Host Country Competition and Technology Transfer by Multinationals

Magnus Blomstrom, Ari Kokko, Mario Zejan

NBER Working Paper No. 4131 (Also Reprint No. r1955)
Issued in March 1995
NBER Program(s):   ITI

This paper examines whether rivalry in host country markets may force multinational films to increase the technology transfer to their foreign affiliates. Such technology flows should be interesting from the perspective of the host country and its firms, since they would increase the potential for "spillovers". Using detailed (unpublished) industry data from Mexican manufacturing industry we find that indicators for local competition are positively related to the technology imports of foreign owned affiliates. The effects appear to be strong in consumer goods industries, which suggest that foreign multinationals are especially sensitive to the local market environment when barriers to entry in the form of complex technology or high capital requirements are relatively low.

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Published: Weltwirtschaftliches Archiv, Review of World Economics, Band 130, Heft 3pp. 521-533, (1994)

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