In dealing with the question of the choice by manufacturers between labor-intensive and capital-intensive techniques of production, theoretical literature in economics tends to stress distortions in the price ratio relating capital and labor which result from market imperfections. The objective of W. Paul Strassman in this volume has been to examine the question of choice of technique in the broadest possible perspective. He has succeeded admirably in this task. He discusses a host of factors which may outweigh the capital-labor price ratio in the calculations of an entrepreneur, such as imperfections in the flow of information concerning availability of new and used machinery, the scarcity of qualified middle management (foremen and supervisors), and size, ownership structure, and volume of operations of the firm.
The title of this volume is somewhat misleading in that it suggests a broader scope than one encounters. The actual focus is on factors influencing technological change in developing countries in general and in Mexico and Puerto Rico in particular. There has been no attempt to isolate the relative effects of this technological change on the economic development of either country. Nor does one find a detailed analysis of “the manufacturing experience of Mexico and Puerto Rico,” although a summary of the main policies influencing industrialization in both countries appears in an appendix. References to Mexico and Puerto Rico are used to provide empirical support in discussing the choice of technology, and these references are largely based on material obtained by Strassman in interviews with 70 manufacturing firms, of which 51 were in Mexico and 19 in Puerto Rico.
Strassman recognizes that Mexico and Puerto Rico are both special eases by virtue of their recent economic and political stability and their proximity to the United States (and Commonwealth status in the case of Puerto Rico). He argues, however, that it is precisely their advantages that make them suitable for observing technological choices, for one can “see what dilemmas remain as obstacles fade, and what opportunities arise” (p. 279). Yet for many of the Latin American countries the continuing coexistence of “dilemmas and obstacles” is likely to produce patterns of technological choice distinctly different from those reported by Strassman.
In presenting tables concerning the findings of his interviews, Strassman subdivides the data according to size of firm, type of ownership (U.S. subsidiary, European subsidiary, immigrant, private national, or public national), type of production (durable or nondurable goods), and location (Nuevo León, the Mexican Central Plateau, or Puerto Rico). The size of the sample is large enough to draw attention to a number of interesting consistencies. For example, producers of nondurables tend to use multiple shift operations more frequently than producers of durables, and firms owned by immigrants tend to shun secondhand machinery. However, the sample is not large enough to permit many reliable generalizations.
The reader interested in entrepreneurial behavior will find the materials on Mexico and Puerto Rico highly instructive. While the empirical evidence for both countries is presented in relation to considerations governing choice of techniques, the patterns revealed by Strassman point to numerous other areas for further fruitful research.