Schumacher meets Schumpeter: Appropriate technology below the radar

Innovation and technological change play an important role in poverty reduction through their contribution to growth, their use of factors of production, their environmental spillovers, the social relations associated with production and the characteristics of the products which they produce. It was only after the 1960s that these linkages were identified, with the recognition that much of global technological progress was directed to meet the needs of the global rich, and was best-suited to operation in high-income environments. The development and diffusion of “appropriate technologies” was an agenda largely pursued by the not-for-profit Appropriate Technology movement. However, with the global diffusion of innovative capabilities, and the rapid rise of incomes of the very poor - the “second bottom billion” - innovation for the poor and innovation appropriate for production in low-wage and poor-infrastructure environments has increasingly become an arena for profitable production. The very large size of China and India, coupled with their growing technological capabilities and the rapid growth of low-incomes, makes it likely that they will become the dominant sources of innovation for the poor.