Technology transfer is crucial to international agreement on environmental policy and is seen by many developing countries as a prerequisite for adherence to treaties. Yet many investing countries see technology transfer as a lengthy and costly process with potential risk to intellectual property rights. This chapter argues such views need to be rethought, and that technology transfer instead needs to be understood by distinguishing between so-called “horizontal” transfer (including long-term sharing of technological expertise), and “vertical” transfer (in which technologies are relocated without sharing). The chapter illustrates how such vertical transfer may occur using evidence from Thailand, Vietnam, Indonesia, and the Philippines. The chapter’s key argument is that integrating technology transfer with international investment offers a powerful way to overcome disagreements in the climate change negotiations, and is an important reflection of foreign policy relating to international economic competitiveness.
Foreign investment is increasingly a crucial component of domestic and foreign policy. With the onset of global investment and global production of commodities in the late twentieth century, governments are no longer seeking to achieve national technological competitiveness by developing domestically owned industries located within their own countries alone. Instead, national competitiveness may also occur through developing effective multinational companies that invest overseas, or through attracting and keeping investment from foreign companies at home. The location and ownership of investment therefore have immense significance for the development and control of technology production worldwide.
The new globalization of technology production offers different strategies to developing countries. On one hand, developing technology through domestic companies may give a country the chance to become internationally competitive in investment; but this may mean waiting years before success is achieved, and also success may never come if the market is already dominated by producers elsewhere. Alternatively, countries may allow foreign companies to produce new technology locally because it may accelerate the supply of useful technology to local users, and also provide associated benefits of investment. Yet the risk of this strategy is that it assumes local producers may never gain economic competitiveness in