Methodological and Technological issues in Technology Transfer

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Annex 1-2. Criteria for Effective Technology Transfer

For technology transfer to be considered effective, several pre-conditions must first be met. The following criteria and categorisation emanate from box 2 of the IPCC Technical Paper I (IPCC, 1996), and from the preparatory process of this special report. The sectoral chapters and the case studies have by and large adopted these criteria as indicated in section 6.2, in their respective analyses of the material presented. The criteria can be grouped into four categories, namely, (1) GHG and environmentally-related; (ii) economic and socially-related; (iii) administrative, institutional and politically-related; and (iv) process-related:

1. GHG and Other Environmental Criteria

GHG reduction potential
Tons of carbon equivalent; percent of IS92a baseline and range (IS92c-e).

Other environmental considerations

Percentage change in emissions of other gases/particulates; biodiversity, soil conservation, watershed management, indoor air quality, etc.

2. Economic and Social Criteria

Cost effectiveness

From the buyer's perspective, especially for enterprises in the private sector with incentives to maximise profits or increase shareholder value, the benefits of a technology must exceed its acquisition costs. The perceived risk of the technology may play an important part in the benefit-cost calculation. For example, companies usually employ risk weighting to adjust the discount rate that they use for calculating costs and benefits associated with specific projects.

Suppliers of technology will only be willing to sell their technology if they perceive that the price received for it exceeds the costs of supply. For sellers of proprietary technology, the lack of patent protection may make this condition difficult to meet. In these situations, the suppliers of technology may believe that there is a risk of their technology being copied without payment, resulting in an inability of the supplier to recoup the costs incurred in research, development, commercialisation and profit. Suppliers must perceive the conditions associated with the terms of transfer to provide them with sufficient incentive to sell the technology.

Adequate financing
There must be adequate financing available to ensure the transfer of technology. The financing can be in the form of commercial bank loans, capital provided through the equity markets, or any one of a number of new and innovative financing schemes. In addition, financing could be provided by public sector organisations such as countries' ODA, the GEF, or the IFC.

Once the terms of transfer have been agreed upon and financing has been identified, the success of the transfer can be measured using a series of performance indicators. Factors that could be evaluated include:

Project-level considerations
Capital and operating costs, opportunity costs, incremental costs must be estimated and compared to alternative options.

Macroeconomic considerations

GDP change, jobs created or lost, effects on inflation or interest rates, implications for long-term development, foreign exchange and trade, other economic benefits or drawbacks.

Equity considerations
Differential impacts on countries, income groups or future generations.

3. Administrative, Institutional and Political Criteria

Information about technology
Buyers require accurate, balanced, and comprehensive information about the technologies they are considering acquiring. Information costs money. The costs to generate useful and useable information about technologies can be costly but, once developed and in the public domain, helps to reduce the buyer's costs. While difficult to measure its effectiveness, the wider dissemination of information about technologies can assist in the more rapid transfer of technology. Dissemination about the various pathways for transfer could also help reduce the costs of negotiating terms of transfer.

Access to technology
Buyers must have access to technology. There are various impediments that sometimes limit the buyers' access. In some instances, the obstacles may involve patent restrictions, whereas in others it could be the high level of technical know-how and costs that limit the diffusion of the technology. While in others market restrictions can be important barriers.

Administrative burden
Institutional capabilities to undertake necessary information collection, monitoring, enforcement, permitting, etc.

Political considerations
Capacity to pass through political and bureaucratic processes and sustain political support; consistency with other public policies.

Adaptability to different geographical and socio-economic-cultural settings.

4. Process-related Criteria

Market penetration
Rate of indigenisation; geographic extent of penetration and impacts on other technologies and ancillary benefits

Long term institutional capacity building

Monitoring and evaluation of continuous delivery of services provided by technology and adequate financial performance

Leakages that reduce the impact of programme or measure

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