The Choice of Techniques

  • A. P. Thirlwall


If labour is more abundant and capital is scarcer in developing countries than in developed countries, we might expect to observe the use of more labour-intensive techniques of production in the industrial sector of developing countries, reflecting a lower price of labour relative to capital. Figure 9.1 shows this. Assuming the same production function in the two sets of countries, labelled ‘1’, and holding everything else constant, the lower relative price of labour in the developing country, given by the price line (or isocost curve) cb, gives a more labour-intensive choice of technique than in the developed country, where the relative price of labour is given by the steeper line ad.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References and Further Reading

  1. A. BHALLA, ‘Investment Allocation and Technological Choice — A Case of Cotton Spinning Techniques’, Economic Journal, September 1964.Google Scholar
  2. C. BLISS and N. STERN, ‘Productivity, Wages and Nutrition, Parts 1 and 11, Journal of Development Economics, vol. 5, 1978.Google Scholar
  3. M. DOBB, ‘A Note on the So-called Degree of Capital Intensity of Investment in Underdeveloped Countries’ in On Economic Theory and Socialism (London: Routledge & Kegan Paul, 1955).Google Scholar
  4. D. FORSYTH and R. SOLOMON, ‘Choice of Technology and Nationality of Ownership in a Developing Country’, Oxford Economic Papers, July 1977.Google Scholar
  5. G. K. HELLEINER, ‘The Role of Multinational Corporations in the Less Developed Countries’ Trade in Technology’, World Development, April 1975.Google Scholar
  6. S. LALL, ‘Transnationals, Domestic Enterprises and Industrial Structures in HOST LDCs: A Survey’, Oxford Economic Papers, July 1978.Google Scholar
  7. H. PACK, ‘The Employment-Output Trade-off in LDCs — A Microeconomic Approach’, Oxford Economic Papers, November 1974.Google Scholar
  8. H. PACK, The Substitution of Labour for Capital in Kenyan Manufacture’, Economic Journal, March 1976.Google Scholar
  9. G. RANIS, ‘Investment Criteria, Productivity and Economic Development: An Empirical Comment’, Quarterly Journal of Economics, May 1962.Google Scholar
  10. J. C. SANDESARA, ‘Scale and Technology in Indian Industry’, Bulletin of the Oxford Institute of Economics and Statistics, August 1966.Google Scholar
  11. A. K. SEN, Choice of Techniques, 3rd edn (Oxford: Basil Btackwell, 1968).Google Scholar
  12. A. K. SEN, ‘Choice of Technology: A Critical Survey of a Class of Debates’, in UNIDO, Planning for Advanced Skills and Technology (New York 1969).Google Scholar
  13. A. K. SEN, Employment, Technology and Development (Oxford: Clarendon Press 1975).Google Scholar
  14. F. STEWART, Technology and Underdevelopment (London: Macmillan, 1972).Google Scholar
  15. F. STEWART and P. STREETEN, ‘Conflicts Between Output and Employment Objectives in Developing Countries’, Oxford Economic Papers, July 1971.Google Scholar
  16. A. P. THIRLWALL, Inflation, Saving and Growth in Developing Economies (London: Macmillan, 1974).Google Scholar
  17. A. P. THIRLWALL, ‘The Shadow Wage when Consumption is Productive’, Bangladesh Development Studies, October–December 1977.Google Scholar
  18. A. P. THIRLWALL, ‘Reconciling the Conflict Between Employment and Saving and Employment and Output in the Choice of Techniques in Developing Countries’, Rivista Internazionale di Scienze Economiche e Commerciali, February 1978.Google Scholar
  19. L. WHITE, The Evidence on Appropriate Factor Proportions for Manufacturing in LDCs: A Survey’, Economic Development and Cultural Change, October 1978.Google Scholar

Copyright information

© A. P. Thirlwall 1983

Authors and Affiliations

  • A. P. Thirlwall
    • 1
  1. 1.University of KentCanterburyNew Zealand

Personalised recommendations