ABSTRACT
The product cycle theory and empirical studies also indicate that transfers of full-scale research and development capabilities by multinationals to foreign affiliates are exceptional and reflect special circumstances, such as the peculiar requirements of a particular national market or host-country government requirements. During the 1970s and 1980s the foreign position in Canadian manufacturing and resource industries declined, hastened by the emergence of alternative investment opportunities for multinationals elsewhere and by nationalist government policies, particularly in the petroleum industry. Host-country government policies figure prominently in the literature on foreign direct investment (FDI). Specific policies to encourage FDI and technology transfers come in a variety of positive and negative forms. Government policies in the countries of domicile of parent firms also have had an impact on foreign investment and technology transfer decisions, perhaps to a greater extent than is generally recognised in the analytical literature.
