Technology and Development
How Entrepreneurs Can Use New Technology to Promote Development
New technology aids in the creative destruction of capitalist progress but only when people are empowered to use it in entrepreneurial ways.
It was Joseph Schumpeter who first wrote that the defining characteristic of capitalism, creative destruction, was an essential part of economic progress because it enabled entrepreneurs to create new technologies to exploit changing situations. Improvements or changes could come in the area of technology but they could also come in the fields of management and organization. Some of the world’s most successful companies in the modern age include McDonalds, Toyota and Microsoft, companies which have built their success on better business organization rather than new technology alone.
Consequently, when new technology is made available, it tends to lead to many changes, especially when entrepreneurs are able to consider different ways they can use it. When mobile telephones were first made available to the small fishermen of Kerala in Southern India, for example, few people expected that they would use them to call different fish wholesalers along the coast to get the best deals for their day’s catch. More incentives for recycling, meanwhile, have seen a boom in scavenging for unwanted goods of all sorts across Asia. People, given opportunities, are often smart and inventive. They must, however, be given the opportunity and have unnecessary barriers removed from their paths.
When progress is possible, then the introduction of new technology is often accompanied by the modernization of complementary activities and services and in the diversification of a country’s economy. Diversification is nearly always a good thing because, by providing alternative sources for future income, it reduces risks from the collapse in the price of one or more markets. To encourage these processes, governments should enable people to have access to new technology and the skills and competencies necessary to use them effectively, as well as financing to lease or buy it as necessary. Youngsters chatting on the internet or texting each other with their mobile phones may seem a largely unproductive set of activities but they have led to many useful efficiency savings in business communications. Computer game technologies also lead to improvements in all kinds of simulations.
However, the types of things that can be done across Asia with new technologies should be broadly in line with the current level of development. It is not practical to expect poor people with little education to come up with high-tech applications, although they can use technology wisely and sustainably in their daily lives when given the chance.
The policy brief on which this article is based may be found at the ADB’s website at: http://www.adb.org/Documents/EDRC/Policy_Briefs/PB049.pdf.
