The challenge of successfully transferring ESTs should be seen in the context of sustainable development. Sustainable development needs not restrict growth but can stimulate the emergence of a vibrant. industrial economy, a process in which technology transfer is likely to play a major role. Sustainable industrialisation is especially a challenge for developing countries, because their low initial level of development provides them with an opportunity to follow a technological trajectory which can be cleaner and more efficient than the path OECD countries have followed.

To enhance the sustainability of the development process, government actions can transform the conditions under which technology transfer takes place. The spread of proven ESTs that would diffuse through commercial transactions may be limited because of the barriers listed above. Governments can play important roles in facilitating the private transfer of ESTs by encouraging private sector trade and investment of environmentally sound technologies. Capacity building programmes and enabling environments that reduce the risks and restrictions associated with the transfer of ESTs will increase the flow of technologies close to the commercial margin. The key issue is thus to make the markets work by " opening the channels". For technologies that will not yet diffuse commercially, it is important to go further than improving market performance by enacting policies that lower costs and stimulate demand in order to realise social and environmental benefits not adequately produced by private conduct. The international community could assist these extra efforts of individual countries by increasing available means for non-market transfers and creating new or improving existing mechanisms for technology transfer.

The Report clearly points out that there is no pre-set answer to enhancing technology transfer. It is important to tailor action to the specific barriers, interests and influences of different stakeholders in order to develop effective policy tools. As has been stated clearly in Agenda 21. policy tools are most effective if they are considered in the context of sustainable development. Agenda 21 provided some of the earliest recommendations for public policies to promote technology transfer for environmental benefits. These recommendations reflect not only the need for hardware, but also for building associated local capacities and for providing market intermediation. Strategies outlined in Agenda 21 include: (a) information networks and clearinghouses that disseminate information and provide advice and training; (b) government policies creating favourable conditions for both public-sector and private-sector transfers; (c) institutional support and training for assessing, developing, and managing new technologies; (d) collaborative networks of technology research and demonstration centres; (e) international programmes for co-operation and assistance in R&D and capacity building; (f) technology-assessment capabilities among international organisations; and (g) long-term collaborative arrangements between private businesses for foreign direct investment and joint ventures.

The three major dimensions of making technology transfer more effective are capacity building, an enabling environment and mechanisms for technology transfer, all of which are discussed in more detail in the subsections below.

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