THE TRANSFER OF INDUSTRIAL TECHNOLOGY TO WESTERN PACIFIC DEVELOPING COUNTRIES

NOTES AND REFERENCES

1. W. Paul Strassman, Technological Change and Economic Development, Cornell University Press, Ithaca, 1968, p. 2.

2. The Japanese experience of technology imports has been extensively documented. See, for example, B. L. Johns, The Transfer of Foreign Technology to Australia and Japan, Australia — Japan Economic Relations Research Project, Research Paper No. 36 Canberra, 1976; and Susumu Watanabe, Technological Linkages Between Formal and Informal Sectors of Manufacturing Industries, International Labour Office, World Employment Programme, Working Paper No. 34, Geneva, 1978.

3. Part of the increase may be attributed to the appreciation of the yen relative to the US dollar over this period, but the real increase valued in terms of yen was nevertheless still very substantial.

4. The best known are Kojima and Ozawa. See Kiyoski Kojima, Japan and a New World Economic Order, Charles E. Tuttle and Co., Tokyo, 1977; and Terutomo Ozawa, Multinationalism, Japanese Style, Princeton University Press, Princeton, New Jersey, 1979.

5. For a useful critique of the Kojima hypothesis see Sueo Sekiguchi and Lawrence B. Krause, ‘Direct foreign investment in ASEAN by Japan and the United States’, in Ross Garnaut (ed.), ASEAN in a Changing Pacific and World Economy, Australian National University Press, Canberra, 1980, pp. 421–47, the comments by Ronald Findlay and Ben Smith, and references cited therein.

6. This is a fruitful area for future research. Limited information is provided in the following references. Tamir Agmon and Charles P. Kindleberger (eds.), Multinationals from Small Countries, MIT Press, Cambridge Mass., 1977; K. Kumar and M. McLeod (eds.), Multinationals from Developing Countries, Lexington Books, Lexington, 1982; Sanjaya Lall, ‘The emergence of Third World multinationals: Indian joint ventures overseas’, World Development 10, 2, 1982, pp. 127–46; Sanjaya Lall, ‘Developing Countries as Exporters of Industrial Technology’, Research Policy 9, 1, 1980, pp. 24–52; and UNCTAD, Organisational Forms of Transfer of Technology to Developing Countries by Small and Medium-sized Enterprises: A Case Study of Equity Joint Ventures and Technology Agreements in Latin America, TD/B/C.6/77, Geneva, 1982.

7. Even North Korea, generally regarded as one of the most inward-looking societies, has turned recently to the United Nations for assistance with an integrated technology program (see Far Eastern Economic Review, 3 February 1983). Burma, another extremely inward-looking country which prohibits DFI in all sectors of the economy except off-shore petroleum exploration, has also stepped up technology sharing agreements with other countries (see Hal Hill, ‘Industrialisation in Burma in historical perspective’, Journal of Southeast Asian Studies, forthcoming March 1984).

8. Carlos M. Correa, ‘Transfer of technology in Latin America: a decade of control’, Journal of World Trade Law, 15, 5, 1981, p. 391. For a summary of the issues involved in the debate, see this paper and Dennis Thompson, ‘The UNCTAD code on transfer of technology’, Journal of World Trade Law, 16, 4, 1982, pp. 311–337.

9. For example, in its first full year of operation, it has been claimed by a senior government official that the Philippine Technology Transfer Board reduced technology licensing fees by almost $40 million through directing the renegotiation of agreements. See Lilia Bautista, Transfer of Technology Regulations in the Philippines, UNCTAD/TT/32, Geneva, 1980.

10. Farok J. Contractor, International Technology Licensing: Compensation, Costs and Negotiations, Lexington Books, Lexington, 1981, p. 133.

11. See, for example, Romeo Bautista, ‘The silicon chip: not a development panacea’, Far Eastern Economic Review, 27 January 1983.

12. On this point, see Richard E. Caves, Harold Crookell, and J. Peter Killing, The Imperfect Market for Technology Licences, Discussion Paper No. 903, Harvard Institute of Economic Research, Harvard University, Cambridge, Mass., 1982.

13. Jack Baranson, Technology and the Multinationals, Lexington Books, Lexington, 1978. One issue which Baranson does not examine in detail in the MNC choice between licensing and DFI is the impact of the host country commercial environment and, in particular, difficulties in supervising technology licensing agreements. The legal environment in many LDCs is in practice uncertain, contractual obligations involving non-resident foreign firms are sometimes difficult to enforce, and there is widespread abuse of patents and trademarks. (On the latter, see the special issue on trademarks in developing countries, World Development, 7, 7, 1979). MNCs may see DFI as a means of mitigating these problems.

14. Stephen Hymer, The International Operations of National Firms: A Study of Direct Foreign Investment, MIT Press, Cambridge, Mass., 1976.

15. For a recent discussion of this point by one of the originators of the theory, see Raymond Vernon, ‘The product cycle hypothesis in a new international environment’, Oxford Bulletin of Economics and Statistics, 41, 4, 1979, pp. 255–67.

16. Reviews of this literature include the following: David Morawetz, ‘Employment implications of industrialisation in developing countries: a survey’, Economic Journal, 84, September 1974, pp. 491–542; James Pickett (ed.), The Choice of Technology in Developing Countries, special issue of World Development, 5, 9/10, 1977; Samuel M. Rosenblatt (ed.), Technology and Economic Development: A Realistic Perspective, Westview Press, Boulder, Colorado, 1979; Frances Stewart, Technology and Underdevelopment, Macmillan, London, second edition, 1979; and Lawrence J. White, ‘The evidence on appropriate factor proportions for manufacturing in less developed countries: a survey’, Economic Development and Cultural Change, 27, 1, 1978, pp. 27–59.

17. Morawetz, op. cit., p. 517.

18. For an elaboration of these arguments, see Gordon C. Winston, ‘The appeal of inappropriate technologies: self-inflicted wages, ethnic pride and corruption’, World Development, 7, 8/9, 1979, pp. 835–46.

19. See, for example, Stewart, op. cit.

20. Byung Soo Chung and Chung H. Lee, ‘The choice of production techniques by foreign and local firms in Korea’, Economic Development and Cultural Change, 29, 1, 1980, pp. 135–40.

21. R. Hal Mason, ‘Some aspects of technology transfer: a case study comparing United States subsidiaries and local counterparts in the Philippines’, Philippine Economic Journal, 9, 1, 1970, pp. 83–108.

22. Samuel A. Morley and Gordon W. Smith, ‘Limited search and the technology choices of multinational firms in Brazil’, Quarterly Journal of Economics, 91, 2, 1977, pp. 263–87.

23. Robert E. Lipsey, Irving B. Kravis and Romualdo A. Roldan, ‘Do multinational firms adapt factor proportions to relative factor prices?’, in Anne O. Krueger (ed.), Trade and Employment in Developing Countries: [2] Factor Supply and Substitution, University of Chicago Press, Chicago for the National Bureau of Economic Research, pp. 215–55.

24. Hal Hill, ‘Foreign investors from small countries: a Philippine manufacturing case study’, Philippine Economic Journal, 21, 2, 1982.

25. White, op. cit., p. 45.

26. See D. Germidis, Transfer of Technology by Multinational Corporations, Development Centre, OECD, Paris, 1977, 2 vols.; and for a comprehensive review of the Philippine experience, Charles W. Lindsey and Ernesto M. Valencia, Foreign Direct Investment in the Philippines: A Review of the Literature, Philippine Institute for Development Studies, Working Paper No. 81–11, Manila, 1981.

27. The strongest argument on this issue has been advanced by Jeffrey James and Francis Stewart, ‘New products: a discussion of the introduction of new products in developing countries’, Oxford Economic Papers, 33, 1, 1981, pp. 81–107, upon which much of this paragraph rests.

28. For one such study, see Tuvia Blumenthal, ‘A note on the relationship between domestic research and development and imports of technology’, Economic Development and Cultural Change, 27, 2, 1979, pp. 303–306.

29. For an interesting case study of the Indian experience, see Sanjaya Lall, ‘Vertical inter-firm linkages in LDCs: an empirical study’, Oxford Bulletin of Economics and Statistics, 44, 3, 1982, pp. 261–71. For a similar study in a smaller, less industrialised economy, see Hal Hill, Vertical inter-firm linkages in LDCs: a note on the Philippines’, Oxford Bulletin of Economics and Statistics, 44, 3, 1982, pp. 261–71.

30. For a discussion of these and related issues, see Howard Pack, ‘Fostering the capital-goods sector in LDCs’, World Development, 9, 3, 1981, pp. 227–50.

31. For a survey of these zones, see Export Processing Zones in Developing Countries, United Nations Industrial Development Organisation, Working Papers on Structural Change No. 19, Vienna, 1980, UNIDO/ICIS, 176.

32. Peter G. Warr, ‘The Jakarta Export Processing Zone’, Australian National University, Canberra, 1982, mimeo.

33. Larry E. Westphal, Yung W. Rhee and Gary Pursell, ‘Foreign influences on Korean industrial development’, Oxford Bulletin of Economics and Statistics, 41, 4, 1979.

34. For a description of these sources, see I. R. Haine, ‘The technological balance of payments — Australian statistics’, paper presented to Workshop on the Technological Balance of Payments, OECD, Paris, 14–15 December 1981.

35. Thomas G. Parry, ‘The multinational enterprise and two-stage technology transfer to developing countries’ in R.G. Hawkins (ed.), Technology Transfer to Developing Countries, JAI Press, Greenwich, Connecticut, 1982, pp. 175–92; and Helen Hughes, ‘Technology transfer: the Australian experience’ in Agmon and Kindleberger, op. cit., pp. 101–27.

36. Parry, op. cit., pp. 179–80. But Hughes, op. cit. is less sanguine about the prospects for such a development.