Human Capital, Governance and the Transfer of Technology (W-4)

Human Capital, Governance and the Transfer of Technology (W-4)

Publication details

  • Sunday | 01 Nov, 1992
  • Nadeem Ul Haque
  • Working Papers
  • 32
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The failure of economic and social development in the developing countries resides in the inconsistent policies, failure to take up and fulfil responsibility, inefficiency and  encouraged waste by the leaders. This paper suggests that transfer of technology in this declining environment would facilitate and encourage economic development. It examines what technology is and also considers the recent dominant trends in technological development. Since transfer implies an act that has to be conducted by some agent, the next issue is of who should effect the said transfer? The answer to this question involves a consideration of the role of government in either directly helping in the transfer or in inducing such a transfer. A by-product of this issue is how the multinational and the indigenous private sector could interact to achieve a transfer of technology. If looked at from this standpoint, how does this issue differ from that of the related issue of foreign direct investment which is going to be an issue of critical importance in the coming years. Given the importance of attracting foreign direct investment, the next consideration should be the economic, political and social factors that could help attract foreign direct investment into the country. Finally, it is argued that, in essence, transfer of technology may be no more than a strong social and policy emphasis on the development of human capital. The paper closes with a discussion of the appropriate policy for the development of human capital.

As the fervour of nationalism in the newly independent colonies died down without yielding the promised rapid economic and social development, there was a scampering for alternative explanations. The tendency was to place the blame squarely on the external environment as the young nations and their leaders continued to exploit the legacy of colonialism to evade their own responsibilities and failures. Thus, through the sixties and seventies, transfer of technology, import substitution, self-reliance, the North-South dialogue and various other such areas that concentrated on blaming the lack of progress on factors other than domestic policy failures were in vogue. Such thinking ignored the fact that developing economies allowed all manner of institution to decline, encouraged waste, inefficiency and rent seeking, maintained inconsistent economic policies, incurred exorbitant defence expenditures, and virtually allowed their human capital to decline, especially if quality considerations are borne in mind.  Somehow, in this environment of social, political and economic decline, transfer of technology would allow the forces of economic development to be unleashed.

Experience, however, proved otherwise and by the end of the seventies, observers had begun to record that "what seemed at first to be technological obstacles to development frequently turn out on closer examination to have been policy failures" (Weiss 1979). An important element of this paper is to attempt a determination of what policy can and cannot accomplish in this area.

Since this subject was in vogue, considerable technological as well as political changes have taken place in the light of which perhaps the issue ought to be re-examined. For example while the growth of electronics, telecommunication and computers has revolutionized our notion of technology, and demise of communism as an extant political system has changed our attitudes to the functioning of the economy and the role of the government in the economy. It is with these factors in mind that this paper has been written.