sanjeev narula

8/3/2019 Sanjeev Narula

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Sanjeev Narula

Abramovitz classifies nations as either forging ahead (technologically advanced nations

undergoing continuous advancements) catching up (less advanced nations undergoing fast

advancement) or falling behind (less advanced as well as advanced nations not progressing or

progressing slower than the rest) (Abramovitz, 1986)1. ArCo (Archiburgi-Coco) indicator results

in distinguishing four groups: leaders, potential leaders, latecomers, marginalized.

An even more refined taxonomy is presented in the National Learning Systems Concept, where

nations classified as Innovators, Active Learners and Passive Learners (Viotti, 20012, 2003

3).

Classification of developing nations, as either active or passive learning economies is also found

in National Systems of Economic Learning (Mathews, 2001)4, National Technology Systems

(Lall, 2003)5, Systems of Innovation for Development (Edquist, 2001)

6and the concept of

National Innovation Systems for Rapid Technological Catch up (Wong, 20017).

Primarily used in understanding the role of technology in economic development for example,

the technology club theory by Castellacci (2008)8, and Fagerberg and Srholec (2008)

9in their

analysis of different kinds of national capabilities (technological, social, political) confirmed that

technological capabilities turn out to be significant in different specifications of cross-country

regressions. These concepts can serve well in explaining technology transfer among nations,

developing nations in particular.

Based on the fact that International Technology Transfer is (besides, other factors) a function of

national technological capability and absorption capacity; we can model the relative differences

in nature and intensity of technology transfer among nations (figure 2-12). Narula, (2004)10

has

1Moses Abramovitz, 1986, Catching Up, Forging Ahead, and Falling Behind The Journal of Economic History, Vol. 46, No. 2, The Tasks of

Economic History. (Jun., 1986), pp. 385-406.2 Viotti, Eduardo B. Indicadores de Inovao Tecnolgica - Fundamentos, Evoluo e sua Situao no Brasil, Curitiba and Braslia, IBQP-PR and

MDIC, 20013 Viotti, Eduardo B. Fundamentos e Evoluo dos Indicadores de Cincia, Tecnologia e Inovao, Chapter 1 in Viotti, Eduardo B. and Mariano

Macedo (eds.), Indicadores de Cincia, Tecnologia e Inovao no Brasil, Campinas, Editora da Unicamp, 20034

John Mathews 2001,National systems of economic learning: The case of technology diffusion Management in East Asia, International Journal

of Technology Management5 Lall, S. and Utra, S. (ed.) (2003), Competiveness, FDI and Technological Activity in East Asia.6 Edquist, C. (2001), Systems of innovation for development, Background paper for Chapter 1: Competitiveness, Innovation and Learning:

Analytical Framework for the UNIDO World Industrial Development Report (WIDR)7 Wong P K, 1999, "National innovation systems for rapid technological catch-up: an analytical framework and a comparative analysis of Korea,

Taiwan and Singapore", paper presented at the DRUID Summer Conference on National Innovation Systems, Industrial Dynamics and

Innovation Policy, Rebild, Denmark8Castellacci, Fulvio, Daniele Archibugi. 2008, The technology clubs: The distribution of knowledge across nations., Research Policy, 37:

1659-1673.9Fagerberg Jan, Martin Srholec. 2008, National innovation systems, capabilities and economic development., Research Policy 37: 14171435.

10Narula, R., 2004, Understanding Absorptive Capacities in an Innovation Systems Context: Consequences for Economic and Employment

Growth, MERIT Research Memorandum 2004-003.


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elaborated the evolution in national technological capability with reference to the changes

absorption capacity construct in a broad perspective.

Based on growth of technological capability and economic development due to accumulation of

knowledge, the model has also explored the changes in national economic structure over time,

with reference to the changing role of state and market, sectoral shift and the changing patterns

of foreign investment. Criscuolo and Narula (2002)11 had stipulate the existence of four stages

of economic development in terms of ability to accumulate knowledge as follows:

y the pre catching-up stage,

y the catching-up stage,

y the pre frontier-sharing stage and

y the frontier-sharing stage.

Some general characteristics of countries in each stage are presented in Table 2.1. One

significant observation is regarding the existence of a minimum and maximum threshold of

absorptive capacity before beginning of a catch-up stage and the final frontier sharing stage of

development. In other words, possessing educated people is a precondition for a countrys

increased absorptive capacity, which contributes to enhanced productivity. The catching up stage

11Criscuolo, P.; Narula, R. (2002). A novel approach to national technological accumulation and absorptive capacity: Aggregating Cohen and

Levinthal, MERIT Research Memorandum 2002-16.

Role of the Markets

(Passive Learning)

(Active Learning)

(Innovative)

Role of the State

Catching-up stage

Pre frontier-sharing stage

Pre catching-up stage

Frontier-sharing stage

Minimum Threshold of Absorptive Capacity

Maximum Threshold of Absorptive Capacity

(Active Learning)

Industrial

Sector

P

rimary

S

ector

Services

Sector

Heckscher-Ohlin labor intensivemanufacturing e.g. textiles

Undifferentiated Smithianindustries e.g. heavy & chemicalindustries

Differentiated Smithian

industries e.g. automobileselectric/electronic goods

Capital and knowledge

intensive Schumpeterian

sectors

Absorptive Capacity, Technological Capability, Sectoral and Comparative Advantage Evolution

TechnologicalCapability

Low

High

Growing

Hih

InwardFDI

Low

Growing

Low

OutwardFDI

High

Growing

FIGURE ERROR! NO TEXT OF SPECIFIED STYLE IN DOCUMENT.-1 EVOLUTION IN NATIONAL ABSORPTION

CAPACITY


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is when the economy starts benefiting from the international transfer of technology. a minimum

human capital threshold level (Perez, 1988)12

, Borenzstein et al. (1998)13

, and Xu (2000)14

.

Knowledge accumulation is much more rapid once the initial threshold level of absorptive

capacity exists. Simply put, technology absorption is easier, once countries have learned-to-

learn (Criscuolo and Narula 2002). And the absence of sufficient levels of absorptive capacity

tends to lead to the inefficient use of technology flows.

Technological and AbsorptiveCapabilities

Expectations about Productivity andEconomic Growth

Fr

ontier-sharing

sta

ge:

Technological opportunities primarily rest on longterm innovation and collaboration. Pushing backfrontiers of knowledge. Considerable in-house R&Dactivity by both domestic and foreign MNEs. OutwardFDI to augment domestic capacity. Growing use ofR&D alliances and networking. Strong knowledgeinfrastructure

Growing use of outsourcing to earlier stage countriesof lower-value added activities.

Productivity growth and economic growth higher than inany previous stages.Economic and productivity growth come from knowledge-intensive industries, but is relatively subdued compared toprevious stages. Growth takes place through inter-sectoralshifts.High investment in creating new industries, and shutting

down sunset sectors.

Prefrontier-

sharing

stage:

Increasingly specialized knowledge infrastructureDecline in potential to imitate and adaptIncreasing integration into efficiency-based globalproduction networks. Strong domestic industry, movetowards Original Brand Manufacturer. Increasing useof networking to achieve modularity.

High productivity growth, but not as high as in the pre-frontier stageTechnology is not the most advanced. High economicgrowth due to switch to technology intensive industries.

Catching-

upstage:

Generic basic infrastructure. Growing capacity toimitate. Engaged in low-value adding manufacturing,often as Original Equipment Manufaturer supplier.Growth of domestic industry in support and relatedsectors.

High productivity growth, but not as high as in the pre-frontier stage(Technology is not the most advanced). High economicgrowth due to switch to technology intensive industries.Employment growth higher than in previous period.

Pre

catching-

upstage:

Natural resource-based, commodity exports. No

technological capabilities. Little or no basicinfrastructure. Underdeveloped institutions Fewdomestic firms with technological capabilities.

Low-labor productivity because of reliance on labor-

intensive technology, positive employment growth,probable high rates of economic growth due to low startinglevels.

TABLE ERROR! NO TEXT OF SPECIFIED STYLE IN DOCUMENT.-1 STAGES OF TECHNOLOGICAL CAPABILITY (SOURCE:

NARULA, 2004)

Although the model is primarily concerned with explain the changing importance of absorptive

capacity during different stages of economic development, it is very useful in plotting the changes in

nature and importance of different channels of technology transfer across nations at different stages.

Accumulation of knowledge and changes in the complexity and vintage of technology employed

in the evolutionary model fit very well with the different characteristics of the channels of

12Perez, C.; Soete, L. (1988). Catching-up in technology: Entry barriers and windows of opportunities, in Dosi et al., Technical change and

economic theory, New York, Columbia University Press.13

Borensztein, E.; De Gregorio J.; Lee, J.W. (1998). How does FDI affect economic growth, in Journal of International Economics, Vol. 45,pp. 115-135.14

Xu, B. (2000). Multinational enterprises, technology diffusion, and host country productivity growth, in, Journal of DevelopmentEconomics, Vol. 62, pp. 477-93.


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transfer of technological knowledge described in figure 2-9. For instance, the technological

sophistication of trade construct proposed by Sunjay lal (in Lall, 200015

, Lall, 200516

) also rank

the technological content embodied in trade according to the technological content embodied in

the exports by nations at different levels of technological and economic development.

Figure 2-12 shows several ways in which technology flows occur, either through arms length

means, such as through licensing, or through trade in intermediate goods, plant and equipment or

even products or services and through hierarchies, between affiliated firms within a transnational

enterprise (TNCs) or through FDI. While thepotentialfor TNC-related spillovers are clear, as

are the opportunities for industrial upgrading there from, it is increasingly acknowledged that the

nature, level and extent of the benefits vary considerably (Narula and Dunning 2000).

As the nature of technological knowledge changes with accumulation of knowledge and increase

in technological capabilities of the nations, so does the propensity, not enough is known, both in

theory and practice, about the relative importanceof each of these channels (Saggi, 2002)17

.

Role of state resources and institutions in FDI,

15Sanjay Lall, 2000, The technological structure and performance of developing country manufactured exports, 1995-1998, Oxford

Development Studies, 28 (3), 337-369.16Sanjaya Lall, John Weiss and Jinkang Zhang, 2005, The Sophistication of Exports: A New Measure Of Product Characteristics, QEHWorking Paper Series QEHWPS 12317 Saggi Kamal, Trade, Foreign Direct Investment, and International Technology Transfer: A Survey The World Bank Research Observer, 2002

Growing

Hih

InwardFDI

Low

Growing

L

ow

OutwardFDI

High

Growing

TechnologicalCapability

andspillover

Low

High

Resource

Based (RB)Products

LowTechnology

(LT)

Medium

Technology

(MT)

High

Technology(HT)

Technological

Content of

Exports

Increasing

Trade in

intermediate

goods

and inter-

industry

processingtrade

BOT

Joint

venture

Green fieldInvestment

Acquisition

and take ver

InternationalContracting

Turnkey

Projects

Propensity of

investment contract

Increasing

movement of

professionals,

and students

University

and R&D

institutions

collaborations

Travel,

Tourism and

mediaexchanges etc

People to Peoplecontacts

Licensin

FIGURE ERROR! NO TEXT OF SPECIFIED STYLE IN DOCUMENT.-2 EVOLUTION OF TECHNOLOGY TRANSFER

CHANNELS AND POTENTIAL


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One may rank the different channels of technology transfer in terms of their relative importance

the interpretation would depend on the stage of economic development of the source and

destination nations with reference to the global technological frontier (figure 2-13).

This scheme uses level of technological and economic development of both source and

destination nations to classify and interpret the nature of international technology transfer

linkages among them provides a holistic background framework for understanding technologytransfer among any two nations of the world.

Recipient

National

S stem

International Technology

Transfer link

Source

National

S stemLevelofTechnologicalProg

ress

andeconomicdevelo

ment


Transfer link


Transfer link

Innovative

TechnologyTransfer

among China

and Pakistan

RecipientNational

S stem

RecipientNational

S stem

SourceNational

S stem

SourceNational

S stem

Active

learning

Passive

learning

Frontier-sharing stage

Pre frontier-sharing stage

Catching-up stage

Pre catching-up stage

FIGURE ERROR! NO TEXT OF SPECIFIED STYLE IN DOCUMENT.-3 INTENSITY OF INTERNATIONAL TECHNOLOGYTRANSFER AND LEVELS OF TECHNOLOGICAL PROGRESS

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