Commodity Prices and Appropriate Technology—Some Lessons from Tin Mining

This paper looks at the economics of the choice of technique in a developing country (Malaysia) as between a labour-intensive, locally developed method of production (gravel pump tin mining) and a capitabintensive method (tin dredging) developed by foreign firms. The ‘appropriateness ‘ of each technique is evaluated by cost-benefit analysis, which finds that rankings by private and by social profitabilities are sensitive both to the discount rate (as one might expect) and (rather surprisingly) to the product price. The paper suggests these findings constitute a new argument in favour of schemes to stabilise primary commodity prices.