Facilitating technology transfer to developing countries - Commission report
Foreign direct investment (FDI) is the key tool for technology transfer from developed to developing countries, according to a communication from the European Communities and their Member States to the trade-related aspects of intellectual property rights (TRIPs) council. The paper, which reflects on technology transfer to developing and least developed countries, examines what both the owners of technology and the potential beneficiaries of the transfer can do to facilitate the process, and concludes that the private sector has an important role to play in terms of FDI. 'Among the possible business partnerships, it appears that foreign direct investment is a privileged channel for TT [technology transfer] since it generally provides not only a whole package of technologies (from equipment to training of workers) but also expertise on the most appropriate technologies. In addition, it usually implies the long term involvement of the investor,' states the communication. The paper recognises, however, that the developing countries themselves have an active role to play in attracting FDI. Key conditions are highlighted as being good governance; stable, transparent and predictable regulatory frameworks; and the protection and enforcement of intellectual property rights. Another issue affecting the transfer of technology via any means is the absorption capacity of the developing countries. '[T]he willingness of isolated players - whether technology owners or beneficiary firms - is not the only crucial factor. The absorption capacity of the beneficiary country is also a key element. It is limited by the quality of the education system and the technical skills of the workers, the existing infrastructures and the characteristics of the production system, the effectiveness of the banking system, the commercial environment, and so on.' Developing countries must also take responsibility for ensuring lasting effects from technology transfer, according to the communication. This should be done by improving education policies, thus developing the capability of local workers to adapt technologies, upgrade them and eventually to reach a higher grade of technological autonomy. The EU's framework programmes for research also have a role to play. The communication notes that joint research programmes 'may contribute to a higher level of knowledge amongst local scientists and to the sharing of the benefits of research and development.' The Sixth Framework Programme [FP6] promotes research collaboration and the mobility of researchers between the EU and third countries, including developing countries, in areas of common interest. Acting alone, the paper suggests that developed countries can also facilitate business partnerships by establishing incentives, financial and non-financial, for national companies to identify potential partners in developing countries.