10.3.3.2 Technology Transfer: International Aspects
10.3.3.2.1 International Technology Transfer Policy
The legal, economic, and political issues that surround technology transfer
have invariably found their place in every international agreement that has
anything to do with social, economic, and environmental topics. The Montreal
Protocol on Substances that Deplete the Ozone Layer includes several provisions
for technology transfer. The Multilateral Fund under the Protocol is a key factor
that has facilitated technology transfer to developing countries to comply with
the Protocol commitments. Several of the Rio Declaration principles address
requirements for states to exchange scientific and technological knowledge and
to promote a supportive and open international economic system for the development,
adaptation diffusion, and transfer of ESTs. Chapter 34 of Agenda 21, devoted
to technology transfer, supports these principles with more detailed proposals
for action. The extent to which these proposals have been implemented varies,
and debate continues within the UN Commission on Sustainable Development. The
Convention on Biological Diversity specifically addresses access to and transfer
of technology relevant to the conservation and the sustainable use of biological
diversity, including biotechnology.
The UNFCCC requires the parties to the Convention “to promote and cooperate
in the development, application, diffusion, including transfer, of technologies,
practices and processes that control, reduce or prevent anthropogenic emissions
of greenhouse gases” (Article 4.1.c). The Convention calls developed country
parties to take all practical steps to promote, facilitate, and finance, as
appropriate, the transfer of, as well as access to, ESTs to other parties, particularly
to developing country parties. The importance of technology transfer is also
recognized in the Kyoto Protocol of the UNFCC. As further discussed in Section
10.3.3.2.2, flexible mechanisms under the Kyoto Protocol provide strong
incentives for technology transfer.
Foreign direct investment (FDI) has proved an effective channel of international
technology transfer. Levels of FDI, commercial lending and equity investment
all increased dramatically during the 1990s, to the point where official development
assistance (ODA) became less than one quarter of the total foreign finance available
to developing countries by mid-decade (IPCC, 2000a). The growing role of FDI
in technology transfer is supported by various domestic and international developments,
including the liberalization of markets, development of stronger domestic legal
and financial systems, and tariff reductions under the Uruguay Round of the
General Agreement on Tariffs and Trade (GATT). In this context, issues related
to intellectual property rights, in particular the Agreement on Trade Related
Aspects of Intellectual Property, will play a prominent role in shaping both
the flows and intensity of technology transfer in the future. To function effectively,
trade and investment require proper enabling frameworks. These include a stable
economic system, transparent and equitable legal and/or financial structures,
sound environmental laws, uniform non-discriminatory enforcement procedures,
respect for local culture, safe and secure environment for workers and/or contractors,
and removal of unnecessary barriers to the movement of personnel and materials.
Beyond the issues concerning property rights and the process of opening national
economies, changes in the features of new technologies (systematic character,
the important role of users, increasing knowledge intensity) have significant
implications for technology transfer policy19.
In particular, many ESTs are still in the early stages of their development
and have a comparatively short track record, so private actors may be unwilling
to accept the extra risks or costs involved in utilizing new technologies. In
general, the spread of proven ESTs that should diffuse through commercial transactions
may be limited because of existing barriers. Barriers to the transfer of ESTs
arise at each stage of the process, as discussed in detail in Chapter
5. These vary according to the specific context, for example from sector
to sector, and can manifest themselves differently in developed countries, developing
countries, and countries with economies in transition. Some of the key barriers
are summarized in Box 10.2. For the success of technology
transfer, the parties concerned need to make common efforts to overcome the
barriers and create opportunities for the transfer and/or diffusion of technology
(Verhoosel, 1997). At present there is no easy answer for overcoming barriers.
Measures to be taken depend on the specific barriers and the interests of different
stakeholders and are discussed in Chapters 5 and 6.
Box 10.2. Main Barriers to Transfer of Environmentally
Sound Technologies (IPCC, 2000a)
- Lack of full-cost pricing, which internalizes environmental and social
cost.
- Poor macroeconomic conditions, which include underdeveloped financial
sector, trade barriers (high tariffs and/or quantity controls), high
or uncertain inflation or interest rates, uncertain stability of tax
and tariff policies, investment risk.
- Risk of change from existing technology to application of new technology,
especially risk aversion and business practices in financial institutions.
- Lack of data, information, knowledge, and awareness regarding the
availability, characteristics, costs, and benefits of ESTs, especially
in the case of “emerging” technologies.
- Lack of markets for ESTs because of lack of confidence in economic
or technical viability.
- High transaction costs of obtaining information, negotiating, contracting,
and enforcing contracts.
- Lack of vision about and understanding of local needs and demands.
- Low private sector involvement because of lack of access to capital,
in particular inadequate financial strength of smaller firms to manufacture,
purchase, and install new ESTs.
- Insufficient human and institutional capabilities.
- Lack of supporting legal institutions and frameworks, including codes
and standards for the evaluation and implementation of ESTs.
- Low, often subsidized, conventional energy prices that result in disincentives
to adopt energy-saving measures and renewable energy technology.
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To improve the enabling environment for technology transfer and diffusion,
governments could consider a number of actions such as:
- Enact measures, including regulations, taxes, codes, standards, and removal
of subsidies, to internalize the full environmental and social costs and reduce
unfair commercial risks.
- Reform legal systems. Uncertain, slow, and expensive enforcement of contracts
by national courts or international arbitration, and insecure property rights
can discourage investment.
- Reform administrative law to reduce regulatory risk and ensure that public
regulation is acceptable to stakeholders and subject to independent review.
- Protect intellectual property rights and licenses, and ensure the active
use of patents.
- Encourage financial reforms, competitive national capital markets, and international
capita flows that support FDI. Governments can expand financial lending for
ESTs through regulation that allows the design of specialized credit instruments,
capital pools, and energy service companies.
- Simplify and make transparent program and project approval procedures and
public procurement requirements.
- Promote competitive markets, liberalize trade policies, and make investment
policies transparent.
- Encourage national markets for ESTs to facilitate economies of scale and
other cost-reducing practices.
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