1. Innovation and Technology Transfer: Some Key Issues
Prasada Reddy
UNCTAD
Division on Investment, Technology and Enterprise Development

2. What is technology?
Basically the term technology means any information/knowledge that leads to either the creation of a product/service or the way a product is manufactured or a service is delivered.
Technological change means any new information that leads to either improvement in the performance of a product or a reduction in the cost of its production. Technological change occurs through ‘innovation’ (Technology Atlas Team, 1987).

3. Cateories of innovations
Incremental innovations
Radical innovations
Changes in technology systems – cumulative radical innovations and affect the industrial sector, e.g steam to electric locomotives
Changes in techno-economic paradigms – cumulative changes in technology systems and affect the entire economy, e.g. electronics, biotechnology.
Source: Freeman and Perez (1988)

4. Changes in the global business environment 1
Economic changes -
Liberalization of economies worldwide
Specialization in economic activities
Privatization
Source: Porter, 1986; Bartlett and Ghoshal, 1991)

5. Changes in the global business environment 2
Technological changes –
Changes in techno-economic paradigm
Impact of new technologies on firms and countries
New technologies as enabling factors and driving forces
Multi-disciplinary nature of innovations
Divisibility of manufacturing & R&D
Source: Reddy, 2000

6. Global competition Nature of competition (e.g. oligopolistic)
New sources of technologies (e.g. SMEs)
Reduced product life cycles
Increasing importance of intellectual property protection
Source: Reddy, 2000

7. Firm-level strategies
Rationalization of global corporate structures
Emergence of inter-firm alliances
Outsourcing
Intellectual property strategies (e.g. knowledge markets)

8. Implications for technology transfer
FDI as a key source of TOT
Inter-firm technology alliances
New suppliers of technology
New opportunities (e.g. divisibility of innovation facilitates participation in the innovation process)

9. Conducive conditions for TOT 1
Host country policies –
Building up & strengthening national innovation system
Development of science/technology parks and clusters
Intellectual property rights regime
Technology-related performance requirements

10. Conducive conditions for TOT 2
Home country measures –
Financing of TOT
TOT through FDI
Match-making and provision of information
Measures to improve host-country’s absorptive and technological capacity
Source: UNCTAD (2005)