Methodological and Technological Issues in Technology Transfer

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4.5.3 Capacity-building for evaluation and adjustment, and repetition stages

Too much policy attention has historically focused on market failures that prevent firms from providing adequate investment in research and development. But policy also needs to focus on the enhancement of competitive performance of firms and the promotion of structural economic change that allows firms to innovate and adopt new technologies. The OECD (1994) said: "technology policy has traditionally focused on the innovation end of the process....this approach has slowly been complemented by a parallel concern for an economic environment conducive to the diffusion of innovations... Policy needs to move towards recognising that, rather than two distinct activities, innovation and diffusion are two facets of the same process. Developing firms' ability to absorb and use new technology effectively also improves their ability to develop innovations themselves."

It is also important to consider the positive interrelationship of technology and innovation to create capacity for autonomous development. There is a widespread tendency to think of technology transfer in minimalist supply side terms-that the initial choice and acquisition of technology is the only critical factor (Brooks, 1995). Conceived this way, it leads to technology transfer's characterisation as a costly process that also may contribute to a perpetuation of technological underdevelopment, stagnation and dependency (Chantramondklasri, 1990). Newer, broader conceptions of technology transfer see it as a process of incremental and cumulative learning by which the results of the initial choice are internalised. Like R&D, it is an essential component of what is described as social learning (Brooks, 1995).

It is increasingly accepted that innovation is the single most important source of long-term economic growth in all countries (STAP, 1996) and that small incremental innovations are even more important to economic success in developing countries than in developed countries (Brooks, 1995). The objective of technology transfer should be to foster technological innovation in recipient firms so that not only do they master new processes, but also have the technical capability to generate improved processes and products (Stobaugh and Wells, 1984). This will depend not only on vendors but also necessarily and largely on the active technological behaviour of recipient firms (Chantramondklasri, 1990).
Despite the central importance of capability for technological innovation, the capacity to innovate and then replicate is poorly developed in developing countries (STAP, 1996). There are several factors accounting for this. First, leaders there are rarely interested in nurturing the development of the capacity to innovate. Second, even when R&D capacity exists, close involvement of industry is rare. Thirdly, bilateral and multilateral assistance targets only those technologies that have a proven track record in already industrialised countries. Moreover, they too provide little assistance aimed at nurturing the capacity to innovate (STAP, 1996).

The engineering and management skills required in acquiring the capacity to optimise and innovate are not trivial. Various kinds of high quality training are needed to embody in personnel of the receiving firm the skills, knowledge and expertise applicable to particular products and processes. Such training, both generic and specific, should be an important part of any technology transfer package and deliberately planned as a learning vehicle for the work force of the recipient firm (Imai, 1994). The transfer should not only be of specific know-how, but also of related systemic knowledge of the relevant technologies so that recipients can add value. This is an important consideration for developing countries, because it implies that the work force must experience continual cumulative learning, both from experience and formal training, in order to remain competitive in a world market where intense continual incremental improvement ("kaizen") is increasingly essential to sustained competitiveness (Brooks, 1995). In those regions of the developing world where existing capabilities are weak in specific technology areas, basic level of technological capability should be built via the establishment of regional institutes that provide training in the fundamentals of technology assessment and management. This approach can produce enabling capacity in a sustainable way and is already being explored within the FCCC process.

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