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EXAMINE THE ROLE OF TECHNOLOGY IN FOSTERING THE
GLOBALIZATION
Introduction:
It has been observed that time lags between countries in respect of introduction or
absorption of technologies. As there are many countries, including India where the TV
arrived very late, though color TV were rampant in the advanced and developing
countries but still when the first telecast started in India, it was black and white telecast.
The time lags in the introduction of technologies even result in some products and also
affected advertising industry and product promotion.
Often, it is noticed that there is a time lag between countries in the adoption and
diffusion of technologies. It is well known fact that developing countries are laggard the
developed countries. Even the technology absorption among the developed countries is
not similar.
However, it has been diminished in several cases.
There are also many other factors which helped in ameliorate the marketability of
products such as food processing, packaging, preservation, transportation etc.
Appropriate technology and technology adaptation
Environment plays a vital for the adaptation of technology as the technology suitable in
one environment may not be appropriate in another. This can be because of the
differences in natural factors such as soil conditions, weather conditions, income levels,
customer characteristics etc.
Schumacher’s concept says that the latest or highly sophisticated technology may not be
the appropriate technology in several environments; this is known as the concept of
appropriate technology.
Thus, the sophisticated capital-intensive technologies in use in the developed countries are
not acceptable in some sectors in several of the developing countries.
An Indian company, Mekins Agro Products Ltd., with designs from International Crop
Research Institute for Semi Arid Tropics (ICRISAT), Hyderabad, introduced easy to
maintain bullock-drawn agriculture equipment in India, which has been exporting to
various developing countries.

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Therefore, technological appropriateness can vary between different environments. Many
situations require modifications to technology which helps companies to perform better.
Impact of technology on Globalization:
Technological advances have tremendously fostered globalization. Technology has in fact
been a very important facilitating factor of globalization.
Several technological developments become a compelling reason for internationalization.
Technological break-throughs are substantially increasing the scale economies and the
market scale required to break even.
Global sourcing was encouraged not only by trade liberalization but also by technological
developments which reduced transport costs. The advent of containerization and super
tonnage cargo ships drastically reduced transport costs.
Technology monopoly, like possession of patented technology, encourages
internationalization because the firm can exploit the respective demand without any
competition.
The pace of globalization has been accelerated by several enabling technologies. The
technological revolution in several spheres, like transport and communication, has given a
great impetus to globalization by its tremendous contribution to the reduction of the
disadvantages of natural barriers like distance and cost. The IT revolution has made an
enormous contribution to the emergence of the global village. The developments in the
field of air cargo transportation have fostered globalization by enabling quick and safe
transportation of sensitive goods (like perishables and goods subject to quick changes in
fashion/taste). Developments of containerization and refrigeration have also been of high
significance. The steep fall in the cost of transportation and communication has
considerably accelerated the pace of globalization. All these have contributed to the
drastic transformation of the logistical and global distribution of the value chain system.
The world wide web has a stupendous impact on globalization.
Advances in information technology are revolutionalising the modus operandi of marketing
and the business system. The business horizon is humming with buzzwords such as
internet, world wide web (www), cyberspace, information superhighways, etc. which are
changing customers; order receiving and processing; and networking and integrating
business system. The revolutionary changes being ushered in by the internet are indeed
exciting.
“Technology experts are anticipating that the internet and the www would become the
centre of commercial universe. Electronic markets will eliminate the need for
intermediaries and that direct contact between manufacturer and customer will bring down

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the cost of transaction and the cost of the final product. The internet has the potential to
evolve into an interconnected electronic market place bringing buyers and sellers together
to facilitate commercial exchanges. The internet is fast becoming an important new
channel for commerce in a range of business-much faster than anyone who would have
predicted apparent; by allowing for direct ubiquitous links to anyone, anywhere, the
internat allows companies to build interactive relationships with consumers and suppliers
and deliver new products and services at low cost.”
Revolutionary changes in information technology have been sweeping across the global
business. Developments in telecommunications and IT have reduced the barriers to time
and place in any part of the globe. It is now possible for the customers and suppliers
to transact business at any time in any part of the globe. The net has changed the face
and pace of business to business marketing and retailing.
Transfer of Technology:
Transfer of technology is a very important factor which fosters international business.
This will take the form of a technology transfer transaction, which may or may not be a
legally binding contract, but which will involve the communication, by the transferor, of
the relevant knowledge to the recipient.
Broadly, there are two forms of TT, viz., internalized and externalized forms of technology
transfer. Internalized forms refers to investment associated TT, where control resides with
the technology transferor, the transferor, normally, holding majority or full equity
ownership. Externalized forms refers to all other forms, such as joint ventures with local
control, licensing, strategic alliance and international subcontracting.
Issues in transfer of Technology:
Cost, appropriateness, dependence and obsolescence the four important issues associated
with the transfer of technology.
In many cases, the developing countries obtain foreign technology at unreasonably high
prices. In a number of cases of foreign direct investment associated with technology
transfer, the net outflow of capital by way of dividend, interest, royalties and technical
fees has been found to be much higher than the corresponding inflow.
The appropriateness of the foreign technology to the physical, economic and social
conditions of the developing countries is an important aspect to be considered in
technology transfer. Further, heavy reliance on foreign technology may lead to
technological dependence. It is pointed out that the import of modern sophisticated
technology has tended to displace the traditional indigenous technology which have been
improved under a different set of policies. It has also been observed that there is a

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tendency to transfer outdated technology to the developing countries. Thus, they would
not enjoy the advantage of the latest technology and would still technologically lag
behind. It is unfortunate that the owners of modem technology view the developing
countries as a means to salvage technology that is obsolescent in the advanced countries,
even when they possess more advanced technology.
Promotion and Regulation:
Despite the problem or shortcomings of foreign technology, it is widely recognized that,
if properly regulated and promoted, it can play a positive role, particularly in the
technologically backward developing countries. The governments of India and a number
of other countries have, therefore, taken a number of regulatory and promotional
measures to take advantages of foreign technology without sacrificing national interests.
Regulatory measure:- a number of regulatory measures have been taken by different
countries to ensure that the technology chosen is the best available, appropriate to
domestic conditions and that indiscriminate and unnecessary import of foreign technology
is not undertaken. The following are the aspects of technology commonly regulated.
 The extent and terms of equity participation-these are generally determined by the
priorities of the technology-using industry in the nation’s economy, supply
condition of the technology and its type and nature.
 Phasing of domestic manufacturing where foreign technology is employed many
governments, including that of India, insisted upon indigenization in a phased
manner.
 Payment terms and foreign exchange outflow most governments take measures to
ensure that disproportionately high payments are not paid for any technology.
Restriction were imposed also on dividend payments and pricing.
 Restrictive terms in the agreement technology imports with highly restrictive terms
on the importing parties are not generally favoured.
Promotional measures:- to take full advantage of the positive role of foreign
technology, it is necessary to take certain promotional measures. These include:
 Assessing technological requirements of various sectors and identifying areas where
foreign technology is required.
 Dissemination of information in foreign countries regarding foreign investment
potentials and scope for technical collaboration in the domestic economy.
 Provision of advisory services to Indian entrepreneurs in respect of foreign
technology including the technique and process of technology transfers.

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References:
 International business: text and cases by Francis Cherunilam (Page no. 112, 113,
114, 115, 116, 117, 118, 119, 120)