Howard Pack
The Wharton School
University of Pennsylvania
Philadelphia, Pa. 19104-6372


The Role of Technology Transfer in Economic Development:
Asian Successes vs. Middle Eastern Failures

Henry and Bryna David Lecture
February 14, 2008

In the 1950s and 1960s, the “advantage of relative backwardness,” the ability of poor nations to benefit from accessing existing more productive technology from the rich nations was thought to provide poor nations with rich opportunity to rapidly accelerate their economic growth. Rather than having to develop them de nouveau through the process of R & D with all of the huge expenses and false roads inevitably encountered, borrowing was much less expensive and risky. Simon Kuznets, a Nobel Laureate, argued that the rapid economic growth in the advanced industrial countries stemmed from the systematic application of science and technology to the production process.

After receiving only limited attention for three decades, the role of technology transfer re-entered the mainstream of discussion of the engines of growth in developed nations as a central point of endogenous growth theory set forth in the 1980s.

This lecture considers the experience of successful Asian nations and the role of technology transfer in their growth trajectory and suggests that one of the determinants of the relatively poor economic performance of many of the Arab nations of North Africa and the Middle East is their extreme isolation from the world flow of knowledge. The causality does not simply run from technical ability to economic growth. Economic growth itself has a positive feedback on the willingness to accumulate technological knowledge. Many Asian nations benefited from a virtuous cycle in this respect whereas many Arab nations appear to have suffered from a dysfunctional self-reinforcing cycle.