ABSTRACT
As discussed in Chapter 3, one of the major contributions MNCs make to the economic growth and development process of host countries, particularly in LDCs, is the introduction of new technology – improved products and techniques of organizing firms, including production and marketing. Such new knowledge is created in anticipation of greater profits from the savings in costs or the increased production it makes possible. Although part of the benefits from the use of such knowledge is appropriated by MNCs in the form of royalties or licence fees, factor owners in the host country also gain from the increased income the greater production makes possible. Consumers also gain from the greater availability of improved products (goods and services) or their cheaper prices due to the use of new knowledge. Furthermore, to the extent local firms are able to imitate the technology of MNCs, indirect advantages are conferred on the population of the host country.
