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  ... 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 Frderung von Umwelttechnologie durch das BMBF", Frauenhofer- Institut fr Systemtechnik und Innovationsforschung, Karlsruhe, January 1997. See also the discussion of the economic potential of ESTs in E. U. von Weizscker et al., "Faktor Vier", Mnich, 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