Setting national technology trajectories: the technology assessment role of development financial institutions in developing countries

Abstract

Development financial institutions (DFIs) in developing countries regularly face challenges in the micro-level assessment of technology to support their decisions of financing proposed technology development investments by firms and technology institutions. These financing decisions are also guided by national technological priorities such as achieving technological self-reliance and addressing energy-environmental concerns. DFIs are therefore well placed to consciously channel technology finance into national priority sector technological research. I argue that by consistently doing so, DFIs play a key role in the setting of macro-level technology trajectories in key technology areas that are of national importance to the developing country. I also argue that as developmental finance increasingly takes prominence over private finance for supporting investments in risky but essential priority sector technological research, this role playtd by DFIs can be superior to other modes adopted by national governments for encouraging priority sector technology development. I therefore suggest that national governments in developing countries actively support DFIs in playing this role, and in developing higher levels of expertise in technology assessment to enable them to set and guide appropriate national technology trajectories. International development institutions can also support DFIs in developing countries by providing them targeted technology funds through national governments.