Why issue of forced technology transfer is so vital for China and the United States
- Dominance of leading-edge technologies is imperative in today’s world, and crucial to China’s growth targets
- Bargaining over the ownership of technology blurs the line between trading and transferring it
Technology transfer is of tremendous interest, since technology is the key to value creation and competitive advantage – even more so if the theory of total factor productivity is taken into account.
The factors of overall productivity include labour, land, capital and technology. Previous industrial revolutions shifted the major factors gradually from land and labour to capital, and then to technology and human capital.
The more the world economy breaks down its internal barriers, the greater the role technology assumes in total factor productivity. Technology and other intangible factors such as research and development, and education are defining economic patterns and development models today, whereas factors such as labour and capital have retreated.
This shift has been happening in China as well. In the past, China relied heavily on its comparative advantages at the lower end of the supply chain: a large working population, cheap labour, and low environment and land costs.
