5 - Transfer of Technology

Summary

THE EXPERIENCE OF THE ASEAN - 3

Singapore's experience with industrialization, as well as the more recent experiences of Malaysia and Thailand, has proven that an MNC-led industrialization strategy can lead to rapid ascent up the technology ladder. This experience disproves the Marxist-inspired development economics of the 1950s and 1960s which harped on the dangers of exploitation by MNCs and a dependency on foreign agents. What the early development economists failed to foresee was the global nature of MNC operations and the tremendous opportunities provided by the international division of labour.

Although it cannot be denied that the ASEAN-3 are dependent on MNCs to generate growth, this dependency has proven to be mutually beneficial. While MNCs benefit from low-cost production bases, the host countries have found that, through MNCs, they have ready access to capital resources, technological know-how, up-to-date products, modern managerial and technical expertise, and global markets. This chapter analyses the manner and extent to which this was achieved in the ASEAN-3. Apart from examining the flow of technology from the more advanced countries to the host ASEAN countries, an assessment will also be made of the intra-ASEAN technology flows based on the experience of the MNCs studied.

Technology is defined here in its broadest sense to include knowledge of modern scientific methods that can be applied to the production and distribution of goods and services. Defined this way, technology is embodied both in the hardware of machinery and equipment and in the “software”, that is, the people who operate, maintain, adapt and develop these machines.

A number of studies on technology transfer in ASEAN have been done by Nathabhol, Osman-Rani et al., Ng et al. and Chng et al. Chng et al. lists three distinct components of technology that can be transferred:

1. 1. physical assets, such as plant, machinery and equipment;

2. 2. information, both technical and commercial, relating to such matters as process know-how; choice of technology; engineering design and plant construction; organization and operating methods; quality control; and market characteristics;

3. 3. human skills, especially those possessed by specialized professionals and engineers.