South–South Trade in Capital Goods – The Market-Driven Diffusion of Appropriate Technology

This article introduces a Special Section addressing technology diffusion as a result of south–south trade in capital goods; taking forward, and updating, arguments from the appropriate technology literature in the 1970s and 1980s. We review capital goods utilised in three sectors of considerable development significance in low- and middle-income economies (agricultural mechanisation in Tanzania, furniture in Kenya and apparel in Uganda). In each sector, southern-origin equipment is distinctive by comparison with northern-origin capital goods. At observed capacity utilisation rates, southern-origin capital goods are economically efficient, accessible and profitable to users, and demonstrably appropriate to operating conditions in these three economies. As a consequence, not only are Chinese-origin capital goods diffusing rapidly in these three economies, but so too are they diffusing in other developing economies. Chinese-origin capital goods now account for almost one-third of all capital goods imports in Africa, Latin America and South-East Asia, and Indian equipment is also widely utilised in many low- and middle-income economies. This suggests a wider significance of our findings and calls for policymakers to harness the opportunities provided by market-driven south–south trade in capital goods.