Before discussing the determinants of the affiliates’
capital imports, it is necessary to make some additional
comments on the relation between imports of
capital equipment and technology transfer in general.
We already noted that affiliates in developing countries
seem to prefer imports of capital equipment
before imports of disembodied technologies - some
possible reasons are that technologies embodied in
machinery may require less human capital, which is
scarce in developing countries, and that payments for
capital equipment are seldom subject to the types of
restrictions that regulate payments of royalties and
license fees in many developing countries. These
arguments imply that there may be some substitution
between different modes of technology transfer, and
that the effects of education and technology transfer
requirements on the variable CAPIMP may be more
complicated than those for LICENSE. For instance,
we have hypothesized that higher learning capability
and labor quality in a host country encourage the
foreign affiliates operating there to import more technology.
These technology flows may not, however,
always occur as increased imports of capital equipment.
A higher level of education may sometimes
mean that it is easier to find local suppliers of
advanced machinery and equipment - so that the
needed machine technology can be imported in the
form of blueprints - and CAPZMP may remain low
although technology transfers in general are high.
Similarly, low levels of education and relatively high
imports of capital equipment may sometimes coincide
if there are no local suppliers of machinery and all
equipment has to be imported. This suggests a more
complex case, with several effects pulling in different
directions.