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The Transfer of technology to Taiwan : a look at the question of technical dependency and several factors affecting the choice of technology Hoy, Thomas Richard

Abstract

The term 'technology' refers to the totality of means employed by mankind to harness a variety of resources to its economic benefit. Levels of technology seriously affect economic growth. In the less developed countries (LDCs), where levels of economic development are by definition low, vast amounts of technology must be transferred in before any significant economic growth can become possible. This study is divided into three main areas. The first looks at channels for the transfer of technology with special attention to the question of continuing technical dependency. The second and third look at factors which, it is hypothesized, have an important bearing on the choice of technology namely: technology information, and a number of general, technology related factors. Continuing technical dependency is a widely discussed phenomenon in the literature on technology transfer. Much criticism has been directed at the transferor, especially the multinational corporation (MNC), for variously restricting the transferee's ability to gain the maximum advantage from the transferred technology. Because of the widespread nature of such criticism, it is expected that such restrictions will also be a problem in Taiwan. The aim of this part of the study is simply to ascertain the extent of the problem or, if there is little or no problem, to formulate hypotheses as to why this is the case. Information is essential in a technology transfer decision. Such information can come from inside the firm but the most important sources, it is expected, are those from the outside; commercial enterprises, government agencies, business associations, and special linkages (in particular subcontracting, and personal friends). It is expected that commercial sources will be the most prolific. The academic literature, however, describes such sources as often incomplete or biased. Thus, it is hypothesized that LDC transferees, despite their relative technical ignorance, will also perceive such sources thus, and will try to corroborate or supplement any information they receive. Government agencies for the gathering and dissemination of technical information have been established in a number of LDCs and it is expected that the government on Taiwan will have done likewise. However, it is hypothesized that, firstly, the ability of such an agency to provide relevant and timely information to potential transferees and, secondly, the willingness of such potential transferees to seek out and/or use such information will be limited. Business associations, on the ether hand, are expected to be a much more popular source of technology related information. Based on the Japanese model, it is expected that firms in Taiwan will have access to a high flow of information within their various associations, especially between the larger, more established firms and the smaller, newer firms, and especially in those industries characterized by distinct market areas, standard product lines and/or well established technologies. Sub-contracting is one kind of special linkage between firms which serves as an important source of technical information for small firms in Japan. As with the case of business associations, it is hypothesized that close historical as well as contemporary economic links between Taiwan and Japan will mean that such a source is also important in Taiwan. Another special link is, of course, personal contact. Given the extra degree of uncertainty involved in a LDC transfer of technology from a foreign, developed country, it is hypothesized that such personal contacts will play a role out of proportion to their real worth. The third main area of this study takes as its basic premise that the object of any transfer of technology is economic advantage. Three factors are looked at, however, which it is hypothesized, will have a major influence on the perception of this economic advantage. These factors are the complexity, compatibility and divisibility of the technology. Given the extraordinary technical adjustments which transfers to a LDC often demand, it is expected that such factors may well play a special role in the choice of technologies in such settings. As to the question of why do a study on the transfer of technology to Taiwan in particular, the answer is simply that, of all possible LDCs, Taiwan was the only one where the writer was equipped and able to do extensive field work. Taiwan,, of course, has many features in common with what might be thought of as the average LDC: it is in Asia, in a hot climate, has very few natural resources, is densely populated, has suffered serious social and economic disruptions within the lifetime of most of its citizens and has received generous amounts of foreign aid. Thus, it is in many ways representative of LDCs in general. More important, however, is the fact that despite these similarities, Taiwan's recent, rapid development has been so markedly dissimilar to the general pattern observed in LDC economies. This would seem to indicate that perhaps Taiwan has somehow been more successful in its experience with technology transfer. If so, a study of this experience might produce insights of value to other less successful transferees.

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