The aim of this paper is to set the task of evaluating and optimizing processes of the international technology transfer. Author analyzes main approaches to assessment of the technology transfer effectiveness and the offered architectural approach to solving of this problem

Omelyanenko, Vitaliy

English

GISAP (Global International Scientific Analytical Project): Scientific Journal

54
International technology transfer (ITT) is a comprehensive term covering mechanisms for shifting information across 
borders and its effective diffusion into recipient economies[5; 
6]. Thus, it refers to numerous complex processes, ranging from 
innovation and international marketing of technology to its ab-
sorption and imitation. Included in these processes are technol-
ogy, trade, and investment policies that can affect the terms of 
access to knowledge. Policy making in this area is especially 
complex and needs careful consideration, both by individual 
countries and at the multilateral level.
ITT is a comprehensive term covering mechanisms for 
shifting information across borders and its effective diffusion 
into recipient economies. Technology transfer is an area of in-
terest not just to business, economists, and technologists but 
also to other disciplines (Zhao and Reisman, 1992), so it has 
multidisciplinary base. 
For economists, as argued by Mansfi eld (1975), the focus 
is on economic growth and achievement of economic goals. 
However, from the perspective of business and technologists 
the main focus of technology transfer is to improve the compet-
itive advantage of fi rms through the enhancement of customer 
value (Ramanathan, 2001). It is envisaged that, through the 
improvement of competitive advantage, a fi rm and its partners 
collaborating in the technology transfer will gain fi nancial and 
other strategic benefi ts.
In the initial ITT equilibrium between two countries, the 
terms of trade settle somewhere within the range set by the 
comparative cost ratios in the two countries, ratios that would 
refl ect autarky prices: ai denote the labor cost of producing the 
ith commodity at home, ai* the labor cost per unit produced 
abroad. 
The sizes of the two labor forces relative to productivities 
are such that in the trading equilibrium the terms of trade settle 
at a value strictly between the autarky ratios so that each coun-
try is completely specialized in the commodity in which it pos-
sesses a comparative advantage. 
The two production blocks in Figure 1 illustrate a two-
country equilibrium. The origin for the home country’s pro-
duction block is shown by 0 in the southeast corner, and the 
origin for the foreign country is denoted by 0* in the north-
west corner. The offer curve for the home country is 0TCH, 
and that for the foreign country is 0TC*F. As illustrated, im-
port demand in each country is elastic, but that is not neces-
sary (although we assume the market equilibrium is stable). 
Equilibrium terms of trade are shown by the slope of the 
λ-ray from the trading origin, 0T.
Figure 1  – Initial state
The effects of ITT are divided into two base components: 
- technology transfer from national companies;
- technology transfer from foreign companies (companies 
with direct investments and importers).
In each of them there are three levels of technological 
excellence: 
 – entire industry;
 – technological direction where there is a world-class 
design;
 – separate technology with the world level, but relative to 
the industry in which the country is lagging behind the world 
level (eg, biotechnology).
Traditional approach assesses technology transfer as a 
knowledge transfer between research laboratories and industry 
and is infl uenced by four main components[3]: 
a) level of collectivization or/and globalization; 
b) availability of new facts (knowledge); 
c) personnel skills and abilities to adapt, use, improve and 
innovate;
d) availability of advanced machines and equipment.
The results indicated that culture, physical environment, 
and geographical location all have signifi cant effects on tech-
nology transfer; necessary accommodations for these adapting 
factors then become vital to the success of technology transfer 
and will strongly facilitate the effectiveness of the technology. 
We will check this hypothesis in the Ukrainian conditions.
The aim of this paper is to set the task of evaluating and optimizing the processes of international 
technology transfer. This paper analyzes the main approaches to assessing the effectiveness of technology 
transfer and the proposed architectural approach to solving this problem.
Keywords: international technology transfer, model, estimation, effi ciency.
Целью данной работы является постановка задачи оценки и оптимизации процессов междуна-
родного трансфера технологий. В работе проанализированы основные подходы к оценке эффектив-
ности трансфера технологий и предложен авторский подход к решению этой задачи.
Ключевые слова: международный трансфер технологий, модель, эффективность, оценка.
EVALUATION OF EFFICIENCY OF THE INTERNATIONAL 
TECHNOLOGY TRANSFER PROCESSES
Omelyanenko V., 
PhD-student
Sumy State 
University, 
Ukraine
Participant of the 
Conference,
National 
championship 
in scientifi c 
analytics
55
Despite the importance of qualitative criteria, we believe 
that it is necessary to develop criteria for evaluating the eco-
nomic effi ciency of the processes of ITT.
The priority for us is a turn-based assessment of the stages 
of transfer (the life cycle of a transfer), as it allows you to:
1) to forecast technological development;
2) realistically assess the existing capacity;
3) to produce “dynamic” technology assessment.
The “Life Cycle Approach for Planning and Implementing 
a Technology Transfer Project” (Table 1) is based on the stage-
gate structure developed by Jagoda and Ramanathan (2005) for 
developing a systematic approach for planning and managing 
ITT. 
We propose to use a matrix to assess the potential effective-
ness of technologies for making decisions about appropriate-
ness of transfer. The matrix has the next form (fi gure 2).
Y-axis represents the characteristics of the technology com-
pared to existing in the country, the x-axis shows the results of 
implementing the technology.
As a result, we can consider the following main situations:
(3) progressive technology transfer: advanced technology – 
high effi ciency: situation of high technology transfer, leading to 
signifi cant social and economic benefi ts in the recipient country 
(transfer of effi ciency);
(5) neutral technology transfer: same technology – similar 
result: a situation when foreign technology is transferred, 
similar to the existing scientifi c and technical base of the state 
(the situation of poor communication and ineffective internal 
technology transfer);
(7) regressive technology transfer: backward technology 
– a poor outcome: a situation when the transfer doesn`t fulfi ll 
its basic function and leads to a qualitative technological 
development of countries (the situation considered in the 
hypothesis of “pollution haven” when implemented transfer 
of environmentally hazardous technologies in developing 
countries riches in a variety of productive resources).
 It should be noted that the achievement of the situation 
(3) requires a considerable effort, since the use of foreign 
technology provides for a “technological gap” due to the fact 
that the successful technology use is the availability of the 
necessary related technologies at the same level (for example – 
the role of engineering in support of all other sectors of national 
economy). It results that “innovation chain transfer” situation, 
when, together with major technology updates the entire 
process chain in the recipient country. Otherwise technology 
can not bring effect, pledged by international agreement.
The “Two Gap” Theory [1] describes constraints limiting 
a developing country’s ability to gain technology. First, 
developing countries are unable to save enough capital to create 
and maintain their own technological base to promote growth. 
Second, the cost of importing technology far exceeds export 
revenues.
Review and analysis of other situations (fi gure 1) reveals a 
problem or an adjustment of innovation policy.
Processes for ITT we can offer the following formula of 
it’s effi ciency:
( )∑∑
==
⋅=
n
j
ji
m
i
i NmsE
11
,        (1)
sj – technology transfer coeffi cient of the stage of innovation 
i; mi – coeffi cient of the effi ciency of the innovative process of 
creating of additional value of stage i; Nj – amount of innovation 
product j which was made on the basis of technology at the 
stage i.
Estimation of value added can be done as:
¦
 
  
N
i
iAV AVAVE
1
max)max( ,     (2)
where AV is criteria for additional value in sectors. 
According to this ITT processes should be aimed at 
maximizing the value added.
IL is criteria for innovational level of ITT and is an 
indicator of science-intensive sectors, we can use the index 
of knowledge-intensity sectors, calculated as the ratio of 
expenditure on science and technology purchase through 
Table 1 – The Life Cycle Approach for Planning and Implementing Technology Transfer
Stage Gate
Stage 1: Identifying CVD enhancing technologies
Stage 2: Focused technology search
Stage 3: Negotiation
Stage 4: Preparing a TT project implementation plan
Stage 5: Implementing technology transfer
Stage 6: Technology transfer impact assessment
Gate 1: Confi rming identifi ed technologies
Gate 2: Technology and supplier selection
Gate 3: Finalizing and approving the TT agreement
Gate 4: Approving the implementation plan
Gate 5: Implementation audit
Gate 6: Developing guidelines for a new project
2 3
4 5 6
987
low neutral high
Result of the introduction 
Po
te
nt
ia
l o
f t
ec
hn
ol
og
y 
lo
w
ne
ut
ra
l
hi
gh
Figure 2 – Evaluation of international technology transfer
56
international technological exchange (import) to the volume of 
industrial production in the industry in the area.
Consider a single multinational fi rm owning a technology 
that may be transferred to a recipient location through FDI or 
licensing with an unaffi liated fi rm. These options incur a fi xed 
transfer cost of the following form:
 Fj=Pj+Cj(k)                 (3)
where j = L, F denotes licensing or FDI. 
Fixed costs are comprised of two distinctive 
components: 
1) production-related costs, denoted P, such as investment 
in equipment, altering production lines, and establishing 
distribution channels. While these differ between FDI and 
licensing contracts, they are independent of the strength of 
intellectual property rights, indexed by k;
2) costs of contractual elements transferring knowledge, 
denoted C. 
So 0)( 
dk
kdC j for j = F, L, where an increase in k indicates 
a more rigorous patent regime. However, it is also plausible that 
the rate at which these contractual costs decline with k is faster 
for licensing contracts: 
dk
kdC
dk
kdC LF )()(  .
Patent transfer counts between priority offi ce and duplicate 
offi ce are extracted from the PATSTAT database while trade data 
between countries comes from the UN COMTRADE database. 
Trade and patent transfers are collected for the period from 
1988 to 2005 where there is data available for approximately 
50 countries.
To substantiate the use of patent data as a measure of 
technological transfer, we would expect trade and patent fl ows 
to be strongly positively correlated as indeed they are found 
to be (Table 2). Firstly, each export-import pair (1988-2005) 
is correlated at 0.69. Aggregating over time for each export-
import pair gives a correlation of 0.74. And fi nally, when 
aggregating trade and patent data for each exporter (regardless 
of who imports) gives a correlation of 0.88.
Technological transfer occurs through many channels, 
although trade, foreign-direct investment and licensing are 
the most important. Using this approach and taking into 
account the multifactor process of international technology 
transfer, we propose to identify the factors using correlation 
graph, which will take into account factors like socio-
economic development, and the factors of the national 
innovation system. A result can be obtained for each 
individual country assessments of factors that will continue 
to develop a set of economic and mathematical models for 
solving control problems.
As a result of multiple linear regression, this method that 
determines the objective of transforming-in each set of variables 
that affect the existed opposite set indicators. Canonical 
analysis allows to identify and assess the interdependence 
between the integral “entrance” and integrated “solution” 
without destroying the possible relationships of latent variables 
in each set.
a1x1 + a2x2 +… + anxn ↔ b1y1 + b2y2 +…+ bmym  (4)
ai – canonical weight and the second variable of the fi rst 
group (“input” set of indicators), refl ecting its contribution to 
the linear combination of variables that are integral “out” set 
of indicators; bk – canonical weight of variable k of the second 
group (“initial” set of indicators), refl ecting its contribution 
to the linear combination of variables that are integral “way 
out”; ↔ – sign means a stochastic relationship between linear 
combinations of the two sets of variables.
These canonical weight should be used for assembly of 
integrated indicators “input” and “output”. However, as the 
output variables differ greatly before the procedure to apply 
their rolls, the value indicators must fi rst normalize. 
The next stage of performance analysis is the calculation of 
integrated indicators “inputs” and “outputs” using the received 
canonical weights (rounded to the second decimal place) and 
their comparison. 
High-technology industries have led the way in the 
globalization of international business in recent years. Success 
often depends on how well a fi rm transfers technology to 
another fi rm or market in a foreign country. ITT usually faces 
greater problems than in a domestic situation due to differing 
cultures, norms, laws, tax policies, etc. 
Many of the important factors are ambiguous by nature 
and diffi cult to measure. For instance, the technology to be 
transferred and the target markets may be changing, estimating 
costs and prices can be diffi cult, and the competition may 
consist of only a small number of fi rms or governments. 
Several critical factors may be external to the fi rms involved, 
such as political, cultural, and economic conditions. It is 
important, under these conditions, for management to have a 
good understanding of the ITT process and the barriers and 
bonds that determine success. 
Table 2. Correlations between trade values and counts of duplicate patent applications [2]
Correlation between 
trade fl ows and duplicate patenting
Full sample Sub-sample excl. outliers
Base dataset – all country pairs and all years (1988-2005),
corr (exports, patents)
0.47 0.69
For each country pair, aggregate over time,
corr (exports, patents)
0.52 0.74
For each exporter country, aggregate across partner countries, corr (exports, 
outgoing patents)
0.76 0.87
For each importer country, aggregate across partner countries,
corr (imports, incoming patents)
0.71 0.76
57
References:
1. Evelyn Su, “The Winners and the Losers: TRIPS 
and its effects on developing countries,” Houston Journal of 
International Law, Vol. 23, 2000
2. Fleur Watson, Nick Johnstone and Ivan Haščič (2009) 
Using Patent Data as an Indicator of ITT Empirical Policy 
Analysis Unit OECD Environment Directorate
3. Jagoda, K., Ramanathan, K., 2005. Critical Success 
and Failure Factors in Planning and Implementing International 
Technology Transfer: A Case Study from Sri Lanka, Refereed 
Proceedings (in CD-ROM) of the Portland International 
Conference on Management of Engineering and Technology – 
PICMET 05, Portland, Oregon, U.S.A, July 31-August 4.
4. Jarohnovic, N., Technology transfer opportunities for 
small open economies: case of Latvia”
5.  Keith E. Maskus, Kamal Saggi, Thitima Puttitanun 
(2003) Patent Rights and International Technology Transfer 
Through Direct Investment and Licensing – Cambridge 
University Press, pp. 265-281
6.  Maskus, K. E. (2003). Encouraging International 
Technology Transfer. UNCTAD/ICTSD Capacity Building 
Project. On Intellectual Property Rights and Sustainable 
Development. 
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Transfer and Technology Transfer Models
8. Rashed, M. Al-Thawwad Technology Transfer 
and Sustainability – Adapting Factors: Culture, Physical 
Environment, and Geographical Location
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May 2007


EVALUATION OF EFFICIENCY OF THE INTERNATIONAL TECHNOLOGY TRANSFER PROCESSES

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EVALUATION OF EFFICIENCY OF THE INTERNATIONAL TECHNOLOGY TRANSFER PROCESSES

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