Methodological and Technological issues in Technology Transfer

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2.2.7 Other Investment and Assistance Flows

Export credit agencies
Governments often facilitate private technology sales by making available export credits, providing various types of risk guarantees, and playing a market intermediation role through trade missions and export promotion programmes. The focus of such efforts, however, is often promoting exports rather than transferring technology to the recipient country in the broad sense used in this Report. Some observers have questioned whether export promotion programmes serve the goal of facilitating transfer of climate-friendly technology, or whether they are actually counterproductive in this regard.

Export Credit Agencies (ECAs) use a number of financial instruments to give national industries advantages: export credits, project financing, risk guarantees and insurance (see also Section 5.2.3 and Box 5.1). These financial supports are provided at terms that are more favourable than those provided by purely commercial banks or investment houses. Although ECAs have traditionally focused on export credits, they are increasingly providing services that support foreign direct investment (long-term project financing and investment guarantees or insurance).

On average ECA flows in the mid-1990s reached an average of $110 to $120 billion annually (World Bank, 1998b). This represents more than twice the average flows of official development assistance reaching developing countries during this period ($50 billion annually on average), and about three times the annual average for concessional financing provided by multilateral development banks, about $40 billion (World Bank, 1998b). Furthermore, over 80 per cent of ECA financing to developing countries is provided by the world's seven major industrialised economies (the G-7, or Canada, France, Germany, Italy, Japan, the United Kingdom and the United States). In parallel fashion, the destinations of ECA financing is concentrated in just 10 developing countries, and among these the top two (Indonesia and China) account for more than half of the total (Maurer and Bhandari, 2000).

A study based on information from a commercial database indicates that fully two-thirds of private financing going to developing countries between 1994 and the first quarter of 1999 ($217 billion) was concentrated in investments and exports that can be considered to be carbon or energy-intensive, such as upstream and downstream oil and gas development, fossil fuelled power generation, heavy infrastructure, energy-intensive manufacturing, and aircraft (Maurer and Bhandari, 2000). Of this, ECAs accounted for 20 per cent, or $44 billion, of the direct financing or guarantees. More significantly, however, ECAs played some financing role in just under half of the financing ($103 billion) for these energy-intensive investments and exports. ECAs, therefore, have a significant leveraging effect and their participation in a project or trade deal draws in significant private capital (Maurer and Bhandari, 2000).

NGO flows
Many non-governmental organisations, foundations, and industry associations support technology transfer activities to developing countries, particularly through efforts that aim to develop capacity or demonstrate technologies (see also Section 4.4). These range from small, not-for-profit development oriented organisations to industry consortia that have as members large utilities and technology providers.

Grants by NGOs to developing countries have stayed fairly constant during the last decade, ranging between US$5 billion and US$6 billion per year since 1990 (OECD, 1999c). Not all of these support technology transfer efforts, however, but they may be significant in the least developed countries. Little data on the distribution of grants by NGOs appears to be available. NGOs are important in that they often help community based organisations in developing countries obtain support through foundation grants and ODA.

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