Poverty and underdevelopment


a. Why is the technology contribution of multinationals potentially so important for developing countries?

b. What factors will determine whether or not the transferred technology actually provides net benefits for the host developing country?

Poverty and underdevelopment on various fronts has been the major issues in developing countries (Gerard Chaliand.2010). In spite of multiple efforts put in by developing nations, not much has been achieved in poverty elimination. What can be solution to this staggering problem of unemployment and poverty is a question for which answer is sought from long ago. Though there are multiple solutions suggested by various planning individuals and institutions, but technology remains a common one. Almost everybody agreed that technology can play a much meaningful role for improving economic and social life of common masses in developing countries. (Peter A. Kopoka.1996). But again the question arises, how to bring technology in developing countries. There come two options, first one being that technology should be acquired through internal means. Generating technology internally i.e. within the country may take a long time and may require commitment of lot of resources including large amount of capital. But availability of capital in developing countries is already squeezed and what so ever capital availability is there, it is taken up by some very urgent problems like health care etc. so we see that developing technology through indigenous means may not be possible generally in developing countries (Toru Yoshikawa .2003). Second option is that if technology can be acquired from external means. Generally more advanced technology is available with governmental agencies and corporations in developed countries. Technology which is available with government agencies in other countries may be controlled by government of that particular country, but technology available with corporations can be had by entering in to alliance with these in many ways. This seems to be a practical way for the developing countries to acquire technology for their ensuing needs. This way technology can be acquired in lesser time and with comparatively lesser resources. Though every nation prefers to have indigenous technology as it gives them better control on its usage and also brings consistency and sustainability in the technology development. It necessitates those developing countries to look for corporations in developed countries for technology transfer (Sanjaya Lall.1993).

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Basically technological developments take place in industrial segments with some particular objective in focus. Technology which comes in commercial and industrial use is developed with particular objective and user community in focus. It can be safely said that if some particular technology is developed by some corporations, it is done with specific purpose of commercial use by that corporation only. Technology transfer means that if this technical knowledge, know how, domain expertise and associated equipments, which were basically developed for corporations' own use are passed to somebody else for use. Then in this case, it is technology transfer. Generally this technology transfer is done with specific objective in focus. This technology transfer helps the host country in upgrading the economic and social living standards of the people in host country (John H. Barton.2007). So in short, one can say, that technology transfer is external acquisition on technology, rather than developing it indigenously through research and development process.

There are various ways through which technology transfer is possible from multinational corporations to developing nations. Equipped with support of government, companies from developing nation may for a joint venture, enter in to technical collaboration or buy technical knowhow from multinational corporations. All these ways have potential to transfer technology to developing nations. It requires commitment of lot of capital and other types of resources like expert manpower having domain knowledge, so as to facilitate effective research and development. Generally it has been observed, that on account of limited capital availability, government of developing nations find it very tough to allocate required amount of funds for research and developmental activities in industrial segments. Not only this, skilled manpower and domain experts who can carry out research in specifically required field are generally also not available in developing nations. It happens on account of migration of potential researchers from developing nations to developed nations, as they find lack of infrastructure and other related facilities required to pursue their research objective (Kenneth King.1981). Over the years scenario develops that even if commercial establishments or government try to get in to research and developmental work, skilled manpower having domain expertise, do not remain available for research work. In such case, even if some research work takes place, it happens at such a slow pace, that not much of the advantage can be had from it. To avoid this long delays in technological advancements and to0 acquire state of the art technology, multinational corporations are the way out.

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In case multinational corporations are allowed to come and set up production base in developing nation, they bring machinery and technology. But, either it is manpower or machinery, multinational corporations have to supplement their needs through local resources. MNCs cannot bring whole management and technical staff of each level from their country of origin. Corporations bring only top level management and technical experts from their country of origin. Operational staff and middle level managers are hired locally. While installing & commissioning plants and subsequently in managing operations, maintenance and marketing activities, this locally hired manpower get know how and technical skills from top level expatriate managers and experts. These locally hired people leave the multinational corporations many a times in their course of career and join other local forms. This way technical knowhow and technical expertise get transferred from Multinational Corporation to local firms (Von Boehmer, A.2002).

In the case of technical collaboration, Multinational Corporation gives technical knowhow, domain expertise and other required advance machinery to firms in host country so as to facilitate the production of goods and services by the local form. Here it is not the written documentation of the technical matters, but actual hand on experience & training, which is imparted to workforce in local firm so as to make production of goods and services not only feasible but a smooth affair. One other way of technology transfer is joint ventures by the multinational corporations with local firm (Iprsonline.2004). In the case of joint venture, Multinational Corporation and firm of the developing nation form a business entity, where equity is put by both and shareholding in the ownership is held in the proportion of the equity put by both the firms. In the joint venture, Multinational Corporation get the benefit of strong presence of local firm in domestic market, its distribution channel and network of suppliers and other business associates of the local firm. Whereas the local firm get the advantage of technical knowhow, domain expertise, advanced technology, better management and marketing skills from multinational corporations. As it happens to be a joint venture, where interaction between Multinational Corporation and local form is not limited on few issues with limited accessibility to each other's resources, all technological inputs are got and imbibed by employees of the local firm. It helped the local firm not only getting full technical expertise, tools and equipment but day to day operational expertise also from the multinational corporation. In return, MNC get access to local market broadening its customer base and adding more stability and sustainability to its operations. Not only new markets, but Multinational Corporation also increases its familiarity to business environment and government in host country. It also generates better linkage with the suppliers of raw material and product distribution channels. Ultimately it helps corporation in getting foothold, in host country many ways. If at some later stage, corporation want to establish an independent production base, its experience in joint venture helps a lot in many ways (Mihir A. Desai.2002).

In case government allows direct investment and multinational corporations establishes its own independent and full fleshed production plant, it sources many required elements from local vendors only, including manpower from operations. This way also continuous interaction of Multinational Corporation with local vendors and manpower slowly transfers technical knowhow to local business. When multinational corporations come to host country to set up independent manufacturing plant, they bring only capital, important machinery and few select experts of various business domains along with. All other elements are sources locally, generating more and more interaction with local industrial set up. This paves the way for greater sharing of technical knowhow of the multinational corporation with local firm, transferring technology directly or indirectly.

So one find with all the above discussion, that multinational corporations are one potential source of technology transfer to developing nations. But here arises a big question as to evaluate the technology for benefit of the host developing nation. Ultimately, multinational corporations are business organizations with profitability of operations as prime objective of their all activities. Their focus remains getting better profits with stable and sustainable operations in long term. So it may happen that their objectives are different than the ones of host country. There are various concerns of host countries especially in developing world against which technology in question should be evaluated so as to have a assessment of suitability and benefits, technology will offer to host country. For example, unemployment is a big issue, which needs to be tackled by developing countries. So a technology, which is of very high standard and reduces employment substantially, may not benefit the host country much. Similarly technology transferred should of level, which can be adopted in host country. If the level of technology is too high, for which local industrial set up find it difficult to adopt, it may not help the host county much. Similarly there should be positive impact on general health care of the working lot and affected people on account of new technology transferred. Waste management in emerged scenario should be better giving net impact of reduced waste generation. Transferred technology should not cause any environmental deterioration to host country. It should not disturb the ecological balance and cause any degradation of natural resources like water bed etc. New technology should also help in upgrading the level of technical knowhow for common skilled workers in host country. So we see that transferred technology should be evaluated on all these counts so as to assess the benefits of transferred technology (Timothy.2005).


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  2. Peter A. Kopoka. (1996). Technology and Poverty Reduction in Tanzania. Available: http://www.fiuc.org/esap/DAR/DAR11/General/kopoka7.pdf. Last accessed 2010.
  3. Toru Yoshikawa . (2003). Technology development and acquisition strategy. International Journal of Technology Management . 25 (6-7), 666-674.
  4. Sanjaya Lal. (1993). Promoting Technology Development : Role of Technology Transfer and Indigenous Efforts. Third World Quarterly. 14 (1), 95 - 102
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  6. Kenneth King. (1981). Dilemmas of Research Aid to Education Developin Countries. Comparative Education. 7 (2), March 2010.
  7. Von Boehmer, A.. (2002). Innovation Management. Technology Management : The New International Language. 7 (1), 135-140.
  8. iprsonline. (2004). International and Technical Cooperation and Technology Transfer. Available: http://www.iprsonline.org/unctadictsd/docs/6.2International_TOT.pdf. Last accessed March 2010.
  9. Mihir A. Desai. (2002). INTERNATIONAL JOINT VENTURES AND THE BOUNDARIES OF THE FIRM. Available: http://www.nber.org/papers/w9115.pdf. Last accessed March 2010.
  10. Timothy G. O'Keefe. (2005). Evaluation technology transfer: Some problems and solutions. The Journal of Technology Transfer. 6 (2), 53-57.
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