Multinational Firms and Technology Transfer

19 Pages Posted: 5 Jun 2003

See all articles by Amy Jocelyn Glass

Amy Jocelyn Glass

Texas A&M University - Department of Economics

Kamal Saggi

Southern Methodist University (SMU) - Department of Economics

Abstract

We construct an oligopoly model in which a multinational firm has a superior technology compared to local firms. Workers employed by the multinational acquire knowledge of its superior technology. The multinational may pay a wage premium to prevent local firms from hiring its workers and thus gaining access to their knowledge. In this setting, the host government has an incentive to attract FDI due to technology transfer to local firms or the wage premium earned by employees of the multinational firm. However, when FDI is particularly attractive to the multinational firm, the host government has an incentive to discourage FDI.

JEL Classification: F13, F23, J41, L13, O14, O33, O38

Suggested Citation

Glass, Amy Jocelyn and Saggi, Kamal, Multinational Firms and Technology Transfer. Available at SSRN: https://ssrn.com/abstract=371852

Amy Jocelyn Glass (Contact Author)

Texas A&M University - Department of Economics ( email )

5201 University Blvd.
College Station, TX 77843-4228
United States
979-845-8507 (Phone)
979-847-8757 (Fax)

Kamal Saggi

Southern Methodist University (SMU) - Department of Economics ( email )

Dallas, TX 75275
United States
214-768-3274 (Phone)
214-768-1821 (Fax)

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