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The Role of Trade in Technology Transfer

Seyed Hossein Mirjalili

MPRA Paper from University Library of Munich, Germany

Abstract: Every economy can be divided into four fundamental components: resource endowments, individual preferences, institutions, and technology. The role of technology is to determine how resources are utilized in the production of goods and services. Technology is the central element of economic growth. Differences in technology across countries are among the key determinants of national income levels. Technology possesses the characteristics of a public good, as its use does not diminish with increased consumption once it has been created. A relatively new branch of economics, the economics of technology, examines both the economic analysis of technological change and the economic transformations driven by technology. While scientific research can contribute to the advancement of a nation’s technological capacity, most countries are unable to bear the heavy costs of research and development, and many also lack a national system of innovation. Consequently, technology transfer emerges as an alternative, primarily facilitated through the trade of goods and services. Through reverse engineering, one can move from examining a product to designing it. The technological knowledge embedded in a product travels with it, and therefore trade serves as a vehicle for the diffusion of technology. For this reason, provisions on technology transfer are explicitly included in various agreements of the World Trade Organization (WTO).

Keywords: Trade; Technology transfer; World Trade Organization. (search for similar items in EconPapers)
JEL-codes: F10 O33 (search for similar items in EconPapers)
Date: 2007-08-08, Revised 2008-02-12
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Published in Commercial Surveys Bimonthly 27.5(2008): pp. 26-32

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