Developing countries as exporters of industrial technology

Abstract

The literature on technical change has unduly neglected the possibilities of technological progress in LDCs. Preliminary examination shows, however, that a number of semi-industrialized LDCs are experiencing rapid technological change (mainly adaptive) and are even manifesting the ability to compete in international markets for the sale of technology for a wide range of industrial activities. Scattered data on five types of commercial technology exports — tumkey projects, consultancy, direct investment, licensing, training shows that India, Brazil, Argentina, Mexico, Korea, Taiwan and Hong Kong have succeeded in selling different types of expertise to other LDCs. This paper links the different types of comparative advantage showed by these LDCs to their varying experience of industrial activity. India has the most diverse and sophisticated technology exports, because it has protected domestic ‘learning’ in the broadest spectrum of industrial, especially capital goods, manufacturing. Others, like Brazil, have greater industrial output but lesser technological capability because they have not protected ‘learning’ against massive incursions by foreign enterprises. The comparative advantage of LDCs in exporting technology is greatest where the pace of change is slow, where large R&D expenditures are not required and where detailed engineering capability is crucial in transferring technology. It is envisaged that in these areas, some LDCs will increasingly undertake technology sales not only to the Third World but also to developed countries. The costs and benefits of this are briefly examined.