Technology Transfer Issues in Environmental Goods and Services E-mail
Tuesday, July 21, 2009

In much of the early development literature, “transfer of technology” (ToT) was conceptualised as the “transfer” of machinery and equipment from North to South through trade, aid and licensing or foreign direct investment (FDI). At first it was regarded as a cost free process. Research in the 1970s discovered that the financial costs of technology transfer stemmed from technology payments and the way in which technology is embedded in social and political institutions that affect the process of technological mastery. During the late 1970s and 1980s, despite the conventional wisdom that argued against “reinventing the wheel”, effective ToT was increasingly conceptualised in terms of domestic capacity building in a small number of Asian and Latin American countries. This resulted in their ability not only to operate new technologies efficiently but also to modify, adapt and improve upon imported technology and to innovate in the development of new designs, production processes and products.


Technology Transfer Issues in Environmental Goods and Services:
An Illustrative Analysis of Sectors Relevant to Air-pollution and Renewable Energy,
ICTSD Issue paper by Lynn Mytelka

These were the firms and countries that proved better able to adjust as technology and competitive practices began to change. Four of these changes were of particular importance:

• The growing knowledge-intensity of production, not only in the so-called “high tech”
industries, but across a wide spectrum of “traditional sectors”;
• The emergence of innovation-based competition and its widespread diffusion through the
process of trade and market liberalisation;
• The adoption of new global trade, intellectual property and investment rules that involved
market opening; and
• Growing concern for the environment and its embodiment in international agreements.

These changes not only created new possibilities for wealth creation and sustainable development, but also new requirements for learning and technological mastery without which it has been difficult for most developing countries to enter export markets and sustain export growth.

The ability of developing countries to integrate into the new trading system, thus, increasingly depends upon a conceptualisation of ToT as a process that contributes to learning, domestic capacity building and innovation. Although this conceptualisation of the ToT process has been integrated into strategy documents and policies in many developed and developing countries, it has not been mainstreamed into WTO negotiations more generally and is notably absent from the mandate for negotiations on EGS, a sector in which goods and the tacit knowledge required for their design and operation, often embodied in services, are closely linked.

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