The Handbook of Global Science, Technology, and Innovation

Chapter 9 Capital and Technology Flows: Changing Technology Acquisition Strategies in Developing Countries

Suma Athreye and Sandeep Kapur

Traditional Modes of Technology Acquisition in Developing Countries

Acquisition of technology is a vital element of the competitive business strategy of firms in developing countries. Technology acquisition can reduce the productivity gap between developed and developing countries, and even more so if acquired technologies diffuse into wider use within developing countries. To the extent that the income gap across countries is sensitive to the technology gap, understanding the channels for technology flow are of great policy relevance.

Acquisition of technology involves transfer of knowledge. This transfer might be in embodied forms, with technology incorporated in plant and machinery, or even embodied in the form of technical personnel. Alternatively, the transfer could be in disembodied forms, such as the provision of intangible technical services. While some elements of technology are codifiable in blueprints and designs, or articulated in patents, other crucial elements may be tacit, captured only in the general know-how and experience of those who operate the technology. These different types of technological knowledge lend themselves in varying extents to conventional market exchange. Technology embodied in plant and machinery or codified into a patent may be acquired quite readily through arms-length market transactions. However, ...