HW 1 CONNECT.docx - Technology spillover refers to the...

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Technology spillover refers to the beneficial effects of technological knowledge on the innovative and productive ability of other firms and countries. It means that an entity can be able to acquire and utilization knowledge created by another firm without paying for it and the owner of the knowledge have no recourse in the face of law. The first factor that affects the likelihood of technological spillover is the attractive market conditions for the firm to make investments and make operations. It will encourage other firms to invest and or go for external innovations to compete and stay in the market. It brings technological spillover effect. The second factor that affects the technology spillover is foreign direct investment. This makes foreign firms to use their human capital in local firm. As a result, the locally absorbed employees stand to learn of new innovations and ways of doing things from the expatriates. The local
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