Technology Transfer Through Commercial Transactions

Abstract

A RECURRING theme in recent years has been the developing countries' insistence upon increased transfers of technical information, in order to expand their manufacturing capacity and reduce their dependence on primary products. This demand was raised at the second general Conference of UNIDO in Lima, March 1975, and also formed part of the call for a new international economic order voiced at UNCTAD IV in Nairobi in June 1976. Despite these calls for action, very little attention has been paid to the arrangements through which knowledge might be made available to lessdeveloped countries. This omission may be of little significance if the focus is restricted to governmental assistance. Where technical information is public property, the good offices of governments may be sufficient to ensure its transfer. In some activities, including agriculture, education, public administration and defence, this is the case, and technical assistance is provided on an official basis. In the industrial field, however, technical knowledge is predominantly private property. An under-developed country hoping to acquire industrial expertise is obliged to seek recourse to the foreign private sector through a variety of means, including foreign direct investment and licensing agreements. The foreign companies involved in these transactions are not necessarily committed to development or familiar with its requirements. Even if their personnel are anxious to provide assistance their operations take place within a commercial framework, subject to the calculus of private cost and benefit. As a result the quality and the quantity of assistance provided may depend on the profitability of the project and upon the technology 'donor's' ability to secure control over those profits. This paper attempts to examine this hypothesis, drawing on a study of collaboration agreements between British and Indian firms.' The first section considers the decision to enter the Indian market and the choice of strategy. The second examines the implications of these decisions for the provision of technical information to Indian partners.