CAMBRIDGE, MASSACHUSETTS - German-British economist Ernst Friedrich Schumacher published a book in 1973 with the captivating title Small Is Beautiful, advocating the use in poor countries of human-scale, less capital-intensive technologies more suited to local conditions. The book sparked vigorous debate among economists in the 1970s and 1980s on ‘appropriate technology.’

For developing countries, the ability to adopt new technologies created in the rich world is surely an important advantage. But technologies developed in advanced economies, where skills and capital are abundant, might constitute at best a mixed blessing. A recent panel discussion involving distinguished economists, convened by the International Economic Association (IEA), suggests there may be even more ground for concern today about the appropriateness of imported technologies.

As Frances Stewart, the University of Oxford economist who was at the center of the earlier round of ‘appropriate technology’ debates, pointed out during the panel, East Asia’s success with export-oriented industrialization seemed to belie the worry that manufacturing will fail to create enough jobs and improve living standards in poorer countries. South Korea and eventually China charted a route out of poverty and grew at unprecedented rates as modern industrial factories absorbed rural labor into more productive employment.

Today, export-oriented industrialization no longer works the same way. Manufacturing technologies have become increasingly skill-intensive, and automation and other forms of innovation have reduced labor’s share of manufacturing value added.