Regulation of Technology Transfer to Developing Countries: The Relevance of Institutional Capacity*

Abstract

This article revisits the debate over appropriate approaches to the regulation of technology transfer to developing countries. It begins by contrasting two stylized approaches, labeled for convenience the “New International Economic Order” model and the “Globalization” model, which have historically struggled for acceptance. It then explores the implications for the choice between these or alternative models of the fact that many developing countries presently lack the institutional capacity required to provide optimal regulation of technology transfer. Existing discussions appear either to assume that developing countries possess sufficient institutional capacity to design and implement sophisticated regulatory regimes, or to take the opposite approach and assume a drastic shortage of institutional capacity. Both approaches ignore the intermediate category of countries that do face constraints upon institutional capacity but are striving to overcome them. The analysis here is intended to demonstrate the general point that a country's present and future institutional capacity ought to be considered highly relevant to the design of central aspects of the regime that it uses to regulate technology transfer. The analysis is also designed to highlight the specific need for attention to the distinctive questions of regulatory design which arise in countries that are in the process of enhancing their institutional capacity in this and other regulatory contexts.