Pakistan Institute of Development Economics



Transfer of Technical Know-How Through Multinational Corporations in Pakistan

Author: G. M. Radhu

The traditional theory of foreign investment says that foreign investors, which usually are the multinational corporations, bring to underdeveloped countries not only foreign equity and loan capital most often in foreign exchange but also advanced technology and managerial experience. Most underdeveloped countries lack qualified technical skills and managerial personnel; local entrepreneurs are usually not adequately trained to meet the problems involved in rapid technological change. Multinational corporations bring with them sophisticated technical know-how, modern management and marketing techniques and manufacturing experience. They also give training to local staff in both the technical and managerial fields. Some patented processes and designs necessary to successful production are sometimes made available under license without the accompanying foreign loan/equity capital; but management, marketing and organizational skills, and some technical know-how complementary to the licensed technology is usually not transferred by multinational firms without having equity participation [1], Often the knowledge covered by license alone is not sufficient; the complementary know-how and skills are required to apply the patented knowledge to actual production. Particularly in underdeveloped countries where local technical skills are scarce and technical personnel is limited, the complementary know-how and skill is very important.

G. M. Radhu

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