What is technology transfer?

All these forms of knowledge may vary in a further important way. At one end of the spectrum, the transfer involved can be concerned with the knowledge for using and operating technology. At the other end, it can be concerned with the knowledge necessary for changing technology and innovating. In between, transferred knowledge may involve the many different kinds of design and engineering knowledge required to replicate and modify technologies.

Moreover, in international technology transfer there is a distinction between horizontal and vertical transfers. Horizontal technology transfer consists of the movement of an established technology from one operational environment to another (for instance from one company to another). Vertical technology transfer, in contrast, refers to the transmission of new technologies from their generation during research and development activities in science and technology organisations, for instance, to application in the industrial and agricultural sectors.
Gaining access to new technologies

Technology transfer is an important means by which developing countries gain access to technologies that are new to them. For example, the acquisition of foreign technologies by East Asian newly industrialised countries, coupled with domestic ‘technological learning’ – efforts to accumulate the capability to change technologies – have been key factors in their rapid technological and economic development.

However the ability of developing countries to use technology transfers to develop their domestic capabilities, allowing such countries to reap the social and economic benefits of existing technologies, have been mixed. There are wide variations between countries and betweensectors within individual countries.

The disparities between – and within – developing countries in benefiting from technology transfer suggest that the relationship between technology transfer and the accumulation of domestic technological capability is far from straightforward. In other words, more technology transfer does not necessarily lead to more technological and economic development.

From technology transfer to technological learning capabilities

The initial emphasis in the analysis of international technology transfer, in discussions among policy analysts up to the late 1970s, was on the costs of technology transfer, and on whether the choice of technologies was appropriate to the local conditions in developing countries. Little attention was given in this analysis to the absorptive capacities and domestic technological learning of those who acquired foreign technologies – in other words, to the processes involved in assimilating imported technologies and putting them to work efficiently. The underlying assumption seemed to be that once a technology was acquired, its absorption and implementation took place almost effortlessly.

However it is now widely accepted that this is not the case. The acquisition and absorption of foreign technologies, and their further development, are each complex processes that demand significant efforts from the acquirers. Several factors contribute to this complexity. First, the acquisition and mastery of technology are both costly and time-consuming. Second, acquired technologies often need to be adapted to local conditions. Thirdly, technologies are not commodities that can be transferred as a complete ready-to-use set; they also contain tacit components that are not easily codified and transmitted in written documents, and require extensive learning efforts to be properly understood.

This increased understanding of the process of technological development has contributed to shifting attention of academics and policy researchers from the narrow transfer of technology as such to the technological learning efforts and mastery of acquirers.

The policy dimension and regulatory frameworks

For some, the process of technology transfer is one that can be left primarily to the operation of the free market. But experience has shown that the process is also sensitive to ‘market failures’, such as imbalances in bargaining power and information between sources and acquirers of technologies.

Trends in the regulations introduced to encourage trade liberalisation also have implications for access by developing countries to foreign technologies. As a result, technology transfer is often the object of policy interventions at the international level, as well as in both developing and developed countries, each trying to tackle these issues from different, and sometimes conflicting, angles.

At the international level, technology transfer is becoming increasingly drawn into political negotiations between developed and developing countries, particularly those involving international agreements on trade and environment-related issues. Provisions on technology transfer, for example, form an important part in several multilateral agreements, such as the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) of the World Trade Organization (WTO) and the United Nations Framework Convention on Climate Change (UNFCCC), as well as in regional and bilateral agreements.

Policies adopted by developed countries for stimulating the transfer of technologies to developing countries are also becoming increasingly relevant. This is because international policies on trade and environment issues often require such countries to create incentives for the transfer of technologies to developing countries.

In this context, according to UNCTAD, 41 agencies and programmes in 23 developed countries offer incentives that directly or indirectly facilitate technology transfer to developing countries. These measures include financing support, training, matching services, partnerships, alliances and support for equipment purchase or licensing. However there is an ongoing discussion about the effectiveness of existing measures. Some analysts, for example, point out that incentives are selective and have limited coverage, and that few such programmes are centrally concerned with technology transfers.

With regard to the policies of developing countries themselves, it is widely accepted that their purpose should be to maximise the gains from technology transfer while limiting its shortcomings. But the new international policies on trade – such as those adopted by the WTO – appear to be ambivalent in this respect. Some aspects of the WTO regime, such as the Trade Related Investment Measures (TRIMS), can constrain the ability of acquiring countries’ governments to act by excluding the use of certain interventions.

However the WTO regime does not rule out all types of interventions. In particular, measures to support training, human resources development and research and development are permitted. For developing countries, therefore, a key question is how to exploit the scope left for pro-active policies that can create the conditions under which technology transfer can be most beneficial. This is particularly relevant in a context of global trade liberalisation, and of the new international rules that govern this process.

Acknowledgement

The above information comes from the Science and Development Network whose aim is to enhance the provision of reliable and authoritative information on science- and technology-related issues that impact on the economic and social development of developing countries. It seeks to achieve this objective primarily through running a free-access website, but also by building regional networks of individuals and institutions who share its goals and by organising capacity-building workshops and other events in the developing world. See www.scidev.net