Sanjeev Narula Abramovitz classifies nations as either µforging ahead¶ (technologically advanced nations undergoing continuous advancements) µcatching

up¶ (less advanced nations undergoing fast advancement) or µfalling behind¶ (less advanced as well as advanced nations not progressing or progressing slower than the rest) (Abramovitz, 1986)1. ArCo (Archiburgi-Coco) indicator results in distinguishing four groups: leaders, potential leaders, latecomers, marginalized. An even more refined taxonomy is presented in the National Learning Systems Concept, where nations classified as Innovators, Active Learners and Passive Learners (Viotti, 20012, 20033). Classification of developing nations, as either active or passive learning economies is also found in National Systems of Economic Learning (Mathews, 2001)4, National Technology Systems (Lall, 2003)5, Systems of Innovation for Development (Edquist, 2001)6 and the concept of National Innovation Systems for Rapid Technological Catch up (Wong, 20017). Primarily used in understanding the role of technology in economic development for example, the µtechnology club theory¶ by Castellacci (2008)8, and Fagerberg and Srholec (2008)9 in their analysis of different kinds of national capabilities (technological, social, political) confirmed that technological capabilities turn out to be significant in different specifications of cross-country regressions. These concepts can serve well in explaining technology transfer among nations, developing nations in particular. Based on the fact that International Technology Transfer is (besides, other factors) a function of national technological capability and absorption capacity; we can model the relative differences in nature and intensity of technology transfer among nations (figure 2-12). Narula, (2004)10 has

Moses Abramovitz, 1986, Catching Up, Forging Ahead, and Falling Behind The Journal of Economic History, Vol. 46, No. 2, The Tasks of Economic History. (Jun., 1986), pp. 385-406. 2 Viotti, Eduardo B. Indicadores de Inovação Tecnológica - Fundamentos, Evolução e sua Situação no Brasil, Curitiba and Brasília, IBQP-PR and MDIC, 2001 3 Viotti, Eduardo B. Fundamentos e Evolução dos Indicadores de Ciência, Tecnologia e Inovação, Chapter 1 in Viotti, Eduardo B. and Mariano Macedo (eds.), Indicadores de Ciência, Tecnologia e Inovação no Brasil, Campinas, Editora da Unicamp, 2003 4 John Mathews 2001, National systems of economic learning: The case of technology diffusion Management in East Asia, International Journal of Technology Management 5 Lall, S. and Utra, S. (ed.) (2003), Competiveness, FDI and Technological Activity in East Asia. 6 Edquist, C. (2001), ³Systems of innovation for development,´ Background paper for Chapter 1: ³Competitiveness, Innovation and Learning: Analytical Framework´ for the UNIDO World Industrial Development Report (WIDR) 7 Wong P K, 1999, "National innovation systems for rapid technological catch-up: an analytical framework and a comparative analysis of Korea, Taiwan and Singapore", paper presented at the DRUID Summer Conference on National Innovation Systems, Industrial Dynamics and Innovation Policy, Rebild, Denmark 8 Castellacci, Fulvio, Daniele Archibugi. 2008, ³The technology clubs: The distribution of knowledge across nations.´, Research Policy, 37: 1659-1673. 9 Fagerberg Jan, Martin Srholec. 2008, ³National innovation systems, capabilities and economic development.´, Research Policy 37: 1417±1435. 10 Narula, R., 2004, µUnderstanding Absorptive Capacities in an Innovation Systems Context: Consequences for Economic and Employment Growth¶, MERIT Research Memorandum 2004-003.

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1. (2002). Some general characteristics of countries in each stage are presented in Table 2. with reference to the changing role of state and market. MERIT Research Memorandum 2002-16. Sectoral and Comparative Advantage Evolution Inward Outward FDI High Growing Growing CAPACITY Low FDI High Growing Low Capital and knowledge intensive Schumpeterian sectors Differentiated Smithian industries e. One significant observation is regarding the existence of a minimum and maximum threshold of absorptive capacity before beginning of a catch-up stage and the final frontier sharing stage of development. the pre frontier-sharing stage and the frontier-sharing stage.-1 EVOLUTION IN NATIONAL ABSORPTION Based on growth of technological capability and economic development due to accumulation of knowledge. ³A novel approach to national technological accumulation and absorptive capacity: Aggregating Cohen and Levinthal´. Narula.g. The catching up stage 11 Criscuolo. P. possessing educated people is a precondition for a country¶s increased absorptive capacity. the catching-up stage.. Technological Capability. automobiles electric/electronic goods Industrial Sector Primary Sector Undifferentiated Smithian industries e. R. sectoral shift and the changing patterns of foreign investment. Absorptive Capacity. Services Sector Frontier-sharing stage (Innovative) High Maximum Threshold of Absorptive Capacity Technological Capability Pre frontier-sharing stage (Active Learning) Role of the Markets Role of the State Catching-up stage (Active Learning) Minimum Threshold of Absorptive Capacity Pre catching-up stage (Passive Learning) Low . the model has also explored the changes in national economic structure over time. In other words.g.g. textiles FIGURE ERROR! NO TEXT OF SPECIFIED STYLE IN DOCUMENT. Criscuolo and Narula (2002)11 had stipulate the existence of four stages of economic development in terms of ability to accumulate knowledge as follows: y y y y the pre catching-up stage.elaborated the evolution in national technological capability with reference to the changes absorption capacity construct in a broad perspective. heavy & chemical industries Heckscher-Ohlin labor intensive manufacturing e. which contributes to enhanced productivity.

³Multinational enterprises. Columbia University Press. High economic growth due to switch to technology intensive industries. Technological and Absorptive Capabilities Technological opportunities primarily rest on long term innovation and collaboration. High investment in creating new industries. once countries have ³learned-tolearn´ (Criscuolo and Narula 2002). Engaged in low-value adding manufacturing. often as Original Equipment Manufaturer supplier. Pre catchingup stage: Catchingup stage: . Vol. but not as high as in the prefrontier stage (Technology is not the most advanced). and shutting down sunset sectors. Growth takes place through inter-sectoral shifts. commodity exports. ³How does FDI affect economic growth´. probable high rates of economic growth due to low starting levels. Underdeveloped institutions Few domestic firms with technological capabilities. Accumulation of knowledge and changes in the complexity and vintage of technology employed in the evolutionary model fit very well with the different characteristics of the channels of 12 Perez. Low-labor productivity because of reliance on laborintensive technology. but not as high as in the prefrontier stage Technology is not the most advanced. positive employment growth. Soete. Journal of Development Economics. pp. Pushing back frontiers of knowledge. in. Growing use of R&D alliances and networking.is when the economy starts benefiting from the international transfer of technology. Strong knowledge infrastructure Growing use of outsourcing to earlier stage countries of lower-value added activities.-1 STAGES OF TECHNOLOGICAL CAPABILITY (SOURCE: NARULA. Increasing use of networking to achieve modularity. New York. Frontier-sharing stage: Expectations about Productivity and Economic Growth Productivity growth and economic growth higher than in any previous stages. Little or no basic infrastructure. C. Technical change and economic theory.W. 14 Xu. Borenzstein et al. Knowledge accumulation is much more rapid once the initial threshold level of absorptive capacity exists.. Natural resource-based.. and host country productivity growth´. in Dosi et al. 1988)12. (1998). Considerable in-house R&D activity by both domestic and foreign MNEs. Economic and productivity growth come from knowledgeintensive industries. No technological capabilities. 45. Increasingly specialized knowledge infrastructure Decline in potential to imitate and adapt Increasing integration into efficiency-based global production networks. Outward FDI to augment domestic capacity. Simply put. Lee. (1998)13. it is very useful in plotting the changes in nature and importance of different channels of technology transfer across nations at different stages. ³Generic´ basic infrastructure. Strong domestic industry. High productivity growth. but is relatively subdued compared to previous stages.. technology diffusion. move towards Original Brand Manufacturer. J. 2004) Although the model is primarily concerned with explain the changing importance of absorptive capacity during different stages of economic development. 62. Employment growth higher than in previous period. technology absorption is easier. High economic growth due to switch to technology intensive industries. E. (2000). ³Catching-up in technology: Entry barriers and windows of opportunities´. B. Vol. Pre frontiersharing stage: High productivity growth. 477-93. 13 Borensztein. (1988). L. And the absence of sufficient levels of absorptive capacity tends to lead to the inefficient use of technology flows. a minimum human capital threshold level (Perez. De Gregorio J. Growing capacity to imitate. pp. Growth of domestic industry in support and related sectors. and Xu (2000)14.. TABLE ERROR! NO TEXT OF SPECIFIED STYLE IN DOCUMENT. in Journal of International Economics. 115-135.

15 Sanjay Lall. 200015.-2 EVOLUTION OF TECHNOLOGY TRANSFER CHANNELS AND POTENTIAL Figure 2-12 shows several ways in which technology flows occur. Technological Content of Exports Increasing Trade in intermediate goods and interindustry processing trade High Technology (HT) Medium Technology (MT) People to People contacts Increasing movement of professionals. 2002 . between affiliated firms within a transnational enterprise (TNCs) or through FDI. about the relative importance of each of these channels (Saggi. and students University and R&D institutions collaborations Travel. 1995-1998¶. µTrade. plant and equipment or even products or services and through hierarchies. not enough is known. Foreign Direct Investment. µThe technological structure and performance of developing country manufactured exports. For instance. 2002)17. so does the propensity. While the potential for TNC-related spillovers are clear. the technological sophistication of trade construct proposed by Sunjay lal (in Lall. 2000. John Weiss and Jinkang Zhang. The µSophistication¶ of Exports: A New Measure Of Product Characteristics. Tourism and media exchanges etc Propensity of investment contract Inward Outward FDI High FDI High High Technological Capability and spillover Licensing Joint venture Green field Investment Acquisition and take over International Contracting Turnkey Projects BOT Low Growing Growing Growing Low Low Technology (LT) Resource Based (RB) Products Low FIGURE ERROR! NO TEXT OF SPECIFIED STYLE IN DOCUMENT. 2005. 337-369. 200516) also rank the technological content embodied in trade according to the technological content embodied in the exports by nations at different levels of technological and economic development. and International Technology Transfer: A Survey¶ The World Bank Research Observer.transfer of technological knowledge described in figure 2-9. as are the opportunities for industrial upgrading there from. both in theory and practice. such as through licensing. either through arms length means. 28 (3). QEH Working Paper Series ± QEHWPS 123 17 Saggi Kamal. it is increasingly acknowledged that the nature. level and extent of the benefits vary considerably (Narula and Dunning 2000). Oxford Development Studies. or through trade in intermediate goods. As the nature of technological knowledge changes with accumulation of knowledge and increase in technological capabilities of the nations. 16 Sanjaya Lall. Role of state resources and institutions in FDI. Lall.

Level of Technological Progress and economic development Pre frontier-sharing stage Active learning Catching-up stage Recipient National System International Technology Transfer link Source National System Passive learning Pre catching-up stage Recipient National System International Technology Transfer link Source National System . Frontier-sharing stage Innovative Recipient National System International Technology Transfer link Source National System Technology Transfer among China and Pakistan FIGURE ERROR! NO TEXT OF SPECIFIED STYLE IN DOCUMENT.-3 INTENSITY OF INTERNATIONAL TECHNOLOGY TRANSFER AND LEVELS OF TECHNOLOGICAL PROGRESS This scheme uses level of technological and economic development of both source and destination nations to classify and interpret the nature of international technology transfer linkages among them provides a holistic background framework for understanding technology transfer among any two nations of the world.One may rank the different channels of technology transfer in terms of their relative importance the interpretation would depend on the stage of economic development of the source and destination nations with reference to the global technological frontier (figure 2-13).

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