Session I: Technology, Trade and Growth-lessons of Experiences Session I: Technology, Trade and Growth-lessons of Experiences Issues related to technology.

Session I:Session I: Technology, Technology, Trade and Growth-lessons Trade and Growth-lessons of Experiencesof ExperiencesIssues related to Issues related to technologytechnology policiespolicies

Assad Omer, UNCTADAssad Omer, UNCTAD

WTOWTO Seminar on Technology, Trade and Seminar on Technology, Trade and DevelopmentDevelopment, ,

14 February 200114 February 2001

Critical determinants of a Critical determinants of a country’s ability to compete country’s ability to compete successfully: successfully:

abilities to create and to abilities to create and to acquire and adapt acquire and adapt technologies from both technologies from both external and internal external and internal sourcessources

1/1/ The conceptThe concept

The challenge:The challenge:

• to establish andto establish and maintain maintain effectiveeffective access access to this to this information, andinformation, and

•to devise mechanisms for to devise mechanisms for diffusing diffusing it effectively it effectively within the economywithin the economy

Technology transfer process : successful learning of information by one party from another party, and effective application of that information in generating marketable products and services

Such transfers are Such transfers are costlycostly and require investment by and require investment by both parties in a process both parties in a process with uncertain outcomeswith uncertain outcomes

Potential opportunitiesPotential opportunities: : Productive activities can be Productive activities can be segmented and spread segmented and spread around the world in different around the world in different locations, more countries locations, more countries could participate in could participate in international production and international production and tradetrade

But these But these opportunitiesopportunities are are not easily tapped by all not easily tapped by all countries countries

Only countries with a broad Only countries with a broad range of range of technological technological capabilitiescapabilities are areable to host specialized able to host specialized activities in the various activities in the various segments of goods and segments of goods and services productionservices production

New approach in policiesNew approach in policies : :

focus more on effective focus more on effective collaboration between collaboration between partners to attain real partners to attain real technology transfertechnology transfer

2/2/ Technology policiesTechnology policies

New New policiespolicies are also aimed at are also aimed at inducing TNCs to improve the inducing TNCs to improve the content of their technology content of their technology transfer by providing better transfer by providing better domestic skills, capabilities, domestic skills, capabilities, supplier networks and supplier networks and infrastructureinfrastructure

The The new technology new technology paradigm paradigm conceptualizes conceptualizes innovation and knowledge innovation and knowledge encompassing not only encompassing not only product and process product and process technology but also technology but also organizational knowledgeorganizational knowledge

New skills and institutional New skills and institutional changes are requiredchanges are required

New technologies relative to New technologies relative to conventional technologies : conventional technologies : low cost-solutions, andlow cost-solutions, andleapfrogging provides high-leapfrogging provides high-tech, inexpensive in the long tech, inexpensive in the long term, and possible blending term, and possible blending technologies technologies (traditional with new, (traditional with new, big with small and indigenous with big with small and indigenous with foreign).foreign).

3/ “Leapfrogging” and technological learning

New technologiesNew technologies:: Hard to learn but high potential Hard to learn but high potential for further innovationfor further innovationTechnological choiceTechnological choice:: choosing the most appropriate choosing the most appropriate technology for a particular technology for a particular period in time period in time ororchoosing the most appropriate choosing the most appropriate path for technological path for technological development over time development over time (technological change is path (technological change is path dependent).dependent).

Countries in higher up the Countries in higher up the technology ladder, better technology ladder, better positioned to acquire and positioned to acquire and adapt high-tech. adapt high-tech.

Countries in lower down the Countries in lower down the technology ladder, better to technology ladder, better to avoid technological fixes and avoid technological fixes and choose technological solutions choose technological solutions with potentially higher with potentially higher learning spilloverslearning spillovers

Technology acquisition and Technology acquisition and application to be accompanied by application to be accompanied by deliberate policiesdeliberate policies to stimulate to stimulate technological learning and the technological learning and the enlargement of local absorptive enlargement of local absorptive capacities (necessary for moving capacities (necessary for moving up the technology ladder)up the technology ladder)

Technological learningTechnological learning requires requires institutional capacity: institutional capacity: successful successful cases of leapfrogging of Brazil and cases of leapfrogging of Brazil and Malaysia in Malaysia in teletelecommunication communication and and information technologiesinformation technologies

As an example, the automotive As an example, the automotive industry in South Africaindustry in South Africa:: from a from a highly protected, inward-highly protected, inward-focused industryfocused industry,, to one with a to one with a marked export orientation marked export orientation compcompeettinging effectively in global effectively in global markets (markets (preliminary findings of a preliminary findings of a series of case-studies: Brazil, India and series of case-studies: Brazil, India and South Africa).South Africa).

4/4/ Openness of economy and Openness of economy and integration inintegration intoto the the world economyworld economy

Integration into global markets Integration into global markets facilitated by: facilitated by: Specific industry support Specific industry support programmes. Institutional programmes. Institutional support in innovation and support in innovation and technological development technological development (( essentiel essentiel role of the South role of the South African Bureau of Standards for African Bureau of Standards for local firms to meet the high local firms to meet the high technical standards)technical standards)

Close links with foreign firms :Close links with foreign firms : facilitated technology and skills facilitated technology and skills transfers, organizational transfers, organizational development, and access to development, and access to international markets. international markets. Effective linkages between Effective linkages between assemblers and components assemblers and components manufacturers :manufacturers : instrumental in instrumental in driving technological driving technological development and setting development and setting industry standardsindustry standards

Role of regulatory policies Role of regulatory policies and national authorities:and national authorities: promoting an enabling promoting an enabling environment for innovation environment for innovation and technological diffusion and technological diffusion involving multiple actors involving multiple actors ( public institutions, domestic firms ( public institutions, domestic firms and entrepreneurs, nongovernmental and entrepreneurs, nongovernmental organizations, multinational organizations, multinational companies, international research companies, international research consortia and individuals)consortia and individuals)

Technological development Technological development and upgrading:and upgrading: important factor for the important factor for the integration and participation integration and participation of developing countries in the of developing countries in the international trading system. international trading system. This can be facilitated by not This can be facilitated by not only domestic but also only domestic but also international actionsinternational actions

Including human resources Including human resources development, strengthening of development, strengthening of the policy and legal the policy and legal frameworks and competitive frameworks and competitive environment, establishment of environment, establishment of science and technology science and technology institutes and infrastructure, institutes and infrastructure, business support services and business support services and home country measures home country measures encouraging technology encouraging technology transfertransfer..

There are also risks:There are also risks: access to these critical access to these critical technologies may be limited in technologies may be limited in an overly protectionist an overly protectionist intellectual property intellectual property environment that does not environment that does not properly properly balancebalance incentive to incentive to innovate against the needs for innovate against the needs for dissemination of knowledge.dissemination of knowledge.