Technology and Institutions in the Process of Economic Reform : Achieving Growth with Poverty Reduction in South Asia

The prime premise in Clarence Ayres's Theory of Economic Progress (1962; c1944) is that the pace of advance in a society is driven by cumulative technological evolution. Technology is not tools alone, but encompasses irreducibly the human skills and ideas necessary to make and use tools for instrumental purposes. Technological progress depends on the flexibility of the counterpart institutional setting. The degree of institutional resistance or opposition inheres in five ceremonial features: social stratification, a system of conventions or mores, the potency of magical beliefs or ideology, the emotional conditioning of socialization, and the mystical rites and ceremonies that codify and intensify the institutional patterns of behavior (Ayres 1962, viii). In his most celebrated phrase, Ayres wrote, "Thus what happens to any society is determined jointly by the forward urging of its technology and the backward pressure of its ceremonial system" (Ayres 1962, ix). Surprisingly, his challenging thesis has rarely been applied as an overarching framework to guide practical development policy work in sectors at the country level. This field report sketches Nepal's economic conditions, explains the motivation for forwarding information technologies in the context of financial sector reforms, and identifies the founts of institutional resistance to their adoption. To date, these institutional obstructions have remained sufficiently powerful to slow to a crawl the pace of technological innovation in Nepal's financial sector