A different view on how to influence the multinationals’
technology transfer has recently been suggested
by Wang and Blomstr6m (1992). They develop
a theoretical model where the MNC affiliate’s decision
to import technology is explicitly related to profit
maximization, i.e. the affiliate imports technology
until the marginal revenue of further import is equal to
the marginal cost. Technology imports raise revenue
(although at a diminishing rate) because the demand
for MNC products is positively related to the technological
gap between the affiliate and competing host
country firms. There are also costs involved, however,
in each transfer operation (e.g., for training of local
workers), and more modem technologies are increasingly
more expensive to transfer.