If your industrial policy is not getting international technology, it isn't working

The more I read about international technology transfer, the more important it seems for economic development. My weekend reading was a review of policies towards technology transfer in developing countries. Procedures like encouraging licensing of technologies to local firms, permitting foreign involvement in firms to fifty percent, and promoting joint ventures are plausibly good means of accelerating transfers to local firms subject to certain conditions, and have been widely practised in East Asian tiger economies.

The supporting empirical work, generally undertaken at company level, is still emerging and nuanced, but indicates that international involvement aimed at getting technology can increase productivity noticeably. The policy works best if local education is good, domestic companies can form to take advantage of spillovers, and intellectual property rights are strong enough that multinational companies are not frightened off.

Coupled with macroeconomic evidence, some posted here on Great Lakes Economics, that technology improvement affects growth to a similar degree as capital and educational accumulation, the message to developing countries is: if your industrial policy is not getting international technology, it isn't working.