An Extended Model For Measuring The Technology Transfer Potential

Southern Cross University
ePublications@SCU
Teses
2011
An extended model for measuring the technology
transfer potentials at the industrial level
Sathayanarayanan Pachamuthu
Southern Cross University, sathayanarayanan2791@gmail.com
ePublications@SCU is an electronic repository administered by Southern Cross University Library. Its goal is to capture and preserve the intellectual
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Suggested Citation
Pachamuthu, S 2011, 'An extended model for measuring the technology transfer potentials at the industrial level', DBA thesis,
Southern Cross University, Lismore, NSW.
Copyright S Pachamuthu 2011

An Extended Model for Measuring the
Technology Transfer Potentials
at the Industrial Level

Sathayanarayanan PACHAMUTHU

A research thesis submitted to the School of Business,
Southern Cross University, Australia, in partial fulfillment of the
requirements for the degree of Doctor of Business Administration.

2011

ii

STATEMENT OF ORIGINAL AUTHORSHIP

I certify that the work presented in this thesis is, to the best of my knowledge and belief, original,
except as acknowledged in the text and the material has not been submitted, either in whole or in
part, for a degree at this or any other university. I also certify that, to the best of my knowledge,
any help received in preparing this thesis, and all sources used have been acknowledged in this
thesis.

Sathayanarayanan PACHAMUTHU

2011

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ACKNOWLEDGEMENTS

During this research, many individuals and institutions provided me great support and
guidance which helped me complete this study successfully. I would like to express my
sincere thanks to Southern Cross University (SCU) and Sydney College of Business and IT
(SCBIT) for providing me the opportunity to undertake my DBA study, and their
management and staff for supporting me throughout my study. I am grateful to SRM
University, India for giving me time and supporting my study financially.

My sincere thanks to the principal supervisor, Dr. Veerappan Jayaraman, who guided me
throughout this research study. His area of interest and research in technology transfer
modeling has inspired me to undertake this study. I greatly acknowledge his support,
guidance, and contributions throughout this study. I am very proud to have modified and
extended his quantitative technology transfer model that he developed in his research.

I have been taught the importance of education and value of knowledge by my parents in
the very early stage of my life. They provided me the education and great opportunities,
and I will always remain grateful to them.

Finally, I would like to thank my wife who had supported me morally throughout my
research study. Throughout my DBA study, she has been a source of encouragement and
strength. Her support and assistance throughout my research made my life lot easier. I
sincerely thank my wife and children for their love, support, patience and understanding
while I worked on this research study.

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ABSTRACT

Technology contributes to the development of society and economy of the nation through
the invention, diffusion, transfer, and application of new knowledge. In the emerging
global economy of the 21st century, technology is a key to sustainable economic
prosperity. Transfer of technology is the key element for the industrialization, growth, and
economic development of the countries. The knowledge transferring capabilities of the
transferor, adaptation and assimilation capabilities of the transferee are important to a large
extent on the success of any transfer of technology.

The quantitative or mathematical modeling has not been significantly utilized in analyzing
the technology transfer process. Some of the well known quantitative studies on
technology transfer have been done by Haq (1979), Suckchareonpong (1979), Baruch Raz,
Gerald Steinberg, and Andrew Ruina (1983), Baruch Raz and Isak Assa (1988), Liu
(1993), Bhargava (1995), Jayaraman, Truong and Agrawal (1998), Truong (2002). It is
possible that more contribution to the knowledge relating to technology transfer can be
made by studying the process of technology transfer using quantitative methods.

The main focus of this study is to develop an extended quantitative model incorporating
time, technological level and a dynamic potential technological distance for measuring the
technology transfer potentials that exist between a transferor and a transferee at the
industrial level. In this study, the technological level of a country, called technology
index, is computed using various variables and employing the factor analysis method. The
factor analysis is used to determine the factor loadings of the variables for formulating the
technology index at the industrial level. By using the logistic growth pattern, the
technology indexes data are then applied to develop its technology index function. By
using the technology index function, the technology level is determined by way of an
index. As the indices are derived through factor analysis, it is likely that the index will
represent the level of a country more accurately if number of variables is considered for its
formulation.

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It is accepted in the literature on Technology Transfer (Haq 1979, Sharif-Haq 1981,
Sukchareonpong 1979, Jayaraman-Truong-Agrawal 1996) that the main factor governing
the technological transfer process, the transfer rate, at any time is proportional to the
current level of assimilation of such technology of the transferee and the level remaining to
be achieved by the transferee in the long run. However, there could be many other
important factors influencing the transfer rate such as the technological gap between
transferor and transferee, the potential technological distance between the transferor and
transferee, the geographical distance between locations etc.

In this study, an extended mathematical model is developed for measuring technology
transfer potentials. It is hypothesised that the rate of assimilation of a particular technology
of a transferee at a certain time, t , is proportional to: (a) the existing level of assimilation of
such technology of the transferee, (b) the level remaining to be achieved by the transferee
in the long run, and (c) a technology transfer function that incorporates the relative
technological gap (potential technological distance) between the transferor and transferee.
Using the technology transfer model developed, the level of assimilation that the transferee
can achieve with the selected transferor during the period of technology transfer is
measured. The boundary conditions for technology transfer model are then verified. The
boundary conditions are based on the fact that when the time tends to minus infinity, the
assimilation level of the transferee would be equal to zero, and when time tends to plus
infinity, the assimilation level of the transferee will be equal to the maximum level that can
be achieved in the long run by the transferee as shown in the model.

The time-level technology transfer models (Haq-Shariff model, Sukchareonpong model,
and Jayaraman-Truong-Agrawal model), and the models of technological change (namely,
Blackmans model, Fisher-Pry model, Mansfields model, and Bhargava model) are shown
to be the derived cases of the dynamic model developed in this study.

To demonstrate the applicability of the developed model, case studies of technology
transfer in automobile industry, electronics industry, and computing industry in selected
member countries such as Korea, Japan, China, Singapore, Malaysia, UK, Germany, USA,

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Brazil, and France are presented. In this study, only a few countries are selected due to the
limitation on the availability and reliability of the data. As this study is on developing an
extended model for measuring the technology transfer potentials that exist between a
transferor and a transferee at the industrial level, the variables that influence and reflect the
performance of the given industry of various countries under study are identified and
collected for the past years. The variables used in this study are broadly categorized into
three groups, namely, (i) variables relevant to national technology climate conditions, (ii)
variables reflecting manufacturing technology climate conditions, and (iii) variables
pertinent to the specific industry technology climate conditions in a country.

In this study, the indicators that influence and reflect the performance of the given industry
such as Research and Development (R&D) Expenses per economically active population,
Output per employee in the manufacturing sector, Value added per employee of the
manufacturing sector, Output per employee of the specific industry, and Value added per
employee of the specific industry, are considered for formulating the technology index at
the industrial level. The national level technology climate variables and the manufacturing
sectoral level technology climate variables are assumed to have direct influence on the
growth of the specific industry. The Value added per employee in the specific industry is
considered as the technology assimilation parameter at the industrial level.

For international comparison of monetary values, the US dollar is considered as a standard
currency in this study. However, the exchange rate does not reflect the real value of each
currency unit. To overcome the above problem of the exchange rate, purchasing power
parity (PPP) is used in this study.

In the case study of technology transfer in Automobile industry in selected member
countries such as Korea, Japan, China, Singapore, Malaysia, UK, Germany, USA, Brazil,
and France, the historical data of the value added per employee (US$ in PPP terms) and the
predicted values are used to fit the technology transfer phenomenon in that industry. In
terms of technology transfer in Automobile industry, the model developed in this study
explains the variation in the prediction to the extent of 99.97% for Japan, 99.94% for

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Malaysia, 98.76% for Singapore, 93.63% for France, 91.26% for Brazil, 90.71% for UK,
90.60% for Korea, 90.51% for Germany, and 83.15% for China. It is found that the
technology transfer model developed in this study provides a very good fit in all the above
transfer situations. The fitness of the model is quite significant for countries such as Japan,
Singapore, Malaysia, Germany and France at the 0.01 level where as it is significant for
countries such as Korea, China, UK, and Brazil at the 0.05 level.

In the case study of technology transfer in Electronics industry in selected member
terms of technology transfer in Electronics industry, the model developed in this study
explains the variation in the prediction to the extent of 99.30% for Germany, 98.20% for
UK, 97.97% for France, 96.20% for Singapore, 95.44% for China, 90.59% for Brazil,
89.96% for Japan, 88.40% for Malaysia, and 76.87% for Korea. It is found that the
technology transfer model developed in this study provides a very good fit in all the above
transfer situations. The fitness of the model is quite significant for countries such as China,
Singapore, UK, Germany, and France at the 0.01 level where as it is significant for
countries such as Korea, Japan, Malaysia and Brazil at the 0.05 level.

In the case study of technology transfer in Computing industry in selected member
terms of technology transfer in Computing industry, the model developed in this study
explains the variation in the prediction to the extent of 96.42% for Singapore, 96.40% for
Brazil, 95.59% for UK, 94.07% for Malaysia, 87.28% for France, 87.00% for China,
72.07% for Japan, and 69.40% for Korea. From the above results, it can be seen that the
technology transfer model developed in this study provides a very good fit in most of the
above transfer situations. The fitness of the model is quite significant for countries such as

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Singapore, Malaysia, UK, Germany, Brazil, and France at the 0.01 level where as it is
significant for country China, Korea and Japan at the 0.05 level.

Based on the results obtained from the case studies of technology transfer in automobile
industry, electronics industry, and computing industry for Korea, Japan, China, Singapore,
Malaysia, UK, Germany, USA, Brazil, and France, it is concluded that the hypothesis used
in this research that the rate of assimilation of a particular technology of a transferee at a
certain time, t , is proportional to: (a) the existing level of assimilation of such technology
of the transferee, (b) the level remaining to be achieved by the transferee in the long run,
and (c) a technology transfer function that incorporates the relative technological gap
(potential technological distance) between the transferor and transferee, is accepted at the
significance level of 0.05.

The fitness of the technology transfer model is found to be very satisfactory in all the three
case studies done. The case studies indicate that the model can provide an effective means
for measuring the transfer potentials that exist between a transferor and a transferee. Since
the model predicts the level of assimilation that a transferee can achieve with a given
transferor in the long run, it is possible for this dynamic model to be used as a decision-
making tool by countries in determining the optimum partner for most effective technology
transfer.

Finally, based on the outcome of the research undertaken, conclusions and the
recommendations for further studies are presented.

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TABLE OF CONTENTS

CHAPTER TITLE PAGE

Statement of Original Authorship ii
Acknowledgments iii
Abstract iv
Table of Contents ix
List of Tables xv

1 INTRODUCTION
1.1 Background 1
1.2 Technology 1
1.3 Technology Transfer 2
1.4 Research Objectives 5
1.5 Research Scope and Limitations 5
1.7 Organization of the Thesis 7

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2 LITERATURE REVIEW
2.1 Introduction 8
2.2 Definition of Technology 8
2.3 Measurement and Indices 9
2.3.1 Measurement 9
2.3.2 Indices 9
2.4 Methods Determining Weight 10
2.5 Technology Transfer 12
2.5.1 Technology Transfer Elements 13
2.5.2 Technology Transfer Mechanisms 14
2.5.3 Technology Transfer Effectiveness 15
2.6 Technology Diffusion and Technology Transfer 15
2.7 Technological Diffusion Models 15
2.8 Technology Transfer Models 22
2.9 Gaps in Literature 32
2.10 Summary 34

3 RESEARCH METHODOLOGY
3.1 Introduction 35
3.2 Technology Index 37
3.3 Methodology for Measuring Technology Index 37

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3.4 Technology Index - Normalization 41
3.5 Technology Index Function 41
3.6 Evaluating Technological Characteristics 42
3.7 Determinants of Technology Index 43
3.8 Summary 44

4 TECHNOLOGY TRANSFER MODEL DEVELOPMENT
4.1 Introduction 45
4.2 Assumptions for Developing Technology Transfer 45
Model
4.3 Technology Transfer - Generalized Model 46
4.4 Technology Transfer - Specific Model 50
4.5 Verification of Technology Transfer Model 53
4.6 Derivation of Previous Technology Transfer/Change 56
Models in the Literature
4.7 Summary 64

5 CASE STUDIES
5.1 Introduction 66
5.2 Method of Case Study Analysis 66
5.2.1 Determinants of Technological Capability 66

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at the Industrial Level
5.2.2 Data Collection 67
5.2.3 Technology Index and Its Function 67
5.3 Technology Transfer in Automobile Industry in Selected 68
Countries
in Automobile Industry
5.3.3 Technology Index of Automobile Industry 70
5.3.4 Technology Index Function of Automobile Industry 82
5.3.5 Technology Transfer Model Incorporating 89
Time and a Dynamic Technological Potential Distance
in Automobile Industry
5.4 Technology Transfer in Electronics Industry in 98
Selected Countries
in Electronics Industry
5.4.3 Technology Index of Electronics Industry 99
5.4.4 Technology Index Function of Electronics Industry 110

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in Electronics Industry
5.5 Technology Transfer in Computing Industry in Selected 124
Countries
in Computing Industry
5.5.3 Technology Index of Computing Industry 125
5.5.4 Technology Index Function of Computing Industry 136
in Computing Industry
5.6 Summary 150

6 CONCLUSIONS AND RECOMMENDATIONS
6.1 Contributions to the Literature 152
6.2 Conclusions 154
6.3 Research Scope and Limitations 161
6.4 Recommendation for Further Studies 163

xiv

REFERENCES 168
APPENDIX 1 RAW DATA 183
APPENDIX 2 FIGURES 199

xv

LIST OF TABLES

TABLE TITLE PAGE

5.1 The Standardized Data of Technology Variables in 72
Automobile Industry
5.2 Correlation Coefficient Matrix of Technology Variables in 75
Automobile Industry
5.3 Factor Analysis and Loading Matrix of Technology 77
Variables in Automobile Industry
5.4 Calculated Indexes and Normalized Indexes of Selected 79
Countries in Automobile Industry
5.5 Technology Index Functions of Selected Countries in 83
Automobile Industry
5.6 The Predicted Values of the Technology Indexes of 85
Selected Countries in Automobile Industry
5.7 The Predicted Values of the Potential Technology 87
Distances of Selected Countries with USA in
Automobile Industry
5.8 Average Potential Technology Distances between 90
USA and other Selected Countries in Automobile Industry

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5.9 Predicted Value Added per Employee data and Historical 93
Value Added per Employee on technology transfer model in
Automobile industry for Selected Countries
5.10 The Fitness of the Technology Transfer Model in 97
Korea, Japan, China, Singapore, Malaysia, UK,
Germany, Brazil, and France Automobile Industry
Electronics Industry
5.12 Correlation Coefficient Matrix of Technology Variables 103
In Electronics Industry
Variables in Electronics Industry
Countries in Electronics Industry
5.16 The Predicted Values of the Technology Indexes 112
of Selected Countries in Electronics Industry
Distances of Selected Countries with USA in

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5.18 Average Potential Technology Distances between 117
USA and other Selected Countries in Electronics Industry
Automobile industry for Selected Countries
Germany, Brazil, and France Electronics Industry
Computing Industry
5.22 Correlation Coefficient Matrix of Technology Variables in 129
Computing Industry
Variables in Computing Industry
Countries in Computing Industry
Computing Industry
5.26 The Predicted Values of the Technology Indexes of 138
Selected Countries in Computing Industry
Distances of Selected Countries with USA in Computing Industry

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5.28 Average Potential Technology Distances between USA 143
and other Selected Countries in Computing Industry
Computing industry for Selected Countries
Germany, Brazil, and France Computing Industry

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CHAPTER 1: INTRODUCTION

1.1 Background
Technology is widely accepted as essential for improving the economy of a nation, in
particular, in developing countries where industrial growth has occupied a very important
role (Guan, Mok, Yam and Pun 2006). Evidences from many countries have shown that a
countrys international competitiveness and capacity to grow in the long term is dependent
on its ability to master technology and to manage and generate technological change
(Haque 1995). Technology can contribute to the development of society and economy of a
nation through the invention, diffusion, transfer, and application of new knowledge.
Technology development is the basic means through which firms, industries, and countries
can foster their competitive capabilities and increase their competitive advantage.
Traditionally, the concept of competitiveness has been analyzed at the firm, the industry
(or one sector of it), and the country level (Wang, Chien, and Kao 2007).

Technology is man-made and consists of two major components, namely, hardware and
software. The technology provides a powerful tool for socioeconomic development of a
nation (Sharif 1986). The modern development would have been essentially inconceivable
without the technology support (Technology Atlas Project Team 1987). Technology is
bought and sold in the world market as a commodity in the form of capital goods and
sometimes intermediary goods; human labor usually skilled and sometimes highly skilled
and specialised manpower; and information, whether of a technical or of a commercial
nature (UNCTAD 1972).

1.2 Technology
Technology is viewed as an important catalyst of national economic growth (Millman
2001). Technology strengthens the national development and international competitiveness
of countries (Lim and Song 1996). In the emerging global economy of the 21st century,
technology is a key to sustainable economic prosperity. Under rapidly changing global
economy, technology development is closely associated with the competitive advantage of
each nation (Sung 2009).

2

The literature on technology management has numerous definitions of technology. In this
study, it is considered that technology consists of four basic components (Technology
Atlas Project Team 1989), namely, (i) Technoware (Facilities), (ii) Humanware (Abilities),
(iii) Inforware (Facts), and (iv) Orgaware (Framework). All the four components of
technology are required simultaneously in any transformation operation that involves in the
production of goods through the conversion of material inputs into outputs and they are
complementary to each another.

1.3 Technology Transfer
The international transfer of know-how, knowledge and technological expertise is growing
and they are increasingly important in the world economy (Archibugi, and Lundvall 2001,
Archibugi, and Pietrobelli 2003). Technology transfer (TT) suggests the movement of
technology from one entity to another, for example, from one organization to another, from
a university to an organization, or from one country to another (Solo and Rogers 1972).
The complexity of the technology transfer process depends on the type of technology, the
owner's capability of tranferring, the acquirer's capability of assimilating, and the complex
interaction between the two parties (Lee, Wang, and Lin 2010, Goc 2002).

The concepts of technology transfer have been defined in many different ways. However,
there is usually an agreement (Sung and Gibson 2000, Sung and Hyon 1998) that
technology transfer requires mainly a human effort. The transfer of technology often
requires collaborative activity between two or more individuals or functional units who are
separated by structural, cultural, and organizational boundaries. Technology transfer is an
interactive process among entities over an extended period of time (Gibson and Smilor
1991). Technology transfer is also defined as being product-embodied, process-embodied
or personnel-embodied (Chen 1996). It can be a lengthy, complex and dynamic process
and its success is influenced by various factors originating from many different sources
(Kumar, Kumar and Persaud 1999, Walter 2000). With special reference to developing
countries, Hoffman and Girvan (1990) suggested that Technology transfer needs to be
perceived in terms of achieving three core objectives: (i) the introduction of new

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techniques by means of investment of new plants; (ii) the improvement of existing
techniques, and (iii) the generation of new knowledge.

It is emphasized that industrialization is the main path for economic growth and
development by many nations. However, its success is dependent on the availability of the
required technology and the capability to use technology effectively (Sharif and Haq
1979). For achieving rapid technological advancement, many countries emphasize the
"Transfer of Technology" as a rational way. Hence, in the developed and the developing
countries, technology transfer has become a subject of considerable research activity.

Technology transfer is a process in which a technology generated in one place is adapted
and utilized or diffused in other places. Technology is carried across the border of two
entities that can be nations, industries, firms, or even individuals, and it can be interpreted
as an active process (Autio and Laamanen, 1995). There must be a transferor and a
transferee for technology transfer to occur. The transferor has higher technological level
than the transferee. A technological level is defined as the capability of the technological
system that consists of technoware, humanware, inforware and orgaware. The
technological gap between the transferor and transferee offers a potential for technology
flow (Technology Atlas Project Team 1989). Unless the technology transferred to a
country from outside is efficiently and effectively assimilated within the country, it would
not contribute to national development (Technology Atlas Project Team 1989). The
success or effectiveness of transfer depends to a large extent on the transferring capabilities
of the transferrer, and the selection, adaptation and assimilation capabilities of the recipient
of the technology. The assimilation capabilities of the countries have direct relationship to
their technological levels (Sharif and Haq 1979, Wong 1995). An effective technology
transfer program would help the transferee in terms of reduction of time and cost of
transfer and increase in the rate of absorption and diffusion of technology (Hoelscher
1975). Therefore, effective management and transfer of technologies are believed to be
increasingly critical for individuals, organizations, and nations in the globalized knowledge
society of the 21st century (Sung 2009).

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The technology innovations and their diffusion have been studied by many researchers
(Blackman 1971 & 1974; Fisher and Pry 1971; Gold, Peirce and Rosegger 1975; Hough
1975; Lakhani 1975; Mahajan and Schoeman 1979; Nielsen 1974; Sharif and Kabir
1976). Technological innovation performs a function in a better and efficient way, and it
contributes to technological substitution over time. Technology substitution is the process
of substitution of one technology for another. Technology substitution models have been
developed by Mansfield (1961), Fisher-Pry (1971), Blackman (1972), Floyd (1968),
Ayres-Noble-Overly (1967), Sharif-Kabir (1976). Number of studies (Nesbath and Ray
1974; Nielsen 1974; Swan 1973; Gold 1981; Metcalfe 1970; Ray 1969; Romeo 1975;
Sharif and Ramanathan 1982; Buzzelli 1982; Clark, Freeman and Soete 1981; Vickery
1981; Madeuf 1982) had focused the international diffusion of technological innovations.

Many researchers (Balasubramanium 1973; Baster 1972; Gruber and Marquis 1969; Hall
and Johnson 1970; Hawthorne 1971; Joshi 1977; Spencer and Woroniak 1967; Teece
1981; Ramanathan 1994; Schwartz 1982; Simon 1991; Davidson 1980; Cusumano and
Elenkov 1994; Madeuf 1984; Jequier 1976; Mytelka 1985; Todaro 1985; Hoelscher
1975; Reddy and Zhao 1990; Mock 1974; Patel 1972; Streeten 1972; Barranson and
Roark 1995; Desai 1994; Katz 1985; Seaton and Cordey-Hayes 1993) studied on the
subject of technology transfer in descriptive nature. A number of qualitative analysis and
case studies of technology transfer between countries have been done (Barranson 1969 &
1981; Barrokman 1983; Bucy 1981; Hayden 1984).

The quantitative or mathematical modeling has not been significantly utilized in analyzing
the technology transfer process even though many studies on technology transfer have
been done using qualitative methods. Some of the well known quantitative studies on
technology transfer were done by Haq (1979), Suckchareonpong (1979), Baruch Raz,
Gerald Steinberg, and Andrew Ruina (1983), Baruch Raz and Isak Assa (1988), Liu
(1993), Bhargava (1995), Jayaraman, Truong and Agrawal (1998). It is possible that more
contribution to the knowledge relating to technology transfer can be made by studying the
process of technology transfer using quantitative methods. If we can quantify the
technological levels of the transferor and transferee, then it would be possible to model the

5

technology transfer process quantitatively. A methodology to evaluate the technology
transfer potentials incorporating the time, technological levels and potential technology
distance between the transferor and transferee will help in understanding the complex
process of technology transfer. The quantitative models could give a defferent approach
and better understanding of the technology transfer process.

Technology transfer, usually, takes place at the firm level, between a firm in the supplier
country and a firm in the recipient country. However, the government policies on
technology transfer are generally formulated at the industrial level. The science and
technology agreements are signed between governments with the objective of facilitating
the technology transfer between an industry in the supplier country and the corresponding
industry in the recipient country.

1.4 Research Objectives
The main objectives of this research are to (i) develop a mathematical function that
evaluates the technological level of a country; (ii) develop a generalized mathematical
model for measuring the technology transfer potentials that exist between a transferor and
a transferee; (iii) develop a specific dynamic mathematical model incorporating time,
technological level and potential technology distance for evaluating technology transfer
potentials; (iv) verify the technology transfer model for boundary conditions; (v) derive the
technological substitution/change models as special cases of the technology transfer model
developed; and (vi) apply the technology transfer model to study the technology transfer
pattern in selected countries in certain industries.

1.5 Research Scope and Limitations
The major limitation in this study is the availability of the sufficient and reliable data. In
this study, the indicators such as Research and Development (R&D) Expenses per
economically active population, Output per employee in the manufacturing sector, Value
added per employee of the manufacturing sector, Output per employee of the specific
industry, and Value added per employee of the specific industry, are considered for
formulating the technology index at the industrial level. The Research and Development

6

Expenditure per Economically Active Population reflects the support of the nation towards
the development of science and technology climate which is a major input to the
development of the overall manufacturing sector that consists of various industries. The
output per employee in the manufacturing sector or each specific industry reflects the
technology and its sophistication employed in their production facilities. The value-added
per employee in the manufacturing sector or each specific industry reflects the
effectiveness of the human skills and technology employed in their production facilities.

The national technology climate conditions and manufacturing technology climate
conditions have direct influence on the growth of the specific industry in a country.
However, these influences may vary depending on the type of industry. In this research it
has been assumed that they will have same influence on all industries.

In this study, the technology level or capability of a particular industry in a given country
is measured through an index called the technology index. It indicates the knowledge of a
country in a particular industry. Technical knowledge or capability is cumulative in nature,
and in general, increases with respect to time (Patel 1972). Further, it is logical to assume
that this increase in the knowledge would be increasing at an increasing rate in the initial
stage and increasing at a decreasing rate toward the latter stage. Thus it is assumed in this
research that the technology index is a function of time and having a form of S-curve or
logistic curve (or Pearl Curve).

In developing the technology transfer model in this research, the function governing the
technology transfer rate is assumed to be dependent on the relative technological gap
between the transferor and the transferee which is the potential technological distance. In
the application of the model, for simplicity of computation, the potential technological
distance between the transferor and the transferee during the period of technology transfer
is assumed to be the average value. Political, social, cultural, language, religious, and legal
factors may impact the effectiveness of the technology transfer process. Some of these
factors act as stimulants and some as barriers to the transfer process. In this research, the
above factors are not considered due to the subjectivity and complexity. In this research,

7

the application of the dynamic model is presented at the industry level not at the firm level
due to the limited availability of data. In this research, the value added per employee in a
specific industry is used as the assimilation parameter indicating the sophistication of the
application of technology in that industry.

Due to the limitation on the availability and consistency of the data, in this research, only
selected countries such as Korea, Japan, China, Singapore, Malaysia, UK, Germany, USA,
Brazil, and France are considered. The case studies are performed in automobile industry,
electronics industry, and computing industry. The data for the periods 2003 2007 are
collected for this study.

1.6 Organization of the Thesis
The organization of this study is summarized through various chapters. Chapter II deals
with the Literature Review. The literature outlining the concept of technology,
measurement and indexes, methods of determining weights including factor analysis, and
the concept of technology transfer are presented in this chapter. The review of existing
technology diffusion and transfer studies in literature are also presented in this chapter.
Chapter III provides the Research Methodology for measuring the technological level of a
country. Chapter IV presents a generalized mathematical model for measuring the
technology transfer potentials that exist between a transferor and a transferee. In this
chapter, a specific dynamic technology transfer model incorporating time and
technological level is also presented. The technology transfer model is verified for
boundary conditions in this chapter. The Haqs model, Blackmans model, Fisher-Pry
model, Bhargava model, Mansfield model, and Jayaraman-Truong-Agrawal model are
shown to be the derived cases of the technology transfer model developed in this chapter.
Chapter V deals with the application of the technology transfer model to the selected
countries for studying the technology transfer pattern in selected industries, namely,
automobile industry, electronics industry, and computing industry. The fitness of the
model and testing of hypothesis used to develop the model are also studied in this chapter.
The contributions of this research to literature & knowledge, the conclusions drawn and
recommendations for further studies are presented in chapter VI.

8

CHAPTER 2: LITERATURE REVIEW

2.1 Introduction
The definition of technology, general overviews of measurement and indices, methods of
determining weights of the factors influencing the technology level, and the technology
transfer and various aspects of technology transfer process are presented in this chapter.
Some well-known technological diffusion models and technology transfer models are
reviewed in this chapter.

2.2 Definition of Technology
There are numerous definitions of technology are available in the literature. Some of the
definitions have been compiled by Ramanathan (1990). Baesd on the various definitions of
technology by researchers, Malecki (1991) viewed technology as a transformer, tool, and
knowledge.

Please note: Copyright material is removed in this section

Ramanathan (1994) quoting Sharif (1986), the Technology Atlas Team (1987) and Asian
and Pacific Centre for Transfer of Technology (1989) also state that technology has four
components: (i) Object embodied form or Technoware (ii) Human embodied form or
Humanware (iii) Document/Record embodied form or Inforware and (iv) Institution
embodied form or Orgaware. This four components classification appears to be more
practical because it provides a useful mean to use technology for decision making,
especially in manufacturing systems. In this study, the four components definition of
technology is considered. All four technology components are complementary to one
another, and are required simultaneously for the production of goods and services. Thus,
there is a minimum requirement for each of the four components. There may also be a
maximum limit for each component, beyond which the production of goods and services
would be non-optimal or inefficient.

9

2.3 Measurement and Indices
2.3.1 Measurement
The concept of 'measurement' was originally explained by scientists by assigning
numerical values to properties of objects or events. Physicists, later, extended this concept
of measurement to selective non-additive physical properties. Behavioural scientists
applied formal measurement procedures to wider range of non-additive psychological and
psychophysical attributes. The concept of measurement has finally widened to encompass
the full range of non-additive and even non-orderable topological data with the
sophistication and flexibility of statistical techniques (Adelmen and Morris 1972).
Measurement is categorized into three different kinds (Torgerson 1960): (i) Derived
measurement It is the measurement obtained through laws relating the property to other
properties; (ii) Measurement by fiat - It is the measurement obtained simply by arbitrary
definition. Ordinarily, it depends on presumed relationships between observations and
concept of interest; and (iii) Fundamental measurement It is a measurement by which
numbers can be assigned according to natural laws to represent the property and yet which
does not presuppose measurement of any other variables.

2.3.2 Indices
An index is something that points or indicates something else. Indices may be
disaggregated, composite (aggregate) or representative. In the case of diaggregated index, a
complex phenomenon is broken down into a number of elements or components, and
indices are selected to represent these different components. These elements should be
homogeneous, mutually exhaustive, and mutually exclusive. In the case of composite
index, a single index is constructed by combining a number of indices, involving some
system of weighting. In the case of representative index, an index is selected as the 'best'
measure of a particular phenomenon on the basis of some criteria such as closeness of
correlation with other indices of the some phenomenon (Baster 1972).

10

Indices are used to describe trends or situations or compare the trends and situations. The
situations may be time periods (e.g. different years), or situations in a spatial sense (e.g.
different countries or regions), or groups of individuals (Baster 1972).

In cases, where the purpose of comparing the overall situation between a number of
countries, individuals or objects (as in the present study of comparing technological level
of different countries), it is appropriate to have a composite index, because a single
measure combining a number of factors which assumed to be causally related to the
situation, will be more meaningful. The formulation of composite index requires the
determination of the weight which gives the degree of relative importance of each
individual factor forming the composite index (Baster 1972).

2.4 Methods of Determining Weight
Some of the well known methods (Harbison, Marvhnic and Resnick 1970, Martino 1972,
Brown and Gibson 1972, Saaty and Rogers 1976) for determining weight or relative
importance of a large number of elements which altogether describes a particular
phenomenon or situation are: (i) Delphi Technique, (ii) Ranking Technique, (iii) Rating
Technique, (iv) Pairwise Comparison Technique, (v) Preference Theory Technique, (vi)
Eigen Value Analysis, (vii) Taxonomic Analysis, and (viii) Factor Analysis. In this study,
Factor Analysis is used for determining weights or relative importance of the variables that
describe the technological level of country in a given industry.

Factor analysis (Morrison 1976, Nie, Hull, Jenkins, Steinbrenner and Bent 1975) is a
method of defining dimensional space among a relatively large group of variables. The
most distinctive characteristic of factor analysis is its data reduction capability. Given an
array of correlation coefficients for a set of variables, factor-analytic techniques enable us
to see whether some underlying pattern of relationships exists such that the data may be
"rearranged" or "reduced" to a smaller set of factors or components that may be taken as
source variables accounting for the observed interrelations in the data.

11

In factor analysis, each of n observed variables is described in the term of m new
uncorrelated factors: F F F
m 1 2
, ......,
,
and unique factors U
j
, (j = 1, 2, 3, ......, n)

Y a F a F a F b U
m m 1 11 1 12 2 1 1 1
= + + + + .......
Y a F a F a F b U
m m 2 21 1 22 2 2 2 2
= + + + + .......
.
.
.
Y a F a F a F b U
n n n nm m n n
= + + + +
1 1 2 2
.......

Where

Y
i
= a standardized form of a variable with known data,
a
jm
= a factor loading or weight for each factor,
F
m
= a function of unknown variables,
U
j
= a unique factor,
and b
j
= a unique factor weight.

The variables entering into each function, F
m
, are unknown and are related in unknown
ways. Each function makes a contribution to the sum of the variances of variables, and in
general a few of the functions will account for a large amount of the total variance. The
factor analysis technique provides values for the constant, a
jm
, called loading, which
represents the extent to which each specific function is related to Y
j
. Once the factor
loadings or weights for each variable are determined, the initial set of statistics can be
aggregated through the determination of factor scores into a single index in which each
variable is weighted proportionally to its involvement in a pattern; the greater the
involvement, the higher the weight.

12

2.5 Technology Transfer
The international transfer of know-how, knowledge and technological expertise are
increasingly important in the world economy (Archibugi, and Lundvall 2001, Archibugi,
and Pietrobelli 2003). Technology transfer (TT) suggests the movement of technology
from one entity to another, for example, from one organization to another, from a
university to an organization, or from one country to another (Solo and Rogers 1972).
Technology transfer depends to a large extent on the complexity of the technology, the
owner's capability of transferring, the acquirer's capability of learning, and the complex
interaction between the two parties (Lee, Wang, and Lin 2010).

The concepts of technology transfer have been defined in many different ways. However,
there is usually agreement (Sung and Gibson 2000, Sung and Hyon 1998) that technology
transfer requires a profoundly human endeavor (Gibson and Smilor 1991). The transfer of
technology often requires collaborative activity between two or more individuals or
functional units who are separated by structural, cultural, and organizational boundaries.
Technology transfer is an interactive process with a great deal of back-and-forth exchange
among individuals over an extended period of time (Gibson and Smilor 1991). Technology
transfer has also been defined as being product-embodied, process-embodied or personnel-
embodied (Chen 1996). It can be a lengthy, complex and dynamic process and its success
is influenced by various factors originating from many different sources (Kumar, Kumar
and Persaud 1999, Walter 2000). With special reference to developing countries, Hoffman
and Girvan (1990) suggested that TT needs to be perceived in terms of achieving three
core objectives: the introduction of new techniques by means of investment of new plants;
the improvement of existing techniques and the generation of new knowledge.

Technology transfer is viewed as an active process, during which technology is carried
across the border of two entities. These entities can be countries, industries, companies, or
even individuals, depending on the viewpoint of the observer. (Autio and Laamanen
1995). Technology transfer is the movement of technology from one entity to another, and
if the transfer is successful, it results in the proper understanding and effective use of the
technology by the receiving entity (Adulbhan and Sharif 1977). Ofjord (1975) viewed the

13

technology transfer process as a complex "communication process" involving a purveyor, a
message, an organised channel, a receiver, and feedback: from the receiver to the purveyor.

Nowadays the technology transfer issue revolves around the extent of degree of
technologies that are transferred by the transferors to transferees (Pak and Park, 2004;
Minbaeva, 2007). The question is no longer whether the transferors are transferring
technology to transferees instead the focus in the literature has shifted to questions on (i)
the level (sophistication) of the transferred technology, and (ii) the stage where the transfer
process has reached (Lai and Narayanan, 1997; Narayanan and Lai, 2000).

2.5.1 Technology Transfer Elements
Technology transfer process involves seven major elements including transferor (source),
transferee (receiver), technology being transferred, transfer mechanism, transferor
environment, transferee environment, and greater environment. The entity that possesses
the technology is known as the transferor. The entity seeking the technology is the
transferee. Technology is the combination of technoware, humanware, inforware and
orgaware. A technology transfer mechanism is any specific form of interaction between
two or more social entities during which technology is transferred. The transferor
environment is the set of conditions such as economic status, its technological status, and
policies and commitment towards technology transfer activities, under which the transferor
is operating - at the individual, organisational, industrial or national level. The transferee
environment is the economic status, technological status, infrastructure, skills availability,
attitude and commitment towards change. These factors determine the absorptive capacity
of the transferee. There are greater environments surrounding the transferor and transferee
environments such as political relationships between the countries, exchange rates,
investment climates, trade negotiations, balance of trade problems, technological levels of
the nations, and international competition.


14

2.5.2 Technology Transfer Mechanisms
Some of the major mechanisms of technology transfer that can be included under these two
categories are as follows (Ramanathan 1994):

Market Oriented Mechanisms: Purchases of plant, equipment and products; Direct foreign
investment; Joint ventures; Technical collaboration; Licensing; Technical services
agreements; Engineering and construction agreements; Subcontracting; Turnkey contracts;
Product-in-hand contracts; Management contracts; Production sharing; Joint research
ventures; and Expert services. Non-Market Oriented Mechanisms: Books, academic
journals, business magazines etc; Sales literature; Technical information services;
Industrial fairs and exhibitions; Informal personal contacts; Participation in conferences,
seminars and workshops; and Training.

The technology transfer mechanisms exhibit some limitations or deficiencies (Seaton and
Cordey-Hayes 1993) such as failure to recognise adequately the significance of recipient
organisations needs, failure to address service delivery aspects of the technology and
knowledge transfer process, and underestimate the importance of the interactive processes
and mechanisms between the supplier and the recipient.

Cusumano and Elenkov (1994) quoting Simon (1991) state that there are five basic
organisational modes for technology transfer including the international technology
market, which is made up of independent buyers and sellers; intra-firm transfer, where
organisations do not resort to the market but transfer technology through either an internal
venture or a wholly owned subsidiary; agreements or exchanges directed by government,
where the counterparts can either be public or private actors; education, training and
conferences, where the dissemination of information is made public for common
consumption by either a general or specialised audience; and pirating or reverse-
engineering, where organisations obtain access to technology without resorting to the
market but at the expense of the property rights of the owners of the technology.

15

2.5.3 Technology Transfer Effectiveness
The effectiveness of transfer activity is evaluated in several different ways in the literature
(Mason 1980, Teece 1981, Schwartz 1982, Madeuf 1984, Mytelka 1985). They measured
transfer effectiveness by calculating the transfer cost, the speed, scope and level of internal
versus external transfer activity, R&D sufficiency in the local facility, control of imported
technology, and whether the technology transferred can assist with the development of new
skills and technology that will alter the host countrys comparative advantage. They
suggested that the imported technology must be assimilated.

A number of factors that influence the effective transfer have been identified and examined
by Reddy and Zhao (1990). The factors include the supplier firms willingness and ability
to transfer technical knowledge, the supplier firms organisational structure, the absorptive
capacity of the recipient firm, the mode of transfer used, the relationship between
interacting countries and firms, and training.


2.6 Technology Diffusion and Technology Transfer
The concepts of technology diffusion and transfer are very close, and in some cases they
are used interchangeably (Konz 1976). Hough (1975) defined technology diffusion as
publicising, adapting, adopting, and ingesting a new item of technology, which may be a
product, process, technique, procedure, or other application of available science or
technology.

2.7 Technological Diffusion Models
The diffusion of technological innovation was studied by a number of researchers
(Blackman 1971 & 1974, Fisher and Pry 1971, Gold, Peirce and Rosegger 1975, Hough
1975, Lakhani 1975, Nielsen 1974, Sharif and Kabir 1976, Mahajan and Schoeman
1979). The diffusion of any technological innovation substitutes an older technology over
time within a given space. For forecasting one to one technological substitution, a number

16

of mathematical models have been developed by researchers (Mansfild 1961, Floyd 1968,
Fisher-Pry 1971, Blackman 1972, Sharif-Kabir 1976, Sharif-Haq 1979).
Mansfield (1961) developed a model that explains the differences among innovations in
the rate of imitation. Mansfield's model is recognizable as the Pearl Curve.

The model expression is as follows:

m t
n
e
ij
ij
l
ij ij
t
( )
( )
=
+
+
1
u

where

m
ij
(t) = number of firms which have adopted the j-th innovation in the i-th industry at
time t,
n
ij
= number of firms in the i-th industry which adopted the j-th innovation,
l
ij
= a constant determining the location of the innovation diffusion curve,
u
ij
= a constant determining the innovation diffusion rate,
t = time.

Floyd (1968) developed a mathematical model permitting trend extrapolation of figure-of-
merit. The model is expressed as:

ln
f f
F f
F f
F f
c c t
c c
(
+

(
= +
1 2

where
f = level of figure-of-merit for new technology,
f
c
= level of figure-of-merit for competing technology,
F= limiting value of figure-of-merit,
c c
1 2 ,
= real constants,
and t = time.

17

Fisher and Pry (1971) developed a technological substitution model with the assumptions
that technological advances are considered as competitive substitutions of one method of
satisfying a need for another, the substitution will proceed to completion once it has
progressed as far as a few percent, and the rate of substitution of new for old is
proportional to the remaining amount of the old left to be substituted.

The model is given by:

f
f
t t
1
2
0
(
= exp ( ) o
where

f = market share of new product in fraction,
1 - f = market share remaining to be substituted,
o = half the annual fractional growth in the early years,
t = time,
and t
o
= time at which substitution is half complete, i.e. f = 1/2.

Blackman (1972) developed a forecasting model for predicting technological performance
figures-of-merit. The model was developed by hypothesizing that the change in the figure-
of-merit is a function of the figure-of-merit obtained at time t divided by the maximum
attainable value, the perceived payoff or reward associated with an increase in the figure-
of-merit and the size of the investment or the extent of commitment of resources required
to improve the figure-of-merit.

Blackman's model is given as:

ln ln ( )
f
F f
f
F f
t t
(
=
(
+
0
0
0
o

18

where

f = the figure-of-merit achieved at time t,
F = the maximum attainable value of the figure-of-merit

f
0
= the figure-of-merit at time t = t
o

o = a constant which governs the rate of change of figure-of-merit,
and t = time.

Sharif-Kabir (1975) developed a generalized technological substitution model expressed
as:

ln
f
F f
F
F f
c c t
(
+
(
= + o
1 2

where

f = market share of a product at time t,
F = upper limit of the market share,
t = time,
c c
1 2 ,
= real constants,
and o = a dimensionless factor, 0 1 s s o .

The Floyd's model (1968), Fisher-Pry model (1971), and Blackman's model (1972) are
special cases of the generalized model developed by Sharif-Kabir (1975). The derivation to
special cases can be made by applying the following conditions as:

for o = 1, the generalized model becomes Floyd's model,
o = 0, the generalized model becomes Blackman's model,
o = 0, and F = 1, the generalized model becomes Fisher-Pry model.

19

Shariff-Haq (1979) developed a causal model for studying the behaviour of technological
substitution. The model is expressed as follows:

| o | u o = + + + + + UAQ Z P S T G D K N K N K [ ( )( )] 2
where

| = a parameter which governs overall substitution rate
Z = a constant representative of a given industry
P = profitability index
S = investment index
T = time since innovation
G = annual rate of growth of industrial production
D = obsolescence effect multiplier
N = total market size
K = adopters of the new technology
U = utility adjusted price effect multiplier
A = advertising effectiveness multiplier
Q = quality effect multiplier
o, |, u, , o = constants

Mahajan and Schoeman (1979) developed a generalized model to describe the time pattern
of the diffusion process for an innovation. The model is given by:

F t
a F F
a bF
a bF t t
a F F
a bF
a bF t t
( )
( )
( )
exp[ ( )( )
( )
( )
exp[ ( )( )
=
+
+
+

+
+
0
0
0
0
0
0
1

where

F(t) = cumulative proportion of adoptors at time t,

20

F = maximum level of the cumulative proportion of adoptors,
a, b = positive real constants,
t = time,
and F
o
= cumulative proportion of adoptors at time t = t
o

A number of studies (Nesbath and Ray 1976; Nielsen 1976; Swan 1973) considered the
international diffusion of technology. Bundgaard-Nielsen (1976) presented a quantitative
analysis of the parameters that influence the international diffusion of new technology. He
used the well known Pearl Reed curve to describe the diffusion process as follows:

A t
A
c t t
( )
( )
exp[ ( )]
=

+ 1
0

where

A(t) = number of adoptions of the new technology that have occurred in year t after
the introduction of the new technology.
A() = final number of adoptions
c = rate constant of the diffusion process
t
0
= time when half of the final number of adoption has occurred.

Swan (1973) made a study on the international diffusion of a consumer product - synthetic
rubber. He tried to quantify the observed patterns of diffusion for each country and to
explain the international differences in the pattern of diffusion. He applied the logistic
trend function to describe the observed pattern of diffusion,

SRS
SRS
e
it
in
a bt
=
+
+
1
( )

where

SRS
it
= synthetic share of total rubber consumption, in country i,
in year t.

21

SRS
in
= long-run equilibrium synthetic share of total rubber consumption, in country i,
0 1 s s SRS
in
.
a = constant term which positions logistic on time scale
b = rate of diffusion.

Therefore, in most of the technology diffusion or substitution studies, it is found to be valid
that the rate of diffusion at any time t is proportional to the present level of diffusion and
the amount yet to be achieved.

Mathematically, it can be expressed as

df t
dt
( )
o f (t) (F - f (t))

where
f (t) = the present level of diffusion at time t.
F = The maximum level of diffusion that can be achieved.
F - f (t) = The amount of diffusion yet to be achieved.

The above expression can be rewritten as

df t
dt
( )
= k. f (t) (F - f (t))

where k is a factor governing the assimilation rate. The traditional view assumes k to be
constant over time at any location (Blackman 1974; Fisher and Pry 1971; Nesbath and
Ray 1974).

22

2.8 Technology Transfer Models
The well known quantitative models on technology transfer have been developed by Haq
(1979), Sukchareonpong (1979), Baruch, Gerald Steinberg, and Andrew Ruina (1983),
Baruch Raz and Isak Assa (1988), Liu (1993) and Jayaraman, Truong and Agrawal (1998).

Haq (1979) developed a time-level technology transfer model to describe the pattern of
technology transfer. The time-level technology transfer model has been shown as follows:

f (D, t) =
F e
F e f D t
f D t
e
MAX
D
MAX
D
F
MAX
A e
D
t t

+

1
0
0
2
0
( , )
( , )
. ( )

Where

f (D, t) = the level of assimilation at a location having potential technological distance
D at time t.
F
MAX
= the maximum level of assimilation that can be achieved by the most
developed source in the technology
f D t ( , )
0
= the level of assimilation at location having potential technological distance
D at time t
0
.
D = potential technological distance between the transferor and recipient,
A = a positive constant,
and t = time.

Blackmans model, Fisher-Pry model and Mansfields model are special cases of the time-
level technology transfer model developed by Haq (1979).

HAQs model assumed that technology levels of transferor and transferee, technological
gap between transferor and transferee, and the potential technological distance of
transferee from transferor as constants.

23

Sukchreonpong (1979) developed the technology transfer model assuming the
technological levels of transferor and transferee, and the technological gap between
transferor and transferee as functions of time. Moreover, the potential technological
distance was used as the average value rather than a constant that has been used by Haq
(1979).

The model is expressed as follows:

f t
F
F f t
f t
a e
a e
a e
a e
e
x
b
x
t
x
b
x
t
kF
b
x
y
b
y
t
y
b
y
t
kF
b
y
kF t t
( )
( )
( )
( )
=
+

(
+
+
(
(
+
+
(
(

1
0
0
0
0
0

where

f (t) = existing level of technology of a transferee at time t
F = Maximum level of technology that can be achieved in the long run by the
transferee
a
x
, b
x
, a
y
, b
y
are positive real constants.
and t = time

Substituting the value of F as defined by Haq (1979), the model has been rewritten as

f t
F e
F f t
f t
a e
a e
a e
a e
e
MAX
D
x
b
x
t
x
b
x
t
kF
MAX
e
D
b
x
y
b
y
t
y
b
y
t
kF
MAX
e
D
b
y
kF t t
( )
( )
( )
( )
=
+

(
+
+
(
(
+
+
(
(

1
0
0
0
0
0

24

where

F
MAX
= maximum possible level of technology that the most developed country
(which has the highest technological level) can attain.
D = average potential technological distance of the transferee from the most developed
country.

Baruch Raz, Gerald Steinberg and Andrew Ruina (1983) developed a quantitative model
for the analysis of technology transfer which relates to the behaviours of the technological
leader and followers. In the model, they assumed that the rate of development of the
technological follower consists of two contributions:

dX
dt
k f x f x x
F
F F L F
= +
1 2
( ) ( , )

The first contribution, k
F
, represents the indigenous development of the follower and the
second contribution represents that of technology transfer. In many cases, k
F
is
significantly less than the second transfer term and progress is, thus, dependent on the gap
between leader and follower. As the gap decreases, the contribution of technology transfer
would logically become less significant, while for large gaps, the follower has a large
reservoir from which to draw.

Thus, the rate of technological progress of the follower has been expressed as

dX
dt
k k x x
F
F T L F
= + ( )

If the technological gap between the leader and the follower is zero, ie. the technological
level of the follower is equal to the leader, then the technology transfer can not occur as
there is nothing to transfer. In this case, the rate of progress of the follower would be only

25

its indigenous development. There will be no contribution due to technology transfer. The
rate of progress of the follower would become

dX
dt
k
F
F
= .

The analytic solution to the above model is given by

( ) ( )
| |
x t x k t k k k x x k k k e
F L L L F T L F L F T
k
T
t
( ) ( ) / ( ) / = +

0 0 0

where x t
F
( ) = technological development of the follower at time t.
x
L
0
= technological development of the leader at time t = 0.
x
F
0
= technological development of the follower at time t = 0.
k
L
= indigenous ability of the leader to develop.
k
F
= indigenous ability of the follower to develop.
k
T
= rate of technology transfer.

Later, Baruch Raz and Isak Assa (1988) improved the above model and the solution to the
above model is given by

X t X e e R e d
F F
K
T
t K
T
t
t
K
T
t
( ) ( ) = +

}
0
0
t t

R t b K e U b e K U b e
F F
K
F
t
F F
K
F
t
T L L
K
L
t
( ) ( ) / ( ). = + + +

1 1
2

where
X
F
0
= technological development of the follower at time t = 0.
K
L
= indigenous ability of the leader to develop.
K
F
= indigenous ability of the follower to develop.
U
L
= the upper limit of the technological development of

26

the leader.
U
F
= the upper limit of the technological development of
the follower.

The parameters such as technology transfer rate, K
T
, the rate of technological development
of the leader, K
L
, and the rate of technological development of the follower, K
F
, were
still assumed as constants.

In order to overcome some of the limitations of the previous work, Liu (1993) developed a
quantitative model for analysing technology transfer processes between countries in which
the absorbing capability of the follower has been taken into account explicitly.

Liu (1993) expressed the model by assuming that the growth rate of the follower is a
product of the absorbing capability (or transfer rate) K t
T
( ) and the current technological
gap between the leader and the follower as follows:

dX t
dt
K t X t X t
F
T L F
( )
( )[ ( ) ( )] =

where X t
L
( ) is an index of technological level of the leader, X t
F
( ) is an index of the
technological level of the follower and K t
T
( ) is a function that reflects transfer rate or the
followers absorbing capability that changes over time. K t
T
( ) is defined as

K t
T
( ) = K
X t
X t
F
F
L
( )
( )

The differential equation describing the technological development of the follower has
been expressed as

dX t
dt
K
X t
X t
X t X t
F
F
F
L
L F
( ) ( )
( )
[ ( ) ( )] =

27

where K
F
is a constant reflecting the transfer rate or absorbing capability of the follower.

The technology transfer models that have been developed by Haq (1979) and
Sukchareonpong (1979) used the following hypothesis:

The rate of assimilation of a transferee in a particular technology during technology
transfer at a certain time, t, is proportional to:

- the existing level of assimilation of the transferee in such technology
- the level remaining to be achieved by the transferee
- the function governing the technology transfer rate

The technology transfer models that have been developed by Raz et al. (1983 & 1988) and
Liu (1993) used the following hypothesis:

The rate of growth of a transferee in a particular technology during technology transfer at a
certain time, t, is proportional to:

- the indigenous development of the transferee
- the technology gap between the transferor and the transferee.
- the function governing the technology transfer rate

The functions governing the technology transfer rate found in the above models can be
summarized as follows:

| (t) = e
D
(Haqs Model)

| (t) = (1 - G (t)) (Sukchareonpongs Model)

28

| (t) =
T t
T t
x
y
( )
( )
(Lius Model)

where
| (t) is the function governing technology transfer rate.
T
x
(t) is the technological level of the transferor.
T
x
(t) =
1
1+

a e
x
b
x
t

T
y
(t) is the technological level of the transferee.
T
y
(t) =
1
1+

a e
y
b
y
t

a a b b
x y x y ,
, , , are positive real constants.
G (t) is the technological gap between the transferor and transferee.
G (t) = T
x
(t) - T
y
(t)
D is the potential technological distance between the transferor and transferee
D =
T T
T
x y
y

In all the models, excluding Raz et al. models (1983 & 1988), the technology transfer rate
is assumed to be governed by a factor, |(t), which reflects the absorbing capability of the
transferee. This is a logical assumption. During technology transfer, the transfer rate is
very much dependent on the assimilation or absorbing capability of the transferee. In Raz
et al. models (1983 & 1988), there is an assumption that the technology transfer is possible
only after the transferee has crossed a threshold point. However, the model does not
incorporate this condition. Moreover, it assumed the transfer rate as constant.

Based on the above hypothesis, Jayaraman (1998) developed the technology transfer
model as

29

f t
e
f t
k e d
kF d
t
t
kF d
t
t
t
t
( )
( )
( )
( )
( )
=
}
+
}
}
|
|
|
0
0
0
0
1

The above generalized mathematical model measures the level of technology assimilation
of a country in an industry during technology transfer with respect to time. It is a non-
linear function of time having a S-shape. The constant k can be obtained from the non-
linear regression analysis.

Jayaraman further developed the specific models for technology transfer using the
following functions governing the technology transfer rate:

| (t) = (1 - G (t)).G(t)

| (t) = R(t).G(t) =
T t
T t
T t T t
y
x
x y
( )
( )
( ( ) ( ))

| (t) = e
D t ( )
.G(t) = e T t T t
T
x
t T
y
t
T
y
t
x y
( ) ( )
( )
.( ( ) ( ))

where

| (t) is the function governing the technology transfer at time t.
T
x
(t) is the technological level of the transferor at time t.
T
x
(t) =
1
1+

a e
x
b
x
t

T
y
(t) is the technological level of the transferee at time t.

30

T
y
(t) =
1
1+

a e
y
b
y
t

a a b b
x y x y
, , , are positive real constants.
G (t) is the technological gap between the transferor and transferee
at time t.
G (t) = T
x
(t) - T
y
(t)
R(t) = relative technology position of the transferee from the transferor at time t.
R t
T t
T t
y
x
( )
( )
( )
=
D(t) = potential technological distance between the transferor and transferee at time t.
D(t) =
T t T t
T t
x y
y
( ) ( )
( )

In all the above functions governing the technology transfer, the following conditions
exist:

When the technology gap, G(t) = 1 ie. the technological level of the transferor, T t
x
( ) , is
very high as compared to the technological level of the transferee, T t
y
( ) , or in other words,
T t
y
( ) = 0, then the function governing the technology transfer, |(t), becomes zero.

When the technology gap, G (t) = 0 ie. the technological levels of the transferor and
transferee are equal, then the function governing the technology transfer, |(t), becomes
again zero.

That means when the technology gap between the transferor and transferee is too high ie.
G (t) = 1, none of the technology can be transferred since the transferee does not have
capability to assimilate the technology. When the technological gap is too close, or in other
words when they have very close technological levels ie. G (t) = 0, again there is no
transfer potential. It is due to the possession of identical level of transfer resources by both
the transferor and transferee - they have very little to transfer. Although there is a small

31

potential for transfer, but still that does not happen in reality because of the existence of
competition amongst themselves.

The specific models for technology transfer are expressed as

Model - 1
df t
dt
k G t G t f t F f t
( )
.( ( )). ( ) ( )( ( )) = 1

Model - 2
df t
dt
k R t G t f t F f t
( )
. ( ). ( ) ( )( ( )) =

Model - 3
df t
dt
k e G t f t F f t
D t
( )
. . ( ) ( )( ( ))
( )
=

where

k = a constant reflecting the rate of technology transfer

The specific models for technology transfer are developed as follows:

Model 1:

( )
f t
F
F f t
f t
a
y
e
b
y
t
a
y
e
b
y
t
kF b
y
e
kF t t
kFa
x
b
x a
x
e
b
x
t
a
x
e
b
x
t
kFa
y
b
y
a
y
e
b
y
t
a
y
e
b
y
t
( )
( )
( )
.
( )
( )
/
( ) ( )
=
+

+
+
+
+

+
+
+

+
(
(
|
\
|
.
|
|
|
\
|
.
|
|
|
1
0
0
0
2
2
0
1 1
0
1 1
0

Where ( )
( )( )
t
dt
a
x
e
b
x
t
a
y
e
b
y
t
t
=
+

+

}
1 1
0

32

Model 2:

f t
e
f t
kG R e d
kF G R d
t
t
kF G R d
t
t
t
t
( )
( )
( ). ( )
( ). ( )
( ). ( )
=
}
+
}
}

0
0
0
0
1

Model 3:
f t
e
f t
kG e e d
kF G e
D
d
t
t
D
kF G e
D d
t
t
t
t
( )
( )
( ).
( ).
( )
( )
( ).
( )
=
}
+

}
}

0
0
0
0
1

The above specific mathematical models measure the level of technology assimilation of
the transferee in a given industry with respect to time. It is a non-linear function of time
having a S-shape. The constant k can be obtained from the non-linear regression analysis.

2.9 Gaps in the Literature
Based on the above literature review, it may be observed that the quantitative or
mathematical modelling has not been significantly utilized in analyzing the technology
transfer process. Some of the well known quantitative studies on technology transfer have
been done by Haq (1979), Suckchareonpong (1979), Baruch Raz, Gerald Steinberg, and
Andrew Ruina (1983), Baruch Raz and Isak Assa (1988), Liu (1993), Bhargava (1995),
Jayaraman, Truong and Agrawal (1998). It is appropriate that more contribution to the
knowledge relating to technology transfer can be made in studying the process of
technology transfer using quantitative methods. If we can quantify the technological level
of the transferor and transferee, the relative technological gap between them and the level
of assimilation, then it would be possible to model the technology transfer process

33

quantitatively. A methodology to evaluate the technology transfer potentials incorporating
the time, technological levels and technology gap between the transferor and transferee
will help in understanding the complex process of technology transfer. The main emphasis
of this study is to develop a quantitative model incorporating time, technological level and
a dynamic potential technological distance for measuring the technology transfer potentials
that exist between a transferor and a transferee at the industrial level.

In developing technology transfer model, Haq (1979) assumed that the technology levels
of transferor and transferee, the technology gap between the transferor and transferee, and
the potential technological distance of the transferee from transferor as constants.
However, Sukchareonpong (1979) assumed the above parameters as functions of time.
Both Haq (1979) and Sukchareonpong (1979) measured the technology levels by way of
an index but used the actual values for measuring the level of assimilation. In developing
technology transfer models, Raz et al. (1983 & 1988), Liu (1993), and Jayaraman, Troung
and Agrawal (1998) assumed that the technology levels of transferor and transferee, and
the technology gap between transferor and transferee as functions of time. They used
indexes for measuring the level of technology growth.

The technology transfer models that have been developed so far in the literature use the
following two types of hypothesis.

Hypothesis 1 - The rate of growth of transferee during technology transfer is proportional
to the indigenous development of the transferee, the technological gap between transferor
and transferee and the function governing the technology transfer rate.

Hypothesis 2 - The rate of assimilation of transferee during technology transfer is
proportional to its existing level of assimilation, the level of assimilation remaining to be
achieved in the long run and the function governing the technology transfer rate.

As discussed earlier, it is widely accepted in the literature on Technology Transfer (Haq
1979, Sharif-Haq 1981, Sukchareonpong 1979], Jayaraman-Truong-Agrawal 1996) that

34

the salient feature governing the technological transfer process is that the transfer rate at
any time is proportional to the current level of assimilation of such technology of the
transferee and the level remaining to be achieved by the transferee in the long run.
However, there may be many other important factors influencing the transfer rate such as
the technological gap between transferor and transferee, the potential technological
distance between the transferor and transferee, the geographical distance between locations
etc.

In this study, in developing the technology transfer model, it is hypothesized that the rate
of assimilation of a particular technology of a transferee at a certain time, t , is proportional
to:
(a) the existing level of assimilation of such technology of the transferee,
(b) the level remaining to be achieved by the transferee in the long run, and
(c) a function that incorporates the factor that influences the assimilation rate in a
significant manner ( such as the relative technological gap between the transferor and
transferee). The potential technological distance is defined as the relative technological gap
between the transferor and transferee.

2.10 Summary
In this chapter, the concept of technology is presented. The definition of technology
consisting of four components (Technoware, Humanware, Orgaware and Inforware) is
considered for this study. The general overviews of measurement and indices are given.
The methods determining weights including factor analysis method are briefly reviewed.
The concept of technology transfer and various technology diffusion and transfer models
available in the literature are then presented. Finally, the gaps in the literature are identified
and presented.

35

CHAPTER 3: RESEARCH METHODOLOGY

3.1 Introduction
The specific objectives of this research is to develop of a mathematical function that
determines the technological level of a country; develop a generalized mathematical model
for measuring the technology transfer potentials that exist between a transferor and a
transferee; develop a specific dynamic mathematical model incorporating time and
technological level for evaluating technology transfer potentials; verify the technology
transfer model for boundary conditions; derive the technological transfer/change models as
a special case of the technology transfer model developed; and apply the technology
transfer model to study the technology transfer pattern in selected countries in certain
industries.

In this chapter, a mathematical function is developed using the logistic growth pattern to
determine the technological level of a country, in a given industry. This is measured by an
indicator called Technology Index. Considering the variables that influence and reflect
the performance of that industry, the technology index is computed using the factor
loadings obtained by the statistical technique factor analysis. Initially, the concept of
technology index and the methodology for measuring the technology index using factor
analysis are presented. The normalization of technology index and the development of
technology index function are then explained. The available input and output indicators
leading to the determinants for measuring the technology index at the industry level are
then presented.

To develop the technology transfer model, it is hypothesised in this study that the
technology assimilation rate of the transferee is proportional to its existing level of
assimilation, the level remaining to be achieved in the long run and the function governing
the technology transfer rate. The function governing the technology transfer rate is
assumed to be the function of relative technological gap, namely potential technological

36

distance, between the transferor and the transferee. A generalized mathematical model for
measuring the technology transfer potentials that exist between a transferor and a
transferee is developed initially in this study. Then, a specific dynamic technology transfer
model is developed incorporating time, technological level and dynamic potential
technological distance.

As this study is on developing a quantitative model for measuring the technology transfer
potentials that exist between a transferor and a transferee at the industrial level, the
variables that influence and reflect the performance of the given industry of various
countries under study are identified and collected for the past few years. The raw data
collected for various countries for the past few years are then converted into standardized
data. The factor analysis is used to determine the factor loadings of the variables for
formulating the technology index at the industrial level. The calculated technology index is
then normalized to have value between 0 and 1. The past technology indexes of each
country in the given industry are used to develop its technology index function by using
the logistic growth pattern. The technology index function developed for each country in
the given industry is then used for determining its technology level by way of an index.

To show the applicability and validity of the technology transfer model developed in this
study, some countries are selected to study their technology transfer pattern in selected
industries such as automobile industry, electronics industry, and computing industry. The
variables such as Research and Development (R&D) Expenses per economically active
population, Output per employee in the manufacturing sector, Value added per employee
of the manufacturing sector, Output per employee of the specific industry, and Value
added per employee of the specific industry, are considered in this study for developing the
technology index function. Here, it is assumed that the national level technology climate
variables and the manufacturing sectoral level technology climate variables have direct
influence on the growth of the specific industry. The Value added per employee in the
specific industry is considered as the technology assimilation parameter indicating the
effectiveness of the application of the technological components at the industrial level.

37

The development of a generalized mathematical model for measuring the technology
transfer potentials that exist between a transferor and a transferee and a specific dynamic
technology transfer model incorporating time, technological level and dynamic
technological gap, verification of the selected technology transfer model for boundary
conditions, and derivation of technology transfer/change models as a special case of the
technology transfer model developed are presented in the chapter 4. The case studies to
show the applicability and validity of the technology transfer model developed are
presented in chapter 5.

3.2 Technology Index
The technological level is defined as the capability of the technological system that
consists of technoware, humanware, inforware and orgaware (Technology Atlas Project
Team 1989) and it is measured through an index called Technology Index. It measures
the technological level on a single measure by aggregating the related statistics. The
technology index measured at the firm level refers to the level of technological
components applied in the production facilities within a firm. The technology index
measured at the industrial level refers to the level of the technological components applied
in the different production facilities within an industry. The technology index measured at
the national level refers to the level of the technological components applied in the
different production facilities in various industries within a country.

3.3 Methodology for Measuring Technology Index
Factor analysis is used in this study to construct the technology index. It is expressed as
follows:

T
a
Y
j
j
n
j
=
=
1
1
1

where

T = technology index,

38

a
j1
= the first factor loading,

1
= eigenvalue for the first factor,
and Y
j
= a standard form of j-th variable.

The factor analysis helps to develop a scale on which individuals, groups or nations can be
rated and compared (Rummel 1970). One of the problems that would be encountered when
using many variables is that the dimensions of these measured values may be different.
Many methods are available to overcome this problem. However, in this study factor
analysis technique is used to perform the required integration of several variables to give a
technology index.

Factor analysis method derives common variation from the correlation of chosen variables,
identifies the measurement overlaps, and extracts a group of fundamental and hypothetical
factors, with a view to use the correlation among the factors to redefine the correlation
among several variables. This technique usually involves the following two steps:

- calculation of the correlation coefficient matrix, and
- extraction of the factor loading matrix.

The variables should be unified into identical measurement units. A statistical method is
used in converting variables with different measurement units to the same measurement
unit transforms the value of each variable to the corresponding probability variable, under
the assumption that each factor forms a normal probability distribution. For example, the
value of each variable can be transformed to the Z-score with the average value of 0 and
the variance of 1 under the assumption that each variable is normally distributed.

Let us assume the case where the factor loading matrices of the five variables,
X X X X
1 2 3 4
, , , , and X
5
are shown below:

39

Factors

Variable F1 F2 F3 F4 F5 Communality

X
1
F
11
F
12
F
13
F
14
F
15
C F
j 1 1
2
=

X
2
F
21
F
22
F
23
F
24
F
25
C F
j 2 2
2
=

X
3
F
31
F
32
F
33
F
34
F
35
C F
j 3 3
2
=

X
4
F
41
F
42
F
43
F
44
F
45
C F
j 4 4
2
=

X
5
F
51
F
52
F
53
F
54
F
55
C F
j 5 5
2
=

Eigen
value E F
i 1 1
2
= E F
i 2 2
2
= E F
i 3 3
2
= E F
i 4 4
2
= E F
i 5 5
2
= 5

In principle, the five variables are respectively matched by the corresponding five factors,
because the meaning of each factor differs so long as the five variables are not identical. In
the factor loading matrix, the factor loading value, ( F i j
ij
, ,2,..., ; ,2,..., = = 1 5 1 5), the
communality, the factor loading matrix, and the eigen value have the following relations:

F C j
ij i
2
1 1 5 = = =
, ( ,2,..., )
F E i
ij i
2
1 5 = =
, ( ,2,..., )
E j
j
= =
5 1 5 , ( ,2,..., )

where

F = the factor loading value
C = the communality
E = the eigen value

40

Suppose that F
11
2
and F
12
2
stand for the variation of X
1
explained by factor 1 and that of
X
1
explained by factor 2, respectively. The total variation of X
1
explained by factor 1
through factor 5, ( F F F F F
11
2
12
2
13
2
14
2
15
2
+ + + + ) amounts to 1.

The total variation of the five variables ( X
1
~ X
5
) that is explained by factor 1 (
F F F F F
11
2
21
2
31
2
41
2
51
2
+ + + + ) is called the eigen value. This value represents the
portion that factor 1 explains out of the total variation. For instance, if the eigen value is
4.0, the total variation of the five variables ( X
1
~ X
5
) is 5, and therefore factor 1 explains
80% (4.0 out of 5) of the total variation.

Assume that F
11
, F
21
, F
31
, F
42
, and F
52
have respectively the highest value in the
corresponding factor loading matrix of X
1
, X
2
, X
3
, X
4
, and X
5
. In this case X
1
, X
2
, and
X
3
can be categorized as a group that shares an identical characteristic of factor 1, and so
can X
4
and X
5
as group that has the characteristic of factor 2. As a result, X
1
, X
2
, X
3
, X
4
, and X
5
can be divided into two groups represented by factor 1 and factor 2. Such a
process leads to the selection of variables required for the derivation of the index.

When X X and X
1 2 3
, , are grouped together, the weight is calculated from factor loading
matrix. The weight of each factor amounts to the variation of each variable ( F i
ij
2
1 3 , ,2, = )
divided by the total variation of X X and X
1 2 3
, , . Therefore, the weight of X
1
is
F
F F F
11
2
11
2
21
2
31
2
+ +
, that of X
2
is
F
F F F
21
2
11
2
21
2
31
2
+ +
, and that of X
3
becoming
F
F F F
31
2
11
2
21
2
31
2
+ +
.

Finally, Index T can be calculated by the following equation:

41

T
F
F F F
Z
F
F F F
Z
F
F F F
Z =
+ +
+
+ +
+
+ +
11
2
11
2
21
2
31
2
1
21
2
11
2
21
2
31
2
2
31
2
11
2
21
2
31
2
3
* * *

where Z Z Z
1 2 3
, , = the Z-scores of X X X
1 2 3
, , , respectively, in the standard normal
distribution.

3.4 Technology Index - Normalization
The technology index, T, obtained from factor analysis ranges from - to +. Since the
variables are assumed to be normally distributed, the technology index, T, which is the
sum of standardized normal variates is also normally distributed. It is appropriate to have a
standardized normal variates (i.e., with mean 0 and variance 1) than the non-standardized
ones. By , employing the cumulative normal distribution table, the technology index, T, is
normalized.

Since Technology index, T is a Z-score, it has positive or negative values. The
methodology of transforming an index with positive or negative values into an index with
nonnegative value between 0 and 1 is known as ZX-score method. The Z-score has the
average of 0 and a variance of 1. The probability that a value of less than 0 can occur is
0.5, which is also the probability area under the normal curve that a value of more than 0
can occur.

3.5 Technology Index Function
The technology index measures the technological level or capability of a particular
industry in a given country. It indicates the knowledge of a country in a particular industry.
Technical knowledge or capability is cumulative in nature, and in general, increases with
respect to time (Patel 1972). Further, it is logical to assume that this increase in the
knowledge would be increasing at an increasing rate in the initial stage and increasing at a
decreasing rate toward the latter stage. In this study, it is hypothesized that the technology
index is a function of time and having a form of S-curve or Pearl Curve as follows:

42

T t
ae
bt
( ) =
+

1
1

where T(t) is the technology index function at year t with 0 s s T t ( ) 1; and the constants a
and b have positive values.

The technology index function can be estimated by taking the natural logarithm on both
sides and converting the resultant expression into linear regression equation as shown
below:

Y t = + o |

where
Y
T t
= ln(
( )
)
1
1

o = ln , a < o <

| = - b, | < 0.

3.6 Evaluating Technological Characteristics
The technological transformation activities of a production system are evaluated using the
concept of substitutability of labour and capital, and the economic value added at a
transformation facility. Some indicators based on capital and labour are capital per
employee, tangible fixed assets per employee, capital per unit output, profit per unit of
capital, and output per employee. Some indicators based on economic value added (VA)
are VA as a ratio of total tangible fixed assets, VA per employee, VA per unit employee
compensation, VA per unit gross output, and profit as a proportion of VA.


43

3.7 Determinants of Technology Index
The technological capability of a country at the industrial level is generally influenced by
both the national and manufacturing technology climate factors.

In this study, the factors that determine the technological capability of a country at the
industrial level are broadly based upon the following three categories:

- National Technology Climate Factors.
- Manufacturing Technology Climate Factors.
- Specific Industry Technology Climate Factors.

Due to the limitation on the availability of data, the following variables are considered for
measuring the technology index at the industrial level:

National Technology Climate Factors:
- Research and Development Expenditure per Economically Active Population.

Manufacturing Technology Climate Factors:
- Output per Employee in Manufacturing Sector.
- Value added per Employee in Manufacturing sector.

Specific Industry Technology Climate Factors:
- Output per Employee in Specific Industry.
- Value added per Employee in Specific Industry.

The Research and Development Expenditure per Economically Active Population reflects
the support of the nation towards the development of science and technology climate
which is a major input to the development of the overall manufacturing sector that consists
of various specific industries.

44

The output per employee in the manufacturing sector or each specific industry reflects the
technology and its sophistication employed in their production facilities. The value-added
per employee in the manufacturing sector or each specific industry reflects the
effectiveness of the human skills and technology employed in their production facilities.


3.8 Summary
In this chapter, the concept of technology index, the methodology used to construct the
technology index, the normalization of technology index and development of technology
index function are presented. The determinants of technology index at the industrial level,
used for this study, are identified. In this chapter, the factor analysis is proposed to
determine the factor loadings of the variables for formulating the technology index at the
industrial level. The calculated technology index is then normalized to have value between
0 and 1. The technology indexes data are used to develop its technology index function by
using the logistic growth pattern. The technology index function is then used for
determining its technology level by way of an index.

45

CHAPTER 4: TECHNOLOGY TRANSFER MODEL
DEVELOPMENT

4.1 Introduction
To develop the technology transfer model, it is hypothesised in this study that the
technology assimilation rate of the transferee is proportional to its existing level of
assimilation, the level remaining to be achieved in the long run and the function governing
the technology transfer rate. The function governing the technology transfer rate is
assumed to be the function of relative technological gap, namely potential technological
distance, between the transferor and the transferee. A generalized mathematical model for
measuring the technology transfer potentials that exist between a transferor and a
transferee is developed initially in this study. Then, a specific dynamic technology transfer
model is developed incorporating time, technological level and dynamic technological gap.

Finally, the model is verified for boundary conditions. The Haqs model, Blackmans
model, Fisher-Pry model, Bhargava model, Mansfield model, and Jayaraman-Truong-
Agrawal model are derived to be the special cases of the technology transfer model
developed.

4.2 Assumptions in developing Technology Transfer Model
In developing the technology transfer model, the following assumptions (Haq 1979, Sharif-
Haq 1981, Sukchareonpong 1979, Jayaraman-Truong-Agrawal 1996, Truong 2002) are
made:

(i) Technology transfer requires a transferor and a transferee of technology. The transferor
must be willing to transfer the technology to the transferee.
(ii) Since the transferor has higher technological level of such technology to be transferred,
there is a technological gap between transferor and transferee.

46

(iii) The transferee must have the required capability to adapt the technology. The
capability of the transferee to exploit a particular technology is determined by its
technological level measured by its technological index.
(iv) The result of the spatial diffusion will be technology assimilation by the transferee.
The level of the technology transferred at time t is determined by the diffusion of that
technology until the time t .
(v) Technology is assumed to be specific. Over time, the mode of production is considered
to remain the same. The model does not allow for revolutionary changes or
breakthrough in the production of similar product.
(vi) If the technology gap between the transferor and transferee in the given industry is too
high, less or even none of technology can be transferred since the transferees industry
does not have enough capability to assimilate the technology. If the technology gap is
too close, the transfer potential is again low because they have very little to transfer.
The countries having close technological level in an industry produce the same kind of
product (or technology), hence they are competitors. Although in this case there is a
small potential for transfer, but still that does not happen in reality because of the
existence of the competition amongst themselves and their desire to maintain a
competitive edge.
(vii) The maximum level of the technology that is to be assimilated by the transferee will
be determined by the relative technological gap between the transferor and transferee.

4.3 Technology Transfer Generalized Model
Several mathematical models of technology transfer have been developed by researchers
regarding the transfer process either as a process of substitution of one technology for
another (Mansfield 1961, Fisher-Pry 1975, Bhargava 1995, Blackman 1974) or as a
technological diffusion process (Haq 1979, Sharif-Haq 1981, Sukchareonpong 1979,
Jayaraman-Truong-Agrawal 1996).

It is widely accepted in the literature on technology transfer (Haq 1979, Sharif-Haq 1981,
Sukchareonpong 1979, Jayaraman-Truong-Agrawal 1996, Truong 2002) that the important
factor governing the technological transfer process is that the transfer rate at any time is

47

proportional to the current level of assimilation of such technology of the transferee and
the level remaining to be achieved by the transferee in the long run. However, there may be
many other important factors influencing the transfer rate such as the technological gap
between transferor and transferee, the potential technological distance between the
transferor and transferee, the geographical distance between locations etc.

In developing the model, the function governing the technology transfer rate is considered
as dependent on the relative technological gap between the transferor and the transferee
which is the potential technological distance. In many spatial diffusion studies, the
geographical distance between the transferor and the transferee acts as a major determinant
of the transfer process. The greater the distance, the lesser the impact of innovation.
Generally the geographical distance has insignificant bearing upon technological
innovation diffusion. For example, Japan is far away from USA as compared to South
American countries, but in case of automobile technology, electronics technology and
computing technology, Japan is far ahead of the South American countries. This suggests
that geographical distance is not necessarily an important factor for studying the
technology transfer process. Instead it will be more relevant to consider the relative
technological distance between the transferor and the transferee.

Therefore, in this study, in developing the technology transfer model, it is hypothesized
that the rate of assimilation of a particular technology of a transferee at a certain time, t , is
proportional to:

(a) the existing level of assimilation of such technology of the transferee,
(b) the level remaining to be achieved by the transferee in the long run, and
(c) a function that incorporates the factor that influences the assimilation rate in a
significant manner ( such as the relative technological gap between the transferor and
transferee). The potential technological distance is defined as the relative technological gap
between the transferor and transferee.

48

Thus the general form of the technology transfer model can be mathematically expressed
as

)] ( ) ( )[ ( ) ( t f t F t f t
dt
df
+

or

)] ( ) ( )[ ( ) ( t f t F t f t k
dt
df
+ = (1)

where

) (t + is a function governing the technology transfer rate and k is a positive proportionality real
constant.

In the literature (Haq 1979, Sharif-Haq 1981, Sukchareonpong 1979, Jayaraman-Truong-
Agrawal 1996, Truong 2002) so far, both ) (t F and ) (t + are taken to be constant. For
instance, Sharif-Haq (1979) introduces the technological gap as
y
y x
T
T T
D

= and assume
D
Ae t

= + ) ( ,
D
e F t F

=
max
) ( where D is treated as a constant. Sukchareonpong (1979)
was the first to incorporate time and a dynamic technological gap ) ( ) ( ) ( t T t T t G
y x
= into
the model by assuming ) ( 1 ) ( t G t = + , where ) (t G is the technological gap between the
transferor and transferee. Jayaraman-Truong-Agrawal (1996) improved Sukchareonpongs
model by taking a more suitable function of the form )] ( 1 )[ ( ) ( t G t G t = + . All authors
have, however, treated ) (t F as a constant. The main reason for this restriction is that, in
such a case one can solve (1) by separating it as:

49

dt t k
t f F f
df
) (
)] ( [
+ =

and then integrating both sides, noting that the integral of the left hand side is
|
|
.
|
\
|
) (
) (
ln
1
t f F
t f
F
.

In this study, we will assume ) (t F is a function of t
.

dt
df
=
2
) ( ) ( ) ( ) ( ) ( t f t k t f t F t k + +

) (
) (
) ( ) (
) (
1
2
t k
t f
t F t k
dt
df
t f
+
+
=

or

- ) (
) (
) ( ) (
) (
1
2
t k
t f
t F t k
dt
df
t f
+ =
+

Solving the above equation, one gets

d e k
t f
e
t f
t
t
t
d F k t
t
d F k
}
+ +
}
=
+
+
}
0
0
0
) ( ) (
0
) ( ) (
) (
) (
1
) ( (2)

Equation (2) is the formula showing the flow of the transferred technology with respect to
time.

50

Notice that in the special case where = = F t F ) ( constant, the general solution (2)
becomes:

}
|
|
.
|
\
|
+
=
+
t
t
d kF
e
t f
t f F
F
t f
0
) (
0
0
) (
) (
1
) (

(3)

Equation (3) is the formula representing the flow of the transferred technology with respect
to time in the case where F is a constant.

4.4 Technology Transfer - Specific Model
In this study, an extended dynamic model of technology transfer is developed by giving
both ) (t + and ) (t F special functional forms and taking into account the influence on the
transfer rate by the most significant factor, the potential technological distance.

Substituting ) ( ' ) ( t D t = + for 0 > t ,
) (
) (
t D
Fe t F

=
in the generalised technology
transfer model developed in (2),

}
}
}
=

t
t
d D e kF
d D e kF
d e D k
t f
e
t f
t
D
t
t
D
0
0
) (
0
) (
) ( '
0
) ( '
) ( '
) (
1
) (

and solving, we get the final solution as:

| |
( ) ( ) { }
) ( ) (
0
0
)
0
(
)
0
( ) (
) (
1
) (
t D t D kFe
e e kF
kFe Ei kFe Ei ke
t f
e
t f
t D
t D t D

+
=

(4)

Equation (4) is the specific mathematical model showing the level of technology
assimilation of a country in an industry with respect to time. It is a non-linear function of

51

time having a S-shape. The constant k can be obtained from the non-linear regression
analysis.

In the above model, the values of D and F are functions of time. For simplicity in
computation, the potential technological distance between the transferor and the transferee
can be reasonably approximated to their average values of D in the time period of t
1
and t
2
. The average value of D is computed by dividing the relative average of technological gap
between the transferor and the transferee in the time period of t
1
and t
2
,
by the average
technological level of the transferee in the time period of t
1
and t
2
. It is further assumed
that F is the maximum level of assimilation that the most developed country can achieve
in the long run.

The potential technological distance is redefined as,

D
T T
T
x y
y
=

where

T
t t
T t dt
x x
t
t
=
}
1
2 1
1
2
( )

= average value of T
x
in the time period of t
1
and t
2
.

T
t t
T t dt
y y
t
t
=
}
1
2 1
1
2
( )

= average value of T
y
in the time period of t
1
and t
2
.

52

substituting the values of T
x
and T
y
in the above Eqn., we get

D
t t
T t dt
t t
T t dt
t t
T t dt
x
t
t
y
t
t
y
t
t
=

} }
}
1 1
1
2 1
1
2
2 1
1
2
2 1
1
2
( ) ( )
( )

D
T t dt T t dt
T t dt
x
t
t
y
t
t
y
t
t
=

} }
}
( ) ( )
( )
1
2
1
2
1
2

Substituting the average value of D as D
T t dt T t dt
T t dt
x
t
t
y
t
t
y
t
t
=

} }
}
( ) ( )
( )
1
2
1
2
1
2
and F =
max
F in the
technology transfer model

| |
( ) ( ) { }
) ( ) (
0
0
)
0
(
)
0
( ) (
) (
1
) (
t D t D kFe
e e kF
kFe Ei kFe Ei ke
t f
e
t f
t D
t D t D

+
=

o

After some arrangement, the above model is given by:

}
|
|
.
|
\
|
+
=

t
t
D D
d e e kF
D
e
t f
t f F
e F
t f
0
max
) (
) (
1
) (
0
0 max
max

53

) (
0
0 max
max
0
2
max
) (
) (
1
) (
t t e kF
D
D
e
t f
t f F
e F
t f

|
|
.
|
\
|
+
=

Notice that this equation can be easily re-written as:

)
0
( 2
max
) (
) (
) (
) (
0 max
0
max
t t D
e kF
D
e
t f F
t f
t f e F
t f

Taking logarithm both sides:

) ( 2
max
0 max
0
max
0
) (
) (
ln
) (
) (
ln
t t D
D D
e kF
t f e F
t f
t f e F
t f

+
(
=
(

Letting:
0
2
max
0 max
0
1
) (
) (
ln t e kF
t f e F
t f
c
D
D

= , and
D
e kF c
2
max 2

= we get:

t c c
t f e F
t f
D
2 1
max
) (
) (
ln + =
(

Knowing the relative technological level of a country compared to various sources and its
own level of assimilation, one can use the above model to determine technology transfer
potentials.

4.5 Verification of Technology Transfer Model
The technology transfer model developed in this study is verified for boundary conditions
as discussed below. The boundary conditions are based on the fact that at time t ;
the
assimilation level of the transferee will be equal to zero, and
at t +;
the assimilation
level of the transferee will be equal to
F e
D
max

.

54

where

max
F
is the maximum level of assimilation that the transferor will achieve
at t +;
and
D is the potential technological distance between the transferor and transferee.

Assuming the average value of D as D
T t dt T t dt
T t dt
x
t
t
y
t
t
y
t
t
=

} }
}
( ) ( )
( )
1
2
1
2
1
2
and F =
max
F in the
technology transfer model

| |
( ) ( ) { }
) ( ) (
0
0
)
0
(
)
0
( ) (
) (
1
) (
t D t D kFe
e e kF
kFe Ei kFe Ei ke
t f
e
t f
t D
t D t D

+
=

o

the model is rewritten as,

) (
0
0 max
max
0
2
max
) (
) (
1
) (
t t e kF
D
D
e
t f
t f F
e F
t f

|
|
.
|
\
|
+
=

To verify the technology transfer model obtained as above, it is necessary that the
following boundary conditions (minimum and maximum values at time infinity) should be
satisfied.

55

(i) at t ; lim ) (t f = 0.
t

(ii) at t +; lim ) (t f = F e
D
max

t +

The boundary conditions are applied to the model as follows:

) (
0
0 max
max
0
2
max
) (
) (
1
) (
t t e kF
D
D
e
t f
t f F
e F
t f

|
|
.
|
\
|
+
=

At t ; on taking the limits of both sides in Eqn. as t , one obtains,

|
|
.
|
\
|
+
=
e
t f
t f e F
e F
t f
D
D
) (
) (
1

) (
0
0 max
max

. 0
1
) (
max
=
+
=
D
e F
t f

At t +; on taking the limits of both sides in Eqn. as t +, one obtains,

|
|
.
|
\
|
+
=
e
t f
t f e F
e F
t f
D
D
) (
) (
1
) (
0
0 max
max

56

D
D
e F
e F
t f

=
+
=
max
max
0 1
) (

The technology transfer model,
) (
0
0 max
max
0
2
max
) (
) (
1
) (
t t e kF
D
D
e
t f
t f F
e F
t f

|
|
.
|
\
|
+
=
is thus verified as shown above.

4.6 Derivation of Previous Technology Transfer/Change Models in the Literature
The dynamic technology transfer model developed in this study can be used to generate the
time-level technology transfer models (Haq-Shariff model, Sukchareonpong model, and
Jayaraman-Truong-Agrawal model), and the models of technological change (namely,
Blackmans model, Fisher-Pry model, Mansfields model, and Bhargava model) by
making certain assumptions. The previous models developed in the literature are shown to
be the derived cases of the dynamic model developed in this study.

Fisher-Pry model (Fisher-Pry 1975):

In this case , take ) (t + = 1, ) (t F = 1, ) (
0
t f =
2
1
, and o 2 = k .

Then the solution as given by:

) ( 2
) ( 2
1 2
0
1 2
0
0
0
0
1
1
) (
1
) (
t t
t t
dt
dt
e
e
e
t f
e
t f
t
t
t
t
+
=
}
+
|
|
.
|
\
|
}
=
o
o
o
o

= 1 ) ( 1 t f
) ( 2
) ( 2
0
0
1
t t
t t
e
e
+
o
o
=
) ( 2
0
1
1
t t
e

+
o

57

) ( 2
0
) ( 1
) (
t t
e
t f
t f

=
o
( Fisher-Pry model).

Bhargava model (Bhargava 1995):

1 1 1
) ( ) (

= = +
c c c
ct b bt c t , ) (t F = 1, ) (
0
t f =
2
1
, and b k = .


) (
) (
0
1
0
1
0
0
1 1
0
1 1
1
1
) (
1
) (

+
=
}
+
|
|
.
|
\
|
}
=
c c c
c c c
t
t
c c
t
t
c c
t t b
t t b
dt ct b b
dt ct b b
e
e
e
t f
e
t f

Putting
c
bt a ) (
0
= , we have:

c
c
bc a
bc a
e
e
t f
) (
) (
1
) (
+
+
+
=

= 1 ) ( 1 t f
c
c
bc a
bc a
e
e
) (
) (
1
+
+
+
=
c
bc a
e
) (
1
1
+
+

c
bc a
e
t f
t f
) (
) ( 1
) (
+
=
( Bhargava model).

58

Blackman model (Blackman 1974):

Here, we take ) (t + = 1, ) (t F =
max
F , and A k = .


}
+
|
|
.
|
\
|
}
=
t
t
t
t
d AF
d AF
e
F F t f
e
t f
0
max
0
max
1
max max 0
1
1 1
) (
1
) (

) (
max max 0
) (
0 max
0 max
1 1
) (
1
) (
t t AF
t t AF
e
F F t f
e
t f
+
|
|
.
|
\
|
=

Putting
) (
0
0 max
) (
t t AF
e t f

= u we have:

u +
u
=
) (
) (
0 max
max
t f F
F
t f

) (
max
t f F =
u +

) (
)] ( [
0 max
0 max max
t f F
t f F F

( )
) (
max
0 max
) (
0 max
0 max
0 max
1
) (
) (
t t AF
t t AF
e
F
t f F
e t f F
+
=

59

)] ( [ ) (
) (
0 max max
max
max
t f F F
F
t f F
t f
u
=
=
) (
) (
0 max
) (
0
0 max
t f F
e t f
t t AF


) (
) (
) (
ln
) (
) (
ln
0 max
0 max
0
max
t t AF
t f F
t f
t f F
t f
+
(
=
(

Let
0 max
0 max
0
1
) (
) (
ln t AF
t f F
t f
c
(
= , and
max 2
AF c = , then

t c c
t f F
t f
2 1
max
) (
) (
ln + =
(
(Blackman model)

Mansfield model (Mansfield 1961):

Here, ) (t + = 1, ) (t F = 1, and A k = . This is case 3 with 1
max
= F .


) (
0
0
0
) ( 1
) (
) ( 1
) (
t t A
e
t f
t f
t f
t f

Letting
(
=
) ( 1
) (
ln
0
0
t f
t f
c , we get:
c
e
t f
t f
=
) ( 1
) (
0
0
.

c
e
t f
t f
=
) ( 1
) (
. )
0
( t t A
e
At At c
e
+
=
) (
0

60

=
At c
e
+
1
, where
0 1
At c c = .

Re-arranging, one gets:

) (
1
1
1
) (
At c
e
t f
+
+
= (Mansfield model).

Sharif-Haq model (Haq 1979, Sharif-Haq 1981):

) (t + =
D
e
, ) (t F =
D
e F

max
, and A k = ,

where
y
y x
T
T T
D

= is treated as a constant.


}
|
|
.
|
\
|
+
=

t
t
D D
d e e AF
D
e
t f
t f F
e F
t f
0
max
) (
) (
1
) (
0
0 max
max

) (
0
0 max
max
0
2
max
) (
) (
1
) (
t t e AF
D
D
e
t f
t f F
e F
t f

|
|
.
|
\
|
+
=

Notice that this equation can be easily re-written as:

)
0
( 2
max
) (
) (
) (
) (
0 max
0
max
t t D
e AF
D
e
t f F
t f
t f e F
t f

61


) ( 2
max
0 max
0
max
0
) (
) (
ln
) (
) (
ln
t t D
D D
e AF
t f e F
t f
t f e F
t f

+
(
=
(

Letting:
) ( 2
max
0 max
0
1
0
) (
) (
ln
t t D
D
e AF
t f e F
t f
c

= , and
D
e AF c
2
max 2

=

we get:

t c c
t f e F
t f
D
2 1
max
) (
) (
ln + =
(
(Sharif-Haq model)

Sukchareonpong model (Sukchareonpong 1979):

) (t + = ) ( 1 t G , ) (t F = F , and o ' k k = , where ' k is a positive constant.

Then the solution as given by (9) is:

}
|
|
.
|
\
|
+
=

t
t
d G kF
e
t f
t f F
F
t f
0
)] ( 1 [
0
0
) (
) (
1
) (

Now,

d
e a
e a
kF d G kF
t
t
t
t
b
y
b
x
y x
} }
+
+
+
=
0 0
]
1
1
1
1
1 [ )] ( 1 [

62

= ( ) ( )
t
t
b
x
y
b
x
x
y
x
e a
b
e a
b
kF
0
ln
1
ln
1
(
(
+ + +

=
|
|
.
|
\
|
+
+
|
|
.
|
\
|
+
+
+
0 0
ln ln ) (
0
t b
y
t b
y
x
t b
x
t b
x
x
y
y
x
x
e a
e a
b
kF
e a
e a
b
kF
t t kF

}

t
t
d G kF
e
0
)] ( 1 [
=
) (
0
0 0
t t kF
b
kF
t b
y
t b
y
b
kF
t b
x
t b
x
e
e a
e a
e a
e a
y
y
y
x
x
x

|
|
.
|
\
|
+
+
|
|
.
|
\
|
+
+

Hence:

e
) (
) (
1
) (
) t - F(t -
0
0
0
0 0
k
b
kF
t b
y
t b
y
b
kF
t b
x
t b
x
y
y
y
x
y
y
e a
e a
e a
e a
t f
t f F
F
t f
|
|
.
|
\
|
+
+
|
|
.
|
\
|
+
+
+
= (Sukchareonpong model)

Jayaraman-Truong-Agrawal model (Jayaraman-Truong-Agrawal 1996):

) (t + = )] ( 1 )[ ( t G t G , ) (t F = F , where ) (t G is as above.


}
|
|
.
|
\
|
+
=

t
t
d G G kF
e
t f
t f F
F
t f
0
)] ( 1 )[ (
0
0
) (
) (
1
) (

63

But

(
(
+
+
+
(
(
+
=

y x y x
b
y
b
x
b
y
b
x
e a
e a
e a
e a
G G
1
1
1
1
1
1
1
1
1
)] ( 1 )[ (

=
( )
( ) ( )( )

y
x
y x
y x b
y
b
x
b
y
b
x
b
y
b
x e a e a e a
e a
e a
e a

+ +
+
+
+
1 1
2
1
1
1
1
1
1
1
1
2 2

Hence:
t
t
t
t
b
y x
y
b
x x
x
b
y
y
kF
e a b
kFa
e a b
kFa
e a
b
kF
d G G kF
y x
y
0
0
) ( 2
) (
) (
) ln(
2
)] ( 1 )[ (
}
(
(
+
+
+
+ + = |

where

}
+ +
=
t
b
y
b
x
y
x
e a e a
d
t
0
) 1 )( 1 (
) (

|

Therefore

|
|
|
.
|
\
|
+
+
+
|
|
.
|
\
|
+
+

|
|
.
|
\
|
+
+
=
}
)] ( ) ( [ 2
1 1 1 1
2
)] ( 1 )[ (
0
0 0
0
0
.
t t kF
e a
e a b
kFa
e a e a b
kFa
b
kF
t b
y
t b
y
d G G kF
t
y
b
y
t
x
b
y x
x
t
x
b
x
t
x
b
x x
x
y
y
y
t
t
e
e a
e a
e
| |

64

Thus,

|
|
|
.
|
\
|
+
+
+
|
|
.
|
\
|
+
+
(
(
+
+
(

+
=
)] ( ) ( [ 2
1 1 1 1
2
0
0
0
0 0
0
.
) (
) (
1
) (
t t kF
e a
e a b
kFa
e a e a b
kFa
b
kF
t b
y
t b
y
t
y
b
y
t
x
b
y x
x
t
x
b
x
t
x
b
x x
x
y
y
y
e
e a
e a
t f
t f F
F
t f
| |

where

}
+ +
=
t
b
y
b
x
y
x
e a e a
d
t
0
) 1 )( 1 (
) (

|

4.7 Summary
In this chapter, a mathematical model for measuring technology transfer potentials is
developed. It is hypothesised that the rate of assimilation of a particular technology of a
transferee at a certain time, t , is proportional to: (a) the existing level of assimilation of
in the long run, and (c) a function that incorporates other factors that may influence the
assimilation rate in a significant manner (such as the relative technological gap between
the transferor and transferee).

In developing the model, the function governing the technology transfer rate is considered
as dependent on the relative technological gap between the transferor and the transferee
which is the potential technological distance. First, a generalized model for technology
transfer is developed. Then, a specific dynamic technology transfer model is developed.
Then, the technology transfer model developed in this study is verified for boundary
conditions based on the fact that at time t ;
the assimilation level of the transferee
will be equal to zero, and
at t +;
the assimilation level of the transferee will be equal
to
F e
D
max

where
max
F
is the maximum level of assimilation that the transferor will

65

achieve
at t +;
and D is the potential technological distance between the transferor and
transferee.

It is also shown, in this chapter, the well established technology transfer/diffusion models
such as Haq-Shariff model, Sukchareonpong model, and Jayaraman-Truong-Agrawal
model, Blackmans model, Fisher-Pry model, Mansfields model, and Bhargava model
developed in the literature are shown to be the derived cases of the dynamic model
developed in this study.

The technology transfer model developed in this chapter can provide an effective means
for measuring the transfer potentials that exist between a transferor and a transferee. Since
the model predicts the level of assimilation that a transferee can achieve with a given
transferor in the long run, it is possible for this dynamic model to be used as a decision-
making tool by countries in determining the optimum partner for most effective technology
transfer.

66

CHAPTER 5: CASE STUDIES

5.1 Introduction
Three case studies are presented in this chapter to demonstrate the applicability and
validate the technology transfer model developed at the industrial level. The transfer of
technology in automobile industry, electronics industry, and computing industry in
selected countries such as Korea, Japan, China, Singapore, Malaysia, UK, Germany, USA,
Brazil, and France are considered. In this study, only a few countries are selected due to
the limitation on the availability and reliability of the data.

5.2 Method of Case Study Analysis
The method of case study analysis is shown as below.

5.2.1 Determinants of Technological Capability at the Industrial Level
The relevant determinants are identified, initially, to develop a function relating to
technology level representing the technological capability of a country at the industrial
level. The technological transformation activities of a production system are generally
analysed on the basis of Output and Value Added (VA) analysis. This approach measures
the economic output and value added, at a transformation facility, to the inputs. The Output
and Value Added information of various industries for countries are published annually by
the United Nations in the Industrial Statistics Year Handbook (2003 - 2007).

Output and VA related ratios as surrogate measures are used to examine the technological
aspects of the industry. The technological capability of a country at the industrial level is
influenced by both national and manufacturing technology climate factors. The following
three categories of factors determine the technological capability of a country at the
industrial level:

67

- National Technology Climate Factors.
- Manufacturing Technology Climate Factors.
- Specific Industry Technology Climate Factors.


5.2.2 Data Collection
The relevant data are collected from UN publications (Industrial Statistics Year Handbook
2003 - 2007) after the identification of the factors determining the technological capability.

5.2.3 Technology Index and Its Function
The technological capability of a country at the industrial level is measured as an indicator,
the technology index, using the above data, and the factor analysis method. Factor analysis
technique develops a scale on which individuals, groups or nations are rated and compared.

Since technological capability of a country is generally cumulative in growth, the
technology index is an increasing function of time. The growth pattern of technology
index function is generally an S curve and technology indexes are scaled to a (0, 1) range
employing cumulative normal distribution table. The technology index function is shown
as follows:

T t
ae
bt
( ) =
+

1
1

Regression analysis is employed in determining parameters a and b of the function.

68

5.3 Technology Transfer in Automobile Industry in Selected Countries
Automobile industry has played a very important role in the economic development of
many nations. International technology transfer in automobile industry has been happening
for a long time.

The value added per employee in automobile industry is used as the assimilation parameter
indicating the sophistication of the application of technology in that industry. The countries
which are selected for the case study are Korea, Japan, China, Singapore, Malaysia, UK,
Germany, USA, Brazil, and France. The study is performed through the steps described in
section 5.2.

5.3.1 Determinants of Technology Index in Automobile Industry
Determinants of Technology Index in Automobile Industry are as follows:

- Research and Development Expenditure per Economically Active Population in
Purchasing Power Parity (PPP) terms.
-
- Output per Employee in Manufacturing Sector in Purchasing Power Parity (PPP)
terms.
- Value added per Employee in Manufacturing sector in Purchasing Power Parity
(PPP) terms.
-
- Output per Employee in Automobile Industry in Purchasing Power Parity (PPP)
terms.
- Value added per Employee in Automobile Industry in Purchasing Power Parity
(PPP) terms.

69

For international comparison of monetary values, it is appropriate to compare each
countrys currency unit with a standard currency, and the exchange rate is used for this
purpose. Even though the US dollar is considered as a standard currency in this study, the
exchange rate does not reflect the real value of each currency unit. The demand and supply
of foreign currency determines the the exchange rate, and they are influenced by the
countrys trade balance with each other, currency policy, etc. The currency unit converted
according to the exchange rate is not the real value and it is only the nominal value. The
purchasing power parity (PPP) is used in this study to overcome the above problem of the
exchange rate. The Table A1.1 (Appendix 1) shows the purchasing power parity and the
exchange rate for the selected countries during 2003 2007. Purchasing Power Parity
(PPP) estimates the amount of adjustment needed on the exchange rate between countries
in order for the exchange to be equivalent to each currency's purchasing power. If the PPP
ratio for a country is more than 1.0, then it means that the cost of goods and services in that
country is less expensive than USA. In this case, the countrys currency has more
purchasing power as compared to USA. On the other hand, if the PPP ratio for a country is
less than 1.0, then it means that the cost of goods and services in that country is more
expensive than USA. In this case, the countrys currency has less purchasing power as
compared to USA. It may be observed from the table A1.1 (Appendix 1) that the PPP
ratios are above 2.0 for China and Malaysia. The purchasing power of currencies in China
and Malaysia is more than twice that of USA. The PPP ratios in Korea and Singapore are
between 1.0 and 2.0. The PPP ratios in Japan, UK, Germany and France are less than 1.0.
In these countries the cost of goods and services are more expensive than USA and as a
result, their purchasing power parity is lower than 1.0.

Data collected from UN publications (Industrial Statistics Year Handbook 2003 - 2007) for
developing technology indexes in automobile industry for selected countries are shown in
Table A1.2 (Appendix 1). The currency unit is the US dollar in PPP terms.

70

The local currencies for the countries Korea, Japan, China, Singapore, Malaysia, UK,
Germany, USA, Brazil, and France are shown below:

Country Local Currency
Korea ROK Won
Japan Yen
China Yuan or Renminbi (RMB)
Singapore Dollar
Malaysia Ringgit (RM)
UK Pound
Germany Euro
USA Dollar
Brazil Real
France Euro

5.3.3 Technology Index of Automobile Industry
In computing technology index in automobile industry of each selected country, the raw
data are converted into standardized data by using the following expression:

Standardized Data = (Raw Data - Mean)/Standard Deviation

The mean and standard deviation of each variable are shown in Table A1.3 (Appendix 1).

The major problem when using many variables is that the dimensions of these measured
values are different. In this study, a statistical method is used in converting the variables
with different measurement units to the same measurement unit that transforms the value
of each variable to the corresponding probability variable, under the assumption that each
factor forms a normal probability distribution. For example, the value of each variable can
be transformed to the Z-score with the average value of 0 and the variance of 1 under the
assumption that each variable is normally distributed.

71

In this study, factor analysis technique is used to perform the required integration of
several variables to give a technology index. The factor analysis technique is chosen
because of the fact that it helps to develop a scale on which individuals, groups or nations
can be rated. Such a scale involves the problem of weighing various characteristics to be
combined into scales. Factor analysis offers a solution by dividing the characteristics into
independent sources of variations termed factor dimensions. Each factor defines a group of
interrelated characteristics - a functional utility that can be used as a scale (Rummel 1970).

Factor analysis (Rummel 1970) is used in redefining the interrelations between several
variables into a correlation by finding common variation patterns from the selected
variables. This method derives common variation from the correlation of chosen variables,
identifies the measurement overlaps, and extracts a group of fundamental and hypothetical
factors, with a view to use the correlation among the factors to redefine the correlation
among several variables. This technique usually involves the following two steps:

- calculation of the correlation coefficient matrix, and
- extraction of the unrotated factor loading matrix.

The Principal Components Analysis of factor analysis is employed by using SPSS for
determining the factor loadings.

The value of technology index, T, obtained from factor analysis ranges from - to +.
Also the variables are assumed to be normally distributed. Thus, technology index, T,
which is the summation of standardized normal variates is also normally distributed. It will
be more convenient to handle or operate a standardized normal variates (i.e., with mean 0
and variance 1) than the non-standardized ones.

In this study, the variables that influence and reflect the performance of the given industry

72

manufacturing sector, Output per employee of the Automobile industry, and Value added
per employee of the Automobile industry, are considered for formulating the technology
index at the industrial level.

The standardized data are shown below in Table 5.1. The correlation coefficient matrix is
shown below in Table 5.2. Factor Analysis and Component Matrix of Technology
Variables in Automobile Industry are shown below in Table 5.3.

Table 5.1 The standardized data of Technology Variables in Automobile Industry
1 Korea RDEMP MFGOUTEMP MFGVAEMP INDOUTEMP INDVAEMP

2007 0.6833 0.9433 0.9656 0.9776 0.9921

2006 0.5838 0.9203 0.9587 0.9654 0.9773

2005 0.4822 0.8620 0.9326 0.9256 0.9476

2004 0.4317 0.8048 0.9135 0.8537 0.9447

2003 0.3602 0.7094 0.8434 0.8049 0.9237

2 Japan

2007 0.8737 0.6655 0.7081 0.9372 0.8966

2006 0.8374 0.5677 0.6364 0.8765 0.8315

2005 0.7873 0.5218 0.6197 0.8481 0.7626

2004 0.7223 0.5111 0.6114 0.8435 0.7558

2003 0.6892 0.4334 0.5478 0.8114 0.7477

73

3 China

2007 0.2598 0.1576 0.1370 0.1810 0.2210

2006 0.2176 0.1124 0.1041 0.1119 0.1522

2005 0.1775 0.0832 0.0821 0.0645 0.1232

2004 0.1456 0.0648 0.0675 0.0582 0.1178

2003 0.1231 0.0550 0.0615 0.0574 0.1158

4

Singapore

2007 0.9885 0.9967 0.8699 0.2290 0.2908

2006 0.9386 0.9945 0.8657 0.1962 0.2459

2005 0.8897 0.9809 0.7814 0.1805 0.2205

2004 0.8617 0.9545 0.7600 0.1620 0.2024

2003 0.7646 0.8654 0.5864 0.1395 0.1736

5 Malaysia

2007 0.0780 0.4632 0.2069 0.3273 0.3087

2006 0.0749 0.3962 0.1922 0.2146 0.2467

2005 0.0720 0.3463 0.1872 0.2046 0.1921

2004 0.0687 0.3398 0.1600 0.1785 0.1561

2003 0.0659 0.2998 0.1385 0.1537 0.1235

6 UK

2007 0.4781 0.3279 0.3968 0.3888 0.3152

2006 0.4383 0.3137 0.3586 0.3795 0.2755

2005 0.4074 0.2798 0.3449 0.3174 0.2744

74

2004 0.3807 0.2784 0.3297 0.3076 0.2620

2003 0.3688 0.2626 0.3137 0.2941 0.2338

7 Germany

2007 0.7374 0.4674 0.3999 0.5467 0.4883

2006 0.7140 0.4146 0.3684 0.5336 0.4292

2005 0.6808 0.3639 0.3652 0.4490 0.4278

2004 0.6636 0.3258 0.3150 0.3924 0.3386

2003 0.6283 0.3227 0.3053 0.3703 0.3205

8

USA

2007 0.9262 0.7627 0.9736 0.9276 0.9522

2006 0.8975 0.7647 0.9672 0.9117 0.9389

2005 0.8662 0.7466 0.9654 0.9093 0.9365

2004 0.8309 0.6284 0.9324 0.9038 0.9222

2003 0.8143 0.5558 0.8976 0.8970 0.9154

9 Brazil

2007 0.0783 0.1649 0.2984 0.3116 0.5217

2006 0.0725 0.1620 0.2962 0.3087 0.5010

2005 0.0675 0.1437 0.2720 0.2926 0.4594

2004 0.0673 0.1368 0.2491 0.2042 0.3924

2003 0.0703 0.1096 0.2104 0.1237 0.3004

75

10 France

2007 0.6341 0.6474 0.3683 0.7301 0.3952

2006 0.6229 0.4295 0.2816 0.7137 0.3429

2005 0.5946 0.4090 0.2715 0.6466 0.3382

2004 0.5757 0.4077 0.2695 0.6282 0.2838

2003 0.5566 0.3505 0.2376 0.5610 0.2304

It may be observed that the standardized values of all the variables are quite high for USA,
followed Korea, Japan, Singapore, Germany, France and UK. The standardized values of
technology variables are relatively low for Malaysia, Brazil and China.

Table 5.2 Correlation Coefficient Matrix of Technology Variables in Automobile Industry

RDEMP MFGOUTEMP MFGVAEMP INDOUTEMP INDVAEMP
RDEMP Pearson
Correlation
1 .736
**
.731
**
.571
**
.454
**

Sig. (2-
tailed)

.000 .000 .000 .001
N 50 50 50 50 50

MFGOUTEMP Pearson
Correlation
.736
**
1 .878
**
.505
**
.506
**

Sig. (2-
tailed)
.000

.000 .000 .000
N 50 50 50 50 50

76

MFGVAEMP Pearson
Correlation
.731
**
.878
**
1 .692
**
.786
**

Sig. (2-
tailed)
.000 .000

.000 .000
N 50 50 50 50 50

INDOUTEMP Pearson
Correlation
.571
**
.505
**
.692
**
1 .908
**

Sig. (2-
tailed)
.000 .000 .000

.000
N 50 50 50 50 50

INDVAEMP Pearson
Correlation
.454
**
.506
**
.786
**
.908
**
1
Sig. (2-
tailed)
.001 .000 .000 .000

N 50 50 50 50 50

**. Correlation is significant at the 0.01 level (2-tailed).

It may be observed from the above correlation matrix that the relationship between the
technology variables RDEMP & MFGOUTEMP, RDEMP & MFGVAEMP, MFGOUTEMP
& MFGVAEMP, MFGVAEMP & INDVAEMP, and INDOUTEMP & INDVAEMP are very
strong. The relationship between other technology variables is moderately strong. The
correlation coefficient between the variables is quite significant at the 0.01 level.

77

Table 5.3 Factor Analysis and Component Matrix of Technology Variables in Automobile
Industry
Communalities

Initial Extraction
RDEMP 1.000 .649
MFGOUTEMP 1.000 .710
MFGVAEMP 1.000 .907
INDOUTEMP 1.000 .727
INDVAEMP 1.000 .725

Extraction Method: Principal Component
Analysis.

Total Variance Explained
Component
Initial Eigenvalues Extraction Sums of Squared Loadings
Total % of Variance Cumulative % Total % of Variance Cumulative %
1 3.718 74.357 74.357 3.718 74.357 74.357
2 .820 16.397 90.755

3 .338 6.768 97.523

4 .109 2.179 99.702

5 .015 .298 100.000

Extraction Method: Principal Component Analysis.

78

Component Matrix
a

Component
1
RDEMP .806
MFGOUTEMP .843
MFGVAEMP .952
INDOUTEMP .853
INDVAEMP .852
Extraction Method: Principal
Component Analysis.
a. 1 components extracted.

From Table 5.3, it is seen that the first factor or component accounts for 74.4 percent of the
total variance. Hence, the factor loading of the first component is then used to determine the
technology index of each selected country in Automobile industry and the following equation
is employed for this purpose:

T
a
Y
ji
j
j
n
=
=
1
1

where
T = technology index,
a
j1
= the first factor loading,

1
= eigenvalue for the first factor,
and Y
j
= a standardized form of jth variable.

79

For example, the technology index of U.S.A. in Automobile industry in 2003 and 2007 are
obtained as:
2003:
178 . 3
1
= T (0.806*0.8143 + 0.843*0.5558 + 0.952*0.8976 + 0.853*0.8970 + 0.852*0.9154 =
0.9479
2007:
178 . 3
1
= T (0.806*0.9262 + 0.843*0.7627 + 0.952*0.9736 + 0.853*0.9276 + 0.852*0.9522 =
1.0540

The calculated index is then normalized into a 0-1 scale employing the cumulative normal
probability distribution table. The calculated indexes and their normalized technology indexes
of the selected countries in Automobile industry are shown below in Table 5.4.

Table 5.4 Calculated Indexes and Normalized Technology Indexes of Selected Countries in
Automobile Industry

CALCULATED NORMALIZED
1 Korea TECH INDEX TECH INDEX

2007 1.0609 0.8556

2006 1.0261 0.8476

2005 0.9683 0.8335

2004 0.9223 0.8218

2003 0.8512 0.8027

80

2 Japan

2007 0.9421 0.8269

2006 0.8648 0.8064

2005 0.8170 0.7930

2004 0.7957 0.7869

2003 0.7454 0.7720

3 China

2007 0.2193 0.5868

2006 0.1599 0.5635

2005 0.1214 0.5483

2004 0.1039 0.5414

2003 0.0946 0.5377

4 Singapore

2007 0.7822 0.7829

2006 0.7520 0.7740

2005 0.7073 0.7603

2004 0.6814 0.7522

2003 0.5839 0.7204

5 Malaysia

2007 0.3207 0.6258

2006 0.2610 0.6030

81

2005 0.2330 0.5921

2004 0.2096 0.5830

2003 0.1813 0.5719

6 UK

2007 0.4410 0.6704

2006 0.4082 0.6584

2005 0.3758 0.6465

2004 0.3607 0.6408

2003 0.3408 0.6334

7 Germany

2007 0.6055 0.7276

2006 0.5639 0.7136

2005 0.5246 0.7001

2004 0.4660 0.6794

2003 0.4460 0.6722

8 USA

2007 1.0540 0.8541

2006 1.0399 0.8508

2005 1.0274 0.8479

2004 0.9800 0.8365

2003 0.9479 0.8284

82

9 Brazil

2007 0.3218 0.6262

2006 0.3139 0.6232

2005 0.2893 0.6138

2004 0.2461 0.5972

2003 0.1912 0.5758

10 France

2007 0.6366 0.7378

2006 0.5468 0.7078

2005 0.5170 0.6974

2004 0.4954 0.6898

2003 0.4425 0.6709

It may be observed from Table 5.4, the technology level or index of Automobile industry
in Korea, Japan and USA are quite high (above 0.80) as compared to the other selected
countries. The technological level of Automobile industry in Germany, Singapore and
France (between 0.70 and 0.80) is relatively high. Even though Malaysia, UK, Brazil and
China are lagging in the technological capability in Automobile industry (between 0.50
and 0.70), they are showing an increasing trend.

5.3.4 Technology Index Function of Automobile Industry
The technology index function of each selected country in Automobile industry is
developed using the normalized technology indexes obtained. Due to non-availability of
data, only few points (for the period 2003 - 2007) of the technology indexes of each
country in Automobile industry are used. The technology index function of

83

T t
ae
bt
( ) =
+

1
1

is linearized into the form

1
1
T t
ae
bt
( )
=

On further manipulation one obtains

Y
T t
a bt =
|
\
|
.
|
= ln
( )
ln
1
1

which is a linear function. The a and b parameters are then obtained by linear
regression analysis. The technology index functions of the selected countries in
Automobile industry are shown below in Table 5.5. The predicted values of the technology
indexes of the selected countries in Automobile industry are shown below in Table 5.6,
and the technology index curves of the selected countries in Automobile industry are
shown in Figs. A2.1 to A2.10 (Appendix 2). The predicted values of the potential
technology distances of selected countries with USA in Automobile industry are shown
below in Table 5.7. The potential technology distance curves of selected countries in
Automobile industry are shown in Figs. A2.11 to A2.19 (Appendix 2).

Table 5.5 Technology Index Functions of the Selected Countries in Automobile Industry

Country Technology Index Function of Automobile Industry
Korea
) 2003 ( 0940 . 0
2656 . 0 1
1
) (

+
=
t
e
t T

84

Japan
) 2003 ( 0810 . 0
3233 . 0 1
1
) (

+
=
t
e
t T

China
) 2003 ( 0489 . 0
9262 . 0 1
1
) (

+
=
t
e
t T

Singapore
) 2003 ( 0794 . 0
4038 . 0 1
1
) (

+
=
t
e
t T

Malaysia
) 2003 ( 0532 . 0
7973 . 0 1
1
) (

+
=
t
e
t T

UK
) 2003 ( 0404 . 0
6078 . 0 1
1
) (

+
=
t
e
t T

Germany
) 2003 ( 0691 . 0
5298 . 0 1
1
) (

+
=
t
e
t T

USA
) 2003 ( 0494 . 0
2147 . 0 1
1
) (

+
=
t
e
t T

Brazil
) 2003 ( 0530 . 0
7578 . 0 1
1
) (

+
=
t
e
t T

85

France
) 2003 ( 0730 . 0
5303 . 0 1
1
) (

+
=
t
e
t T

It may be observed from Table 5.5 (based on values of a in the technology index function),
Korea, Japan and USA have been early starters in their technological development in
Automobile industry, followed by Singapore, Germany, France and UK. The countries Brazil,
Malaysia, and China appear to be the late starters in their technological development in
Automobile industry. USA is the technology leader in the Automobile industry followed by
Korea, Japan, Singapore and Germany. Hence, it is assumed in this study that USA is the
transferor and other countries are transferees in technology transfer in Automobile industry.

Table 5.6 The predicted values of the technology indexes of the selected countries in Automobile
industry.

KOREA JAPAN CHINA SINGAPORE MALAYSIA

2003 0.8053 0.7703 0.5314 0.7283 0.5695
2004 0.8196 0.7843 0.5435 0.7437 0.5824
2005 0.8331 0.7977 0.5556 0.7586 0.5953
2006 0.8457 0.8105 0.5677 0.7728 0.6080
2007 0.8576 0.8226 0.5796 0.7865 0.6206
2008 0.8687 0.8341 0.5915 0.7995 0.6331
2009 0.8791 0.8450 0.6032 0.8119 0.6453
2010 0.8887 0.8553 0.6149 0.8237 0.6574
2011 0.8977 0.8650 0.6264 0.8350 0.6693
2012 0.9060 0.8742 0.6378 0.8456 0.6809
2013 0.9137 0.8828 0.6490 0.8557 0.6924

86

2014 0.9208 0.8910 0.6600 0.8652 0.7036
2015 0.9274 0.8986 0.6709 0.8742 0.7145
2016 0.9335 0.9057 0.6816 0.8827 0.7253
2017 0.9391 0.9124 0.6921 0.8907 0.7357
2018 0.9442 0.9187 0.7025 0.8982 0.7459
2019 0.9490 0.9245 0.7126 0.9052 0.7559
2020 0.9533 0.9300 0.7225 0.9118 0.7656

Table 5.6 The predicted values of the technology indexes of the selected countries in Automobile
industry (Continued)

UK GERMANY BRAZIL FRANCE USA
2003 0.6314 0.6691 0.5819 0.6698 0.8303
2004 0.6408 0.6842 0.5947 0.6857 0.8371
2005 0.6500 0.6990 0.6074 0.7012 0.8438
2006 0.6591 0.7133 0.6200 0.7163 0.8502
2007 0.6682 0.7272 0.6324 0.7309 0.8563
2008 0.6770 0.7407 0.6446 0.7450 0.8623
2009 0.6858 0.7537 0.6567 0.7586 0.8681
2010 0.6944 0.7663 0.6685 0.7717 0.8736
2011 0.7029 0.7785 0.6801 0.7843 0.8790
2012 0.7113 0.7901 0.6916 0.7964 0.8841
2013 0.7195 0.8014 0.7028 0.8080 0.8891
2014 0.7276 0.8121 0.7137 0.8190 0.8939
2015 0.7355 0.8224 0.7244 0.8296 0.8984
2016 0.7433 0.8323 0.7349 0.8397 0.9029

87

2017 0.7509 0.8417 0.7451 0.8493 0.9071
2018 0.7584 0.8507 0.7550 0.8584 0.9112
2019 0.7657 0.8593 0.7647 0.8670 0.9151
2020 0.7729 0.8674 0.7741 0.8752 0.9189

It may be observed from Table 5.6, Korea, Japan, Singapore and USA will achieve higher
technological capability in Automobile industry in 2020, followed by France, Germany, UK,
Brazil, Malaysia and China. It is also observed that Korea and Japan will be exceeding the
USA in terms their technological capability in Automobile industry by 2020.

Table 5.7 The predicted values of the potential technology distances of selected countries with
USA in Automobile industry.

2003 0.0311 0.0779 0.5626 0.1400 0.4581
2004 0.0214 0.0673 0.5403 0.1256 0.4373
2005 0.0128 0.0577 0.5186 0.1123 0.4174
2006 0.0052 0.0490 0.4977 0.1001 0.3982
2007 -0.0015 0.0410 0.4774 0.0889 0.3798
2008 -0.0074 0.0338 0.4579 0.0786 0.3621
2009 -0.0125 0.0273 0.4390 0.0691 0.3451
2010 -0.0170 0.0214 0.4208 0.0605 0.3289
2011 -0.0208 0.0161 0.4032 0.0527 0.3133
2012 -0.0241 0.0113 0.3863 0.0455 0.2984
2013 -0.0269 0.0071 0.3700 0.0390 0.2841
2014 -0.0293 0.0032 0.3542 0.0331 0.2704

88

2015 -0.0312 -0.0002 0.3391 0.0277 0.2574
2016 -0.0328 -0.0032 0.3246 0.0228 0.2449
2017 -0.0340 -0.0058 0.3106 0.0184 0.2329
2018 -0.0350 -0.0082 0.2971 0.0145 0.2215
2019 -0.0357 -0.0102 0.2842 0.0109 0.2106
2020 -0.0362 -0.0120 0.2718 0.0077 0.2003

USA in Automobile industry (Continued)

UK GERMANY BRAZIL FRANCE

2003 0.3150 0.2409 0.4270 0.2396
2004 0.3065 0.2235 0.4077 0.2208
2005 0.2981 0.2072 0.3891 0.2033
2006 0.2898 0.1919 0.3713 0.1869
2007 0.2816 0.1776 0.3542 0.1716
2008 0.2736 0.1642 0.3377 0.1575
2009 0.2657 0.1517 0.3220 0.1443
2010 0.2580 0.1400 0.3068 0.1320
2011 0.2504 0.1291 0.2923 0.1207
2012 0.2429 0.1189 0.2784 0.1101
2013 0.2356 0.1095 0.2651 0.1004
2014 0.2285 0.1006 0.2524 0.0913
2015 0.2215 0.0924 0.2402 0.0830
2016 0.2146 0.0848 0.2286 0.0753

89

2017 0.2080 0.0777 0.2175 0.0681
2018 0.2014 0.0711 0.2069 0.0615
2019 0.1951 0.0650 0.1967 0.0555
2020 0.1888 0.0593 0.1870 0.0499

It may be observed from Table 5.7, the potential technological distance in Automobile
industry of Korea and Japan with USA will reduce considerably in 2020 and result in their
technological capability exceeding USA by that period. The potential technological distance
in Automobile industry of Singapore with USA will become almost zero by 2020. The
potential technological distance of Germany and France with USA also will reduce to about
0.05 by 2020. The potential technological distance of UK, Brazil, Malaysia and China with
USA will remain reasonably high in year 2020.

5.3.5 Technology Transfer Model Incorporating Time and a Dynamic Potential
Technological Distance in Automobile Industry
In developing the technology transfer model for Automobile industry, the potential
technology distance between transferor and transferee has to be evaluated first. In this study,
U.S.A. is assumed to be the transferor of technology in Automobile industry to Korea, Japan,
China, Singapore, Malaysia, UK, Germany, Brazil, and France. Moreover, since USA is the
technology leader in Automobile industry, it is assumed to be the most developed country in
Automobile industry. The average potential technological distance is determined by using the
following equations:

Average Potential Technology Distance, D, is given by

D
T t dt T t dt
T t dt
x y
t
t
t
t
y
t
t
=

} }
}
( ) ( )
( )
1
2
1
2
1
2

90

The results obtained are as shown below in Table 5.8.

Table 5.8 Average Potential Technology Distance between U.S.A. and other Selected Countries

Country Average Potential Technology
Distance, D
Korea -0.0152
Japan 0.0208
China 0.4031
Singapore 0.0582
Malaysia 0.3145
UK 0.2486
Germany 0.1336
Brazil 0.2934
France 0.1262

It may be observed from the Table 5.8 that USA has closer average potential technology
distance with Korea, Japan and Singapore, followed by France, Germany, UK, Brazil,
Malaysia and China.

After the potential technology distance has been evaluated, the historical data of the value
added per employee (US$ in PPP terms) are used to fit the technology transfer phenomenon in
Automobile industry as given by the following technology transfer model:

}
|
|
.
|
\
|
+
=

t
t
D D
d e e kF
D
e
t f
t f F
e F
t f
0
max
) (
) (
1
) (
0
0 max
max

91

) (
0
0 max
max
0
2
max
) (
) (
1
) (
t t e kF
D
D
e
t f
t f F
e F
t f

|
|
.
|
\
|
+
=

Where

f
t
= assimilation level of the transferee at time t.
F
max
= maximum assimilation level that the most developed country in a particular
industry can achieve.
= D potential technology distance between the transferor, x, and the most
developed country.
t
0
= initial period.
f
t
0
= assimilation level of the transferee at time t
0
.
k = a proportionality constant governing the technology transfer.

The maximum possible level of value added per employee of the most developed country
(in this case - the U.S.A.) is assumed to be 500,000 US$ in PPP terms per year. This is an
estimate based on the past trend. From the historical data of value added per employee, the
technology transfer model for Korea, Japan, China, Singapore, Malaysia, UK, Germany,
Brazil, and France are obtained. The numerical values required for the above technology
transfer model are summarized as follows:

Transferor (USA)
000 , 500
max
= F US$ in PPP terms

Transferee
Korea:
D = -0.0152;
2003
0
= t ; f
t
0
= 168,415 US$ (PPP)
k = 0.000000190757

92

Japan:
D = 0.0208;
2003
0
= t ; f
t
0
= 130,854 US$ (PPP)
k = 0.000000147386

China:
D = 0.4031;
2003
0
= t ; f
t
0
= 39,131 US$ (PPP)
k = 0.000000544848

Singapore:
D = 0.0582;
2003
0
= t ; f
t
0
= 51,746 US$ (PPP)
k = 0.000000192861

Malaysia:
D = 0.3145;
2003
0
= t ; f
t
0
= 41,038 US$ (PPP)
k = 0.000000642546

UK:
D = 0.2486;
2003
0
= t ; f
t
0
= 62,258 US$ (PPP)
k = 0.000000642546

Germany:
D = 0.1336;
2003
0
= t ; f
t
0
= 75,060 US$ (PPP)
k = 0.000000209042

93

Brazil:
D = 0.2934;
2003
0
= t ; f
t
0
= 72,266 US$ (PPP)
k = 0.000000380856

France:
D = 0.1262;
2003
0
= t ; f
t
0
= 61,717 US$ (PPP)
k = 0.000000231351

Historical data on technology transfer in Automobile industry and the predicted values of the
technology transfer model for Korea, Japan, China, Singapore, Malaysia, UK, Germany,
Brazil, and France are given in Table 5.9. Historical data on technology transfer in
Automobile industry and the model prediction for Korea, Japan, China, Singapore, Malaysia,
UK, Germany, Brazil, and France are shown in Figs. A2.20 to A2.29 (Appendix 2).

Table 5.9 Predicted Value Added per Employee data and Historical Value Added per
Employee on technology transfer model in Automobile industry for Korea, Japan, China,
Singapore, Malaysia, UK, Germany, Brazil, and France. Values are given in US$ (PPP terms)

Korea Korea Japan Japan China China
Year Predicted Historical Predicted Historical Predicted Historical

VA per emp VA per emp VA per emp VA per emp VA per emp VA per emp

2003 164349 168415 126363 130854 36295 39131
2004 175461 176537 133103 132120 40422 39630
2005 186914 177834 140065 133185 44947 40951

94

2006 198668 196489 147239 145268 49894 47474
2007 210676 216871 154619 160160 55280 60180
2008 222887

162194

61123
2009 235244

169951

67434
2010 247690

177878

74219
2011 260166

185960

81479
2012 272612

194180

89205
2013 284967

202521

97382
2014 297174

210965

105983
2015 309179

219492

114975
2016 320929

228081

124315
2017 332377

236712

133949
2018 343483

245363

143818
2019 354210

254013

153856
2020 364528

262641

163990

95

Continued

Singapore Singapore Malaysia Malaysia UK UK
Year Predicted Historical Predicted Historical Predicted Historical

VA per
emp
VA per
emp
VA per
emp
VA per
emp
VA per
emp
VA per
emp
2003

52000

51746

41212

41038

62923

62258
2004 56106 57019 47901 48279 65420 66647
2005 60490 60088 55490 55182 67996 68507
2006 65162 64171 64038 64306 70651 68671
2007 70134 70887 73591 73428 73386 74332
2008 75415

84169

76201
2009 81013

95769

79098
2010 86936

108350

82075
2011 93189

121837

85135
2012 99774

136112

88275
2013 106694

151022

91497
2014 113947

166378

94799
2015 121529

181968

98181
2016 129432

197566

101642
2017 137648

212947

105182
2018 146162

227896

108798

96

2019 154959

242223

112489
2020 164018

255772

116254

Continued

Germany Germany Brazil Brazil France France USA USA
Year Predicted Historical Predicted Historical Predicted Historical Predicted Historical

VA per
emp
VA per
emp
VA per
emp
VA per
emp
VA per
emp
VA per
emp
VA per
emp
VA per
emp

2003 74754 75060 75713 72266 63642 61717 165215 165677
2004 79845 77523 82304 84567 68694 69877 168654 167897
2005 85201 89056 89296 93000 74068 77466 172129 173103
2006 90825 89234 96685 98134 79772 78098 175637 174090
2007 96718 96571 104459 100687 85813 84934 179178 180052
2008 102880

112604

92194

182750
2009 109308

121098

98918

186351
2010 115999

129912

105983

189982
2011 122947

139014

113385

193639
2012 130141

148364

121117

197322
2013 137573

157918

129168

201028
2014 145229

167628

137524

204758
2015 153093

177442

146167

208508

97

2016 161148

187306

155075

212278
2017 169375

197166

164224

216065
2018 177751

206965

173584

219868
2019 186254

216651

183125

223686
2020 194858

226173

192811

227516

It may be observed from Table 5.9, Korea will achieve the Value Added per employee as
$364,528 (US $ in PPP terms), followed by Japan $262,641, Malaysia $255,772, USA
$227,516, Brazil $226,173, Germany $194,858, France $192,811, Singapore $164,018, China
$163,990, and UK $116,254 in 2020. The Value Added per Employee is considered as a
measure of effective technology assimilation level and its values are forecast and compared in
terms of US $ in PPP terms using the technology transfer model developed. The historical
data of the value added per employee (US$ in PPP terms) and the predicted values are used to
fit the technology transfer phenomenon in Automobile industry and the results are shown
below in Table 5.10.

Table 5.10 The Fitness of the Technology Transfer Model in Korea, Japan, China, Singapore,
Malaysia, UK, Germany, Brazil, and France Automobile Industry
Country Correlation
Coefficient
Coefficient of
Determination
Significance level
Korea 0.9518 0.9060 0.0126
Japan 0.9998 0.9997 0.0000

China 0.9119 0.8315 0.0309
Singapore 0.9938 0.9876 0.0005

Malaysia 0.9997 0.9994 0.0000

UK 0.9524 0.9071 0.0123

Germany 0.9638 0.9051 0.0082

Brazil 0.9553 0.9126 0.0112
France 0.9676 0.9363 0.0069

98

It may be observed from the above that in terms of technology transfer in Automobile
industry, the model developed in this study explains the variation in the prediction to the
extent of 99.97% for Japan, 99.94% for Malaysia, 98.76% for Singapore, 93.63% for France,
91.26% for Brazil, 90.71% for UK, 90.60% for Korea, 90.51% for Germany, and 83.15% for
China. From the above figures, it can be seen that the technology transfer model developed in
this study provides a very good fit in all the above transfer situations. The fitness of the model
is quite significant for countries such as Japan, Singapore, Malaysia, Germany and France at
the 0.01 level where as it is significant for countries such as Korea, China, UK, and Brazil at
the 0.05 level.

5.4 Technology Transfer in Electronics Industry in Selected Countries
Electronics industry has played a very important role in the economic development of
many nations. International technology transfer in Electronics industry has been happening
on for a long time.

The value added per employee in Electronics industry is used as the assimilation parameter
section 5.2.

5.4.1 Determinants of Technology Index in Electronics Industry
Determinants of Technology Index in Electronics Industry are as follows:


terms.

99

(PPP) terms.

- Output per Employee in Electronics Industry in Purchasing Power Parity (PPP)
terms.
- Value added per Employee in Electronics Industry in Purchasing Power Parity
(PPP) terms.

developing technology indexes in Electronics industry for selected countries are shown in

5.4.3 Technology Index of Electronics Industry
In computing technology index in automobile industry of each selected country, the raw
data are converted into standardized data. The Principal Components Analysis of factor
analysis is employed by using SPSS for determining the factor loadings. The mean and
standard deviation of each variable are shown in Table A1.5 (Appendix 1). The
standardized data are shown below in Table 5.11. The correlation coefficient matrix is
Variables in Electronics Industry are shown below in Table 5.13.

manufacturing sector, Output per employee of the Electronics industry, and Value added
per employee of the Electronics industry, are considered for formulating the technology

100

Table 5.11 The standardized data of Technology Variables in Electronics Industry


2007 0.6833 0.9433 0.9656 0.8973 0.9664

2006 0.5838 0.9203 0.9587 0.8901 0.9647

2005 0.4822 0.8620 0.9326 0.8629 0.9607

2004 0.4317 0.8048 0.9135 0.8499 0.9497

2003 0.3602 0.7094 0.8434 0.7872 0.8960

2 Japan

2007 0.8737 0.6655 0.7081 0.5847 0.5691

2006 0.8374 0.5677 0.6364 0.5537 0.5352

2005 0.7873 0.5218 0.6197 0.5305 0.5220

2004 0.7223 0.5111 0.6114 0.5285 0.5158

2003 0.6892 0.4334 0.5478 0.4740 0.4605

3

China

2007 0.2598 0.1576 0.1370 0.1350 0.1467

2006 0.2176 0.1124 0.1041 0.1356 0.1383

2005 0.1775 0.0832 0.0821 0.1089 0.1379

2004 0.1456 0.0648 0.0675 0.1052 0.1307

2003 0.1231 0.0550 0.0615 0.0981 0.1247

101

4 Singapore

2007 0.9885 0.9967 0.8699 0.9971 0.8470

2006 0.9386 0.9945 0.8657 0.9930 0.7825

2005 0.8897 0.9809 0.7814 0.9897 0.7528

2004 0.8617 0.9545 0.7600 0.9810 0.6585

2003 0.7646 0.8654 0.5864 0.9088 0.5343

5 Malaysia

2007 0.0780 0.4632 0.2069 0.3751 0.1824

2006 0.0749 0.3962 0.1922 0.3385 0.1753

2005 0.0720 0.3463 0.1872 0.3361 0.1421

2004 0.0687 0.3398 0.1600 0.3199 0.1346

2003 0.0659 0.2998 0.1385 0.2629 0.1344

6 UK

2007 0.4781 0.3279 0.3968 0.1942 0.2999

2006 0.4383 0.3137 0.3586 0.1926 0.2666

2005 0.4074 0.2798 0.3449 0.1870 0.2544

2004 0.3807 0.2784 0.3297 0.1357 0.2363

2003 0.3688 0.2626 0.3137 0.1325 0.2193

7

Germany

2007 0.7374 0.4674 0.3999 0.5191 0.3620

2006 0.7140 0.4146 0.3684 0.4068 0.3442

2005 0.6808 0.3639 0.3652 0.2950 0.3291

102

2004 0.6636 0.3258 0.3150 0.2771 0.3196

2003 0.6283 0.3227 0.3053 0.2613 0.3026

8 USA

2007 0.9262 0.7627 0.9736 0.7242 0.9724

2006 0.8975 0.7647 0.9672 0.6951 0.9687

2005 0.8662 0.7466 0.9654 0.6254 0.9664

2004 0.8309 0.6284 0.9324 0.6188 0.9479

2003 0.8143 0.5558 0.8976 0.5602 0.9374

9 Brazil

2007 0.0783 0.1649 0.2984 0.5913 0.4923

2006 0.0725 0.1620 0.2962 0.5618 0.4879

2005 0.0675 0.1437 0.2720 0.5343 0.4618

2004 0.0673 0.1368 0.2491 0.3986 0.4167

2003 0.0703 0.1096 0.2104 0.3914 0.3663

10 France

2007 0.6341 0.6474 0.3683 0.3160 0.2689

2006 0.6229 0.4295 0.2816 0.2506 0.2559

2005 0.5946 0.4090 0.2715 0.2227 0.2372

2004 0.5757 0.4077 0.2695 0.2058 0.2286

2003 0.5566 0.3505 0.2376 0.1999 0.2208

103

followed Korea, Japan, Singapore, Germany, France and UK. The standardized values of

Table 5.12 Correlation Coefficient Matrix of Technology Variables in Electronics Industry
Correlations

RDEMP Pearson
Correlati
on
1 .736
**
.731
**
.527
**
.593
**

Sig. (2-
tailed)

.000 .000 .000 .000
N 50 50 50 50 50
MFGOUTEMP Pearson
Correlati
on
.736
**
1 .878
**
.866
**
.788
**

Sig. (2-
tailed)
.000

.000 .000 .000
N 50 50 50 50 50

MFGVAEMP Pearson
Correlati
on
.731
**
.878
**
1 .842
**
.964
**

Sig. (2-
tailed)
.000 .000

.000 .000
N 50 50 50 50 50

104

INDOUTEMP Pearson
Correlati
on
.527
**
.866
**
.842
**
1 .860
**

Sig. (2-
tailed)
.000 .000 .000

.000
N 50 50 50 50 50

INDVAEMP Pearson
Correlati
on
.593
**
.788
**
.964
**
.860
**
1
Sig. (2-
tailed)
.000 .000 .000 .000

N 50 50 50 50 50


technology variables RDEMP & MFGOUTEMP, RDEMP & MFGVAEMP,
MFGOUTEMP & MFGVAEMP, MFGVAEMP & INDVAEMP, and INDOUTEMP &
INDVAEMP are very strong. The relationship between other technology variables is
moderately strong. The correlation coefficient between the variables is quite significant at
the 0.01 level.

105

Table 5.13 Factor Analysis and Component Matrix of Technology Variables in Electronics
Industry
Communalities

Initial Extraction
RDEMP 1.000 .604
MFGVAEMP 1.000 .951
INDVAEMP 1.000 .870
Analysis.

Component
Total % of Variance
Cumulative
% Total % of Variance
Cumulative
%
1 4.135 82.708 82.708 4.135 82.708 82.708
2 .536 10.717 93.424

3 .236 4.715 98.140

4 .085 1.693 99.832

5 .008 .168 100.000


106

Component Matrix
a

Component
1
RDEMP .777
MFGOUTEMP .941
MFGVAEMP .975
INDOUTEMP .908
INDVAEMP .933
Component Analysis.

From Table 5.13, it is seen that the first factor accounts for 82.7 percent of the total
variance. Hence, the factor loading of the first component is then used to determine the
technology index of each selected country in Electronics industry. The details for obtaining
the technology indexes for Electronics industry are similar to those of the technology
indexes for the Automobile industry described in section 5.3.3. The calculated and
normalized indexes of technology of the selected countries in Electronics industry are
shown below in Table 5.14.

107



2007 0.9858 0.8379

2006 0.9583 0.8311

2005 0.9129 0.8194

2004 0.8806 0.8107

2003 0.8030 0.7890

2 Japan

2007 0.7394 0.7702

2006 0.6789 0.7514

2005 0.6471 0.7412

2004 0.6286 0.7352

2003 0.5653 0.7141

3 China

2007 0.1797 0.5713

2006 0.1520 0.5604

2005 0.1267 0.5504

2004 0.1106 0.5440

2003 0.0998 0.5398

108

4 Singapore

2007 1.0278 0.8480

2006 1.0014 0.8417

2005 0.9618 0.8319

2004 0.9223 0.8218

2003 0.7990 0.7879

5 Malaysia

2007 0.2924 0.6150

2006 0.2634 0.6039

2005 0.2423 0.5957

2004 0.2286 0.5904

2003 0.2013 0.5798

6 UK

2007 0.3683 0.6437

2006 0.3407 0.6334

2005 0.3200 0.6255

2004 0.2957 0.6163

2003 0.2816 0.6109

7 Germany

2007 0.5349 0.7036

2006 0.4824 0.6852

2005 0.4359 0.6685

109

2004 0.4060 0.6576

2003 0.3892 0.6514

8

USA

2007 0.9556 0.8304

2006 0.9419 0.8269

2005 0.9157 0.8201

2004 0.8687 0.8075

2003 0.8257 0.7955

9 Brazil

2007 0.3636 0.6419

2006 0.3538 0.6383

2005 0.3311 0.6297

2004 0.2841 0.6118

2003 0.2563 0.6012

10 France

2007 0.4834 0.6856

2006 0.3940 0.6532

2005 0.3713 0.6448

2004 0.3613 0.6411

2003 0.3341 0.6308

110

It may be observed from Table 5.14, the technology level or index of Electronics industry
in Korea, Singapore and USA are quite high (above 0.80) as compared to the other selected
countries. The technological level of Electronics industry in Japan (between 0.70 and 0.80)
is relatively high. The technological level of Electronics industry in Japan (between 0.70
and 0.80) is relatively high. Even though Malaysia, UK, Germany, France, Brazil and
China are lagging in the technological capability in Electronics industry (between 0.50 and
0.70), they are showing an increasing trend.

5.4.4 Technology Index Function of Electronics Industry
The technology index function of each selected country in Electronics industry is
country in Electronics industry are used.

The technology index functions of the selected countries in Electronics industry are shown
below in Table 5.15. The predicted values of the technology indexes of the selected
countries in Electronics industry are shown below in Table 5.16, and the technology index
curves of the selected countries in Electronics industry are shown in Figs. A2.30 to A2.39
(Appendix 2). The predicted values of the potential technology distances of selected
countries with USA in Electronics industry are shown below in Table 5.17. The potential
technology distance curves of selected countries in Electronics industry are shown in Figs.
A2.40 to A2.48 (Appendix 2).

Table 5.15 Technology Index Functions of the Selected Countries in Electronics Industry

Country Technology Index Function of Electronics Industry

Korea
) 2003 ( 0786 . 0
2812 . 0 1
1
) (

+
=
t
e
t T

111

Japan
) 2003 ( 0673 . 0
4236 . 0 1
1
) (

+
=
t
e
t T

China
) 2003 ( 0322 . 0
8895 . 0 1
1
) (

+
=
t
e
t T

Singapore
) 2003 ( 0956 . 0
2782 . 0 1
1
) (

+
=
t
e
t T

Malaysia
) 2003 ( 0349 . 0
7495 . 0 1
1
) (

+
=
t
e
t T

UK
) 2003 ( 0354 . 0
6643 . 0 1
1
) (

+
=
t
e
t T

Germany
) 2003 ( 0604 . 0
5808 . 0 1
1
) (

+
=
t
e
t T

USA
) 2003 ( 0590 . 0
2684 . 0 1
1
) (

+
=
t
e
t T

Brazil
) 2003 ( 0460 . 0
6896 . 0 1
1
) (

+
=
t
e
t T

France
) 2003 ( 0541 . 0
6296 . 0 1
1
) (

+
=
t
e
t T

112

It may be observed from Table 5.15 (based on values of a in the technology index
function), Korea, Singapore and USA have been early starters in their technological
development in Electronics industry, followed by Japan, Germany, France and UK. The
countries Brazil, Malaysia, and China appear to be the late starters in their technological
development in Electronics industry. USA is the technology leader in the Electronics
industry followed by Korea, Japan, Singapore and Germany. Hence, it is assumed in this
study that USA is the transferor and other countries are transferees in technology transfer
in Electronics industry.

Table 5.16 The predicted values of the technology indexes of the selected countries in
Electronics industry.

2003 0.7937 0.7163 0.5372 0.7982 0.5801
2004 0.8062 0.7298 0.5452 0.8131 0.5886
2005 0.8182 0.7428 0.5532 0.8272 0.5970
2006 0.8296 0.7555 0.5612 0.8404 0.6054
2007 0.8404 0.7677 0.5691 0.8528 0.6137
2008 0.8507 0.7795 0.5769 0.8644 0.6219
2009 0.8604 0.7908 0.5848 0.8752 0.6301
2010 0.8696 0.8018 0.5926 0.8853 0.6382
2011 0.8782 0.8122 0.6003 0.8947 0.6462
2012 0.8864 0.8223 0.6080 0.9033 0.6542
2013 0.8940 0.8319 0.6157 0.9114 0.6620
2014 0.9013 0.8411 0.6233 0.9188 0.6698
2015 0.9080 0.8499 0.6308 0.9256 0.6775
2016 0.9144 0.8583 0.6382 0.9320 0.6850

113

2017 0.9203 0.8663 0.6456 0.9378 0.6925
2018 0.9259 0.8739 0.6530 0.9431 0.6999
2019 0.9311 0.8811 0.6602 0.9480 0.7072
2020 0.9360 0.8880 0.6674 0.9525 0.7144

Electronics industry (Continued)

2003 0.6093 0.6465 0.6029 0.6264 0.7981
2004 0.6177 0.6602 0.6139 0.6390 0.8074
2005 0.6260 0.6736 0.6247 0.6513 0.8164
2006 0.6343 0.6867 0.6354 0.6635 0.8251
2007 0.6424 0.6996 0.6460 0.6755 0.8334
2008 0.6505 0.7121 0.6564 0.6872 0.8415
2009 0.6585 0.7243 0.6667 0.6987 0.8492
2010 0.6664 0.7362 0.6768 0.7100 0.8566
2011 0.6742 0.7478 0.6868 0.7210 0.8636
2012 0.6819 0.7590 0.6966 0.7317 0.8704
2013 0.6896 0.7699 0.7062 0.7422 0.8769
2014 0.6971 0.7804 0.7157 0.7524 0.8832
2015 0.7045 0.7906 0.7249 0.7623 0.8891
2016 0.7118 0.8004 0.7340 0.7720 0.8948
2017 0.7190 0.8099 0.7429 0.7814 0.9002
2018 0.7261 0.8190 0.7516 0.7905 0.9054

114

2019 0.7331 0.8278 0.7600 0.7993 0.9103
2020 0.7399 0.8362 0.7683 0.8078 0.9150

It may be observed from Table 5.16, Korea, Singapore and USA will achieve higher
technological capability in Electronics industry in 2020, followed by Japan, Germany, France,
Brazil, UK, Malaysia and China. It is also observed that Korea and Singapore will be
exceeding the USA in terms their technological capability in Electronics industry by 2020.

USA in Electronics industry.

2003 0.0056 0.1142 0.4855 -0.0001 0.3757
2004 0.0015 0.1064 0.4808 -0.0070 0.3718
2005 -0.0022 0.0990 0.4758 -0.0130 0.3675
2006 -0.0055 0.0921 0.4703 -0.0183 0.3629
2007 -0.0083 0.0856 0.4646 -0.0228 0.3581
2008 -0.0109 0.0795 0.4585 -0.0266 0.3530
2009 -0.0131 0.0737 0.4521 -0.0298 0.3476
2010 -0.0150 0.0683 0.4455 -0.0325 0.3421
2011 -0.0166 0.0633 0.4386 -0.0347 0.3364
2012 -0.0180 0.0586 0.4316 -0.0364 0.3306
2013 -0.0191 0.0541 0.4244 -0.0378 0.3247
2014 -0.0201 0.0500 0.4170 -0.0388 0.3186
2015 -0.0208 0.0461 0.4095 -0.0395 0.3124

115

2016 -0.0214 0.0425 0.4020 -0.0399 0.3062
2017 -0.0219 0.0392 0.3943 -0.0400 0.2999
2018 -0.0222 0.0360 0.3866 -0.0400 0.2936
2019 -0.0223 0.0331 0.3788 -0.0398 0.2872
2020 -0.0224 0.0304 0.3710 -0.0394 0.2809

USA in Electronics industry (Continued)

2003 0.0056 0.1142 0.4855 -0.0001 0.3757
2004 0.0015 0.1064 0.4808 -0.0070 0.3718
2005 -0.0022 0.0990 0.4758 -0.0130 0.3675
2006 -0.0055 0.0921 0.4703 -0.0183 0.3629
2007 -0.0083 0.0856 0.4646 -0.0228 0.3581
2008 -0.0109 0.0795 0.4585 -0.0266 0.3530
2009 -0.0131 0.0737 0.4521 -0.0298 0.3476
2010 -0.0150 0.0683 0.4455 -0.0325 0.3421
2011 -0.0166 0.0633 0.4386 -0.0347 0.3364
2012 -0.0180 0.0586 0.4316 -0.0364 0.3306
2013 -0.0191 0.0541 0.4244 -0.0378 0.3247
2014 -0.0201 0.0500 0.4170 -0.0388 0.3186
2015 -0.0208 0.0461 0.4095 -0.0395 0.3124
2016 -0.0214 0.0425 0.4020 -0.0399 0.3062
2017 -0.0219 0.0392 0.3943 -0.0400 0.2999

116

2018 -0.0222 0.0360 0.3866 -0.0400 0.2936
2019 -0.0223 0.0331 0.3788 -0.0398 0.2872
2020 -0.0224 0.0304 0.3710 -0.0394 0.2809

It may be observed from Table 5.17, the potential technological distance in Automobile
industry of Korea and Singapore with USA will reduce considerably in 2020 and result in
their technological capability exceeding USA by that period. The potential technological
distance in Automobile industry of Japan with USA will become closer to 0.03 by 2020.
The potential technological distance of Germany and France with USA also will reduce to
about 0.09 to 0.13 by 2020. The potential technological distance of UK, Brazil, Malaysia
and China with USA will remain reasonably high in year 2020.

Technological Distance in Electronics Industry
In developing the technology transfer model for Electronics industry, the potential
technology distance between transferor and transferee has to be evaluated first. In this
study, U.S.A. is assumed to be the transferor of technology in Electronics industry to
Korea, Japan, China, Singapore, Malaysia, UK, Germany, Brazil, and France. Moreover,
USA is assumed to be the most developed country in Electronics industry. The average
potential technological distances is determined and the results obtained are as shown below
in Table 5.18.

117

Table 5.18 Average Potential Technology Distance between U.S.A. and other Selected
Countries
Distance, D
Korea -0.0140
Japan 0.0651
China 0.4326
Singapore -0.0298
Malaysia 0.3316
UK 0.2767
Germany 0.1559
Brazil 0.2550
France 0.1973

distance with Korea, Singapore and Japan, followed by Germany, France, Brazil, UK,
Malaysia and China.

added per employee (US$ in PPP terms) are used to fit the technology transfer
phenomenon in Electronics industry. The maximum possible level of value added per
employee of the most developed country (in this case - the U.S.A.) is assumed to be
500,000 US$ in PPP terms per year. This is an estimate based on the past trend. From the
historical data of value added per employee, the technology transfer model for Korea,
Japan, China, Singapore, Malaysia, UK, Germany, Brazil, and France are obtained. The
numerical values required for the above technology transfer model are summarized as
follows:

118

Transferor (USA)

000 , 500
max

Transferee
Korea:
D = -0.0140;
2003
0
= t ; f
t
0
= 200,442 US$ (PPP)
k = 0.000000140090

Japan:
D = 0.0651;
2003
0
= t ; f
t
0
= 107,477 US$ (PPP)
k = 0.000000105909

China:
D = 0.4326;
2003
0
= t ; f
t
0
= 35,439 US$ (PPP)
k = 0.000000225559

Singapore:
D = -0.0298;
2003
0
= t ; f
t
0
= 120,158 US$ (PPP)
k = 0.000000272519

Malaysia:
D = 0.3316;
2003
0
= t ; f
t
0
= 38,571 US$ (PPP)
k = 0.000000386768

119

UK:
D = 0.2767;
2003
0
= t ; f
t
0
= 61,249 US$ (PPP)
k = 0.000000250270

Germany:
D = 0.1559;
2003
0
= t ; f
t
0
= 78,895 US$ (PPP)
k = 0.000000109070

Brazil:
D = 0.2550;
2003
0
= t ; f
t
0
= 90,885 US$ (PPP)
k = 0.000000249673

France:
D = 0.1973;
2003
0
= t ; f
t
0
= 61,594 US$ (PPP)
k = 0.000000143577

Historical data on technology transfer in Electronics industry and the predicted values of
the technology transfer model for Korea, Japan, China, Singapore, Malaysia, UK,
Germany, Brazil, and France are shown below in Table 5.19. Historical data on technology
transfer in Electronics industry and the model prediction for Korea, Japan, China,
Singapore, Malaysia, UK, Germany, Brazil, and France are shown in Figs. A2.49 to A2.58
(Appendix 2).

120

Table 5.19 Predicted Value Added per Employee data and Historical Value Added per Employee
on technology transfer model in Electronics industry for Korea, Japan, China, Singapore,
Malaysia, UK, Germany, Brazil, and France. Values are given in US$ (PPP terms)


Predicted Historical Predicted Historical Predicted Historical

VA per
Emp
VA per
Emp
VA per
Emp
VA per
Emp
VA per
Emp
VA per
Emp

2003 209868 200442 109688 107477 35738 35439
2004 218780 226656 113642 116977 37276 37412
2005 227781 234697 117691 118041 38871 39661
2006 236847 238056 121835 120313 40525 39811
2007 245956 239574 126073 126179 42239 42340
2008 255085

130402

44014
2009 264210

134822

45852
2010 273307

139330

47753
2011 282354

143923

49719
2012 291326

148600

51751
2013 300203

153356

53849
2014 308963

158190

56016
2015 317585

163097

58250
2016 326053

168074

60554
2017 334348

173117

62927
2018 342454

178221

65370

121

2019 350359

183382

67883
2020 358049

188596

70467

Malaysia, UK, Germany, Brazil, and France. Values are given in US$ (PPP terms) Continued



VA per
Emp
VA per
Emp
VA per
Emp
VA per
Emp
VA per
Emp
VA per
Emp

2003 124808 120158 36718 38571 61141 61249
2004 138989 142227 40134 38640 64921 65103
2005 154145 161046 43826 40967 68885 69049
2006 170206 167712 47805 50384 73034 71612
2007 187073 184343 52087 52232 77371 78356
2008 204620

56682

81896
2009 222696

61601

86610
2010 241128

66852

91512
2011 259731

72442

96599
2012 278311

78374

101870
2013 296677

84648

107318
2014 314644

91261

112940
2015 332045

98206

118727

122

2016 348735

105470

124672
2017 364593

113040

130765
2018 379527

120893

136995
2019 393474

129005

143352
2020 406397

137348

149820



Predicted Historical Predicted Historical Predicted Historical Predicted Historical

VA per
Emp
VA per
Emp
VA per
Emp
VA per
Emp
VA per
Emp
VA per
Emp
VA per
Emp
VA per
Emp
2003 79052 78895 93466 90885 61060 61594 220533 219207
2004 81658 82172 98885 99873 63618 63383 227383 225465
2005 84328 83992 104506 107711 66262 65314 234267 239552
2006 87064 86817 110325 112197 68995 69373 241175 241761
2007 89866 90095 116335 112956 71817 72098 248097 245491
2008 92733

122527

74729

255021
2009 95666

128892

77732

261938
2010 98664

135419

80826

268836
2011 101727

142094

84013

275706
2012 104855

148905

87292

282537
2013 108048

155834

90663

289319

123

2014 111304

162866

94127

296042
2015 114623

169982

97682

302696
2016 118005

177164

101329

309274
2017 121447

184392

105067

315765
2018 124949

191646

108893

322163
2019 128510

198906

112808

328459
2020 132128

206152

116808

334647

It may be observed from Table 5.18, Singapore will achieve the Value Added per
employee as $406,397 (US $ in PPP terms), followed by Korea $358,049, USA $334,647,
Brazil $206,152, Japan $188,596, UK $149,820, Malaysia $137,348 Germany $132,128,
France $116,808, and China $70,467 in 2020. The Value Added per Employee is
considered as a measure of effective technology assimilation level and its values are
forecast and compared in terms of US $ in PPP terms using the technology transfer model
developed. The historical data of the value added per employee (US$ in PPP terms) and
the predicted values are used to fit the technology transfer phenomenon in Automobile
industry and the results are shown in Table 5.20.

Malaysia, UK, Germany, Brazil, and France Electronics Industry

Country Correlation
Coefficient
Coefficient of
Determination
Significance level
Korea 0.8767 0.7687 0.0500
Japan 0.9485 0.8996 0.0139

China 0.9769 0.9544 0.0042
Singapore 0.9808 0.9620 0.0032

124

Malaysia 0.9402 0.8840 0.0174

UK 0.9909 0.9820 0.0010

Germany 0.9965 0.9930 0.0002

Brazil 0.9518 0.9059 0.0126
France 0.9898 0.9797 0.0012

It may be observed from the above that in terms of technology transfer in Electronics
extent of 99.30% for Germany, 98.20% for UK, 97.97% for France, 96.20% for Singapore,
95.44% for China, 90.59% for Brazil, 89.96% for Japan, 88.40% for Malaysia, and 76.87%
for Korea. From the above figures, it can be seen that the technology transfer model
developed in this study provides a very good fit in all the above transfer situations. The
fitness of the model is quite significant for countries such as China, Singapore, UK,
Germany, and France at the 0.01 level where as it is significant for countries such as
Korea, Japan, Malaysia and Brazil at the 0.05 level.

5.5 Technology Transfer in Computing Industry in Selected Countries
Computing industry has played a very important role in the economic development of
many nations. International technology transfer in computing industry has been happening
on for a long time.

The value added per employee in computing industry is used as the assimilation parameter
section 5.2.

125

5.5.1 Determinants of Technology Index in Computing Industry
Determinants of Technology Index in Computing Industry are as follows:


terms.
(PPP) terms.

- Output per Employee in Computing Industry in Purchasing Power Parity (PPP)
terms.
- Value added per Employee in Computing Industry in Purchasing Power Parity
(PPP) terms.

developing technology indexes in Computing industry for selected countries are shown in

5.5.3 Technology Index of Computing Industry
In developing technology index in computing industry of each selected country, the raw
data are converted into standardized data. The Principal Components Analysis of factor
analysis is employed by using SPSS for determining the factor loadings. The mean and
standard deviation of each variable are shown in Table A1.7 (Appendix 1). The
standardized data are shown below in Table 5.21. The correlation coefficient matrix is

126

Variables in Computing Industry are shown below in Table 5.23.

manufacturing sector, Output per employee of the Automobile industry, and Value added
per employee of the Computing industry, are considered for formulating the technology
Table 5.21 The standardized data of Technology Variables in Computing Industry


2007 0.6833 0.9433 0.9656 0.8581 0.7538

2006 0.5838 0.9203 0.9587 0.6699 0.7301

2005 0.4822 0.8620 0.9326 0.5242 0.7289

2004 0.4317 0.8048 0.9135 0.5044 0.7236

2003 0.3602 0.7094 0.8434 0.4022 0.6224

2 Japan

2007 0.8737 0.6655 0.7081 0.6034 0.3876

2006 0.8374 0.5677 0.6364 0.5135 0.3751

2005 0.7873 0.5218 0.6197 0.4504 0.3660

2004 0.7223 0.5111 0.6114 0.4249 0.3673

2003 0.6892 0.4334 0.5478 0.3800 0.3089

127

3 China

2007 0.2598 0.1576 0.1370 0.2346 0.1856

2006 0.2176 0.1124 0.1041 0.2323 0.1845

2005 0.1775 0.0832 0.0821 0.2299 0.1804

2004 0.1456 0.0648 0.0675 0.2297 0.1670

2003 0.1231 0.0550 0.0615 0.2250 0.1552

4 Singapore

2007 0.9885 0.9967 0.8699 0.9920 0.6448

2006 0.9386 0.9945 0.8657 0.9888 0.6284

2005 0.8897 0.9809 0.7814 0.9868 0.5749

2004 0.8617 0.9545 0.7600 0.9868 0.5529

2003 0.7646 0.8654 0.5864 0.9852 0.4941

5 Malaysia

2007 0.0780 0.4632 0.2069 0.8040 0.3303

2006 0.0749 0.3962 0.1922 0.6798 0.2877

2005 0.0720 0.3463 0.1872 0.4992 0.2154

2004 0.0687 0.3398 0.1600 0.4967 0.2123

2003 0.0659 0.2998 0.1385 0.4762 0.1881

6 UK

2007 0.4781 0.3279 0.3968 0.5382 0.9722

2006 0.4383 0.3137 0.3586 0.3429 0.7484

2005 0.4074 0.2798 0.3449 0.2853 0.4992

128

2004 0.3807 0.2784 0.3297 0.2511 0.4273

2003 0.3688 0.2626 0.3137 0.1286 0.2577

7 Germany

2007 0.7374 0.4674 0.3999 0.3681 0.4157

2006 0.7140 0.4146 0.3684 0.3407 0.4085

2005 0.6808 0.3639 0.3652 0.3118 0.3953

2004 0.6636 0.3258 0.3150 0.2937 0.3620

2003 0.6283 0.3227 0.3053 0.2627 0.3366

8 USA

2007 0.9262 0.7627 0.9736 0.9409 0.9963

2006 0.8975 0.7647 0.9672 0.8591 0.9960

2005 0.8662 0.7466 0.9654 0.8164 0.9955

2004 0.8309 0.6284 0.9324 0.8137 0.9948

2003 0.8143 0.5558 0.8976 0.6263 0.9458

9 Brazil

2007 0.0783 0.1649 0.2984 0.1889 0.3635

2006 0.0725 0.1620 0.2962 0.1883 0.3093

2005 0.0675 0.1437 0.2720 0.1769 0.2996

2004 0.0673 0.1368 0.2491 0.1471 0.2720

2003 0.0703 0.1096 0.2104 0.1373 0.2444

129

10 France

2007 0.6341 0.6474 0.3683 0.2644 0.3491

2006 0.6229 0.4295 0.2816 0.2037 0.2366

2005 0.5946 0.4090 0.2715 0.1599 0.2281

2004 0.5757 0.4077 0.2695 0.1517 0.2075

2003 0.5566 0.3505 0.2376 0.1106 0.1804

followed Singapore, Korea, Japan, Germany, France and UK. The standardized values of

Table 5.22 Correlation Coefficient Matrix of Technology Variables in Computing Industry
Correlations

RDEMP Pearson
Correlation
1 .736
**
.731
**
.563
**
.568
**

Sig. (2-
tailed)

.000 .000 .000 .000
N 50 50 50 50 50

MFGOUTEMP Pearson
Correlation
.736
**
1 .878
**
.829
**
.644
**

Sig. (2-
tailed)
.000

.000 .000 .000
N 50 50 50 50 50

130

MFGVAEMP Pearson
Correlation
.731
**
.878
**
1 .724
**
.835
**

Sig. (2-
tailed)
.000 .000

.000 .000
N 50 50 50 50 50

INDOUTEMP Pearson
Correlation
.563
**
.829
**
.724
**
1 .658
**

Sig. (2-
tailed)
.000 .000 .000

.000
N 50 50 50 50 50

INDVAEMP Pearson
Correlation
.568
**
.644
**
.835
**
.658
**
1
Sig. (2-
tailed)
.000 .000 .000 .000

N 50 50 50 50 50


technology variables RDEMP & MFGOUTEMP, RDEMP & MFGVAEMP,
MFGOUTEMP & MFGVAEMP, and MFGVAEMP & INDVAEMP are very strong. The
relationship between other technology variables is moderately strong. The correlation
coefficient between the variables is quite significant at the 0.01 level.

131

Table 5.23 Factor Analysis and Component Matrix of Technology Variables in Computing
Industry

Communalities

Initial Extraction
RDEMP 1.000 .662
MFGVAEMP 1.000 .904
INDVAEMP 1.000 .707
Analysis.

Component
Total % of Variance Cumulative % Total % of Variance Cumulative %
1 3.879 77.589 77.589 3.879 77.589 77.589
2 .469 9.384 86.973

3 .419 8.386 95.359

4 .186 3.729 99.088

5 .046 .912 100.000


132

Component Matrix
a

Component
1
RDEMP .813
MFGOUTEMP .933
MFGVAEMP .951
INDOUTEMP .859
INDVAEMP .841
Component Analysis.

From Table 5.23, it is seen that the first factor accounts for 77.6 percent of the total
variance. Hence, the factor loading of the first component is then used to determine the
technology index of each selected country in computing industry. The details for obtaining
the technology indexes for computing industry are similar to those of the technology
indexes for the Automobile industry described in section 5.3.3. The calculated and
normalized indexes of technology of the selected countries in computing tool industry are
shown below in Table 5.24.

133

Computing Industry


2007 0.9603 0.8315

2006 0.8854 0.8120

2005 0.8112 0.7914

2004 0.7766 0.7813

2003 0.6769 0.7508

2 Japan

2007 0.7344 0.7687

2006 0.6631 0.7464

2005 0.6216 0.7329

2004 0.5979 0.7251

2003 0.5341 0.7034

3 China

2007 0.2181 0.5863

2006 0.1896 0.5752

2005 0.1674 0.5665

2004 0.1497 0.5595

2003 0.1376 0.5547

134

4 Singapore

2007 1.0197 0.8461

2006 1.0034 0.8422

2005 0.9571 0.8308

2004 0.9349 0.8251

2003 0.8375 0.7988

5 Malaysia

2007 0.4281 0.6657

2006 0.3710 0.6447

2005 0.3015 0.6185

2004 0.2914 0.6146

2003 0.2661 0.6049

6 UK

2007 0.6063 0.7278

2006 0.4934 0.6891

2005 0.4087 0.6586

2004 0.3758 0.6465

2003 0.3017 0.6186

7 Germany

2007 0.5366 0.7042

2006 0.5037 0.6928

2005 0.4745 0.6824

135

2004 0.4382 0.6694

2003 0.4153 0.6610

8 USA

2007 1.0406 0.8510

2006 1.0153 0.8450

2005 0.9944 0.8400

2004 0.9498 0.8289

2003 0.8682 0.8073

9 Brazil

2007 0.2499 0.5987

2006 0.2356 0.5931

2005 0.2195 0.5869

2004 0.1996 0.5791

2003 0.1760 0.5699

10 France

2007 0.5131 0.6961

2006 0.3993 0.6552

2005 0.3744 0.6460

2004 0.3634 0.6418

2003 0.3228 0.6266

136

It may be observed from Table 5.24, the technology level or index of Computing industry
in USA, Singapore, and Korea are quite high (above 0.80) as compared to the other
selected countries. The technological level of Computing industry in Japan (between 0.70
and 0.80) is relatively high. Even though Malaysia, UK, Germany, France, Brazil and
China are lagging in the technological capability in Computing industry (between 0.50 and
0.70), they are showing an increasing trend.

5.5.4 Technology Index Function of Computing Industry
The technology index function of each selected country in computing industry is
country in computing industry are used.

The technology index functions of the selected countries in computing industry are shown
below in Table 5.25. The predicted values of the technology indexes of the selected
countries in Computing industry are shown below in Table 5.26, and the technology index
curves of the selected countries in computing industry are shown in Figs. A2.59 to A2.68
(Appendix 2). The predicted values of the potential technology distances of selected
countries with USA in computing industry are shown below in Table 5.27. The potential
technology distance curves of selected countries in computing industry are shown in Figs.
A2.69 to A2.77 (Appendix 2).

Table 5.25 Technology Index Functions of the Selected Countries in Computing Industry

Country Technology Index Function of Computing Industry
Korea
) 2003 ( 1178 . 0
3677 . 0 1
1
) (

+
=
t
e
t T

137

Japan
) 2003 ( 0784 . 0
4542 . 0 1
1
) (

+
=
t
e
t T

China
) 2003 ( 0322 . 0
8361 . 0 1
1
) (

+
=
t
e
t T

Singapore
) 2003 ( 0773 . 0
2598 . 0 1
1
) (

+
=
t
e
t T

Malaysia
) 2003 ( 0655 . 0
7148 . 0 1
1
) (

+
=
t
e
t T

UK
) 2003 ( 1193 . 0
7069 . 0 1
1
) (

+
=
t
e
t T

Germany
) 2003 ( 0507 . 0
5424 . 0 1
1
) (

+
=
t
e
t T

USA
) 2003 ( 0737 . 0
2465 . 0 1
1
) (

+
=
t
e
t T

Brazil
) 2003 ( 0295 . 0
7732 . 0 1
1
) (

+
=
t
e
t T

138

France
) 2003 ( 0681 . 0
6503 . 0 1
1
) (

+
=
t
e
t T

It may be observed from Table 5.25 (based on values of a in the technology index function),
USA, Singapore, and Korea have been early starters in their technological development in
Computing industry, followed by Japan, Germany, France and UK. The countries Malaysia,
Brazil, and China appear to be the late starters in their technological development in
Computing industry. USA is the technology leader in the Computing industry followed by
transferor and other countries are transferees in technology transfer in Computing industry.

Computing industry

2003 0.7537 0.7042 0.5526 0.8062 0.5990
2004 0.7749 0.7203 0.5606 0.8180 0.6146
2005 0.7947 0.7358 0.5685 0.8292 0.6300
2006 0.8133 0.7508 0.5764 0.8399 0.6451
2007 0.8305 0.7652 0.5842 0.8500 0.6599
2008 0.8465 0.7790 0.5920 0.8596 0.6745
2009 0.8612 0.7922 0.5998 0.8687 0.6887
2010 0.8746 0.8048 0.6075 0.8772 0.7026
2011 0.8870 0.8169 0.6151 0.8853 0.7160
2012 0.8983 0.8283 0.6227 0.8929 0.7292
2013 0.9085 0.8392 0.6303 0.9001 0.7419

139

2014 0.9179 0.8495 0.6378 0.9068 0.7542
2015 0.9263 0.8592 0.6452 0.9132 0.7662
2016 0.9340 0.8685 0.6525 0.9191 0.7777
2017 0.9409 0.8772 0.6598 0.9247 0.7888
2018 0.9471 0.8854 0.6670 0.9299 0.7995
2019 0.9527 0.8931 0.6741 0.9348 0.8098
2020 0.9577 0.9004 0.6811 0.9393 0.8197

Computing industry (Continued)

2003 0.6145 0.6598 0.5712 0.6221 0.8137
2004 0.6423 0.6711 0.5784 0.6380 0.8246
2005 0.6693 0.6822 0.5856 0.6535 0.8350
2006 0.6951 0.6931 0.5927 0.6688 0.8449
2007 0.7198 0.7037 0.5998 0.6837 0.8543
2008 0.7432 0.7142 0.6069 0.6982 0.8633
2009 0.7653 0.7244 0.6139 0.7123 0.8717
2010 0.7861 0.7344 0.6208 0.7261 0.8797
2011 0.8054 0.7442 0.6277 0.7394 0.8873
2012 0.8235 0.7537 0.6346 0.7523 0.8945
2013 0.8401 0.7630 0.6414 0.7648 0.9013
2014 0.8555 0.7721 0.6482 0.7768 0.9076
2015 0.8697 0.7809 0.6549 0.7884 0.9136

140

2016 0.8826 0.7894 0.6615 0.7995 0.9193
2017 0.8944 0.7977 0.6681 0.8102 0.9246
2018 0.9052 0.8058 0.6746 0.8204 0.9296
2019 0.9149 0.8136 0.6810 0.8302 0.9342
2020 0.9238 0.8212 0.6874 0.8396 0.9386

It may be observed from Table 5.26, Korea, Singapore and USA will achieve higher
technological capability in Computing industry in 2020, followed by UK, Japan, France,
Germany, UK, Malaysia, Brazil, and China. It is also observed that Korea and Singapore will
be exceeding the USA in terms their technological capability in Computing industry by 2020.

USA in Computing industry

2003 0.0796 0.1554 0.4724 0.0093 0.3584
2004 0.0642 0.1447 0.4710 0.0081 0.3417
2005 0.0506 0.1347 0.4688 0.0070 0.3254
2006 0.0389 0.1253 0.4659 0.0060 0.3097
2007 0.0286 0.1165 0.4623 0.0051 0.2945
2008 0.0198 0.1082 0.4582 0.0043 0.2799
2009 0.0123 0.1004 0.4534 0.0035 0.2658
2010 0.0058 0.0931 0.4482 0.0029 0.2522
2011 0.0004 0.0863 0.4425 0.0023 0.2392
2012 -0.0042 0.0799 0.4364 0.0017 0.2267

141

2013 -0.0080 0.0740 0.4299 0.0013 0.2148
2014 -0.0112 0.0684 0.4231 0.0009 0.2034
2015 -0.0137 0.0633 0.4161 0.0005 0.1924
2016 -0.0157 0.0585 0.4088 0.0002 0.1820
2017 -0.0173 0.0540 0.4013 -0.0001 0.1721
2018 -0.0185 0.0499 0.3937 -0.0004 0.1627
2019 -0.0194 0.0461 0.3859 -0.0006 0.1537
2020 -0.0200 0.0425 0.3780 -0.0008 0.1451

USA in Computing industry (Continued)

UK GERMANY BRAZIL FRANCE
2003 0.3241 0.2332 0.4245 0.3079
2004 0.2837 0.2287 0.4256 0.2925
2005 0.2476 0.2240 0.4260 0.2777
2006 0.2155 0.2191 0.4255 0.2634
2007 0.1869 0.2140 0.4243 0.2496
2008 0.1615 0.2087 0.4225 0.2364
2009 0.1390 0.2033 0.4201 0.2238
2010 0.1192 0.1978 0.4171 0.2116
2011 0.1017 0.1923 0.4135 0.2001
2012 0.0863 0.1867 0.4095 0.1890
2013 0.0727 0.1811 0.4051 0.1785
2014 0.0609 0.1756 0.4003 0.1684

142

2015 0.0506 0.1700 0.3951 0.1589
2016 0.0415 0.1645 0.3897 0.1498
2017 0.0337 0.1590 0.3840 0.1412
2018 0.0270 0.1536 0.3780 0.1330
2019 0.0211 0.1483 0.3718 0.1253
2020 0.0161 0.1430 0.3655 0.1179

It may be observed from Table 5.27, the potential technological distance in Computing
industry of Korea and Singapore with USA will reduce considerably in 2020 and result in
their technological capability exceeding USA by that period. The potential technological
distance in Computing industry of UK and Japan with USA will become 0.02 to 0.04 by
2020. The potential technological distance of Germany, France, and Malaysia with USA
also will reduce to about 0.12 to 0.14 by 2020. The potential technological distance of
Brazil, and China with USA will remain reasonably high in year 2020.

Technological Distance in Computing Industry
In developing the technology transfer model for Computing industry, the potential
technology distance between transferor and transferee has to be evaluated first. In this
study, U.S.A. is assumed to be the transferor of technology in computing industry to
Korea, Japan, China, Singapore, Malaysia, UK, Germany, Brazil, and France. Moreover,
USA is assumed to be the most developed country in computing industry. The average
potential technological distances is determined and the results obtained are as shown below
in Table 5.28.

143

Table 5.28 Average Potential Technology Distance between U.S.A. and other Selected
Countries
Distance, D
Korea 0.0096
Japan 0.0890
China 0.4342
Singapore 0.0028
Malaysia 0.2400
UK 0.1216
Germany 0.1891
Brazil 0.4055
France 0.2014

distance with Korea, Singapore and Japan, followed by UK, Germany, France, Malaysia,
Brazil, and China.

added per employee (US$ in PPP terms) are used to fit the technology transfer
phenomenon in Computing industry. The maximum possible level of value added per
employee of the most developed country (in this case - the U.S.A.) is assumed to be
700,000 US$ in PPP terms per year. This is an estimate based on the past trend. From the
historical data of value added per employee, the technology transfer model for Korea,
Japan, China, Singapore, Malaysia, UK, Germany, Brazil, and France are obtained. The
numerical values required for the above technology transfer model are summarized as
follows:

144

Transferor (USA)

000 , 700
max

Transferee
Korea:
D = 0.0096;
2003
0
= t ; f
t
0
= 151,967 US$ (PPP)
k = 0.000000102426

Japan:
D = 0.0890;
2003
0
= t ; f
t
0
= 84,709 US$ (PPP)
k = 0.000000111037

China:
D = 0.4342;
2003
0
= t ; f
t
0
= 41,964 US$ (PPP)
k = 0.000000288618

Singapore:
D = 0.0028;
2003
0
= t ; f
t
0
= 124,879 US$ (PPP)
k = 0.000000143208

Malaysia:
D = 0.2400;
2003
0
= t ; f
t
0
= 52,718 US$ (PPP)
k = 0.000000498840

145

UK:
D = 0.1216;
2003
0
= t ; f
t
0
= 72,161 US$ (PPP)
k = 0.000001115341

Germany:
D = 0.1891;
2003
0
= t ; f
t
0
= 91,114 US$ (PPP)
k = 0.000000157794

Brazil:
D = 0.4055;
2003
0
= t ; f
t
0
= 68,687 US$ (PPP)
k = 0.000000439908

France:
D = 0.2014;
2003
0
= t ; f
t
0
= 50,319 US$ (PPP)
k = 0.000000469250

Historical data on technology transfer in Computing industry and the predicted values of
the technology transfer model for Korea, Japan, China, Singapore, Malaysia, UK,
Germany, Brazil, and France are shown below in Table 5.29. Historical data on technology
transfer in Computing industry and the model prediction for Korea, Japan, China,
Singapore, Malaysia, UK, Germany, Brazil, France, and USA are shown in Figs. A2.78 to
A2.87 (Appendix 2).

146

on technology transfer model in Computing industry for Korea, Japan, China, Singapore,
Malaysia, UK, Germany, Brazil, and France. Values are given in US$ (PPP terms)



VA per
Emp
VA per
Emp
VA per
Emp
VA per
Emp
VA per
Emp
VA per
Emp
2003 159852 151967 88971 84709 43244 41964
2004 166115 175326 92590 97993 45671 45968
2005 172544 176649 96332 97696 48219 50315
2006 179137 176938 100197 99701 50892 51599
2007 185892 183028 104187 102408 53692 51949
2008 192806

108304

56626
2009 199876

112550

59695
2010 207098

116926

62905
2011 214467

121432

66258
2012 221979

126071

69758
2013 229628

130842

73407
2014 237408

135746

77210
2015 245312

140783

81167
2016 253333

145953

85281
2017 261463

151255

89553
2018 269694

156689

93985
2019 278017

162253

98577
2020 286424

167946

103328

147




VA per
Emp
VA per
Emp
VA per
Emp
VA per
Emp
VA per
Emp
VA per
Emp
2003 126969 124879 51148 52718 69667 72161
2004 134533 137127 58773 59868 101615 110896
2005 142436 141763 67381 60756 144368 125939
2006 150678 153266 77052 79651 198229 181626
2007 159261 156904 87859 89675 261147 284889
2008 168183

99863

328478
2009 177440

113105

394096
2010 187026

127606

452467
2011 196935

143357

500323
2012 207156

160316

537002
2013 217676

178402

563689
2014 228483

197496

582380
2015 239558

217440

595123
2016 250883

238040

603653
2017 262437

259075

609293
2018 274198

280302

612992
2019 286138

301469

615404
2020 298233

322329

616972

148



Predicted Historical Predicted Historical Predicted Historical Predicted Historical

VA per
Emp
VA per
Emp
VA per
Emp
VA per
Emp
VA per
Emp
VA per
Emp
VA per
Emp
VA per
Emp
2003 92579 91114 69044 68687 49352 50319 289133 259230
2004 96861 96823 74995 75774 56899 58502 307720 338503
2005 101300 104071 81353 82513 65455 64293 326553 342537
2006 105898 106911 88129 84816 75111 66597 345523 346126
2007 110656 108434 95330 97134 85950 93931 364520 348321
2008 115576

102960

98044

383431
2009 120658

111017

111450

402147
2010 125903

119498

126201

420563
2011 131311

128393

142302

438581
2012 136881

137687

159722

456111
2013 142612

147361

178389

473073
2014 148503

157389

198190

489400
2015 154550

167742

218967

505037
2016 160753

178382

240523

519940
2017 167106

189270

262622

534078
2018 173606

200361

285009

547431
2019 180248

211606

307409

559992
2020 187027

222954

329550

571761

149

It may be observed from Table 5.29, UK will achieve the Value Added per employee as
$616,972 (US $ in PPP terms), followed by USA $571,761, Korea $386,424, France
$329,550, Malaysia $322,329, Singapore $298,233, Brazil $222,954, Germany $187,027,
Japan $167,946, China $103,328 in 2020. The Value Added per Employee is considered as
a measure of effective technology assimilation level and its values are forecast and
compared in terms of US $ in PPP terms using the technology transfer model developed.
The historical data of the value added per employee (US$ in PPP terms) and the predicted
values are used to fit the technology transfer phenomenon in Automobile industry and the
results are shown in Table 5.30.

Malaysia, UK, Germany, Brazil, and France Computing Industry

Country Correlation
Coefficient
Coefficient of
Determination
Significance level
Korea 0.8331 0.6940 0.0498
Japan 0.8490 0.7207 0.0388
China 0.9327 0.8700 0.0207
Singapore 0.9819 0.9642 0.0029
Malaysia 0.9699 0.9407 0.0062
UK 0.9777 0.9559 0.0039
Germany 0.9625 0.9264 0.0086
Brazil 0.9818 0.9640 0.0029
France 0.9342 0.8728 0.0200

It may be observed from the above that in terms of technology transfer in Automobile
extent of 96.42% for Singapore, 96.40% for Brazil, 95.59% for UK, 94.07% for Malaysia,
87.28% for France, 87.00% for China, 72.07% for Japan, and 69.40% for Korea. From the

150

above figures, it can be seen that the technology transfer model developed in this study
provides a very good fit in most of the above transfer situations. The fitness of the model is
quite significant for countries such as Singapore, Malaysia, UK, Germany, Brazil, and
France at the 0.01 level where as it is significant for country China, Korea and Japan at the
0.05 level.

5.6 Summary
To demonstrate the applicability and validity of the technology transfer model developed
in this study, some of the countries such as Korea, Japan, China, Singapore, Malaysia, UK,
Germany, USA, Brazil, and France, are selected in this chapter to study their technology
transfer pattern in selected industries such as automobile industry, electronics industry and
computing industry. The variables such as Research and Development expenditure per
economically active population, Output per employee in manufacturing sector, Value
added per employee in manufacturing sector, Output per employee of the specific industry,
and Value added per employee of the specific industry, are considered in the case studies
for developing the technology index function. It is assumed that the national level
technology climate variables and the manufacturing sectoral level technology climate
variables have direct influence on the growth of the specific industry. The Value added per
employee in the specific industry is considered as the technology assimilation parameter
indicating the effectiveness of the application of the technology at the industrial level.

In the case studies, the variables that influence and reflect the performance of the given
industry in the selected countries under study are identified and collected for the period
2003 - 2007. The raw data collected are then converted into standardized data. The factor
analysis is used to determine the factor loadings of the variables for formulating the
technology index at the industrial level. The calculated technology index is then
normalized to have value between 0 and 1. The technology indexes of each country in the
given industry are used to develop its technology index function by using the logistic S -
growth pattern. The technology index function developed for each country in the given
industry is then used for determining its technology level by way of an index.

151

By using the technology transfer model developed in this study, the level of assimilation
that the transferee can achieve with the transferor during the period of technology transfer
is measured. Historical data on technology transfer in the selected industries of the
countries under study and the predicted values of the technology transfer model are found
to have high correlation. From the analysis results, it is seen that the technology transfer
model developed in this study provides a very good fit in the transfer situations in
Automobile industry, Electronics industry, and Computing industry in selected such as
Korea, Japan, China, Singapore, Malaysia, UK, Germany, USA, Brazil, and France.

and (c) a technology transfer function that incorporates the potential technological distance
between the transferor and transferee, is accepted at the significance level of 0.05.

152

CHAPTER 6: CONCLUSIONS AND RECOMMENDATIONS

6.1 Contributions to the Literature
The main emphasis of this study is to develop an extended model incorporating time,
technological level and a dynamic potential technological distance for measuring the
technology transfer potentials that exist between a transferor and a transferee at the
industrial level. In this study, the technological level of a country is measured by an
indicator called technology index. The technology index is developed based upon various
variables and the procedure employed is the factor analysis method. The factor analysis is
used to determine the factor loadings of the variables for formulating the technology index
at the industrial level. The calculated technology index is then normalized to have value
between 0 and 1. The technology indexes data are used to develop its technology index
function by using the logistic growth pattern. The technology index function is then used
for determining its technology level by way of an index. As the indices are derived through
factor analysis, it is likely that the index will represent the level of a country more
accurately if a large number of variables are considered for its formulation.

The variables used are broadly categorized into three groups, namely, (i) variables relevant
to national technology climate conditions, (ii) variables reflecting manufacturing
technology climate conditions, and (iii) variables pertinent to the specific industry
technology climate conditions in a country. It is assumed that the national technology
climate conditions and manufacturing technology climate conditions have direct influence
on the growth of the specific industry in a country. A large number of technological
variables determine the technological level of a country in a given industry. However, the
non-availability of relevant data made it necessary to consider only few variables for
formulating the technology index of a country in a given industry in this study.

In this study, a mathematical model for measuring technology transfer potentials is
developed. It is hypothesised that the rate of assimilation of a particular technology of a
transferee at a certain time, t , is proportional to: (a) the existing level of assimilation of

153

in the long run, and (c) a function that incorporates the factor that influences the
assimilation rate in a significant manner (such as the relative technological gap between
the transferor and transferee). The technology transfer model is developed in the context of
technological diffusion process. It incorporates time, spatial aspect and a dynamic potential
technological distance and is referred to as a dynamic model. The potential technological
distance between the source and the recipient is considered as the spatial dimension for
measuring the technology assimilation capability of the recipient. The potential
technological distance is defined as the relative difference in technological levels between
countries.

The time-level technology transfer models (Haq-Shariff model, Sukchareonpong model,
and Jayaraman-Truong-Agrawal model), and the models of technological change (namely,
Blackmans model, Fisher-Pry model, Mansfields model, and Bhargava model) are shown
to be the special cases of the dynamic model developed in this study. To demonstrate the
applicability of the developed model, case studies of technology transfer in automobile
industry, electronics industry, and computing industry in selected member countries such
as Korea, Japan, China, Singapore, Malaysia, UK, Germany, USA, Brazil, and France are
presented.


The fitness of the technology transfer model is found to be very satisfactory. The case
studies indicate that the model can provide an effective means for measuring the transfer
potentials that exist between a transferor and a transferee. The model provides a greater

154

insight into the complex phenomenon of technology transfer. Since the model predicts the
level of assimilation that a transferee can achieve with a given transferor in the long run, it
is possible for this dynamic model to be used as a decision-making tool by countries in
determining the optimum partners for most effective technology transfer.

6.2 Conclusions
manufacturing sector, Output per employee of the specific industry, and Value added per
employee of the specific industry, are considered for formulating the technology index at
the industrial level. In this study, the technology transfer model developed is applied to the
technology transfer situations in automobile industry, electronics industry, and computing
industry in selected member countries such as Korea, Japan, China, Singapore, Malaysia,
UK, Germany, USA, Brazil, and France.

The following conclusions are made as regards to the technological level and technology
transfer in Automobile industry in selected member countries such as Korea, Japan, China,
Singapore, Malaysia, UK, Germany, USA, Brazil, and France:

1. The technology level or index of Automobile industry in Korea, Japan and USA are
quite high (above 0.80) as compared to the other selected countries. The technological
level of Automobile industry in Germany, Singapore and France (between 0.70 and
0.80) is relatively high. Even though Malaysia, UK, Brazil and China are lagging in
the technological capability in Automobile industry (between 0.50 and 0.70), they are
showing an increasing trend.

2. USA, Japan and Korea have been early starters in their technological development in
Automobile industry, followed by Singapore, Germany, France and UK. The countries
Brazil, Malaysia, and China appear to be the late starters in their technological
development in Automobile industry. USA is the technology leader in the Automobile

155

industry followed by Korea, Japan, Singapore and Germany. Hence, it is assumed in
this study that USA is the transferor and other countries are transferees in technology
transfer in Automobile industry.

3. Korea, Japan, Singapore and USA will achieve higher technological capability in
Automobile industry in 2020, followed by France, Germany, UK, Brazil, Malaysia
and China. By 2020, Korea and Japan will be exceeding the USA in terms their
technological capability in Automobile industry.

4. The potential technological distance in Automobile industry of Korea and Japan with
USA will reduce considerably in 2020 and result in their technological capability
exceeding USA by that period. The potential technological distance in Automobile
industry of Singapore with USA will become almost zero by 2020. The potential
technological distance of Germany and France with USA also will reduce to about
0.05 by 2020. The potential technological distance of UK, Brazil, Malaysia and China
with USA will remain reasonably high in year 2020.

5. The Value Added per Employee is considered as a measure of effective technology
assimilation level and its values are forecast and compared in terms of US $ in PPP
terms using the technology transfer model developed. In this study, it is observed that
Korea will achieve the Value Added per employee as $364,528 (US $ in PPP terms),
followed by Japan $262,641, Malaysia $255,772, USA $227,516, Brazil $226,173,
Germany $194,858, France $192,811, Singapore $164,018, China $163,990, and UK
$116,254 in 2020.

6. The historical data of the value added per employee (US$ in PPP terms) and the
predicted values are used to fit the technology transfer phenomenon in Automobile
industry The Fitness of the Technology Transfer Model in Korea, Japan, China,
Singapore, Malaysia, UK, Germany, Brazil, and France is found to be very
satisfactory as shown in the table below:

156

Country Correlation
Coefficient
Coefficient of
Determination
Significance
F value
Korea 0.9518 0.9060 0.0126
Japan 0.9998 0.9997 0.0000

China 0.9119 0.8315 0.0309
Singapore 0.9938 0.9876 0.0005

Malaysia 0.9997 0.9994 0.0000

UK 0.9524 0.9071 0.0123

Germany 0.9638 0.9051 0.0082

Brazil 0.9553 0.9126 0.0112
France 0.9676 0.9363 0.0069

In terms of technology transfer in Automobile industry, the model developed in this study
explains the variation in the prediction to the extent of 99.97% for Japan, 99.94% for
Malaysia, 98.76% for Singapore, 93.63% for France, 91.26% for Brazil, 90.71% for UK,
90.60% for Korea, 90.51% for Germany, and 83.15% for China. From the above results, it
can be seen that the technology transfer model developed in this study provides a very
good fit in all the above transfer situations. The fitness of the model is quite significant for
countries such as Japan, Singapore, Malaysia, Germany and France at the 0.01 level where
as it is significant for countries such as Korea, China, UK, and Brazil at the 0.05 level.

transfer in Electronics industry in selected member countries such as Korea, Japan, China,

1. The technology level or index of Electronics industry in Korea, Singapore and USA are
level of Electronics industry in Japan (between 0.70 and 0.80) is relatively high. The
technological level of Electronics industry in Japan (between 0.70 and 0.80) is relatively
high. Even though Malaysia, UK, Germany, France, Brazil and China are lagging in the

157

technological capability in Electronics industry (between 0.50 and 0.70), they are showing
an increasing trend.

2. USA, Korea, and Singapore have been early starters in their technological development in
Electronics industry, followed by Japan, Germany, France and UK. The countries Brazil,
Malaysia, and China appear to be the late starters in their technological development in
Electronics industry. USA is the technology leader in the Electronics industry followed by
transferor and other countries are transferees in technology transfer in Electronics industry.

3. Korea, Singapore and USA will achieve higher technological capability in Electronics
industry in 2020, followed by Japan, Germany, France, Brazil, UK, Malaysia and China. It
is also observed that Korea and Singapore will be exceeding the USA in terms their
technological capability in Electronics industry by 2020.

4. The potential technological distance in Automobile industry of Korea and Singapore with
exceeding USA by that period. The potential technological distance in Automobile
industry of Japan with USA will become closer to 0.03 by 2020. The potential
technological distance of Germany and France with USA also will reduce to about 0.09 to
0.13 by 2020. The potential technological distance of UK, Brazil, Malaysia and China with
USA will remain reasonably high in year 2020.

assimilation level and its values are forecast and compared in terms of US $ in PPP terms
using the technology transfer model developed. In this study, Singapore will achieve the
Value Added per employee as $406,397 (US $ in PPP terms), followed by Korea
$358,049, USA $334,647, Brazil $206,152, Japan $188,596, UK $149,820, Malaysia
$137,348 Germany $132,128, France $116,808, and China $70,467 in 2020.

158

6. The historical data of the value added per employee (US$ in PPP terms) and the predicted
values are used to fit the technology transfer phenomenon in Electronics industry The
Fitness of the Technology Transfer Model in Korea, Japan, China, Singapore, Malaysia,
UK, Germany, Brazil, and France is found to be very satisfactory as shown in the table
below:

Country Correlation
Coefficient
Coefficient of
Determination
Significance
F value
Korea 0.8767 0.7687 0.0500
Japan 0.9485 0.8996 0.0139

China 0.9769 0.9544 0.0042
Singapore 0.9808 0.9620 0.0032

Malaysia 0.9402 0.8840 0.0174

UK 0.9909 0.9820 0.0010

Germany 0.9965 0.9930 0.0002

Brazil 0.9518 0.9059 0.0126
France 0.9898 0.9797 0.0012

In terms of technology transfer in Electronics industry, the model developed in this study
explains the variation in the prediction to the extent of 99.30% for Germany, 98.20% for
UK, 97.97% for France, 96.20% for Singapore, 95.44% for China, 90.59% for Brazil,
89.96% for Japan, 88.40% for Malaysia, and 76.87% for Korea. From the above results, it
can be seen that the technology transfer model developed in this study provides a very
good fit in all the above transfer situations. The fitness of the model is quite significant for
countries such as China, Singapore, UK, Germany, and France at the 0.01 level where as it
is significant for countries such as Korea, Japan, Malaysia and Brazil at the 0.05 level.

transfer in Computing industry in selected member countries such as Korea, Japan, China,

159

1. The technology level or index of Computing industry in USA, Singapore, and Korea are
level of Computing industry in Japan (between 0.70 and 0.80) is relatively high. Even
though Malaysia, UK, Germany, France, Brazil and China are lagging in the technological
capability in Computing industry (between 0.50 and 0.70), they are showing an increasing
trend.

2. USA, Singapore, and Korea have been early starters in their technological development in
Computing industry, followed by Japan, Germany, France and UK. The countries
Malaysia, Brazil, and China appear to be the late starters in their technological
development in Computing industry. USA is the technology leader in the Computing
industry followed by Korea, Japan, Singapore and Germany. Hence, it is assumed in this
study that USA is the transferor and other countries are transferees in technology transfer
in Computing industry.

3. Korea, Singapore and USA will achieve higher technological capability in Computing
industry in 2020, followed by UK, Japan, France, Germany, UK, Malaysia, Brazil, and
China. It is also observed that Korea and Singapore will be exceeding the USA in terms
their technological capability in Computing industry by 2020.

4. The potential technological distance in Computing industry of Korea and Singapore with
exceeding USA by that period. The potential technological distance in Computing industry
of UK and Japan with USA will become 0.02 to 0.04 by 2020. The potential technological
distance of Germany, France, and Malaysia with USA also will reduce to about 0.12 to
0.14 by 2020. The potential technological distance of Brazil, and China with USA will
remain reasonably high in year 2020.

assimilation level and its values are forecast and compared in terms of US $ in PPP terms
using the technology transfer model developed. In this study, UK will achieve the Value

160

Added per employee as $616,972 (US $ in PPP terms), followed by USA $571,761, Korea
$386,424, France $329,550, Malaysia $322,329, Singapore $298,233, Brazil $222,954,
Germany $187,027, Japan $167,946, China $103,328 in 2020.

6. The historical data of the value added per employee (US$ in PPP terms) and the predicted
values are used to fit the technology transfer phenomenon in Computing industry The
Fitness of the Technology Transfer Model in Korea, Japan, China, Singapore, Malaysia,
UK, Germany, Brazil, and France is found to be very satisfactory as shown in the table
below:

Country Correlation
Coefficient
Coefficient of
Determination
Significance
F value
Korea 0.8331 0.6940 0.0498
Japan 0.8490 0.7207 0.0388
China 0.9327 0.8700 0.0207
Singapore 0.9819 0.9642 0.0029
Malaysia 0.9699 0.9407 0.0062
UK 0.9777 0.9559 0.0039
Germany 0.9625 0.9264 0.0086
Brazil 0.9818 0.9640 0.0029
France 0.9342 0.8728 0.0200

In terms of technology transfer in Computing industry, the model developed in this study
explains the variation in the prediction to the extent of 96.42% for Singapore, 96.40% for
Brazil, 95.59% for UK, 94.07% for Malaysia, 87.28% for France, 87.00% for China,
72.07% for Japan, and 69.40% for Korea. From the above results, it can be seen that the
technology transfer model developed in this study provides a very good fit in most of the
above transfer situations. The fitness of the model is quite significant for countries such as
Singapore, Malaysia, UK, Germany, Brazil, and France at the 0.01 level where as it is
significant for country China, Korea and Japan at the 0.05 level.

161


6.3 Research Scope and Limitations
1. The major limitation in applying the model developed in this study might be the
availability of the sufficient and reliable data. The state of technological development or
the technological level of a country, in a given industry, is reflected by a number of related
input and output factors. In this study, the indicators that influence and reflect the
performance of the given industry such as Research and Development (R&D) Expenses
per economically active population, Output per employee in the manufacturing sector,
Value added per employee of the manufacturing sector, Output per employee of the
specific industry, and Value added per employee of the specific industry, are considered
for formulating the technology index at the industrial level.

2. The Research and Development Expenditure per Economically Active Population reflects
the support of the nation towards the development of science and technology climate
which is a major input to the development of the overall manufacturing sector that consists
of various specific industries. The output per employee in the manufacturing sector or each
specific industry reflects the technology and its sophistication employed in their production
facilities. The value-added per employee in the manufacturing sector or each specific
industry reflects the effectiveness of the human skills and technology employed in their
production facilities. The national technology climate conditions and manufacturing
technology climate conditions have direct influence on the growth of the specific industry
in a country. However, these influences may vary depending on the type of industry. In
this research it has been assumed that they will have same influence on all industries.

162

3. For international comparison of monetary values, the US dollar is considered as a standard
currency in this study. However, the exchange rate does not reflect the real value of each
currency unit. The purchasing power parity (PPP) is used in this study to overcome the
above problem of the exchange rate.

4. The non-availability of sufficient data relating to the industry level imposes a constraint in
the use of the model. The more the number of different factors considered for formulating
the index (measure of technological level), the more accurate will be the representation.
The model, however, is general enough in terms of its algorithm.

5. The technology index is an indication of the technological level or capability of a particular
industry in a given country. It indicates the knowledge of a country in a particular industry.
Technical knowledge or capability is cumulative in nature, and in general, increases with
respect to time. Further, it is logical to assume that this increase in the knowledge would be
increasing at an increasing rate in the initial stage and increasing at a decreasing rate
toward the latter stage. Thus it is assumed in this research that the technology index is a
function of time and having a form of S-curve or logistic curve.

6. In developing the technology transfer model in this research, the function governing the
technology transfer rate is assumed to be dependent on the relative technological gap
between the transferor and the transferee which is the potential technological distance. In
the application of the model, for simplicity of computation, the potential technological
distance between the transferor and the transferee during the period of technology transfer
is assumed to be the average value.

7. Political, social, cultural, language, religious, and legal factors exert considerable impact
on the transfer of technology. Some of these factors act as stimulants and some as barriers
to the transfer process. In this research, the above factors are not considered due to the
subjectivity and complexity.

163

8. In this research, the application of the dynamic model is presented at the industry level not
at the firm level due to the limited availability of data.

9. In this research, the value added per employee in a specific industry is used as the
assimilation parameter indicating the sophistication of the application of technology in that
industry.

10. Due to the limitation on the availability and consistency of the data, in this research, only
selected countries including Korea, Japan, China, Singapore, Malaysia, UK, Germany,
USA, Brazil, and France are considered. The case studies are performed in automobile
industry, electronics industry, and computing industry. The data for the periods 2033
2007 are collected for this study.

6.4 Recommendations for Further Studies
Based upon the present study, the followings are recommended for further studies:

1. As discussed earlier in this study, the technology index is an indication of the
technological level or capability of a particular industry in a given country. It indicates
the knowledge of a country in a particular industry. Technical knowledge or capability
is cumulative in nature, and in general, increases with respect to time. It is logical to
assume that this increase in the knowledge would be increasing at an increasing rate in
the initial stage and increasing at a decreasing rate toward the latter stage. Thus it is
assumed in this research that the technology index is a function of time and having a
form of S-curve or logistic curve. However, the logistic growth curve forms an S
shape in the very long run. In medium term, the technology growth curve could have
exponential or semi exponential growth pattern. In view of this, other growth curves
such as Gompertz curve or an exponential curve with limit will be a worthwhile study
to test the fitness of the model developed using those growth patterns.

2. In developing the model, the function governing the technology transfer rate is
considered as dependent on the relative technological gap between the transferor and

164

the transferee which is the potential technological distance. In many spatial diffusion
studies, the geographical distance between the transferor and the transferee acts as a
major determinant of the transfer process. The greater the distance, the lesser the
impact of innovation. Generally the geographical distance has insignificant bearing
upon technological innovation diffusion. For example, Japan is far away from USA as
compared to South American countries, but in case of automobile technology,
electronics technology and computing technology, Japan is far ahead of the South
American countries. This suggests that geographical distance is not necessarily an
important factor for studying the technology transfer process. Instead it will be more
relevant to consider the relative technological distance between the transferor and the
transferee as done in this study. However, one may very well argue otherwise that,
both technological distance and geographical distance may play their part, but the
Japanese technological level, due to its stronger scientific base, had overwhelmed its
disadvantage in distance to the USA whereas the South American countries, despite
their proximity to the USA had not been successful as Japan due to the large gap in
their technological levels in relation to the USA For two countries with similar
technological gap to the USA, the geographical distance can be a rather important
factor. Thus, it may be worthwhile to study the effect of the geographical distance
upon the technological transfer process in future study.

3. In the application of the model, for simplicity of computation, the potential
technological distance between the transferor and the transferee during the period of
technology transfer is assumed to be the average value. The dynamic model can be
applied in further study without assuming the average values of potential technology
distance between the transferor and the transferee.

4. Political, social, cultural, language, religious, and legal factors exert considerable
impact on the transfer of technology. Some of these factors act as stimulants and some
as barriers to the transfer process. For example, the bilateral relationship between
countries and regional cooperation among countries contribute considerably to the
effective technology transfer process. The countries with the same social & cultural

165

background, speaking the same language, and having the same religion tend to
cooperate and work closer. It is believed that a model incorporating all these factors
will help to evaluate the actual transfer, which in turn will help the policy makers
especially of the recipient country to formulate policy guidelines more accurately. But
subjectivity and non-availability of relevant data might make the study very complex.
In future study, the impact of other factors can be considered in developing the model
to evaluate the technology transfer.

5. In this study, the application of the dynamic model is presented at the industry level
due to the limited availability of data. It is very common that science and technology
agreements are signed between governments with the objective of facilitating the
technology transfer between their respective industries. Though the government
policies on technology transfer are formulated at the industrial level, the individual
technology transfer decisions are, usually, taken at the firm level, At the macro-level,
the technology transfer decisions are focused more at the industrial level. However,
at the micro-level, the technology transfer decisions are normally taken at the firm
level. Hence it will be worthwhile study in further that the technology model should be
applied to the firm level data.

6. In this study, the indicators that influence and reflect the performance of the given
industry such as Research and Development (R&D) Expenses per economically active
population, Output per employee in the manufacturing sector, Value added per
employee of the manufacturing sector, Output per employee of the specific industry,
and Value added per employee of the specific industry, are considered for formulating
the technology index at the industrial level. Due to the limitation on the availability of
data, only few variables are considered for measuring the technology index at the
industrial level. A large number of technological variables determine the technological
level of a country in a specific industry. The more the number of variables considered
for formulating the index (measure of technological level), the better and more
accurate will be the representation. In future study, more variables can be considered
for measuring the technological level of a country in a specific industry.

166

7. In this study, the value added per employee in a specific industry is used as the
assimilation parameter indicating the sophistication of the application of technology in
that industry. In future study, other variable can be considered as the assimilation
parameter indicating the sophistication of the application of technology in that
industry.

8. The results of this study are not definitive and need further confirmation. To
demonstrate the applicability of the technology transfer model developed, case studies
of technology transfer situations in automobile industry, electronics industry, and
computing industry are performed in this study. The application of the developed
model on transferring technologies in other industries is recommended for future
study.

9. To demonstrate the applicability of the developed model, case studies of technology
transfer in automobile industry, electronics industry, and computing industry in
selected member countries such as Korea, Japan, China, Singapore, Malaysia, UK,
Germany, USA, Brazil, and France are performed in this study. Only a few countries
are considered for the case studies due to the limitation on the availability and
consistency of the data. In this study, the selected countries have relatively higher
technology levels in automobile industry, electronics industry, and computing
industry. The countries having lower technology levels could be included in further
study if the accurate industrial level data can be collected for those countries. It is also
worth pursuing to consider in future study whether the concept of Economic
Cooperation among countries can develop a framework for technological cooperation
at the industrial level by evaluating their respective technology transfer potentials so
as to identify the optimal partners among themselves to have an effective technology
transfer process.

10. In the case studies, due to the limitation on the availability and consistency of the data,
the variables that influence and reflect the performance of the given industry in the

167

selected countries under study are identified and collected only for the period 2003 -
2007. The complete UN published data was available only up to 2007 at the time of
this study. The most recent data and more periods would predict the model more
accurately. In future study, the data can be collected for the most recent period and
more periods.

168

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183

APPENDIX 1: RAW DATA

TABLE TITLE PAGE

A1.1 Purchasing Power Parity (PPP) and the Exchange 184
Rate For the Selected Countries during 2003 - 2007
A1.2 Raw Data of Technology Variables in Automobile 187
Industry for the Selected Countries for the period
2003 2007
A1.3 Mean and Standard Deviation of Technology Variables 190
in Automobile Industry.
A1.4 Raw Data of Technology Variables in Electronics 191
Industry for the Selected Countries during 2003 2007
in Electronics Industry.
A1.6 Raw Data of Technology Variables in Computing Industry 195
for the Selected Countries for the period 2003 2007
in Computing Industry.

184

Table A1.1 Purchasing Power Parity (PPP) and the exchange rate for the selected countries
during 2003 2007

EXCHANGE RATE PPP RATIO

TO US$
Korea
2007 929.2570 1.2673
2006 954.7910 1.3071
2005 1024.1200 1.3467
2004 1145.3200 1.4659
2003 1191.6100 1.5899

Japan
2007 117.7540 0.9193
2006 116.2990 0.8512
2005 110.2180 0.7967
2004 108.1930 0.8068
2003 115.9330 0.8366

China
2007 7.6075 2.2531
2006 7.9734 2.3333
2005 8.1943 2.3563
2004 8.2768 2.3933
2003 8.2770 2.5039

185

Singapore
2007 1.5071 1.4682
2006 1.5889 1.5049
2005 1.6644 1.5074
2004 1.6902 1.5300
2003 1.7422 1.5904

Malaysia
2007 3.4376 2.0607
2006 3.6682 2.1384
2005 3.7871 2.1558
2004 3.8000 2.2004
2003 3.8000 2.3197

UK
2007 0.4998 0.8183
2006 0.5435 0.8374
2005 0.5500 0.8573
2004 0.5462 0.9321
2003 0.6125 1.0407

Germany
2007 0.8119 0.8910
2006 0.8194 0.8991
2005 0.8500 0.9054

186

2004 0.8852 0.9747
2003 0.8856 1.1078

USA
2007 1.0000 0.9957
2006 1.0000 0.9862
2005 1.0000 0.9660
2004 1.0000 0.9687
2003 1.0000 1.0016

Brazil
2007 1.9471 1.5693
2006 2.1753 1.8320
2005 2.4344 2.0907
2004 2.9251 2.3664
2003 3.0775 2.4646

France
2007 0.8928 0.8726
2006 0.8659 0.8781
2005 0.8500 0.8847
2004 0.8522 0.9634
2003 0.8279 1.1254

187

Table A1.2 Raw Data of Technology Variables in Automobile Industry for Selected Countries
for the period 2003 2007

1 Korea

2007 1.7642 471517 164641 614780 216871

2006 1.5482 449865 161089 590476 196489

2005 1.3396 410712 150821 542694 177834

2004 1.2359 382277 145178 492499 176537

2003 1.0845 344394 130062 467740 168415

2 Japan

2007 2.3072 329095 110412 553937 160160

2006 2.1767 297426 101918 506001 145268

2005 2.0248 283160 100033 489423 133185

2004 1.8558 279839 99103 486899 132120

2003 1.7776 255722 92158 470768 130854

3 China

2007 0.8518 152586 40361 240670 60180

2006 0.7406 126804 33345 201535 47474

2005 0.6231 105792 27702 162912 40951

2004 0.5166 89556 23277 156260 39630

2003 0.4319 79402 21228 155339 39131

188

4 Singapore

2007 3.2276 610893 135065 262396 70887

2006 2.6320 589947 134235 247884 64171

2005 2.3731 531939 120172 240437 60088

2004 2.2616 484760 117164 231087 57019

2003 1.9629 412610 96350 218709 51746

5 Malaysia

2007 0.2211 265016 52163 300188 73428

2006 0.2035 243956 49923 256174 64306

2005 0.1868 227687 49136 251704 55182

2004 0.1665 225509 44608 239430 48279

2003 0.1491 211691 40666 226659 41038

6 UK

2007 1.3312 221465 75870 321343 74332

2006 1.2495 216590 71577 318221 68671

2005 1.1853 204507 70008 296637 68507

2004 1.1288 203967 68230 293105 66647

2003 1.1031 198111 66321 288117 62258

7 Germany

2007 1.8930 266316 76219 372593 96571

2006 1.8358 249807 72694 368350 89234

2005 1.7584 233508 72328 341109 89056

189

2004 1.7196 220736 66482 322535 77523

2003 1.6424 219673 65313 315110 75060

8

USA

2007 2.5546 364547 169679 544498 180052

2006 2.4074 365345 165573 530791 174090

2005 2.2784 358228 164529 528908 173103

2004 2.1553 316794 150768 524700 167897

2003 2.1036 293724 141118 519694 165677

9 Brazil

2007 0.2229 156304 64464 294528 100687

2006 0.1898 154832 64198 293476 98134

2005 0.1594 145297 61150 287543 93000

2004 0.1580 141434 58145 251522 84567

2003 0.1763 124934 52684 209236 72266

10 France

2007 1.6549 323053 72680 436170 84934

2006 1.6308 254514 62371 429907 78098

2005 1.5708 248039 61089 405792 77466

2004 1.5314 247643 60825 399498 69877

2003 1.4918 229070 56571 377212 61717

190

Where

RDEMP Research and Development Expenditure per Economically Active Population
(US Dollars in PPP terms)
MFGOUTEMP - Output per Employee in Manufacturing sector (US Dollars in PPP terms)
MFGVAEMP - Value added per Employee in Manufacturing sector (US Dollars in PPP
terms)
INDOUTEMP- Output per Employee in Automobile Industry (US Dollars in PPP terms)
INDVAEMP - Value added per Employee in Automobile Industry (US Dollars in PPP
terms)

Table A1.3 Mean and Standard Deviation of Technology Variables in Automobile Industry


Mean 1.3759 276412 87034 357544 98013

Std Dev 0.8140 123268 42661 128227 49218

191

Table A1.4 Raw Data of Technology Variables in Electronics Industry for Selected Countries for
the period 2003 - 2007.

1 Korea

2007 1.7642 471517 164641 527858 239574

2006 1.5482 449865 161089 522113 238056

2005 1.3396 410712 150821 502519 234697

2004 1.2359 382277 145178 494177 226656

2003 1.0845 344394 130062 459195 200442

2 Japan

2007 2.3072 329095 110412 373962 126179

2006 2.1767 297426 101918 362404 120313

2005 2.0248 283160 100033 353853 118041

2004 1.8558 279839 99103 353143 116977

2003 1.7776 255722 92158 333137 107477

3 China

2007 0.8518 152586 40361 181423 42340

2006 0.7406 126804 33345 181766 39811

2005 0.6231 105792 27702 162447 39661

2004 0.5166 89556 23277 159538 37412

2003 0.4319 79402 21228 153699 35439

192

4 Singapore

2007 3.2276 610893 135065 746356 184343

2006 2.6320 589947 134235 701816 167712

2005 2.3731 531939 120172 680976 161046

2004 2.2616 484760 117164 646125 142227

2003 1.9629 412610 96350 537602 120158
5

Malaysia

2007 0.2211 265016 52163 296126 52232

2006 0.2035 243956 49923 281779 50384

2005 0.1868 227687 49136 280789 40967

2004 0.1665 225509 44608 274247 38640

2003 0.1491 211691 40666 249917 38571

6 UK

2007 1.3312 221465 75870 216570 78356

2006 1.2495 216590 71577 215719 71612

2005 1.1853 204507 70008 212695 69049

2004 1.1288 203967 68230 181855 65103

2003 1.1031 198111 66321 179721 61249

7 Germany

2007 1.8930 266316 76219 349693 90095

2006 1.8358 249807 72694 308213 86817

2005 1.7584 233508 72328 263884 83992

193

2004 1.7196 220736 66482 256188 82172

2003 1.6424 219673 65313 249209 78895

8 USA

2007 2.5546 364547 169679 429735 245491

2006 2.4074 365345 165573 417303 241761

2005 2.2784 358228 164529 389421 239552

2004 2.1553 316794 150768 386875 225465

2003 2.1036 293724 141118 364811 219207
9

Brazil

2007 0.2229 156304 64464 376451 112956

2006 0.1898 154832 64198 365403 112197

2005 0.1594 145297 61150 355264 107711

2004 0.1580 141434 58145 305099 99873

2003 0.1763 124934 52684 302365 90885

10 France

2007 1.6549 323053 72680 272652 72098

2006 1.6308 254514 62371 244311 69373

2005 1.5708 248039 61089 231112 65314

2004 1.5314 247643 60825 222628 63383

2003 1.4918 229070 56571 219564 61594

194

Where

MFGOUTEMP - Output in Manufacturing sector per Employee (US Dollars in PPP terms)
terms)
INDOUTEMP- Output in Electronics Industry per Employee (US Dollars in PPP terms)
INDVAEMP - Value added per Employee in Electronics Industry (US Dollars in PPP
terms)

Table A1.5 Mean and Standard Deviation of Technology Variables in Electronics Industry


Mean 1.3759 276412 87034 342674 114271

Std Dev 0.8140 123268 42661 146215 68450

195

Table A1.6 Raw Data of Technology Variables in Computing Industry for Selected Countries for
the period 2003 - 2007.

1 Korea

2007 1.7642 471517 164641 668808 239574

2006 1.5482 449865 161089 541333 238056

2005 1.3396 410712 150821 464991 234697

2004 1.2359 382277 145178 454977 226656

2003 1.0845 344394 130062 402818 200442

2 Japan

2007 2.3072 329095 110412 505575 126179

2006 2.1767 297426 101918 459581 120313

2005 2.0248 283160 100033 427644 118041

2004 1.8558 279839 99103 414591 116977

2003 1.7776 255722 92158 391194 107477

3 China

2007 0.8518 152586 40361 306866 42340

2006 0.7406 126804 33345 305391 39811

2005 0.6231 105792 27702 303801 39661

2004 0.5166 89556 23277 303624 37412

2003 0.4319 79402 21228 300515 35439

MFGVAEMP INDOUTEMP INDVAEMP

196

4 Singapore

2007 3.2276 610893 135065 938004 184343

2006 2.6320 589947 134235 913188 167712

2005 2.3731 531939 120172 900131 161046

2004 2.2616 484760 117164 899949 142227

2003 1.9629 412610 96350 891206 120158

5

Malaysia

2007 0.2211 265016 52163 625277 52232

2006 0.2035 243956 49923 546912 50384

2005 0.1868 227687 49136 452354 40967

2004 0.1665 225509 44608 451097 38640

2003 0.1491 211691 40666 440712 38571

6 UK

2007 1.3312 221465 75870 472083 78356

2006 1.2495 216590 71577 371218 71612

2005 1.1853 204507 70008 338455 69049

2004 1.1288 203967 68230 317480 65103

2003 1.1031 198111 66321 224371 61249

7 Germany

2007 1.8930 266316 76219 384834 90095

2006 1.8358 249807 72694 369998 86817

2005 1.7584 233508 72328 353843 83992

197

2004 1.7196 220736 66482 343381 82172

2003 1.6424 219673 65313 324735 78895

8 USA

2007 2.5546 364547 169679 767558 245491

2006 2.4074 365345 165573 669655 241761

2005 2.2784 358228 164529 634449 239552

2004 2.1553 316794 150768 632458 225465

2003 2.1036 293724 141118 517657 219207

9

Brazil

2007 0.2229 156304 64464 275011 112956

2006 0.1898 154832 64198 274581 112197

2005 0.1594 145297 61150 265872 107711

2004 0.1580 141434 58145 241340 99873

2003 0.1763 124934 52684 232565 90885

10 France

2007 1.6549 323053 72680 325804 72098

2006 1.6308 254514 62371 285794 69373

2005 1.5708 248039 61089 252261 65314

2004 1.5314 247643 60825 245337 63383

2003 1.4918 229070 56571 206216 61594

198

Where

MFGOUTEMP - Output per Employee in Manufacturing sector (US Dollars in PPP terms)
terms)
INDOUTEMP- Output per Employee in Automobile Industry (US Dollars in PPP terms)
INDVAEMP - Value added per Employee in Automobile Industry (US Dollars in PPP
terms)

Table A1.7 Mean and Standard Deviation of Technology Variables in Computing Industry


Mean 1.3759 276412 87034 452750 114271

Std Dev 0.8140 123268 42661 201542 68450

199

APPENDIX 2: FIGURES

FIGURE TITLE PAGE

A2.1 Automobile Industry - Technology Index Korea 204
A2.2 Automobile Industry - Technology Index Japan 205
A2.3 Automobile Industry - Technology Index China 206
A2.4 Automobile Industry - Technology Index Singapore 207
A2.5 Automobile Industry - Technology Index Malaysia 208
A2.6 Automobile Industry - Technology Index UK 209
A2.7 Automobile Industry - Technology Index Germany 210
A2.8 Automobile Industry - Technology Index USA 211
A2.9 Automobile Industry - Technology Index Brazil 212
A2.10 Automobile Industry - Technology Index France 213
A2.11 Automobile Industry - Potential Technology Distance 214
USA - Korea
USA - Japan
USA - China
USA - Singapore
USA - Malaysia
USA - UK
USA - Germany

200

USA - Brazil
USA - France
A2.20 Automobile Industry VA Predicted and Historical Values 223
Korea
Japan
China
Singapore
Malaysia
UK
Germany
USA
Brazil
France
A2.30 Electronics Industry - Technology Index Korea 233
A2.31 Electronics Industry - Technology Index Japan 234
A2.32 Electronics Industry - Technology Index China 235
A2.33 Electronics Industry - Technology Index Singapore 236
A2.34 Electronics Industry - Technology Index Malaysia 237
A2.35 Electronics Industry - Technology Index UK 238
A2.36 Electronics Industry - Technology Index Germany 239

201

A2.37 Electronics Industry - Technology Index USA 240
A2.38 Electronics Industry - Technology Index Brazil 241
A2.39 Electronics Industry - Technology Index France 242
A2.40 Electronics Industry - Potential Technology Distance 243
USA - Korea
USA - Japan
USA - China
USA - Singapore
USA - Malaysia
USA - UK
USA - Germany
USA - Brazil
USA - France
A2.49 Electronics Industry VA Predicted and Historical Values 252
Korea
Japan
China
Singapore
Malaysia

202

UK
Germany
USA
Brazil
France
A2.59 Computing Industry - Technology Index Korea 262
A2.60 Computing Industry - Technology Index Japan 263
A2.61 Computing Industry - Technology Index China 264
A2.62 Computing Industry - Technology Index Singapore 265
A2.63 Computing Industry - Technology Index Malaysia 266
A2.64 Computing Industry - Technology Index UK 267
A2.65 Computing Industry - Technology Index Germany 268
A2.66 Computing Industry - Technology Index USA 269
A2.67 Computing Industry - Technology Index Brazil 270
A2.68 Computing Industry - Technology Index France 271
A2.69 Computing Industry - Potential Technology Distance 272
USA - Korea
USA - Japan
USA - China
USA - Singapore
USA - Malaysia

203

USA - UK
USA - Germany
USA - Brazil
USA - France
A2.78 Computing Industry VA Predicted and Historical Values 281
Korea
Japan
China
Singapore
Malaysia
A2.83 Technology Transfer Pattern for Computing Industry in 286
UK
Germany
USA
Brazil
France

204

0.7800
0.8000
0.8200
0.8400
0.8600
0.8800
0.9000
0.9200
0.9400
0.9600
0.9800
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.1 Automobile Industry - Technology Index - Korea
Technology Index - Korea

205

0.0000
0.1000
0.2000
0.3000
0.4000
0.5000
0.6000
0.7000
0.8000
0.9000
1.0000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.2 Automobile Industry - Technology Index - Japan
Technology Index - Japan

206

0.0000
0.1000
0.2000
0.3000
0.4000
0.5000
0.6000
0.7000
0.8000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.3 Automobile Industry - Technology Index - China
Technology Index - China

207

0.0000
0.1000
0.2000
0.3000
0.4000
0.5000
0.6000
0.7000
0.8000
0.9000
1.0000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.4 Automobile Industry - Technology Index - Singapore
Technology Index - Singapore

208

0.0000
0.1000
0.2000
0.3000
0.4000
0.5000
0.6000
0.7000
0.8000
0.9000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.5 Automobile Industry - Technology Index - Malaysia
Technology Index - Malaysia

209

0.0000
0.1000
0.2000
0.3000
0.4000
0.5000
0.6000
0.7000
0.8000
0.9000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.6 Automobile Industry - Technology Index - UK
Technology Index - UK

210

0.0000
0.1000
0.2000
0.3000
0.4000
0.5000
0.6000
0.7000
0.8000
0.9000
1.0000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.7 Automobile Industry - Technology Index - Germany
Technology Index - Germany

211

0.8200
0.8300
0.8400
0.8500
0.8600
0.8700
0.8800
0.8900
0.9000
0.9100
0.9200
0.9300
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.8 Automobile Industry - Technology Index - USA
Technology Index - USA

212

0.0000
0.1000
0.2000
0.3000
0.4000
0.5000
0.6000
0.7000
0.8000
0.9000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.9 Automobile Industry - Technology Index - Brazil
Technology Index - Brazil

213

0.0000
0.1000
0.2000
0.3000
0.4000
0.5000
0.6000
0.7000
0.8000
0.9000
1.0000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.10 Automobile Industry - Technology Index - France
Technology Index - France

214

-0.0400
-0.0300
-0.0200
-0.0100
0.0000
0.0100
0.0200
0.0300
0.0400
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.11 Automobile Industry - Potential Technological Distance -
Korea_USA
Potential Technological Distance - Korea_USA

215

-0.0200
-0.0100
0.0000
0.0100
0.0200
0.0300
0.0400
0.0500
0.0600
0.0700
0.0800
0.0900
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Japan_USA
Potential Technological Distance - Japan_USA

216

0.0000
0.1000
0.2000
0.3000
0.4000
0.5000
0.6000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
China_USA
Potential Technological Distance - China_USA

217

0.0000
0.0200
0.0400
0.0600
0.0800
0.1000
0.1200
0.1400
0.1600
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Singapore_USA
Potential Technological Distance -
Singapore_USA

218

0.0000
0.0500
0.1000
0.1500
0.2000
0.2500
0.3000
0.3500
0.4000
0.4500
0.5000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Malaysia_USA
Malaysia_USA

219

0.0000
0.0500
0.1000
0.1500
0.2000
0.2500
0.3000
0.3500
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
UK_USA
Potential Technological Distance - UK_USA

220

0.0000
0.0500
0.1000
0.1500
0.2000
0.2500
0.3000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Germany_USA
Germany_USA

221

0.0000
0.0500
0.1000
0.1500
0.2000
0.2500
0.3000
0.3500
0.4000
0.4500
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Brazil_USA
Potential Technological Distance - Brazil_USA

222

0.0000
0.0500
0.1000
0.1500
0.2000
0.2500
0.3000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
France_USA
Potential Technological Distance - France_USA

223

A2.20 Automobile Industry VA Predicted & Historical Values - Korea

0
50000
100000
150000
200000
250000
300000
350000
400000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Korea - Automobile Industry - VA Predicted
Values
Korea - Automobile Industry - VA Historical
Values

224

A2.21 Automobile Industry VA Predicted & Historical Values - Japan

0
50000
100000
150000
200000
250000
300000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Japan - Automobile Industry - VA Predicted
Values
Japan - Automobile Industry - VA Historical
Values

225

A2.22 Automobile Industry VA Predicted & Historical Values - China

0
20000
40000
60000
80000
100000
120000
140000
160000
180000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
China - Automobile Industry - VA Predicted
Values
China - Automobile Industry - VA Historical
Values

226

A2.23 Automobile Industry VA Predicted & Historical Values - Singapore

0
20000
40000
60000
80000
100000
120000
140000
160000
180000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Singapore - Automobile Industry - VA
Predicted Values
Singapore - Automobile Industry - VA Historical
Values

227

A2.24 Automobile Industry VA Predicted & Historical Values - Malaysia

0
50000
100000
150000
200000
250000
300000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Malaysia - Automobile Industry - VA Predicted
Vales
Malaysia - Automobile Industry - VA Historical
Values

228

A2.25 Automobile Industry VA Predicted & Historical Values - UK

0
20000
40000
60000
80000
100000
120000
140000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
UK - Automobile Industry - VA Predicted
Values
UK - Automobile Industry - VA Historical
Values

229

A2.26 Automobile Industry VA Predicted & Historical Values - Germany

0
50000
100000
150000
200000
250000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Germany - Automobile Industry - VA
Predicted Values
Germany - Automobile Industry - VA
Historical Values

230

A2.27 Automobile Industry VA Predicted & Historical Values - USA

0
50000
100000
150000
200000
250000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
USA - Automobile Industry - VA Predicted
Values
USA - Automobile Industry - VA Historical
Values

231

A2.28 Automobile Industry VA Predicted & Historical Values - Brazil

0
50000
100000
150000
200000
250000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Brazil - Automobile Industry - VA Predicted
Values
Brazil - Automobile Industry - VA Historical
Values

232

A2.29 Automobile Industry VA Predicted & Historical Values - France

0
50000
100000
150000
200000
250000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
France - Automobile Industry - VA Predicted
Values
France - Automobile Industry - VA Historical
Values

233

0.7800
0.8000
0.8200
0.8400
0.8600
0.8800
0.9000
0.9200
0.9400
0.9600
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.30 Electronics Industry - Technology Index - Korea
Electronics Industry - Korea Technology Index

234

0.0000
0.1000
0.2000
0.3000
0.4000
0.5000
0.6000
0.7000
0.8000
0.9000
1.0000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.31 Electronics Industry - Technology Index - Japan
Electronics Industry - Technology Index -
Japan

235

0.0000
0.1000
0.2000
0.3000
0.4000
0.5000
0.6000
0.7000
0.8000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.32 Electronics Industry - Technology Index - China
Electronics Industry - Technology Index - China

236

0.7800
0.8000
0.8200
0.8400
0.8600
0.8800
0.9000
0.9200
0.9400
0.9600
0.9800
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.33 Electronics Industry - Technology Index - Singapore
Singapore

237

0.0000
0.1000
0.2000
0.3000
0.4000
0.5000
0.6000
0.7000
0.8000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.34 Electronics Industry - Technology Index - Malaysia
Malaysia

238

0.0000
0.1000
0.2000
0.3000
0.4000
0.5000
0.6000
0.7000
0.8000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.35 Electronics Industry - Technology Index - UK
Electronics Industry - Technology Index - UK

239

0.0000
0.1000
0.2000
0.3000
0.4000
0.5000
0.6000
0.7000
0.8000
0.9000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.36 Electronics Industry - Technology Index - Germany
Germany

240

0.7800
0.8000
0.8200
0.8400
0.8600
0.8800
0.9000
0.9200
0.9400
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.37 Electronics Industry - Technology Index - USA
Electronics Industry - Technology Index - USA

241

0.0000
0.1000
0.2000
0.3000
0.4000
0.5000
0.6000
0.7000
0.8000
0.9000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.38 Electronics Industry - Technology Index - Brazil
Electronics Industry - Technology Index - Brazil

242

0.0000
0.1000
0.2000
0.3000
0.4000
0.5000
0.6000
0.7000
0.8000
0.9000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.39 Electronics Industry - Technology Index - France
France

243

-0.0250
-0.0200
-0.0150
-0.0100
-0.0050
0.0000
0.0050
0.0100
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.40 Electronics Industry - Potential Technological Distance -
Korea_USA
Electronics Industry - Potential Technological
Distance - Korea_USA

244

0.0000
0.0200
0.0400
0.0600
0.0800
0.1000
0.1200
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Japan_USA
Distance - Japan_USA

245

0.0000
0.1000
0.2000
0.3000
0.4000
0.5000
0.6000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
China_USA
Distance - China_USA

246

-0.0450
-0.0400
-0.0350
-0.0300
-0.0250
-0.0200
-0.0150
-0.0100
-0.0050
0.0000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.43 Electronics Industry - Potential Technological Distance
Singapore_USA
Distance - Singapore_USA

247

0.0000
0.0500
0.1000
0.1500
0.2000
0.2500
0.3000
0.3500
0.4000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Malaysia_USA
Distance - Malaysia_USA

248

0.0000
0.0500
0.1000
0.1500
0.2000
0.2500
0.3000
0.3500
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
UK_USA
Distance - UK_USA

249

0.0000
0.0500
0.1000
0.1500
0.2000
0.2500
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2. 46 Electronics Industry - Potential Technological Distance -
Germany_USA
Distance - Germany_USA

250

0.0000
0.0500
0.1000
0.1500
0.2000
0.2500
0.3000
0.3500
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Brazil_USA
Distance - Brazil_USA

251

0.0000
0.0500
0.1000
0.1500
0.2000
0.2500
0.3000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
France_USA
Distance - France_USA

252

A2.49 Electronics Industry VA Predicted & Historical Values - Korea

0
50000
100000
150000
200000
250000
300000
350000
400000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Electronics Industry - Korea - VA Predicted
Values
Electronics Industry - Korea - VA Historical
Values

253

A2.50 Electronics Industry VA Predicted & Historical Values - Japan

0
20000
40000
60000
80000
100000
120000
140000
160000
180000
200000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Electronics Industry - Japan - VA Predicted
Values
Electronics Industry - Japan - VA Historical
Values

254

A2.51 Electronics Industry VA Predicted & Historical Values - China

0
10000
20000
30000
40000
50000
60000
70000
80000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Electronics Industry - China - VA Predicted
Values
Electronics Industry - China - VA Historical
Values

255

A2.52 Electronics Industry VA Predicted & Historical Values - Singapore

0
50000
100000
150000
200000
250000
300000
350000
400000
450000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Electronics Industry - Singapore - VA Predicted
Values
Electronics Industry - Singapore - VA Historical
Values

256

A2.53 Electronics Industry VA Predicted & Historical Values - Malaysia

0
20000
40000
60000
80000
100000
120000
140000
160000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Electronics Industry - Malaysia - VA Predicted
Values
Electronics Industry - Malaysia - VA Historical
Values

257

A2.54 Electronics Industry VA Predicted & Historical Values - UK

0
20000
40000
60000
80000
100000
120000
140000
160000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Electronics Industry - UK - VA Predicted
Values
Electronics Industry - UK - VA Historical
Values

258

A2.55 Electronics Industry VA Predicted & Historical Values - Germany

0
20000
40000
60000
80000
100000
120000
140000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Electronics Industry - Germany - VA Predicted
Values
Electronics Industry - Germany - VA Historical
Values

259

A2.56 Electronics Industry VA Predicted & Historical Values - USA

0
50000
100000
150000
200000
250000
300000
350000
400000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Electronics Industry - USA - VA Predicted
Values
Electronics Industry - USA - VA Historical
Values

260

A2.57 Electronics Industry VA Predicted & Historical Values - Brazil

0
50000
100000
150000
200000
250000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Electronics Industry - Brazil - VA Predicted
Values
Electronics Industry - Brazil - VA Historical
Values

261

A2.58 Electronics Industry VA Predicted & Historical Values - France

0
20000
40000
60000
80000
100000
120000
140000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Electronics Industry - France - VA Predicted
Values
Electronics Industry - France - VA Historical
Values

262

0.0000
0.2000
0.4000
0.6000
0.8000
1.0000
1.2000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.59 Computing Industry - Technology Index - Korea
Computing Industry - Technology Index - Korea

263

0.0000
0.1000
0.2000
0.3000
0.4000
0.5000
0.6000
0.7000
0.8000
0.9000
1.0000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.60 Computing Industry - Technology Index - Japan
Computing Industry - Technology Index -
Japan

264

0.0000
0.1000
0.2000
0.3000
0.4000
0.5000
0.6000
0.7000
0.8000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.61 Computing Industry - Technology Index - China
China

265

0.7800
0.8000
0.8200
0.8400
0.8600
0.8800
0.9000
0.9200
0.9400
0.9600
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.62 Computing Industry - Technology Index - Singapore
Singapore

266

0.0000
0.1000
0.2000
0.3000
0.4000
0.5000
0.6000
0.7000
0.8000
0.9000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.63 Computing Industry - Technology Index - Malaysia
Malaysia

267

0.0000
0.1000
0.2000
0.3000
0.4000
0.5000
0.6000
0.7000
0.8000
0.9000
1.0000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.64 Computing Industry - Technology Index - UK
Computing Industry - Technology Index - UK

268

0.0000
0.1000
0.2000
0.3000
0.4000
0.5000
0.6000
0.7000
0.8000
0.9000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.65 Computing Industry - Technology Index - Germany
Germany

269

0.8000
0.8200
0.8400
0.8600
0.8800
0.9000
0.9200
0.9400
0.9600
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.66 Computing Industry - Technology Index - USA
Computing Industry - Technology Index - USA

270

0.0000
0.1000
0.2000
0.3000
0.4000
0.5000
0.6000
0.7000
0.8000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.67 Computing Industry - Technology Index - Brazil
Brazil

271

0.0000
0.1000
0.2000
0.3000
0.4000
0.5000
0.6000
0.7000
0.8000
0.9000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.68 Computing Industry - Technology Index - France
France

272

-0.0400
-0.0200
0.0000
0.0200
0.0400
0.0600
0.0800
0.1000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
A2.69 Computing Industry - Potential Technological Distance -
Korea_USA
Computing Industry - Potential Technological
Distance - Korea_USA

273

0.0000
0.0200
0.0400
0.0600
0.0800
0.1000
0.1200
0.1400
0.1600
0.1800
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Japan_USA
Distance - Japan_USA

274

0.0000
0.0500
0.1000
0.1500
0.2000
0.2500
0.3000
0.3500
0.4000
0.4500
0.5000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
China_USA
Distance - China_USA

275

-0.0020
0.0000
0.0020
0.0040
0.0060
0.0080
0.0100
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Singapore_USA
Distance - Singapore_USA

276

0.0000
0.0500
0.1000
0.1500
0.2000
0.2500
0.3000
0.3500
0.4000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Malaysia_USA
Distance - Malaysia_USA

277

0.0000
0.0500
0.1000
0.1500
0.2000
0.2500
0.3000
0.3500
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
UK_USA
Distance - UK_USA

278

0.0000
0.0500
0.1000
0.1500
0.2000
0.2500
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Germany_USA
Distance - Germany_USA

279

0.3600
0.3700
0.3800
0.3900
0.4000
0.4100
0.4200
0.4300
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Brazil_USA
Distance - Brazil_USA

280

0.0000
0.0500
0.1000
0.1500
0.2000
0.2500
0.3000
0.3500
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
France_USA
Distance - France_USA

281

A2.78 Computing Industry VA Predicted & Historical Values - Korea

0
50000
100000
150000
200000
250000
300000
350000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Computing Industry - Korea - VA Predicted
Values
Computing Industry - Korea - VA Historical
Values

282

A2.79 Computing Industry VA Predicted & Historical Values - Japan

0
20000
40000
60000
80000
100000
120000
140000
160000
180000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Computing Industry - Japan - VA Predicted
Values
Computing Industry - Japan - VA Historical
Values

283

A2.80 Computing Industry VA Predicted & Historical Values - China

0
20000
40000
60000
80000
100000
120000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Computing Industry - China - VA Predicted
Values
Computing Industry - China - VA Historical
Values

284

A2.81 Computing Industry VA Predicted & Historical Values - Singapore

0
50000
100000
150000
200000
250000
300000
350000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Computing Industry - Singapore - VA
Predicted Values
Computing Industry - Singapore - VA
Historical Values

285

A2.82 Computing Industry VA Predicted & Historical Values - Malaysia

0
50000
100000
150000
200000
250000
300000
350000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Computing Industry - Malaysia - VA Predicted
Values
Computing Industry - Malaysia - VA Historical
Values

286

A2.83 Computing Industry VA Predicted & Historical Values - UK

0
100000
200000
300000
400000
500000
600000
700000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Computing Industry - UK - VA Predicted Values
Computing Industry - UK - VA Historical Values

287

A2.84 Computing Industry VA Predicted & Historical Values - Germany

0
20000
40000
60000
80000
100000
120000
140000
160000
180000
200000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Computing Industry - Germany - VA Predicted
Values
Computing Industry - Germany - VA Historical
Values

288

A2.85 Computing Industry VA Predicted & Historical Values - USA

0
100000
200000
300000
400000
500000
600000
700000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Computing Industry - USA - VA Predicted
Values
Computing Industry - USA - VA Historical
Values

289

A2.86 Computing Industry VA Predicted & Historical Values - Brazil

0
50000
100000
150000
200000
250000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Computing Industry - Brazil - VA Predicted
Values
Computing Industry - Brazil - VA Historical
Values

290

A2.87 Computing Industry VA Predicted & Historical Values - France

0
50000
100000
150000
200000
250000
300000
350000
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Computing Industry - France - VA Predicted
Values
Computing Industry - France - VA Historical
Values

An Extended Model For Measuring The Technology Transfer Potential

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