Many countries in the southern hemisphere - from the Middle East to South America - have failed in their attempts to master the process of technology transfer. Significant efforts have been made without avail. Astronomical resources have been spent. In your views, what are the reasons for such failure?
Familistic / nepotistic corruption, united with [authorized by] religious archaisms. Result, too many governments full of reactionaries and / or incompetents.
—g
There are many problem with transfer of technology in developing countries:
1. Lack of pool of scientists and researchers in specific domains
2. Brain drain
3. Small market size
4. Bureaucratic climate
5. Inability to make public investments in appropriate research and infrastructure
Many new technologies generally are capital intensive and many of these countries may not have those resources. Generally the first adopters gets the benefits which favors the developed countries because of their resources.
Dear Patrick, Nageswara,
don't you believe that at the basis of the reasons that you correctly identified, it could exist the matters I suggested in my first post [corruption, nepotistic attitudes, archaism]?
I.e., I had a proof that this is the real and more radical origin of the problem in many regions of my country.
So that, for many generations the young students were driven to prefer humanistics [in partucular, Law— and we are full of lawyers, while there are few mathematicians], the most brilliants were inducted to emigrate [ > brain drain], we suffered of market nanism in hi-tech, clean-tech, green tech [etx.], while a huge burocracy maintained its power, guaranteeing power of influence to incompetents, barons and nepotistic people / families; > and also investments, infrastructures and technology transfer were at its lowest levels.
—g
Giuseppe Laquidara
Yes. The points that you have identified are present in many political situations (corruption, nepotism, etc.) in developing countries including in India. Those pose real hurdles for many entrepreneurs who try to excel with technology. Many people try to manage through some ways to overcome those obstacles. As a result, these provide a very big weight around the neck of people. The main reason why these countries are not able to progress as much as possible is because of these problems. To some extent the availability of computerization and high tech industries are helping to reduce the effect of these problems to some extent in India. But what we need is some real good administrator who can take decisions purely for the benefit of people and not because they are popular. In India even when the administrator wants to do good, the bureaucracy really derails him/her. There are too many problems and we are seeing only a very slow improvements that too in the upper echelons of the society and is not really percolating down.
Many countries are not ready for such a transfer of technology. It is related to the pace of development. Just transfering technology without skilled human resources to ensure its sustainability, means wastage of resources. We have important a highly sophisticated machine, but for years we are not able to use it due to lack of human resources. The readiness of the country is important.
Many developing countries suffer from the lack of the productivity of labour that is one of the main factors of the economic growth. The lack of the productivity, which can be seen as unskilled labour force, is the most important reason of the failure of the transfer of the technology. However, the root of this problem is their corrupt governments. The next factor that can be interesting is the terms of giving creadit to the developing countries by organisations of the western worlds. One of the common terms is cutting budget expenses for education in those countries. In that case, can those developing countries with the cut budget for education and unskilled labour force use that money efficiently?! That is one of the possible answers to this question, as I see.
Giuseppe's answer of "Familistic / nepotistic corruption" and "reactionaries and / or incompetents" certainly sounds like South Africa, where I reside.
We've also added "Cronyism" (http://en.wikipedia.org/wiki/Cronyism) and "Ineptitude" (http://www.merriam-webster.com/dictionary/ineptitude) to our regular vocabulary.
Technology transfer is not a simple task. This statement seems obvious, but needs to be understood by the receiver side of technology, in order to increase the chances of absorbing what it wants. The difficulty relates to several factors: 1) all the problems related to teamwork; 2) leadership; 3) exchange of team members; 4) problems related to motivation; 5) team members seeking personal purposes and not necessarily the best for their countries; 6) the side that transfers technology has its own interests, hardly linked to long-term with the receiving side; and 7) the process itself is complex, involving Technology Management and Knowledge Management.
To answer this question is seemingly easy to point at things that are by nature secondary sources, such as that noted by D.Johnson and Giuseppe, and others. I believe that the main reason why there is little to no adoption in technology in developing countries is because of: i) access to technology, capital and finance to begin with; ii) the feudal/colonial mindset that still exist today, i.e. developing counrty supply the raw materials, and developed country utilise and supply the secondary material; iii) The heavy handed system of governance implemented by developed country partners. In a nutshell, the problem is bigger than what it seems. THe solution: i) radical reversal of existing development approach; ii) status quo, and; iii) a mixture of both i) and ii).
Thanks P Low, in simple terms. If you give a kid a stick he only does as much as he can with a stick. Give him a ball, he does the same. A computer, he does the same, a tractor no big difference, a farmer a genetically enginered seed, his first thought is food for the next infinite years of existence, provided he is Eden, it can grow from zero cultivation and husbandry practices. If he is central Africa where constraints are apparent, should he wait for the next monsoone? Like the kid a computer without any anti-virus and printer, that is another matter.
On the mentality part, If an investor appears in any of these countries and say I will but your dirt, the mental picture that comes into mind is just a heap of dirt. But if an investors appears and say I buy dirt, build a dirt factory, and we sell these proceeds together. I'd imagine that the man in the hut will see clearly where he can be in the next few years.
So to deduce a little, no one can say that Jim is lazy, just because he is offered a house and bed, despite living in the outback. He that provides this new technology has to complete his/her investment, along business ethics that suports real growth rather than individual persuit of profit. In Jim's case, you give him a hamock, tarpline and say to him, you give me red dirt you pay off hamock and I give you milk, bread butter for more dirt you bring.
Of cause there is a thin line between efficiency and productivity, but the question is, which efficiency equilibrium that should be adopted. Is it the monopolist equilibrium or the liberalist. WHich ideology of economic development that has to be undertaken, especially for developing countries or any community for that matter: Marx's or Friedmans, which is fair, just and suitable? THese are basic questions an investors and advocates of technology have to and often have already answered before they go into operation. The sad and/or happy side to this is that the result/outcome of these transfer is dependent on the type of answer they have for initial questions they pose to answer.
@Mohamed, I do warmly recommend a paper available here at Research Gate, on this issue!
Article Technology transfer: why some succeed and some don't
I am interested in this kind of work as I have published papers on this issue. Please send emails to further discussion. More to follow. Thank you.
The facrtors influencing the transfer process are institutional hinderances ,absortive capacity that is function of human capital , required level of industrial infrastructure,,
openness of the economy.and nature of transfer agreements.
We have found transfer of technology from public R&D public institutions to users within INDIA is problematic resulting in social wastage.
In many developing countries there inst investment in research, because They don´t have money that´s why these countries have to import technology, is very expensive. Export technology is a big business for developed countries.
Martha: Unfortunately in many developing countries the problem of proper leadership and their priorities, and the way they are brainwashed by some vested interests. All these will make them choose the wrong priorities to the detriment of the people.
Bringing something new in any field of activity represents an important step that must be understood and accepted. Also, the fear of new can represent a possible obstacle as long as the new technology clearly replaces the old one and requires new skills for the people that will use it.
At the macroeconomic level, the transfer of new technologies can be done only under the aegis of a good organization and a long-run strategically thinking, which unfortunately do not represent a common characteristic for developing countries.
Gabriela has made some important points that deserve serious consideration and elaboration.
To add some details to Nageswara Posinasetti's answer: There are not only problmes related to apsortive capacities of host economies and domestic firms, but also with multinational companies' strategies. They practice strategies of exploiting home-base capabilities rather than enhancing host capabilities. On the other hand, MNCs tend to imitate strategies and attitudes of domestic firms, especially in sector which domestic firms show some advantage or expertise, potentially useful for MNCs. This second aspect is clear in intermediate countries; you can see an exercise with Spanish data in "The innovative activity of foreign subsidiaries in the Spanish Innovation System: An evaluation of their impact from a sectoral taxonomy approach" (Technovation 01/2008; DOI:10.1016/j.technovation.2008.03.005)
Thanks Antonio for your answer. Yes multinationals have their interests and they protect it at all costs. It is very rare to see a MNC with social responsibility.
Thanks Nageswara, Multinationals Companies send much money their countries for many concepts: technololy, patents, brands, that´s why developing countries spend enough money for these concepts, also these countries hadn´t investment in research. I think government should drive research in schools, universities, companies, etc.
That is true Martha. India’s share of R & D spending 0.95% of GDP. In fact private sector spent almost four times that much on R & D. So it is certainly not enough and that is reflected in the technologies developed. The result is much of the important technology is controlled by MNCs. Case in point is Monsanto and their seeds used in India. The farmer using those seeds has to buy only from Monsanto year after year.
In 2011, Mexico share of reasearch of Gross Domestic Product was low only 0.46%. It´s slower than India.
There are already plenty of different answers highlighting the complexity of development. Transfering technology is one of the many aspects in this process. Aftter analysing 143 countries, I concluded that four items are most important for keeping development ongoing: i) providing ease of doing business; ii) reducing corruption; iii) providing good education; and iv) reducing economic inequality. See page 225 in "Missing a Decent Living for Everyone: Success and Failure in 143 countries (available in ResearchGate).
The question seems to take as given that technology of the North/West is what is needed in the South/East. THat means, to see failure of technology transfer it might also mean that this technology might not have been appropriate at all for the communities meant to be "developed" by it. In most cases, technologies develop according to the needs of the communities they are invented in and hardly never fit the communities where some people try to have the technology transplanted. To this, i would add the class-ethnicity/colonial aspect of technology: a technology (whether technical, socila, institutional) constructed to transfer wealth from the working/cultivating classes or producers in general to the middle/profiteering classes is not appropriate for communities who anyway have very disfavourable production and trading conditions in the global economy. So, the question might have been "what technology should be transferred? for whom? under which conditions? under which social groups' control?"
I would agree with Veli, Irene and others, but there is always the devil in the detail. From experience, technology transfer has sub-components. These would be: transfer mode, transfer rate; transfer medium; which technology type; coverage; implication; application; suitability; adoption rate, real vs norminal; cost; sustainability; recourse; maintenance; environmental hazards; life span, and; others. These are not to be taken in isolation. This brings us back to which approach is best: top-down or bottom-up? THis point back to: research whether x technology is appropriate; or technology x or y is better for society a or b or both or neither; promotion and testing; adoption and self-sustainability. The promotion part is often intrusive and that which leads to misuse and distrust. In developing countries, an area that corporate take advantage of is the absence or lack of legislative recourse towards impacts and recycle of technology, resulting in the south and east as a dumping ground for technology from the north west. Why than DC's fail to transfer technology, the answers would be: i) developers in the North/West develop technology for their own use, the main target group was not developing countries, due to (capital/finance) population size, education level, etc; ii) the old phsyche that developing countries are resource suppliers and buyers of final product; iii) lack of legal empowerment as recourse to impact, and; iv) costs, to import, to disseminate, to educate, to discard, to recall. I am afraid there is more to it than what meets the eye.
It`s very important to devoloping countries invest in science and technoloy if they want to growth fast and don`t pay enough money for these concepts. In most cases when these countries buy technology is obsolete and expensive. Mexico government is going to reach 1 percent as percentage of Gross Domestic Product.
Import of technology and development of new technology locally should be considered as complementary activities. Without adequate domestic R&D effort imported technology cannot be defused widely.
Inefficient and week administration, malpractices and corruption, ignorance of the people, lack of capital and investment, over population, poverty, unemployment, inequality in the distribution of income and wealth are the problems.
Transfer technology is a process complex, because is not only transferring skills, knowledge, technologies, methods of manufacturing, for developing countries is transferring money. Its a inequal situation.
I think the most important among the factors is the lack of appropriate technology to transfer in developing countries. South-South transfer is supposed to be more appropriate because such technologies come from similar factor endowment and may be from a similar stage of development. Absorptive capacity may also be more effective, but South-South trade of technology is extremely limited until now.
I would just like to contribute in a couple of views that I believe were mentioned above. Firstly, the most developed countries try and exploit developing countries' resources because they are either abundant and cheap. This may facilitate the appearance of technology but only developed countries will benefit. On another view, people in developing are extremely poor. Only 1% of those people are rich, and they hold 98% of those countries' wealth as I stated in another post. This is a sad and "scary" reality and it cannot be changed in an easy way. But this is the exact problem that begins the answer to your question. The main issues that generate development are (appart from economic growth) innovation and knowledge, and all those aspects are dependent on people. Since people are not supported and their lack of economic stability forces them to fully focus on family time, then they won't even think about creating new ways for development. Also, since bigger businesses are exploiting these human resources at a very low price, they don't have any reason to transfer much knowledge and qualifications to those employees. This is exactly what's wrong. In a perfect world everyone should get fair opportunities to state their opinions and to contribute as much as they can to increase productivity levels and to generate economic growth in a specific location. Unless governments, business, agents and stakeholders understand that people need to be supported , technology will not be transferred in these countries and they will remain sort of motionless for a longer period of time.
Dear Pedro. I agree with what you are saying. The problem here is in these countries the government, business men and politicians are not really thinking about the welfare of people and country. That unfortunately is our fate.
The problem is rich countries and their lobby groups use the self-interest motive of the government, business men and politicians or so called elites. Rich countries are thus able to dump obsolete technologies to the LICs but some LICs are growing by adapting such technologies according to their need. For example, ordinary people in Bangladesh made it possible to add value to tractor engine by using it in boat, husking machine and in some road transports. These people are not getting recognition for their contribution but this is how the country may be growing fast, although we see the government and the main opposition political party are always fighting with each other, probably making negative contribution to otherwise impressive growth. UN organizations and other international private organisations should come forward to recognise ordinary people who are contributing to the development of appropriate technologies like to adaptation of tractor engines. South-South trade of this type of knowledge should be encouraged.
Well said Shaheen. It is time the local talent however low end of technology should be recognized because it is the Appropriate Technology.
If we integrate previous entries we can underline five main hampering-factors for technology transfer in developing countries:
1. Institutional weakness (bureaucracy, nepotism, corruption, legal system,...) and scarcity of entrepreneur factor (in Scumpeter's innovative sense specially).
2. Scarcity of technological capabilities and human factor (scientists and researchers).
3. Lack of financiation and inefficient capital markets.
4. Lack of social perception of importance and effects of innovation and technology (in politicians, businessmen, mass media and society in general).
5. Distance (divergence?) between offer (from developed countries) of innovation, technology and knowledge and their demand (and needs) in developing countries (is illustrative last Shaheen answer).
Additionally, we have a problem of measurement: usual indicators and standars for developed countries are not necessarily adequate for developing countries.
So, we have some aspects to develop:
I. An adequate system of indicators, usefull both, for researcher and policy makers. That means to exploit existing statistical sources in a creative way (compile disperse data from several national and international official data in an integrate system of indicators) but also identificate technological, knowledege and innovation demand and needs in developing countries.
II. To foreground the need to promote and develop actions and policies to enhance the domestic effort in R&D and formative policies, as necesary conditions to develop innovations locally and to take profit (absorb) of imported technology. As pointed by Autar Dhesi, Import of technology and development of new technology locally should be considered as complementary activities. Without adequate domestic R&D effort imported technology cannot be diffused widely.
In both cases, the pedagogical and divulgative work is huge: to politicians, to businessmen, to media and to society in general.
Dear All, Lijo Francis, Patrick Low and others that you know are not able any longer to log in their RG account from yesterday. RG suspended their accounts without any reason. I don't know why, but I find this an outstanding abuse. Please help them and inform all other participants as this is a signal that things are not going in the right way in RG before it happens to you!
Regards
Gianni
Many developing countries fail in the transfer of technology due to many reasons:
- Lack of research infrastruture
- Poor investment in research
- Education is not adequate to the labor market
- Administration bureaucracy
- Foreign direct investment is not well oriented to the strategic sectors.
The main reasons for developing countries failing to transfer their technologies is no formal mechanism for technology transfer except for Agriculture where we have a formal technology transfer mechanism which is taken care by the state department of agriculture in most of the countries and in some countries it is the duty of both; Agricultural Universities as well as ministry of agriculture. In India, we have a very large network of Krishi Vigyan Kendras (Farm Science Centres) spread through the length and breadth of the country; 637 in number which are technology transfer machinery at district level comprising experts from various disciplines of agricultural sciences according to the thrust areas of that particular district. Still as a result of the increasing population, this ratio of extension worker : farmer is as wide as 1: 1000 that means for thousand farmers, we have only one extension worker. This ratio is same in Malaysia too but there the farmers have access to technology and the extension worker keeps changing his position and each one of them has a laptop to connect with the farmers personally and farmers are also educated having access to technology. One more impressive data which indicates lack of TOT mechanism is having less number of women in extension services. Globally, there are only 12-13% women in extension services whereas we say that they are equal partners in development. If there will be a woman extension worker to talk to a woman farmer, things could progress well. So, ultimate advice is increase the number of extension workers and also this increase should be gender balanced.
We have to investigate the obstacles for transferring technology. Then we should concentrate on the people working on the requirements for the transfer.
Obstacles to technology transfer are many, but the principal is economic, because it represents a big business.
I am surprised that the issue of "which technology is beneficial or advantageous for whom" has not been discussed.
Could the writer of question define or elaborate on this a bit? Could others?
As noted above, a lot of inappropriate technologies creating a wasteland in developing countries has occurred in the past and will occur again.
Let´s see an example of potential technological transfer, a real example, far from theories or hypothesis:
Place: Peru
Sector: Design of earthquake resistant civil structures like hospitals, airports, schools
Technology to be transferred: energy dissipators, installed on floors, walls, that allow flexible movement of structure thus reducing break-ups and walls falling apart on people.
Actors involved, whose interests are in conflict, thus making difficult the transfer of appropriate technologies:
1. A Peruvian engineer trained in the US who learnt about dissipators in a leading US University while doing his Ph.D. He wants to transfer US technology, adapted to Peruvian scarce resources, at lower prices.
2. Peruvian engineers employed in Peruvian educational institutions who must do reports for Peruvian government to design legislation regarding what, who, how in matters of protection of structures. THey in theory want to encourage innovation and knowledge transfer but believe Peruvians abroad are not the appropriate agents of knowledge transfer because in their opinion (reproduced in Peruvian media and politics) "only Peruvians in Peru know what real Peruvians need". Also, Peruvians abroad are used to bribes and therefore try to avoid them as much as they can. For this reason, Peruvians employed in public institutions preferred to deal with US or European non-Peruvian multinationals eager to pay them personal or institutional incentives that for sure would be bigger than incentives another Peruvian would pay them. This, who may pay more in pooor public institutions, highly determined with thom technology transfer of energy dissipators would result.
3. Latin American employees of US multinationals who have patents on energy dissipation for structures. THey are used to pay bribes and deal with business culture of Peruvians.
4. The Government: polititians usually have no specialized technicians, so regularly they call reputed professors of the public university system for advice. These professors often receive greater incentives, as said, from foreign multinationals than from Peruvian colleagues doing technology abroad and willing to bring back their innovations. This way the public educational system acts as an obstacle to introduce similar advanced technologies at cheaper prices in the country.
A big problem, thus, to introduce innovations in developing nations is the reduced number of potential experts in an specialized field of science. These few experts reduce the channels to introduce new ideas from outside.
Advice: Governments, private companies, and entrepreneurs, in developing economies, should try to use much more internet, and search for innovations outside their countries, and do not trust as in the past their small, short-oriented group of old and few national experts. If so, this would certainly mean greater competitveness, better prices, and more satisfied local consumers.
Attempts to transfer production technology to underdeveloped countries usually encounter the "cart before horse" paradigm As pointed out by many researchers at the World Bank, more that 60 billion dollars have been invested in transferring technology to Africa with no discernible increase in per capita income. The reason: Abject market failure for products of small land holders. So little is known about how to develop competitive market infrastructure for anything other than large scale commercial agriculture; we find that attempts are seldom made by development projects to consider market structure for products of small land holders. Supply does not create its own demand. Small holders must develop and they need markets. This lesson must be learned before technology transfer can hope to be successful.
@K,evin Stoda
Thanks for the question, it is indeed very relevant. I did not specify the type of technology in order to capture as much diversity of opinions as possible. In addition, it seems that colleagues on this platform have actually made valuable contributions. They argued, or rather attempted to answer the question from a wealth of perspectives by referring to different types of technologies, and that is very enriching to the debate.
Thanks Kevin for raising the question.
One of the pre-requisite for technology transfer is the mechanism to protect the intellectual property rights (IPR) of the technology developers. Most of the developing countries are yet to enforce an intellectual property regime, which suits their country specific needs. For those countries with IPR laws and regulations, weak judicial system hinders its enforcement.
When I first studied international development in Latin America in the 1980s, I was taken for a hike on a hill of 40% and across one creek, we were shown an aging USA tractor. It was huge--and one wondered how the tractor had ever made it up that hill and across the river a decade or more before. (A helicopter was probably used. Probably no fuel nor spare parts were given for the tractor--probably the gift of some well meaning donor.)
Such are some of the ridiculous attempts at direct transfers of technology that litter what we used to called derogatorily the 3rd World. In short, both donors and locals may seem ill-informed at times.
It could be so many reasons from the technological compatibility to the existing situation ( like considering social, economical, political and cultural benefits to the existing society) because the time dimension matters a lot.
On the other hand infrastructural development matters a lot in transferring the existing technologies at hand. Here for instance facilities of research equipment, development of educational status, financial inquiries etc can hinder the transferring process at large yet some technologies are easily accepted by the societies and policy maker as they early returns to development impact and economic growth of the nation which are also considered to have positive contribution with the existing social thoughts of people.
If one country wants to grow and develoment needs technology, how do it get?
Nowadays many countries buy technology, but is expensive.It´s a failure.
another possibility is to invest in science and tecnology. besides support research in universities.
technology is not transferred because there arent uses of it. Usually its a political economy issue. If people feel the need they find ways to use technology (and technology to use). Most often political economy issues limit people's choices so that they dont have a use for the new technology. For e.g. you can talk about electronic medical records but unless they lead to some improvement in someone's life, they wont use it.
Dear all,
Thank you for interesting discussion. Many answers are related with SME administration at the macro and micro level or derived from this regulation. These problems relate generally to the development of business in developing countries, and are not typical to technology transfer. Our colleagues, which mentioned the weak development of science sector, have important contribution the same. I would like to address the problem of technological transfer to innovation policy. So, fail of technological transfer in developing countries is associated with an underestimation of the importance and weak capability in formulation of innovation policy as well as its implementation.
Part of the explanation of poor ethnology transfer in these countries has been the historic trajectory of innovation. During the 20th century, most global innovation had its origins in the north, producing products for high-income consumers, developing technologies that excluded poor enterprises. So, the dominant innovators in the global economy were located in advanced economies and had no or little incentive to meet the needs of the income-low global producers, or of incorporating the poor in global value chains. At present importance of low-income consumers is rising in the context of the global economic crisis, the development of radical technologies (such as mobile telephony and renewable energy).
In this context, the important findings are contained in the report of OECD/World Bank. Making Innovation Policy Work LEARNING FROM EXPERIMENTATION, 2014: “Innovation policies characterised by top-down government interventions are not the right approach to development. The reasons for the failures of such policies are well known, and include the risks of capture by vested interests, lack of information on the economy and strong information asymmetry with private actors, and a lack of capability in the public sector for effective policy making. Another, more appropriate approach to innovation (and industrial) policy, involves search, experimentation, monitoring, learning and adaptation, all of which need to occur in a context of international openness to knowledge, trade, investment and competition. “
Having read most of the answers in thread, it seems that technology is less of an issue, whereas knowledge transfer might be the real issueat stake!
Dear Marica Dumitrasco, thank you for an up-to-date view of literature on the subject of technology transfer and also to the many writers who mention the many conceptual reasons who technology transfer fails in so many cases.
I think a consensus would be that technology transfer does not have a technical answer; and that is because the root answer is that technology transfer is a problem of economic efficiency. We know from economic theory and real world practice that economic efficiency is a function of technical and price efficiency. See M.J. Farrell for a seminal article on the subject. If technology is not economically efficient it will never be adopted (except in command economies).
Even when economic efficiency is possible, previous viewers of this question point out there may be other barriers. Adman Khan, as well as others, points out there may be problems of political economy. Yes, and importantly I think, points out that the public sector does not provide appropriate information to those that need it. This a failure of "Extension Services" of public institutions. See the answer of Paloma Fernandez. While Extension in the U.S. has had many outstanding success, there is evidence that the private sector may be even more important. Do review the success of CARD.Am in Armenia which is a privatized effort resulting from the USDA MAP project (See millerbillr.com)
Finally, on the question of price efficiency: With more than 150 billion dollars per year now being spent by the international community on the question of poverty elimination and economic development, less than one percent is directed at the issue of why there is significant market failure in transmitting price (via derived demand) to the level of small farm production where a significant level of poverty exists. Market infrastructure for products of small farms is a significant problem that is not being addressed by development projects, but it can be with very successful results. See millerbillr.com
Dear all,
I agree with Miller that the problem with low adoption is lack of markets for small holder farmers produce. These smallholders struggle so much to produce and there are no end markets for their produce. They would rather remain subsistence unless the developers of these new high yielding technologies start developing markets for the end products of their technologies. In Ghana for instance, the adoption rates of improved cassava varieties used to very low in the 90s and early 2000s but once markets for cassava products were found, the adoption rates have been increasing and smallholder farmers are getting some incomes.
Theoretically, FDI inflows have some positive spillover effects. They can greatly benefit host countries through the introduction of new technologies and skills, the creation of new jobs, improving productivity, surging domestic competition and expanding access to international marketing networks.
But, empirical studies provided robust evidence that the education level is crucial to catalyzing FDI effects on growth because it enables larger technological spillovers obtained from workers’ mobility (Blomstrom et al., 1994; Borensztein et al., 1998; Lipsey, 2000; Li and Liu, 2005). It was also shown that trade openness (Balasubramanyam et al., 1996; OECD, 2002), export diversification (Nicet-Chenaf and Rougier, 2009), financial development (Hermes and Lensink, 2003; Alfaro et al., 2004), or a more efficient and stable legal and institutional environment (Bengoa and Sanchez-Robles, 2003) all favor the positive effects of FDI on economic growth.
Thanks Patricia Acheampong for an excellent example of how markets must be discovered to use productivity growth. The concept of discovery is vital. Markets don't just happen. I repeat an oft quoted concept. "Supply does not create its own demand". I also believe the concept as quoted also applies to Belloumi's description of the benefits of FDI. To begin, Belloumi has managed to include in a short, but well written comment, every "catch phrase' ever uttered by representatives of World Bank, USAID, and Washington beltway consults. I counted 12, but I want repeat them here as you can review them in Belloumi's comment. He may have left out an important one from USAID which is "cross cutting". But I say emphatically that the 12 benefits of FDI quoted by Belloumi do not occur because you send FDI to a developing country.
No, some very difficult work is required to find and development markets and unfortunately everyone who use the concept "marketing" does not fully understand the complexity of developing a market. Knowledge of what a marketing system does, who it serves, and what is feasible, this essential. Then add risk capital and you may have the right mix provided you have advisers on the ground who can manage the job of using benefits of increased productivity.
.
Several developing countries despite having huge natural resource and work workforce are not able to develop enough perfected and transferable technologies due to the lack of adequate modern research infrastructure, specialized scientific manpower, migration of scientists to developed countries for higher studies, meager investment in research, lack of support from political and bureaucratic system, poor access to potential market and user groups are some the reason behind the failure in ToT by developing countries.
The Economics of Innovation literature stresses the role of absorptive capacity (Cohen and Levinthal, 1990) as the key ingredient that allows an invidual institution/organization as well as a (local/national) system to gain from the interaction with a more advanced "partner".
Thus the level of knowledge base (both measured in terms of R&D outlays, # of scientists/technicians) as well as the stock of accumulated output (proxy of learning by doing, as stressed in the endogenous growth literature) are the main obstacles (if they are too low) of an effective ToT.
Coming to theinstitutional economics aproach I do think that TRIPs may also have a large role in limiting the inappropriability of scientific and technological knowledge (as assumed in Arrow 1962)
I have done some research on technology transfer between peripherical areas in the north in the 18th and 19th century, something I call traversal technology transfer. From this, I would argue that the suitability of a technology to the particular nexus of social and natural conditions it is deployed in is more important than how advanced it is. This might also give some insights to the current discussion on technology transfer as a means of development. Perhaps we should put more emphasis on South-South technology transfer?
Jan Kunnas, “Traversal Technology Transfer: The Transfer of Agricultural Knowledge Between Periferias in the North”, in Dolly Jørgensen and Sverker Sörlin, (eds.) Northscapes: History, Technology, and the Making of Northern Environments. Vancouver: University of British Columbia Press, November 2013.
@ Jan
I love the argument you advance, I think it points very precisely to the issues of context adaptation that if often ignored in technology transfer. A big thankyou.
@Mohamed Thanks, I can send you the whole article, if you give me your email.
It takes many decades, if not centuries, to educate the public the importance of knowledge/technology transfer. Many people still narrowly focus on self-interest without knowing that enhancing knowledge transfer will ultimate promote self-interest too. Educating a population is not an easy task.
Before we get to one-sided in our thoughts here. Let's look a bit at the Amish approach to technology and realize that they are not the only people on the planet who generally follow the rule: The Rule of Gelassenheit.
"The Gelassenheit posture toward technology could probably best be summed up with this question: 'Does it bring us together, or draw us apart?' "
Read about it a bit here: http://thesecondeclectic.blogspot.com/2011/05/amish-technology.html
or
http://classes.soe.ucsc.edu/cmpe080e/Spring10/Week%2009/Amish.pdf
In Oman, this has historically been a major paradigm, too.
Thanks Kevin, that's an insightful piece of work that certainly reminds us of some of the social influences of technology that we often do not consider seriously.
Mexican Government will increase invesment in science and technology in the next years. the goal is 1% as percentage of Gross Domestic Product.
Mohammed,
"Ubuntu" in the Xhosa culture means: ‘I am because we are.”
http://eslkevin.wordpress.com/2014/06/15/lesson-in-ubuntu-ubuntu-in-the-xhosa-culture-means-i-am-because-we-are/
Ther are many factors why many developing countries fail to transfer technology. The main reason is the lack of funds. Following that can be the nonavailability of infrastructure.
Dear Nageswara,
Your 3. point is not proper for all the developing countries. Look at China, India, Pakistan, Egypt...
Dear Kamal,
I think and hope that there are sincere and honest scientists in developing countries. As to the leaders...
Dear Nageswara,
Your 5. point “Inability to make public investments in appropriate research and infrastructure” is more than interesting. I have but one question: why?
I don't absolutely agree about the discussion trend above. I think developing countries are happy and able to absorb some technologies as well or better than more than some advanced traditional rural and urban regions of various so-called developed countries.
I think of all the telephone and cellphone banking that goes around. Developing regions of Africa are embracing this as a means of doing business even in the most rural regions. Meanwhile, in traditional societies, like my own (USA) many avoid using the cellphone and phone or even internet banking because
(1) they don't trust the powers that be
(2) they have the luxury of doing face-to-face banking which they enjoy more than doing things over a phone.
Developing countries are not able to invest adequately in R&D ventures due to their socio-economic and political reasons. There is no dearth of talented minds in these countries; however, compelled to migrate to developed countries due to lack of promotion and opportunities. Such competent workforce is getting due recognition and opportunities in developed countries. Behind most of the technology missions of developed countries, role of S&T personnel from developing countries are obvious. Hence, considering economic constraints, developing countries need to limit their S&T mission to prioritised areas and focus on the aspect where they can take a lead. All R&D programmes should be conducted with technology mission approach supported with adequate funding till fruitful and implementable technologies are attained.
Following up on Kevin Stoda's comment, perhaps we should put more focus on the ablity of developing countries ability to absorb technology, and how to strenghten that, than arguing why many developing countries fail doin that. Altough these issues are to some degree the flip-sides of the same coin.
In the Environmental Kuznets Curve literature, which is do not wholly support, Mohan Munasinghe (1999) argues: “that developing countries could learn from past experiences of the industrialized world by adopting measures which would permit them to ´tunnel´ through the EKC, providing a possibility to avoid the most serious damage to the environment by avoiding the peak before a downturn of the emissions...”
https://www.academia.edu/505966/Are_There_Policy_Tunnels_for_China_to_Follow
Going straight to cell phones and internet banking is another kind of tunneling trough. Indeed developing countries should not adopt all technologies from developed world. Cherry picking is well advised!
Dear Andras
Thanks for clarifying the point.
3. Small market size
I was trying to give here the general principles why there are problems during technology transfer. India being a large market benefitted to a great extent by many of the technologies transferred due to its internal market size. But that also depends on the type of technology whether they are benefitting the large number of population or some superfluous like Cocacola and Pepsi.
Dear Andras
Thanks for your observation.
5. Inability to make public investments in appropriate research and infrastructure
Unfortunately in many a countries including India, the public investments are not made purely based on public interest. Politics, Corruption and favoritism come in a big way in making some of these vital decisions. As a result, the country suffers in the long run, while politicians and bureaucrats gets the benefits of such investments.
Most answers to this question appear to be political, sociological or philosophical. The answer, however, is simple economics. Most new technology is developed for use by large commercial enterprises that don't exist in developing countries.
Appropriate technology is easily and quickly transferred. We proved it in Armenia. See millerbillr.com and card.am
If an apprentice shows up at the shop and sweeps the floor, he will observe many things done by the experienced tradesman. In time, the experienced tradesman wants skilled assistants, so he teaches them.
But the apprentice cannot build the bike that he polished the first time.
And he cannot build the bike whose brakes he installed on the 10th bike project he joined on.
Etc.
I.e., it takes time. And anyways, if the apprentice hasn't been to grade school, then maybe it's too much work to train him for some things, so he gets stuck sweeping the floor and doing simple dirty tasks until his final days.
But the apprentice should be sure that the experienced tradesman it looking for an apprentice, and not just someone to sweep the floor.
OK, I don't mean to think of it as apprentices and experienced tradesmen. The analogy is wrong for a variety of reasons. But I think the example is nevertheless illustrative for very practical reasons which limit technology transfer.
@ Nageswara
In India, I think it is preferred to protect a traditional method or the group of people who practice that method than to seek ways of arranging things which maximize productivity growth. This way of thinking certainly means that there is less political impetus to allow competition which would force them to become more efficient.
@ROSSITSA
You make a valid point by giving a reminder of the complexity of the issue at hand. A lot of countries have make progress in the areas you mentioned but still failed.
Building on the factors you mentioned, It seems to me that it is rather the "agencements" between these factors that needs particular attention. What do you think?
(This response is based on a homework that I made for a lecture in university - hope will be helpful)
It is surprising to read some of the replies in this blog and not find any reference to the international system of intellectual property as a fundamental reason to understand why developing countries fail to transfer technology.
The knowledge has an owner and it´s sold to the highest bidder. The countries of the "economic south" must pay to have the right to the access and use of the scientific information whereas at the same time, they are forced to import all kind of technology with monopolistic prices.
Many analysts have agreed that the industrial revolution was possible, in some degree, because the western companies discovered how to privatize knowledge; it allowed them to expand their influence to all Europe and everywhere. Sounds incredible that somebody can be owner of an idea, or even of a entire specie of plants, cells or the blood of another human being!!. It’s incredible but its true.
During the last two decades, western countries displayed a more aggressive strategy to strengthen the overall control model of intellectual property in the world. It was done by strengthening multilateral and bilateral agreements. The interest was not only to prevent the countries from exercising their right to apply parallel imports and compulsory licenses, it is also to make these countries to accept and recognize the pipeline protection to second-use patents and to provide a multi-year term of protection for pharmaceutical “test data” (Helfer & Karen J. Alter, 2013).
Data exclusivity is actually maybe one of the most controversial trends of IP because it´s a way to prevent generic competition and maintain artificially high prices for the benefit of the holders of a patent, thus restricting access to other commercial versions of the protected drugs or chemical products. These legal instruments have the objective of protecting western monopolies in the world.
For example, they require -to the emergent industry of developing countries- to submit new "Test-data" once the period of patent protection expired. This means that the possible competitors from poor countries have to invest large sums of money in research during several years, about things that where already researched in the past. Is this an incentive to research or an incentive to monopolization of all the productive sector? Data exclusivity gives to "Test data" a status of invention when it is not, by the contrary it conferes intellectual property rights to an administrative process and directly bans the possibility of any bussines to the countries productive sector..
Some of the measures proposed by the U.S. for the TPP Intellectual Property charter go beyond the advances reached until now with respect to extending the exclusive use of data for a new and previously approved chemical products. In an interesting review of the magazine Public Citizen are some details about the new normatives of IP included in the Transpacific Economic Association (TPP) and those contained in TRIPS+. All the negotiations have been very secret especially those related with Intellectual Property, but here is the synthesis of some of the most important changes related with scientific IPR:
• Patents for new uses or use-methods of a known product.
• Patents for diagnostic, therapeutic and surgical methods.
• Compensation for delays in the patent research and in the review by the regulatory agency.
• Deleting the oppositions to patents that where done before the grant of the patents.
• Judicial and administrative presumption of patent validity.
• Definition for industrial application criteria.
• New and extensive measures related with the patents of biological products and incorporation of Secret Trade mechanisms
• Changes in the definition of new pharmaceutical products.
From (Burku Kilic, Mi Kyoeng Kim, & Peter Maybard, 2014
also:
• Establishment of new frameworks for arbitration for the settlement of disputes, including claims not bases in infractions.
• Reduce the possibility of application of the TRIPS flexibilities even admitted as drug and copyrighted.
Some final ideas
There is no evidence of benefits to the poor countries for being part of the international intellectual property system. Unlike, there are several studies that show that this system is a mechanism for transferring wealth from the people to the big companies as a south-north flow of money and information. About it, there is an interesting and highly recomendable studie done by IFARMA foundation and the Pan-American Health Organization. They conclude that the impacts of these agreements in poor countries could by very high because of the rise of prices and public expenditures in public health. For example, only in the case of Colombia they estimated that this regulation will cost about USD 80 millions annually impeding the access to public health to about 1 million Colombians, it mean the poorest people. The results in other countries are very similar and in some cases very concerning.(Edson Meza Cornejo & Iván Rodríguez Bernate, n.d.)
However, the problem to analyze is not only about economics, it is also a political and ethical concern. The western companies have legalized the idea that they are the owners of knowledge of humanity because they own most part of patents. And it had become a real obstacle to the development of science in the southern countries.
While the pharmaceutical sector has a big lobby to impact in national and international decision making to secure their IP rights, they are any kind of control and regulation systems against possible abuses. For example, any institution has enough power to obligate companies to disseminate their research results and the companies are still not required to publish the clinical trials carried out; there are no regulations that force them to publish any results and very limited controls over the promotion and quality of its products.
Bibliography:
Antonio Gaybor S, Carlos Nieto, & Nieto C. (2006). TLC y plaguicidas: impactos en los mercados y la agricultura ecuatoriana. Quito, Ecuador: SIPAE.
Burku Kilic, Mi Kyoeng Kim, & Peter Maybard. (2014, January). Challenges for Health and Innovation Policy in the Trans - Pacific Partnership Agreement (TPP): Comparative Analysis of the United States’ Intellectual Property Proposal and Japanese Law. Public Citizen, Global Access to Medicins Program. Retrieved from http://www.citizen.org/documents/comparitive-table-japan-and-tpp-january-2014.pdf
Edson Meza Cornejo, & Iván Rodríguez Bernate. (n.d.). Impact of the EU-Andean Trade Agreements on Access to Medicines in Peru. CAN EU Alliance on Access to Medicines - IFARMA. Retrieved from http://www.haiweb.org/11112009/ReportIFARMAImpactStudyPeru%28EN%29.pdf
Gamba, M. E. C., Buenaventura, F. R., & Bernate, I. R. (2010). IMPACTO DE LOS DERECHOS DE PROPIEDAD IN℡ECTUAL SOBRE EL PRECIO, GASTO Y ACCESO A MEDICAMENTOS EN EL ECUADOR. Fundación IFARMA, ORGANIZACIÓN PANAMERICA DE LA SALUD. Retrieved from http://haieurope.org/wp-content/uploads/2011/07/Impacto-de-los-derechos-de-PI-Ecuador-diciembre-2010.pdf
Helfer, L. R., & Karen J. Alter. (2013). The Influence of the Andean Intellectual Property Regime on Access to Medicines in Latin America. Rochelle Dreyfuss & César Rodríguez - Garavito, eds. Retrieved from http://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=3064&context=faculty_scholarship
Mayer Brezis. (2008). Big pharma and health care: unsolvable conflict of interests between private enterprise and public health. Israel Journal of Psychiatry and Related Sciences, 45(2), 83. Retrieved from http://publichealth.doctorsonly.co.il/wp-content/uploads/2011/12/2008_2_3.pdf
Rokiah Alavi, Ashish Arora, Estelle Bianoba, Cerkia Bramley, & Andrés López. (2009, January). THE ECONOMICS OF INTELLECTUAL PROPERTY Suggestions for Further Research in Developing Countries and Countries with Economies in Transition. WIPO Publication No. 1012. Retrieved from http://www.wipo.int/export/sites/www/freepublications/en/economics/1012/wipo_pub_1012.pdf
World Trade Organization. (2014). WTO | intellectual property (TRIPS) - What are Intellectual Property Rights? Retrieved June 30, 2014, from http://www.wto.org/english/tratop_e/trips_e/intel1_e.htm
I found Antonio's input to be quite informative.
There is the notion that the first person to figure something out has a certain claim over it can stimulate incentive for innovation, research, etc. ...
Applied within a country, this can easily make sense.
But when it is an American company/court/society saying "we figured it out first, now Africans have to pay us if they try to make it for themselves any time in the next 20-50-100 years", well, I'll leave it to you to decide whether that is just.
At present, the injustice of the matter is why it needs to be discussed. There is also the fact that fruitful relations and significant improvement in living conditions could be easily achieved, given that I don't think Americans are exactly going to be ordering African generics online even if it were legal.
What doesn't make sense to me about IP is that the person making the latest teeeny innovation is able to capitalize the sum of all human knowledge and millions of steps of innovation over thousands of years. Anyways, this is why a mere law can create such a huge financial incentive. It effectively takes all of human development and attributes the full reward to the person coming up with the latest improvement.
We have all heard the arguments in favour of IP protection enough times. When will we protect our shared legacy for the common good?
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