TECHNOLOGICAL CHANGE*

by Nawaz Sharif
1. Understanding Technological Change Technological change largely shaped today's societies. In the previous chapter we discussed how technological change has been recognized as a major driving force behind rising standards of living. It has been the main weapon for development. In this chapter we will see how technology itself changes over time. The process of technological change will be discussed first, and then we will look into the rate of change of technologies. 1.1 The Process of Technological Change Technological growth is the result of new inventions and innovations. Every invention (either hardware or software) is something new (in most of the cases, it is a new combination of already existing technological elements), and an invention becomes an innovation when applied for the first time. An innovation which has little disruptive impact on behaviour patterns is called a continuous innovation (fluoride toothpaste is an example); in such cases alteration of an existing product, rather than creation of a new product is involved. There also are dynamically continuous innovations which do not involve new consumption patterns but involve the creation of a new product or the alteration of an existing one (electric toothbrush is an example). In addition, there are discontinuous innovations which involve the establishment of new behaviour patterns and the creation of previously unknown products (examples: automobile, television, computer, etc.). The process of technological change is very much linked to innovation. 8 A lot of things are invented, but it is only through innovation that technology effects social change. And the process through which technological change occurs--(i) substitution and (ii) diffusion. Substitution has been an instrument of man's material progress since prehistoric days. Man has substituted machines for muscle, agriculture for hunting, automobiles for animal carts, aircraft for surface vehicles, and preventive inoculations for disease treatment. The substitution phenomenon is based on the fact that one product or technology is based on the fact that one product or technology which exhibits a relative improvement in performance or cost over the older (established or conventional product or technology) will eventually substitute for the product or technology of lesser performance or higher cost.14 Diffusion refers to the acceptance, over time, of some specific technology (product or know-how) by individuals, groups or organization.12 In the following sections we will discuss these processes in details. _______________________ *REPRINTED FROM: Nawaz Sharif, The Management of Technology Transfer and Development (U.N. ESCAP Regional Centre for Technology Transfer: Bangalore, India, 1983), Chapters 4-5, pp. 25-44.

1.2 Change Through Substitution The simplest form of technological substitution occurs when a new technology (combination of hardware and software from one extreme to the other) captures over a period of time a substantial share of the market from an existing older technology. 13 With the passage of time the total market changes both in terms of volume and constituents. Since the new technology is better and economically more viable, after it has gained a small market share it is likely to become more competitive as time progresses, and therefore, once a substitution has begun it is highly probable that it will eventually takeover the available market. This is a simple one-to-one technological substitution process, very good example of a simple one-to-one substitution is the introduction of colour television in place of black and white television. In many cases of rapid technological change, however, before the older technology is substituted by the latter, a still newer technology enters the market and creates a situation of multilevel technological substitution.13 In this case, the oldest technology will lose its market share to the two newer technologies, as they are superior. On the other hand, the newest technology will gain market share from both of its predecessors. The intermediate technology will, however, continue to gain market share from the oldest one and at he same time will be losing some of its own market to the newest one. "Vacuum tube-transistor-integrated circuit" in the electronics industry and "wood-metal-plastic" for furniture are examples of multilevel substitution. In general there can be series of innovations in rapid succession, giving rise to a large number of competitive technologies in the market, and resulting in a complex but orderly multilevel substitution phenomenon. This complex multilevel situation can, however, be successively reduced to a series of sample one-to-one substitution cases. Some examples of technological substitution models will be given later. The substitution theory is valid for continuous type innovations. However, for discontinuous innovations technological growth occurs through diffusion. 1.3 Change Through Diffusion Many ways have been used to measure the diffusion of an innovation at any particular time. Perhaps the commonest as well as the simplest situation arises when individuals are the adoption units and the innovation concerned is a consumer type. In this case, at any given time the number of individuals who have adopted the innovation gives a good measure of the diffusion process with time. However, in the case of a process innovation, taking the number of companies that have adopted the innovation as a measure of diffusion may not be very useful for two reasons. 3 Firstly, all the companies may not be of the same size and capacity. Secondly, there may be companies which might adopt a new process innovation but still use the old method to account for some of its production. A further difficulty is that as diffusion progresses the innovation itself can undergo major and major changes leading to an improvement in performance. (i.e., a continuous innovation giving rise to the substitution process described earlier). Therefore, selecting a surrogate measure to study the temporal pattern of innovation diffusion requires careful consideration, in view of the multiplicity of the kinds of innovations and of adoption units. Two important considerations in understanding the diffusion process are-(i) Neighbourhood and Hierarchical Effects, and (ii) Information, Communication and Interaction.12 The Neighbourhood effect states that, other things being equal, the closer a potential adoption
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unit to the source of innovation, or to another unit that had already adopted the innovation, the greater the probability that it will adopt the innovation before potential adopters further away. On the other hand, the hierarchical effect says that if one defines a base for a hierarchy, be it size, social status or any other criterion, the higher the ranking of a potential adoption unit in that hierarchy, the greater the chance of adoption before units that are lower in the hierarchy. This in fact implies that simple geographical distance need not always be the most dominant factor in a diffusion process. For example, big cities of the world, linked with strong information flow, are actually closer to one another than they are in simple geographical space. There is common agreement in the literature on innovation diffusion that information spread precedes, or coincides, with adoption. Interpersonal influence and mass media are both major causes of diffusion when individuals are the adoption units.15 However, when the adoption unit is an organization it is also important to look into other socio-economic factors. Some of these factors are discussed later in this chapter. 1.4 Factors Influencing Substitution and Diffusion Researchers have investigated a broad spectrum of factors that can have an impact on the processes of substitution and diffusion.18 These factors can be conveniently classified into: (i) factors affecting the demand for a technology; and (ii) factors affecting the supply of a technology. These are listed below:

1. DEMAND SIDE FACTORS (a) Social, psychological, economic and locational characteristics of the potential adopters; (b) Size of the investment required to adopt the innovation; (c) Profitability of the investment in an innovation; (d) Compatibility of the innovation with other con-current technologies; (e) Visibility or salience of the relative advantage of the innovation over its predecessors; (f) Complexity and efficiency of the innovation; (g) Quality characteristics of the innovation; (h) Utility-adjusted price ratio between the innovation and its competitors;
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(i) Age, condition and the rate of obsolescence of the existing capital equipment that the innovation is seeking to displace; (j) State of overall growth of the economy; (k) The decision making environment and related organizational and political factors; and (l) The number who have already adopted the innovation, and the number who have not yet adopted it.

2. SUPPLY SIDE FACTORS (a) Diffusion agency actions pertaining to pricing and infrastructure; (b) Actions of private and public entities such as infrastructure development and governmental regulation/promotion of the innovation; (c) Diffusion agency actions pertaining to market selection, segmentation and promotional communication; and (d) Actions of other private and public entities pertaining to market selection, segmentation and promotional communications. The factors listed above are not exhaustive. They are identified on the basis of available studies, and not all of these factors may be relevant in every situation. 1.5 Technological Change Patterns Over the years, we have noticed an accelerated growth in technology. 10 Alvin Toffler, the author of "Futureshock", has put the historical facts in a simple way.19 He has observed, for example, that if the past 50,000 years of man's existence were divided into lifetimes of approximately 62 years each, there have been about 800 such lifetimes. Of these 800, fully 650 were spent in caves. Only during the past 70 lifetimes has it been possible to communicate effectively from one lifetime to another - as writing made it possible to do. Only during the past six lifetimes have masses of our men ever seen a printed word. Only during the past four has it been possible to measure time with any precision. Only in the past two has become anywhere used an electric motor. And the over-whelming majority of all the material goods we use in daily life today have been developed within the present, the 800th, lifetime.
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The same accelerative tendency is instantly apparent if we observe the sequence in travelling speed achieved by human beings. In 6000 B. C. a camel could move people at a maximum speed of 8 miles per hour (mph). The first animal driven cart, chariot in 3000 B.C., increased our speed to 20 mph. With the introduction of steam locomotive in 1880 A.D. the travelling speed became 40 mph. Since then the rate of increase itself is increased. Aircraft, in 1960, could move people at a speed of 500 mph. Supersonic planes have made it possible in 1980 for people to travel at 1,500 mph speed. Today, the space-capsules travel at the enormous speed of 25,000 mph.17 There are thousands of other examples which illustrate that technology is growing exponentially. One can cite various reasons for this.7 Some of these are: (i) inventions breed inventions; (ii) inventions of all the world are more and more pooled together as the barriers to communication are progressively reduced; (iii) the elements being combined are also becoming more and more powerful; and (iv) methods of problem solving are being improved more and more swiftly. During the last one hundred years we have also witnessed acceleration in all the three aspects of technological change that we have discussed previously--(i) the rate of invention; (ii) the time between invention and first application; and (iii) substitution of old technology and diffusion of new innovations. Table 1-1 gives some evidence to indicate that there is a decreasing trend in the speed of introducing technological developments into social use. The time of substitution has also decreased over the years. This stepped-up pace of invention, innovation and substitution/ diffusion, in turn, accelerates the whole process of technological change even more. 6 For new machines and techniques are not merely products, but sources of fresh creative ideas. Each new hardware and software, in a sense, changes all existing technologies by permitting us to put them together into new combinations. The number of possible combinations rises exponentially. Thus, the basic patterns of technological change follows an exponential growth. Table 1-2 provides a "felling" regarding the dynamics of an exponential growth process. With even a very small increase in the annual rate of growth an exponential growth process reaches an enormous size in a very much reduced time interval! 1.6 The S-Curve We have mentioned earlier that the growth of a technology measured in terms of the cumulative pattern of adopters or the cumulative proportion of activity accounted for (whether it be a substitution or diffusion), usually conforms to an exponential curve. However, the exponential growth pattern may be of three distinctive types - (i) simple exponential; (ii) modified exponential; and (iii) S-curve. Figure 1-1 gives a schematic presentation of all the three patterns. The history of technology amply documents that when a given innovation is first established as discipline, scientific breakthroughs are frequent. But as the discipline matures, fewer breakthroughs occur because the number of possibilities decline steadily. Hence, the simple exponential pattern with possible infinite growth is not applicable after the technology matures. The modified exponential patterns with a finite upper limit is a more reasonable representation of matured technologies. However, this curve fails to match with the growth pattern in the early stage. Usually the growth of any particular technology conforms to an S-shaped curve (called Scurve) which is a combination of simple (increasing increasingly) and modified (increasing decreasingly) exponential curves.11 Various researchers have given many reasons for justifying the empirical regularity of the S-curve of technological growth.2 One explanation is that in the adoption
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of innovation there will always be some early innovators who adopt first. Once they set the example they are quickly followed by a group called the early majority, who are in turn followed by the later majority. Last to adopt are the laggards at the tail-end when nearly everyone else has adopted the innovation. It can be seen that interaction of these postulates causes the S-curve's slow increase; then rapid increase and then slow again; until saturation.

Many economic reasons are also given for the S-curve patterns. Some of these are: (a) Initially only very few firms will be willing to be the earliest to try out new techniques which may in general considerable uncertainty and risk; (b) If a few pioneer firms overcome the teething troubles of a new technique, they substantially reduce the risk in the eyes of those who have yet to adopt it; (c) Good reports of a new technique form those already using it may carry considerable weight to other potential adopters than reports in the press of publicity by the supplier; (d) Modifications to the new technique in the early stages of commercial application may substantially increase the potential range of its use, as well as its superiority over existing technologies. (e) Firms whose existing capital equipment is old relative the average age of capital equipment in the industry will be prompt to accept new processes; while other firms with relatively new capital equipment will be slow in their innovative response; (f) Some potential adopters may anticipate improvements in the cost/performance characteristics of the innovation and may postpone adoption; (g) However, after some time, due to supply bottlenecks the innovation may not be that easily available, and this can slow down the adoption rate; (h) It may transpire that there are areas of production in which the new technique is after all not very suitable; probably the most promising areas have already been exploited first; and (i) The very success of the innovation in its early stages may stimulate some firms to improve their existing methods of production for fear of competition. This empirical regularity has thus been widely used to describe the trend in any particular technology.21 Although a particular technology may exhibit the S-curve growth pattern (which eventually reaches a limiting condition), other related technologies are developed to achieve further growth (also S-shaped) beyond the limit of the previous S-curve. This is shown schematically in Figure 1-2. In this figure, let us consider the speed of passenger air-travel, where technology "A" is propeller aircraft, technology "B" is truboprop aircraft, and technology "C" is the jet aircraft. Similarly, if we consider the intensity of electric lights (in lumens/watt) then "A" is incandescent lamp, "B" is fluorescent lamp, and "C" is the mercury-vapour lamp. In both cases, each individual technology improves over time following the S-curve pattern. The overall growth of various technologies (representing a system of higher order, characterized by a succession of discontinuous innovations) can be observed by drawing the "envelope" curve.1 Figures 1-3 and 1-4 are two examples of envelope-curve growth of two sets of technologies. The envelope curves also show an exponential growth trend. One would expect envelope curves to take the form of a "Big-S" riding on the small S-curves for the individual technologies.9 The current technological level of the world is perhaps the initial phase of the Big-S curves! We
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hope to find sound technological solutions to approach the upper limit of the Big-S curves. 1.7 References

the problems of the present world before we

(1) Ayres, R. U.; "Envelope Curve Forecasting", in Technological Forecasting for Industry and Government (Bright, J. R., Ed.), New Jersey: Prentice-Hall, 1968. (2) Brown, L. A. and Cox, K.R., "Empirical Regularities in the Diffusion of Innovation", Annals of American Geography, Vol. - 61, 1971. (3) Davies, S.; The Diffusion of Process Innovations, Cambridge University Press, Cambridge, 1979. (4) Davis, W. J.; The Seventh Year: Industrial Civilization in Transition, New York: Norton, 1979. (5) Dobrov, G.: "A Strategy for Organized Technology", Technological Forecasting and Social Change, Vol. - 19, 1979. (6) Gray, E. et al; Growth and its Implications for the Future, Connectucut: Dinosaur, 1975. (7) Hornsby, J.; The Story of Inventions, Weidenfeld and Nicolson, 1977. (8) Mansfield, E.; Technological Change, New York: Norton, 1971. (9) Meadows, D H. et al; The Limits to Growth, New York Universe Books, 1972. (10) Mishan, E. J.; Technology and Growth, New York: Praegar, 1969. (11) Robinson, J. M.; "Technological Learning, Technological Substitution, and Technological Change", Technological Forecasting and Social Change, Vol - 18, 1980. (12) Rogers, E. M.; Diffusion of Innovations, New York: Free Press, 1962. (13) Sharif, M. N. and Kabir, C.; "Basic Substitution Models", Substitution (Linstone and Sahal, Eds.), New York: Elsevier, 1976. in Technological

(14) Sharif, M. N.; "Technological Substitution Models", in Renewable Resources: A Systemic Approach (Campos Lopez, Ed.), New York: Academic Press, 1980.
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(15) Sharif, M. N. and Ramanathan, K.; "Binomial Innovation Diffusion Models with Dynamic Potential Adopter Population", Technological Forecasting and Social Change, Vol.20, 1981. (16) Sharif, M. N. and Ramanathan, K.; "Polynomial Innovation Diffusion Models", Technological Forecasting and Social Change, Vol - 22, 1982. (17) Shellard, P.; History at Source: Man and Machines, London: Evan Brothers, 1972. (18) Starr, D. C. and Rudman, R.; "Parameters of Technological Growth", Professional Engineer, March, 1973. (19) Toffler, A.; Future Shock, New York: Random House Press, 1970. (20) Van Duijin, J. "Fluctuations in Innovation Over Time", Futures, Vol - 13, 1981. (21) Van Wyk, R. J.; "Technological Change: A Macro Perspective", Technological Forecasting and Social Change, Vol- 15, 1979.

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2. Technology is a Product From the discussions so far, we have seen that technology has played the basic role of an instrument for transforming the primitive and natural world into a technological and man-made world. The primitive world is the so-called "not developed" world. We have observed the direct relationship between technology and development- at individual, social and national levels. In addition, we have noted that in the past technology has been growing at an exponential rate. The enormous growth in technology has very significant implications for the future mankind. We have seen that technology has--(i) enabled us to dominate nature; (ii) acted as a motor for material progress; and (iii) provided us with opportunities that did not exist before. However, technology has also--(i) caused alienation from nature; (ii) helped in the creation of destructive armaments and (iii) generated many problems which did not exist before. In this chapter we will take an in-depth look into--"What is technology?" It is proposed that we consider technology as a product. The discussions will lead us to see that technology is a man-made, knowledge-based, research and development factory-produced, marketable product. It is a product in the economic sense. It has product life-cycle characteristics. And its price is determined by the law of supply and demand.

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2.1 Technology is Man-Made and Knowledge-Based It is self-evident that technology is man-made. It has come into existence due to the human desire to make life easier and to improve living conditions. As a matter of fact, man became human when he began to use his brain to create options beyond those originally provided by nature.14 In his earliest days man's technology grew through luck, inspiration, and "trial and error". In most cases probably he did not understand why his useful innovations worked; he only knew that they worked. It is only in the last few centuries that he has developed a systematic approach to learning.8 Memory and ability to learn are the two most important functions of human brain. Memory underlies the highest functions of the brain, from multiplying two numbers to developing a sense of self. It lifts humans out of an eternity of unconnected moments to create a sense of continuity and unity, of connection with their past. The learning activities, on the other hand, add knowledge to human brain. Knowledge is the fact of condition of knowing something with familiarity gained through experience or association. It is the sum total of what is known--the body of truth, information and principles acquired by mankind. Technology is the application of knowledge to the solution of practical problems. Many people tend to think of technology as being embodied in the machines, tools, devices and implements (the hardware). But no hardware can function itself. Human involvement is inherent in the productive capacity of any conceivable hardware. Technology is all the processes, methods, techniques, know-hows (the software), and also the hardware that have helped society survive and improve its life. Technology is what people do with what they know. And technology is knowledge-based. One of the big differences between developed and developing countries lies in the state of their knowledge base--advanced industrialized societies tend to be knowledge-intensive societies, while one of the characteristics of less developed societies is, by contrast, knowledge poverty. The situation is identical with respect to technology, because technology is knowledge-based. 2.2 Knowledge, Science and Technology Science is the pursuit of knowledge while technology is the application of knowledge.9 The scientist may pursue knowledge for its own sake, but the technologist is utility-oriented. The relationship between science and technology is by and large a recent phenomenon.2 Technology is not necessarily the application of science. In fact, the technology up to the middle of the nineteenth century grew up relatively independently of science. The technologies of those days (such as typewriter, sewing machine, cotton picker, building materials, machine tools, etc.) were products of mechanical ingenuity, rather than application of science per se. In those days, people already knew the "how" before they learned the "why". With the growth of the chemical, communications, power and aeronautic industries in early twentieth century, one can observe a greater interaction between science and technology. Increasingly, however, science has overtaken technology. A very important element in the growth of modern technology is the adoption of instruments initially developed for scientific advance itself. Theories paved the way for better practice. In turn,
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technology provided the devices scientists needed in their pursuit of knowledge. multiplicity of relationships between science and technology.

Thus there is

While scientist are inventors, technologists reduce an invention to some practical form. In early days technology tended to run ahead of science. Scientific theory paves the way for practice today. Creation of new science is a necessary, though not sufficient, condition for the creation of new technology. Science provides the environment in which technological ideas can be exploited. 2.3 Technology is Produced in R & D Factory Today most of the new technologies are produced in research and development (R & D) organizations of the private sector in developed countries. The intentions of private organizations are basically economic.4 The economic essence of technology is not its physical or chemical configuration but its marketability. Thus, technology is a product produced in the R & D factories. The input resources to the R & D factory are--(i) the traditional inputs to a factory, such as: money, materials, facilities, energy and manpower; and (ii) the brain-based inputs, such as: knowledge, science, technology, information and skills. The basic driving force for allocation of resources comes from the urge to satisfy various goals--(i) satisfaction of human needs; (ii) increasing productivity of human activities; (iii) gaining markets through competitive edge; (iv) reducing uncertainty by improving self-reliance; and (v) securing future growth by achieving technological independence. New technologies are being developed continuously to substitute for older methods of satisfying human needs. Technologies embodied in new consumer products give higher profits to organizations with R & D factories. New technologies which increase agricultural, industrial and educational productivity lead eventually to economic and social prosperity. The world's population has gown tremendously causing an increasing demand on the resources of a finite earth. Therefore, new technologies which help substitution, recycling and conservation of scarce and non-renewable resources lead to both self-reliance and independence. However, from the economic point of view, the most important objective of R & D investments is "to gain a competitive edge".12 Throughout the world, we observe a highly competitive situation.4 A firm exists in competition with other firms in its industry. A whole industry is in competition with other industries that offer alternative ways of satisfying some needs. A country exists in competition with other countries for its export market. In all of these situations technology is the key factor in getting a competitive edge.6 Whatever technology comes out of the R & D factory is an output only when it is used, and any output modifies the surroundings (economical, socio-cultural, politico-legal, environmental as well as technological). The effect of new technology on the surroundings act as a guiding force for further allocation of resources to the R & D factories. Although the economic purpose of R & D resource allocation is obvious, the effects on the surroundings pose some serious constraints.13 In a technological society, everything becomes a component of the expanding social system. As the overall functions of a society become more complex, each individual function becomes more refined, more limited and more dependent on every other function in the system for its
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survival.11 Hence, the management criteria for R & D organizations should be two-fold--(i) maximize the positive effects by producing technologies that satisfy goals; and at the same time (ii) minimize the negative effects by not producing those technologies that causes deterioration of the surroundings.

2.4 Technology Life Cycle We have defined earlier that any technology is a combination of hardware and software in various proportions. For our discussions here, let us call technologies with relatively higher hardware component as "hardware technologies" and those with relatively higher software as "software technologies". In simple words, hardware technologies are embodied in physical products and software technologies are in the form of know-how. Hardware technology, being physical-based, exhibits life cycle characteristics similar to the well-known "product life cycles".7 The stages and dynamics of the hardware technology life cycle are described in Figure 2-1 and Table 2-1. For the software technology the life cycle follows the pattern of "S" and "big-S" curves, as explained in the previous chapter. Software technology, being mind-based, exhibits growth only. As we can see from Figure 2-1, each technology passes through an incubation phase where many ideas are reduced to one successful idea for introduction into the market. In the introduction phase the number of application of the new technology increase very slowly in the beginning. Later, when it starts increasing rapidly, the technology is in its growth phase. After some time, its growth is reduced and some stability can be observed in the maturity phase. Finally, an improved substitute makes the technology obsolete in the decline phase. The various changes that are normally associated with any technology as it passes through the introduction, growth and maturity phases are described in Table 2-1. In this table we have considered the technology change process with respect to: socio-political, management, economic, production as well as innovation aspects. It must be noted that investment on technology development does not refer to R & D alone. Although R & D is the most important factor, in terms of cost, it is only a small part of the total technology development process. The complete commercial launching of any technology involves--(i) R & D investment; (ii) Market research; (iii) Design work; (iv) Planning and installation of production plant; (v) Trial production; (vi) Testing and improvement; and (vii) Preparing the market to accept it (i.e., promotion). For a developing country, evolving industry or a new way of human need satisfaction, the complex of technologies seem to pass through three stages.7 During the first stage of technological

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development, the economic and political institutions are generally more flexible. In this early phase, knowledge is used to create new technologies for the new environment. In the second stage, technology begins to multiply--itself as well as benefits and costs. Finally, the society reaches the third stage, where its institutional complex is so enlarged that it takes more technology to maintain it than the system can afford. At this point the system begins to disintegrate. And a new set of technologies is sought to fix the current technological mess. Thus the technology lifecycle goes on.

2.5 Technology and International Trade It is common knowledge that; in general, the export from developing to developed countries is predominantly "non-technology intensive", whereas the export from developed to developing countries is mostly "technology intensive".4 This is generally true as long as we consider the developing countries as a group versus developed countries as a group. Within these groups, however, the pattern of trade is somewhat mixed. But it is obvious that technology plays an important role in international trade. As we have discussed earlier, technology provides the competitive edge in international trade.15 We have also looked into "where" and "how" technology is produced. Therefore, international trade in technology means export of technology from its country of origin to other countries. Let us first look at the trade situation with respect to those technologies which are more hardware intensive.16 Figure 2-2 gives the relationship of the technology life cycle to international trade. Introduction of a new technology gives the country of its origin an absolute advantage over other countries for a time, but in relatively short time other countries which are not far behind in that particular technological area start imitating and succeed in producing the technology as well. Therefore, in the introduction phase of the technology life cycle the country of origin produces more than its own needs and earns good profit from exports. Somewhere in the growth phase, other developed countries start producing the same technology to meet their own demand. At this time the country of origin starts exporting to less developed countries. But eventually after the technology has reached the maturity phase (when some other new technology produced by developed country starts substituting this technology), the developing countries start to produce the technology marginally economically, and the trade situation is reversed (often with little profit).5 Next let us consider the trade situation with respect to those technologies which are more software intensive. As most technologies are developed in the R & D factories of the private sector of the developed countries, they sell their know-how to developing countries.3 The sale of technology here means either the direct sale for a lump sum of the sale of a license for royalty.

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2.6 What, Why and How In this chapter we have defined what is technology. Technology is a combination of hardware and software; it is man-made; it is produced in the R & D factories; it is a marketable commodity; it is not free, but an economic goods sold to those who can pay for it; it has life-cycle characteristics, and its market value changes with the stages of life-cycle. However, quite unlike other commodities, technology is not depleted nor its supply diminished when sold or used. In the previous chapters we have explained that technology is a tool for national development. Therefore, it is obvious that developing countries would like to have technology. The important question now is: How? Part two of this book will explore this question of "how" on the basis of the foundation provided in this part. 2.7 References (1) Boston, J. R.; "Who Gets the Technology?", Asian Business and Industry, November, 1976. (2) Danzin, A.; Science and the Second Renaissance of Europe, London: Pergamon Press, 1979. (3) Ford, D. and Ryan, C.; "Taking Technology to Market", Harvard Business Review, March, 1981. (4) Hill, C. T. and Utterback, J. M. (eds.); Technological Innovation for a Dynamic Economy, New York: Pergamon, 1979. (5) Kolde, E. J.; "International Technology Market and Developing Countries", EKI, Vol 25, No - 1977. (6) Kotler, p.; Marketing Management, New Jersey: Prentice-Hall, 1980. (7) Malecki, E. L.; "Product cycles, Innovation Cycles, and Regional Economic Change", Technological Forecasting and Social Change, Vol - 19, 1980. (8) Marchetti, C.; "Society as a Learning System: Discovery, Invention and Innovation Cycles Revisited", Technological Forecasting and Social Change, Vol- 18, 1980. (9) OECD, Science and Technology in the New Socio-Economic Context, Paris, 1979.

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(10) Reddy, A. K. N.; Technology, Development and the Environment, UNEP, Nairobi, 1979. (11) Rickman, H. P.; Living with Technology, London: Hodder and Stoughton, 1967. (12) Scherer, F. M.; Industrial Market Structure and Economic Performance, Chicago: Rand McNally, 1970. (13) Schon, D. A.; Technology and Change, New York: Delta Publishers, 1970. (14) Susskind, C.; Understanding Technology, London: John Hopkins Press, 1973. (15) Vernon, R.; The Technology Factor in International Trade, New York: Columbia University Press, 1970. (16) Wella, L. T. (ed.); The Product Life Cycle Harvard Press, 1972. and International Trade, Boston:

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