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In the early 1960s, American steel producers came under severe pressure from imported steel. Most of this steel came from Europe and Japan, where large new steelworks had been constructed. The appropriate economic response by the American producers to the "internationalization" of their home markets would have been technological modernization and an accelerated reform of their splintered plant structure. This would have required the closing of many marginal installations and, simultaneously, the construction of new plants. After several decades of decision making in a less competitive and hence more predictable economic environment, the managers of the large steel companies were unprepared to embrace a strategy ensuing in abrupt change and headlong innovation. Neither was the labor union ready to cooperate fully with management on the issue of work rules and productivity. Instead, both management and labor sought to buy time by means of political lobbying for protection. Although successful, this strategy cannot be considered a long-term solution to the import problem of the integrated steel producers. Steel is an important input for the large metal working sector, and trade measures that raise the cost of steel would impair the ability of many firms to compete in domestic and foreign markets.

Twenty years ago, Lenski and Nolan published a seminal article in which they established empirical links between modern development and traditional technology in developing countries. This analysis is expanded in two ways: by improving the indicators of traditional technologies, and by introducing a second dimension of structural complexity, the socio-political differentiation of traditional societies. Though two indices measure functionally related aspects, they have distinct impacts on the socio-economic development of the 65 non-western countries analyzed in this article. Since traditional socio-political differentiation explains modern development better than traditional technology, we suggest significant revisions, and a new interpretation of Lenski and Nolan's results.