerge when we look across scales within countries still generally under import substitution policies -- but where the impact of such policies varies by size of firm. The paper points attention to the major specific manifestations of industrial technological flexibility at the machine and plant level and briefly discusses the importance of R&D expenditures, government infrastructure, educational strategy, and type of private sector organization as additional dimensions of an adequate economic framework for optimum LDC technology choice. Finally, SectionIV summarizes the overall findings of the paper and presents conclusions for policy of relevance to both the technology borrowing and lending countries.