Technology Contribution Importance To Developing Countries

In this world many things can be distributed, transformed and employed which really helps to the development of civilization, but knowledge is the rarest of unusual wealth that cannot be stolen and it remains intact with a person until it is portrayed. Once it is indicated, there is absolutely no warrant how it can be used and manipulated. To regulate this unauthorized use of technology several laws and regulations like patent laws, the laws of copyright etc were drafted all over the world. Knowledge is recognized as one of the in a position resources for powerful global business environment. (Sharif et al. )Technology copy is not an easy issue it has potential to effect the politics and financial relationships of countries also. Multinational companies are experiencing a rare chance to copy the new technology to the producing countries. Recently the link between the technology copy and foreign immediate investment through multinational companies became central plank of the problem in every international economics and economical development debates.

Importance of technology transfer from MNC's to expanding countries:

Transfer of technology by Multinational Companies is considered as a boon to the producing countries. Every expanding nation somewhat than with regards to the cheap labor to develop economy should also focus on the intellectual capital and development capabilities. So there should be attractive polices from the government to ensure that multinational companies should co-operate to raise the study and development capability in the country. Multinational companies can handle technology diffusion, knowledge creation and research & development capacity (Worasinchai and Bechina 2010).

There are several means of technology copy and mutual advantage is derived from it for both developing nations and the multinational companies. Some of the factors that contain major impact upon the knowledge showing mechanisms are strong characteristics, professional characteristics and business models. Over the last ten years with the growing globalization range, foreign direct investment's (FDI's) are arriving to developing countries. Multinational companies are capable of creating new jobs thereby contributing to the introduction of overall economy and welfare of the region in particular. This will likely also enhance the range of taxpayer credited to improvement in the salary of the employees. This enables the government to spend this economic source in the areas of health care, education and infrastructure development (Bruce 1979).

Establishment of multinational companies paves way to the entry of developing nations in to the global market which helps it to understand the modern principles and business routines. Appealing to multinational companies and in so doing improving the foreign currency and foreign direct investment is an improved option. Brining loans from the national development organizations, World Bank or investment company and other organizations with great deal many agreements is difficult and instead, it is easy to encourage multinational companies to get. Multinational companies are recognized as powerful motors for economic development than every other source (Bruce 1979).

Multinational companies improve competitiveness in the developing nations by influencing few aspects such as capital, exports, competence/skill, technology and infrastructure. Transfer of technology with synergistic results are based on achieving "reasonable compatible" goals between low developed countries and multi countrywide companies (Madu and Jacob 2002).

With the WTO and GATT plan the admittance of multinational companies became easy even in the expanding orthodox communist land like China. For every company and country technology and innovation are important in brining competitive border. By liberalizing its insurance policies China is planning to build its technology and invention capacities through international direct opportunities. The technology copy is performed by multi countrywide companies through various methods

1. Forwards and backward linkages of MNC's with the neighborhood customers and firms.

2. Induction by the neighborhood firms after observing the patterns and procedure for MNC's.

3. Recruiting the employees with experience in MNC's.

4. Carrying out the research and development activities of MNCs in the variety countries.

Direct transfer of technology is done through producing new process techniques, capital goods, services and new management skills. Direct transfer is the result of spillovers such as onward and backward linkages, competition results and trained staff member migration. The amount and level of knowledge exchanges may be linked to the local industry characteristics. There should be a balanced degree of absorptive capacity and technology mixed up in work. So number country potential in absorbing that scientific spillover is also a identifying factor in technical advancement (Glass 2001).

China tops the growing countries with huge magnitude of international immediate investment inflows with one third of total world FDI investment funds and even received more FDI inflows than US in early 2000s (UNCTAD 2005). Technology transfer to China from MNC's is mainly through indirect effects. Several researches were conducted on these subjects uncovered interesting conclusions. A research conducted in Venezuela during 1976-89 remarked that "spillovers" are minute from international corporations or even negative from the joint ventures. A report conducted in Indonesia, discovered that domestic firms benefited through the high productivity resulting in spillovers rather than because of the foreign possession.

Factors identifying the great things about host country:

On the other part of the gold coin, there's a chance of confining the indigenous technical growth features. Local technical research and development is curbed and "crowding-out" effects may also arise. Generally MNC's will not copy technology, as they wish to maintain monopoly over the market (Zhao and Zhang 2007). The technology transfer by the multinational companies is not appropriate to the web host firms thereby influencing their chances to contend in the global market. There's a need to imbibe that technology by establishing those companies that are suitable compared to that transferred technology.

The American type technology transfer will try to monopolize the market and there exists a gap between receiving and providing countries in a particular industry that is expected to transfer technology. It is a kind of reverse-order technology copy. This won't result in any profit to the host country and offer an out-station (Kojima and Kiyoshi 1977).

Multinational companies also take enough measures to control the total amount and kind of technology copy through following methods

1. Restricting the advanced technology to the subsidiary organizations in the variety nations.

2. Moving the technology that won't tactically give edge to the coordinator nations.

3. Making use of the intellectual property regulations to maintain the technical advantage.

4. Importing of key commercial inputs from the mother or father company to its subsidiaries in that way minimizing linkage effects.

There are some factors impacting on the technology copy insurance policy in less developed countries including financial, social, political etc. Even the international environment is also impacting on the transfer policy. At this time of your time, technology, recruiting and capital will be the three sources affecting the business enterprise. There need to be a clear knowledge of what is technology transfer, how it is properly done and would you it well. After attaining clarity on these questions, a specific authority is to be organized which keeps updates about what can be acquired and what is needed in terms of new technologies. Transfer of right systems to right spots with right nature, at right time should be done. (Saklou 2000)

Factors identifying the viability of transferred technology in producing countries:

The transferred technology must incorporate social, political, technological and environmental needs of variety country, where basing on these only the huge benefits are examined.

Social factors:

Generally the MNC's will try to exploit the cheap labor available in the growing countries. They transfer the technology that will assist these labors to the purpose only. To determine whether this technology is useful or not, it is dependant on the capability to reuse the experience in the other relevant companies or build its replica whether it's affordable. The recruiting available in the sponsor country should be in a position to understand and conform the technology. The transferred technology also needs to assist in producing the essential infrastructure of the variety nations. Objective of MNC is to exploit the resources, but there is a growing demand of communal responsibility from these institutions, apart from the technology copy and FDI's. Establishment of charity trusts, educational companies, later years homes etc will be the extension of the tasks in the coordinator country with or without needing the advanced technology. Corporate Responsibility is described by the globe Business Council for Sustainable Development as the "ethical behavior of any company towards society". The corporate responsibility of MNC should be supported with the sociable responsibility increasing the host public conditions not only by donations but also through solid actions of transferring useful technology as a long-term strategy (Vidya Hattangadi 2005).

Technical factors:

One of the prominent postulation of the Excursions agreement is that intellectual property rights safety and enforcement will contribute to the dissemination and copy of technology. It also mentioned that developed countries shall encourage companies to transfer technology to the least developed nations. The strict IP polices are reliable with the interrelationship in factor with the other factors including the composition of factor source, size of domestic markets, the degree of stableness of the macroeconomic environment and productive infrastructure. As there are enough IP laws and regulations, the developed countries will be absolve to transfer technology. At the same time provided with the strict patent, hallmark, trade secrets the growing countries can concentrate on the indigenous technology development without infringement dread. These technical factors can help the sponsor country to change technology and develop indigenous technology without infringement (UNCTAD-ICTSD Task 2003).

Political and Monetary factors:

Political factors play a crucial role in copy of technology in one country to other country. The developed land allows its MNC's to establish in the countries with ideal environment and bilateral agreements and even the sponsor nations will have its reservations in allowing MNC's. There's a dependence on strong fits in allowing its security and nuclear technology copy. India makes great deal of defense acquisitions from France and Russia and established joint endeavors with them. The recent nuclear deal with US for nuclear technology and nuclear materials benefited India to a huge extant. Financial reforms like FDI insurance policy, Industrial licensing, exchange control and taxation prompted many MNC's to determine in India. This has advanced the healthy competition per capita income and even likely to reach 35 times by 2050. MNC's are paying more to Indian staff than the other in the geographies due to their capability (Siliconindia 2008).

Environmental factors:

China and India are the biggest pharmaceutical exporters of the world. Both in India and China, there are lot of MNC's founded where research and development is done at variety country. There's a strong criticism on the developed countries that, they choose these expanding countries to make certain that their land will not get any injury through the research on the drugs as there are chances of damage to the general public health. Bhopal gas leakage incident is also a clear example of this sort. Apart from the negative aspects, the transferred technology in this industry put these developing countries in top position. Improving in the overall medical care of the country by providing equipment and service opportunities and training health care workers by MNC's is a inviting step (Medcof and Chatoorgoon 2006). The technology copy in agro-business will maintain self-sustainability in growing countries. Inducting biotechnological process and seeds produced desired results in the majority of the developing countries (Sankat et. al 2007).


Technology transfer is the most crucial profit through the MNC's to the local countries, but there is no guarantee that it is computerized or free. This technology transfer is done only through spill over rather than through copy. Major FDI's are received only in the reduced technology business, where huge labor is required and few advanced technical inputs are sufficient. More copy is done due to the presence of MNC's allowing the local firms to know through the procedure of observation, induction of trained staff and enhancing competitive skills. There must be a balance between your transfer and absorptive capacity. Research and Development establishments will have more access and chance to technological spillovers from FDI.

MNC's should copy the technology that suites to hold nations and municipality also should take proactive steps and take the ideas of the analysts about its benefits to host region before allowing FDIs and MNCs in a specific area. Transfer of technology should not be simply a copying process from the developed countries, but it requires adoption that recognizes the indigenous capabilities necessary to clothes home conditions.

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