CHAPTER ONE

INTRODUCTION

The importance of international technology transfer (international transfer of technology) for economic development can hardly be overstated. Both the acquisition of technology and its diffusion foster productivity growth. As invention and creation processes remain overwhelmingly the province of the OECD countries, most developing countries must rely largely on imported technologies as sources of new productive knowledge. However, considerable amounts of follow-on innovation and adaptation occur in such countries. Indeed, these processes effectively drive technological change in developing nations. Developing countries have long sought to use both national policies and international agreements to stimulate international transfer of technology. National policies range from economy-wide programs (e.g., education) to funding for the creation and acquisition of technology, tax incentives for purchase of capital equipment and intellectual property rights. A prominent episode of international efforts to encourage international transfer of technology came in the late 1970s, when many developing countries sought a Code of Conduct to regulate technology transfer under United Nations (UN) auspices. It is difficult to regulate international transfer of technology effectively given the incentives for owners not to transfer technology without an adequate return and the problem of monitoring compliance with any rules that might be imposed. This helps explain why international transfer of technology is predominately mediated by national policies rather than by international disciplines. While some policies are subject to multilateral disciplines (e.g., subsidies, trade and IPR policies), the rules in place are primarily constraining in nature they define limits on what is allowed. Multilateral efforts to identify actions that governments should pursue to encourage international transfer of technology are largely of a best-endeavor nature. Starting in the mid 1990s, multilateral disciplines on international transfer of technology-related policies began to deepen. The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) calls on countries to enforce comprehensive minimum standards of IPR protection on a nondiscriminatory basis. It also has provisions relating to international transfer of technology.