ABSTRACT
In the developing countries, a large proportion of the workforce is engaged as wage labour, in low paid salaried work or as self-employed generating their own incomes and employment by operating small or micro enterprises with the help of family labour alone. Much of these workers constitute a large and growing informal economy, with little legal regulation and social security benefits. In fast changing globalising economies labour and small enterprises struggle to survive, remain viable and grow in terms of income for labour and turnover or profits for enterprises. Education and skills are seen as routes out of poverty for labour and technology as a route to increase productivity in small enterprises. Skill training and access to technology are the two lifelines for them in developing economies. However, with low levels of basic education, acquiring skills for labour, and with low levels of investment, acquiring technology for small enterprises, is a challenge. On the supply side, provision of relevant skill training and technology is also a challenge for governments due to the low capacity to absorb such inputs. This chapter provides some insights into the challenges faced in skill formation and technology absorption in developing countries. We argue that skills and technology are closely linked for productivity and income enhancing effects.
