Technology Transfer and Cooperation are recognized as key elements for the successful implementation of all three pillars of the CBD. Through adoption of advanced technologies, Parties may reduce reliance on primary or extractive industries in favour of environmentally sustainable economic activities. Tech Transfer can also assist indigenous communities to engage in the global economy while remaining in their home communities and may also allow the sharing of benefits relating to genetic resources and traditional knowledge through the development of new products. These things and much more are possible with development of an enabling environment for technology transfer.
Those CBD Parties that have succeeded in establishing a positive climate for technology transfer demonstrate a durable commitment to science and science infrastructure, provide a strong rule-of-law culture, and implement economic policies that reward innovation in the marketplace.
Understanding the drivers More generally, developing and developed countries alike have relied on technology transfer, e.g. the dissemination and diffusion of new technologies, to promote social and economic benefits of innovation. Increasingly, this involves the sharing of know-how and business methods, as much or more than machinery or hardware. In the 21st century, one of the biggest drivers of technology transfer in the developing world has been engagement in the global economy through active partnerships between governments, research institutes/universities, and regional or multinational companies. In addition, individuals who have moved abroad to pursue education or R&D industry careers have proven to be great assets, resulting in ‘brain-gain’ for developing countries who have developed communication networks with their diaspora populations.
The Convention is renewing its efforts to promote technology transfer both within and among Parties, with an emphasis on developing country members. At the second meeting of the Ad Hoc Open-ended Working Group on Review of Implementation of the Convention (WGRI-2), I overheard a comment somewhat along the lines of: “will the CBD finally mandate technology transfer and make it happen?” This reflects the confusion over what technology transfer is, and how it occurs.
So what really drives technology transfer? And more fundamentally, what is it we are trying to measure in even benchmarking whether it is taking place, increasing or decreasing?
In the second half of the 20th century, governments sought technology transfer from industry as a condition of allowing foreign investment. Technology transfer was commonly viewed as the establishment of a manufacturing site or other ‘bricks and mortar’ facilities that would create jobs for growing populations. And governments created these so-called ‘local working’ requirements as a condition of respecting intellectual property or even allowing a company to enter the local market. Other requirements included the obligation to enter into a partnership with a local partner and not to allow 100% foreign ownership of the enterprise. All of these policies were well-intended and meant to improve the technology base of the developing country. However, the outcomes were not positive, and countries with these policies did not, on average, grow faster economically or provide greater social benefits to their populations.
This was for two reasons: first, the growth in value of intangible assets and related technology transfer has far out-paced the importance of any individual manufacturing plant or hardware in spurring development of local industries and knowledge-based sectors that can bring sustainable economic growth. It is estimated that over the last twenty years alone, the growth of intangible assets in the U.S. economy has increased to 70% of all assets — far outstripping so-called ‘hard assets’ including real estate, manufacturing equipment and commodities.
Second, and equally importantly, while governments can succeed in placing local-working and other stumbling blocks in front of foreign (and indigenous) industry, technology transfer needs an enabling, cooperative environment to thrive. Technology transfer now is as much about the ‘know-how’ and trade secrets associated with patented technologies as hardware or infrastructure. It isn’t something sitting in a room or behind a wall, but instead represents the value of collaborative working relationships, e.g. scientific exchange, innovative business methods, and the like.
It is also not one-sided, and may involve a multinational company learning about a unique local natural resource that may hold the key to development of a novel product for international sale. Technology transfer may take years of collaboration and cooperation and is unlikely to succeed via government fiat. And those governments that have succeeded in creating economic and social benefits through the assimilation of new technologies have created enabling environments to encourage technology transfer among public institutions and private companies.
Three legs, all necessary So, what does it mean to establish an enabling environment for technology transfer and cooperation? There are three areas in which governments can pro-actively engage to create this enabling environment and all are of critical importance to ultimate success: (1) a durable government commitment to science education, research, and related infrastructure; (2) broad rule-of-law protections, including enforceability of contracts and strong IP protections; and (3) reliance on markets as the engine of growth for technology transfer. These three pillars of technology transfer are like the three legs of a stool: all are necessary, and none of them is sufficient by itself.
When there is a durable government commitment, authorities provide the core building blocks for technological advancement, both in terms of physical infrastructure, education, and primary and early applied science research dollars, either through donor resources or government revenues. This investment in education and training (both at home and abroad, at secondary and university levels) creates an enabling environment for science and technology.
Rule-of-law protections give individuals and corporations alike the ability to enter into enforceable agreements or contracts with others; they promise predictable and timely judicial remedies in case these agreements or contracts are breached. Intellectual property protection is another rule-of-law protection recognized not just by OECD-level countries but also by a growing number of developing countries around the world as critical to provide incentives for investment and growth.
Market-oriented policies And increasingly, CBD developing country members are turning towards market-oriented policies to encourage the risk taking needed to create new enterprises and promote technology transfer at home. I can not tell you how many times I have met with senior officials in ministries of industry and trade only to be told that country X realizes that the government is not the appropriate engine of growth for new technologies, and they need to attract investment and build more sustainable economic growth based on market-friendly policies. Even in the United States of America, technology transfer stagnated in the cold-war period. In the mid-20th century, the U.S. Government weakened the environment for technology transfer by placing restrictive conditions on access to federally funded research, and did not grant exclusive rights to publicly funded inventions. Although this policy was well-intended, the impact was to undermine any incentive for an individual to invest his or her assets in the commercialization of a technology that would be available freely to third parties. This resulted, in the mid to late-1970s, in economic stagnation and fears that the USA was losing its technology edge, resulting in a number of proposals to improve the situation.
The Bayh-Dole Act of 1980 created exclusive rights for commercialization of federally funded research, and also included special incentives for small and medium enterprises and the requirement that public interest benchmarks also be met in the process of commercialization. And following the Bayh-Dole Act and a 1980 land-mark U.S. Supreme Court case providing patent protection for biotechnology inventions, the United States witnessed an explosion of innovation, resulting in important contributions with new technologies in the areas of health, agriculture, and even highway safety.
Three examples I would like to highlight three geographically diverse examples where technology transfer has played a direct role in promoting the goals of the Convention.
As a result of a decade-long (and continuing) programme of economic and social reforms, Jordan has created a highly-enabling environment for knowledge-based sectors, including information and communication technologies (ICT) and pharmaceutical clinical research and development that rely both on market oriented policies and strong rule-of-law and Intellectual Property protections. Until very recently, Jordan’s number one industry and source of foreign exchange was the extraction of minerals from the Dead Sea. This was both environmentally unsustainable and socially unproductive, providing few opportunities for technological advancement and movement up the value chain.
Arguably, the greatest single benefit to Jordan has been the role of multinational companies that have transferred critical ‘doing-business’ technologies in the areas of information technology and contract clinical research. As a result, the World Intellectual Property Organization now recognizes Jordan as the centre of the knowledge economy among Arab states in the region. In addition, Jordan had developed a successful, innovative medical-tourism sector, providing traditional medicinal treatments to tourists in state-of-the-art spa facilities near the Dead Sea and other natural wonders.
In Brazil, Natura provides an example of the importance of allowing market forces to guide technology transfer. Natura is an indigenous Brazilian company with sales in excess of USD 1bn annually and a regional leader in the development and marketing of cosmetics, personal hygiene products and perfumes based on natural products in collaboration with indigenous peoples. Natura’s Ekos product line, launched in 2001, includes products developed from traditional plants found in the Amazonian Rainforest and based on Brazilian biodiversity in collaboration with indigenous communities in Brazil. For example, the breu Branco resin is used by Natura in its Perfume do Brasil. This is one of the first ABS contractual agreements between a company and a traditional community in Brazil, as approved in 2004 by the Generic Heritage Management Council (CGEN).
Since that time, Natura reports that it has entered into ABS agreements with a total of 20 traditional communities in Brazil. Benefits provided by Natura include a focus on technology transfer, capacity building, improved livelihood, skills and education, as well as support for local conservation efforts. Indigenous communities have benefited by gaining new skills, a greater understanding of sustainable economic activities relating to biodiverse genetic resources, and are participating in new economic relationships with Natura that contribute to greater social stability in their communities.
China demonstrates the value of a durable government commitment to science. In the late 20th century, there was substantial cause for concern that important medicinal plants and other herbs in China would be lost to extinction. Instead, the Chinese Government has made a durable investment in the protection and study of these traditional plants through the Institute of Medicinal Plant Development (IMPLAD). The Institute’s systematic study of traditional medicines from Chinese herbs and plant extracts for commercial development supports related clinical research relating to Traditional Chinese Medicine (TCM). IMPLAD activities include ethnography to rescue plants from the threat of extinction, cultivation of medicinal plants to establish germplasm — and gene-pool for development of medicines, R&D, lll lll patenting, and commercial development and production of drugs along the Western model. IMPLAD’s accomplishments to date include joint ventures with three commercial companies in China, three branch institutes in sub-tropical southern China, and more than 1,000 papers and 30 monographs.
The commercialization of Chinese medicinal herbs could provide significantly more meaningful incentives for the conservation and sustainable use of genetic resources. In addition to Chinese and foreign government investment in TCM, major multinational biopharmaceutical companies, like Novartis, are also investing in clinical research in China on TCM, relying on strong intellectual property protections to ensure a return on their investment.
These and many other technology success stories have been made possible through durable government commitments to create an enabling environment through support for basic science and related infrastructure, strong rule-of-law and intellectual property protections, and reliance on market forces to direct technology transfer activities. In each case, companies have played a key role in providing technological ‘know-how’ to local communities and promoting the retention of local populations.
Successful technology-transfer models also offer incentives to national diasporas in the United States and Europe to contribute to home-grown success stories. In the 21st century digital technologies can enable a new connectedness of individual across borders, promoting ‘virtual brain-gain’ to bring technology transfer and development benefits regardless of the physical location of expatriates.
Now, more than ever, as the CBD launches a new technology transfer Programme of Work, there are important opportunities to learn from these and other technology transfer success in developing countries in varied regions and with different social and economic structures.
Susan Kling Finston (
susan@finstonconsulting.com) is Founder, Finston Consulting, LLC and Board Member, BayhDole25, Inc., she also serves as Executive Director to the
American BioIndustry Alliance (ABIA).
See also:
BayHole25.org