Governments around the world are turning to investments and policy incentives to promote the growth of innovation in their local information communications technology (ICT) industries.  Some governments have begun implementing a number of “forced localization” policies designed to boost their domestic manufacturing, high-technology and R&D capabilities, and services by discriminating against foreign companies.  These types of policies were once limited to China, and to a lesser extent Brazil, but are emerging in India, Russia, Indonesia, Nigeria, and Argentina.

Some of these policies share a number of troubling provisions, including mandatory technology transfer requirements, local sourcing requirements in government and private sector procurements, the escrow of source code and other sensitive design elements, import restrictions, and restrictions on the flow of data.   All of this is out of step with international norms that have helped to drive the growth of the global ICT and other industries.

These types of policies will reverse decades of global growth and innovation and threaten the millions of quality jobs that are tied to the global technology industry.  The ability to access foreign markets and compete on equal terms has been critical to the health of the ICT and other sectors.  As the global economy recovers from a severe recession, it is critical that global ICT companies be able to access the large percentage of consumers who live in both developing and developed markets.

In Washington D.C., ITI is leading the charge to work with a diverse range of stakeholders to ensure the concerns surrounding this issue of global forced localization policy is understood by senior policymakers in the U.S. Government.  In addition, on the global front, ITI cooperated with its member companies to monitor, analyze, and engage on country-specific forced localization policies.  We also partner closely with like-minded international technology and trade associations in Tokyo, Brussels, Seoul, etc. to combat the troubling aspects of forced localization. 

Moreover, ITI works with governments around the world on how to best promote effective innovation policies through foreign direct investment (FDI).  ICT companies operate globally and choose investment locations that offer the most competitive and welcoming environment.  Baseline considerations center on a stable and predictable regulatory environment.  A number of general enabling factors further facilitate investment, such as a steady macroeconomic climate, access to international trade, a skilled workforce, world-class infrastructure, public sector transparency, strong rule of law, robust intellectual property protections, and protections against arbitrary expropriation.

Links:

OECD Innovation Strategy

White House Innovation Strategy