Methodological and Technological Issues in Technology Transfer

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8.5.2 Policies and Programmes for Technology Transfer between Countries

Creating an enabling business environment and building suitable indigenous technological capability in technology recipient countries, and creating the enabling environment for stimulating technology outflows are basic to transport technology transfer. Hence, these are briefly commented on in the following two paragraphs before continuing with a description of specific technology transfer policies and measures.

Building the necessary human resource for technology transfer and development is important to the transfer process, and this may involve programmes and policies for an adequate S&T human resource base, promotion of general S&T literacy, ensuring active participation of the indigenous S&T community and utilising local materials and other resources. A modern computerised system for information storage, retrieval and use with linkages to relevant national and global systems is very important. Equally important is a well-organised and co-ordinated institutional framework performing functions ranging from regulating, skill development, information development and dissemination, and to financial management. Suitable legislation for technology imports (choice, selection, evaluation and monitoring), foreign investments, and project assessment, approval and monitoring are needed, as well as institutions for law enforcement and arbitration (Davidson, 1998).

Creating a favourable business environment is important in addition to a stable macro-economy for technology flows. This includes having clear and well-defined operating guidelines for business operations, organised financial institutions, market information development and dissemination, and support training programmes and associated technologies. These capacities will not only enhance the absorption of technologies being transferred, but create the capacity for generating new technologies and so offer new transfer opportunities. As an example, these capacities were crucial in the transfer of technologies to the Asian countries, which have enjoyed significant economic progress recently (World Bank, 1996).

Stimulating technology flows from technology supplier countries is needed for the transfer of transport technologies. This will require instituting certain measures such as informing local companies about potential markets, financial support for joint ventures with companies in recipient countries, grants for investments with transfer-of-transport options, preferential treatment to firms that transfer and sponsor expertise to live and work with recipients. In addition, supplier countries should ensure that options for transfer have been adequately tested domestically to build the confidence and respect of the recipient (UNCTAD, 1999).

An important specific policy for technology transfer is the will and commitment of governments involved in the transfer and development of transport technology. This was the most single important factor for the success of technology transfer of the automobile industry in South Korea as shown in Table 8.6 (Pacudan, 1998). This commitment can be from the highest possible authority and be demonstrated by long-term strategic plans of technology growth, while linking it to other development policies and programmes.

Table 8.6 Transfer of vehicle technology: a case study of South Korea
  1962-1967 1968-1974 1975-1981 1982-1990 1991-present
Passenger Cars (Hyundai and Daewoo)
  • Semi-knocked manufacturing of Japanese Models
  • Complete knocked down manufacturing of American and European models
  • Mass production of local model
  • Restyling and front wheel drive car model development
  • Engine development
  • 21% local content
  • 30% local content
  • 85% local content
  • 97% local content
  • 100% local content
  • Suppliers of spare parts
  • Technology licensing and joint ventures
  • Technology licensing and joint ventures
  • Technology licensing, joint ventures and in-house R&D
  • In-house R&D and technology licensing
  • Acquisition of assembly and operational skills
  • * Acquisition of inspection and production management skills
  • * New model quality control and EEC tests
  • Mass production of front wheel drive designed vehicles.
  • Acquisition of engine design skills
  • FMVSS tests

Another specific policy is the promotion of R&D in the transport sector. Globally, industrial R&D in the transport sector have undergone major changes in the last two decades. First, there has been a substantial increase in R&D funds by vehicle manufacturers in industrialised countries, especially in the US, Europe and Japan; second, a change in direction and scope of R&D funding; and third, a change in the management and organisation (Gerybadze, 1994). R&D management has changed from centralisation with no explicit strategies in the 1970s, to project planning, strategic management and decentralisation in the 1980s, and now to integration of R&D strategy to corporate strategy, balancing between basic and applied research programmes within networks. Governments can institute new policies and programmes to exploit these changes, because despite production still being concentrated in a few companies, opportunities exist for technology recipients with vehicle assembly plants to encourage joint R&D activities with the main firms. The case of increased imports of cars produced in Mexico by the U.S. automobile manufacturers illustrates this point. During the devaluation of the Mexican peso, U.S. companies easily imported high quality produced cars from Mexico back to the U.S. for distribution because they were cheaper. It shows the importance of building capabilities in recipient countries. Another aspect of R&D programmes is to enhance local R&D through promotion of contract R&D programmes between public and private sectors within and between countries. This can promote relevance and stimulate interest in local R&D, as has been the case of Malaysia where companies have been able to receive a 200% tax exemption for R&D expenditure (Idrus, 1988). Setting up a revolving fund for R&D promotion and commercialisation of results as being done in countries such as South Korea and Japan can help to promote R&D. Due to the rapidity in innovations, and the expensive and skill demanding nature of modern R&D globally, countries need to participate in international and regional R&D networks. Joint R&D will allow technology recipient countries access to very expensive equipment, laboratories, and high quality skills, which are normally absent in many technology recipient countries.

In general, technology co-operative agreements among firms can form a very good basis for the transfer of transport technologies. Joint ventures in equity and no-equity firms offer opportunities for technology transfer. In equity form, the recipient will be fully involved in decision-making in the capitalisation of technology, royalty fees and organisational arrangements, and depending on the capability of the recipient, significant technical skills such as procurement of equipment, R&D, quality control and marketing skills can be transferred through joint programmes. Joint R&D programmes could be an efficient means of transferring knowledge and stimulating activities especially among resource-constrained countries. Financial, marketing and management cooperation agreements can be used to access technology through non-equity joint ventures. The use of joint agreements in other forms can be used effectively to promote information access and exchange. However, in joint agreements, partners need to be prepared to share the risks and costs of programmes. These agreements could be used to stimulate the transfer of smaller and fuel-efficient cars between parent and subsidiary firms, hence encouraging transfer between countries.

Bilateral co-operative agreements between countries which could lead to twining or linking of cities can provide opportunities for cities with successful urban planning systems that had yielded GHG benefits to transfer such experiences to other cities. Exchange of personnel, targeted visits, joint implementation of programmes are some of activities which could result in the transfer of skills and knowledge (Figueroa et al, 1998). "Integrated transport planning" which involves a set of policies that matches the environmental and transport agendas using experiences worldwide can improve the local and global environment of many cities. This can include the harmonisation of a wide range of policy objectives such as wider use of public transport, new road infrastructures, pricing policies, and environmental quality monitoring (IIEC, 1996).

Technical assistance programmes can offer technology recipient countries opportunity to access specific skills such as technical advice on operation, maintenance, and quality control, but not proprietary technical information. Consultancy services can be used to transfer specific technical skills. Management contracts could be used to acquire selected skills such as organisational and technology-sourcing skills, but problems could arise from different perceptions of project objectives between the two parties, unnecessary extension of contracts, and level of involvement of indigenous employees.

Promotion of standards and regulations can significantly be used to control emissions, especially from road vehicles as was demonstrated in the USA with the 'Clean Air Act'. Nearly all countries have standards for vehicle emissions, but many technology recipient countries have weak enforcement mechanisms, hence compliance is generally weak. Applying standards depends on several factors such as the manufacturing base of the country, capacity to enforce the standards and facilities to comply with the standards. Using similar standards in countries with assembly plants as those of the parent companies will ensure that updated technology will be transferred between both countries. Countries without manufacturing capacities can institute strict standards, but they need to have the capacity to enforce them such as testing and inspection facilities. Strict standards can also be used to control second-hand imports.

Policies that can promote local technology development if the basic technical capacities are present include discouraging imports of completely built up units, providing incentives to local assemblers to increase local content in production (tax reduction, subsidies), and regulations to ensure local content in varying percentages. These policies, which were instituted in the development of automobile manufacture in South Korea, can provide significant lessons for technology recipient countries in the acquisition of many GHG reduction options in the transport sector (see Table 8.6). Some countries have embarked on national programmes for transport technology development, though most of them are for automobile promotion as was the case of South Korea and India. More recently, some African countries are doing the same. Nigeria and Kenya are examples of such moves. In the case of Nigeria the prototype has been demonstrated, while in the case of Kenya the prototype is yet to be adequately tested.

Policies and measures to promote non-motorised systems mainly involve the construction of the associated infrastructure such as dedicated lanes with the supporting signalling systems, and parking facilities for cycles. Creating local manufacturing facilities for bicycles to increase public access will be useful to improve their use by poorer members of the society. On the whole, these policies and measures should be integrated into the overall transport policy, as has been done in some European cities.

Multilateral agencies can be useful in facilitating the transfer of transport technologies through provision of specific information, support for local information networks, provision of technical advice and providing training programmes. Also, these organisations can be used to provide unbiased information regarding technology products and services. The Global Environment Facility (GEF) that is concerned with providing funds for abating GHG emissions will hopefully approve a transport programme soon that is aimed at funding non-motorised transport, modal shifts, electric and hybrid vehicles, and biomass transport fuel. GEF is expected to be restructured to include support for technology transfer activities (GEF, 1999).

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