WREC

1996

HODBLS
OF UBNKKABLK
KSKUCY
TKCKNOLOGY
TKANSFIR
TODKVSLOPING
COUN?RIKS
U. ABLK-TEOKAS
Departrent of Engineering, The Garbia Civil Aviation Authority, Banjul International
Carbia. West Africa.

Airport,

P.O. Box 285, Banjul, The

ABSTRACT
This paper will discuss the benefits and needs for renewable energy technology transfer to developing countries. It will also
assess and discuss the different rodels or channels of renewable energy technology transfer for successful disseeination in
developing countries.
INTNODUCtION
It is believed that one of the rajor conditions for develop8ent is access to new technology. If developing countries
are to becore industrialired,
the overrbelring part of such technology lust be iiported, at least in the initial stages. Thug,
in recent years, techmlogy transfer has had a vital role to play and, according to OSKSCO [1], it ha8 been seen a8 the
panacea for the econoric ills of my countries regardless of their stage of development.
In their earnest desire to solve the energy crisis, rany of the developing countries are nor turning to appropriate
renewable energy sources such as solar, wind, hydro, etc to reet their urgent energy need8 [2,3]. Technology, if properly
ranaged, narrows the technological gap between developed and developing countries. Korever, without generating the skills and
resource8 to apply the transferred technology as rell as the social iea8ure8 to accept it, imported technology can be counter
productive, only creating dependency on foreign auppliers and increasing national debts. This is a situation that developing
countries should be particularly
aware of if it is to develop an indigenous capability in renewable energy technology. This
paper will di8CU88 the benefit8 and need8 for renewable energy technology transfer to developing countries.
Technology transfer
occurs because of the erietence of seller8
(called transferors)
and buyer8 (called
transferees).
Consequently, there ar8 rany rode18 through which technology can flow fro8 transferor to transferee,
80
creating the third i8portaat element in the transfer process. Hany divereified lode18 of channels have been in u8e to transfer
technology fro8 the developed to developing countries [4,5]. recbnology transfer channels are usually divided into tro
categories:(1) Couercial channel8 or rode18 of transfer - this involves physical or tangible capital assets.
or technical knowledge that facilitates
the
(2) Non-couercial channel8 or lode18 of transfer - this involves scientific
productive u8e of physical aesets and the ekills and know-how necessary for productive workers and lanegers. !his paper will
assess and discus8 the different models or channels of renewable energy technology transfer for SuCCe88fUldisselination
in
developing countries.
COUKKRCIAL
HODKLS
OF TKANSPER
These for88 of transfer are usually through an enterprise-to-enterprise
arrangelent. Fheae are given helow:(1) Foreign Direct Investaent (FDI), (2) Joint Ventures, (3) Licensing Agreerents (including patents, know-hoe, trade nares),
(4) International Subcontracting8 and (5) Turnkey Contracts.
FORKIGN
DIRKCFINVKSTPKNT
(FDI)
yhe rajor features of foreign direct invesbent are given belor:(a) Various eleuents of the technology are supplied in bundled or packaged fore. the transfer, apart from the accompanying
technological flow of specific production technology, also includes:uarketinq expertise, (ii) ranagerial skills and [iii) engineering design.
(i)
(b) It enable8 the technology supplier to retain ownership and to exercise control over the new production plant.
(c) It provides entry into a doieatic industry by 8 foreign fin, e.g. it involves the creation of a subsidiary by the parent
multinational company in a host country.
(d) It involve8 the flow of productive capital from one country to another 16).
lhere are several rotives for the foreign investor to use FDI a8 a vehicle for transferring technology:(1) Foreign firm take advantage of the local condition8 such as low rage rates and low raw iaterial CO8tS, e.g. Japanese
Multi-National Corpaniee (KNCs)far8 out the production of technologically sirpler components to South-Kast Asian countriee,
using labour intensive techniques.
(2) Foreign firm provide, through local rather than distant bore production, fuller coverage of local rarkets.
(3) Foreign fir88 use FDI when their dowtic hone market is saturated and the deuand for their products has elored doun.
(4) Foreign firm, carpeting abroad, are at a disadvantage in relation to competition fror their ho& country aed they u8e FDI
to lirit or reduce that disadvantage.
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WREC 1996
FDIcould create a growingdependence
on foreign technologiesand discouragesthe seerpenceof indigenouscapabilities
for technologicaldevelopmt [5]. Technology
transfer by this sethod, withoutadaptationof technical knowledge
by the host
(in this case the Latin kserican countries), molted in increasednnesplopent, inequality and dependency.Theseare lessons
to be learnt bv other develooinanations. It shouldalso be noted that, to rectifv a situation like the one eentionedabove,
the sepal Poriign Investeen~aid Technology
Actwasestablished. Thisincludes skill fonation as one of the criteria on the
basis of whichPDI is consideredby the competentauthority in the country. It is also of the opinion that FIJIprosotesthe
rate of diffusion of technologyand acceleratesdeveloprent.
Althoughthere is still an on-goingdebateas to the usefulnessof FDIfor the host country, there are advantagesfor
the recipient worthsentionlng:(1) Recruitrentof local labour force.
(2) Creationof newjob opportunities.
(3) Transferof financial resources.
(4) Raisingof technologicaland educationallevels of the labour force.
(5) Transferof technical andsanagerial skills.
(6) Benefits to researchanddevelopsentinstitutions.
In the case of rost developingcountries, FDIwouldbe recouendedfor the ranufacturingof renewableenergysystem
like solar cells and PVsodules. This is eainly becauseof the iwesteent costs, skills and infrastructure rhich wouldbe
involved.Thereis little doubtthat FDIwouldbenefit their econoriesat its present stage.
Developingcountries are becoringawareof the difference betweennere geographicalor interfirs transfer and genuine
indigenousassirilation of technologywith rastery, control and irproved ability to gain future autonosy.Theyhave been
striving to find waysand leans to unbundlepackagedeals. As an alternative to FDI, several levels of unpackaging
have
evolvedand the sost significant one takes the forr of Joint Ventores.Later it hecaseclear that joint ventnres had becose
far sore importantas a vehicle of overseasinvestrent by HDCs
than FDI. Joint venture is defined as a business association
betweentwoor sore parties whoagree to share the provisionof equity capital, the investmentrisk, the control and decisionraking authority, and the profits or other benefits of the operation.Hostcountries usually insist on havinga higher share
(in order to prevent the control that exists in FDI)than that of the foreign firs8 to give local governsantsor firm an
influential role and assure a certain equality of position asongpartners. Joint ventures could be the sost prosising route
for successful technologytransfer for those developingcountries rith adeqoatecapital and con&sent to developsentbecause
of the benefits they offers to the host country. Soreof the benefits are as follors:(1) Transferringof scientific knowledge
and advancedtechnology.
(2) Trainingof local ssployeesand acquiringof ranagerial skills.
(3) Solvingof discrepanciesis facilitated due to a certain equality of both partners involvedand risks are shared.
(4) Gainingfror the expertise of the foreign investor in all aspects (e.g. acquiringknow-how,
exportingto foreign sarkets,
etc.)
(5) Generatingtechnologicalspin-offs and productivityspill-over.
hnother cited potential advantageof joint ventures, is the ability to balance the interests of the technological
adapter and developervith the potential user of the technology,althoughsuppliers of high technology(IIIICsin large part)
have traditioaally been reluctant to transfer whatthey consider coretechnology(i.e. unique or proprietary knor-hoe)to
non-controlledfires overseas.
Anyfore of joint venture that brings investsent into developingcountries rith socio-econoricbenefits shooldbe
relcosed. Joint ventures with entrepreneursin developingcountries coold be established in the area of renewableenergy
technologyespecially PVsoduleassesblyand Balance-of-Spstes
(BOS)sanufacture.
Yhena foreign firs wantsto avoid any risks involvedin setting up an affiliate in an other country, the preferred
rode1 of transferring techsologyis rainly througha licensing agreerent. Underthis agreesent certain specific rights of
access to a technologyconferredon the acquirer for a specific duration say consist of authoriration to use industrial
property rights, secret knowhoe, patents, traderarks and technological assistance. Paysents for licensing diserbodied
technologytake a variety of forss, e.g. royalties, lnrp sus fees, a share in profits and paysentson an as-usedbasis.
Japan, at the very outset of industrialiration, put erphasison ranpowerdevelopsentwhichlade it possible for her to
continue to absorb and duplicate advancedtechnologyautonorouslyand to rely on technologytransfer in unbundledfors,
rainly throughlicensing contracts. Transfer via licensing, horever, is only of besefit to the nation if transfer is limited
to productsor processesthat the nation is capableof producingor using at internationally competitivecosts, or products
serving purely dosestic sarkets, for whichneither isports nor exportsare an option. India, for exasple, pursueda policy of
developinga dorestic eachinetool industry throughjudicious licensing fro8 suppliers in the industrially advancedcountries.
By the late 1970s Indias DindustanWachineTools had producedsachine tools of ever-increasing sophistication and
diversification.
The success of Japan and India is in their ability to absorb, utilixe effectively and improvethe transferred
technology.
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WREC 1996
Conpaniesin developing countries thinking of licensing sane parts of the renewable energy technology, lust ensure
that all the necessary infrastructure is in place, so that their product8 would have a perforraoce and cost which is
corpetitive rith importedproducts.

IO this arrangerent, a foreign raoufacturiog enterprise subcontracts the manufactureof certain parts or the asserbly
of finished products, using inputs and technology supplied by the foreign fire, to another enterprise in the developing
country. The transfer of technology, e.g. specifications, production know-bow, rachinery and equiplent, depends on the
capacity of the subcontractor to produce parts according to the detailed specifications and instructions of the contracting
enterprise. Subcontracting can be considered a channel for transferring technology, since there is always the possibility that
technological spin-offs lay be generated for the local enterprise involved.
IINCssoxetires prefer subcontracting part of their PV nodule assenbly to countries with low wages and basic
infrastructure since this part of the manufacture is aore labour intensive. The production of PV consumerproducts in gong
Kongstarted in this way. PVmanufacturecould be subcontracted hence generating erployaeot with economicbenefits.

ybis node1 is an emple of a highly packagedforr of transfer in whichbundled technological knowledgeis combined.
The foreign contractor fire undertakes the responsibility for carrying out all of the activities (e.g. includes provision of
process know-how,supply of complete plant and equipeeot, initial training of process operators, infrastructure, etc.]
required for the planning and construction of a discrete project in the host country. Turnkeycontracts are defined as
operations which are basically sales to a host country by a foreign firn of plants including equiprent and technical
assistance.
IO rany circurstances the turnkey packageretbod is the rost practical uay for transferring technology, because:(1) It is specially suited to the first stage of industrial development,since developing coontries usually lack local skilled
ranpowerand resources.
(2) It gives direct access to all supportive resources of the foreign firms.
The bundled way of supplying technology to developing countries is controversial and Japanese policy rakers in the
early stage of developrent realized that the acquisition of highly packagedtransferred technology has to be kept to a
rinirux for several reasons:(1) Mastery of technology cannot be bought, it has to be learned. Thus, in the case of turnkey plants, local technical
personnel were not involved fror the initial process design phase and indigenous R&Dinputs, required to irprove and adapt
technologies, will be rioirized.
(2) Technological dependencearises whenrost of a countrys technology coxes fror abroad and greater reliance is on the
foreign technology, hence greater dependence. To avoid such dependency,sole developing countries have in recent years been
unbundlingthe packageof technology supplies so as to acquire thee separately fror different sources [?I.
(3) Packagedtransfer gives the technology supplier monopolistic advantages such as, for exarple, switching the collection
of profits frox one source to another with relative ease, or irposiog higher prices comparedto unpackaged
transfers.
NON-COMMCIAL
HODELS
OFTRANSFER
Theserainly take place through an intermediary. Sole of the lost obvious channels are as follows:(l) Exchangeof inforeation at international conferences, trade fairs, official orgaoisatioos (e.g. universities).
(2) Purchaseof equipxeot and machineryand related literature.
(3) Traosrission of know-how
and managerial skills related to couercial channels of transfer.
(4) Eeplofleot of foreign experts and consultaocy arrangerents.
(5) Exchangeof personnel through technical assistance prograues.
(6) Educationand training of host countrys labour force.
(7) The flow of books, journals, files and other publications.
(8) Theroverent of persons fror country to conntry, e.g. travel, imigration, exchangeof students and experts.
Alnost all developing countries suffer fror a shortage of skilled laboor necessary for successfully absorbing and
processing the exogenous technologies, due to either a lack of trained local personnel or to the brain drain. To help
alleviate the forcer probler, there is a need to train local ranpower in vocational and technical institutes, on-the-job
training or sending students overseas. The choice of acquiring technology is influenced by a variety of factors:(1) The outlook and rotivation of local enterprises.
(2) The nature of the technology itself.
(3) The level of skills of personnel and industrial capabilities of the host country.
(4) The level of absorption and assirilation of the technology e&died in foreign couodities (e.g. intensity and capacity of
MDof recipient, strength of existing infrastructure in the host country, etc.).
(5) The size of the supply rarket and pattern of consuxptiooof the technology importer.

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WREC 1996
Developingcountries rust develop and sodemise their infrastructure at great expense, because buying technology can
either be the rost useless outlay or the best of possible bargains dependingnpon the transferees ability to rake good nse of
it. The existence of a sound infrastructure (e.g. adequate schooling facilities, ports, road and rail systeis, etc.1 is
generally an essential ingredient for accosplishuent.
Another essential element, which should be given high priority for a successful technology transplant is a rinirur
investsent on R&D
expenditure by the acquiring party. U&D
can be distinguished in either applied research (also adaptive
research), i.e. directed to the adaptation and sodification of irported technology, or in basic research (also pure
research], i.e. concentrating on original invention. For developing countries, the import of technology has to be parallel to
applied dosestic R&D
efforts.
An expansion of science and technology activities requires a base of highly qualified scientists and engineers. To
counteract the probler of brain-drain, raterial and social incentives have to be introduced and adequate research
laboratories have to be established both to motivate research scholars to stay in their hoseland and to tempt back those who
have erigrated.
Efficient husan capital or software in the for8 of technical, engineering and ranagerent skills in the host
country are needed to exploit fully all advantages fro8 transferred technology.
Developingcountries need sore of riddle-level skills and technicians whocan contribute aost towards the selection,
unpackaging, adaptation and utilization of received technology. There is also a need for highly qualified professionals to
ranage and direct these riddle-level skills and technicians. In particular there is a need for a centre of expertise which
understands international technical developsents and can relate these to the needs of their country.
CONCLUSION
Technologytransfer is the exchangeof hardwareand technical knowledge(in the fore of physical knowledgeand hurancapital) amongdifferent geographical locations for the purpose of adaptation and use in new functions and production units.
It corprises all those activities in which a supplier sakes technologies available, and a recipient adopts them to his own
needs. For the recipient to do so successfully, usually the transfer of hard technologies (rachinery, factories and equiprent]
must be accospanied by cosplesentary soft ones (expertise, organisation and ranagenent sethods, uaintenance capacities and
adequate l&D) to allow the adaptation and integration of techniques. This irplies that the transfer lust be rade in an
appropriate econoric environrent in which the necessary infrastructures are in place, needed sopplies are available, and
market and profitability perspectives are adequate.
The greatest benefit derived fro8 technology transfer is the saving in tile and san hours spent in discovering
technologies that are already known. Developing countries, in order to attain socio-econoric progress, need to select
technologies appropriate to their factor proportions, level of developmentand developeent strategies. This could be either a
transfer of interrediate srall-scale or modernlarge-scale capital intensive technologies. Eowever,after irportation of
an appropriate technology, measures that require constant attention, such as skill and humandeveloprent, training, R&D,etc.,
uust be undertakento develop further the abilitp to produce newtechnologies leading to eventual self-reliance. Otherwisethe
inported technologywill soon becose outroded and will be of less value to the host country.
The creation of an indigenous renewable energy technology capability in developing countries involves sose form of
technology transfer. Yell planned strategy is essential in rasisising the benefits of technology transfer.

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