A similar discussion is now emerging in the literature
on foreign direct investment (FDI) and technology
transfer. Some of the main host country benefits of
FDI are considered to stem from the inflows of new
technology to affiliates of multinational corporations
(MNCs), since these flows create a potential for technology
spillovers to the host country’s local firms
(Caves, 1974; Globerman, 1979; Mansfield and
Romeo, 1980; Blomstrijm, 1989; Kokko, 1994). What
policy measures should host countries adopt to get the
MNCs to transfer more technology, and to increase the
potential for spillovers? The traditional view has been
that different types of regulations are necessary. Many
governments have therefore framed the environment
within which multinationals operate by introducing
various performance requirements for their behavior.
Special attention has been given to policies regardingtechnology transfer, and a number of measures
intended to encourage or force multinational firms to
increase their technology transfer have been introduced
over the years, including requirements for local
content and local research and development (R&D).