Overview

Explains how firms in four southern African countries— Lesotho, Mauritius, Namibia, and South Africa—absorb technology and how policy makers can accelerate the process. By improving technology absorption, these developing countries can increase market share to generate faster growth and create more jobs. Multiple channels of technology transfer and absorption through trade and foreign direct investment (FDI) contribute to advanced technology acquisition, while skill shortages and research and development (R&D) activities present challenges. Public policy should (1) focus on getting the basics right through fostering entrepreneurship, improving the investment climate, and strengthening competition; and (2) provide learning through trade, FDI spillovers, skill development of workers, and R&D activities such as tax incentives and intracountry technology transfer. OECD countries’ progress from the 1950s through 2000s serve as a model for supporting innovation.