The Role of Multinational Corporations in the Transfer of
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 have to be answered on a case-by-case basis. However, this paper will discuss each of these three issues in a broad sense. It will then look at what measures can be taken, or already have been taken, to assure that an LDC effectively acquires and develops technology.
Appropriate technology is defined as "providing technical solutions that are appropriate to the economic structure of those influenced . . . emphasizes the need to include social as well...