In the world of today no country can be sure of its economic progress and prosperity without acquiring, if not mastery, at least sufficient competency in science and technology. Similarly competitive survival or growth of a business firm depends on how superior its internal technological environment is as compared to its rivals. Insensitivity to the acquisition of science and technology leads to dependencies of all kinds.
There are three stages in the acquisition of technology: (1) identification, (2) transfer and (3) internalization. The channels of acquiring technology are foreign direct investment, subsidiaries, joint ventures, turnkey contracts and licensing agreements. The agents of acquisition are government, non-government and business organizations.
This dissertation is concerned with the second stage i.e. transfer of technology trough licensing agreement by business organizations of a LDC like Pakistan.
Although there are other channels of technology transfer but licensing agreement is not only a separate channel but also common to all other channels.
The efficiency of the transfer of technology depends, besides some other factors, on the terms on which the technology is made available. These terms, as appearing in various clauses in the agreements, indicate the bargaining strength of the parties; the importance attached by the parties to these terms, the legal framework within which the government allows the inflow of technology; and the care and diligence put in by the regulatory agencies of the country concerned.
A large number of studies have analyzed the terms of technology transfer from developed to less developed countries. But almost all were restricted to two broad categories of clauses, viz. the restrictive and remuneration clauses. No attention was paid to clauses dealing with such matters as the age of the technology; suitability of the licensor to transfer the technology; secrecy; post termination matters; sub-contracting and sublicensing; exclusivity and non-exclusivity; training; quality control; indemnity; improvements and their grant back.
This dissertation is an exploratory effort to break the ground for studying the licensing agreements as a whole. The contents of the clauses and their incidence found in the licensing agreements in Pakistan have been studied.
The main conclusions drawn from this study are that technology is still being transferred on terms which are not conducive to the technological development of Pakistan. Although explicit restrictive clauses such as tied purchases and export restrictions are not found in the Pakistan agreements, due to the requirements of registration, the objectives of heir inclusion may still be achieved by licensors through quality control and exclusivity and territorial restrictions. Restrictions on subcontracting, sublicensing and secrecy appear to hamper the development of vendor industries and hence the diffusion of imported technology.