International Technology Transfer

The Essences and Forms of the International Technology Transfer

The international technological exchange (technology transfer) is understood to be the complex of the economic relations of different countries concerning the transfer of scientific and technological achievements.

The scientific and technical knowledge being bought and sold in the world market, which is the result of scientific research, engineering and experience of their commercial exploitation, as well as engineering services for the use of scientific, technical, technological and managerial developments. They are the objects of intellectual property, possessing both scientific and commercial values. As commodities they include the following:

- a patent is a certificate, which is issued by the proper government agency to an inventor and certifies its monopoly for the use of the invention;

- a copyright is an exclusive right of an author of a literary, audio or video product for display and reproduction of the work;

- a trademark is a symbol (a picture, graphics, combination of letters, etc.) of a particular organization which is used to personalize the product manufacturer and which cannot be used by other organizations without the official permission of the owner;

- industrial designs, which must be new and original;

- non-divulged information (know-how), which is secret and kept in secret, has commercial value and is provided to the government and governmental organizations as a condition of approval for the marketing of certain products;

- a variety of technical, design, commercial and marketing documentation. These products of intellectual work belong to so-called nonmaterial forms of

technology, and trade operations in international practice are commonly referred to as international technological exchange. Thus, international technological exchange is understood to be the complex of economic relations between contractors of different countries for the transfer of scientific and technological achievements (nonmaterial types of technology) with scientific and practical values, on the commercial basis. It should be noted that there are also noncommercial forms of international technological exchange:

• technical, scientific and professional journals, patent publications, periodicals and other specialized literature;

• database and databanks;

• international exhibitions, fairs, symposia, conferences;

• exchange of delegations;

• migration of scientists and specialists;

• training of scientists and specialists in companies, universities and organizations;

• education of undergraduate and graduate students;

• activities of international organizations in the field of science and technology.

Under modern conditions, international technological exchange has certain features [8, p.264]:

1. The development of market of high technologies. The generally accepted classification of high technologies for exports and imports of products, containing new and leading technology, is the classification developed in the USA, which is used by international organizations for statistical comparisons of different countries. The classification system allows to explore the trade in products of high technology in 10 main technological sectors: biotechnology; human life science technology; optoelectronics; computers and telecommunications; electronics; computerized production; new materials; aerospace technology; armament; nuclear technology.

2. The monopoly of large firms in technology markets. Research and development are concentrated in the largest firms of the industrialized countries, since only they have sufficient financial means for expensive research. Transnational corporations actively attract for R&D their foreign subsidiaries, characterized by increasing the expenses for scientific research in the total amount of the expenses of TNCs.

3. Technology policy of TNCs. In recent years there have been changes in the trends of R&D of TNCs. Research moves to the industries that determine success in the production and marketing activities:

• enhancement of traditional kinds of products to meet the requirements of the world market concerning the indicators of in material intensity, energy efficiency, security, reliability, etc.;

• creation of innovative products, market research, where you can expect high returns;

• improvement of the existing technology and creation of a new one. TNCs apply new approaches to the transfer of scientific and technological


• sale of licenses at the initial stages of the life cycle of products, in order to cover the expenses for R&D by incomes from realization of their results;

• establishment of exclusively high prices for the patented products, and limitation of the production and output of a new product by license buyers;

• agreement undertaking between TNCs to obtain exclusive rights to the patents for the most important inventions. The use of patents to control technique development or to hamper this development;

• deprivation of TNCs subsidiaries the autonomy in the choice of equipment and technology. They should be guided by the general licensing policy

within the TNCs;

• TNCs transmission of licenses in non-commercial terms to their subsidiaries and affiliates;

• the establishment of strategic alliances between TNCs from different countries to solve jointly the scientific and technological problems.

4. Relationship between TNCs and the developing countries. TNCs try to create a structure of international division of labor, which would provide economic and technical dependency of the developing countries. For example, in these countries, TNCs create enterprises that produce components that are supplied to the subsidiaries in other countries. Transferring the technology for manufacturing intermediate products to the countries with cheap labor force, a TNCs reduces the cost of their goods.

TNCs often moves to the developing countries the production of goods, the lifecycle of which expired and the profit from sales gradually decreases. They receive these goods at low prices and then sell them through their marketing network under their well-known trademark, getting a higher profit.

A technology, which is transferred to the developing countries, is generally ill-adapted to their possibilities, because it takes into account the level of development and the structure of the industry in the developed countries.

The developing countries account for about 10% of international technological exchange due to the small capacity of their technological market.

5. Participation in international technological exchange of "venture" firms (small and mid-sized firms employing up to 1 thousand people). The advantage of these firms in the market of technologies is a narrow specialization. Producing a limited product line, these firms have access to highly specialized global markets; they do not bear additional expenses for market research, advertising; they pay more attention to the direct solving of scientific and technical problems.

6. Development of international technical assistance. This assistance is provided by the developed countries to the developing countries and countries with economies in transition in the field of the transfer of technical knowledge, experience, technologies, technology-intensive products, personnel trainings.

The main buyers in the market of technologies are as follows: foreign subsidiaries of TNCs; individual independent firms.

Transfer of TNCs' new technologies to their foreign branches is conditioned by the fact that:

• overcoming the disagreement between the need for greater use of the latest technical developments with a view to maximize the profits and resulting there from threat of losing their monopoly for scientific and technological achievements;

• decreasing the specific costs for R&D;

• excluding the outflow of production secrets beyond the boundaries of


• increasing the profit of the parent company (since in most countries the payments for the new technology reception are exempted from taxes).

Independent firms usually buy technology of the industries where the expenses for R&D are small (metallurgy, metal processing, textile and clothing industry).

Products of intellectual labor are sold in the world market through sales or by means of establishing the relations arising in connection with obtaining of a temporary right to use the results of scientific research and development on the basis of international licensing agreements, as well as contracts for engineering services.

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