Some aspects of technology transfer and direct foreign investment

Abstract

A model showing technology transfer to developing countries links questions of appropriations with the socio-economic reasons for technological change. The rate at which foreign capital is used is found to be directly related to after-tax profits. If the developing country raises taxes on foreign capital, the effect is to increase the proportion of domestic capital needed and to widen the technological gap between the two countries. The analysis also shows a higher gain from new techniques with increased demand volume and suggests large developing countries with similar capital to invest are more likely to generate intermediate technologies. 8 references.

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