Technology Transfer

Dependence of Developing Counties on the Developed Countries - Although it is seen that the Asian economy has become less dependent to the US economy, the recent global credit crunch has shown that Asian economy is not fully decoupled from the US economy. But since Asia has developed to levels never seen before in the world arena they are far more prepared to face challenges. For example, the recent initiative to increase international trade and investment to and from countries other than US is one such move.

But since international economics depends on a vast array of factors there is a long way to go in this regards for all countries.

Terrorism - The issue with technology transfer have been in the recent past for obvious reasons. Governments across the globe, mainly developed countries have been reluctant to transfer technology to other countries since they believe that such an act could increase the competitive advantage of the importing country. Investing firms are also of the same opinion.

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This thinking has also been catalysed by the terrorist attacks on many developed countries and they believe that technology transfer can increase the chances of such attacks in future.

But for international business to flourish a more of open minded thinking will be required to reap the total benefits of international trade and investment. One outcome of terrorism that Michael R. Czinkota and Ilkka A. Ronkainen (2005) argues is that due to terrorist risk in a particular country international business houses are forced to move out to other location even though the cost is comparatively higher.

This affects the overall cost and production and the very meaning of going global.

Environmental Changes - The issue that the NGOs have raised worldwide against globalisation is the environmental issues that international business brings along. Countries depend on energy for production and hence revenue for growth. Fossil fuel is widely used around the world for energy and accounts for 80 percent of worldwide energy production. Details of primary energy consumption by source from 1947 to 2007 can be found at the Energy Information Administration website at the link <http://www.eia.doe.gov/emeu/aer/txt/ptb0103.html>. But along with this come environmental pollution. The projected figures of pollution due to fossil fuels are alarming as shown in the figure below.

The Kyoto Protocol had tried many ways to curtail this effect by many measures. One of the steps taken is by asking US to cut carbon dioxide emission by 25 percent by 2012. But this comes at a price of between $100 billion to $400 billion per year for the US. The US has withdrawn from the agreement and many Annex B countries are pushing for relaxation of the target. Christoph Bohringer and Andreas Loschel (2002) argue that there can be significant reduction in the total costs of compliance with Kyoto by International trade in emissions. Though the developing nations have been exempt from emission cuts to an extent, they depend on US for much of the economic assistance. This may worsen international relations and international business which depends on intergovernmental policies for existence. Policy makers should make sure that such developments should not affect international business.

Though international business has thrown toward us a lot of challenges it has stayed on owing much to the opportunities it can offer to people across the globe. Globalisation has provided for greater economic freedom and widened the choices people have. To a great extend international trade and investment has also improved education, public health and thereby relieved poverty to a great level. A few of the opportunities in the 21st century are discussed below.

Even though International Business faces many challenges, the future holds many opportunities for the international trade and investment. Some of opportunities for international business in the 21st century are discussed below. Beyond Chindia - As discussed earlier the rise of Asia has brought about better income and urbanisation to the Asian middle class. Due to the continuous demand in consumer and industrial products and large population less exposed to quality good, Asia is better equipped to maintain the growth and the region will attract more investors. One other aspect that is beginning to happen is the slow rise of other nations like Vietnam, Bangladesh and Myanmar.

A few of the lesser economies have better advantage over China and India like infrastructure, education and more open trade policies. Hence, if the resources are tapped systematically the Asian block has the potential to grow and catch up with the other Asian giants. Since the Asian region has various advantages compared to other countries, the region will continue to grow and become the biggest driver of the global economy.

Technology Transfer - Information Technology is a critical factor in International business. The technological capability of a company gives MNCs competitive advantage in the market. This is also applicable when MNCs try investing in foreign markets. The ability of a firm to transfer technology to foreign market is very critical to the success of the company to achieve more profit. Technology transfer is defined as the transmission of know-how to suit local conditions, with effective absorption and diffusion both within and across countries (Chung, 2001; Kaynak, 1985; Tihanyi& Roath, 2002).

In recent developments it is seen that MNCs are very open to the idea of transferring technology in relation to FDI in transitional economies (Uhlenbruck & De Castro, 2000; Young & Lan, 1997). Thereby with the technology transfer not only does the foreign company benefit but more benefit is being achieved by the host country in terms of adopting the relevant technology domain. Hence developing countries that are open to international FDIs will gain much more via international business and leap forward in terms of economic progress.

More Regional Free Trade Agreements - As seen from the success story of the European Union it is quite evident that regional collaboration can lead to regional prosperity and a better stand in the world. It can lead to better trade and investment and thereby raise the economic condition of the member countries. Though Asia in the past had tried, and to an extent succeeded in establishing Free Trade Agreement not much success has come out the agreements. For example since 2000, China has been an active participant in FTA but only two exist in practise, one with Hong Kong and the other with Macao. This when compared with the regional collaboration in Europe one finds that though there is much to be gained very little has been done in this direction.

This is an opportunity for Asia to come up to level of the developed countries. There are political roadblocks, but the rise of many Asian countries in the last decade suggest that if countries rise above politics and come together to set up a unified zone with common governing body then much faster progress can be made for the economic development of the region and in effect raise the economic level of one third of the world population.

Domain of International Business Today - The concept of International business has been in existence now for centuries. But it has gained momentum and far more significance in today's world due to number of factors like, relaxation of trade barriers, common customer preference triggered by development in information technology and transportation. This has led to growing interdependence between countries across the globe for trade and eventually for economic development. In fact nations across the globe are far more interdependent than ever before in history. This has led to many changes in the way business is done in today's world. International business now operates in a much more complex and demanding environment.

There has been significant amount of changes that happened across the globe that has led to such a scenario wherein it has now become difficulty in defining the overall domain of international business. One major change that is happening is the influence of international market events on the local economic policy formulation of a country. Nations across the world have come to a scenario wherein it has become very difficult to formulate a domestic policy without judging its impact on the global market. Hence domestic policy formulation has become more complex owing to the impact it will have on the international trade and investment of the country and its direct and indirect impact on the local economy.

The scenario is such that nations are now in dilemma of whether to formulate a domestic policy that is in tune with the international market movement or to have a foreign policy that will appease the local policy sentiments. International Business sentiments invariably affect the domestic legislation now and then. For example, in 2001 when Japan put restrictions on Chinese products; the Chinese retaliated by imposing 100 percent tariff on Japanese vehicle and mobile phone imports. Thus it is becoming clear that the domain of international business is far beyond foreign policies of a nation, it is invariably playing an active role directly or indirectly on the local policy and vice versa.

One other development that is rendering the international business environment more complex is the weakening of international institutions like the WTO and IMF due to various factors. One major factor that is reducing the influence of WTO is the emergence of numerous regional trade agreements and different economic systems. This can be seen in the change in the main focus of the WTO, which has now shifted from reducing tariff barriers (for which as established) to regulating non-tariff barriers which are much more challenging. The non-tariff barriers in international business include factors like bureaucratic hurdles, special treatment of domestic products, intense domestic campaign, restricted import on certain product or service, varying product standards and complex regulatory environment.

Since the laws governing each of these non-tariff barriers vary from country to country and since there is no clear boundary with regard to the factors any disputes in this regard are intensely debatable. Coupled with this scenario is the emergence of regional trade agreements. Every country is in one way or the other indulged in a regional trade agreement. Hence WTO has the additional burden of looking into the global trade scenario and at the same time respect the regional commitments of each member countries.

Along similar lines is the complex scenario through which International Monetary Fund (IMF) is going through. The emergence of new economic conditions has demanded for different approaches. For example the new link between political and economic stability require different considerations, there by substantially changing the mission of IMF. The complexities evolving from these developments in the International business arena are such that it has put pressure even on the international organisations like WTO, IMF and the World Bank to reanalyse their strategy.

Overall in this paper we have seen that political, legal and economic factors are all inter linked in such a way that any change in any of the factor shows up considerable changes on other factors. Since these factors affect the domestic policies of the country and also on the foreign policy outlook of the country international business in the end is also directly or indirectly affected.

Though some may argue that with globalisation a form of standardisation has happened with the help of world governing bodies and other compelling factors, overall we see in today's world a complex picture emerging in the international business scenario and the more the world gets involved with international trade and investment the more factors it has to take into consideration to keep up the profitability and sustain economic development.

In short it is seen that the boundary of international business keeps on increasing. Overall in future years there must be better regulation in the capital markets, trade and business across the globe and that barriers restricting international business must be addressed and overcome which will benefit not only developed nations but will also be more beneficial to emerging nations across the globe.