Abstract
This study investigates how small-scale firms in developing countries acquire technological capability - the knowledge and skills required to operate technology effectively and to adapt it to local conditions. It fills a gap in the established literature on technological capability, which has neglected the small-scale sector in spite of the important role it plays in employment generation in those countries. The focus is on the capital goods industry, where capability building makes a crucial contribution to local technological progress. Detailed insight into how firms in this industry enhance their capability is gained through a quantitative analysis based on fieldwork among farm equipment manufacturers in Pakistan's Punjab Province undertaken by the author in 1994.
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