Technology transfer

Definition

Technology transfer refers to the process of sharing or disseminating technology, knowledge, and skills between entities, often across borders. This can occur through various means such as foreign direct investment, joint ventures, licensing agreements, and collaborations between firms and research institutions, allowing countries to enhance their productive capacities and economic growth.

5 Must Know Facts For Your Next Test

1. Technology transfer can play a crucial role in developing countries by providing access to advanced technologies that enhance productivity and innovation.
2. The effectiveness of technology transfer is often influenced by the recipient country's absorptive capacity, which refers to its ability to effectively utilize and adapt new technologies.
3. Multinational corporations are key players in technology transfer, as they often establish subsidiaries in foreign countries, bringing with them advanced technologies and practices.
4. Government policies and incentives can significantly impact the flow of technology transfer, encouraging or discouraging foreign investments and collaborations.
5. Technology transfer can also lead to knowledge spillovers, where benefits extend beyond the immediate recipients, fostering broader economic growth and development.

Review Questions

• How does technology transfer facilitate economic development in emerging markets?
  • Technology transfer facilitates economic development in emerging markets by providing access to advanced tools and processes that can boost productivity. By allowing these markets to adopt new technologies, they can improve their manufacturing capabilities and innovate more effectively. This process often includes foreign direct investment from multinational companies that bring not just capital but also expertise and established practices that contribute to local economic growth.
• Discuss the role of multinational corporations in the technology transfer process and how it impacts local economies.
  • Multinational corporations play a pivotal role in the technology transfer process as they invest in foreign markets and bring their advanced technologies with them. This can lead to significant impacts on local economies by improving productivity levels, creating jobs, and fostering innovation within local firms. Furthermore, these corporations often engage in partnerships with local businesses, which enhances knowledge exchange and supports the overall growth of the local economy.
• Evaluate the potential challenges associated with technology transfer and propose solutions to enhance its effectiveness.
  • Challenges associated with technology transfer include disparities in technological capabilities between countries, regulatory hurdles, and potential resistance from local industries fearing competition. To enhance its effectiveness, solutions could involve strengthening educational institutions to boost local expertise, establishing supportive government policies that facilitate collaboration between foreign firms and local businesses, and creating frameworks for better intellectual property protection that encourages innovation while allowing for knowledge sharing.

Related terms

Foreign Direct Investment (FDI): Investment made by a firm or individual in one country in business interests in another country, typically through establishing business operations or acquiring business assets.

Joint Venture: A business arrangement where two or more parties agree to pool their resources for a specific task, sharing both the risks and rewards.

Licensing Agreement: A legal contract in which one party permits another to use its intellectual property rights under specified conditions in exchange for compensation.