United Nations
Commission on Sustainable Development

Background Paper


Commission on Sustainable Development             Background Paper No. 22
Sixth Session
20 April - 1 May 1998


              THE ROLE OF PUBLICLY FUNDED RESEARCH AND
          PUBLICLY OWNED TECHNOLOGIES IN THE TRANSFER AND
          DIFFUSION OF ENVIRONMENTALLY SOUND TECHNOLOGIES

       United Nations Commission on Trade and Development 1/


I.     INTRODUCTION

A.   Background

1.   The objective of this study,  prepared with the generous support of the
Republic of Korea, is to take stock of the role, scope and relative importance
of publicly funded research and development (R&D) in the generation of
environmentally sound technologies (ESTs).  In this context, the study
explores the feasibility of implementing relevant provisions under Agenda 21,
reviews existing policies, including legal and institutional issues, and
suggests possible policy options and initiatives.  Its findings were discussed
at the International Expert Meeting on the Role of Publicly Funded Research
and Publicly Owned Technologies in the Transfer and Diffusion of
Environmentally Sound Technologies, organized by the Government of the
Republic of Korea, and held in Kyongju from 4 to 6 February 1998.  The results
of this meeting are being made available to the sixth session of the
Commission on Sustainable Development (CSD), to be held in New York in April
1998.

2.  The study was a cooperative effort of the United Nations Conference on
Trade and Development (UNCTAD), the Department of Economic and Social Affairs
of the United Nations (DESA) and the United Nations Environment Programme
(UNEP).  It was prepared pursuant to recommendations of the Commission on
Sustainable Development, at its fifth session, which concluded that: 

           "A proportion of technology is held or owned by Governments and
           public institutions or results from publicly funded research and
           development activities.  The Government■s control and influence
           over the technological knowledge produced in publicly funded
           research and development institutions open up a potential for the
           generation of publicly owned technologies that could be made
           accessible to developing countries, and could be an important
           means for Governments to catalyse private sector technology
           transfer.  Proposals for the further study of the options with
           respect to those technologies and publicly funded research and
           development activities are to be welcomed". 2/

3.  The application of new, resource-efficient and clean technologies holds
a key to environmental sustainability at both national and global levels.  In
this context, the adoption of ESTs is essential for countries in order to
maintain a balance between the objectives of development and those of the
environment.  Facilitating the use of ESTs in all countries calls for a
combination of measures involving a broad coalition of institutions from the
public and private sectors.  Technology transfer to developing countries has
traditionally been a complex and critical issue, which has not been resolved
satisfactorily at the international level.  However, with regard to ESTs, the
stakes are higher compared with other areas, given the urgent nature of global
environmental degradation and the degree of international commitments
reflected in the discussions and agreements at the United Nations Conference
on Environment and Development (UNCED) in 1992 and at the  "Rio+5" meeting,
held  in New York in June 1997.

4.   All major international agreements addressing global environmental
problems, ranging from the Convention on Biological Diversity to the United
Nations Framework Convention on Climate Change, and particularly the Montreal
Protocol and its amendments, contain specific provisions regarding
legislative, administrative or policy measures for access to and transfer of
technology. 3/   This is in line with the international recognition of
"global commons", "intergenerational equity" 4/  and the fact that economic
development and environmental degradation are closely linked. 

5.    According to the World Resources Institute, technological transformation
is a primary strategy for avoiding further environmental degradation.  It is
argued that "widespread, continuing development and adoption of ever less
polluting and more resource-efficient products and services" 5/  would be
able to contribute to the expansion of wealth and productivity, and at the
same time hold a key to environmental sustainability. 

6.   In several industrialized countries the development and diffusion of
environmentally sound technologies has clearly contributed to innovation and
the strengthening of economic competitiveness. 6/   Governments that have
recognized the dual purpose and importance of ESTs have put considerable
public resources and finances into R&D activities that may result in the
development of such technologies.  Nevertheless, the expectations raised at
Rio for a rapid diffusion of ESTs to all parts of the world, including
developing countries and countries in transition, 7/  have not been fully
realized.

7.  Within the United Nations, the discussion on the use of publicly funded
R&D and publicly owned technologies for environmental protection measures in
recent years sometimes focused on the conversion of military R&D to civilian
use.  Thus,  a report by the Secretary-General of the United Nations 
proposed, inter alia, that the technological capabilities of military
establishments including their R&D endeavours, laboratories, equipment and
expertise, be utilized for measures designed to protect the environment. 
Particular attention was paid to the reallocation of skills and capabilities
with regard to "dual-use technologies" from military to environmental tasks in
areas such as environmental monitoring, chemical analysis, cartography,
medicine, microbiology and radiology. 8/   The broad spectrum of the
technological capacities mentioned in the area of defence-related R&D in that
report provides some indication of the potential range of publicly funded
technologies in other areas.  However, so far, no systematic effort has been
made to explore the potential that publicly funded R&D could offer in the
generation, diffusion and transfer of ESTs.

8. The identification of appropriate mechanisms for the transfer of ESTs
raises a number of issues.  First, it is not known to what extent publicly
funded R&D leads to the generation of ESTs and whether such technologies meet
the specific ecological needs of all countries, particularly developing
countries.  Second, it is not clear under what conditions such technologies
could be successfully transferred to third parties.  Third, there are no
readily available mechanisms through which publicly funded technology could be
transferred to developing countries.  These issues will be addressed below. 

B.   Methodology

9.  This study draws on a number of case studies as well as a preparatory
review meeting involving the three cooperating agencies and a selected number
of experts.  Country case studies included studies on Brazil, Canada, the
Czech Republic, France, Germany, India, Japan, the Republic of Korea, the
United Kingdom and the United States.  This selection represents countries
with developed and developing economies, as well as one country with an
economy in transition, which are important producers and consumers of ESTs.  
Furthermore, three additional studies -- on the United States, France
(including the European Union framework) and the MERCOSUR countries -- were
carried out on selected policy and institutional issues dealing with the
transfer and commercialization of ESTs.  In an attempt to gain a better
understanding of the role of supporting institutions in the generation of
ESTs, a review of publicly funded R&D in universities was also prepared, using
as an example leading universities in the United States.  Existing provisions
under multilateral environmental agreements are only briefly described, since
they do not specifically refer to publicly funded or publicly owned ESTs.

10.   The concept of technology applied by this study includes knowledge
embodied in machinery and equipment, knowledge codified  in patents and
blueprints as well as tacit knowledge, including the special routines,
practices and know-how to manage production processes.  In much of the
literature, technology "diffusion" refers to the wider utilization of
technology, while "transfer" refers to technology that affects production and
to its transmission to another party.   In the international debate, there has
sometimes been a notion that differentiated between the "transfer" and
"commercialization" of technology.  In this understanding, "transfer" was seen
as a direct, even costless or preferential provision of technology, whereas 
"commercialization" of technology involved the sale or licensing by the owner
or producer of it.  As illustrated by the country case studies, governments
today often equate "commercialization" with the transfer of technology.

11.  As highlighted by the country case studies, there are no commonly
accepted definitions of "ESTs", although there are generally recognized
features of environmentally sound technologies, and an increasing recognition
that these distinguish them from other technologies. 9/   It should be
noted, however,  that because of the evolving nature of environmental
problems, ESTs have dynamic features in that what might be perceived as
environmentally sound today may not necessarily be sound tomorrow.  Equally,
any technology must be viewed in its socio-economic and cultural context. 
Thus, what is environmentally sound technology in one country may not be so in
another. 10/   Providing an exact definition of ESTs is, at this stage,
neither helpful nor desirable. 11/   For the purposes of the present study:

           "The terminology "environmentally sound technologies" refers to
           "clean" technologies which are low in impact on the environment in
           terms of pollution and/or high in energy-efficiency compared to
           other technologies currently in use.  Often,  ESTs are being
           introduced to alleviate the adverse impact of development on the
           environment. ESTs may be categorized as follows:
           -           end-of-pipe technologies designed for the treatment of
                       pollution;
           -           remedial technologies aimed at cleaning up damage or
                       reclaiming resources that were formerly degraded;
           -           process technologies producing goods or services with
                       lower resource consumption or waste generation;
           -           product technologies involving environmental
                       improvement through altered final or intermediary
                       products which are less polluting and recyclable." 12/

12. In the context of this study, "publicly funded ESTs" are understood as
those that are generated from R&D activities sponsored by the public sector. 
The results of publicly funded R&D may be disseminated through public
institutions or private firms, or a combination of both.  The ownership
structure, as is shown in this study, sometimes  involves complex models that
include both government and the private sector. 13/   In carrying out this
research work, answers to the following questions were sought:

-          What is the extent of public sector financing for R&D activities?
-          What are the range and types of ESTs developed as a result of
           publicly funded R&D activities? 
-          How are these technologies diffused or/and commercialized at the
           national level? 
-          To what extent are these technologies appropriate to third
           countries?
-          What mechanisms are required to facilitate the effective transfer
           of such technologies to developing countries and economies in
           transition?  


           II.     PUBLICLY FUNDED R&D IN THE GENERATION OF ESTs

13. This chapter provides data on the first two of our five basic questions
(paragraph 12).  Section A contains an overview of publicly funded R&D using
data from OECD sources 14/  and from the country case studies unless
otherwise stated.  Data in section B rely mainly on the case studies
undertaken for this study.

A.   The General Extent of Public Sector Financing in R&D Activities

14. The country case studies demonstrate that public funding remains a major
source for R&D activities, although in most countries in which case studies
were conducted, government■s share in gross domestic expenditure on R&D has
been declining in recent years. 15/   However, this relative decline should
not conceal the fact that it remains important in the countries under
consideration (see figure 1).  Moreover, in some countries in which the
government■s share in total R&D spending has traditionally been low when
compared with the private sector (Japan, Republic of Korea) it appeared to be
increasing in the early 1990s.  In the Czech Republic, the one economy in
transition that was part of this study, public funding for R&D is rising again
after having experienced a steep decline.  Finally, public, as compared with
private, R&D support tends to be considerably higher in developing countries
than in developed countries (over 80 per cent in one case).


      Figure 1:   The relative importance of R&D spending by governments
                  (1993-1995)

----------------------------------------------------------------------------
R&D/GDP                   Government share in total R&D expenditure
                 -----------------------------------------------------------
                         High              Medium               Low
                    > 66 per cent      33-66 per cent      < 33 per cent
----------------------------------------------------------------------------
High                                    Germany
> 2.5 per cent                          United States        Japan
----------------------------------------------------------------------------
Medium                                  France               United Kingdom
1-2.5 per cent                          Canada               Rep. of Korea
----------------------------------------------------------------------------
Low                      Brazil
< 1 per cent             India          Czech Republic                        
----------------------------------------------------------------------------


15. Governments, in general, are convinced that public support to R&D is
important for ensuring a competitive economy, and emphasize this fact
in public policy statements. 16/  Several of our country case
studies testify to this.  Such statements are not mere rhetoric, as
governments do follow up with public financing of R&D and with setting
priorities among different technological areas.  Even in countries
that emphasize the predominant role of private initiative, political
commitment to provide support to -key technological areas■ such as
information and communications technology remains strong.

16.       All the developed countries provide direct support to R&D carried
out in the private sector as well.  On average, the rate of public-
public versus public-private support in these countries remains
constant, i.e. a decline in the overall support to public R&D
institutions was paralleled by a decline in direct public R&D support
to private companies.  In developing countries, public R&D support
continues to go predominantly to public institutions.

17.        Public funding of R&D usually takes one of two forms:  general
support to national R&D institutions and laboratories that perform
research in areas according to their mandate and designation, or
direct funding of specific projects according to set government
priorities.  The latter could be carried out in public institutions,
universities, both public or private, or in private companies.  In
some countries, in addition to the federal government, state or local
governments provide substantial funding to R&D (e.g. Brazil, Germany,
Japan and the United States).

18.       On average, over the past decade, up to 40 per cent of annual
national R&D spending within a number of OECD member States was
publicly funded (see appendix I).  The average of national public
sector spending on R&D for the 15 EU member countries in 1993 was 39.7
per cent.  The equivalent figures were 39.6 per cent for North
America, 19.6 per cent for Japan and 36.2 per cent for the OECD as a
whole. 17/   While 1995 figures were lower (but higher for Japan),
they remain significant:  34.5 per cent for the OECD countries as a
whole, 36.1 per cent for the United States, 33.1 per cent for the EU
and 22.4 per cent for Japan. 18/   A high percentage of the finance
for R&D activities in a number of developing countries also originates
in the public sector. 19/   Figure 1 summarizes the relative
position of the ten countries covered in this study with respect to
the share of R&D in gross domestic product (GDP) and the share of
public funding in gross domestic expenditure on R&D (GERD). 

19.                  Data available on total expenditure on R&D for OECD
countries indicate that the rate of growth has declined in North
America, the European Union and the Asia-Pacific region, causing the
overall OECD R&D expenditure as a percentage of GDP to fall slightly
from 2.3 per cent in 1985 to 2.2 per cent in 1993.  The slight decline
in overall R&D expenditure and the more pronounced decrease in the
share of government funding of R&D in some OECD countries can be
partially explained by a decline in defence-related R&D activities. 
But public sector funding of R&D in general has also come under closer
scrutiny.  Nonetheless, as the case studies conducted reveal, the role
of the public sector as a source of direct funds for R&D activities
remains significant.  In addition, governments in many countries play
an indirect role in funding corporate R&D, for example through the
allocation of preferential financing and through tax incentives. 

20.                 All country case studies provide details on the
institutional framework that has been established to coordinate,
guide, control and channel public R&D funding to the scientific
community in the public and private sectors.  For example, in Canada,
these institutions range from the National Research Council to
Networks of Centres of Excellence.  In the United States, national
laboratories play a central role in publicly funded R&D alongside
public institutions such as the National Science Foundation that
provide funding to public and private universities.  In Japan, public
assistance for R&D supports the work of laboratories of national
universities as well as specialized public R&D institutes.  In the
Republic of Korea, there are various government-supported technology
development programmes conducted by ministries and government
agencies.  These are programmes available to private industries and
academic communities, designed to promote technological innovation in
general.  In the Czech Republic, the Academy of Sciences, although
downsized, continues to play a central role in public R&D.  The two
studies carried out under this project in developing countries, Brazil
and India, provide detailed evidence of government R&D programmes and
institutional capacity-building.


B.   The role and relative importance of publicly funded R&D in the
     generation of ESTs

21.       This section focuses on the significance of publicly funded R&D
in the development of ESTs and the range and types of ESTs developed
as a result of publicly funded R&D activities.  It also assesses the
extent to which the ESTs generated as a result of publicly funded R&D
meet the needs of developing countries and countries with economies in
transition.

22.        The findings of the country case studies show that the role of
publicly funded R&D in the development of ESTs is vital.  However,
isolating the data regarding the ratio of public funding for R&D
earmarked for ESTs proved to be a tedious exercise in many of the case
studies.  Even in the few countries that explicitly list technologies
for "environmental protection" as a separate category of funded R&D,
this category covers only a small percentage of ESTs.  Other ESTs are
found in fields as diverse as alternative energy technologies,
ecologically benign agricultural technologies or technologies related
to waste reduction. 

23.       Thus, in spite of the frequent use of the term -ESTs■ in
international forums and multilateral environmental agreements, the
concept remains elusive at the national level.  This point is
highlighted by the Brazilian study, which notes that:

           "The concept of ESTs is ... very little understood in all
           institutions visited or contacted.  Both in research
           institutes and in government agencies responsible for
           devising and implementing environmental and S&T policies,
           the technicians have difficulties in conceptualizing ESTs. 
           This obviously creates predictable difficulties in the
           classification of projects whose objective is the direct or
           indirect development of technologies being considered in
           this study."

Nevertheless, a notional idea of technologies that can be classified
as ESTs does exist.  The UNEP typology presented in figure 2
illustrates such an approach.


           Figure 2:  Example of a typology of ESTs  (Source: UNEP)

----------------------------------------------------------------------
Water pollution control   Technologies for water and wastewater
and water supply          treatment, water supply and water resources
                          management
----------------------------------------------------------------------
Air pollution control     Technologies for the control and treatment
                          of air pollution emissions (NOx, SOx and 
                          CO -- excluding greenhouse gases)
----------------------------------------------------------------------
Noise and vibration 
protection and abatement  --
----------------------------------------------------------------------
Solid waste management    Technologies for collection, transport,
                          storage, treatment, recycling and disposal
                          of solid waste
----------------------------------------------------------------------
Hazardous waste           Technologies for collection, transport,
management                storage, treatment and disposal of hazardous
                          waste
----------------------------------------------------------------------
Energy                    Technologies for alternative and renewable
                          energy supplies and for energy conservation
----------------------------------------------------------------------
Cleaner production        Integrated preventive environmental
                          strategies for processes and products to
                          reduce risks to humans and the environment
----------------------------------------------------------------------
Land and agriculture      Technologies related to the sustainable
                          development and conservation of land,
                          agriculture and natural resources, including
                          land remediation, soil conservation, mineral
                          extraction, biodiversity, agro-chemicals,
                          sustainable agriculture and afforestation
----------------------------------------------------------------------
Construction, building    Technologies related to engineering,
and engineering           infrastructure development and building
                          construction (the latter including
                          machinery, equipment or methods/techniques
                          of construction) which are environmentally
                          sound
----------------------------------------------------------------------
Global environment        Technologies for reduction of greenhouse gas
                          emissions, mitigation of global warming and
                          alternatives to ozone-depleting substances
                          (ODS)
----------------------------------------------------------------------


24. The case studies show that the role of the public sector in
the financing of R&D activities related to the generation of ESTs in
this broad sense is considerable.  The modalities of public sector
financing of such activities vary between countries.  There are also
variations in the policies that governments have adopted as regards
financing of the generation of ESTs.  Some governments have developed
clear policy guidelines not only on R&D financing, but also on the
innovative activities required by recipients of such funding and the
specific target areas requiring ESTs.  In contrast, one finds
countries where the public sector is to some extent active in
environment-related R&D, but does not provide clear policy guidance. 
Thus, several country studies found that while government support
programmes for the environment industry did exist, coordinated efforts
for the development, growth and market access of environmental
technologies and services were lacking.

25.    The multifaceted nature of ESTs makes it difficult to
provide accurate data on the proportion of public sector funding of
R&D activities which are directed at ESTs.  However, estimates of some
components of ESTs are available.  One source estimates the ratio for
energy research at 5.5 per cent for Canada, 3.9 per cent for France,
20.5 per cent for Japan and 4.2 per cent for the United States. 20/  
Public R&D spending directly classified as targeting "environmental
protection" is 0.6 per cent in the United States and 4.2 per cent in
France and Germany. 21/  In Germany, the share of federal funding
targeted at EST-related R&D activities in total federal R&D
expenditures was 2.25 per cent in 1996.  This marks an increase from
1.67 per cent in 1990.  However, these figures do not include funds
earmarked for other EST-related activities in fields such as energy
research and energy technology, innovation and improvement in basic
conditions.  Nor do they include EST-related R&D financed by the State
Governments (La"nder).  In India, 4.1 per cent of the entire 1994-1995
R&D expenditure was spent on protection of the environment.

26. Translating the above percentage numbers into absolute
figures reveals a considerable amount of public R&D spending. 
According to the OECD, many of its member States began to sponsor R&D
programmes for cleaner technologies in 1989 and 1990. 22/   By 1992,
these programmes alone were investing over US$1.5 billion and growing
rapidly.  The programmes ranged from funds directed at advanced and
engineering development of cleaner production and products to major
process changes.  The commercialization of these government-assisted
cleaner technologies is deemed successful.

27.  The country case studies reveal that a range of ESTs that could
meet the needs of developing countries and economies in transition
appear to be available in both developed and developing countries.  In
India, for example, publicly funded ESTs are found within a range of
each of the following classifications:  chemicals and allied, marine
chemicals, plastics, resins, paints, insecticides, pesticides, agro-
based, food processing, drugs and pharmaceuticals, leather processing,
metallurgy, building and construction, mechanical engineering,
instruments and devices, electrical, miscellaneous, and others.  In
Germany, the range of publicly funded ESTs which could also meet the
needs of developing countries include the development of
environmentally more friendly automobiles and a traffic management
system for urban areas, the application of biotechnology for arid
areas, the optimization of animal feeding and water management systems
for mega cities in developing countries, and technologies for
treatment and utilization of wastes.

28. Many countries included in the study have established
national institutions or ministries designed to coordinate
environmental activities, including those related to technology.  In
Canada, the Environment Technology Centre (ETC) of Environment Canada
was established as long ago as 1975 to provide specialized technical
and R&D support for the department■s activities.  In Germany,
environmental aspects, particularly environmental protection, are
major criteria in taking decisions on research funding.  The German
study shows that partly because of a reduction in public resources
available for R&D activities, the Government is now following an -
integrated research approach■ whereby research strategies are
formulated in close collaboration with private enterprises, taking
into account the needs of global markets and the export opportunities
for German enterprises.  To that end, R&D pilot projects in areas
where German enterprises have a comparative advantage are encouraged. 
In line with this thinking, the integrated research approach provides
incentives for the promotion of new technologies and the framework
necessary for their effective implementation.  Scientific institutions
are also encouraged through public sector funding to play an active
role in the targeted areas, which include ecological research,
research in the field of environmental technology and environmental
education.  Priority is given to the promotion of environmentally
sound technologies that allow a cleaner production process.  For
industrial sectors, priority is given to technological efforts that
lead to a sound management of materials inputs and outputs.  The
importance of integrating management, planning, innovation and
environmental protection features in the production process is
recognized.

29.  In the United Kingdom, several government ministries are
responsible for promoting the development and diffusion of
environmentally sound practices and technologies.  The Department of
the Environment, Transport and Regions, for example, carries out
programmes for energy efficiency and environmental technology best
practice.  These programmes aim at stimulating the adoption of cost-
effective technologies which have environmental benefits through
industry■s reduced use of raw materials and lower waste disposal
costs.

30. In the Republic of Korea, a noticeable increase in
government funding for clean technology development is observed.  The
country case study shows that almost every basic clean technology
project within each of four major categories -- product, process,
treatment and recycling -- was primarily supported by government
funding, even though traditionally R&D had mainly been privately
funded.

31.   In Japan, among the institutions specifically geared to
environment-related research is the New Energy and Industrial
Technology Development Organization (NEDO).  NEDO was established
immediately following the second oil crisis as a core government
institution for technological development.  Similarly, the Research
Institute of Innovative Technology for the Earth (RITE) was
established in 1990 in order to support -innovative environmental
technology development in response to global warming■.  At present,
there are 16 national R&D institutes focusing on environmental
technologies alone.  Local public institutes are also active in this
respect.


      III.     PATTERNS AND MODALITIES FOR THE TRANSFER AND
               COMMERCIALIZATION OF ESTs

32.       How are ESTs diffused and/or commercialized and what mechanisms
exist to facilitate the transfer of such technologies to third
countries?  This chapter describes established patterns of transfer of
publicly funded R&D in the area of ESTs, including those related to
existing Multilateral Environmental Agreements (MEAs).  It takes stock
of a variety of models that exist nationally and internationally.
23/   It does so in an illustrative manner, as the scope of this study
does not allow an exhaustive coverage of bilateral and multilateral
initiatives.

33.      Some developing countries continue to face difficulties in
accessing foreign technology, including ESTs. However, technology
transfer is a complex process that cannot only be defined in terms of
access to technology (the supply side), but needs to be examined in
terms of the demand side as well.  On the demand side, for example,
the small size of most firms in developing countries as well as the
lack of support structures are impediments to obtaining technology. 
These issues are often neglected if discussions of policies for
promoting the transfer and diffusion of ESTs focus primarily on the
supply side.

34.  The above considerations led to a number of questions.  What
are the modalities, if any, relating to the transfer and
commercialization of publicly funded ESTs including relevant policies,
institutional arrangements and aspects, and existing regulatory
regimes relating to the protection, exploitation and diffusion of
these technologies?  Could governments influence this process?  What
are the implications of public-sector involvement in the financing of
R&D for the ownership, transfer and commercialization of these
technologies?

35. ESTs are different from other technologies, such as the new
information and communication technologies, for a number of reasons: 
(i)  compared with other areas, the stakes are higher in ESTs given
the urgent nature of global environmental degradation and the degree
of international commitment reflected in existing multilateral
environmental agreements.  In this context, it has been argued that
the state of the global environment is sensitive for the national
well-being of nations and that "environmental security" will become an
increasing concern in the coming years;  (ii) the framework for the
introduction of ESTs is  highly regulatory, ranging from areas such as
wastewater treatment to CFC substitution;  (iii) many governments have
been funding  R&D for the development of ESTs required to meet
specific needs, including environmental regulations;  (iv) unlike
other technological areas, very often the development of  ESTs
necessitates public "seed" funds as incentives for companies to
initiate EST-related R&D.  Firms by themselves are often reluctant to
develop ESTs if they are considered expensive and if the return is
difficult to foresee (for example, if regulations and standards are
vague);  (v) many ESTs are commercialized by specialized small and
medium-sized firms (SMEs). Often such firms must rely on support
structures to develop markets, both domestically and in other
countries.  Unlike in other technological areas, few venture capital
firms see a market in ESTs to provide the initial support needed; 
(vi) many ESTs are developed and receive public R&D funding with very
specific domestic applications and markets in mind and are thus not
automatically suited to other markets, particularly the specific
conditions and needs prevailing in many developing countries.  For the
above reasons, it is assumed that ESTs could -- theoretically -- be
treated differently from other technologies in terms of the modalities
of their transfer and diffusion. 

           Issues and policies

36. In most countries analysed in this study, government
policies and regulations play a role in the development, transfer and
diffusion of ESTs.  They stimulate innovation in ESTs through
regulatory policies that set environmental standards in areas such as
waste, water and emissions.  For example, the Clean Air Act in the
United States required 22 major metropolitan areas to improve their
air quality or lose federal funds.  This has led to considerable
research activity in finding less-polluting transportation
technologies. 24/   A number of ESTs have been developed by
traditional industries to meet regulatory needs. 25/  In some
countries, policies creating such demand are explicitly stated and
consistent;  in others, particularly the developing countries, a clear
policy framework could not be identified.

37.  All countries included in this study have established
institutions dealing with the promotion of ESTs and different models
of R&D community-enterprise cooperation without directly interfering
in the transfer and commercialization process.  Some governments have
also introduced incentive schemes designed to facilitate or accelerate
the development and application of ESTs.  These include tax
incentives, preferential loans, financial grants or similar measures
designed to support private sector use of ESTs.

38. Some governments exercise a strong level of control over the
selection of R&D projects and programmes to be funded,  and --
increasingly -- this decision is made in favour of funding EST-related
R&D.  However, in most countries government involvement does not
extend to the commercialization and transfer of these technologies. 

39. Nevertheless, other governments do exercise a degree of
control over technologies developed with government R&D funding, at
least for a limited period of time.  In the Republic of Korea, for
example, institutions which receive public funds for R&D programmes
own the intellectual property rights of the technologies developed. 
These could be national/public research institutes (NRIs), government-
invested institutions (GIIs) or government-supported research
institutes (GRIs), universities, research associations and other legal
entities.  Cooperative R&D programmes involving private companies and
GRIs or universities are common.  Since the 1970s, the Government has
adopted various policy measures to promote such cooperation and such
efforts receive top priority for research grants.  Some of the
technologies developed under public programmes are owned by these
research institutes.  The Republic of Korea study concludes that, as a
consequence, some direct or indirect government influence does exist. 
This applies also to R&D related to clean production technologies
developed under such programmes, which often fall into the category of
"publicly owned technology". 

40. A common trend in the transfer and commercialization of ESTs
reflected by several case studies is to be found in collaborative
efforts sought through networks, partnerships and alliances. 
Increasingly, the "research culture" and the "business culture", each
of which are different, 26/  join forces in the "demonstration" and
"prototyping" of new technologies.  Several countries refer to the
importance of such public-private partnerships involving a broad range
of economic actors ranging from universities and R&D institutions to
government entities and private companies.  While most such
initiatives are designed for technology transfer and commercialization
at the national level, a limited number of initiatives have been taken
to develop similar schemes for cooperation internationally, including
developing countries.

41. Many governments are conscious of the international
dimension of global environmental degradation and the role of ESTs in
addressing this problem.  This continues to be a major challenge
facing the international community.  A recent OECD study concluded
that:

           "Given that non-Member countries are predicted to triple
           their industrial output by the year 2010 as compared to
           1990, "direct application of cleaner production technologies
           outside the OECD area will be crucial for sustainable
           development". The OECD and its Member countries must
           therefore give attention to technology and information
           transfer." 27/

Accordingly, several industrialized countries are now developing
schemes under their official development assistance (ODA) to
facilitate the transfer of ESTs to developing countries, and some have
earmarked a proportion of their ODA for environment- and EST-related
projects (Germany, Japan and the United Kingdom, for example). 

42.        Canada promotes the transfer of ESTs through bilateral
agreements.  It has signed a host of Memoranda of Understanding on
Environment Cooperation with other countries.  While these agreements
are general in nature, they facilitate specific projects, some of
which involve technology transfer.  For example, one such arrangement
is the letter of intent with respect to the joint project known as 
"Watershed Management 2000 -- Improvement of Water Resources Management
in the State of Sao Paulo".  This project involves a partnership
between a large number of Canadian and Brazilian institutions.  While
some of the start-up funding originates in Canadian ODA (Canadian
International Development Agency (CIDA)) as well as "in-kind"
contributions by participating organizations, it is anticipated that a
successful start of the project will also attract other international
donors with interests in Brazil (World Bank, Inter-American
Development Bank). The project involves a broad range of support
measures to improve water management and treatment in the State of S■o
Paulo. 28/

43.        A number of the country studies describe  institutions,
bilateral cooperation agencies and non-governmental organizations
which have initiated similar programmes.  Many of these new
initiatives aim to increase North-South technology partnerships
through the encouragement of joint ventures, licensing, joint
technology development and the creation of information clearing-houses
and "match-making" services, needed to make both suppliers and
potential technology recipients aware of opportunities in the area of
ESTs.  Public support, including funding, is often a factor in the
development of these initiatives.

44.  Japan has developed an initiative for mitigating global
warming -- the Green Initiative.  Its objective is to promote and
accelerate the introduction and dissemination of technologies for
energy saving and non-fossil fuel energy technologies in developing
countries.  Under this initiative, various programmes for technology
transfer and financial assistance have been implemented or are in the
planning stage.  Similarly, the Green Aid Plan was developed in 1992
"in order to promote the transfer and dissemination of Japanese
technology and experience to developing countries of Asia". 29/  
The programme concentrates on efficient energy utilization and
prevention of industrial pollution.

45. The United States provides technical advice and facilitates
access to private financing.  The Country Studies Program Support for
National Action Plans assists developing countries and countries with
economies in transition in carrying out technology assessment as a
basis for developing national climate action plans. 30/   However,
two important mechanisms for the dissemination of ESTs by the United
States to other countries (including developing nations) are also the
Export-Import Bank and the Overseas Private Investment Corporation. 
The former provides companies with funds (e.g. credit, loans,
guarantees) for the goods and services of a company that seeks to
export.  The Bank will target certain regions of the world and
therefore give preferential rates and service to companies seeking
business there.

46.  Another example of a bilateral programme is the United
States-Asia Environmental Partnership Initiative (USAEP).  Under this
programme joint study groups were formed involving universities and
national laboratories from both regions with a view to facilitating
the transfer of advanced environmental and energy technologies through
private sector cooperation.  The initiative includes face-to-face
interaction between the different partner institutions as well as on-
site environmental assessments and training programmes. 

47.   In Germany, the Federal Government promotes the building of
scientific and technological capabilities of developing countries,
including in the area of ESTs.  Related projects, which have specific
research objectives, complement the development schemes of the Federal
Ministry for Economic Cooperation, which support, among other things,
the development and improvement of the scientific and technological
infrastructure (higher education, technology centres, research
institutes) in the developing countries.  Environment-related funding
and support focus mainly on energy research and energy technology, and
the study of tropical ecosystems.  Generally, cooperation in the field
of environmental technologies concentrates on developing and adapting
low-emission technologies for use in developing countries.  Important
activities are the development of ecologically sound manufacturing
processes, sewage and waste treatment, as well as studies of soil and
air pollution.

48.  One example of public-private cooperation at the
international level is the Technology Partnership Initiative (TPI) of
the Department of Trade and Industry in the United Kingdom.  The TPI
was established to promote technology cooperation in the area of ESTs
between British and developing country firms.  Its main aim is to
promote direct access by businesses from developing countries and
newly industrializing economies to information on environmentally
sound technologies available in the United Kingdom.  It has
established several criteria for ESTs:  they have to be affordable; 
they have to be appropriate to the needs of a wide range of
industrializing developing countries;  and they have to enable
businesses operating in developing countries to grow in accordance
with sustainable development principles. The main mechanisms of the
TPI are to expand existing channels of communication between United
Kingdom businesses and those in developing countries; to provide
information about the opportunities for joint ventures and other forms
of partnership;  to make available to businesses in developing
countries case studies and guides to best practice;  and to provide
information on technological solutions and techniques and
demonstration of leading-edge technology.  The Initiative also covers
environmental management and training and sources of finance.  It has
sponsored seminars and supported the work of international
organizations (UNEP, UNCTAD) in these areas.  Furthermore, it
identifies United Kingdom companies prepared to part-finance
training. 31/

49. There are a limited number of other pilot projects,
mechanisms and programmes addressing issues such as financing of the
various phases of technology transfer, creating awareness, finding
partners, launching specific transfer processes and encouraging R&D
institutions to transfer technology.  Some of these are in the area of
ESTs, while others address technologies in a more general way. 
However, all of them could serve as effective models for the transfer
and diffusion of ESTs.  For example,  the United States Agency for
International Development (USAID) supported a five-year University-
Industry Linkages and Economic Development Program.  This project was
designed to ensure collaboration between Northwestern University in
the United States and the Autonomous University of Yucatan in Mexico,
focusing on linkages between the university and the local productive
sector.  Its objectives were to develop joint research capabilities as
well as an academic programme in technology and organizational
performance, and to extend extension programmes of the Mexican
university to assist local manufacturers. 32/   

50.   Similarly, a Yale University initiative, in collaboration
with UNDP, supports the creation of public-private partnerships to
tackle water, sewage and energy problems in urban environments.  The
project emphasizes eco-efficiency, stakeholder participation and
replicability. It uses ODA to leverage private sector investments by
creating joint ventures while building an effective enabling
environment with solid supporting mechanisms at the same time. 33/

           Multilateral initiatives

51.  At the multilateral level, several initiatives are under way
as well.  Thus, the OECD and the International Energy Agency (IEA) are 
engaged as facilitators for technology transfer in various ways.  One
such example is the Climate Technology Initiative (CTI).  CTI was
launched in 1995 as a voluntary initiative by 23 OECD/IEA member
countries and the European Commission to support the technology-
related objectives of the Framework Convention on Climate Change.  It
generally aims at developing and disseminating climate-friendly
technologies.  In that context, joint research agreements involving
scientists from a dozen nations have been signed under this
initiative.  At the same time, partnership agreements with five major
international organizations have been concluded.  The IEA provides the
technical and staff support.  Activities have included regional
workshops in developing countries, and analysis of information centres
and networks to support the climate change negotiation process. 34/

52.     Another example of international cooperation is the IEA
collaborative effort in the area of energy technology R&D.  Each
project is set up under an -Implementing Agreement■, which provides a
legal contractual mechanism.  Within this framework, participating
countries choose the particular tasks in which they wish to be
involved.  There are currently over 40 active IEA Implementing
Agreements.  Research expenditures are directly coordinated through
the programme.  Countries achieve a multiplier effect on their
contribution, gaining access to results generated by all the partners. 
Implementing Agreements provide substantial leveraging of domestic
expenditure through, among other factors, sharing costs, pooling
resources, strengthening national R&D capacities and building a common
understanding of the technical basis of issues. 35/   International
cooperation may include non-member countries.  According to the OECD,
IEA collaborative activities have been at the forefront of research to
solve environmental issues related to energy technologies.  In this
context, new collaborative activities in the area of the environment
have been initiated, such as "GREENTIE" and "CADDET Renewables", which
are promoting the increased utilization of new environmentally benign
technologies to reduce greenhouse gas and other emissions. 36/

53.    In addition to the agencies that have prepared the present
document -- UNCTAD, DESA and UNEP -- several international
organizations carry out work relevant to ESTs within their specific
mandate.  Often these include information, advisory services or 
"match-making" activities.  For example, UNIDO, in cooperation with
UNEP, has launched a programme for National Cleaner Production centres
conducting in-plant demonstrations, providing training for cleaner-
production assessors, disseminating information and giving policy
advice.  Specialized programmes including technology transfer exist in
particularly polluting sectors such as the tanning industry. 

54.   The European Union (EU) provides public support for moving R&D,
even in the private sector, from knowledge generator to potential
users. It recognizes that SMEs often require financial assistance to
turn research results into marketable products. One type of financial
assistance is equity capital, and the First Action Plan for Innovation
in Europe (1996) attempts to deal with a number of barriers to the
commercialization of research identified by the Commission, notably
the high costs of initial appraisal and the need for ongoing
management and support.  When the venture capital market is not very
well developed, these factors create additional difficulties for SMEs. 
An Innovation and Technology Equity Capital "pilot scheme was launched
in July [1997] ... to lower these barriers by directly supporting the
development of cost-effective appraisal and management procedures". 37/
In addition, the EU has developed other programmes to move
"publicly" funded R&D, e.g. R&D supported by one of the EU■s "RTD"
projects, to users;  one is a programme to validate R&D results by
setting up pilot projects as part of a transfer of technology process. 
The programme, an extension of the SPRINT specific projects, is part
of the EU■s Innovation Programme and is aimed at transferring generic
technologies from one sector to another and encouraging the diffusion
of such technologies across EU regions.  It also seeks to foster links
between the enterprise sector and research institutions.  While the
above initiatives focus on EU countries and firms, the EU has
acknowledged that EU research policy must also take into consideration
the needs of developing countries.  The current EU research programme
has allocated funds for cooperation with developing countries and for
a regular exchange of knowledge between the EU and developing
countries. 

55. In 1984, an international research cooperation network in
the area of science and technology -- CYTED -- was created, linking 21
Spanish- and Portuguese-speaking countries from Europe and Latin
America. This programme, which is supported by several international
organizations, involves different models of cooperation between
universities, R&D centres and enterprises.  Its primary objective
today is to establish cooperation in research and technology
development and the transfer of R&D results to the productive sector. 
It includes sectoral activities relevant to ESTs in areas such as
energy conservation and biodiversity. 38/

56.  All major international agreements addressing global
environmental problems, ranging from the Convention on Biological
Diversity to the United Nations Framework Convention on Climate
Change, and -- in particular -- the Montreal Protocol and its
amendments, contain specific provisions regarding legislative,
administrative or policy measures for access to and transfer of
technology.  However, in reviewing initiatives to implement these
provisions, a general observation can be made that the use or
development of appropriate modalities/mechanisms to facilitate the
transfer and diffusion of ESTs has not been at the forefront of the
policy deliberations under these agreements.  The general focus is on
"information", in particular the identification of technologies that
are considered essential to the further implementation of the
conventions, accessibility to information on these technologies as
well as the modalities for the dissemination of this information.  
Concern about R&D basically related to the adaptability of available
technologies to the specific needs of countries rather than research
on, and development of, new technologies. 39/  

57.  For example, a significant part of the technology-related
recommendations adopted by the Basel Convention centred on the
establishment and networking of regional and/or subregional centres
for training and technology transfer.   Progress being achieved in
establishing regional and subregional centres for training and
technology transfer, and on organizational arrangements and the
funding situation regarding the respective centres, will be reported
to the Conference of the Parties. 

58.       The Conference of the Parties of the Biodiversity Convention
centred its discussion on the usefulness and modalities of
establishing clearing-house mechanisms to promote information exchange
on scientific and technical matters, policy and management issues, 
technology transfer  and capacity-building. 

59.      The Convention to Combat Desertification called for the
development of new technologies to stop desertification or cope with
its effects.  Those technologies  should be transferred to countries
in need of them and adapted to local circumstances.  In various
contexts, the Convention calls for scientific and technical
cooperation among the Parties to it in areas such as joint research
programmes, information collection and dissemination, technology
transfer, protection and utilization of traditional and local
knowledge and know-how, conservation of land and water resources, and
sustainable management of transboundary natural resources.  Scientists
world-wide are encouraged to contribute with their know-how and
research results to this effort.

60. Under the Framework Convention on Climate Change, surveys
are being conducted on technology transfer activities of member
countries, as well as on the terms of transfer of technologies that
are available and relevant to the implementation of the objectives of
the Convention.  Priority is given to methods for monitoring and
assessing the effectiveness of policies and implementation  strategies
to support the use, adaptation and diffusion of technologies.  The
Global Environment Facility (GEF) provides for interim funding for
specific well-defined projects.

61.   Under the Montreal Protocol, the -OzonAction Programme■ was
established as an information clearing-house in response to the
realization that:   (i) there is a clear need for technology transfer
to comply with a legally binding international agreement;  (ii) there
are efforts to develop national strategies through country programmes; 
(iii) there is an extensive effort to obtain and disseminate, on a
wide scale, information on the available technical options and sources
of technologies, equipment and chemicals;  (iv) there are extensive
training and networking efforts to build local capacities for ODS
phase-out;  and (v) there is financial support for the entire effort. 
A specific feature of the Montreal Protocol is the creation of a
multilateral fund specifically intended to accelerate the use of
alternative technologies to CFC gases in developing countries.  The
establishment of this specifically focused fund has been widely
regarded as a success, although there are a number of shortcomings.  

           Impediments to technology transfer and diffusion

62.    As shown in this report, a broad range of ESTs are generated from
publicly funded R&D activities that could meet the needs of developing
countries and economies in transition. In many respects, the needs of
developing countries, in terms of global environmental protection, are
not different from those of developed countries.  However, there are
differences in the capacity and capabilities of countries to apply
available ESTs effectively.  The constraints that firms face in
accessing ESTs available in both developed and developing economies 
originate from both supply and demand sides.  Among the supply-side
obstacles noted in the case studies are the protection or lack of
appropriate protection of intellectual property (as discussed in
chapter IV), cost factors (too expensive), lack of relevant
information to make the right choice, the fact that some ESTs are not
yet marketable or marketed, time-consuming licensing procedures adding
to the cost of the technology, and inadequate policy and incentive
measures in technology-producing countries to promote the diffusion of
ESTs. Some ESTs are costly, especially for small firms in developing
countries.  This is partly because the technologies may be in their
infancy or the main focus of the entities generating the technology
may be on research rather than the economic viability and
commercialization of the technologies generated.

63.   On the demand side, some of the major impediments include
financial constraints, lack of local capacity and the skills required
to acquire, adapt and assimilate technologies, lack of awareness and
relevant information on available ESTs, and the absence of
regulations, policies, incentives and the instruments of enforcement
to advance the utilization of ESTs. Firms, especially those in
developing countries, are not often aware of the range and types of
ESTs available and the benefits, in terms of efficient use of raw
materials, clean-ups and competitiveness, arising from the application
of such technologies.  In developed countries, the formulation of
explicit policies and the introduction of incentive measures
specifically designed to influence both producers and consumers to use
ESTs were instrumental in promoting their use.  It is evident that the
effective diffusion of ESTs is dependent on the local policy and
regulatory environment conducive to wider use of such technologies.

64.  The issue of affordability is often a major demand
constraint, particularly where the economic conditions of the country
to which the technology is to be transferred are very different from
those of the industrialized country where the technology has been
developed and applied.  For example, the size of the market and the
less sophisticated distribution systems and marketing channels may
mean that production costs per unit will be higher and a high volume
of production cannot be attained.  The technology as applied in
industrialized countries may well need to be adapted to these
different conditions, which will also incur additional costs. 
Overcoming the initial barriers to the introduction of a new
technology may require public sector funding, as deliberate efforts
are required in constructing an economic and policy environment
appropriate for the transfer and diffusion of ESTs and to sensitize
potential users to the advantages of acquiring, adopting and
assimilating ESTs.  Yet these are not always present, as the case
studies show.

65. Some country studies explicitly list impediments to the
transfer and commercialization of ESTs at the national level. 40/  
A German survey of private and public enterprises and public
institutions found that new products are too costly;  the technologies
generated are not readily marketable;   there is a lack of awareness
on the part of potential users;  and the procedure for obtaining
licences takes too long, thus adding to the cost. 

66.  Often, specific policies for the transfer and diffusion of
ESTs do not exist.  For example, the country case study for Brazil
found that "no discernible patterns for the diffusion of ESTs were
identified in the survey".  A similar observation was made by the
special study on the MERCOSUR countries.  The report of the Czech
Republic concluded that

           "the overall regulatory regime is rather underdeveloped. 
           The protection and exploitation of the results of R&D are
           subject to an internationally established legal framework
           that is in place....  However, there are no special
           instruments in place to stimulate the dissemination of
           results, the development of prototypes and/or the
           commercialization of the technological innovation."

In contrast, United States legislation, such as the Stevenson-Wydler
Technology Innovation Act of 1980, is explicit in its intention of
ensuring that publicly funded R&D is put to "commercial and useful
purpose."  However, the Bayh-Dole Act, also enacted in 1980, makes it
clear that the primary aim of publicly funded R&D is "to promote the
commercialization of public availability of inventions made in the
United States by United States industry and labour". 41/

67.       A difficulty in commercializing publicly funded ESTs on a global
level due to legal constraints is exemplified by a case study of fuel
cells in the United States. 42/   Publicly funded research in the
area of fuel cells, as an environmentally friendly technology for
automobiles, did not initially find a private firm ready to
commercialize this technology, which had been developed in a national
laboratory. Eventually, an international financial and manufacturing
consortium led by Australian investors entered into a Cooperative and
Development Agreement with the laboratory.  However, policies
governing publicly funded R&D requiring -substantial manufacturing■ in
the United States proved to be an impediment to the transfer of
technology.  The technology was finally commercialized through the
creation of an international consortium which involved an American
firm.

68.  As pointed out above, there are -cultural■ gaps between the
research communities and the private sector which partly explain the
small proportion of R&D results that are transferred to the productive
sector or commercialized. 43/   More often than not, the incentives
for the private sector to commercialize R&D results (market
penetration, profit and equity) are different from those that motivate
the public sector R&D institutions (publications, promotion and
tenure).  For instance, despite years of collaborative links between
university researchers and industry promoted through EU programmes
such as ESPRIT, interviews with both business and researchers show
wide gaps in the work cultures and in the expectations they have of
each other.  44/ 


           IV.     POLICY AND INSTITUTIONAL FRAMEWORK

69. The dominance of liberal approaches to economic management
has entailed a shift in the choice of mechanisms to encourage the
process of technology transfer.  Increasingly, the private sector has
been placed at the centre of the technology transfer process in
contrast to a state-oriented approach.  This new trend does not
preclude public authorities from assuming a role to influence the
transfer of publicly funded technologies, and the existing legal
regimes, with necessary variations, still include a number of public
policy  instruments that in the context of sustainable development
imperatives deserve further consideration. 

70. This chapter discusses policy, institutional and legal
issues relevant to the transfer of ESTs derived from publicly funded
R&D activities.  It describes selected policies and mechanisms for the
diffusion and commercialization of R&D results, with emphasis on
intellectual property rights regimes, including institutional
mechanisms in public entities.  It draws on surveys undertaken in the
United States, the  MERCOSUR countries (Argentina, Brazil, Paraguay
and Uruguay) and France.  The French study also considered related
policy measures of the European Union.  The key findings and
conclusions of these studies are summarized below.

           Main findings of the surveys

71.   The legal survey undertaken in the United States shows
that, for at least the past two decades, the goals of policies have
been to promote commercial development of federally sponsored
technologies and to leverage research funding into areas where United
States products have a strong comparative advantage in world markets. 
These goals pervade not only general statutory provisions applicable
to technology transfer across the spectrum of federally sponsored
research, but also more specific statutes concerning environmental
technologies.  The policy of the United States has strongly favoured
private appropriation of the results of publicly sponsored research
through primarily the patent system.  Two principal strategic
motivations emerge from a review of legislative provisions governing
the commercialization of  government sponsored research.  The first is
a desire to motivate the private sector to pick up where government
funding leaves off, so that research advances can be developed into
useful new technologies; 45/ and the second is the improvement of
the competitive position of United States firms. 46/ 

72.    Under existing law, federal agencies sponsoring research in
United States-based institutions are directed to permit the latter to
retain patent ownership, provided that these institutions are diligent
about pursuing commercial development of the inventions either on
their own or through licensees.  In cases where the sponsoring agency
retains ownership, the agency is directed to make technology transfer
to the firm level a priority and is permitted to grant exclusive
licences to private firms in order to promote commercial development. 
Regardless of who owns the patent rights, preference in the selection
of exclusive licensees is to be given to firms that agree to
manufacture substantially in the United States.  Sponsoring agencies
retain "a nonexclusive, nontransferable, irrevocable, paid-up license
to practice or have practiced for or on behalf of the United States
any subject invention throughout the world".

73.   In France, there is no specific legal regulation on the
commercialization of ESTs, with the exception of general provisions in
Law No. 95-101 of 2 February 1995, relating to the reinforcement of
the protection of the environment, which  introduced some new
principles to French law, and the regulations protecting the
environment in general, which limit or prohibit the use of certain
technologies. Nor does the French system provide for specific policies
concerning the commercialization of publicly sponsored R&D. 
Nevertheless, it is worth noting that, in the French system, publicly
funded research falls under two broad categories. The first relates to
research conducted directly by a public entity (state services, state
body or local community), in which case the results are the property
of that public entity;  and the second relates to research conducted
by private entities, acting on behalf of or with the financial support
of a public entity.  These categories apply to all R&D activities,
including those related to ESTs. 

74.  Since the mid-1980s, an important shift in the paradigm of
publicly funded R&D has taken place in the MERCOSUR countries. 
Increasingly, public sector R&D institutions are encouraged to recover
R&D costs through the appropriation and transfer to the productive
sector of the results of their R&D activities.  However, as in the
case of France, the appropriation and transfer of the results of
publicly funded R&D are not subject to a specific regime, but to
general rules originating in different legal regimes,  namely
constitutional and civil law, intellectual property, contract, labour
and administrative law.  These regimes, as applied at the national
level in each country, determine the general conditions for the
appropriation and transfer of publicly funded R&D results.  The
current trend in public R&D institutions in the MERCOSUR countries is
not simply to place R&D results in the public domain but, if possible,
to claim intellectual property rights and demand compensation for
their transfer. 

           Policy and institutional issues

75. The surveys of the regulatory and legal regimes governing
technology transfer in the area of ESTs in the United States,
France/EU and MERCOSUR countries have raised policy and institutional
issues that include a broad range of questions relating to foreign
access to technology, intellectual property rights and licensing.  In
this context, it was noted that the legal and institutional framework
of ESTs did not differ from technology in general and that ESTs are
subject to the same rules governing all results of publicly sponsored
R&D.  The United States is one country that has paid more attention to
specific policies governing the results of R&D in general.  In the
case of the other countries reviewed in the project, general
principles of law, either of a public or private nature, regulate the
matter.

76.  One issue raised by the study was that of the availability
of ESTs that are publicly owned.  The concept of "publicly owned"
technology is distinctively different from that of "public domain". 47/ 
The latter means that the knowledge is freely accessible and
usable, i.e. anybody can use it without authorization and
compensation.  In contrast, the concept of "publicly owned" technology
indicates that there exists some form of appropriation based on the
intellectual property rights (IPRs) held by the public entity. 
Because of the high cost of obtaining patents throughout the world,
however, it may be that many ESTs that are covered by patents will
remain unpatented in developing countries.  In cases where there are
no local patent rights covering the technology, it may be possible to
obtain the necessary technical information from publications, foreign
patent documents or government agencies, and put it directly to use. 

77. But even when patent rights do not compel developing
countries to go through foreign firms to obtain access to ESTs, there
may sometimes be technical advantages to collaborating with firms that
have developed ESTs commercially and have extensive experience with
these technologies.  In other words, neither public domain nor -public
ownership■ is equivalent to immediate mastering of the respective
technology.  The economic agent needs the technological capacity to
exercise those rights.  This issue of technology, theoretically placed
in the public domain, deserves further exploration, particularly in
the context of publicly funded R&D.  Here it is important to stress
that there are situations in which it might be in the common interest
of an R&D institution and of an economic agent to enjoy exclusivity in
the use of a technology developed by the former that has not been
protected in a particular country.  The lack of intellectual property
rights protection could be, in this particular case, an obstacle to
the utilization of ESTs.  In this instance, a case could be made for
considering the conferring of a special status on the transfer of ESTs
in order to protect the investment and the technology that otherwise
would not enjoy protection under traditional intellectual property
rights regimes.

78. As noted above, in a framework of increasing "privatization"
of public research, "publicly funded R&D" does not generally mean that
the results of the R&D are "publicly available", but that the results
could be subject to appropriation under patents or other titles held
by the entities that took part in their development. There is,
however,  a qualitative difference between technologies fully subject
to private decisions and those that may not be exclusively subject to
private decisions, the topic of this study.  It has been observed that
the public entity can still exercise some influence concerning the use
and commercialization of publicly funded technology.  For example, in
the case of the United States, which has undoubtedly a highly
elaborate legal regime on the subject,  the Government retains rights
to grant licences on reasonable terms if (a) the contractor fails to
take effective steps to achieve practical application of the
invention;  (b) such action is necessary to alleviate health or safety
needs;  (c) such action is necessary to meet requirements for public
use specified by federal regulations;  or (d) the contractor or its
exclusive licensee has either failed to agree to manufacture
substantially in the United States or is in breach of such an
agreement. 48/

79. Furthermore, in the United States, some statutes (including
the Clean Water Act and the Atomic Energy Act) provide for the
issuance of mandatory licences in cases where firms controlling the
patent rights are not willing to license certain technologies on
reasonable terms.  The statutory provisions and implementing
regulations make clear, however, that mandatory licences are a remedy
of last resort available only to parties that have been unable after
reasonable efforts to obtain a licence from the owner of the patent on
reasonable terms.  Even these limited provisions for mandatory
licences are extraordinary in the United States patent system, which
as a general rule entrusts patent licensing to the realm of private
bargaining. It could not be verified, however whether any such
licences have ever been granted.

80. In the other countries under examination, intellectual
property rights held by public entities are generally deemed a "private"
property of the State or of the parastatal institution, and
they can therefore be assigned or licensed through contractual
arrangements to third parties.  In general, there are no restrictions
on granting exclusive licences, or even assigning them to a
contracting party that has financed or co-financed the respective
research project.  The appropriation of the technology is subject to
the general regime governing intellectual property rights, and in this
context, compulsory licences are provided in line with the Agreement
on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

81. It was observed in several case studies that, in the
generation and commercialization of ESTs, there is a trend towards
partnerships or consortia in both the public and private sectors as
well as between the public and private sectors.  The following
paragraphs describe some existing mechanisms in public institutions in
the developed and the developing countries that could become important
vehicles for partnerships or consortia to facilitate the transfer and
commercialization of ESTs. 

82.  Universities play an important role in developing programmes
for the commercialization of technology that are generated through
publicly funded research.  For example, four private American
universities reviewed in this project -- Columbia, Harvard, Yale and
Stanford -- were found to have special mechanisms for the
commercialization of technologies.  These universities are renowned
for active collaboration between government and academia in
specialized fields relevant for the generation of ESTs. The four
universities have Offices of Technology Transfer and Licensing
established during the 1980s.  Each has the role of protecting the
intellectual property rights developed by their respective researchers
and the economic interests of the university, on the basis of the
federal laws governing publicly funded R&D.  Each institution is
allowed to determine how royalty fees, royalty sharing and other
compensation are allocated.  For example, Harvard operates its
royalty-sharing policy in its Office of Technology and Trademark
Licensing through a distributed allocation to the inventor
(researcher), the researcher■s department, the faculty and the
university in general.  The main federal legislation that guides
university policies in the area of publicly funded R&D is the
Bayh-Dole Act of 1980.  In this respect, the guidelines on university
technology transfer developed by the Council on Governmental Relations
(COGR) provide that "Universities should be extremely cautious in
considering foreign licensees, especially if the research was funded
by the United States Government.  For those inventions, all exclusive
licenses require the licensee, including foreign companies, to
manufacture products substantially in the United States".

83. In the case of the MERCOSUR countries, many institutions
that undertake and/or fund R&D have also established their own
policies and regulations on the appropriation and transfer of publicly
funded R&D results.  However, there is no general regime applicable, 
and, therefore, a high degree of decentralization exists.  In order to
define the legal status of a particular set of results of publicly
funded R&D, it will be necessary to determine the extent to which the
general legal regimes and/or specific institutional regulations are
applicable.  The policies adopted by public institutions involved in
R&D activities generally define the allocation of rights between the
institution and the research personnel, or between them and a third
party that has contracted the research.  Normally, the transfer of R&D
results to third parties is promoted without discrimination in terms
of nationality, capital, size or other characteristics of the
receiving companies.

84. In practice, however, the number of patents actually applied
for by universities and other R&D institutions, though growing, is
very small.  In the case of Brazil, the issue of intellectual property
rights is quite new for universities.  Each university defines its own
policy for the appropriation and transfer of R&D results. The general
approach is that such results are controlled by the universities
themselves.  When they are exploited through a licence by a third
party, the researchers may generally claim a participation in the
benefits.  In the case of Brazil, between 1988 and 1991, universities
and R&D institutions applied for 222 patents, less than 1 per cent of
patent applications made by residents of Brazil. The productivity of
such institutions in terms of patents per researcher has been
extremely low (less than one a year), with some exceptions. 49/

           ESTs and the TRIPS Agreement

85.  The prevailing paradigm, which favours the private
appropriation of technologies resulting from publicly funded R&D,
relates to the role of intellectual property rights in the transfer of
those technologies.  This points to the new features of IPRs.  As
highlighted in a recent study by UNCTAD, attitudes towards intangible
property are actually evolving. 50/   There appears to be an
emerging global consensus that unauthorized copying of copyrighted
material (software, music, films, etc.) and trademark products
(clothing, cosmetics and jewellery) for purposes of resale is an
illegitimate activity and should be eliminated.  Attitudes towards
creation, dissemination and ownership of technological information
(for example, production processes for pharmaceuticals,
biotechnological products) remain more divided.  Against this new
background, and in the light of a backdrop of growing concern over
differences and inadequacies in IPRs systems and of the difficulties
this situation posed for global exploitation of intellectual assets, 
countries committed themselves, in the Uruguay Round, to adopting a
set of universal standards of protection.  The Final Act, embodying
the results of the Uruguay Round, contains in annex 1C the TRIPS
Agreement. 51/

86. The basic principles of the TRIPS Agreement refer to
criteria and objectives regarding the contribution that the protection
and enforcement of IPRs should make to the promotion of technological
innovation and the transfer and dissemination of technology.  In this
new framework, patents are to be available for any inventions, in all
fields of technology.  One of the few justifications for excluding
patentability is for the aim of  avoiding "serious prejudice to the
environment".  The Agreement also refers to measures that countries
may adopt to protect public health and nutrition and to promote public
interest in sectors of vital importance to their socio-economic and
technological development.  These principles also provide that
appropriate measures may be needed to prevent the abuse of
intellectual property rights or practices which unreasonably restrain
trade or adversely affect the international transfer of technology.

87.   The strengthening of IPRs as a result of the implementation
of the TRIPS Agreement is likely to have a mixed effect on the
transfer of ESTs to developing countries.  On the one hand, stronger
and broader IPRs would enhance the bargaining position of technology
holders vis-a`-vis potential licensees.  On the other hand, the
implementation of stronger protection of IPRs in developing countries
may be a necessary condition for a transfer of technology to take
place.

88.  The TRIPS Agreement provides a number of  mechanisms aimed
at fostering competition and innovation and restoring market forces
when these are unjustifiably suppressed or distorted by the exercise
of patent rights.  One such set of mechanisms is dealt with under the
heading of other "uses without the authorization" of the patent-
holder.  Developing countries may require "uses without the
authorization" of the patentee on a variety of grounds, which are not
limited by the Agreement.  However, these impositions are subject to
conditions that attempt to balance the patentees■ interests against
those of the public, and these might constitute impediments to an
effective transfer of ESTs to developing countries. 

89. Both the public-interest clause and the measures to prevent abuse
(respectively stipulated in Article 8 of the TRIPS Agreement)
can justify resorting  to "uses without the authorization" of the
right-holder (compulsory licensing).  Article 31 requires the would-be
licensee to seek a negotiated licence from the right-holder and,
failing this, to pay equitable compensation.  The refusal to grant a
licence on reasonable terms and conditions could, in itself, justify
the granting of a compulsory licence. 52/   However, the
implementation of such provisions in practice remains to be analysed
and no actual cases were found in the preparation of this study.

90. The requirement that would-be compulsory licensees negotiate
seriously with right-holders to obtain exclusive licences on
reasonable terms should increase the pressure on patentees to
accommodate pricing and other strategies to local market conditions. 
This, in turn, should lessen the need for governments to seek
compulsory licensing in the first instance.  Thus, the TRIPS Agreement
does not limit the grounds under which a compulsory licence may be
granted.  It is useful to recall that Agenda 21 (Article 34.18.e)
suggested the adoption of compulsory licences in the field of ESTs to
prevent the abuse of IPRs, subject to the relevant international
conventions and to "equitable and adequate compensation".  Again, it
appears that this provision has not yet been applied and no cases were
found in the preparation of this report.


       V.     BUILDING NEW TRANSFER AND DIFFUSION MECHANISMS

91. The set of policies and measures that can be undertaken to
enhance transfer of ESTs needs to take into account the prevailing
policy orientation towards technology transfer, as shown in this
study.  Technology can be transferred through various channels such as
trade (purchase of equipment, final goods, licences and services); 
investment (foreign direct investment and joint ventures and
production);  and the use of scientific results available in the
public domain for the development of technologies within a firm.  The
importance of the different channels varies over time, involves the
recipient and the supplier of technology in different ways, and
requires different information and technological capabilities, and
hence different sets of policies. 

92.     An effective process of technology transfer is essentially a
process of  "innovation" in product, process, organization or
management routines for the firm adopting the new technology.  A
considerable body of literature dealing with the process of innovation
shows that this is fundamentally an interactive process. 53/  Firms
are stimulated to change through their interaction with other firms --
suppliers or clients -- research institutions, business associations
and other actors.  Product design and quality improvements,
adaptations required in order to utilize local inputs, and process
changes that increase efficiency and reduce costs, may all be
stimulated and in some instances supported through interaction amongst
users and producers or between producers and other actors in the
environment -- local or long-distance.  An effective process of
technology transfer, therefore, will require interaction between user
firms and the producers and/or adaptors of technology.  The policy
environment is also critical in stimulating innovation, since it
shapes the parameters within which decisions concerning the adoption
of a new product, process, organizational structure or management
routine are taken.  Developing appropriate policies will thus require
further study at the national level in those countries interested in
promoting the use of ESTs by locally based firms.

93.   A number of factors have to be considered. These include lack of
interest or stimulus on the part of the originating R&D institutions
in engaging in the technology transfer/commercialization process due
to cultural norms (researchers versus entrepreneurs), lack of
knowledge of the process, and lack of financing and institutional
support in-house for finding potential partners.  There are a number
of possible solutions to these problems, particularly if the
objectives are (a) to ensure that publicly funded R&D is
commercialized, and (b) to facilitate the transfer of ESTs to
developing countries and countries with economies in transition, thus
avoiding their falling further behind in meeting the goals of Agenda
21.  It should be noted that, in the developing countries, the vast
majority of firms are small.  Many are family-owned and have a
tendency to be risk-adverse, particularly when it comes to the
introduction of innovations based on unproven technologies.  Support
structures that provide assistance in training and in debugging will
have to be put in place where they do not now exist.  Most of these
firms have difficulty in securing loans from local credit
institutions, and financing will be needed to make change possible. 
Few have scanning and networking capabilities that would enable them
to access and evaluate technological information.  There is a need,
therefore, to develop a support structure designed to provide
information on ESTs available and ensure an effective transfer of
these technologies to SMEs.  Some of the broader mechanisms required
to facilitate the transfer of ESTs to developing countries are
discussed below.

94.  An effective transfer and diffusion of ESTs to developing
countries would thus require mechanisms that could cover the following
set of tasks:

           (i)         the identification of ESTs;
           (ii)        their acquisition;
           (iii)       the assessment of their utility to developing
                       countries;
           (iv.a)      the identification of potential users, most probably
                       amongst SMEs in developing countries; 
           (iv.b)      sensitizing them to the need to adopt environmentally
                       sound technologies;  and
           (iv.c)      creating an awareness of the accessibility of such
                       technologies and the benefits (financial, quality of
                       output, image/marketing, etc.) that they would bring
                       to the firm;
           (v)         to ensure the adaptation of these technologies to these
                       users at minimal cost;
           (vi)        to finance the process of adaptation;
           (vii)       to maintain contact with the users for follow-up and
                       debugging.

95.     A technology pool, such as an environmentally sound
technology rights bank (ESTRB), could be one potential solution to the
problem of identifying and acquiring environmentally sound
technologies, i.e. tasks 1 and 2 above.  Such a mechanism would
closely cooperate with and complement the existing initiatives and
networks described in chapter III of this study.  As shown in this
study, most technological breakthroughs in environmental protection
and conservation are of a proprietary nature.  An ESTRB would act as
an intermediary for proprietary ESTs by making them available to
developing countries under conditions to be negotiated on a case-by-
case basis.  As technologies may include both patented and unpatented
know-how, an ESTRB would have to acquire not only the patent rights to
but also the related enabling knowledge for each specific technology
in order to make possible the mastery of the technologies in
developing countries.

96.     While the technology owner, either private or public, would
retain exploitative rights in the industrialized regions, the
mechanism would aim to increase developing countries■ access to
environmentally sound technologies by:   (a) negotiating the
acquisition and diffusion of such rights with private firms and other
technology developers, including public institutions, on a fair
commercial value basis;  (b) accepting patents as donations from both
private and public sources;  and (c) initiating licences, commercial
development agreements and "use" agreements with suitable -users■ in
the developing countries, under conditions to be negotiated case by
case.  The success of such a mechanism will depend on, among other
things, reliable methods for the identification of available ESTs that
could meet the needs of developing countries and are affordable.  In
this respect, there is a need for methodologies to develop inventories
of ESTs and for the assessment of identified ESTs and their
adaptability to developing countries■ needs.

97.       The effective transfer of technology, however, does not depend
solely on the accessibility and the terms and conditions for the
acquisition of technology, as is often assumed, but also on local
demand conditions and, as stated in Agenda 21, on the prior "building
of technical and managerial capabilities".  An important element in
the building of local capability for transfer of technology and
innovation is the development of networks.  The conditions for
building such networks and possible structures are identified below:  

(a)        First, the technology in question would have to be assessed in
order to determine whether it will be usable by developing countries. 
It might be useful at this stage to put the originating research
institute into contact with a network of other R&D institutions in
developing countries which could assess the technology.  Research and
Technology Development Institutions (RTIs) that include local RTIs in
both developed and developing countries already exist. 54/   The
principal tasks of this network would be to assess the utility of ESTs
for potential users in the developing world (task 3, above), and
ensure the adaptation of these technologies to user firms (task 5). 
The bulk of the work on adaptation would be undertaken by local RTIs
in developing countries to reduce costs and ensure the capacity to
undertake debugging (task 7) activities as required by their clients. 
Partnerships within the network between RTIs in developed and
developing countries would provide additional capacity-building and
facilitate debugging and the further adaptation of the technology,
should these activities be necessary.  The network would work closely
with the private sector.

(b)        Second, adaptation and further development of the technology
might be required in order to move it from the laboratory to potential
users.  Here partnerships could be explored involving the originating
R&D institution and R&D institutions in those countries where a
potential exists for applying a technology.  Chapter III provides a
number of examples of such partnerships. 

(c)        Third, it would be necessary to encourage the development of
pilot projects at home and abroad to show potential users that a
technology is viable.  The initiatives by the European Union described
in chapter III could serve as a model for such projects.

(d)        Fourth, it would be necessary to support linkages between
research institutes, where the publicly funded R&D on ESTs was being
carried out, and R&D institutions in other countries where there may
be local user-firms (three-way partnerships). This would speed up the
diffusion of the technology.  An example of a three-way partnership
might appear as follows:


---------------------------------------------------------------------
         Foreign R&D institute -- local R&D institutions
                                           | 
                                           |
                                          \ /
                                       local firms
---------------------------------------------------------------------


           A variant of such a partnership might appear as follows:


---------------------------------------------------------------------
              Originating R&D institute -- local firm
                                                |
                                                |
                                               \ / 
                                          foreign firm
---------------------------------------------------------------------


98.      To further stimulate transfer and diffusion of ESTs in developing
countries, a second network consisting of  Centres for Innovation and
Enterprise Development (CIEDs) might also be envisaged.  These
Centres would be identified from among existing business-related organizations
in Latin America, Asia and Africa.  The primary task of the CIEDs is to
identify potential users and explore business opportunities for them,
sensitize them to the need to adopt ESTs, and create awareness of
the accessibility of such technologies and the benefits to be derived from
their adoption.  The CIEDs might also facilitate the search
for funds to finance the process of adaptation (task 6).  However, it is
anticipated that the major cost of the adaptation process would be borne by
the users themselves.

99.      Thus, following identification of potential users for each type of
technology, the CIEDs would play a critical role in forming potential  users
into user-consortia.  For example, interested leather-tanning firms, dyeing
firms, printing companies, paper and pulp manufacturers, chemical companies
and other heavy polluters would be brought together into consortia.  These
consortia would collectively fund the adaptation process in local research and
technology development (R&TD) institutions either through direct contribution
or through  local funding available for this purpose.  The CIEDs would remain
in contact with consortia members after the transfer and would play an
intermediary role in the event of technical problems requiring further
assistance from local or foreign R&TD institutions (task 7). 
They would diffuse the knowledge needed to overcome such problems as it
becomes available and would progressively sensitize other local firms to the
benefits that might be obtained through adoption of the "new technology".  
Newcomers would pay a fee equivalent to the share paid by consortia members
for adaptation by local R&TD institutions.  This fee would be used by the
CIEDs to continue their work in the transfer and diffusion of ESTs.  Since
user fees would largely cover the local costs of tasks 4, 5 and 7, the role of
foreign assistance in the process of transferring and diffusing ESTs could
then be limited to the following activities:  financing tasks 1 and 2 --
identifying and evaluating the suitability and adaptability of 
environmentally sound technologies for transfer to developing countries and 
participating in the financing needed to acquire the rights to ESTs.  

100. Such a mechanism, building on and closely working with
the existing initiatives described in chapter III, and mechanisms discussed
above, could create a framework within which the necessary identification,
assessment, adaptation and post-transfer follow-up could take place.  It
ensures that transfer of ESTs is effective by building technological capacity
in both local firms and research and technology institutions, and promoting
the interaction  between them that is needed to stimulate and sustain a
process of innovation. It does so, moreover, without prejudice to the form in
which ESTs are acquired.  Incremental support would be required to launch the
process of creating a mechanism of this sort on a global scale.


        VI.     MAIN FINDINGS AND ISSUES FOR FURTHER CONSIDERATION

101.      The findings of the study show that public sector funding remains a
major source for R&D activities, although in recent years the public sector
share in total R&D spending has declined in most countries covered by this
study (see appendix 1). Increasingly, the commercialization of publicly funded
technologies has been emphasized with the objective of cost recovery and
market-based diffusion of technologies. 

102.         In all countries, the role of publicly funded R&D in the
development of ESTs is significant. Through both policy and public funding,
the public sector continues to be an important motor in the
development of ESTs.  As figure 3 shows, there are many steps in the
development, transfer and diffusion of ESTs for which public policies,
initiatives and support structures provide a critical stimulus.

103.        Although, as figure 3 also illustrates, ESTs are in some ways
different from other technologies, the country case studies reveal that, in
general, public control or ownership of the results of publicly funded
R&D, including ESTs, and their transfer and commercialization is rarely
exercised.  In some countries, ESTs generated from publicly funded R&D
activities are owned either directly by the research institutions
concerned or through some form of co-ownership arrangement with the
company(ies) commercializing the technology;  in others, ownership is fully
transferred to private entities. But overall, public sector
involvement in the financing of R&D has few implications for the mode of
ownership, commercialization, diffusion or transfer of these technologies.

104.       The study reveals that both developed and developing countries
undertake R&D on ESTs and that a broad range of ESTs is available to meet the
needs of developing countries and countries in transition.  However, only a
small proportion of ESTs resulting from publicly funded R&D are patented,
commercialized or transferred. 55/  Among the reasons highlighted were the
costly and lengthy process of obtaining patent rights, the lack of knowledge
about the business aspects of technology development, the absence of an
incentive structure conducive to the commercialization of research results,
and the fact that much of the R&D activity is still too upstream in many
countries.  Consequently, relatively few of the technologies generated in
public R&D institutions and laboratories reach the development,
commercialization and transfer stages, and the mechanisms available for moving
publicly funded technologies from public institutions to the commercialization
stage are limited.  In cases where patents on publicly funded ESTs were
obtained and successful transfer has taken place, partnership with private
enterprises has often been the main channel, though even here much more might
have been expected.


   Figure 3:   Similarities and differences between ESTs and other  
               technologies

---------------------------------------------------------------------
                           ESTs             Other technologies
                -----------------------------------------------------
Main drivers    Public policy-regulatory  - Market forces: demand,
                policies, or their        competition, production
                absence; multilateral     - Bottlenecks
                environmental agreements  - Etc.
---------------------------------------------------------------------
Finance         Public funding vital;     Largely private funding,
                lack of venture capital   including reinvested
                                          earnings, venture capital
                                          and sale of stocks
---------------------------------------------------------------------
Location of R&D Mainly in universities,   Mainly enterprise-based
                public R&D institutes     
                and laboratories
---------------------------------------------------------------------
Mechanisms for  Transfer to private       New structures through
transfer        sector; emerging role     inter-firm R&D collaboration
                for public-private        as well as partnerships
                sector partnerships       of firms with public R&D
                (e.g. university-         
                enterprise cooperation)   
----------------------------------------------------------------------
Commercia-      Increasingly private;     Private
lization        many SMEs involved; 
                support structures and 
                incentives needed            
----------------------------------------------------------------------
Application     Often site or             Increasingly global
                locationally specific 
                applications, some ESTs 
                could be applied globally
                (e.g. CFC substitutes)  
----------------------------------------------------------------------
Transfer to     Commercialization; ODA;   Almost exclusively
developing      sometimes with funding    through private
countries and   from multilateral sources commercialization
countries with  (e.g. multilateral fund
economies in    under Montreal Protocol,
transition      GEF)  
----------------------------------------------------------------------


105.  In both developed and developing countries, it is necessary
to strengthen the policy framework and the support structures needed
for the commercialization and transfer of publicly funded ESTs within
and between countries.  From the limited transfer and
commercialization of ESTs resulting from publicly funded R&D within
domestic and international environments and from the numerous
statements to the effect that such technologies should be transferred,
it is evident that market mechanisms are not yet sufficient to ensure
a broad diffusion of ESTs everywhere.  At the same time, however,
global environmental degradation is worsening.  Some of the key
elements in the transfer of ESTs and mechanisms likely to bring about
a more effective transfer of technology to all countries, particularly
those in the developing world, have been discussed in chapter V.  In
this context, there is a need for governments to develop a variety of
demonstration projects (including the pilot phase) for the transfer
and diffusion of publicly funded ESTs, create better sources of
information about the availability of ESTs originating from public
R&D, and stimulate partnering between public and private sector
institutions in order to ensure the transfer and more rapid diffusion
of ESTs.  This point may also require considerable sensitization of
the R&D community to the need to transfer their results to users,
either through working together to further develop the
process/product, and build a pilot plant for testing and adaptation,
or through licensing and other commercial means.

106.       In summary: 

(a)        Many governments covered by this study explicitly refer in their
public policy statements to the need to share ESTs with the developing
world.  Nevertheless, they have not yet incorporated formal policy
measures to implement the recommendations contained in Agenda 21 on
the issue of technology, including publicly owned technologies. 
Overall, and relative to these public policy statements, the extent to
which and the pace at which ESTs are being transferred to developing
countries and countries with economies in transition appear inadequate
when compared with the expectations raised prior to and at the United
Nations Conference on Environment and Development (UNCED) in 1992.

(b)        The problem, however, is not one of incompatibility between the
policy objective of public R&D funding for domestic industrial
competitiveness and the need for accelerated technology transfer in
the area of ESTs.  Rather, as the case studies illustrate, publicly
funded technologies are increasingly commercialized on the basis of
market mechanisms and cost recovery criteria.  Most governments equate
transfer of technology with commercialization, including in the area
of ESTs.  With this understanding, they appear to fulfil their mandate
under Agenda 21 by transferring the results of publicly funded R&D to
private domestic firms.  Much of the publicly funded R&D, however, is
never transferred, not even to local firms. 56/   There is thus
considerable room for the role that governments could play in
exploring new mechanisms for the transfer and diffusion of ESTs
resulting from publicly funded R&D.

(c)        While the predominant pattern for the transfer of ESTs, both at
the national and international levels,  is -commercialization■, some
efforts have been made to aid the process of transfer of ESTs through
bilateral and multilateral initiatives which are of a -classical■ ODA
type or are based on promoting new forms of public-private partnership
for technology transfer that involve some public support.  Thus, as
shown in this study, several countries have launched initiatives,
cooperation programmes and pilot projects that could serve this
purpose, including policies and mechanisms to ensure financing of the
various phases in the process of technology transfer.  A number of
these -- which have been described in chapter III -- are innovative
models of technology transfer which could be adopted  to accelerate
the implementation of technology-related provisions in Agenda 21,
including those referring to publicly owned technologies.  These
initiatives have wide-ranging objectives:  creating awareness; 
finding partners;  launching a pilot project;  developing policies and
programmes that encourage R&D institutions to transfer technology; 
creating adequate funding mechanisms for them;  and finally,
establishing policies that actively pursue technology partnership
among enterprises.  While these are promising developments, they are
often scattered individual programmes, and funding for such activities
remains relatively low.

(d)        In the above context, new policy initiatives may be required and
support structures need to be strengthened.  Thus, some of the
initiatives discussed in chapter III deserve further attention.  While
an assessment of these programmes goes beyond the scope of the present
study,  this could be one area for further investigation by the
Commission on Sustainable Development.  Such a study could focus, in
particular, on whether the initiatives identified above might
concentrate more on publicly funded or publicly owned technologies
than they currently do, especially with regard to technologies that
are not being commercialized.  Another focus could be on increased
cooperation between the initiatives already in place for ESTs■
transfer and public R&D institutions, which usually lack the budget
needed to carry out the transfer themselves.  Linkages between ODA and
public R&D institutions could improve and strengthen the transfer of
ESTs and prevent companies in the developing world from falling
further behind in the use and diffusion of ESTs.  Incorporating the
transfer of publicly funded ESTs into ODA policies could also be
considered.  Chapter V describes how new transfer and diffusion
mechanisms could bring all these elements together.

(e)        Another area for further investigation could be the legal and
institutional obstacles confronting the transfer of ESTs.  Chapter III
briefly illustrated some of these, and chapter IV pointed out  that
the legal and institutional framework governing the commercialization
and transfer of ESTs does not generally differ from that of technology
in general.  Here one could argue that governments might consider
exploring the possibility of exempting ESTs from some of the relevant
legal provisions.  However, given the difficulty in defining -ESTs■ in
the first place, this would require reaching a common understanding as
to what types of technologies could be considered for such exemptions. 
The technologies listed in figure 2, as well as those needed under
multilateral environmental agreements, could form the core of such a
list.  It would be more difficult to include ESTs with dual-use
applications.  Generally, in our survey of policy and institutional
factors, IPRs -- although sometimes involving costly and lengthy
processes -- did not seem to be the major obstacle in the transfer of
ESTs.  On the contrary, it was argued in the discussion that the
presence of an effective IPR system facilitates technology transfer. 
On the other hand, provisions that do not permit the transfer of
publicly funded technology to firms in other countries -- even when no
domestic firms are ready to commercialize them -- could be regarded as
an effective obstacle to the diffusion of ESTs. 

107.        As the above summary illustrates, there  is considerable room for
action by governments committed to the broad diffusion of ESTs on a
global level, particularly of technologies that are the result of
publicly funded R&D.  Specifics could be built into the agreed
recommendations of the International Expert Meeting in Kyongju for the
sixth session of the Commission on Sustainable Development. 


APPENDIX 1:   Gross domestic expenditure on R&D (GERD)
              -- public percentage of total GERD --
              1985  -  1995

----------------------------------------------------------------------
Year/type            1985                1990               1995
              --------------------------------------------------------
Country        Public % of total  Public % of total  Public % of total
grouping             GERD                GERD               GERD
----------------------------------------------------------------------
Overall OECD         43.0                37.8               34.5

United States        50.3                43.8               36.1

Canada               48.9                44.3               37.7

European Union       44.4                40.9               33.1

United Kingdom       42.2                35.5               33.3

France               52.9                48.3                --

Japan                21.0                18.0               22.4

Germany              37.6                33.9               37.1

Korea (Republic of)                      17.0               18.2

Czech Republic        --                 30.6               34.9

India                88.5                87.3               84.6

Brazil                                                      82.0*
--------------------------------------------------------------------

Sources:   OECD, UNESCO, and various national sources compiled by  
           UNCTAD.
* =  year 1994.


APPENDIX 2:    List of contributors to the project and studies
               undertaken


Country case studies

Brazil:                     Ms. Le'a VELHO, University of Campinas, Sao
                            Paulo, Brazil, and  Mr. Paulo VELHO

Canada:                     Mr. Trent GOW and Mr. Christopher HILKENE, of
                            Thompson Gow and Associates, Toronto

Czech Republic:             Mr. Bedrich MOLDAN, Charles University, Prague

France:                     Mr. Bertrand WARUSFEL and Mr. Alain ESTABLIER, of
                            Warusfel & Associates, Paris

Germany:                    Dr. Hans-Peter WINKELMANN, Institute for
                            Environmental Research  (INFU), University of
                            Dortmund, Dortmund

India:                      Mr. Upendra TRIPATHY, Director, Environment, 
                            Government of India, Bangalore

Japan:                      Dr. Shuichi SASAKI, Global Industrial and
                            Social Progress Research Institute, Tokyo,
                            and Mr. Shouchuan ASUKA-ZHANG, Center for
                            Northeast Asian Studies, Tohoku University,
                            Sendai

Korea, Republic of:         Professor Il Chun KWAK, Department of
                            Regional Development, Kyungwon University

United Kingdom:             Mr. Andrew J. BLAZA and Ms. Rita van der VORST, 
                            Imperial College Centre for Environmental
                            Technology, London

United States:              Mr. Woody CLARK Jr., University of California at
                            Davis, California


Legal regimes studies

France/EU:                  Mr. Bertrand WARUSFEL and Mr. Alain ESTABLIER,
                            Warusfel & Associates, Paris

MERCOSUR countries:         Mr. Carlos CORREA, University of Buenos Aires

United States:              Ms. Rebecca EISENBERG, University of Michigan Law
                            School


Study on role of            Professor Kumsoo KIM,
universities in the         Department of Chemical Engineering, Columbia
generation of ESTs:         University, New York


Preparatory project group:  L. Mytelka, P. Roffe, D. Koenig and 
                            T. Tesfachew,
                            United Nations Conference on Trade and
                            Development, Geneva

                            D. Pilari, 
                            United Nations Department of Economic and
                            Social Affairs, New York

                            J. Aloisi de Larderel and S. Gorman
                            United Nations Environment Programme -
                            Industry and Environment Centre, Paris

                            J. Whitelaw,
                            United Nations Environment Programme, 
                            International Environmental Technology
                            Centre, Osaka


                                    Notes

1/  This paper was prepared by the UNCTAD secretariat in cooperation with the
Division for Sustainable Development of the United Nations Department of
Economic and Social Affairs (UN DESA) and the United Nations Environment
Programme (UNEP) as background document for the International Expert
Meeting on the Role of Publicly Funded Research and Publicly Owned
Technologies in the Transfer and Diffusion of Environmentally Sound
Technologies, held in Kyongju, Republic of Korea, 4-6 February 1998.

2/  Paragraph 91, "Programme for the further implementation of Agenda 21",
adopted by the General Assembly at its 19th special session, 23-27 June 1997.

3/  See chapter III for details.

4/  For a detailed discussion of these fundamental questions, see Edith Brown
Weiss, In Fairness to Future Generations: International Law, Common Patrimony
and Intergenerational Equity, New York, Transnational Publishers, 1988;  and
"Environmental Change and International Law", Tokyo, United Nations University
Press, 1992.

5/  George Heaton, Robert Repetto and Rodney Sobin, "Transforming Technology:
An Agenda for Environmentally Sound Technology in the 21st Century",
Washington, D.C. World Resources Institute, 1991, p. ix.

6/  Moreover, these technologies have often stimulated other technological
areas.  See, for example, the analysis of the economic, ecological and legal
implications of over 1,400 publicly funded ESTs in Germany:  BMBF, "Wirkungen
der F”rderung von Umwelttechnologie durch das BMBF", Frauenhofer-
Institut fr Systemtechnik und Innovationsforschung, Karlsruhe, January 1997. 
See also the discussion of the economic potential of ESTs in  E. U. von
Weizs„cker et al., "Faktor Vier", Mnich, Droemer Knaur, 1996.

7/  For the expectations raised prior to Rio, see, for example, the proposal
for a "Strategic Environmental Initiative" made by Al Gore:  Al Gore, "Earth
in the Balance", Boston, Houghton Mifflin, 1992.

8/  United Nations, "Report of the Secretary-General on General and Complete
Disarmament: Charting Potential Uses of Resources allocated to Military
Activities for Civilian Endeavours to Protect the Environment" (A/46/364), 17
September 1991.   Compare also the UNCTAD study carried out for the
Commission on Science and Technology for Development:  United Nations,
Economic and Social Council, Commission on Science and Technology for
Development, second session, "Scientific and Technological Aspects of the
Conversion of Military Capacities for Civilian Use and Sustainable
Development" (E/CN.16/1995/13), 3 March 1995.

9/  Chapter III elaborates on this point.

10/ See, "Environmentally sound technology for sustainable development", "ATAS
Bulletin", no. 7, United Nations, New York, 1992.

11/ Nevertheless, some agencies have attempted to provide information on the
range and types of ESTs available.  See, for example, figure 2 in the present
study.

12/ Quotation from project document.

13/ Publicly owned technology is clearly differentiated  from technology in
the public domain.  Publicly owned technology is the product of publicly
financed R&D, whether or not it is protected by intellectual property rights,
while technology in the public domain is formally proprietary technology whose
intellectual property protection has already expired or which never received
or was never eligible for protection.  The results of "publicly funded R&D"
may be publicly or privately owned technologies or involve complex
combinations of ownership.   Most of this document will deal with publicly
funded R&D, while the concept of public ownership will be referred to, but --
overall -- remains somewhat elusive.

14/ OECD, "Industry and Technology Outlook", Paris, 1996;  OECD, "Science,
Technology and Industry Scoreboard of Indicators 1997", Paris, 1997.

15/ It was, however, often increasing in absolute dollar terms.

16/ R&D continues to include scientific activities which may be neither
directly nor necessarily related to competitiveness, but many public
statements emphasize the latter. 

17/ OECD, "Science, Technology and Industry Outlook 1996", Paris, 1996, p.
239.  Data are for 1993.

18/ OECD, "Main Science and Technology Indicators 1997", Paris, 1997.

19/ Details for developing countries may be found in UNESCO, "World Science
Report 1996", Paris, 1996.

20/ OECD (1997).

21/ Rolf G. Sternberg, "Government R&D expenditure and space:  Empirical
evidence from five industrialized countries", in "Research Policy", 25, 1996,
pp. 741-758 (here: p. 742).

22/ OECD, "Technologies for Cleaner Production", Paris, 1995, p. 70.

23/ Chapter V will elaborate on the possibility of  alternative transfer and
diffusion mechanisms that could offer new opportunities for an accelerated use
of ESTs throughout the world, including the developing countries.

24/ W. W. Clark and E. Paolucci, "An industrial model for technology
commercialization:  Fuel cells into design manufacturing", paper delivered at
the International Conference on Product Design and Manufacturing, Stockholm,
May 1997.

25/ Lanjouw and Mody (1996), for example show that the level of innovation in
ESTs as measured by patenting in the areas of air and water pollution is
responsive to regulatory policies at home, but also abroad. The latter
operates in particular when trade relations are involved. Air pollution
limitation in Germany thus increased in response to car emission standards in
the United States (J.O. Langjouw and A. Mody, "Innovation and the
international diffusion of environmentally responsive technology", in
"Research Policy", vol. 25, no. 4, 1996, pp .549-572).

26/ They operate under different rules and norms.  For the researcher,
publications are a pathway to advancement;  while this has been changing in
some technological areas, it is still the basic cultural norm in most public
R&D institutions.  For the business culture, getting technologies
commercialized and into the market-place is the incentive and basic driving
force.  This is a generalization, however.  As demonstrated by some of the
case studies, there is already a degree of integration of the two cultures in
some countries or academic fields.

27/ OECD (1995), p. 12.

28/ See the Canadian country study and the Canadian International Development
Agency, "Watershed Management 2000 in the State of S■o Paulo, Brazil"

29/ OECD, "Climate Technology Initiative:  Inventory of Activities", Paris,
1996, p. 26.

30/ Ibid., p. 29.

31/ Department of Trade and Industry, Technology Partnership, "Guide to UK
Environmental Technology and Services", London, 1993;  Stella Blacklaws,
"Environmental technology cooperation", in UNCTAD, "Technological
Capacity-building and Technology Partnership", Geneva and New York, 1995.

32/ Atul Wad, "University-industry linkages and economic development:  Lessons
and analytical perspectives drawn from the UDLP project", paper prepared for
the VIth Symposium on Technology Management, Autonomous University of Yucatan,
Merida, 4-5 December 1997.

33/ Environmental Health and Safety Management, Inc., "EHS Management", 27
October 1997.

34/ CTI, Press Release, "UNEP joins forces with Climate Technology Initiative
to combat climate change", Kyoto, 4 December 1997.  See also OECD, "Climate
Technology Initiative", Paris, 1996.

35/ See, for example, IEA, "International Energy Technology Collaboration: 
Benefits and Achievements", Paris, 1996 (OECD publication), pp. 15-17.

36/ Ibid., p. 20.

37/ "Capital for exploiting research results", in "Innovation and Technology
Transfer",vol. 4,  July 1997 (EU Commission).

38/ "Noticias de CYTED", Programa Iberoamericano de Ciencia y Tecnología para
el Desarollo, Numero 9, June 1997.

39/ The Montreal Protocol may be an exception.

40/ See also chapter IV for specific legal and institutional impediments.

41/ For details of this legislation, see chapter IV.

42/ Clark and Paolucci, op. cit.

43/ Compare explanation in chapter III above.

44/ See B. Vavakova, "Building 'research-industry' partnerships through
European R&D programs", "International Journal of Technology Management", vol.
10, nos.4/5/6, 1995 (Special Issue on the Evaluation of Research and
Innovation), pp. 567-586.

45/ With respect to this first strategic motivation, the findings set forth at
the beginning of the Stevenson-Wydler Technology Innovation Act of 1980 make
this explicit:  "Many new discoveries and advances in science occur in
universities and Federal laboratories, while the application of this new
knowledge to commercial and useful public purposes depends largely upon
actions by business and labor.  Cooperation among academia, Federal
laboratories, labor, and industry, in such forms as technology transfer,
personnel exchange, joint research projects, and others, should be renewed,
expanded, and strengthened".  The Bayh-Dole Act, also of 1980 -- aimed at
encouraging small businesses and non-profit organizations to patent the
results of government-sponsored research -- states that "It is the policy and
objective of the Congress to use the patent system to promote the utilization
of inventions arising from federally supported research or development.

46/ According to the Bayh-Dole Act, a targeted aim is "to promote the
commercialization and public availability of inventions made in the United
States by United States industry and labor" .   The Stevenson-
Wydler Act■s introductory list of Congressional findings deplores that
"[i]ndustrial and technological innovation in the United States may be lagging
when compared to historical patterns and other industrialized nations"  and
claims that technology and industrial innovation facilitate "creation of new
industries and employment opportunities and enhanced competitiveness of United
States products in world markets"  and will "reduce trade deficits, stabilize
the dollar, increase productivity gains, increase employment, and stabilize
prices".

47/ See footnote 12.

48/ 35 U.S.C.A. para.203(1).

49/ According to Lanjouw and Mody (1996), among non-OECD countries in the
1970s and 1980s, Brazil "has been the clear leader: over 18 years between 1971
and 1988, Brazil granted 2,180 environmental patents".  In comparison,  India
granted 384 patents in the 15 years between 1974 and 1988;  the Republic of
Korea granted 436 patents in the 13 years between 1976 and 1988;  and China,
with a relatively new patents system, had granted 279 patents by 1988. (op.
cit., p. 563). Of the patents, 68 per cent were granted to foreigners in
Brazil, 63 per cent in India, 44  per cent in the Republic of Korea and 36 per
cent in China (op. cit., p. 562)

50/ "Intellectual property is an essential component of an environment
conducive to the creation and international transfer of technology" (see
UNCTAD IX, Midrand Declaration and a Partnership for Growth and Development,
para. 37).

51/ The Uruguay Round of Multinational Trade Negotiations, "Final Act
Embodying the Results of the
Uruguay Round of Multinational Trade Negotiations", Marrakesh, Morocco, 15
April 1994.

52/ The practical effects of Article 31 of the TRIPS Agreement ("Other use
without authorization of the right holder") in the context of the overall
provisions of the Agreement and of the Paris Convention are a subject that
merits further examination and research.

53/ See, particularly, B. A. Lundvall, "Innovation as an interactive process: 
From user-producer interaction to the national system of innovation", in G.
Dosi et al. (eds.), "Technical Change and Economic Theory", London, Pinter
Publishers, 1988, pp. 349-370.

54/ The core for the development of a network of RTIs could, for example, be
found in two existing networks:  the World Association of Industrial and
Technological Research Organizations (WAITRO) and the International
Association of Technology Assessment and Forecasting Institutions (IATAFI),
both of which draw their members from developed and developing countries. 
Other institutions can be progressively identified and added to this core,
including regional institutions such as the Asian and Pacific Centre for
Transfer of Technology (APCTT) in Asia, and national institutions,
for example the Raw Materials Research and Development Council in Nigeria and
the Scientific and Industrial Research and Development Centre (SIRDC) in
Zimbabwe.

55/ See, for example, BMBF (1997), p. 65.

56/ Up to two-thirds, according to the innovation literature.

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Date last posted: 8 December 1999 15:15:30
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