As economies grow they tend to substitute capital for labor. Hence the literature on the social effects of technological change focuses on labor displacement and absorption. But what happens when a capital-intensive process appears in a developing economy where labor is cheap?
Here’s a fascinating example of labor displacing capital: a Ugandan financial institution has created an ATM network without ATMs. The machines are too expensive to put in rural areas, so the bank contracts with local shopkeepers who receive and disburse currency using inexpensive smart-card readers linked wirelessly to a central database.