ABSTRACT
In Chapter 11 we laid out a variety of policy measures that may be applied to support the attraction of technologies (phase 4 in Figure 12.1). These aim to engage MNCs in an internal transfer of technology from the parent to the local subsidiary (see also Section 6.1). However, an internal transfer to a subsidiary does not yet guarantee a successful absorption and diffusion of a technology within the economy of a host country (phase 5 in Figure 12.1). For this to occur, external spillovers have to materialize. Without external spillovers, the technology transfer is restricted to the MNC, only generating limited benefits for the host country. In the extreme case of a MNC shutting down its local subsidiary, the technology would even be lost for the host country.
