report that nearly 50 percent of techno-parks never reach viability and nearly half of those that do are forced to diversify from research- based activities into other types of functions.<sup>51</sup> The record of public technology institutions in enhancing industrial productivity is generally not impressive. In many cases, research institutions have tended to be science (pure research) rather than demand-driven In some, governments have made them ‘mission oriented’, pushing advanced technologies that have little relevance to industry or little chance of commercial application. SME extension services have not been market-driven, but tended to be passive and bureaucratic. The granting of large research subsidies has sometimes added to the profits of large companies that would have undertaken research in any case. However, public policy intervention has made some difference in this area as in Korea, Taiwan (China). In an appropriate incentive framework, technology institutions can make a significant contribution to technology upgrading.<sup>52</sup> In some countries, with government funding drying up, such institutions have become more market-oriented and even earning income from the sale of their services to firms.<sup>53</sup>

# _World Bank projects_

59. A 1995 OED evaluation of the World Bank’s lending for industrial technology in six countries found mixed results.<sup>54</sup> In three countries, the World Bank projects had limited impact. In Hungary, impact was limited because of distortions in the industrial and incentive environment. In Mexico, while the project facilitated the formulation of a new technology policy by financing a study, it failed to achieve its main objective, i.e., promote R& D in the private sector and privatization of research institutes. In Indonesia, while the project helped enlarge the skill base by sending graduates abroad for higher training, it did not enhance the technological capabilities of Indonesian industry. Indeed the impact was perverse because the project focused on some protected, inefficient, socalled “strategic” industries and thereby helped divert scarce skill and training resources from institutions that were geared to serving the technological needs of the private sector.

60. Projects in India, Korea and Spain were relatively successful. In India, the project assisted the private-sector industrial enterprises in acquiring technology from abroad, the innovators to have access to venture-capital funds, and a number of research and development institutes to direct their efforts towards the needs of industry. In Korea, three technology loans that financed KTDC (Korea Technology Development Corporation) contributed to promoting R&D activities in SMEs. Finally, in Spain, the project was, to some extent, instrumental in encouraging and promoting efforts by CDTI (Centro para el Desarrollo Technologico Industrial) to develop new processes and products, and to bring them to the point of commercialization.

> 51 Luthria (2000).

> 52 Iqbal and  Urata (2001).

> 53 In India, following the restructuring of the Center for Scientific and Industrial Research (CSIR) network of institutions, contractual research incomes went up from negligible to as high as 70 percent of total revenues in some cases. These institutions have not only been able to assist firms through joint problem solving, but by virtue of having weaned themselves from government support have been able to survive the massive budget cuts that are symptomatic of research funding world-wide.

> 54 Najmabadi and Lall (1995). The study covered India, Indonesia, Hungary, Korea, Mexico and Spain.

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