establishment of many subsidiaries by MNCs and TNCs which can create several

Establishment of many subsidiaries by mncs and tncs

This preview shows page 18 - 20 out of 31 pages.

establishment of many subsidiaries by MNCs and TNCs, which can create several jobs, improve the economy, and be the basis for national industrial development (Li-Hua, 2010, Uchida, 1990, Khurana, 2013). Remember that a country that does well in ITT will eventually become a magnet of subsequent exogenous and endogenous investments and will earn respect in the world economic map. The human nature compels people to identify themselves with successes and not with failures. Challenges: Several challenges face ITT. The three common ones are: incomplete information; market power; and market failures. Incomplete information is the fact that technology owners do not always disclose all the information to the recipient; hence the buyer is unable to fully appreciate the actual price ant the extent of the technology. Owners would prefer to open subsidiaries than disclosing the whole truth to the would-be competitors. Regarding market power, owners of technology have more power than buyers because of their accumulated advantage and the power of patents and the backing they get from International Bodies. This situation makes the price of technology often higher than expected; hence giving a smile to technology owners and pain to buyers. Besides, the market can not always appreciate and measure the costs and benefits of technology diffusion. Hence, technology owners may not gain any benefit that might eventually occur when the diffused technology produces spillovers. If there are any positive spillover results, the advantage will go to technology buyer alone (Hoekman, Maskus, Saggi, 2004).
Image of page 18
Page 19 of 31 Another problem is that policy makers and planners may face difficulty in analyzing, measuring and pricing of complex ITT processes. Together with that challenge is the intricate issue of technology imitation. Imitation is hardly reported or documented properly; hence, making the capture of innovation spillover difficult. These measurement challenges leads to another complication for policy makers of how to formulate adequate TT targets for the national policies and programs in the complex ITT undertakings (Hoekman, Maskus, Saggi, 2004). Furthermore, there is problem of how to balance certain ITT aspects such as: technology protectionism vs. open trade regime; local content vs. requirements of foreign investors. Then, the question is: Should FDI be placed under restrictions or be left without any? Remember that Japan, South Korea, and Taiwan at various points imposed certain restrictions on FDI (Hoekman, Maskus, Saggi, 2004). Technology owners prefer the recipient country to have more liberal FDI and TT policies to their advantage. What about the stake of technology recipient? All these issues need to be well considered in policy making. Additional problem lies in the hidden mismatch between the goals of technology giver and buyer. The capitalist world adores super profits. Hence, their goal is often to realize as much profit as possible through whatever form of ITT. The poor world is struggling with solving socio- economic growth problems. The goal here is to get technology at cheapest possible price (Li-Hua,
Image of page 19
Image of page 20

You've reached the end of your free preview.

Want to read all 31 pages?

  • Summer '15
  • AZIRA
  • Management, Technology transfer

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes