ABSTRACT
The relevance of differential science and technology choices for aggregate performance differentials must be traced to the micro level in terms of differential technology performance. This chapter aims to distinguish between the “demand” and “supply” sides governing the choice of appropriate technologies and the appropriate direction of innovative activity. The Japanese experience demonstrates the importance of the often neglected quality dimension of technology choice and change, often ignored by economists but lying at the heart of businessmen’s entrepreneurial options. More important on the demand side of appropriate technology choice is the effect of the differential macro-policy setting in the institutional/organizational dimension rather than the simple question of relative factor prices which has been much discussed in the literature. The macroeconomic policy setting in many developing countries is commonly oriented towards the support of powerful vested interest groups, mainly a new industrial class, organized workers and civil servants whose scramble for rents emerges under the so-called early import substitution/infant industry regime.
