International Technology Transfer (ITT) and Technological Capability Upgrading of Pakistan’s SME clusters Presenter Ahsan Munir

Layout of Presentation Definition of International Technology Transfer (ITT) Definition of Technological Capability Upgrading (TCU) Factors affecting ITT and thus TCU in a developing country Focus of factors affecting TCU in Pakistan Research Methodology General characteristics of researched clusters ITT initiatives taken by researched firms Findings Recommendations for facilitating ITT for TCU Ahsan Munir

1. Definition of ITT ITT in context of developing countries, such as Pakistan, has been described as: ITT covers international transfer of all forms of physical assets, knowledge and human capabilities for the manufacture of a product or for the application of a process ITT is a major source of TCU in firms, especially SMES, in developing countries Ahsan Munir

2.1 Definition of TCU TCU in context of developing countries, such as Pakistan, has been described as: The ability of a firm to buy, understand(assimilate), use and adapt (or change), and improve or create a technology for better value-added processes and products for existing and higher end markets Ahsan Munir

2.2 Phases of TCU in a Developing Country Ahsan Munir

3. Factors affecting ITT and thus TCU in a Developing Country Government policy Local development agencies International development agencies Academia Ahsan Munir

4. Focus of Factors affecting TCU in Pakistan Ahsan Munir

4.1 Focus of government policy SMEs policy focuses on business performance, access to different markets, quality, international accreditations, supply chain management However, there is no effort to identify technological capability of cluster(s) and their upgrading Ahsan Munir

4.2 Focus of local development agencies Focus of government development agencies, such as SMEDA, TUSDEC, TDAP, TVETA, have been generally to improve the operational efficiency of SMEs to make them cost competitive However, integration/ coordination among local agencies would help to upgrading existing SME clusters’ capabilities Ahsan Munir

4.3 Focus of international development agencies Various development agencies, such as UNIDO, JICA, individually focus on increasing productivity and quality of various SME industrial clusters Ahsan Munir

4.4 Focus of academia Again, local literature focuses on manufacturing SMEs to improve business performance, access to different markets, quality accreditation, supply chain management However, international literature has moved from focusing on operational efficiency to TCU for sustained competitiveness Ahsan Munir

5. Research Methodology Select leading SMEs which have been in existence for more than twenty years Interview SME executives for ITT initiatives Analyse data at cluster and cross-cluster level Ahsan Munir

6. General characteristics of researched clusters Ahsan Munir

7. ITT initiatives taken by researched firms Industrial cluster Name of firm ITT initiative ITT initiative type (process, product, managerial) Factor(s) affecting ITT initiative Outcome Constrain for ITT initiative Enabler for ITT initiative   Leather cluster Firm A Setting up of production line Process upgrading Existing workforce not trained on modern lines Hiring of foreign consultants to train local workforce Increased productivity improved quality Sports goods cluster Firm E Hockey manufacturing Expertise not available within firm or cluster Collaborated with customer to train local workforce according to their requirements Secured existing market Pre-stretched leather football manufacturing New, mature product introduction in firm Addition to product portfolio Artificial leather football manufacturing Collaborated with customer to train local workforce according to their requirement Firm F Sports shoes manufacturing Product upgrading New product New customers Firm G Fair trade certification Managerial upgrading Hired foreign consultant to achieve it Football manufacturing Collaborated with German customer to improve manufacturing process Process improvement New customer Surgical instrument cluster Firm I FDA approval Hiring of consultant, internal R&D Firm K Improved products Collaboration with German customer Improved productivity, quality Collaboration with Japanese customer Own brand name in Japan New market Ahsan Munir

8. Findings Most of ITT initiatives involved transfer of process technology for improved productivity and quality Few ITT initiatives involved product transfer, but firms have not been able to improve them Some ITT initiatives involved international accreditations against targeted markets Firms identified customers and international exhibitions as source of ITTs However, initiatives did not show local development agencies or academia cooperation Also, firms cited lack of government support in identification of suitable technology, its acquisition and exploitation for process/product upgrade Ahsan Munir

9. Recommendations for facilitating ITT for TCU First, suitable sectors/ clusters for TCU need to be identified Second, their technological capability levels needs to be identified/ categorised Third, it needs to be determined if these sectors /clusters need to go for capacity increase/ product portfolio increase or for better value-added processes and products Fourth, suitable sources of ITT be identified Fifth, suitable infrastructure needs to be identified and put in place to acquire the requisite technology Sixth, HR should be identified and trained to understand how this imported technology functions Lastly, organisational changes such as new production methods, new production layout, new marketing skills need to be put in place to absorb and exploit new technologies Ahsan Munir

THANKS Ahsan Munir