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Analysis on Technology Transfer from Global Trading and Related Measuring Indication ZHANG Rugen, LI Chunmei Heilongjiang Institute of Science and Technology, P.R.China, 150027 [email protected] Abstract: Mainly researches effects of technology transfer of the international trade and establishes the model of based on catching up theory, analyzing the tremendous influence of opening up level to the outside of a country on technology transfer, points out the promoting functions of international trade to technological progress, at last puts forwards a few proposals to accelerate technological progress of our China. Keywords: Technology transfer international trade 1 Introduction With an upsurge of economic globalization, trade liberalization and liberalization of international capital flowing are increasing. Scientific and technological advancement and the rapid development of knowledge-based economy make international competition more and more perform for the technical level and the accumulation of knowledge competition. Technology transfer has become the most important impetus of contemporary economic growth. 1.1Technology diffusion The process of technology diffusion is that advanced technologies shift from the high potential energy position to the low potential energy position. The developed countries usually diffuse outward technology and gain the economic interest through the below ways 1 Output the materials, products, equipments of high technological content, namely carry on international merchandise trade. 2 Direct foreign investment. 3 Directly transfer and sell the new technology and the new craft, namely carry on an international technology trade. : () () () 1.2Technology spill-over effects The transmission way of technology spill-over effects mainly includes: 1 Demonstrational and training effect. In the preparatory phase of international trade, in order to facilitate the import side to understand the performance of products, reduce the information asymmetry and cognitive differences to commodity, the output will show a certain extent the characteristics of their products stating quality, features, functions and using ways of their new products, resulting in some loss of technological innovation. 2 Foreign and local businesses associate front and back. That is, domestic enterprises as the identity of the supplier (backward linkages) form a long-term trading relationship with customers of foreign high-quality products(forward association), thus receiving a more comprehensive technical support of foreign investors, as well as after-sales service and technical training. Which are of great significance for domestic enterprises to improve production process, improve the production technology level, and strengthen the development of new products. 3 Technical imitation. While advanced countries will transmit new products to developing countries, the importing country has been brought about the motive of imitating production, and the nature of imitating production is a process of learning new technologies and new techniques, in the process, technology began to overflow, importing country's technological level has improved. () () () 977 ( 4 )Technical competitive effects. When facing the competition of investing enterprise of the multinational corporation, the original enterprise in leading position or even monopolistic position in domestic in order to maintain market competitiveness will rapidly increase productivity, enhance the management level, reduce the production cost, improve product quality, strengthen the technology progress and Upgrade its technology level. Competitive pressures arising from transnational corporations are an important impetus to upgrade the technological level of China's telecommunications equipment, automobiles, engineering machinery, power station equipment, and many other industry-funded enterprises. 5 Learning-by-doing effect. The majority of transnational corporations in China produces in China, foreign-related processing enterprises imports foreign key raw materials and equipments for the assembly, exploring, understanding and absorbing foreign knowledge and technical know-how, in the processing, and gradually mastering the ability to produce these intermediate products to continuously improve the product domestically. The products are sold abroad in the process, foreign consumers can have feedback to performance of products, so that enterprises can improve product structure according to market demand, increase product sales, while promote innovation and learn world new technologies. 6 Contagion effect. Practice has proved that the more open country , there will be greater chance to learn advanced technology from other countries , the U.S. economist Findlay explained this phenomenon with "contagion theory". The theory compares technology to infectious diseases: it can spread far and more people come into contact ,the more quick speed of the spread .Fast. contacts and exchanges With the inventor or the receiver of technological innovation, technological innovation can be effectively copied. () () 2 The model of technology transfer theory 2.1 The model of catching up theory by Veblen and Gerschenkron Assume that there is the developed country A and the developing country B. TA (t) and TB (t) separately represent the technical level of the two countries in the t time. KF (t) and KD (t) represent quantity of overseas national capital and domestic capital about B .we define, x= TB (t ) K (t ) X (t ) + M ( t ) ;y = F ;z = TA (t ) K D (t ) G D P (t ) (technical ratio two countries) (foreign capital dependency of B country) (foreign trade dependency of B country) The theory is that: as long as the technology of the backward countries reach a certain level, then technical level disparities between the two countries are greater, then the speed of the international technology transfer is greater. The FDI and trade is an important channel for technology spillover. Therefore, we can give the following expressions, ε = f ( x, y , z ) And η = g ( x, y ) df df df dg dg < 0; > 0; > 0; < 0; <0 dx dy dz dx dy Assume Z as exogenous variable in this system, When ε ′ = 0 and η ′ = 0 System achieve a balanced state, , ( 0 = f x, y , z ( ) 0 = g x, y TT represents curve ) ε ′ = 0 (Technology transfer speed line), we have: 978 0 = f ( x, y, z ) Differential, 0 = f x dx + f y dy + f z dz The partial derivative of y with respect to x is: f ∂y =− x >0 fy ∂x That TT is an upward inclined curve, KK represents curve η = 0 FDI growth rate line , we can have: ( ) 0 = g ( x, y ) Differential, 0 = g x dx + g y dy The partial derivative of y with respect to x is: g dy =− x <0 dx gy That KK curve is a downward inclined curve. TT curve intersect KK curve at the point of equilibrium. In a balanced state, the technology gap between A and B country is a constant; The proportion of foreign capital and domestic capital is also a constant. However, because df > 0 , the equilibrium value x is increasing function of the z. Namely the trade dz may make technology differences further narrow, but will not make a technical difference reversed. foreign capital degree of dependency ( ) KK TT D E C Figure 2-1: capital flows, trade and technology transfer (relative technical ratio) 2.2 The impact of the different open policy of the backward countries on technology progress Following we analyze that the impact of the different open policy of the backward countries on technology progress. 2.2.1. Closed economy If an economy B is completely closed and relatively backward technology, foreign direct investment is zero, thus Y is equal to zero, then B lies in a point of X-axis coordinates, as C spot. This economic technological progress is entirely endogenous, without any international technology transfer and technology diffusion, so "the delayed advantage " also does not exist. Since the technical accumulation degree of the backward countries is lower than that of the advanced countries, the growth rate of its technology TB is less than the growth rate of technology TA in advanced countries and relative 979 technology X of the backward economy will reduce gradually. In Figure 5-1 ,that represents that C spot move to O, and the technological gap between the backward countries and the advanced countries is getting greater. 2.2.2. From a closed economy to an open economy When the economy B change from close to open, because of the technological gap, foreign direct investment of the economy B began to appear and gradually increase. FDI and international trade is the main channel for technology transfer, and the speed of technology transfer and proliferation is in direct proportion to foreign capital dependence and foreign trade dependence, therefore, at the beginning, the speed of technology transfer is slow and the rate of the growth of technology progress of B country are still below that of A country. In figure 2-1, the spots of the relative technology and foreign capital dependence of B country on the curve from the C to D. Those which need the specially explanation are that , when the country B move from C spot to D spot, although the relative technology X is in reduction, technical level of the country B grow faster than that in closed time because of its technological innovation and technology transfer of international trade. 2.2.3. The economy tends to be completely open When FDI increases to a certain extent, namely in figure 5-1 when foreign capital dependence of the country B surpasses the D spot, then the value of X and Y also increase at the same time, from the spots on curve DE gradually converge at equilibrium E. A high level of openness of the countries and regions can elaborate "the delayed advantage", through international trade study and absorbing the more advanced technology of advanced countries. At this time, the rate of technology progress of the backward countries will be faster than that in advanced countries. 1970s and 1980s, the "four little dragons in Asia" adopted an open economic policy and actively introduced advanced technology of developed countries, attracted a large number of foreign direct investment. During this period, the technological progress and economic growth of the "four little dragons in Asia" were very fast. 2.2.4. Balanced state At equilibrium E, technology gap between the backward countries and the advanced is a constant. The two countries gain technological progress by the same speed. The foreign capital dependence will also be a constant. That is, no matter how open a country, it is limited for the country to achieve technological progress relying on international technology transfer. 2.2.5. The impact of foreign trade dependence on equilibrium In figure 2-2, foreign trade dependence will affect the position of curve TT, increases of foreign trade dependence will make TT curve move right. In addition, the foreign trade dependence degree does not change the location of KK. E equilibrium move to E ' equilibrium and the relatively balanced technology will increase. Y KK TT TT/ E E/ X O Figure 2-2: capital flows, trade and technology transfer The above analysis shows that the international technology transfer can narrow the technology gap between developed countries and backward countries, but they can not catch up even not over the 980 technical level of developed countries. So, does the backward country forever falls behind? Of course not, because we have not considered the self-technology innovation of the backward countries in above discussions. Technology progress includes the endogenous technology progress and the exogenous technology progress. The former may be called self-type technology progress and the latter may be called acquired technology progress. If a country can organically unify two kinds of technology progress, it Is likely to quickly catch up with and surpass the advanced world level. 3 Indication Our country couldn’t invest move R & D finance cause our nation’s fund are constraint. So, we are not good at technology innovation. We should make good use of international trade to promote technology progress. 3.1Enhance foreign trade, make good use of technology Economist Helpman had investigated the diffuse of technology R&D in the world, showed that: when US R&D charge increase 1%, the average product rate in developing country will increase 0.04; when the R&D charge invest Europe and Japan increase 1%, the average product rate in developing country will increase 0.02% and 0.01%. So, we should make bigger progress in foreign trade system, enlarge the power and scope of the enterprise export, let enterprise take part in international competition directly, and make good use of technology diffuse and overcharge to accelerate technology progress. 3.2 Attract multi-national corporation which has big potential in technology develop to invest in china Government can use industrial Preferential policy, such as market permission, fax reduction, to inspire multi-national company of computer, communication, bio-technology, medical engineer, new-material invest in china. The product and technology of these industries is important for cultivating the new industry and developing our traditional industry. And these technology is un-mature, have a bright future in progress, the multi-national company will input move human resource capital. 3.3 Accelerate technology diffuse and overcharge of the multi-national First, government can construct training fund according to the difference of industry, and then improve the capital contribution of multi-national. Then, government can make the requirement of the local ingredient product according to the difference of industry, and rule the strict foreign capital balance. This policy can make multi-national company transform foreign supplier to domestic country, then improve the level of production directly. 3.4 Combine the technology innovation and impress together We should make good use of international trade and let if be a channel for technology impress and overcharge, and import, learn, digest foreign cutting-edge technology positively, then innovate at this foundation, spare no effort to gain more benefit with technology progress 3.5 Combine technology and comparative advantage On the one hand, we should pay attention to technology innovation. On the other, we should use high-tech achievement to reform traditional labor-intensive industry, improve technology level and additional value. We should combine comparative advantage and technology progress, on the base of use domestic country advantage, we can make rapid progress through technology innovation, system reformation, structure revolution method. 4 Conclusion International trade and foreign direct investment is the main channels of international technology transfer and the spillover. One of the main purposes for China to carry out Opening-up policy is to 981 introduce advanced foreign technologies, equipment and management experience and organizational capacity. Researching and imitating on imported advanced products can inspire the sense of innovation of enterprises. During export process, the foreign consumer demand will force enterprises to improve product performance and product quality. Foreign direct investment brings about exemplary role directly and competition. While contacting with foreign counterparts, the enterprises will obtain useful information and technology, technology spillover is more likely. 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