The purpose of this paper has been to determine
whether host countries aiming to maximize the
inflows of technology through foreign multinationals
have viable policy alternatives to formal technology
transfer requirements. On the basis of a simple theoretical
model of technology transfer, proposed by
Wang and Blomstrijm (1992), we hypothesized that
polices making use of market forces may be preferable
to conventional technology transfer requirements. For
instance, policies increasing the level of competition
in the host country may erode the MNC affiliate’s
technological advantages, and force it to import new
technology from its parent. Similarly, policies
improving local learning capability and labor skills
466 WORLD DEVELOPMENT
may reduce technology transfer costs, and encourage
imports of technology.