Technology transfer offers a fast route toward rebuilding the COVID-ravaged economies of low-and-middle income countries
Technology transfer is a measure of the way in which countries manage their international flows of capital, goods, services, ideas and people. Borders and tariffs in rich countries often impede the economic and technological exchanges that could otherwise accelerate development and growth in poorer nations. Evidence shows that quickly spreading technology and technological knowledge quickly reduces poverty.
Yet more than seventeen years since countries signed up to the World Trade Organisations’ TRIPS Agreement, we simply do not know if countries are living up to the commitments that they made to improve technology transfer. In the years that have passed inter-country inequality has fallen, but it is impossible to know whether these falls can be equated with technology transfer — or not. This is unfortunate, because as countries retrench from foreign aid, technology transfer offers an alternative catalyst for growth in the developing world.
Official Development Assistance
Each year the Centre for Global Development (CDI) publishes a Commitment To Development Index which ranks forty of the world’s most powerful countries based on their dedication to policies that positively impact the five billion people who are living in poor and developing nations. One of the factors that the Index takes into account is development finance (foreign aid), which is measured according to the 50-year-old United Nations resolution that rich countries should spend 0.7% of their gross national income (GNI) on development assistance.
In 2019 only five countries – the United Kingdom, Denmark, Luxembourg, Norway and Sweden – met the 0.7% target. Then on 25th November 2020 Britain’s Chancellor of the Exchequer Rishi Sunak announced that in 2021 the United Kingdom will reduce the proportion of national income allocated to Official Development Assistance to 0.5% of GNI, the first time since 2013 that the UK will not meet the United Nations target.
Sharing And Spreading Technologies
This type of aid is not the only way to ameliorate and alleviate poverty. The ‘Commitment To Development Index’ also gives heavy weighting to countries that provide international public goods from which developing nations yield benefits, such as technology, security and the environment. Sweden came top of the Commitment To Development Index in 2020, followed by France, Norway and the United Kingdom.
Whilst the United Kingdom scored very highly for its 0.7% of GNI commitment (second behind Canada) and its contribution to global security (ranking top at number one), the country scored very poorly for ‘technology’ with rank of 21 placing Britain behind Luxembourg Australia, South Korea, France, South Africa, Saudi Arabia and Russia.
With its world class technology sector, that the UK is scoring so badly for its commitment to technology transfer is a missed opportunity: technology could part-mitigate Britain’s retrenchment in its foreign aid commitment.
Technology Transfer
It is because of the potential for technology to reduce poverty that measuring the propensity of individual countries to spread technological knowledge and ideas is so important. The world’s major economies play a big role in both new technology creation and in its diffusion worldwide.
Technologies can reduce the prices of goods and services, making them more accessible to all in both rich and poor countries. Technological advances in areas such as medicines, sustainable energy and agriculture typically raise the quality of life of everyone.
In his book ‘Getting Better’ Charles Kenny demonstrates the huge gains in health across the world which arose during the 20th century because of the spread of germ theory (ideas), hand washing (norms), and antibiotics (technology).
Reducing Inequality Between Nations
One thing that did not change during the 20th century were the high levels of economic inequality between nations. Yet for the first time since records began, data from the World Bank suggests that this high degree of economic inequality is now being reversed.
Between 1988 and 2008 we may have witnessed the first decline in global inequality between nations since the Industrial Revolution. Importantly, the World Bank also claims that this decline can only be sustained if countries’ average incomes continue to converge and if ‘in-country’ inequalities are kept in check.
Technology transfer could be a major tool for achieving this. Technology can help to ensure that average incomes continue to converge by generating new wealth and spreading it across nations whilst simultaneously improving the health and livelihoods of millions of people.
A Multi-Lateral Approach
The World Trade Organisations’ 1994 Trade Related Intellectual Property Rights (TRIPS) Agreement obliges all developed countries to support technological advancement by helping to spread technologies to developing countries in return for the global enforcement of intellectual property rights. Yet we simply do not know if developed countries are living up to their 1994 commitment to improve technology transfer.
Anecdotally we know that technology entrepreneurs and deep tech investors rarely shy away from the opportunity to expand adoption of their technology or technological application into new countries and new markets. The default impetus of pioneering technologists and technology companies is in favour of technology transfer. Governments should focus on removing the invisible barriers that create friction and disincentives.
The fallout of the Coronavirus pandemic has been accented by an alarming sentiment amongst some populist politicians that developing countries — especially the emerging economies — are competitors. This perception is reinforced by talk of a “global race” which dampens enthusiasm for sharing technologies to enable poorer countries to ‘catch up’. This is bad thinking: global economic growth is win-win, not zero sum; and the consumption of knowledge is non-rival.
Improving Technology Transfer
In fact, the technology transfer objective is extremely simple: we want modern, up-to-date technologies to spread to the developing world at affordable prices. To achieve this, we need indigenous firms in low-and-middle-income countries to receive licensing contracts on reasonable terms to manufacture high-value technological products and services. And we also need the subsidiaries of foreign firms to hire and train employees within those countries to expand know-how and capability.
Since 2013 the United Kingdom set the ‘gold standard’ amongst developed countries by maintaining its 0.7% of GNI commitment to foreign aid. As the UK retrenches from this commitment, it should seek to embrace the responsibility of finding other ways to reduce global poverty, and technology transfer should be at the top of the agenda. Because everyone, everywhere, should be able to take advantage of technological progress.