Institutions and Technology Transfer

This is the fourth in a series of postings that I began with a posting on the World Bank's report titled Global Economic Prospects 2008: Technology Diffusion in the Developing World. I continued with "A Thought About Wealth and Technological Diversity". The third in the series was "Still More on Wealth, Markets and Technological Diversity."

I wrote about the creation of common markets and my idea that the growth of larger market areas has lead to a more complex web of technology. Of course, the elaboration of the transportation and communications infrastructure has made possible the larger market sizes, which in turn is related to the developments in transportation and communications technology.

I want to think more about other institutions.

The Industrial Revolution of the 19th century and the Information Revolution both involved periods of globalization. The Industrial Revolution took place in the context of colonial empires which were dismantled in the 20th century. On the other hand, the 20th century saw the proliferation of thousands of intergovernmental organizations. The webs of colonial institutions in the Industrial Revolution and of intergovernmental institutions in the Information Revolution have had major impacts on the international flows of technology. Think about the World Trade Organization and the various UN decentralized agencies such as WHO, FAO, and UNIDO, as well as the International Financial Institutions such as the World Bank.

The rise of multinational corporations in the 20th century is another factor which has influenced the rate of technology development and flows among countries. Of course firms producing goods in poor areas of the world for markets in rich areas is not a new phenomenon. However, it seems new to me to see multinational firms moving their high technology production lines away from their home countries to Asia is a new phenomenon. Newer still is the movement of research and engineering functions to developing nations. It seems obvious that these multinational firms are a new institutional form with major implications for the location of technological capacities.