The Japanese experience in technology transfer and how it may apply to Saudi Arabia.

INTRODUCTION

THERE IS NO DOUBT THAT THE TECHNOLOGICAL PROGRESS of the Japanese has been one of the primary reasons behind its unprecedented modernization and becoming one of the world's leading industrialized powers in only four decades. Furthermore, it has been said that "Japan's technological progress has been achieved so far primarily through the introduction of foreign technologies."(1) This, coupled with Japan's human resources and managerial practices, has made Japan a role model for the rest of the developing and developed world.

Having said that, it is the objective of this essay to shed some light on the following four questions: 1) Can a Third World country like Saudi Arabia benefit from the Japanese experience in technology transfer? 2) How did Japan successfully implement the process of technology transfer? 3) What would motivate Japan to eventually allow its technology and experience to be transferred to a Third World country like Saudi Arabia? and 4) Why should Saudi Arabia look to the Japanese to transfer the needed technologies?

No doubt, the next one or two decades will witness dramatic changes in information technology that will affect our society at all levels. It is not an exaggeration to state that many of today's business practices are becoming obsolete and new business techniques are evolving daily to meet fast changing circumstances.(2) Moreover, information technology has allowed for the transmission of large volumes of information around the globe in a very short time. As a consequence, governments, companies and cultures have been brought closer together than any time in history. As a result, managerial practices at all levels are taking new turns in today's fast changing world.

The strategic use of information technology may very well depend on the availability of state-of-the-art technologies on the one hand, and the knowledge of how to fully operate and utilize such technology on the other. Senior managers or decision makers must have the necessary knowledge and the advanced technology in order to make the right decision to meet even tougher challenges. In the words of a business writer, "for decision-makers with only a superficial knowledge, it has been compared with trying to hit a moving target blind folded." In other words, information technology should serve as a tool to management and the effective use of it is contingent upon effective utilization and considerable knowledge of available technology(3).

It is very important to succeed in the upcoming phase; the phase in which science and technology plays the essential role in the development process. Japan has reached the pinnacle of success not by way of aggressive industrial managerial plans alone, but by constantly looking to the United States and Europe for recent advances in science and technology and transferring home what is most needed. It is a fact that for the past four decades since the end of the World War II, Japan has invested both money and effort to transfer technology from abroad, especially from the United States to Japan.

As Japan made use of the post-World War II state order to slowly build its industry, strengthen its economy and transfer the West's technology, the Third World countries can now make use of the "New World Order" to achieve new heights if their respective governments draft responsible and careful policies that involve analyzing scientific and technological priorities that meet development goals.

In my opinion, the task of learning about the Japanese experience as it relates to the development of its industry is as important as their experience in transferring technology and know-how for industrial growth. We must understand the "process" or ways and means through which Japan has used advanced technology as a major thrust to gain a competitive edge in its modernization drive. It is the attempt of this essay to address this point.

THE JAPANESE EXPERIENCE IN TECHNOLOGY TRANSFER

In this section, the reader is given a glimpse of the Japanese experience as it relates to technology transfer. Certainly such a topic is a very broad one and the space provided here will not suffice to cover all the angles one would desire. Moreover, it is not the intention of this essay to discuss technology transfer as a major topic either, nor to study specific technological capabilities of Japan and technological needs of Saudi Arabia. The focus will be on the major dimensions of technology transfer and how Japan handled them.

By achieving unprecedented heights in industrial and technological advances, Japan has become the only nation in history to have risen "as a phoenix" from the ashes of war in four decades. As a result, Japan is now held with a degree of awe, veneration and has won the admiration of the entire world. This admiration has generated curiosity, and an urge to learn what has become known as the "Japanese Experience."

After World War II, Japan's major aim was to re-build its economy. Japanese policy-makers realized then that the latest and most cost effective approach to achieve economic recovery was through imported technologies. Indeed, Japan succeeded in obtaining most of its technology from the United States and Europe in a very short time without having to invest either large sums of money or effort. It was reported that the United States technology transfer to Japan was estimated to be U.S. $10 billion in the Fifties and Sixties and "included transistor patents, semiconductor technology and IC technology," which served as building blocks for Japan's technology achievements.(4)

Technology Transfer: Requirements, Obstacles and Channels

In the words of Gruber, the concept of technology transfer means "the utilization of an existing technique in an instant when it has not previously been used."(5) The key word in this definition is "instant" which implies that a great deal of money, time, resources and efforts are being saved. Hence, the benefits of technology transfer are abundant if it is successfully implemented and fully utilized. According to Dahlam, there exist three levels of technology transfer:

1. The capability required to operate a technology. Such capabilities are either operational or technology-specific (know-how). The former can be learned through the job training and the latter can be acquired by the technology transfer package.

2. Investment capability that wishes to create a new production capacity.

3. Innovation capability that requires a proper environment for R&D activities.(6)

Unfortunately, many developing nations only understand technology transfer to mean the "physical" transfer of hardware or software for some application. True technology transfer is only possible when the recipient has the above three capabilities. Furthermore, the "physical" component of technology transfer will not be utilized effectively unless it is part of a "technology package." For this package to be complete, it must at least include the following major components:

* actual hardware, software and materials,

* documentation that gives the operational, technology-specific and know-how skills,

* training team and/or consulting firms, and

* management systems.

For the transfer to be smooth and less time consuming, the training team and the consulting firms must play an important role in easing the transfer of the new technology and its adaptability in the new society.

Because of their previous experiences, Japanese have excellent on-the-job training programs, including sending employees of the host country to Japan to gain first hand knowledge about the technology being transferred. This is normally done at moderate costs with satisfying outcomes.(7)

Generally speaking, obstacles to technology transfer may vary widely from one host country to another. This in large part depends on the host country's previous experience in technology transfer, and other internal and external parameters. The first is easier to deal with than the latter since the host country has direct control over such parameters. Hence, some of the measures to encourage or facilitate technology transfer would have to be taken by the host country: It must fully participate in the process. It was shown in previous studies that the obstacles are predominantly internal and particularly in government policies that discourage technology transfer, although that is not their purpose.(8)

The lack of skilled and professional manpower has often delayed the successful implementation of technology transfer. It is known that one of the most important dimensions of technology transfer is the human resource dimension. This dimension could very well become a major constraint that inhibits the transfer or becomes a vital tool that facilitates it. It has been reported that many countries suffer from a great scarcity of highly educated people in fields related to technology transfer. This is noticeable especially when it comes to technical expertise. Developing countries have suffered from the "brain-drain" caused by a large emigration of engineers, researchers and scientists to more developed countries. In order to avoid shortages of managerial and entrepreneurial skills, the host country should actively pursue a policy of training technical and managerial personnel, hire qualified graduates and use local faculty for consultation and research.

Another potential obstacle to technology transfer is what is known as the "technology gap" between the supplier and the recipient.(9) This gap gives a measure of technical competence between the two sides. When the gap becomes wider and wider, it will ultimately affect the time and cost that is required to successfully implant the technology package being transferred. However, it should be noted that the speed of bridging the technology gap between nations is on the rise and such a gap is increasingly becoming an insignificant parameter of obstruction.

The principal modes or channels of technology transfer are: licensing agreements, sub-contracting, and equipment supplies.(10) Licensing agreements have been the number one method of transferring technology between nations. Under such methods, a complete package of instructions, technical assistance, training and management support is transferred. It has been reported that no other country has been so successful as Japan in acquiring new technologies through licensing agreements. Up to late 1981, the number of licensing agreements with non-Japanese organizations for the import of technology rose from 76 agreements to 2500 per year, totaling 30,000 agreements in three decades.(11) Furthermore, it is interesting to note that the cumulative cost of these agreements, that resulted in Japan transferring all the related technology of the world, is only a fraction of the United States expenditure on R&D activities.(12)

DEVELOPING SCIENCE AND TECHNOLOGY IN JAPAN

Although there is no basic formula for the successful development of science and technology in an advanced country like Japan, one might be able to identify factors or components that play a major role in such a formula: R&D activities, the government's role, and the educational system. Japan's technological development over the past three decades is impressive because of the policy-makers' success in strengthening and promoting R&D programs coupled with government support and the creation of an atmosphere of cooperation between academic institutions and industry.(13)

1) Research and Development Programs:

No doubt that R&D activities have played a very important role in speeding Japan's rise to the top of the industrialized world. In less than two decades after World War II, Ozawa noted that Japan reached new heights in technological achievement when it decided that R&D programs must be heavily invested in, and should export its technology and products to the outside world.(14) In his study of Japan's research in transferring technology abroad, Smith noted:

Japan's policies vis-a-vis the importation of technology have been supportive of rapid technological development without allowing control by world technology suppliers. Japan has bought, at every reasonable cost via the licensing mechanism, the best technologies available in the world. Then through stimulative research and development policies, these technologies were adopted and improved and are now ready for exportation from Japan.

R&D activities in Japan cover a wide base of technological and scientific areas of interest. The United States and Japan are currently the top two leading nations actively pursuing R&D. However, the emphasis of the former is on defense related projects, whereas, the latter has consistently focused on the private sector, managerial and information technology related projects.(15) Furthermore, because of its limited resources, unlike the U.S. economy, the Japanese economy is engaged heavily in research for a stable supply of overseas resources.

A study published by Japan's Ministry of International Trade and Industry (MITI) shows that from 1980 until 1988 Japan's changing R&D mix was focused in the direction of industry-related projects. It was shown that the expenditure in R&D on industry related projects increased from U.S. $13 billion in 1980 to $42.7 billion in 1988, an increase of more than 300%.(3) Given the financial and professional strength of its R&D programs, Japan's economy will continue its transition to more technologically sound, knowledge-intensive industries.(16)

The creation of dynamic science and technology centers, or what is known as "science parks," has been a key for strengthening R&D activities in Japan. Table 1 shows a list of major science parks in Japan, the total investments in U.S. dollars, number of companies associated with each park and their areas in square kilometers. Such science parks have become a method for pure and applied science and technology research in a variety of disciplines. Each of these science parks is associated with at least one university and they all obey a few basic precepts: proximity of strong institutions of higher education, enjoy government funding, and equipped with qualified scientists, engineers and technicians.

Table 1: Major Science Parks in Japan

Name of                                  Number of Associated   Total
Investment Institution         Area in [Km.sup.2]        Companies
in million US$

1. Tsukuba           285.6000                   70                    $34.3
   Science City

2. 21st Century        0.8502                   70                     $35.0
   Plaza

3. Eniwa Business      0.9800                   37                     $18.2
   Research Park

4. Nagaoka             4.6976                    9                     $27.8
   Research Park

5. Toyame Center       3.8467                   10                     $24.1

6. Kanagawa            1.7513                  127                     $134.3
   Science Park

7. Kurume Techno       1.2527                   30                      $19.7
   Research Park

Source: IEEE Spectrum, July 1991

2) Government Role:

Since the 1950s, the Japanese government has played a very constructive role in speeding the economic recovery of the nation. Its early objective was not to allow one Japanese company to have a monopoly on a single technology. In his assessment of the government's role in Japan, Uyehara stated that the "Japanese government intervened very directly in the negotiations by skimming a ceiling on royalty payments, by working to limit the agreements, and in particular by trying to reduce the export restrictions that are often embodied in technological agreements of these sorts."(17)

It was said that Japan's technological development over the past three decades was impressive because of the unique role played by Japan's MITI. Today, this Ministry continues to guide and encourage institutions, scientists and engineers in order to meet future challenges. Even though Japanese companies fund the bulk of R&D, the government remains active in industrial policy. According to professor Daniel Okimoto at Stanford University, MITI's main objectives include:

* articulating a long-term vision for industries under its jurisdiction

* setting sectoral priorities

* adjusting the industrial structure

* protecting infant industries

* regulating excessive competition

* promoting ways to reduce risks and diffuse costs

* mediating trade conflicts.

When carefully examining these objectives, one must conclude that the Japanese government through MITI does the planning, the promotion and the protection of its industries. Moreover, given the financial strength, managerial skills and organizational capabilities, it is expected that MITI will continue to direct many R&D programs that will comfortably put Japan ahead of the rest of the industrialized nations in the 21st Century.

Other Japanese institutions supporting the advancement of science and technology include: the Council for Science and Technology (CST) whose objective is to promote a comprehensive national policy; the Science and Technology Agency (STA) whose objectives are to fund research, oversee a worldwide collection of scientific and engineering publications, and direct technology transfer corporations.[12] Furthermore, every five years, STA surveys industries and universities in order to identify research areas of national priority. According to Phillips, MITI and STA are constantly introducing systems in which scientific targets are set. Objectives can be achieved by collaborative teams called from industry, higher education and national research institutions.[18]

Japan's government subsidies take the form of direct aid, tax benefits and low interest loans. Such subsidies are given to a limited number of companies to promote competition. According to a 1990 U.S. Office of Technology Assessment (OTA) report, each year Tokyo allocates U.S. $27 billion in direct loans and U.S. $5 billion in loan guarantees to small and medium size enterprises, which account for 74% of all production jobs. Whereas, the United States spends U.S. $47 billion and guarantees another U.S. $3.6 billion in loans to small businesses, which provides only 35% of production jobs?

3) Educational Systems:

Ozawa has observed that the immediate objective of the Japanese government since the beginning of this century was to "upgrade education." That was accomplished by first establishing engineering schools at the university level. These served as a major source of technological manpower for industry and government. Secondly, selected students were sent abroad for study and training in science and technology.[20]

Today Japan enjoys a one hundred percent literacy rate, the highest in the world. This, coupled with a strong commitment to education, means that Japan turns out hundreds of thousands of well qualified scientists and engineers every year. Japan over the past twenty years has drastically strengthened its educational system; pre-college, undergraduate and graduate levels. Unlike any other nation, science in Japan has been taught very seriously in primary and secondary schools. As a result, the pre-college population in Japan has come to be known as a "technology literate" population.

Unlike the United States and Europe, planning, organizing and managing primary and secondary schools for the entire nation is handled by the Ministry of Education, Science and Culture (MESC). Moreover, Japan awards over 77 thousand engineering degrees annually. Whereas, the United States graduates 133 thousand engineers per year (a high number of which are foreign nationals). If expressed as a percentage of the population, then Japan has the higher figure.[21]

Because of the financial support and guidance of MESC, coupled with their academic reputations, Japanese universities attract and recruit the brightest students for graduate work in science and technology. According to a 1988 National Science Foundation (NSF) report, "Japan's higher education sector also appears to play a larger role in the nation's R&D system than it does in the United States."

It is very important to note that the Japanese veneration of knowledge and education coupled with their enthusiasm and strong devotion to family, respect for social cohesion and the pride in their heritage and culture also have in large part contributed to Japan's successful drive toward modernization.

TRANSFER OF TECHNOLOGY FROM JAPAN

In this section, an attempt is made to investigate the factors or reasons that might motivate Japan to transfer its advanced technologies abroad and want to strengthen its economic ties with Third World countries, especially with an oil-producing country like Saudi Arabia. Two related questions are to be addressed here: What are the motives behind Japan's willingness to transfer its advanced technology? and, Why should Saudi Arabia look to Japan for developing its scientific and technological capabilities?

Japan's Willingness to Transfer Technology Abroad

It is known that as a pattern of their industrial growth and development, the industrialized world has allowed or permitted in some cases, and encouraged in others, the transfer of technology to developing countries. Even though each industrial nation may have its own reasons for letting go of some of its advanced technologies, one predominant and common reason is the need to create new markets for its products. Unlike other industrialized nations, Japan in recent years is more inclined to transfer some of its most advanced technologies to developing countries in the Arab World.[22] As one author observed, "devoid of prior political entanglements, Japan is freer than most other industrialized countries to establish an economic presence in virtually all countries, and engage in a substantial range of technology transfer." Several developments have taken place in recent years that led Japan's policy-makers to re-think their trading policies abroad. Some of the major developments were:

1) The advent of the European Economic Community (EEC) as a single-market structure in 1992 will limit the size of the present Japanese market in Europe. Hence, it is expected that Japan might be forced to look beyond its borders for friendship.

2) With the emergence of the "New World Order" as a result of the collapse of communism in Eastern Europe, Japan as an economic world power has no choice but to draw itself into the center of the world stage in order to play an active role in setting the new economic and political world order. Consequently, Japan's economic expansion policies, more than ever, are directed toward developing nations.

3) The emergence of the newly industrialized Asian countries as strong economic powers, makes it even tougher for the Japanese to compete in the world market.[23]

4) Japan's growing need for imported raw materials has been, for more than one hundred years, one of the most pressing motives for Japan's interest abroad.[24] Most importantly, Japan's strong dependence on Arab oil, especially from Saudi Arabia, has led to ever stronger commercial ties between the oil producing countries and Japan. This could be easily confirmed by Japan's absolute increase in total sales and its trade practices with the Gulf States after the oil embargo of 1973.[25] Furthermore, like any industrialized nation, Japan wants to recycle petro-dollars from these countries back into its economy. Table 2 shows Japan's direct investment abroad in 1985 and in 1989. This data reveals that the largest jump in percentage in Japan's investment abroad has occurred in the Middle East.

5) Many experts argue that "Japan, as a major economic power, has to fulfill its responsibility in the international community by playing an active role in harmonizing world prosperity."[26]

As a leading industrialized nation, Japan should contribute to the "accumulation of international common scientific and technological knowledge." Furthermore, it has been stated repeatedly in the literature that Japan is under international pressure to "develop a completely new scheme of international technological exchange" that should reverse its traditional role from being a technological borrower to being a giver by transferring its technologies abroad.

6) Both Japan and the United States are aware of the need for economic and political stability in the developing countries. This translates into the need to embark on a program that is based on scientific cooperation to provide the technologies that are suited to the capabilities of the developing countries. One of the main recommendations stated in the 1984 report by the United States-Japan Advisory Commission was that "economic development and political stability in the developing world are matters of vital concern to the United States and Japan for economic, political and humanitarian reasons . . . . Attention should also be focused on cooperation in science and technology programs in appropriate fields related to national development. . . . The United States and Japan should consider scientific cooperation to provide technology suited to the capabilities of developing countries."

Table 2: Japanese Direct Investment Abroad (US $ million)

Country or Region                              Percentage of
                      1985(*)     1989(*)        Change

United States           5,395      71,860        1,332%
Canada                    100       3,231        3,231%
Europe                  1,930      30,164        1,563%
Latin America           2,616      31,617        1,209%
Middle East                45       3,388        7,529%
Asia                    1,435      32,227        2,246%
Africa                    172       4,604        2,677%

* Fiscal year 1988/1989. This data is cumulative up to March 31, 1989

Source: IEEE-Spectrum, July 1991.

Based on the above, there is no doubt that Japan's search for new markets will be clearly intensified in the coming years. As a result, this will be accompanied by the latest technologies that are badly needed in the developing countries.

Japan's Economic Ties With Saudi Arabia

Based on the above discussion, it is fair to state that Japan, for its own economic benefit, is indeed willing to transfer its advanced technology abroad. The logical question to be addressed next is why should the Saudis look to Japan for developing their scientific and technological capabilities?

There are several visible factors that might motivate Japan and Saudi Arabia to strengthen their economic ties and to cooperate in science and technology issues. They include:

1) Generally speaking, the Middle East is considered to be a very important market for the industrialized world. Traditionally the United States has been the largest exporter to this region. However, for the past three decades, Japan has consistently pursued policies aimed at enhancing cooperation and strengthening economic ties with the Middle East region. By 1980, the United States had lost its position to Japan of being the largest exporter to the Middle East.

Studies indicate that the site and the local market are the most determining factors in foreign technology transfer. In his study of Japanese technology transfer to Brazil, Smith stated that ". . . Japanese executives indicated that the local Brazilian market was the single most important factor influencing their company's selection of Brazil as a recipient of their technology."[8] If the Japanese motives in transferring technology to Brazil are still applicable today, then the Arab market will be very attractive.

2) Many experts have observed that despite Japan's historical, cultural and ideological differences with the region, and despite its virtual absence prior to 1973, Japan has shown a considerable desire to be in the Middle East.

In short, as long as Japan's economy continues to expand and it is faced with the South East Asian countries as potential competitors and the European Economic Community single market formation, together with the existing barriers caused by world recession and domestic protectionism, Japan's strategy and commitment in passing on advanced technologies to the Middle East region will become firmer.

3) As mentioned earlier, being Japan's major petroleum source, the Middle East has been a special place for the Japanese. With no real indication of any shift in Japan's pattern of energy consumption, Japan's policy-makers will seriously weigh the economic and political decision process pertaining to the Gulf States, especially as it concerns the Saudis. This may be the most important single factor that motivates the Japanese to be present in the region.

4) For Japan, or any other country for that matter, one major component that influences government policies toward establishing trade links with foreign nations is what is known as the "risk factor;" in all of its forms and shapes, whether political, economic, social, cultural or geographical. Perhaps, when it comes to establishing economic ties with the Middle East, the "political risk" factor is the most important in influencing decision-makers. This fear will remain as long as no comprehensive settlement of the Arab-Israeli conflict is achieved.

Fortunately, unlike other industrialized nations, Japan may be motivated to be in the Middle East because it is less vulnerable to political risk, especially when it comes to dealing with Saudi Arabia. For example, commercial ties between the United States and Saudi Arabia are strong at the present time and will remain so for the foreseeable future, especially after the Gulf war. However, there remains a substantial degree of political risk that is always attached to these ties. Commentators argue that this will continue to be a factor as long as the United States maintains its one-sided policy toward Israel.[14]

Moreover, since the Arab oil embargo in late 1973, Japan has followed a policy that may be fairly classified as "pro-Arab." Japan's support for the Palestinians has been clearly demonstrated by Japan's call upon Israel to withdraw from the occupied territories and by its support for Palestinian self-determination.[27] Further, Japan continues to give financial aid to the Palestinian refugees in the occupied territories, and in Jordan and Lebanon.

5) It is interesting to observe that foreign companies are no longer judged by the host country solely on the price and quality of their products, but on other factors as well, these factors include:

a. the contribution made to the local economy,

b. environmental damage,

c. attitudes toward the citizens of the host country,

d. involvement in culturally related activities that promote understanding and respect for the host country's culture.

When the host country is sensitive to foreign cultures, then these determining factors should be viewed as positive developments. Unlike the United States and Europe, Japan may score high marks when it comes to its sensitivity and understanding of foreign cultures. This is because Japan is known to be a strong culturally-oriented society with experience in modernizing while maintaining its cultural inheritance intact. Ilgen and Perel have concluded in their studies that one important characteristic of the Japanese is that they "seem very conscious of various sensitivities to the range of needs expressed by recipients of technology."[28]

6) According to Smith, one of the most frequently cited barriers in transferring technologies to developing countries is the "infrastructure problem." Fortunately, Saudi Arabia's infrastructure imposes no problem whatsoever. This is due to the fact that the kingdom has decades of experience in building its oil industry. Thus, its infrastructure is well developed when compared to other developing countries as well as to newly industrialized countries.

7) Saudi Arabia enjoys a good climate for foreign investment when compared to other countries in the region. This is due to the "free convertibility of currency, the freedom to repatriate profits and fees, and the relative simplicity of the country's tax system."[29]

8) At the psychological level, one might point out that unlike the South East Asians, Europeans, and the Americans, Arabs have no "war-time" memories with Japan on the one hand, and unlike the Europeans, the Japanese have no "colonial memories" of the Arab World on the other hand.

TECHNOLOGY TRANSFER TO SAUDI ARABIA

In the previous two sections, we have discussed the Japanese experience in technology transfer and possible motivations for economic cooperation in science and technology between themselves and Saudi Arabia. In this section, based on the Japanese experience in technology transfer, ways to facilitate the process of technology transfer to Saudi Arabia will be discussed.

With more than two-thirds of the world's oil reserves buried in its desert, as the largest exporter of petroleum in the world, and while enjoying an unprecedented period of development, Saudi Arabia is in need of material and the expertise of the industrialized world in order to continue its drive for diversification of its economy base and expansion of infrastructural facilities.[30] This drive will not be smooth if it is not accompanied by the latest technology that the western countries now possess. In other words, the pace of diversifying the economic base and developing human resources will definitely be effected by the availability of necessary technology. Furthermore, the importance of technology transfer to Saudi Arabia goes beyond the normal push for economic development. This is because Saudi Arabia's economy depends solely on oil revenues, hence, any dramatic increase or decrease in oil revenues will pose considerable challenges and difficulties for decision makers. This was recently demonstrated by the Gulf war. Hence, technology is urgently needed in Saudi Arabia for it to succeed in achieving an acceptable level of diversification of its economy.

As other newly industrialized countries like Brazil, India, and several others in South East Asia have benefitted tremendously from the Japanese experience in transferring science and technology, Saudi Arabia has the potential and should do the same. Moreover, just as joint ventures between the United States and Japan have helped Third World countries like Thailand and Indonesia,[31] similar ventures between Japan and Saudi Arabia should be established to facilitate technology transfer. Attention should be focused on development projects in information technology, and planning should begin from the stage which involves the formation of joint ventures. The opportunity to acquire state-of-the-art technology from Japan for both industrial and non-industrial applications is them. The pressing question is what practical steps should Saudi Arabia follow in order to achieve it? Even though there is no specific formula that might guarantee the desired success in technology transfer, one might make the following observations:

I. Unfortunately, thus far the Arab World has not learned the technique or the art of technology transfer and it is a prevailing feeling that a true technology transfer has not taken place in the Arab World. Generally speaking, several reasons have been reported:

1. Lack of a comprehensive plan to create "a body of knowledge" to facilitate, manage and direct technology transfer.

2. Lack of skilled and professional manpower to operate the new technologies and manage the information technology.

3. Lack of professional institutions that concentrate on the R&D necessary to maintain and absorb the new technologies.

4. Lack of the knowledge and experience to identify the most needed technologies.

5. Lack of knowledge and/or commitment to apply and integrate science and technology in the developing process, both in education and industry.

6. Lack of a spirit of cooperation between the Arab countries.

7. Lack of financial resources.

II. According to Oshima, there are four key dimensions, when it comes to the scientific and technological activities of any nation: the intellectual, the economic, the political and the social. For the Saudis, the most important is the intellectual dimension which has to do with the creation of a "body of knowledge" that is capable of operating, maintaining, modifying and dealing with science and technology. This body can be created through a comprehensive plan that strengthens the educational system, establishes institutions that specialize in recruitment and training of individuals, allocates sufficient funds for R&D and guarantees the government's support.

III. Generally speaking, R&D expenditure in the Arab World is still very small, a fraction of 1% of GDP for many countries.[32] This is extremely modest when compared to R&D expenditures in the industrialized nations. Technology transfer without credible R&D programs to support the newly acquired technologies and to improve the existing one is not be a true transfer. Like the Japanese government, the Saudi government should actively participate by introducing measures to increase funding for R&D programs, infrastructure, and tax breaks and other incentives to promote such activities.

It is encouraging to know that Saudi Arabia was the first country in the Gulf Cooperation Council to establish a National Science and Technology policy-making institution. The King Abdul Aziz City for Science and Technology has been actively involved in setting scientific and technological policies and supporting R&D activities. The Ministry of Higher Education formulates national policies and plans for R&D at the universities.

IV. As we stated earlier, Japan's success in many ways was ensured by free enterprise and government guidance. Likewise, the government's role in industrial development in Saudi Arabia is, no doubt, an essential one. The government should play not only the role of the catalyst, but also be the stabilizer, supporter, promoter and most importantly, the partner.

Generally speaking, in many Arab countries, governments have invited the private sector to furnish ideas, advice or to participate in the decision-making process.[33] The government's encouragement of the private sector will give it vitality in developing the economy and allow it to function without administrative or official hinderance.

One success achieved by the government of Saudi Arabia over the past forty years has been in strengthening the oil sector through a series of "development plans." By supporting a similar free enterprise policy, the Saudi government could reap the benefits by encouraging the private sector to import the needed technologies and carry the burden of absorbing it into society.

V. In short, to allow for smooth technology transfer, the Saudi government should:

1. Establish specialized centers for technology transfer that set the policies and priorities and coordinate the technical training activities.

2. Draft a national science and technology "plan of action" like the one that was clearly defined by Japan's MITI in the early 1900s.

3. Promote R&D programs which focus on the newly acquired technologies.

4. Establish specialized institutions which obtain and disseminate necessary technical knowledge.

5. Strengthen the educational system at both the undergraduate and graduate levels so as to serve as a source for skilled manpower.

6. Encourage interaction between the universities, industry and national laboratories by providing advice, consultation, and support.

7. Establish a dialogue between scientists and engineers on the one hand and various government officials responsible for development programs on the other.[34]

Given their mutual interest and economic interdependence coupled with the Japanese-rich experience, Saudi Arabia and Japan should enjoy years of cooperation and understanding that will serve both nations. Saudi Arabia's developing its science and technology capabilities, with expertise provided by Japan, is a step in that direction.

Ultimately, the transfer of technology from Japan and elsewhere will be critical to Saudi Arabia becoming an industrialized nation.

SELECTED BIBLIOGRAPHY

1. "Economic Survey of Japan 1978/1979," Economic Planning Agency, Japanese Government, p. 135, 1980.

2. "Global Connection," TIME Magazine, 24 June 1991.

3. Ibid.

4. "Asian Power-Technology's Pacific Tilt," IEEE-Spectrum, Vol. 28, No. 6, p. 27, June 1991.

5. Gruber and Marquis, Research on Human Factor, pp. 225-256.

6. Dahlman and Larry Westphal, "The Transfer of Technology -- Issues in the Acquisition of Technological Capability by Developing Countries," Finance and Development, December 1983.

7. Charles T. Stewart and Yasumitsu Nihei, Technology Transfer and Human Factors, Lexington Books, p. 140, 1987.

8. Ibid.

9. Europe America, A High Technology Gap? Europe, America and Japan, Edited by Andrew J. Pierre, p. 89, New York, University Press, 1987.

10. Charles T. Stewart and Yasumitsu Nihei, Technology Transfer and Human Factors, Lexington Books, p. 140, 1987.

11. Charles Smith, III, Japanese Technology Transfer to Brazil, UMI Research Press, 1981.

12. Technology Exchange: The U.S:-Japan Experience, proceedings of a symposium held on 2 October 1981, edited by Cecil H. Uyehara, 1982.

13. "Asian Power-Technology's Pacific Tilt," IEEE-Spectrum, Vol. 28, No. 6, p. 27, June 1991.

14. Terutomo Ozawa, Japan's Technological Challenge to the west, 1950-1974; Motivation and Accomplishments, Cambridge, M.I.T. Press, p. 44, 1974.

15. "Research and Development-Special Issue," IEEE-Spectrum, Vol. 27, No. 10, October 1990.

16. Ibid.

17. Technology Exchange: The U.S.-Japan Experience.

18. Glyn O. Phillips, Innovation and Technology Transfer in Japan and Europe: Industry-Academic Interaction, Routledge, New York, p. 213, 1989.

19. Chalmers Johnson, MITI and the Japanese Miracle: The Growth of Industrial Policy. 1925-1975, Stanford University Press, Stanford, California, 1982. Also see, Daniel Okimoto, Between MITI and the Market: Japanese Industrial Policy for High Technology, Stanford University Press, Stanford, California, 1989.

20. Terutomo Ozawa, Japan's Technological Challenge to the West, 1950-1974; Motivation and Accomplishments, Cambridge, M.I.T. Press, p. 44, 1974.

21. "Asian Power-Technology's Pacific Tilt," IEEE-Spectrum, Vol. 28, No. 6, p. 27, June 1991.

22. James Emery, Norman A. Graham and Michael Oppenheimer, Technology Trade with the Middle East, Westview Press, 1985.

23. "Intra-National Transfer of Technology," Symposium on Intra National Technology Transfer, Asian Production Organization, Tokyo, 1975.

24. Europe America, A High Technology Gap? Europe, America and Japan, New York, p. 89.

25. Thomas Ilgen and T.J. Perel, Trading Technology, Europe and Japan in the Middle East, Praeger, New York, p. 40, 1987.

26. EuropeAmerica, A High Technology Gap? Europe, America and Japan, New York, p. 89.

27. Yashi Tsurumi, Japan, Deadalus-104, p. 124, 1975.

28. Thomas Ilgen and T. J. Perel, Trading Technology, Europe and Japan in the Middle East, Praeger, New York, p. 122, 1987.

29. Political and Economic Trends in the Middle East: Implications for U.S. Policy, Edited by Shireen Hunter, 1985.

30. Ragaei El-Mallakh, Saudi Arabia Rush to Development, Johns Hopkins University Press, 1985.

31. "Effective Mechanisms for the Enhancement of Technology and Skills in the Philippines," Institution of South East Asia Studies, 1987.

32. F. A. Daghestani, A Regional Background Paper, Published from The Regional Expert Group Meeting on "End-of-Decade Review of the Implementation of the Vienna Programe of Action on Science and Technology," December - February 1988, Amman-Jordan.

33. The Economic Development of Jordan, Edited by Bichara Khader and Adnan Badran, Published by Croom Helm, 1987.

34. "Methods for Priority Determination in Science and Technology," UNESCO/UNACAST Surveys of Institutional Needs of Developing Countries in the Field of Science and Technology, p. 7.

Issa E. Batarseh is an assistant professor of Electrical Engineering in the Department of Electrical and Computer Engineering at the University of Central Florida, Orlando, Florida.