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Transfer of technology

Transfer of technology. Trade is driving force in Asia. Technology transfer from abroad, particularly advanced capital equipment imports as a source of new technologies. Exports under longer term Original Equipment (OEM) is another way to acquire technology.

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Transfer of technology

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  1. Transfer of technology • Trade is driving force in Asia. • Technology transfer from abroad, particularly advanced capital equipment imports as a source of new technologies. • Exports under longer term Original Equipment (OEM) is another way to acquire technology. • These are manufacturing type contracts as part of the global production networks of foreign multinationals • The process involves acquisition of patents, non-patented inventions, licenses, disclosures of know-how, trademarks, designs, patterns, and other technological services.

  2. Transfer of technology • Local affiliates of foreign multinationals through foreign direct investment (FDI). Technology flows via FDI could occur through so-called horizontal technological spillovers from foreign affiliates competing in the same industry, • Also technology transfers through “vertical”relationships, when MNC affiliates undertake to strengthen their suppliers through OEM. • At some point OEM can shift to ODM – own design manufacturing which allows local firm more autonomy • Eventually the shift can go to OBM – where local firm is now independent and strikes out on own.

  3. Transfer of technology • Also technology transfers can occur through “vertical”relationships, when MNC affiliates undertake to strengthen their suppliers. • Firms and economies at all levels of development rely extensively on knowledge from outside their boundaries. • Even among developed economies, foreign sources of technology account for 80 percent or more of domestic productivity growth in most OECD countries, the only exceptions being the U.S. and Japan. • A 1 percent increase in U.S. R&D leads to an estimated 0.35 percent rise in knowledge creation (patenting) in other OECD countries within 10 years.

  4. Transfer of technology • “Reverse engineering” of imported capital equipment has also been an important way that firms in newly industrializing economies like Korea and Taiwan (China) have strengthened their technological understanding and capabilities

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