I recently got an opportunity to speak with Steve Daniels, author of "Making Do", about making a business out of making things out of waste in Kenya. You should read it, its free online. This was Mr. Daniels senior honors thesis at Brown University, and I am impressed.
I'm unfamiliar with the social sciences, and have never done anything as ballsy as travel to the poorest parts of the world to study their problems and potential solutions first hand. So, utmost respect to Mr. Daniels, and I doubt I will be able to contribute much to this particular topic, but here are some thoughts.
My absolute favorite line in the thesis is the following :
"microenterprise efficiency comes not from the individual firm, but from the dynamics among similar enterprises in collective geospatial clusters. In fact, through clustering the jua-kali economy displays a critical property of ecosystems that Western economies lack: it produces virtually no waste."
Daniels illustrates how large industrial centers have arisen spontaneously in Kenya, capable of processing local scrap into useful goods. Everything is recycled and re-used. Items as complex as welding tools and metal lathes are made locally from improvised scrap. These tools can then be used to process more scrap, and to improvise even more tools, creating an organically growing and self reproducing means of production.
"... the linkages among microenterprises form dense networks of activity. Take a stroll through Gikomba, and one can’t help but think of the informal sector as a living organism with intricate systems that form a concordant whole."
Daniels goes on to elaborate on what industrialized nations can learn from this production scheme, in terms of building an efficient economy that wastes nothing and can run on constrained resources. Daniels also notes that there are a number of barriers slowing down the technological progress of this informal manufacturing. Most notable is that subsistence lifestyles leave no room for risk taking and credit is scarce, so there is no room try to develop new technology. There are a number of clear and very doable suggestions in the text, and the work represents one of the few satisfying "and this, in detail, is how we will save the world" answers that I've come across.
In some sense, this form of production is similar to an idealized future-society that we've been considering some time. That is, a society that can run on very low resources, produces zero waste, fits into the natural environment, is local, is self reproducing, and is highly mobile. Now, scrap processing in Kenya does not fit all of these criteria and presents with some serious drawbacks. It would be beneficial to consider weather the flaws evident in the from scrap production in Kenya generalize to our idealized science-industrial complex.
In Making Do, Daniels notes that production of uniform, high quality machinery in the improvised production environment is not cost effective. The specific example cited is an irrigation pump that could not be made affordable to local farmers until its production was outsourced to China. I believe that this could be a fundamental flaw in aiming for local, robust economies that contain a complete industrial basis. At the end of the day, the most efficient means of production is always to produce en masse, for the entire planet, and in a giant optimized and computer controlled assembly facility. Globalization is not just inevitable, it is the necessary and most efficient means to produce high technology.
That said, the optimal means of production my be a hybrid of the local-cellular approach and the global-centralized approach. It makes some sense to claim that the level of sophistication in a technology is directly related to the extent that globalization of production is necessary. As a simple matter of resources, technology that requires neodymium, sapphire, gold, silicon, arsenic, germanium, must necessarily involve global trade networks. Simpler technology that requires only rocks and plants can be manufactured in your backyard. Scrap metal re-use in Kenya that can produce lathes and welding torches and stoves requires an intermediate level of trade integration.
I suspect we can reason about this formally. If we look at a graph representing the transportation cost between population centers, we can get some insight as to where to place the global-local trade off. If transportation costs are low, the whole world is highly connected anyway, so in a sense everything is local. If transportation costs are infinite, no global activity is possible. Reality lies somewhere on this spectrum. It also seems likely that the transportation cost has been kept artificially low due to the temporary abundance of fossil fuels, skewing our means of production to have more globalized characteristics than may be sustainable.
So why was I ever set on some science fiction of the self-reproducing assembly machine that could produce everything I'd ever want in my garage (this being the epitome of hyper-local high tech production)? I remember it has to do with Star Trek and those "replicator" machines that you carry around in space and will make you tea, lasers, whatever you want. If we are to achieve off-world colonization, it is necessary to reduce our industrial basis to something that can escape Earth's gravity well. If we can figure out how to make computers in a slum in India, from purely local resources, maybe we can start working on how to produce them on Mars.
So, with that selfish interest in mind, it sounds like improving the availability of micro-finance in poor regions, coupled with Fab Labs to distribute prototyping technology and skills, is a promising course to follow both for alleviating world poverty and for purely academic advancement in local manufacturing. Read Daniels' thesis for the full list concrete solutions for expanding improvised manufacturing in the third world.