ASIA AND POLITICS OF TECHNOLOGY TRANSFER IN THE DEVELOPING COUNTRIES  (A CASE STUDY OF NIGERIA)

ABSTRACT

 

Technological advancement and growth in skilled expertise are some of the factors contributing to economic development. As a developing country, Nigeria’s quest to achieve economic growth is underpinned by the need to have technology embedded within the various economic sectors. Furthermore, a skilled and technologically adept workforce will be afforded an opportunity to improve their lives economically. Multi-National Corporations (MNCs) engaged in commercial activities within various developing countries have often contributed significantly to technology and skills- set transfers into the local economies. As Nigeria intensifies its relationship with China, Chinese MNCs continue to be embedded into the Nigerian economic space. Even as activities of MNCs increase the question of whether Nigeria is benefitting in terms of technology transfer from these MNCs begs to be asked. The aim of this study is therefore to assess whether Nigeria is gaining new technology from Chinese MNCs operating in Nigeria. This study therefore attempted to answer the question, “What is the prevalence of international technology transfer by Chinese firms into the Nigeria government construction sector?” Data for this study was based on both primary data, obtained via interviews, as well as secondary data, obtained from reports, government publications, journals, books, newspaper articles amongst other documentary sources. The research conducted would be beneficial to both academic enthusiasts as well as policy makers in assessing various effects technology transfer by MNCs operating within the local economic sphere.

 

CHAPTER ONE

INTRODUCTION

 

1.1 Background of the Study

 

Nigeria is in constant need of infrastructure to meet its basic needs as well as achieve sustainable economic growth. Being a middle income economy, Nigeria’s construction sector is a vital component of the country’s economic growth. With a rising population infrastructure demand for schools, hospitals, commercial spaces, roads as well as urban residential housing has increased. In this regard the Nigerian government has set out goals in infrastructural development by engaging expansively in the construction sector.

Nigeria has had a long relationship with China since attaining independence in 1960. However, the relationship became more cemented after 2002 with deepening of economic relations between the two countries championed by the former President Obasonjo. The former President as well as the then Chinese Premier Wien Jiabao, reiterated in a 2005 meeting in Beijing that they would strengthen bilateral relations in agriculture, telecommunication and infrastructure construction (Xinhua, 2005). In 2013, the then newly elected President Goodluck entered into a bi-lateral agreement with the Chinese Premier worth five (5) Billion US dollars. The agreement was to strengthen boost development in industrialization and energy sectors (BBC, 2013).

Nigeria has experienced an influx of Chinese firms into the local economy and more so in the construction sector. Chinese firms have changed the local landscape of Nigeria’s urban centres with landmark buildings and notable construction projects (Thuita, 2013). This is as a result of several contracts entered into by the Nigerian government and the China Development Bank to fund construction various construction projects. As a result, several construction projects have been undertaken and provided ample low and medium priced housing in the Nigerian housing sector. Several other projects have been financed by China in the same fashion. (Aid Data, 2006).

Rapid industrialization and technological advancement have continued to be an agenda for Nigeria In its quest to achieve economic growth. Indeed, technological advancement and presence of specialized skills within an economy are the backbone of economic growth for any developing state. Furthermore, technological advancement is beneficial to a third world economy due to increased production, increased exports, job creation, jumpstarting innovation amongst other advantages (Kvochko, 2013).

Technological advancement is usually preceded by innovation, research and development funded by the state, private sector or other non-state actors. However, technology transfer from foreign firms and Multi-National Corporations are viewed as one of the most effective means of obtaining technology since home-grown technology can be a costly affair. Technology transfer is described “as the process through which knowledge relating to transfer of inputs to outputs is transferred into entities within a country from sources outside that country.” (Wahab, 2014) In order to avoid risky ventures, governments therefore invest in beneficial relationships with MNCs and other foreign firms in order to achieve technological transfer which translates into technology being transferred into the local market (Harrie & Percy, 2007).

Transfer of the said technology is usually realized through contractual agreements, trade in products, trade in technology and inter-state movements of persons with expertise. It is hardly ever achieved as a by-product of interaction by MNCs with the economies in developing countries. In some instances, however governments of developing countries host MNCs with the hope that some of the technology employed by the companies will be “spilled” over into the local market and effect advancement in technology that will eventually manifest in economic growth (Harrie & Percy, 2007). Furthermore, successful technology transfer often depends on the host government taking deliberate steps to ensure that transfer takes place by creating a conducive environment to ensure that it does indeed occur. In other instances, the technology at hand is too advanced for the underdeveloped economy and thus cannot be effectively absorbed and utilized locally (Wahab, 2014).

With the entry of many MNCs, the government grapples with the daunting task of nabbing the most favourable contractual agreements to the Nigerian economy. It is unfortunate that technology transfer may not occur where the elaborate terms have not been negotiated with the MNCs by the host country’s government officials. In these regard, Nigeria in tandem with the rest of the international community has put in place regulations to tackle technology transfer. Legislation such as the Industrial Property Act 2001, allows for private corporations to transfer technology via contractual agreements with the state providing an oversight role (Nigeria Law reports, 2001). Other bodies that are intricately involved in technology transfer into the country include Nigeria Industrial Property Institute (KIPI) that scrutinizes what technology is brought into the country (Nigeria Legal Resources, 2011).

China has made deliberate efforts to ensure technology transfer to its African partners. Through the initial agreements set out through the Forum for China-Africa Cooperation (FOCAC) annual meetings, technology transfer was outlined as a major theme that would characterize all the government partnerships. Nigeria was also expected to benefit in terms of technology from the intensified Nigeria-China relations (Nording, 2012). In line with this, National Treasury has also received funding from China in ‘continuance with economic and technical cooperation’ (Aid Data, 2010). Furthermore, Chinese MNCs have set up training centres in Nigeria for conducting technology training sessions. For instance, in 2016 the China Road and Bridge Corporation responsible for constructing the historic Standard Gauge Railway opened a railway training institute in Abuja. The institute has thus far trained several Nigerian youths on railway maintenance (Xinhua News Agency, 2016).

The entry of China into Nigeria’s economy as a key financier and development partner has drastically changed the character of Nigeria’s external debt. Though mega projects such as the SGR, Nigeria continues to accumulate its external debt to China which is currently the country’s largest creditor. According to a World Bank report, Nigeria’s debts to China have increased by 54% between 2010 and 2014 which has in effect elbowed out other creditors. The heavy debt accumulation from China has faced a lot of criticism from local politicians and civil society who question the viability of mega structures in the name of achieving rapid economic growth (Mungai, 2016).

More specifically Chinese firms have dominated the local construction industry and giving unparalleled competition to local firms. China currently controls over 60% of the current infrastructural projects. This has elicited an outcry from both local and other foreign firms who are agitating for a bigger stake in the local construction sector (Genasi, 2016).

1.2  Statement of the Problem

 

As the government grapples with the rising demand for infrastructure, China continues to fill in the gap by providing the much needed infrastructure through involvement in the construction sector. China has also proven to be a willing partner in ensuring that rapid infrastructural development is achieved by the Nigerian government and has willingly provided workmanship as well as the finance for the said projects. In assessing the extent to which China is involved in government construction sector, the danger of overreliance on China is a present reality even as debt rises to unsustainable levels. Chinese domination also bears the danger of stifling local firms and thus impeding growth of the local industry.

Amidst the growing concern over China’s increased dominance, there arises the need to assess the economic benefits that accrue from Nigeria’s interaction with China. One of the intended benefits of the interaction is technology transfer from Chinese MNCs into the partnering local firms, consultancies and government departments. This supposed technology transfer would then translate into technological advancement that would lead to economic growth. Furthermore, it is useful to equally examine the nature of technology transfer agreements between Nigeria and China and assess their success or failure.

 

1.3  Research Objectives: –

The following were the objectives of the research: –

 

1. To assess the existing policy frameworks regulating international technology transfer between China and Nigeria,
2. To assess the prevalence of technology, transfer by Chinese MNCs into the Nigeria government construction sector,

• To assess the perception of local professionals as to the prevalence of technology transfer by Chinese MNCs into the government construction sector.

1.4  Research Questions: –

 

The research project sought to answer the following questions: –

 

1. What are the existing policy frameworks regulating international technology transfer between China and Nigeria?
2. Is there substantive technology transfer from Chinese MNCs to stakeholders within the government construction sector?

• What is the perception of local professionals as to the prevalence of technology transfer into the government construction sector?

1.5              Purpose of the Study: –

 

Nigeria aims to achieve economic growth from her agreements with China. As a developing country engaged in international trade, one of the key means to achieving this growth is to ensure that technology transfer occurs from more technologically advanced economies. In this regard Chinese MNCs have become prevalent in the Nigerian economy and can act as a source of new and more advanced technology to the Nigerian economy. Therefore, the purpose of the study is to assess whether there is transfer of technology within the construction sector between the two countries.

1.6  Significance of the Study

 

There are two major realms through which the significance of the study can be highlighted.

 

1.6.1        Theoretical significance

 

Even with proliferation of Chinese firms into the local economy and specifically government projects; the impact of China on the local economy is yet to be fully appreciated. There is a marked increase in literature that focuses on China-Nigeria relations and its impact on economic growth. China will continue being a significant part of the Nigerian economy as manifested in construction of mega infrastructure and provision of development loans. Despite these developments, very little literature exists on technology transfer within from the MNCs into various Nigerian economic sectors. This study will be of assistance to those in the academic field who wish to continue in their study of the nature of bi-lateral interactions between the two states and the subsequent outcome as far as transfer of technology is concerned.

1.6.2        Policy significance

 

The findings of this study will be useful to policy and lawmakers in formulating and redefining legislation and regulations that touch on technology transfer from foreign entities particularly within the construction sector. Other stakeholders such as private firms, experts involved in issues of technology transfer will have a reference point on various factors that necessitate successful international transfer of technology.

• Theoretical Framework– Dependency Theory:

Dependency Theory was formulated in the 1950s by Raul Prebisch who was at the time the Director, UNEC in Latin America.

In Dependency theory, the world is dichotomized into two, that is, the core represented by the developed states and the periphery represented by the underdeveloped states. Andre Gunder Frank describes dependency as largely a problem created by capitalism. In this context, an imbalanced division of labour has been put in place by the developed world. The division of labour creates an exploitative relationship that is favourable to the developed nations who receive cheap raw materials and agricultural produce from the developing countries (Yergin & Stanislow, 2002).

ASIA AND POLITICS OF TECHNOLOGY TRANSFER IN THE DEVELOPING COUNTRIES  (A CASE STUDY OF NIGERIA)

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