Technology is not limited to equipment and objects but includes the ability to know, understand and control and harness the underlying principles and processes.
Diverse technologies, not just those called ‘biomedical’, affect the incidence and control of all diseases, including tuberculosis. ‘New technology’ refers to something recently developed, but any technology that is new to people with no prior experience.
For developing countries, technological innovation is much less important than relevance, which includes, among other things: direct application to reduce the risk of infection and disease; affordability and cost-effectiveness; foreign exchange savings; To meet the demand of the people with political advantage to the government; and promote social equality.
The health gained by the new technology must be worth more than its cost, but it is difficult to measure. It is generally assumed that industrialized countries are eager to export technologies, but intellectual property and patient regulations of the importing country may prevent such transfers.
Similarly, ethical issues involving the safety of human subjects and informed consent can complicate clinical trials and technology evaluation in a developing country environment.
This article introduces the decision framework for technology transfer from developed countries (DCs) or multinational corporations (MNCs) to less developed countries (LDCs).
The framework considers technology to be an important strategic variable in national development planning. By considering technology transfer in the formal planning process, LDCs and MNCs can reduce the risks associated with the transfer of unsuitable technology.
This framework takes a holistic or systematic approach of technology transfer and suggests how technology can progress through research and development. Technology advancements can lead to long-term economic growth for LDCs.
According to the 1990 New Development Theory, “innovation is the major source of technological progress … which in turn drives economic growth”. Absorbing technical spillover from foreign country firms is one of the major objectives of the host developing countries for wider acceptance and encouragement of various channels of FDI. freebookspdf
Hard technologies (industrial processes, equipment and plants) or soft technologies (technical know-how, management ideas, marketing skills, etc.) contributed by multi-national enterprises (MNEs) (Dunning and Lunden 2008) are considered the main sources of economic growth. . and increase.
When a multinational firm is vertically integrated with the developing country firms, host firms, they are required to adhere to the strict guidance and standards of MNEs to ensure quality goods or services in the form of raw materials or upstream services. is forced to.
Foreign firms will guide and assist both managerially and technically thereby improving both the quality and quantity of service by local partners. Simultaneously, domestic rival firms enhance their offerings to keep pace with foreign affiliated firms in the market, thereby increasing the productivity of the host country’s firms. The entry and rapid expansion of Wal-Mart, the largest US retailer in China, has helped the logistics industry climb to higher levels in the Chinese market (Zhu (2010)). Xnxnxnxn Cube Algorithms
For developing countries to make their place in the global economy, they need to be technologically advanced. There is a possibility of import of new technology from foreign developed market, but it will be a setback as the process will be costly. Countries will also find themselves isolated from the advancement of technologies if they cannot develop export markets (Sachs 2008).
This can be mitigated to a great extent by the ‘trickle down’ effect of MNEs, in which transfer of technical skills from developed countries to developing countries takes place through FDI.
The relocation of Panasonic’s microwave manufacturing base from the United States to China has led to the appearance of 2800 Chinese enterprises to provide components for it, which has contributed not only new technology, but advanced operation management techniques to the Chinese market. have also contributed (Sinani and Mayer 2004).
The uncertainty of the results of new technology and the risk factor due to heavy investment prevents developing countries from introducing any new technology from scratch.
The argument in support of MNEs is that technology is the quintessential component of economic growth and calls for substantial investment in research and development (R&D). However, developing countries lack both the necessary skills and funds for R&D, which has led to low levels of R&D in developing economies. Innovation from host countries can be encouraged due to the presence of MNEs, which will control the resources needed for R&D.
Host firms can therefore save on cost by using technologies that are already implemented and performance by MNEs (by MNEs) and imitation (by host firms) (Das 1987; Wang & Blomstrom 1992, cited in Crespo and Fontaura 2007 ) is used. However, patent regulation and the challenge of absorbing technical skills into short-term collaborative contracts make the process very challenging for firms in emerging markets.
Human resource mobility from MNEs to local firms also acts as a channel of technology transfer and expansion as the systematic training provided to these highly-skilled employees is eliminated as new managerial capability to domestic firms. So that domestic enterprises can be increased. would otherwise be impossible (Crespo and Fontaura 2007).
Table 1: Summary of FDI Spillover Channels (Blomstorm and Kokko (1998); Gorg and Greenway (2001); Gorg and Stroble (2002))
Technology transfer usually occurs in a market that is imperfectly competitive and does not have a specific market structure. Since different developing countries will have different market structures, it becomes very complex to have a generalized theory and model to find the determinants of technical spillover benefits to local firms (Mandal and Pant 2010).
The results of empirical studies by various researchers serve as an alternative to analyzing the net benefits of technology spillover for host developing countries. The firm’s total factor productivity (factors such as R&D levels, foreign presence, firm size) can be used as a proxy for technology transfer (quoted in Haddad and Harrison 1992, Crespo and Fontaura 2007). According to Sec (2011). “A 10% increase in a developing country’s foreign R&D capital stock leads to an increase in its total factor productivity by more than a 2% percentage point”.