The Problem of Second-Hand Industrial Equipment: Reclaiming a Missed Opportunity

Abstract

Some of the most populous economies in the world, such as China and India, are also among the fastest growing. Such growth depends upon steady increases in industrial output, particularly in commodities such as steel, cement, and paper. Faced with severely limited access to capital, many companies in developing countries purchase second-hand equipment from more developed countries, rather than newer, less polluting and more efficient technologies. This paper explores some of the issues involved with the trade in second-hand equipment, and recommends a methodology for analyzing the true long-term economic costs of such capital investment decisions. It also discusses incremental improvements which can be made to second-hand equipment.