Technological Rentierism and Capability Formation in Wealth-Rich Economies

In this paper, we introduce the concept of Technological Rentierism as a theoretical model to explain why even with an abundance of capital, high levels of infrastructure, large amounts of talent and access to global information/ knowledge, wealthy countries will continue to depend upon foreign-produced technologies. The model suggests that technological dependence can become a self-perpetuating (equilibrium) process. In each country's context, governments, companies, investors and consumers all make individual selections to use established foreign technologies simply because they represent lower risks over time and offer functional capabilities immediately; but at least initially, there will be institutional legitimacy associated with those selections. While each of these selections is individually rational when viewed separately, together they create conditions for weakening domestic capacity development through a reduction in opportunity for domestic businesses to compete and invest in developing their own technologies domestically, while enhancing the perception among consumers that foreign systems are both safer and more legitimate than domestic alternatives. The paper identifies four primary mechanisms including: Capability Fragmentation, Legitimacy Inheritance, Capability Consumption and Self-Reinforcing Procurement/Investment Behavior. The paper further distinguishes between productive technology imports that support capability building and learning and imports that consistently replace or substitute for the development of domestic capabilities.