EXAMINE THE ROLE OF TECHNOLOGY IN FOSTERING THE

GLOBALIZATION

Introduction:

It has been observed that time lags between countries in respect of introduction or

absorption of technologies. As there are many countries, including India where the TV

arrived very late, though color TV were rampant in the advanced and developing

countries but still when the first telecast started in India, it was black and white telecast.

The time lags in the introduction of technologies even result in some products and also

affected advertising industry and product promotion.

Often, it is noticed that there is a time lag between countries in the adoption and

diffusion of technologies. It is well known fact that developing countries are laggard the

developed countries. Even the technology absorption among the developed countries is

not similar.

However, it has been diminished in several cases.

There are also many other factors which helped in ameliorate the marketability of

products such as food processing, packaging, preservation, transportation etc.

Appropriate technology and technology adaptation

Environment plays a vital for the adaptation of technology as the technology suitable in

one environment may not be appropriate in another. This can be because of the

differences in natural factors such as soil conditions, weather conditions, income levels,

customer characteristics etc.

Schumacher’s concept says that the latest or highly sophisticated technology may not be

the appropriate technology in several environments; this is known as the concept of

appropriate technology.

Thus, the sophisticated capital-intensive technologies in use in the developed countries are

not acceptable in some sectors in several of the developing countries.

An Indian company, Mekins Agro Products Ltd., with designs from International Crop

Research Institute for Semi Arid Tropics (ICRISAT), Hyderabad, introduced easy to

maintain bullock-drawn agriculture equipment in India, which has been exporting to

various developing countries.

Therefore, technological appropriateness can vary between different environments. Many

situations require modifications to technology which helps companies to perform better.

Impact of technology on Globalization:

Technological advances have tremendously fostered globalization. Technology has in fact

been a very important facilitating factor of globalization.

Several technological developments become a compelling reason for internationalization.

Technological break-throughs are substantially increasing the scale economies and the

market scale required to break even.

Global sourcing was encouraged not only by trade liberalization but also by technological

developments which reduced transport costs. The advent of containerization and super

tonnage cargo ships drastically reduced transport costs.

Technology monopoly, like possession of patented technology, encourages

internationalization because the firm can exploit the respective demand without any

competition.

The pace of globalization has been accelerated by several enabling technologies. The

technological revolution in several spheres, like transport and communication, has given a

great impetus to globalization by its tremendous contribution to the reduction of the

disadvantages of natural barriers like distance and cost. The IT revolution has made an

enormous contribution to the emergence of the global village. The developments in the

field of air cargo transportation have fostered globalization by enabling quick and safe

transportation of sensitive goods (like perishables and goods subject to quick changes in

fashion/taste). Developments of containerization and refrigeration have also been of high

significance. The steep fall in the cost of transportation and communication has

considerably accelerated the pace of globalization. All these have contributed to the

drastic transformation of the logistical and global distribution of the value chain system.

The world wide web has a stupendous impact on globalization.

Advances in information technology are revolutionalising the modus operandi of marketing

and the business system. The business horizon is humming with buzzwords such as

internet, world wide web (www), cyberspace, information superhighways, etc. which are

changing customers; order receiving and processing; and networking and integrating

business system. The revolutionary changes being ushered in by the internet are indeed

exciting.

“Technology experts are anticipating that the internet and the www would become the

centre of commercial universe. Electronic markets will eliminate the need for

intermediaries and that direct contact between manufacturer and customer will bring down

the cost of transaction and the cost of the final product. The internet has the potential to

evolve into an interconnected electronic market place bringing buyers and sellers together

to facilitate commercial exchanges. The internet is fast becoming an important new

channel for commerce in a range of business-much faster than anyone who would have

predicted apparent; by allowing for direct ubiquitous links to anyone, anywhere, the

internat allows companies to build interactive relationships with consumers and suppliers

and deliver new products and services at low cost.”

Revolutionary changes in information technology have been sweeping across the global

business. Developments in telecommunications and IT have reduced the barriers to time

and place in any part of the globe. It is now possible for the customers and suppliers

to transact business at any time in any part of the globe. The net has changed the face

and pace of business to business marketing and retailing.

Transfer of Technology:

Transfer of technology is a very important factor which fosters international business.

This will take the form of a technology transfer transaction, which may or may not be a

legally binding contract, but which will involve the communication, by the transferor, of

the relevant knowledge to the recipient.

Broadly, there are two forms of TT, viz., internalized and externalized forms of technology

transfer. Internalized forms refers to investment associated TT, where control resides with

the technology transferor, the transferor, normally, holding majority or full equity

ownership. Externalized forms refers to all other forms, such as joint ventures with local

control, licensing, strategic alliance and international subcontracting.

Issues in transfer of Technology:

Cost, appropriateness, dependence and obsolescence the four important issues associated

with the transfer of technology.

In many cases, the developing countries obtain foreign technology at unreasonably high

prices. In a number of cases of foreign direct investment associated with technology

transfer, the net outflow of capital by way of dividend, interest, royalties and technical

fees has been found to be much higher than the corresponding inflow.

The appropriateness of the foreign technology to the physical, economic and social

conditions of the developing countries is an important aspect to be considered in

technology transfer. Further, heavy reliance on foreign technology may lead to

technological dependence. It is pointed out that the import of modern sophisticated

technology has tended to displace the traditional indigenous technology which have been

improved under a different set of policies. It has also been observed that there is a

tendency to transfer outdated technology to the developing countries. Thus, they would

not enjoy the advantage of the latest technology and would still technologically lag

behind. It is unfortunate that the owners of modem technology view the developing

countries as a means to salvage technology that is obsolescent in the advanced countries,

even when they possess more advanced technology.

Promotion and Regulation:

Despite the problem or shortcomings of foreign technology, it is widely recognized that,

if properly regulated and promoted, it can play a positive role, particularly in the

technologically backward developing countries. The governments of India and a number

of other countries have, therefore, taken a number of regulatory and promotional

measures to take advantages of foreign technology without sacrificing national interests.

Regulatory measure:- a number of regulatory measures have been taken by different

countries to ensure that the technology chosen is the best available, appropriate to

domestic conditions and that indiscriminate and unnecessary import of foreign technology

is not undertaken. The following are the aspects of technology commonly regulated.

The extent and terms of equity participation-these are generally determined by the

priorities of the technology-using industry in the nation’s economy, supply

condition of the technology and its type and nature.

Phasing of domestic manufacturing where foreign technology is employed many

governments, including that of India, insisted upon indigenization in a phased

manner.

Payment terms and foreign exchange outflow most governments take measures to

ensure that disproportionately high payments are not paid for any technology.

Restriction were imposed also on dividend payments and pricing.

Restrictive terms in the agreement technology imports with highly restrictive terms

on the importing parties are not generally favoured.

Promotional measures:- to take full advantage of the positive role of foreign

technology, it is necessary to take certain promotional measures. These include:

Assessing technological requirements of various sectors and identifying areas where

foreign technology is required.

Dissemination of information in foreign countries regarding foreign investment

potentials and scope for technical collaboration in the domestic economy.

Provision of advisory services to Indian entrepreneurs in respect of foreign

technology including the technique and process of technology transfers.

References:

International business: text and cases by Francis Cherunilam (Page no. 112, 113,

114, 115, 116, 117, 118, 119, 120)