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Technology Localization and its Role in Economic Development

What is Technology Transfer?

Technology transfer is a process in which technology or knowledge developed at one organization or country is transferred to another, typically for the purpose of commercialization. Technology transfer can be accomplished through a variety of methods, including licenses to use protected intellectual property and exchanges of know-how and materials. The term may also be applied to the process by which a technology developed for a specific use or sector becomes applicable in a different sector. 

In developed countries, the concept often refers to the process whereby universities or research centers provide access to technologies through a variety of mechanisms for use in the market. Technology transfer can be done between universities, businesses, and governments to share skills, knowledge, technologies, manufacturing methods, etc. Thus, it ensures that scientific and technological developments are available to a wider range of users who can in turn help develop it. 

Technology transfer can be categorized into three basic types: 

  1. Technology push. This takes place when a company or university patents its invention and licenses it to other companies.
  2. Market pull. This is when new technologies are developed in response to demand for a product or service. This is the most common way of technology transfer as it pulls up innovation in order to meet the demands of the market.
  3. Technological spillover. This takes place when new advances in one area stimulate progress in another. 

Technology Transfer as a Key Pillar of Economic Development 

Knowledge and technology spread around the world as societies and economies have become increasingly interconnected. But access to technology and innovation has been uneven, and there’s even a growing gap between developed and developing countries in how much innovative technologies are used for scientific research. 

Although innovation and knowledge creation have been traditionally concentrated around a few countries, in recent years there has been a growing trend towards more globalization of innovation and knowledge creation. More countries are investing in research and development (R&D) and developing capacity for scientific research, as it plays an important role in achieving sustained long-term growth. 

The United Nations 2030 Agenda for sustainable development, whose vision states that signing countries, “envisage a world in which every country enjoys sustained, inclusive, and sustainable economic growth and decent work for all,” explicitly recognizes the potential of information and communications technology for global interconnectedness and to accelerate human progress: 

"The spread of information and communications technology and global interconnectedness has great potential to accelerate human progress, to bridge the digital divide and to develop knowledge societies, as does scientific and technological innovation across areas as diverse as medicine and energy.”* 

Better access to existing and new technology is the key to achieving the vision of the 2030 agenda. However, the spread of technologies often takes a long time and depends on a wide range of factors, including maturity, cost, as well as social, economic, and regulatory environments that enable it. 

A higher use of technology has historically been linked with growth and more jobs. Despite the common concept that automation puts jobs at risk, technology-led automation complements specific job tasks and makes workers more productive and more valuable. Also, technology diffusion boosts new industries and products, generating more employment. 

Undoubtedly, governments play a key role in promoting the adoption and spread of new breakthrough technology. 

The Example of Saudi Arabia 

The 2030 vision developed by Saudi Arabia is an outstanding example of how governmental engagement can be a huge enabler of technology adoption. By making research and technology as one of the pillars of the 2030 strategic vision in Saudi Arabia, the country is ensuring a strategic orchestration between industrial sectors and the academic world and ensuring “alignment of education outputs with labor market needs.” 

The country has set a priority to localize promising manufacturing industries and key sectors such as the military industry, providing enabling conditions for sectors and claiming the plan to, “create favorable growth conditions, infrastructure, and environment to enable vital sectors to achieve rapid growth in the coming years.” 

To achieve such a purpose, several initiatives have been developed to establish capacity development centers specialized in Industry 4.0 technologies. By supporting technological innovation and the spread of Industry 4.0, the country focuses on improving productivity and maintaining competitiveness in priority sectors. The Saudi government has included opportunities to increase the local content and Saudize industry through two clear strategies: 

  • Agreements with leading global companies to transfer and localize the technology
  • Technology transfer facilitators, such as the King Abdullah University of Science and Technology (KAUST), a global leading research center that attracts talent from around the world

This last point is of special importance, as it aligns back with the need of bringing together market needs and education, which in turn brings us back to technology. Societies need to not only make sure they are preparing students for the real world, but also make sure current workers are being upskilled for constantly changing requirements in fields such as smart manufacturing. In this regard, technologies such as augmented reality or wearable devices are proving key to training workers. 

Investing in skills development will be key for all countries as jobs across all manufacturing subsectors are likely to become increasingly non-routine and will require more cognitive skills. This will create a demand for the development of information and communications technology (ICT) skills such as programming and coding or complementary skills in engineering. Along the same lines, the importance of soft skills that foster creativity, problem solving, and initiative are likely to become more important. If countries want to strengthen their innovation systems, they will need to build a domestic capacity to handle the technologies that will enable sustainable development. 

The Role of Intellectual Property Management 

Technology transfer is a first step to innovation, though it is not innovation itself. Innovation is driven by business and economic growth, and requires both technology and knowledge. The ability to innovate depends on a wide variety of interrelated economic, social, and institutional factors. 

What is more important: The transfer of technology, or the transfer of knowledge? For many, this might seem like a “chicken and the egg” dilemma. In the short-term, transfer of technology is more important, whereas in the long-term, transfer of knowledge is more important. The reality though is that both must eventually converge. 

If you get advanced scientific knowledge, but don’t have the necessary infrastructure to shape the knowledge into technology, you run into big limitations. However, if you have all the necessary tools, but lack the knowledge to work with them, it becomes a waste. 

In transferring knowledge, managing global intellectual property (IP) rights becomes crucial, as this should consistently stimulate, and not restrict, private initiatives in technological development. The big increase in IP applications witnessed in recent years reflects the growing importance of technology and innovation in the global economy. This importance will continue to grow as humanity responds to the critical global challenges of our time, such as climate change, global health, and food security. 

To ensure proper IP management, processes and procedures should be established to ensure that inventions and any technical developments are disclosed to technology transfer offices early on for their evaluation in terms of patentability and marketability. 

The Role of Free and Open-Source Software (FOSS) 

Software is a major subsector of ICT and one that is particularly suitable for technology transfer—it exists as pure applied knowledge and can be produced and distributed independently of the hardware platforms that it uses to operate. One particular type of software—free and open-source software (FOSS)—has particular characteristics that make it worth mentioning when talking about technology transfer. 

FOSS has explicit copyright and end-user licenses that permit users to copy and redistribute software without restrictions. Indeed, its copyright and end user license were created to promote transfer and absorption. The most popular license, General Public License (GPL), imposes a unique restriction: All copies, regardless of how much the software was altered, must also use the GPL and thus permit further unrestricted copying particularly relevant for technology transfer purposes. FOSS licenses require that authors of a particular program make its source code publicly available. Access to the source code allows anyone to copy or technically alter the performance and features of a program. 

Conclusion 

Technology is essential to innovation, which, in turn, is essential to economic development of countries. Technology transfer is one key path to shorten the innovation cycle, but for it to be successful, it requires the alignment of all actors in the ecosystem, including education, research, private investment, and a public framework to encourage it all. That is to say, to spur the development of a tech-based industrial landscape which drives economic growth, you need an environment that fosters the appetite for innovation. 

*Section 15, Our World Today section of the resolution adopted by the UN General Assembly on September 25th 2015: Transforming our world: The 2030 Agenda for Sustainable Development.

Elena Rios
Elena Rios
Elena has over 20 years of experience in marketing and communications for high tech companies. She holds a BA in Linguistics and Communication, and a Masters Degree in Translation and Interpreting, and is passionate about technical translation and communications. She is currently the CMO of SAAB RDS, a company that focuses on empowering customers in their digital transformation journey and works with the Engineering Academic and Scientific Research community to bridge the gap between academia and industry. Having been a teacher herself, Elena is passionate about the company’s mission of providing teachers and students with the right tools to modernize learning approaches in STEM education.

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