Borrowing of technology

“Borrowing of technology” is understood as the borrowing of scientific and technical achievements from the advance countries by the following countries to help the following countries leveling of the gap and catch up the level of development, even is beyond the countries went ahead. In the world, countries like the U.S., former Soviet Union, Japan and some East Asian countries like Korea, Taiwan had been referred to as successful examples in the application of borrowing technology forms (such as reserve engineering, copying, or buying a license) to the successful implementation of modernization or industrialization in each country. In the advantages of borrowing of the technology, we can see as follows:

First, we can see that borrowing of technology can make latecomer countries quickly get new technologies and by the form of "reverse engineering" or "copying", latecomer countries can further research in order to put the technology to reach to new heights, making the technology became their own, to serve the goals beyond from other countries. We can take a few examples from Tunzelmannn's book:

- In case of the United States: the United States was the technology borrower such as steam, electricity, steel technology from Britain and other European countries. After that, the United States had succeeded in attracting scientific human resource from the flow of immigrants as well as strongly investment in research and application of "reverse engineering", to develop borrowed technology and turning them into "special of America”. Then with their achievements, the United States has become the industrial powers in the world in the early 20th century.

- In case of the Soviet Union: after conducting five-year plans, the Soviet Union accomplished industrialization. After the end of World War II, the Soviet Union was quick to use the technology obtained from Western allies before and the scientific achievements derive from Germany to go ahead and become a superpower. A typical example (from a lecture on “the History of Science” of Mr.Gustav) that after getting the technology of manufacturing V2 missiles from Germany, the Soviet Union had successfully in applying this technology to create the missiles can launch satellites in to orbit (Sputnik), opening the development of the universe industry.

Second, borrowing of technology has also helped to latecomer countries (with a backward level) can save costs and avoid risks in research so that make them can quickly catch up with the advanced technology of the world, to shorten the time of industrialization compared with the previous industrialization countries:

- Tunzelmann's book mentions that Japan has used "reverse engineering" method and "catch up" (as in the straight on the electrification and skip the conversion of energy sources such as steam power) to reach  the development level of the U.S. and other western countries, creating a "miracle growth" in the period 1950 to 1980.

- Following Japan, East Asian countries such as Korea and Taiwan those were with the backward starting point have chosen policies to attract FDI and through that to study technology from developed countries. Besides, by buying foreign license to deploy new technology in their countries, those countries have also speed up the process of industrialization and nowadays Korea and Taiwan are classified as newly industrialized countries (NICs)

However, borrowing of technology also has the disadvantage. Countries have no appropriate borrowing of technology policy will easily encounter the following problems:

- The cost of importing foreign technology when purchasing a license to be allowed to deploy the technology (in case of Taiwan that had to import more and more - Tunzelmann's book)

- The borrowed technology may not consistent with the borrowing country (because the technology had formed through R & D processes in the origin country of the technology).  Thus, the borrowing country could get risks such as not deploying the technology or technological factors require that the borrowing country was not available (for the import of Japanese textiles technology - Tunzelmann's book)

- Dependence on foreign technology and does not promote scientific research capacity in the country.

Conclusion

Borrowing of technology is necessary for latecomer countries in development, to catch up with developed countries in the world. I think the technology borrowing countries (especially the developing countries like Vietnam) should have a right policy, to one side catch up with the development level of the world, and other side to become autonomy and creativity in science and technology activities. That can help the technology borrowing countries to shorten the time of industrialization and modernization period.

The role of Science, Technology and Innovation (STI) in Economic Growth

Economics and STI.

We know that economic growth is the subject of economics research. To explain the economic growth, the economists in each period were always trying to find out the factors that decision to the growth.

- During the period of the classical economists, to explain the social and economic development of that period, the economists have referred to the emergence of a "capital" and "capitalism" and their role in investment in production, leading to the impulse for the development of society. Also during this period, Karl Marx had to be "the first of the classical thinkers who stressed Technological change as a driving force in history" (tutorial lecture by Professor Claes).

- By that time the neoclassical economics, the economists emphasize on the inputs of production such as "Land", "Capital" and "Labour" and that the alternative between "Capital" and " Labour" in the Cobb-Douglas production function is the basis for growth. A factor that today is known as the activities of STI had not been grouped as factors explaining economic growth. Until the time when the results of the test by R.Solow and later by E.Denison were announced, people understand that the activities of STI has a significant role for economic growth, although that contribution is very difficult to measure (led by information from a lecture by Professor Claes and Tunzelmann’s book).

- When the evolutionary economics occurs, the activities of STI have been determined that they have actually contributed significantly to economic growth. Based on inspiration from the concept of "Creative Destruction" in the previous period of J.Schumpeter, the economist in this school considered that the companies and firms always have to conduct innovation to overcome the selection of the market, then continue to exist and develop (information from a lecture by Professor Claes and Tunzelmann’s book). For companies and firms have little or no innovation often, they will encounter many challenges of the market so prone to failure and destruction.

The economic crisis and the role of STI

I want to use the information in the lecture by Professor Claes and Tunzelmann’s book on the findings of N.Kondratiev (Long Wave Theories) and J.Schumpeter (Creative Destruction) to talk about the link between economic growth after each period of crisis with STI activities.

Accordingly, an economic cycle for the N.Kondratiev was extended from 50 to 60 years, called the Long Waves, go through the four phases: prosperity, recession, depression and recovery. Absorb the theories of N.Kondratiev, J.Schumpeter discovered "counter waves", ie in each cycle when the economy fell into depression phase, the development of STI activities becomes very strongly. J.Schumpeter called that development is "Creative Destruction" and this innovation brings new things (new products, new management and production methods, new markets or new resources etc...), promoting investment activities, making the economy more vibrant active to go out of the crisis and return to growth period.

In the history of the world economy, the following markers can be considered to illustrate for the findings of N.Kondratiev and J.Schumpeter:

- In 1771: the industrial revolution.

- In 1829: the textile industry and the railways.

- In 1875: the period of the chemical industry, electricity and steel.

- In 1908: the period of the oil, automobile and mass production.

-In 1971: the period of information technology.

(Quoted by http://en.wikipedia.org/wiki/Kondratiev_wave).

Conclusions.

We can see that STI activities inextricably linked to economic growth. The economists are the people who tested this includes economists that initially did not consider factors such as science and technology is one of the reasons for the economic growth.

        Economics is a field of activity is always highly competitive, with the input of resources is always limited. To survive and development, economic institutions always need to capture growth through efficient use of resource inputs, providing outputs which are innovative and competitive. The investment in STI activities is a solution to that problem. At the national level, the identification and appropriate investment for STI activities will promote the growth of key economic sectors, accompanied by the growth of entire economies, thereby sustain development for that country. Besides, we know that in every period of economic crisis, the activities of the STI is the hope to create a new dynamism for the economy to overcome the depression. Clearly, the role of STI activities for economic growth is huge. Today, we know that the development of STI activities in each country is the one of the criteria to assess the level of economic development in those countries.

Truong Chi