Foreign technology and investment : ( a study of their rolein India's industrialization).

In its twenty years' life, the term "foreign collaboration" has acquired a heavy load of mythology. The early view of it as an instrument of inter national brotherhood has today been replaced by an equally melodramatic view which attributes to it all the elements of a conspiracy to impose upon this country and to prevent it from developing its own technological capability.

The present study removes the shrouds of conventional wisdom and looks upon the phenomenon in its primary form-namely, the purchase of foreign technology. It highlights the fact that the quality of technology has an important influence on the quality and production costs of the products it helps to produce: that the purchase of technology must be judged not only by the price paid for it, but also by its quality and by its use in the development of more advanced technology. Post-war foreign investment is seen to be closely connected with imports of technology, and is placed in the context of the various alternative forms of payment for technology.

These basic conclusions throw an altogether new light on the working of policy. The main thrust of the policy has been towards keeping down the cost of imported technology, which, owing to its inherent quality varia tions, has proved an intractable subject for price control. The govern ment's information base regarding the quality of technologies has been narrow; consequently it has not been in a position to prevent deleterious effects of price control on the quality.

In recent years the import of technology has been restricted for the protection of domestic technology. In this regard the study points out that the relationship between indigenous and foreign technology is as often at complementary as a competitive one, and that what research and develop ment is done in industry today has largely arisen from problems raised by imported technology. And where the relationship is competitive, the stimulation of the competition can, up to a limit, result in better allocation of the country's R & D effort as well as promote industrial efficiency.