Should developing countries adopt a technology policy?

The paper offers some reflections on technological capability building in the context of low income developing countries. The relevant literature strongly focuses on technological learning (enabling technical change to take place), the two important components of which are the development of human capital, and research and development (R&D). The issue is of particular concern, especially in an economic climate of liberalisation hostile to direct state intervention, at a time when the less developed countries are struggling to compete. While the literature on technology transfer that developed in the 1970s and early 1980s has been critcised for its static approach, in the recent past there appears to have developed a consensus regarding the need for improving the ability of a developing country to operate imported technology efficiently and effectively, thus enabling it to compete in the international market. After briefly reviewing the relevant theoretical background the paper surveys the state of technology policy in three countries of the Indian sub-continent -India, Bangladesh and Nepal - in order to draw some lessons. The externalities and market imperfections involved in technology development are so substantial that, if left to market forces without a technology policy, there seems little prospect of the successful building of technological capability by low-income developing countries. This does not necessarily imply direct public production of R&D; given the experience of government failures in implementing efficient resource allocation in developing countries, the specific role of the government requires careful consideration.