What's the Big Deal with Technology Transfer?

and Why Countries and MNCs Won't do it

The year was 1639. Japan was slowly becoming isolated from the rest of the world to avoid colonialism. It also separated itself to protect its culture and religion from Spanish and Portuguese influence. It was the start of the shogunate.

I'd go deeper, but this is not a history class.

Until the 1830s to 1850s, Japan would not be open to western powers, although it maintained an economic relationship with China. Japan had rich coal deposits, which the U.S. needed. Under the command of Commodore Matthew Perry, the west went to Japan, Tokyo Bay, after winning the Chinese Opium War. He would be responsible for opening Japan to the rest of the world for trade.

When the year was 1858, an Anglo-Japanese treaty on commerce was signed. In 1868, Sir Harry Parkes was sent as a British diplomat to Japan. There was a civil crisis in Japan between two sects: pro-modernisation and anti-modernisation. To protect British interests, he sided with the pro-modernisation and brought many British foreign advisors to train the Japanese Navy and army in British technology.

While they did this, the British built modern infrastructures like railways, telegraph systems, lighthouses, and many others in Japan, this was encouraged, and research into western medicine, education, and technology was also patted on the back.

Japan grew stronger. What took the west centuries took Japan decades. The Industrial Revolution in Japan became a threat to the technological advancement of the west, and World War II happened, with Japan on the offensive against the West. Japan is the best example of technology transfer and why developed countries don't want to support developing countries technologically.

How Does Technology Transfer Work?

Ask anyone, and they'll tell you technology transfer is the transition of knowledge in data, designs, innovations, and other technical expertise from one country to another. It could even be between institutions/universities or companies. Technology transfer or transfer of technology exists to equip the recipient with the lacking skills, inventions, and technology in a sending country.

Technology transfer can be done by either transferring the needed constructed devices or sharing the ideas. It is done to develop the economy of the recipient country. However, there is a challenge with that.

Technology transfer necessitates the commercialisation of such products, inventions or ideas. But governments are as sceptical as companies when it comes to sharing their technology. While discussing climate change, the Russian president, Vladimir Putin, cited that technology transfer has been impossible for developing nations because the world is complex and complicated.

These countries and companies are concerned.

Why?

What is Technology Transfer in International Business?

A core part of innovations or technology transfer is the intellectual property rights attached to the invention. Transferring tech to a recipient country or institution must be laced with the assurance that recipients will respect their I.P. rights and that their ideas will remain theirs. Even with these assurances, both countries and MNCs are reluctant to share their inventions. They do not want another Japan or China due to their humanitarian agency.

MNCs are told to transfer their technology and use their ideas to help host economies (although some are forced to do it in China). They are also encouraged to help competitors since sharing innovations can promote creativity and increase production. However, aside from the fact these MNCs will lose profit, counterfeit products are a challenge.

The U.S. Customs and Border Protection rejected 34,143 shipments in 2017, seizing and destroying items worth $1.21 billion in 2017. 17% of UK citizens are said to buy counterfeit products. In Nigeria, Africa's largest economy, 80% of all goods sold in 2016 were fake. According to the World Customs Organisation, China, the largest economy in Asia, is responsible for 70% of global counterfeit goods.

Counterfeits, the fact that companies and institutions will not enjoy I.P. rights or protection of their ideas, is a turn-off. The security of intellectual property through trademarks, industrial designs, copyright, etc., that could eliminate pirating and protect the brands' reputation, becomes an illusion.

Technology transfer also stiffens competition. Take a look at Coca-cola. It tries to buy off competitors while keeping its recipes secret. As Forbes reported, Coca-Cola acquires rivals, some of which specialise in soda, coconut water, tea, and even vitamin water.

However, guaranteeing intellectual property rights can help governments and even improve their economy. This is because innovators will find it easy to share their inventions. Commercialising these inventions fosters creativity. Through creativity, more efficient products can be made, and recipients will witness the expected growth in their economy. I.P. rights which provide and protect the market for original creations, also become essential for technology transfer. They protect the brands from competitors or other people from exploiting or misusing the creator's ideas and products.

Why Technology Transfer is Essential for Developing Countries

Technology transfer promotes the development witnessed in the recipient country. The goal of the strategy is to pass advanced knowledge to a recipient country at a cost-effective price, meaning that technology transfer makes it easy to attain knowledge. However, the institutions, governments, or organisations that pass the knowledge will retain their intellectual property rights and issue a license for the recipient's conditional use of the technology.

This doesn't only make the recipient country better; when the citizens of such a company gain access to patents and discoveries, they can improve on the technology. They can develop better technology systems to improve commerce and make living conditions friendlier through extensive research. This will also result in a rise in employment rates. The developing country will have a seat with already developed countries in the long run.

Final Words

Although technology transfer is an essential part of globalisation, it exists mainly on paper. Leading countries and companies do not exchange their ideas with developing countries or startups in those countries. This is partly because technology transfer can necessitate the rise in the recipient country's economy, just as is seen in Japan. Many developing countries have an efficient labour force. If the knowledge is passed, the world will change, possibly at the expense of the leading countries.