TECHNOLOGY TRANSFER IN FDI

AJIT KUNWAR(201275048)

Executive summary

This presentation focus onCommercial technologyMotives of host and home coun-

triesGeneration, transfer and diffusionConflict resolutionCreating win-win situationBrief discussion on Chinese auto-

mobile industry

TNCs goes abroad for…

Resource seekingMarketEfficiencyGlobal presence and overall increase in

turn-over

Host countries‘ motives…

Technology transfer

Partnership and alliances in R&D

Training and knowledge spillovers

Employment and economic growth

Technology Generation

Capital intensive R&D, time consuming process,

may take decades to be commercially viable

Developing nations lack enough infrastructure to

make R&D economical

Ways of technology transfer

1. Trade in goods and services

2. Foreign direct investment(FDI)

3. Technology purchase and licensing

Technology transfer through FDI

1. Internalized Full ownership New affiliate Acquisition of lo-

cal firms

2. Externalized Technical assistance Manufacturing ar-

rangements subcontracting Monitoring joint

ventures

Determinants of mode of transfer

Nature of technology

Business strategy of TNCs

Capabilities of buyers

Host government’s policy

Absorptive capacity of host countries

Technology diffusion

Local firms trying to imitate technol-ogy

Cooperation between foreign affili-ates and domestic suppliers and cus-tomers

Labor mobility

Conflicts….

Host countriesMay not transfer technologyDeter technology transferExploitation of natural resources and la-

borHome countries

Heavy taxBarriers in expansion of business

Conflict resolution, Win-Win situation

Win –Win situationsFor host countries

Introduction of new technologyImprovement in R&D sectorEconomic growth

For home countriesTax and other incentivesExpansion of businessExport to home country and other

market

Encouraging transfer of technology

Regulatory approach collaboration between in particular de-

veloped and developing nationsMarket based technology approach transfer by whatever means it sees fit incentives by home countries Intra regional technology development agreements between regional develop-

ing countries

Transformation of Chinese automobile industry

1989 first family cars Progressive immergence of ICAMsCHERY, Geely, Great Wall, Hafei e.t.c. Global automakers are having, Sino-for-

eign JVICAMs obtained basic technological capa-

bilities in R&D, manufacturing and salesCHEERY sold 119,800 units overseas in

2007

Role of international technology transfer in the Chinese Automotive Industry

Spreading sides

Direct pathway

Sino-foreign JV(manufacturing &sales)

CHERY & Geely (ICAMs) ( R&D, manufacturing)

Indirect pathway(Spillover)

ICAMs(R&D, manufacturing ,sales)

Conclusions…FDI main source of technology transfer

Policy support in both countries is es-

sential

Create win-win situation

Host countries should improve their

infrastructure & absorptive capability

Thank you!