The alternative proxy PREQS re&cts the share of
affiliates that faced various quantitative performance
requirements in 1982 (including import restrictions,
minimum local content, and minimum local employment requirements).
These requirements are likely to
increase the costs of importing and using advanced
technologies, and we hypothesize that PREQS will
have a negative impact on technology transfer. It is
possible that PREQS avoids some of the problems
afflicting TREQS, and it may therefore be more suitable
for present purposes. One of its advantages is that
the quantitative requirements reflected by PREQS are
less ambiguous and easier to uphold than those
included in TREQS; another is that local content
requirements are typically not motivated by worries
about low technology inflows to the affiliates of
foreign MNCs, but rather by concerns about the
employment and balance-of-payments effects of FDI.