In getting highly qualified personnel and recommending options according to the industry needs.

Consulting summarizes some of the key global trends which are making it more difficult for developing countries to replicate the fast growth experience of the developing countries.

The main argument of this is that technology is an increasingly important element of globalization and of competitiveness and that the acceleration in the rate of technological change and the pre-requisites necessary to participate effectively in globalization are making it more difficult for many developing countries to compete.

  1. Innovation in the context of developing countries

Innovation in the context of developing countries is not so much a matter of pushing back the frontier of global knowledge, but more the challenge of facilitating the first use of new technology in the domestic context.

Innovations should be considered broadly as improved products, processes, and business or organizational models. Development strategists ought to think not only of R&D and the creation of knowledge, but also attend to the details of its acquisition, adaptation, dissemination, and use in diversified local settings. It is useful to review what is involved in each of these five activities as this taxonomy will help structure the analysis of the most appropriate policies, institutions and capabilities necessary to increase innovation in the broad sense suggested here.

  1. The creation, acquisition, adaptation, dissemination, and use of knowledge in developing countries

The creation of knowledge is the process of inventive activity. It is usually the result of explicit research and development effort normally carried out by scientists and engineers. The key institutions involved in the creation of knowledge are public R&D laboratories, universities, and private R&D centres.

However, not all creation of knowledge is the result of formal R&D effort.

Sometimes inventions come from the experience of production, or through informal trial and error; sometimes they come from serendipitous insight.

Notably, the multiple origination of knowledge raises a measurement problem because not all R&D activity results in an invention, and not all inventions come from formal R&D activity. Nonetheless, various proxies are available to track knowledge, R&D effort, and their interconnections. Accordingly, the most standard proxies will be applied as needed in the following discussion.

For countries behind the technological frontier, acquisition of existing knowledge may be expected to yield higher increases in productivity than would flow from a similar scale investment in R&D or other efforts to push back the technological frontier.

There are many means of technology transfer for private goods. Direct foreign investment, licensing, technical assistance, importation of technology as embodied in capital goods, components or products, copying and reverse engineering, and foreign study are the key channels. Also, more generally, easy communication allows access to technical information in printed or electronic form, especially including what can be accessed through the internet. Proprietary technology is usually sold or transferred on a contractual basis. But even proprietary technology may leak out depending on the strength of the Intellectual Property Rights (IPR) regime and its enforcement, and the reverse engineering capacity of users.

However, despite significant proprietary constraints, much of the most useful technology is in the public domain or is owned by governments who could potentially put it in the public domain. As such, the key challenges for

Technology, Globalization, and International Competitiveness 33 development strategy are less about the creation and acquisition process and more often related to the challenges of delivering technology and knowledge to those who need it.

Technologies often must undergo adaptation to be applicable in specific local conditions. This need is particularly clear in agriculture, where new technologies such as hybrid seeds are very sensitive to specific local conditions.

To meet local needs, further research and experimentation is often required to adapt general agriculture solutions to specific temperature, soil, and water conditions as well as local pests. To a lesser extent, even industrial technologies have to be adapted to local conditions: access to raw materials, sources of power, labour traditions, various standards, and climate are just some of the local idiosyncrasies that leave their mark on industry. And yet, often the skills necessary to adapt technologies to local conditions are not too dissimilar from those necessary to create new technology. Similar to knowledge creation, adaptation also requires research and experimentation.

In the private sector, the dissemination of knowledge happens when enterprises expand, sell, or transfer their knowledge, or when other firms or organizations imitate or replicate the knowledge others have created. The efficient dissemination of knowledge requires appropriate mechanisms to educate potential users in the benefits of the related technology, often a process inclusive of broad educational advance, not just the provision of technical information.

Much dissemination also occurs through the sale of new machinery or other inputs that embody a new technology. There are also specialized institutions, such as agricultural research and extension systems, productivity organizations, and consulting firms that specialize in helping disseminate technologies. These efforts usually involve explicit training, demonstration projects, or technical assistance on how to use the technology.

To use new technologies usually requires literacy as well as specialized training. Also, beyond education, using new technology often requires access to complementary inputs and supporting industries, and access to finance for new equipment, inputs or purchase of the technology license. When it involves starting a new business, it is important to have a supportive regulatory environment, namely one without excessive red tape, but which at the same time has a strong rule of law, respects private property, and facilitates the enforcement of contracts. At the broadest level, knowledge use also requires macroeconomic stability and good governance. In short, it requires a well developed economic and institutional regime.

Countries have followed different strategies in how they created, acquired, adapted, disseminated or used knowledge for their development. Most countries that are behind the global technological frontier can take advantage of acquiring knowledge that already exists elsewhere in the world and adapting it for use in their local settings. This is most often done through trade and through formal technology transfer agreements. Foreign technology owners are not always willing to license their cutting edge technology.

Some countries explicitly try to attract foreign investors to bring their advanced foreign technology to their countries, while others do not. In addition, not all countries that have put in place foreign investment promotion policies have met with success. Countries have sometimes preferred to develop their own technology, rather than to rely (primarily) on foreign technology.

COSSR will attempt to draw some conclusions on what works under what circumstances before considering some of the new elements of global competition which are affecting what may be feasible in the new, more demanding context.

  1. Global overview of changing competitiveness

Before focusing on the strategies of the developing countries that have had the highest rates of growth in the last 50 years, it is useful to have a somewhat broader perspective of the relative performance of different regions.

This is done using two different sets of data where nominal exchange rates are used and purchasing power parity (PPP) exchange rates are also used.