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Patterns in Technology Transfer: Impacts and Experiences Contents CHAPTER 10 Patterns in Technology Transfer: Impacts and Experiences Contents Page INTRODUCTION . , . 403 IMPACTS OF TECHNOLOGY TRANSFER IN THE SECTORS EXAMINED BY OTA. 404 Commercial Aircraft Support Systems. 404 Telecommunications Systems . 405 Medical Services . 406 Petrochemical Production. 407 Commercial Nuclear Power . 408 Comparison of Sectoral Impacts ....... ........ 409 Variations in National Experience . 411 BROADER IMPLICATIONS OF TECHNOLOGY TRANSFER . 413 Technology Transfer and Political Instability . 414 The Terms of Technology Transfer . 415 “Appropriate" Technology Transfer . 416 The Question of “Dependence” on Foreign Workers . 418 The Vulnerability of Suppliers of Technology to Recipient Leverage . 418 CONCLUSION . 421 Table Table No. Page 90. Major Areas of Impact of Technology Transfers infectors Examined by OTA . 410 CHAPTER 10 Patterns in Technology Transfer: Impacts and Experiences INTRODUCTION Transfers of advanced civilian technologies fects depend on the content of the technology can have significant effects, positive and neg- transfer, and because the changes in capabili- ative, on both recipients and suppliers. Be- ty that result are most apparent in the recipi- cause technology transfer is a complex proc- ent firm—its efficiency of operations and the ess, assessment of impacts requires skills of its personnel. This chapter compares consideration of the interrelationship between and contrasts impacts of technology transfers technology transfers and major social, eco- in commercial aircraft support systems, tele- nomic, and political changes. As discussed in communications systems, medical services, pe- chapter 2, evaluations of ‘success’ inevitably trochemical production facilities, and nuclear depend on rankings of the political, economic, power production. The extent of technology and social criteria used in evaluation. Assess- absorption across these sectors varies consid- ment of the impacts, or the effects of complex erably. While technology absorption has been processes such as technology transfer, is nec- limited in all sectors, it has been more exten- essarily inexact and tentative. Analyzing ex- sive in sectors where goods and services are periences with civilian technology transfers to being provided for local markets. Even in sec- the Middle East during the past decade is nev- tors such as petrochemical production where ertheless essential because it provides insights technology absorption has been limited, how- useful to U.S. policy makers as they develop ever, recipients benefit from technology trans- policies affecting technology transfers in the fers that help to build world-class export in- years ahead. dustries. The purpose of this chapter is to compare The chapter also examines broader issues re- and contrast findings concerning impacts lating to the larger (nonsectoral) implications across sectors and countries. The major ques- of technology transfer. The analysis under- tions include the following: Have technology scores the point that it is extremely difficult transfers of certain types been particularly to predict these larger effects. In light of conducive to technology absorption? Have the OTA’s findings, it also addresses controver- experiences of various recipient and supplier sies concerning the broader national implica- nations differed significantly? Have the effects tions for technology transfers. of these civilian technology transfers been gen- Some observers have suggested that tech- erally favorable or adverse for suppliers and nology transfers to developing nations neces- recipients? The impacts discussed here include sarily challenge the status quo because they those related to technology absorption by re- involve the introduction of foreign personnel, cipients, as well as other economic, political, values, and equipment into traditional cul- and social effects important to suppliers and tures, In their view, technology transfers are recipients. fundamentally destabilizing. Others see tech- The effects of technology transfer are more nology transfers as contributing to economic readily assessed at the firm or sector level than growth, which brings benefits to and improve- at the national level. This is because these ef- ments in the recipient society. A major theme 403 404 . Technology Transfer to the Middle East in the discussion that follows is that the ef- growth of Middle Eastern economies and the fects of technology transfer are conditional expansion of export revenues for Western na- upon a number of factors, such as the pace of tions. At the same time, OTA identifies prob- change, the distribution of benefits, and the lems associated with some technology trans- wisdom of political leaders. Technology trans- fers (e. g., potential nuclear weapons fers, in conjunction with other social, politi- proliferation, anticipated export competition cal, and economic developments do have im- with Middle Eastern petrochemical manufact- portant effects, but it is not possible to urers, and the symbolic use of technology identify the discrete contribution of all tech- transfer by various political groups) which are nology transfers on societywide change. legitimate concerns for policy makers. The civilian technology transfers examined by OTA have in most cases contributed to IMPACTS OF TECHNOLOGY TRANSFER IN THE SECTORS EXAMINED BY OTA Chapters 5 through 9 examined the process construction firms, but also airport manage- of technology transfer in a number of civilian ment firms. For the recipient countries, these production facilities and service systems in the airlines are in many cases not great revenue Middle East. The primary focus of that analy- earners, but they have added to the expansion sis was technology transfers occurring during of transport infrastructure. the last decade of rapid economic growth. The The most significant problem, from the per- sections that follow analyze and compare the effects to date. Technology transfers in these spective of the suppliers, has been that com- sectors are still underway, and in some cases, petition among them has led to the expansion just beginning. Therefore, potential impacts of government-supported export credits. These official credits represent a cost to the are also mentioned where it seems appropri- ate. The major emphasis, however, is on analy- supplier governments and to taxpayers. In sis of impacts already apparent. some cases, attractive financing has played an important role in competition for sales. The Organization for Economic Cooperation and COMMERCIAL AIRCRAFT Development nations have reached a special SUPPORT SYSTEMS agreement covering export credits for aircraft The primary effects of technology transfers sales. Nevertheless, continuing competition for sales of aircraft and support services in the commercial aircraft support systems among U.S. and West European firms indi- sector have been economic. Sales of large com- mercial aircraft are significant in terms of the cates the need to strengthen agreements large dollar-volume of aircraft sales and in fol- among suppliers about international trading low-on sales of auxiliary equipment, including rules. testing and maintenance equipment, avionics The political or military effects of technol- packages, and spare parts. Requirements for ogy transfers in this sector are less clear-cut technical services (including ground support) than the economic effects. Supplier govern- have made this sector an important revenue ments have in some cases attempted to assist earner for the supplier firms, including not their exporting firms through high-level eco- only the aircraft manufacturers and airport nomic diplomacy, and the involvement of U.S. Ch. 10—Patterns in Technology Transfer: Impacts and Experiences ● 405 firms in sales and servicing of aircraft in Saudi There are a number of possible explanations Arabia was preceded by discussions involving for this pattern of fairly extensive technology President Roosevelt. However, foreign policy absorption. First and foremost is the consid- controls affecting sales of U.S. aircraft have erable length of experience. In a sense, com- earned the United States a reputation as an mercial airline support systems represent a unreliable supplier and have acted to reduce model for technology absorption in other sec- U.S. sales in the region. To many developing tors because many Middle Eastern countries nations, commercial airlines stand as symbols have had commercial airlines for as long as a of national prestige. In response to foreign pol- generation and the process of building indig- icy controls, Middle Eastern countries have enous capability has developed gradually over in some cases attempted to diversify suppliers. that comparatively long period. Secondly, the Because commercial aircraft exports have technologies involved are straightforward and been subject to foreign policy controls, the po- well established, and procedures for training litical factors have strongly influenced trade and operations are fairly standardized. Re- in this sector. quirements of airline safety and maintenance Runways, fuel storage facilities, and radar have provided clear operational standards. capability contribute in a general sense to stra- Finally, Middle Eastern airlines serve local tegic defense capabilities. However, military markets primarily and, while they have not all equipment is much more specialized and com- been profitable, they are viewed as important plex than commercial airline support equip- symbols of national prestige.
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