9.3 Magnitude of Current Technology Transfer
|Figure 9.1: Regional shares of world manufacturing value added
(MVA). Source: International yearbook of industrial statistics 1997, UNIDO.
|Figure 9.2: Development of manufacturing value added (MVA) as
function of GDP in various regions.
Source: IMAGE data supplied by rivm, The Netherlands.
As countries develop from an agrarian society to an industrial urban economy
the economic structure of a developing nation goes through a transition process,
as described by Kuznets (1971). The structure of the economy is strongly dependent
on the stage of development, and hence the technology needs. A World Bank study
confirmed the transition patterns for a large number of economies (Syrquin and
Chenery, 1988). The transition process may not be smooth (especially in short
periods), and may follow various paths. Syrquin and Chenery (1988) showed that
the performance of the economy is associated with large size, a manufacturing
orientation and with a higher degree of openness. The smaller the economy, the
more it relies on the open character of the economy. However, alternative paths
may be successful too, as evidenced by the development of economies as in Korea,
where industries matured under economic protection (Lee, 1997).
The rate of technological change strongly affects the rate of investment and
the productivity and vice versa. Investment in modern equipment, evidenced by
the economic growth in newly industrialised economies in East Asia, is seen
as a more important contribution to growth than other investments (UNIDO, 1997).
The growing industrial production in Asia, especially China (5% of world manufacturing
value added (MVA) in 1995), is shown in Figure 9.1.
Figure 9.1 also shows that world MVA is still dominated
by the industrialised countries, while MVA of the economies in transition has
decreased. The share of MVA from other regions of the world has remained stable.
The regional development of the industrial sector is depicted in Figure
9.2. It shows that the importance of the industrial sector in the regional
economy is increasing in most developing regions.
Although the growth pattern of the industrial sector may differ between countries,
generally the growth is associated with the use of capital intensive technology
such as in the raw material based industries. China, India (Kaplinsky, 1997)
and Korea are examples of this pattern, though in different stages of development.
There is, however, considerable debate about the importance of the industrial
sector in the economic development process. The growing importance of the services
sector in some developing economies (Asia, Latin America) generates an increasingly
larger part of total economic growth (World Bank, 1998). Different investment
patterns influence industrial growth, structure and technology adoption.
We use investment flows as an indicator for investments and technology transfer.
While, recognising that investment flows do not consider differences in the
'quality' of investments made, there is no other simple indicator for the magnitude
of technology transfer taking place.