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Home > Data & Research > Research > Programs > Trade Research

Multinational firms and technology transfer, Volume 1

Author:	Glass, Amy Jocelyn; Saggi, Kamal;	Collection Title:	Policy, Research working paper ; no. WPS 2067
Date Stored:	2001/04/25	Document Date:	1999/02/28
Document Type:	Policy Research Working Paper	Language:	English
Major Sector:	(Historic)Private Sector Development	Report Number:	WPS2067
Sub Sectors:	Business Environment	SubTopics:	Foreign Direct Investment; Environmental Economics & Policies; General Technology; Education for the Knowledge Economy; ICT Policy and Strategies
Volume No:	1

Summary: The authors construct an oligopoly model in which a multinational firm has a technology superior to those of local firms in the host country. Workers employed by the multinational acquire knowledge of the superior technology and can spread their knowledge to local firms by switching employers. The multinational chooses to pay a wage premium to prevent local firms from hiring away its workers if the local firms are sufficiently disadvantaged or if there are enough local firms. Diffusion of the superior technology benefits local firms at the expense of workers, whose wages suffer. The host government might have an incentive to attract foreign direct investment even when technology transfer will not result, because of the wage premium local employees of the multinational firm earn. Also, foreign direct investment with technology transfer may reduce the total economic rent the host country earns.


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	PDF 33 pages	WPS2067	0.29

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