"A country (or an individual firm) that draws on technologies developed elsewhere is spared the expense of ‘reinventing the wheel.’ But making effective use of imported technologies— even if only direct copying is required— often requires a stock of indigenous skill that cannot always be easily found."

• Technologies shared between countries can be used for very different purposes
  1. China— Gun Powder— used medicinally for centuries— passed on to Europe
  2. Europe— within short time using it for cannons and firearms
• When Technology is transferred from one country to another, modifications are most likely required for Technology to work.... Thus it isn’t the exact same Technology
  1. Japan and Steel Production— Japanese tried to apply Dutch steel production but
  2. Had to make many modifications. In particular, the special characteristics
  3. Of Japanese coal and iron ore required special modifications

HOWEVER The assumption that Technologies of developed nations are essential to economic and Technological modernization of undeveloped countries is problematic

• Not all countries have equal resources (human and material)
• Even if Technologies can be transferred the results are not always desirable
• Pakistan— introduction of tractor— replaces worker— 40% unemployment rate
• Workers migrate to cities— dire poverty results— per acre crop yields hardly increased at all.

1. U.S. (pop. 290 million)-- one car/ 1.5 people
2. China (pop. 1.5 billion)-- one car/ 500 people

• Technology of one country may not makes good economic sense for another country
• Poorer countries need Technologies that create human jobs, not replace human jobs
• Technologies are often chosen by small power groups that represent their interests rather than the interests of the country.

Business Firms and Technological Diffusion

• Diffusion similar to that which occurs from country to country
• Factors that influence diffusion:
  1. Relative advantages over existing Technology
  2. Compatibility w/ existing values of firm
  3. Ease/difficulty of understanding and applying new Technology
  4. Ease of experimentation with new Technology
  5. Extent to which positive results appear
• People with knowledge of Technology are KEY to diffusion of Technology
• As with countries, Technology that works in one environment may fail in another

Economics Motives and Technological Transfer

• Expectation of cost and benefits strongly influences speed at which Technology is diffused
• Mechanical Reaper— pre reaper— grain harvested manually— LABOR INTENSIVE
• Mechanical Reaper introduced (1830's) but diffused very slowly until 1850's
• 1850's--Crimean War— increase of grain prices— motivation to produce grain
• More grain— bigger farms— Mechanical reaper makes sense to buy
• Qualifications for Mechanical Reaper— may not have been widely used because it required refinement in order to be of practical use to farmer

The "Not Invented Here" (NIH) Syndrome

• Risky nature of Technological innovation blocks the diffusion of new Technologies
• "The status quo is a hell of a lot easier than making changes." Henry Ford

"The exclusive possession of a particular Technology can confer great advantages on those that have it."

1. Venice— 16 cent. Glass makers— assassins sent out to kill expatriate glass makers
2. England— 1719— illegal for skilled artisans to emigrate
3. Present Day— strict rules against exporting technologies

• Despite regulations, diffusion of technology difficult to regulate

• Patents confer exclusive use of an invention and are, obviously, highly desired
• Patents can stifle Technological development
• Patents can help diffuse Technological knowledge— patent makes public the knowledge
• Ideally, patents make invention known and available to public rather that just inventor
• Patent isn’t an iron-clad protection, merely a "license to sue"
• Patents often quickly out-moded by Technological advance
• Advantages/disadvantages of patent difficult weigh over the other