RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/WGTTT/M/23 
15 May 2008 
 (08-2234) 
Working Group on Trade and Transfer of Technology 
Twenty-Third Session  
 
 
 
NOTE ON THE MEETING OF 10 MARCH 2008 
 
Chairperson:  H.E. Mr. Kwabena Baah-Duodu (Ghana)  
  
 
A.
 ADOPTION OF THE AGENDA .........................................................................................................1  
B. ELECTION OF THE CHAIRPERSON .................................................................................................1  
C. ANALYSIS OF THE RELATIONSHIP BETWEEN TRADE AND TRANSFER OF TECHNOLOGY ..............1  
D. ANY POSSIBLE RECOMMENDATIONS ON STEPS T HAT MIGHT BE TAKEN WITHIN THE 
MANDATE OF THE WTO TO INCREASE FLOWS OF TECHNOLOGY TO DEVELOPING 
COUNTRIES ............................................................................................................................... ...3 
E. OTHER BUSINESS .........................................................................................................................3  
 
 
A. ADOPTION OF THE AGENDA  
1. The agenda contained in Airgram WTO/ AIR/3159 of 26 February 2008 was adopted . 
B. ELECTION OF THE CHAIRPERSON  
2. Following the consensus at the General Council meeting held on 5 February on the slate of 
the names of Chairpersons for the various WTO bodi es, Members formally confirmed the re-election 
of Ambassador Kwabena Baah-Duodu of Ghana as Chairperson of the Working Group. 
C. ANALYSIS OF THE RELATIONSHIP BETWEEN TRADE AND TRANSFER OF TECHNOLOGY  
3. The analysis of the relationship between trade and transfer of technology continued on the 
basis of a study, recently conducted by the World Bank, entitled " Global Economic Prospects:  
Technology Diffusion in the Developing World" .  In that context, the representative of the World Bank 
made a presentation on the study.   
4. While underscoring the critical link that technology could provide in contributing to 
sustainable economic growth and in helping to reduce poverty, the study took an in-depth look at recent trends in technological advancements and how various factors influenced the diffusion of 
technology in developing countries.  It highlighted the central link between technology and innovation, two critical drivers of economic growth.  While noting the large technology gap that still 
existed between rich and poor countries, the study found that it was rapidly narrowing due to a 
number of reasons, including the shortening of technology life-cycles, increasing internet 
accessibility,  improvements in the macroeconomic environm ent and regulatory regimes of developing 
countries, and the increasing ability of these countries to adopt and adapt to new technologies.   WT/WGTTT/M/23 
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  5. The study recognized that technology was a majo r driver of growth and often accounted for 
more than half of the increase in per capita income .  For example, in East Asia, virtually all of the 
economic growth over the 1990 to 2005 period was associated purely with technological progress.  
Similarly, in Eastern Europe and South Asia, th e high rate of technological progress could also be 
attributed to this phenomenon.  It found that over the period of 1980 to 1992, in fast growing to the 
lowest growing economies, the contribution of technology vis-à-vis  capital investment was two thirds 
of the economic growth.  This underscores the cr ucial role of technology in countries’ economic 
growth.   
6. While noting the large technology gap that exis ted between the rich and poor countries, the 
study pointed to the fact that it was rapidly na rrowing as developing countries adapted pre-existing 
technologies.  The technology index in a country was based upon three major components:  
(i) scientific innovation and invention;  (ii) the pene tration of older technologies and (iii) pre-existing 
know-how and rate of literacy.  Comparing  the p ace of change of technological achievement between 
1990s and 2000s, it found that low-income countri es had improved their measurement scores on the 
technological index at a much faster rate than hi gh-income countries, primarily by adapting existing  
and lower-level technologies at a more rapid pace.   There was a clear flow of technology being 
generated in the rich countries, but flowing very  rapidly to the poor countries suggesting the rapid 
spread of technology.  In the 1880s, it took 100 years for a major invention in the rich countries to filter down to 80 per cent of the developing countries.  Today it only took, on average, 25 years to reach those levels.   
7. The study also found that four channels in the global market place were important drivers of 
technology diffusion, technological performance a nd productivity increases and therefore, enhancing 
economic growth.  These included;  trade, foreign direct investment (FDI), direct access and migrations i.e.  the movement of people.  Trade, especially imports, w as an important factor in driving 
productivity increases in developing countries.  In th at context, import competition directly forced 
firms to be more competitive thr ough the adoption of new technologies or become irrelevant in the 
global market place.  Cheap access to  cheap inputs was an important driver of total factor productivity 
and, therefore, growth in developing countries.  The research and development (R&D) content of 
imports was another important aspect in this regard .  A number of studies on the subject substantiated 
the fact that high-tech imports as a percentage of Gross Domestic Product (GDP), have been an 
indicator of technological advancement of a count ry.  In addition, exports-based economies could 
have a higher degree of technological advancement and hence productivity.  FDI is another channel 
which might affect total factor productivity as wh en foreign investors moved into a local economy 
they often brought with them technology, know-h ow, new ways of doing things, that result in 
improving the productivity of the ec onomy overall as well as their own enterprise.  Competition in the 
market place always forced the firms to adopt th e latest technologies.  Direct access, for example 
through the internet, was another important factor  in making technology much more available to 
producers in the farthest corners of the world.  Another important element that could contribute to 
total factor productivity was the diaspora and migration.  All said, these channels were not automatic in themselves.  A lot depended on the regulatory framework and the incentive regime of the host 
country.  These must be mutually supportive to best achieve the objectives set out in a country’s development strategy.  
8. The study went on to identify four dimensions of absorptive capacity that could be crucial in 
reaping optimum benefits from opportunities that th e global market place offered.  These included: 
appropriate macro-economic enviro nment;  financial structure and intermediation;  regulatory 
environment and governance and, basic/advanced t echnological literacy and education.  The basic 
message from the study was that there was a signi ficant improvement in the macro and the finance 
sector, but somewhat slower progress had been registered in the regulatory field and literacy in the 
developing countries that, consequently, hamper ed significant improvements in technological 
absorptive capacity.    WT/WGTTT/M/23 
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  9. The study recognized that each country needed to  customize its technology policies to suit its 
particular circumstances.  Stopping short of being prescriptive, it suggested some general policies that 
could positively contribute technological advances and f actor productivity.  In that regard, openness to 
trade and FDI and participation of  diaspora were crucial for technological change and for increasing 
total factor productivity.  In addition, a sound i nvestment environment, including sound intellectual 
property regime and macro economic stability were  important in allowing innovative firms to 
flourish.  Also important were steady and increa sing investments in basic infrastructure, roads, 
electricity and other communication networks.  Th is was where the Aid for Trade initiative could 
make a meaningful contribution.  Equally important  was the need for upgrading the quality and spread 
of education for creating absorptive capacity.   
10. Members welcomed the World Bank study as a positive contribution to the work of the 
Working Group and engaged in a useful discussion.  Information and clarifications were sought on 
various elements of the study, including on the technology life-cycles;  technology dumping by developed countries and what the multilateral trad ing system could do to reduce the technology gap 
among countries.  One Member pointed out that diffu sion remained the weakest link in the technology 
transfer process in most developing countries.  Recognizing the usefulness of such studies for the 
work of the Working Group, a suggestion was made  that other international organizations, including 
for instance, the Organisation for Economic Co-ope ration and Development (O ECD), be invited to 
make a presentation to the Working Group, especially  on how the international trading system could 
facilitate technology transfer.  
D. 
ANY POSSIBLE RECOMMENDATIONS ON  STEPS THAT MIGHT BE TAKEN WITHIN THE MANDATE 
OF THE WTO TO INCREASE FLOWS OF TECHNOLOGY TO DEVELOPING COUNTRIES  
11. Under the agenda item relating to the consider ation of possible recommendations on steps that 
might be taken within the mandate of the WTO to increase flows of technology to developing 
countries, Members continued their discussion on the revised version of the room document that had 
been tabled by India, Pakist an and the Philippines at the 17th Session of the Working Group.  In that 
context, Members reiterated their commitment to wo rk towards fulfilling the mandate of the Working 
Group.  Overall, the discussions were somewhat lukewarm and lacked effective participation by 
Members.  The Chairman stated that he would or ganize informal consultations in the coming weeks 
with some of the key players to explore ways on how best to make progress on this agenda item.  
12. India indicated that it intended to share its own experience in technology generation and its 
transfer at the next meeting of the Working Group.   
E. OTHER BUSINESS  
13. The Chairman , before closing the meeting, informed Members that the next meeting of the 
Working Group was tentatively scheduled for 11 June 2008.  
 
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