Macroeconomic implications of factor substitution in industrial processes
PACK, H.
This paper examines the scope for capital-labor substitution in the LDCs. It addresses three principal questions: How do the benefits to private producers of systematically adopting appropriate technology compare with those of adopting capital-intensive technology? How surmountable are the obstacles to adopting appropriate technology that is available? If the benefits of adopting appropriate technology are great and the obstacles surmountable, why are LDC producers opting for capital-intensive processes? The analysis relies on engineering-economic analyses to answer the first question; a reformulation of obstacles in a cost-benefit framework to answer the second; and a discussion of alternative profit-seeking activities of producers to answer the third.
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