Transfer of Technical Know-How Through Multinational Corporations in Pakistan

Abstract

The traditional theory of foreign investment says that foreign investors, which usually are the multinational corporations, bring to underdeveloped countries not only foreign equity and loan capital most often in foreign exchange but also advanced technology and managerial experience. Most underdeve¬loped countries lack qualified technical skills and managerial personnel; local entrepreneurs are usually not adequately trained to meet the problems involved in rapid technological change. Multinational corporations bring with them sophisticated technical know-how, modern management and marketing techni¬ques and manufacturing experience. They also give training to local staff in both the technical and managerial fields. Some patented processes and designs necessary to successful production are sometimes made available under licence without the accompanying foreign loan/equity capital; but management, marketing and organizational skills, and some technical know-how complementary to the licensed technology is usually not transferred by multinational firms without having equity participa¬tion [1], Often the knowledge covered by licence alone is not sufficient; the complementary know-how and skills are required to apply the patented know¬ledge to actual production. Particularly in underdeveloped countries where local technical skills are scarce and technical personnel is limited, the comple¬mentary know-how and skill is very important.

Technology Transfer, Development, Deployment and Productivity Performance in Pakistan

“…We have used imports of non-electrical machinery and transport equipment as proxy for imports of machinery. The data regarding RLF have been acquired from IMF balance of payments (BOP) Statistics, which is available from the 1993; whereas, we obtain data from the 1965-69 from Radhu (1973). Moreover, we interpolate remaining data the said variable.…”

Pakistan, Growth, Dependency, and Crisis

“…There is reason to believe that positive spillovers from even this low level of FDI would have been negligible. Typically, foreign firms had such restrictive clauses on the use of the technology that positive spillovers to the rest of the domestic economy would likely have been negligible (Radhu, 1973). Predictably, Shabbir and Mahmood (1992) find that, after 1959/60, there was no significant correlation between FDI and GDP.…”