New technologies have burgeoned in several areas in the '80s and '90s. Foremost among these is microelectronics, followed by biotechnology, energy, remote sensing and telecommunications.

However, in the small scale sector, the adoption of microelectronic technology (on which we focus) lags for behind the availability in the less developed societies, LDCs. Differences in factor prices frequently dictate in favour of using earlier vintages of technology in developing countries. Imperfect capital markets obviate the use of new technology by enterprises facing financial constraints. Often it is not feasible to reach a minimum threshold of scale of operations, below which new technologies do not pay. New technologies are accompanied by risks and uncertainty, including the unpredictability of the pace of technological obsolescence, which potential adopters sometimes find too daunting. Perceived transactions costs in learning about alternative technologies, screening alternative sources, and bargaining for new technologies may discourage some entrepreneurs. Aside from these `rational' economic conditions, introduction of the latest methods can be allowed by vested interests threatened by change, bounded rationality, or a high `attention' threshold' below which the firm will not act.

First, we find new technology diffusion primarily in a limited number of cutting-edge industries. Second, this localised pattern of diffusion does not yield the full productivity gains that are potentially available from the new technology. Third, and particularly in the case of developing countries, the adoption of new technology has occurred more rapidly in routine administrative activities in government, public enterprises, banks, airlines, and railways than in production planning and control in industry. This has been shown for India where the transport sector (Indian railways, Indian airlines, and Air India) have introduced microelectronics-based information technology much more than has manufacturing industry.

The adoption of new technologies imposes stringent requirements for additional and new types of skills at different levels. First, the demand for new types of sophisticated skills, for example, in programming and repair and maintenance, will need to be met. Second, many of the traditional types of skills and occupations which become obsolete will require readaptation and retraining for alternative employment. Third, for a strategy of blending to work, the latest technical skills will need to be imparted to illiterate and semi-educated producers in rural and urban informal sectors through demonstration projects. Fourth, planners and policymakers will need to be sensitized to the potentials of new technologies for their application and integration with traditional production modes.

In this context a distinction between the use of new technology in producer goods or consumer goods production may be relevant. Many of the new consumer goods such as electronic toys and the assembly of CD players continue to require a high ratio of unskilled labour although some intermediate goods used in their production embody advanced technology. Furthermore, new technology displaces not only unskilled manual workers, but also many skilled occupations including a range of white-collar jobs, both technical (draughtsmen) and professional. The demand for some skilled occupations may also decrease because their productivity increased as a result of the application of new technology. It is therefore desirable that basic information on these technologies and the role of the small producers in utilising them be imparted through what has been called the technique of `training-by-doing'.

In a study of microelectronic industrial machinery in Malaysia and Singapore (Fong) the high cost of equipment was cited more than twice as frequently as any other perceived constraint on adoption. The new techniques may in some cases entirely dominate the old, that is, when they are more profitable at all relevant factor price ratios. But in other cases the new techniques will be profitable at the factor prices prevailing in the rich countries but not necessarily those in the poor, considering that many of the new techniques in garments and textiles are labour-saving and that the ratio of the difference in labour costs between the rich and poor countries can be as much as 18:1.

Although the cost of many technologies is going down, it may still be high relative to the national per capita income and the availability of foreign exchange. The new technology hardware will remain rather too sophisticated for efficient and full use so long as the infrastructure, software and skill requirements are not met in these countries. Experience has shown that even though the use of new technology such as microelectronics may be capital-saving, the infrastructure (e.g., the telecommunications network) needed for its successful application, is highly capital intensive. In the case of biotechnology, Fransman notes the possibility that the upscaling of some biotechnological processes (e.g., fermentation) will raise barriers to the entry of developing countries in this field. He also notes that in some cases `greater scale may not result in cost advantages'.