Scientific and technical capability are crucial to the economic and industrial development of developing countries (Rama Rao, 1997; Song, 1997; Suttmeier, 1997; also Section 2.3 in Chapter 2 and Sections 4.3 and 4.12 in Chapter 4 discuss the role of R&D). Technology transfer is defined as the transfer and development of "hardware" and "software". The "software" may include scientific and engineering knowledge as well as managerial and operational skills. Direct investment in industrial R&D may be included in the investment figures discussed above. In industrialised countries the private sector is often the largest investor in R&D. However, in developing and transitional countries, the public sector is the largest contributor, e.g. in China (Song, 1997), the Czech Republic (Moldan, 1997) and India (Rama Rao, 1997; Tripathy, 1997). Although difficult to estimate, the R&D funds allocated to environmental technology are only a small part of the total industrial technology R&D budget. Energy R&D budgets of OECD countries have declined in past decades (Williams and Goldemberg, 1995). Less than 6% of the total energy R&D budget in IEA countries was spent on energy efficiency (incl. industrial technology), whereas most is allocated to nuclear technology R&D (IEA, 1994). Scientific knowledge and R&D are getting more and more internationally oriented, as evidenced by foreign direct investment in R&D. It is estimated that foreign corporation spending in the U.S. in 1994 amounted to 15 B$, or 15% of total industrial R&D spending (Florida, 1997). Generally, FDI in R&D is comparatively small, mostly directed to support local industry. However, FDI in R&D is growing rapidly, particularly in the U.S., and also the focus is changing to developing new products, obtaining information on local scientific developments and access to local human capital (Florida, 1997). International R&D collaboration can be an effective means of technology transfer (see, for example, Case Study 4, Chapter 16), and recent initiatives like the Climate Technology Initiative (CTI) can enhance this collaboration. Preliminary analysis seems to suggest that newly industrialised countries seem to increase the generation of scientific and technological knowledge within their countries, although the majority of knowledge is still generated in the industrialised world (Amsden and Mourshed, 1997). The type of scientific output and knowledge may vary by country. In India, in 1994 to 1995, total research expenditure is estimated to have been 0.8% of GDP (Rama Rao, 1997) and in China it was estimated at 0.5% in 1995 (Song, 1997), while total spending in science and technology development was estimated at 1.5% of GDP. The figures are slightly lower than the years before. However, no accurate information is available on the global role of and investments in scientific knowledge in developing countries.
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