- The Technological Capability Building Economics Essay - Texas Essay Editors | Economics Essays - Texas Essay Editors | Economics Essays

Essay Writing Service

The Technological Capability Building Economics Essay

Technological capability building (TCB) is the process in which development of the abilities to adopt and create new technologies are enhanced (Bhalla, 1996). The technology developed becomes an asset in responding appropriately to the changes in global environment where technology has become an important driving force of the major economies. TCB creates an environment where superior and efficient productivity of labor is realized. This increased production per person is partly due to the technique promoted by TCB in division of labor and specialization that enables one person to effectively manage the work of many laborers. When the technique is applied over a long period of time the art of division of labor to the most effective units is perfected and a big base of capital is built. During the process progressive technological innovations are discovered and adopted increasing the levels of production and income (Kim, 1980). There are numerous studies explaining how this growth in output is achieved and there is a consensus that economic growth is a product of progressive improvements in the efficiency of the labor force used in the production. This paper evaluates the TCB process as a learning process and examines whether the governments in the developing countries should intervene in promoting this process in their developing agenda.

Technological Capability Building (TCB) as a process of learning

TCB is seen as a learning process that enables a country in importing and adopting appropriate technology effectively. The learning feature of TCB involves different components most significant being the aspect of developing human capital. This process ensures that the labor force progressively learns on how to identify areas of need, make appropriate selection of required tools and machinery, install and maintain them. With time the process would enable the work force to be able to design their own technology and manufacture the required tools and machinery. Though the workers may not necessarily be inventors they should learn how to implement the borrowed technology effectively. For instance the extensive technological adoption and implementation in Singapore and South Korea, lend to successful industrial advancement that can be emulated by the developing countries (Huq, 1998).

Another important component in TCB process is research and development an aspect that is seen as the basis of technological advancement. A country’s system and culture of innovation is centered on the level of effort towards research and development. The countries in Asia and South America for example, have carried out intensive research and development on new technologies in Agriculture a fact that has enabled the Green Revolution to register success. The social rate of return from research and development is normally as high as 40% in the agriculture sector (Huq, 1998). However, the developing countries invest very little in research and development in manufacturing industry to have significant results.

Two approaches in the developing countries can be adopted in evaluating the progress of learning in their TCB process.

2.1 Evaluation Based on Technology Adoption

This approach focuses on examining the implementation of the imported technologies by examining the extent in which they have been adopted. The success in this approach is realized when the borrowed technology is not only adopted successfully by the first recipients but when thy successfully help others to do the same (Chitrakar, 1994). The transfer of the imported technology to third parties is a clear prove that the first recipients have fully internalized the concepts surrounding the technology. In the process of transferring the learnt technology to others, a firm may develop new ways of improving the technology and making it more appropriate to their specific needs.

2.2 Evaluation Based on Capabilities

This kind of evaluation focuses on the acquired capabilities to judge the effect of the learning process induced by the TCB process. First the production capabilities are examined in which the productive efficiency and adaptations to changes in the market are rated. Secondly the investment capability of the firm is examined to establish the new facilities adopted that are appropriate in expanding the old ones. Then the innovation capability of the firm is examined to establish the level in which it can create new technologies and use them appropriately in developing tailor made products and services. Finally the linkage capability can be tested to examine the level in which an enterprise is able to transfer the learnt technology to others and develop it from advanced skills either sourced externally or internally. This level of learning ensures both productive efficiency and aligning of sustainable industrial structures that are important in overall development.

It must however be noted that the measuring of the levels of success in TCB learning process is a complex affair. The development of appropriate technological capabilities is also an expensive affair which takes a long time to accomplish (Chitrakar, 1994). The success experienced in the East Asian countries is however setting an example to adopting technological aspects that are appropriate and accessible to other developing countries. For example the countries can adopt technologies in running labor intensive industries like textiles and progress to technologies for capital intensive industries such as steel fabrication and eventually to technologies of complex industries like ship building. In such a scenario a lot of learning is done at every stage as the capital base and income for laborers grows (Bhalla, 1996). Adoption of advanced technology induces learning when implemented for a long time giving the developing countries the capabilities to produce products and export them. As seen in the table below such exports by some of the developing countries can be higher than those recorded by the developed countries when computed as percentage of the total manufactured goods.

Source: (Bhalla, 1996).

Government Interventions on Technological Capability Building

Most developing countries are often under pressure from their donor agencies to liberalize their economies. The ability for such countries to compete favorably in the modern global markets is highly dependent on their ability to set up and maintain an effective production culture. However being importers of relevant production technologies, these countries are unable to develop monopoly profit making ventures and therefore remain disadvantaged in the competitive market. Their exports are based on old technologies that are out for competition from other developing countries and competing firms. This scenario lowers their profit margins making it difficult to build up enough capital to move to higher stages of production. The low profits also reduce the levels of research and development of their products and technologies making such firms to over-rely on their technology suppliers (Bhalla, 1996).

With the pressure on liberalization direct intervention by the state on technological capability building on particular firms is usually met with a lot of opposition. Many players in the international market believe that state’s intervention on trade in the developing countries is the root cause of the poor performance in trade in these regions (Chitrakar, 1994). There is therefore unanimous support for any attempt to force such governments to keep off trading activities in their countries. It can therefore be seen that the current wave is for a technological capability building process that is purely driven by the market forces. The market environment would enable the process to establish efficient equilibrium without the involvement of the state machineries (Bhalla, 1996). It is also notable that government involvement in free enterprise models of market as exercised in the developed countries is not necessary.

There is strong relationship between the country’s per capita income and the levels of research and development that are achievable in that country. The indirect involvement of the state machineries will therefore continue to be felt as it commits to carry out necessary research on particular sensitive technological fields. The funding for such research is drawn from the Gross Domestic Product (GDP) and its percentage depends on the commitment of the government in the TCB process. A strong commitment from India’s government through proper coordination of the state actions regarding technological development has registered a rapid growth in its industrial status within a short time. According to Bhalla, (1996) the success of policies is realized when the demand and supply forces of technology are carefully considered within a trading system. Nepal is a good example of developing countries where the government policy in science and technology is fragmented leaving very little support in research and development of new technologies (Kim, 1980). Such disregard of technological policy by the state machineries may as well affect other important policy areas like education, industries, and tariffs.

It is therefore paramount to clearly differentiate between trade and technological policies. Liberalization aspects that have been adopted by many countries can be seen more as a trade issue than a technological issue. The forces brought about by market imperfections in the developing countries can be so severe on technological advancements if they are left at the mercies of market forces, in the full absence of appropriate technological policies. Moreover, government failure in most of the developing countries is largely associated with failed industrial policies. There is therefore a need to promote the formulation of policies that will set the ground for technological advancement in these countries (Chitrakar, 1994). The governments should also take the center stage in coordinating and funding relevant researches and development in direct focus of the growth of the entire economy. South Korea is an example in this case where the State took up campaigns to promote development of indigenous technology setting the necessary science and technology infrastructure, funding research projects and encouraging the private companies to carry out their own research programs (Huq, 1998).


It is clear that Technological Capability Building is a process of learning that is perfected by the time that enterprises take implementing it. The learning process is not complete until the firm can be able to transfer the technology learnt to others. The technological advancement in developing countries is greatly hampered by the vicious cycle of dependence on technology suppliers who monopolizes new technologies and releases the old technologies to be scrambled over by the poor states. This makes the competition of their products stiff lowering their prices and hence realizing very low profit hardly enough to finance their own technological researches.

Though the liberalization of industries in the developing world is a welcome move, it is important that the states take their position in developing technology policies and structures that are friendly to Technological Capability Building. While the state involvement in correcting underproduction is necessary, it does not mean that the state be directly engaged in production.

Most Used Categories

EssayHub’s Community of Professional Tutors & Editors
Tutoring Service, EssayHub
Professional Essay Writers for Hire
Essay Writing Service, EssayPro
Professional Custom
Professional Custom Essay Writing Services
In need of qualified essay help online or professional assistance with your research paper?
Browsing the web for a reliable custom writing service to give you a hand with college assignment?
Out of time and require quick and moreover effective support with your term paper or dissertation?