Knowledge Transfer to Emerging Markets via Consulting Projects

Abstract

In recent years, development agencies (DAs) have focused their activities on consulting projects rather than on financing turnkey projects when assisting emerging markets. The main reason is that the implementation of consulting projects is likely to be connected with an intensive knowledge transfer from developed to emerging markets. Training of local employees and cooperation with local firms are necessary elements to make the transfer effective. The empirical statistics shows training and cooperation to be more frequent in consulting projects financed by DAs as compared to commercial projects. According to theory and experience, training should be included in projects in the least developed host countries, whereas local cooperation should be more frequent, the higher is the development level of the host country. However, DAs do not follow these rules of thumb in a convincing way. A policy implication of the paper is therefore that DAs should better organize and plan the contents of their consulting projects

Keywords: knowledge transfer, consulting projects, development agencies, emerging markets, absorptive capacity, training, local cooperation

JEL Classification: F14, L84, O19