IT assignment essay on: Technology Transfer
Mansfield (1994) mention that transferring technology to developing countries is an important means by foreign direct investment. He emphasise that a developing country’s system of intellectual property rights protection has effects on the transfer of technology to a country through foreign direct investment. He then argued that developing countries with weak intellectual property rights protection may have lower chance of MNCs investing in the country. The MNCs may be willing to invest only in wholly owned subsidiaries, but not joint ventures with local partners or transfer only older technologies if they invest in these developing countries. He went on to say that this and other hypotheses were challenged and without substantial evidence. However, it is generally agreed that countries with strength or weakness in their intellectual property protections have considerable effect on technology transfer, in particular in high-technology industries from U.S. firms to China.
Young and Lan (1997) published a research in which they highlighted that technology provides firms with exceptional competitive advantages; however, technology transfer overseas brings with it the possibility of knowledge dissipation and encourages competition. They emphasised that innovation, through research and development (R&D), plays a crucial role in enhancing the competiveness of firms. The methodology was based on two methods, by postal survey and personal interview.
They draw our attention to the exiting problems in transferring technology into China through FDI with empirical evidence showing the degree of technology transfer to China is fairly limited and expected, based on China’s technological capacities and developing country status.
Their research, based on a case study of FDI to the coastal city Dalian in Northeast China assess the nature and extent of the difficulties experienced in FDI-linked technology transfer.
Their paper reviews a number of issues in the literature on foreign technology transfer such as China are at early stage of technological development, the size of technology gap by accessing how many years for local firms took to develop the technology brought by FDI, based on the technology previously used by local firms and how many years these local firms need to overcome the gap by themselves based on their technology capabilities preceding to FDI.
Problems identified in their research were incomplete economic reform, government policy discrimination in favour of FDI including foreign investment joint ventures, discrimination of the nationality of investor by giving better incentives to low technology FDI from Hong Kong, Macau and Taiwan as well as policy of encouraging quantity FDI than quality.
Given the size and growth of China market, with appropriate policy changes, there are substantial opportunities exist for increased technology transfer. Using FDI as a potential tool for technological development in Chinese context is far greater than theory would suggest.
Dunning (1995) points out that the only way in which developing countries can obtain advanced technology is through foreign direct investment. Wang and Zhou (1999) mentions that technology transfer (TT) in China is moving into new phase and facing a new business environment. The landscapes of this phase are trend towards globalisation of industries, internationalisation of Chinese domestic market and China’s economy will be entering a period of structural changes such as from planned economy to market economy and from extensive economy to an intensive economy. This is eminent that technology transfer plays a very important part in adjusting industry structure so that new strategies are adopted by Chinese firms that are fitted to the new environment as described. Therefore, it is generally agreed that one of learning and improving the developing countries technological capability is by the process of technology acquisition.
Lemoine and Kesenci (2004) in their study on technology transfer in relation to China, identify that China’s outstanding export performance is directly linked to its integration in the international segmentation of production processes. China has specialised in assembly operations through its engagement in production sharing with Asian countries, which allowed for speedy diverse of manufactured exports from textiles to electronic industries.
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