Nepal | May 21, 2019

Transfer of technology: Costs and benefits

GIRISH P. PANT

A techno-economic national institution working in close co-operation with the finance, industry, and commerce ministries and promotional divisions of the government should be set up

Nepal Technology. Illustration: Ratna Sagar Shrestha/THT

Nepal Technology. Illustration: Ratna Sagar Shrestha/THT

Transfer of technology from one country to another, or from one sector of the economy to another, does not merely connote the passing of some technical information, but rather the actual transplantation from one milieu to another of applied scientific methodologies, their operating statistics and production capacity.

It is an elemental portion of national development, requiring the same bases and infrastructures.

The long term growth of a technology suggests that it must not only be productive during its life period, but also reproductive before being obsolescent.

A myriad of determinants persuade firms in deciding whether to transfer technology. Among them the economic factors such as intensity of competition, obstacles to entry to the industry, and the volume of markets have a crucial influence.

Political factors, plus the investment climate and incentive policies ( free zones, grants, interest subsidies), and controls and regulations on transfers, play a vital role.

In general, a settlement to transfer technology indicates trade-offs between short-term and long-term competitive strategies or between old and new productive activities; but overall the future balance must be positive, otherwise transfers would be fruitless.

The impacts of any transfer are administered by the objectives of technology holders and receivers, and by their technological capacities, negotiating skills and strategies.

They are also decided by demand and supply factors such as natural resource endowments, government policies and the economic and social plight in the recipient country and the country exporting it.

The effects persist over an extended duration   and there emanate various gains and losses of employment in various industrial undertakings.

More jobs are generated as a consequence of exports and capital and intermediate goods and services related directly to the transfer and as an outcome of the greater economic enterprise spawned in the importing country.

On the other hand, if industrial capacity and jobs are generated outside and this production capacity ushers to competing exports, direct negative effects on employment emerge.

Spread effects may then transmit losses to the related industries. Notwithstanding, not only are there   employment effects, but also induced effects in income distribution and prices.

As of the technological backwardness of quite a few developing countries, transfer of modern technology are necessary if they are to industrialize analogously as developed countries.

Developing countries can categorically procure the gains of the transfer of efficient technology by allowing foreign corporations, operating on a global scale, to create plants on her soil.

Foreign investment fetches organizational aptitudes and technology over and above contributions to balance of payments and current account.

But scarcely any foreign investors would desire to invest capital in such enterprises unless they have managerial obligation, facilities for repatriation of profits and the furnishing of utilities such as transportation, fuel , power and communications.

Procuring of foreign technology is one of the primary conduits of transfer between a developed and developing country.

However, there are certain restraints faced by developing countries.

Even when elaborate drawings, specifications, process schedules and in-depth instructions on every aspect regarding the technology are made available, they seldom prove enough for installing and operating the newfangled technique on a physical plane.

Some related costs are with reference   to technical guidance, supervision and staff training. Developing countries, ergo, have to negotiate not only for the price of technology, but also for the curtailment in the cost of other components.

The foregoing points lead to the examination of foreign collaboration which is a far more effective access for technological transfer.

For developing countries, all foreign collaborations entail in-depth technical and financial scrutiny of their infrastructures and potential markets.

Also, the explicit resources and the geo-political factors influencing the long-term interests of the country concerned have to be enquired into.

Despite   the overriding prominence of technological progress for economic growth, this topic has not received requisite and systemic attention in Nepal.

Finally, a techno-economic national institution   working in close co-operation with the finance, industry, and commerce ministries and promotional divisions of the government, and other organizations should be set up which could give the policy direction for technological growth for fostering the overall national interests.

It would be of greater benefit if a senior cabinet minister presides over its deliberations, with a small but puissant   secretariat consisting of the top-most technocrats and civil servants to take routine decisions.

They should ascribe definite tangible accountabilities to various   institutions spread over the country.

They should additionally revamp the categorical outcomes acquired from indigenous and foreign sources towards the transfer and growth of technologies to the different sectors of the national economy, and take measures to improve performances by promoting, curtailing, or expanding their activities in terms of the national requirements.


A version of this article appears in print on May 06, 2016 of The Himalayan Times.


Follow The Himalayan Times on Twitter and Facebook

Recommended Stories: