Innovate to Elevate: Multi-Stakeholder Partnerships for Promoting Higher Economic Value at the Regional Level
Description
Economic transformation is marked by a shifting from low-value raw materials to highervalue manufactured products. By investing in technological advancements, developing economies will be able to provide higher economic value within global value chains. However, many developing economies face challenges due to limited access to modern technologies, resulting in exports predominantly comprising raw or semi-finished goods.
Modern technologies could be acquired through in-house research and development or licensing agreements, another option is acquiring technology through Foreign Direct Investment (FDI). However, this presents its own challenges. Many developing countries lack "absorptive capacity" – a skilled workforce, adequate infrastructure, and a strong knowledge base. This makes developed countries hesitant to transfer their technologies, fearing competition or insecure technology practices (leaks or breaches).
Despite many internal measures that developing countries need to undertake, developed countries' role in transferring and accessing technology is fundamental. However, this role is hardly evident in the developed countries’ commitments in various international cooperation and fora, whether binding or non-binding. Although, as stipulated in Article 66.2 of the TRIPS Agreement (Trade-Related Aspects of Intellectual Property Rights), developed countries are required to provide incentives for companies and institutions to promote technology transfer to developing countries, the implementation of these commitments sometimes hindered by changes in domestic policies or related to nonbinding fora such as the G20 and APEC. The lack of sanctions for non-compliance in these fora result in developed countries not being obligated to fulfill these commitments.
In the longer term, successful technology transfers must also be accompanied by increased mutually beneficial cooperation and enthusiasm from higher-income countries to utilize these value-added products. Developing countries should synergize efforts to avoid unnecessary competition. Strengthening Regional Value Chains (RVCs) enhances competitive advantages, enabling countries to complement each other. As regional economic powerhouses, it is crucial to establish division of labor and responsibilities, allowing countries to specialize in products where they have a competitive advantage. This collaborative approach in production and marketing minimizes competition and promotes their respective strengths. By working together, developing countries can share production insights, simultaneously enhancing their industrial capabilities through specialization based on comparative advantage and contributing to specific product creation.
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