Technology and Developing Countries

Practical Applications, Theoretical Issues

Richard Heeks

• Publisher: Routledge
• Year: 2020
• ISBN:
  9781135242138
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

The relationship between technology and development is explored by economists, policy analysts and other experts. The adoption of technology is studied in five main areas agriculture, energy, infrastructure, the introduction of technology and the success and constraints of technological diffusion as a whole. This volume also examines the technology transfer between North and South from a perspective of training, environmental impact and aid dependency. The emphasis is not placed simply on finding problems, but ways forward are examined. By bringing together both practical and intellectual analysis, this collection signposts future directions in the technologydevelopment relationship.

TECHNOLOGY TRANSFER

Technology Transfer and the Environment

RICHARD SANDBROOK

Richard Sandbrook is Director of the International Institute for Environment and Development (IED), London

For more than 20 years, international conferences on technology transfer have been, more often than not, graveyards of good intentions. While there has been near universal acceptance of the need for enhancement of the technological capabilities of developing countries, agreement has stopped here. Simply put, developed country governments have argued that technology is privately-owned and is best transferred through the market. Developing countries have responded that the market is biased against them, and that they need concessional and preferential terms, including a relaxation of intellectual property laws. It is regrettable, but perhaps no surprise that we are still awaiting the conclusion of the UNCTAD negotiations started in 1974 for an international code of conduct for technology transfer.

Results have not kept up with expectations. Indeed the OECD reported in 1991 that there has been an ‘unprecedented shrinkage’ of technology flows to the Third World during the 1980s. Moreover, the urgent need for globally sustainable development, promoted by the 1987 Bruntland Report and confirmed by over 100 world leaders at last year’s Rio ‘Earth Summit’, has challenged the trajectory of current technological development. But we live in the real world, and in the real world, the South rightly aspires to more technologically advanced lifestyles. We are faced with a double challenge: first, achieving the technological transformation in the North towards more ‘eco-efficient’ products and processes, and second, finding practical ways to overcome the exclusion of much of the developing world from the benefits of such transformation.

Technology at the Earth Summit

Technology transfer was one of the most controversial issues at Rio. This is not just because of the never-ending semantic arguments pitting technology ‘transfer’ against technology ‘cooperation’, ‘clean’ technologies against ‘environmentally safe and sound’ technologies and ‘concessional’ terms against ‘mutually agreed’ terms. The heart of the matter lay in the distribution of power and resources between rich and poor. Here, Rio was a disappointment, not only because of the lack of firm commitments from the developed world to increased aid flows, but also because of the unwillingness to recognise the need to improve substantially the quality of existing aid flows.

Apart from the question of finance, the rest of the chapter on ‘Transfer of Environmentally Sound Technology, Cooperation and Capacity Building’ in the Agenda 21 represents a victory of diplomatic fatigue over policy clarity. But as with much of the UNCED process, more progress was achieved outside the official negotiations, in the discussions within the business and NGO communities about realities of technology transfer: for example, the Business Council for Sustainable Development (BCSD) argued that ‘technology cooperation concentrates on developing human resources by extending a country’s ability to absorb, generate and apply knowledge’, adding that it works best ‘through business to business long-term partnership’. With brutal frankness, the BCSD stated that ‘less than a third of all countries possess the political, social and economic framework necessary to conduct international technology cooperation activities on purely commercial terms’.

For IIED what happens to the two-thirds who cannot acquire technology is of primary importance. Indeed, how to give the poor the ability to participate in markets is one of the key sustainable development dilemmas. While Agenda 21 is infused with community-driven focus, little connection was made between the ‘high politics’ of technology transfer and the ‘low politics’ of poverty alleviation.

Building Technology Partnerships

1. Ninety per cent of technology transfer and R&D expenditure occurs in the developed trade of North America, Western Europe, and Japan.

2. Similarly, 90 per cent of all technology transfers take place within the private sector.

3. Finally, nearly 90 per cent of the technology needed by developing countries is already in the public domain.

The real barriers to technology flows between North and South are the lack of finance, information, skills and institutional capacity. The Wupertal Institute in Germany has estimated that if the consumption gulf that separates the developed and developing worlds is to be closed in an ecologically-sustainable way, then production and consumption technologies will have to use 10 times less materials and energy. Stimulating such a transformation is primarily a responsibility of northern governments. OECD governments need to build out of the consensus language of Agenda 21 a long-term technology development strategy. In parallel, governments in the South should concentrate on human resource development and institutional capacity building to facilitate the absorption of imported technologies. This means channelling more aid schemes promoting yesterday’s technologies. There is growing support for this view. For example, the EU’s FAST programme has identified the role for government in the area of R&D. According to FAST, needs – rather than market-driven research – should be a priority for publicly funded research in the years ahead.

It is easy to talk in general terms about technology transfer, cooperation or partnership. To achieve real partnership, greater openness to community concerns is required from governments and industry. The ‘Earth Summit’ helped clear away some of the undergrowth of the past, but gave no clear direction for future technological development. This is the challenge that needs to be seized as the countries of the world begin to draft and implement their national strategies for sustainable development.

Technology Transfer and International Organisations: The Question of Localisation

K. Y. CHOOI, J. R. WEBB and K. N. BERNARD

The authors are in the Department of Marketing, University of Strathclyde.

The management of the technology transfer function is becoming a key factor in the administration of countries and companies; local participation in its choice, implementation and adaptation is an important aspect in the successful absorption of technologies. This article will consider how localisation policies may have an effect on the process of technology transfer. Particular consideration will be given to such issues as the ‘indigenisation’ of the work force, the development of local infrastructures and the establishment of local R&D capabilities. The article will offer some preliminary conclusions concerning policy issues for localisation, based on research with the oil industry in developing countries.

Introduction

The expansion of technological capabilities of developing countries by foreign direct investment remains a controversial issue. Studies [Dahlman, 1978; Bell and Scott-Kemmis, 1980; Maxwell, 1981] indicate that local participation in the choice, implementation and adaptation of technologies is an important aspect in the absorption of technologies and a country’s accumulation of technological capabilities. As a result, there has been a rise in the instigation of ‘localisation’ policies by many host countries to regulate the activities of foreign direct investors. Such policies may only bring short-term benefits to host countries, unless they themselves have well-defined and integrated long-term domestic, industrial and technological policies designed to build up the nation’s industrial infrastructure, human resources and institutions in order to evaluate, acquire and implement the most appropriate technologies [UNCTC, 1987; Tan and Tan, 1990].

This article will consider the role of foreign direct investors in the processes of technology transfer to developing countries, addressing this objective in two ways. Firstly, the authors offer a review of the literature concerned with the accumulation of technological capabilities, identifying three generic areas for study: the role of Research and Development (R&D) activity; the sourcing of goods and services; and the availability, education and training of the work force.

Secondly, the authors introduce some of the findings from a detailed study of technological development and transfer activities in the oil industry in three countries at different stages of economic development, two of which fall into the ‘developing country’ category. Although the oil industry has certain abnormal characteristics, most particularly that its location is dictated in considerable part by the location of the raw material (and may have only a short-term economic future), it represents something of a classic example of global business development; its centre of gravity having shifted steadily from the developed industrialised world to progressively less developed countries. It is, and has been for many years, dominated by a small number of very large multinational corporations (MNCs). Whilst the product is technically differentiable, it is widely traded on a commodity basis, thus oligopolistic competition is a fact of life. Despite the relatively short future life span of the industry in its present form, it is generally regarded as occupying a major strategic role as a source of energy and a motor for individual economies; as a facilitator for other industries and materials/processes, and as a large scale employer which requires relatively high levels of educated employees. In summary, therefore, this paper will discuss the role of multinational oil companies in the process of technology transfer and will present some preliminary research findings involving consideration of these activities alongside host countries’ policies, especially the current trend towards localisation. In conclusion, some broad issues for future policy decision will be identified.

A Concise Literature Review of Technology Transfer

This section presents a concise resumé of technology transfer as a context against which the specific research topic may be set. The acquisition of technological mastery and capability may be hampered because:

i)	much of technology cannot be made explicit in manuals, blueprints and so on [Nelson, 1979; Pavitt, 1985] and there are difficulties in teaching, imitating and appreciating the capabilities of technologies;
ii)	technological mastery typically requires trial, error and modification. The increased capabilities so acquired may contribute to a firm’s or country’s capacity to undertake independent technological efforts including replication and/or adaptation of foreign technology as well as the creation of new technologies [Dahlman and Westphal, 1981, 1983].

Precursor and predisposing conditions for the absorption of technology require :

i)	that general knowledge should be disseminated throughout the indigenous population, that is, a country’s ‘absorptive capacity’ is expanded [Singh, 1981; Madu, 1989];
ii)	a well-trained population which is numerate, literate, and has technical (electrical, mechanical and so on) professional (engineering, business and so on) skills [Tuma, 1987];
iii)	a propensity of markets to absorb products and services using the new technologies [Rodrigues, 1985]; and
iv)	a certain degree of intensity in the interaction of the legal, social and economic infrastructures; the higher the amount of interaction, the greater the ease with which technology is transferred or diffused [Dimitris, 1977].

The technological needs of developing countries:

i)	have been characterised as being overwhelmingly composed of small firms, farms and businesses, with an abundance of unskilled labour and a scarcity of capital;
ii)	are more for labour-intensive technologies for the production of goods or services;
iii)	when successfully met, may have a profound impact upon a host country’s social and economic development in that it increases labour productivity, raises income levels which, in turn, expand the technological base of the country; and
iv)	represents a greater risk for absorption for firms in less developed countries, which tend to lack appropriate infrastructures, than in those with higher levels of scientific, technological and industrial ‘know-how’. Thus, comprehensive policy-frameworks are vital to ensure the successful absorption of imported technology and its adaptation to the prevailing factor endowments.

The relationship between MNCs and host countries:

i)	is unequal, as MNCs generally seek to satisfy corporate goals rather than those of a host country’s government and also because technologically creative sources tend to be highly concentrated in larger firms/MNCs in developed countries [Vickery, 1986], thus there is an element of monopolistic or oligopolistic power in the international technology transfer market [Vaitsos, 1979];
ii)	is partially determined by a host country’s resource endowments and capabilities, ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Introduction: Current Issues in the Technology-Development Relationship
• Basic Needs - Water and Energy Technologies
• Poverty Alleviation - Agricultural and Related Technologies
• Industrial Technological Capabilities
• Technology Transfer
• Summary Papers