What role does foreign direct investment play in international transfer of technology?
What will be an ideal response?
Foreign direct investment is particularly important because it is a major conduit for technology transfer, though in most cases this transfer is not the goal of the foreign firm that is making the investment. When a British company becomes part of a joint venture or opens a factory in China, it brings its know-how and technology to the country. This type of technology transfer enables recipient countries to improve their productivity. Technology transfer creates cross-country interdependence. Countries are not only trading goods and services and having their firms and banks borrow from and lend to each other, but they are also technologically interlinked. Innovations and technological improvements in one country will ultimately improve productivity in all countries. Moreover, the more interaction there is between these countries, in particular through international trade and foreign direct investment, the faster these improvements will migrate from one to the other.
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At full employment the unemployment rate equals the
A) cyclical unemployment rate. B) structural unemployment rate plus the frictional unemployment rate. C) structural unemployment rate plus the cyclical unemployment rate. D) structural unemployment rate.
According to the kinked demand curve model, an oligopolist may face
a. more elastic demand than a monopolistic competitor. b. less elastic demand than a monopolistic competitor. c. more elastic demand if she raises her price than if she lowers her price. d. less elastic demand if she raises her price than if she lowers her price.
Exhibit 17-1 Inflation and unemployment rates
In Exhibit 17-1, when the unemployment rate goes from 3 percent to 9 percent,
A. the level of inflation is unaffected. B. the inflation rate goes from 8 percent to 14 percent. C. the inflation rate goes from 8 percent to 3 percent. D. the inflation rate goes to 0 percent.
Mr. Garrison has recently obtained a bank card from South Park National Bank. Excited about the concept of using a little plastic card to get money from a machine, he quickly runs down to the nearest ATM and withdraws $500. This action has:
A. increased the money supply by $500. B. reduced the money supply by $500. C. reduced the bank's required reserves by $25 assuming the reserve ratio is 5 percent. D. not changed the money supply.