Multinational Corporations & Transfer of Technology

Technology to LDCS: Issues and Recommendations

The transfer of technology is one of the greatest benefits a lesser developed country (LDC) can hope for when allowing a multinational corporation (MNC) to invest in it. Back in the early 1960s, and even before, economists, motivated by the Prebisch hypothesis, were advocating policies of import substitution and export promotion for LDCS. Government officials in LDCs hoped that this could be accomplished through the MNCS. With this form of direct investment, the host country would acquire the processes of production and the management and marketing skills which they lacked. Eventually, the LDCs would catch up and the gap between the wealthy developed countries and their own poor countries would be bridged.

This has not happened. Poverty and the technological gap have remained prevalent in most LDCS, very few of which have been able to compete in world markets. The notion of whether LDCs gain through this supposed transfer of technology is directly challenged. In the 1970s and early 1980s, many studies were undertaken examining some of the issues involved when technology is imported by MNCS.

From these studies,, three central questions emerged which are relevant to governments in LDCS: Is the technology imported appropriate for the LDCS? Is the technology absorbed by the LDC? Is the LDC able to then pursue autonomous growth? Certainly, questions like these

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s statement should be qualified. First, having a dual industrial society is not necessarily a good thing. If a country has plans for self-reliance, then a large gap in its technological techniques is undesirable because it may not know how to produce goods in that gap which may be necessary for further development. Second, unless the country is already somewhat developed in its human capital sector, the know-how passed on will be less effective. It will tend to take the form of show-how rather than know-how, with the result being less than desirable. This point is addressed when the question of technological dependency is discussed. However, a development objective of an LDC must be to increase education and training in order to raise the level of human capital. The third issue, that of technological dependence, is more controversial since dependence is a strongly connotative word. However, given the evidence just presented concerning the lack of effective transference, it should not be surprising that there is a good deal of support for the idea that the LDCs become technologically dependent. Most MNCs do not conduct research in the small LDC markets. Indeed, it seems that the newest advances in product lines are first
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Some common words found in the essay are:
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Approximate Word count = 3602
Approximate Pages = 14 (250 words per page)