How could relative underdevelopment pose a constraint to the harnessing of technological change and increased output productivity due to technological developments? In this paper one possible chain of causation in the understanding of this question is suggested. It is argued that fragmentation of markets and the absence of industrial deepening, both factors characteristic of developing country markets, could constitute important barriers to the adoption of firm strategies that promote technological efficiency in producer goods sectors. The fragmentation of markets (due to poor infrastructure) prevents specialization and thus impedes technological learning through this route. The lack of industrial deepening implies that a large proportion of demand for intermediate producer goods emerges from households in the economy rather than firms.