9 Demerits (negative implications) of Technology transfer
- It leads to technological unemployment. This is because it usually tends to be capital intensive yet developing countries are labour abundant. The machines replace labour hence unemployment.
- It leads to emergence of private foreign monopolies. Dependence on technology transfer through multi-national corporations can easily lead to creation of monopoly tendencies. This increases consumer exploitation as private foreign monopolies restrict output and charge high prices with the aim of maximizing profits.
- It leads to rural -urban migration. Transfer of technology is usually concentrated in urban areas. This attracts people from rural areas due to better services resulting from the use of better technology hence rural urban migration and its negative consequences.
- It discourages local initiatives and the, development of appropriate technology. This is because the local investors tend to lose the creativity and copy the expensive foreign technology. This undermines the development of the local small scale industries with limited capital.
- It promotes income inequalities in the economy. Dependence on imported technology provides employment to only a few urban skilled individuals there by leading to income, inequality, For example computer experts.
- It leads to unfavorable balance of payments in the economy. Technology transfer consumes the scarce foreign exchange and it leads to continuous importation of spare parts from developed countries. This forces developing countries to borrow externally hence increasing foreign exchange outflow in form debt repayment.
- It leads to profit repatriation. Technology transfer by foreign investors encourages profit repatriation as foreign investors take back the profits made to their home countries instead of re- investing them in the countries where they operate. This leads to low capital accumulation in the economy.
- It leads to over dependence of the economy on developed countries. This is in form of continued Importation of spare parts and expatriates from developed countries. This increases foreign dominance and control of the economy in terms of resources and economic decisions through direct economic dependence.
- It leads to over exploitation of resources. This is because private foreign investors may take advantage of the imported efficient technology to exploit the resources with the aim of maximizing profits. This in the long run leads to negative externalities like environmental degradation and depletion of natural resources hence failure of the economy to be self-sustaining in the long-run.
CATEGORIES Economics
TAGS Dr. Bbosa Science
