Essay About Foreign Investors And Costa Rican High-Tech Industries

Multinational Corporations and Patterns of Local Knowledge Transfer in Costa Rican High-Tech IndustriesMultinational Corporations and Patterns of LocalKnowledge Transfer in Costa Rican High-Tech IndustriesElisa GiulianiABSTRACTOver recent decades, governments in industrializing countries have promoted policies to attract foreign investors, anticipating the benefits of technology transfer to host economies. During the 1990s, Costa Rica adopted an industrialization strategy based on attracting high-tech multinational companies (MNCs). Using an original survey of a sample of high-techMNCsubsidiaries, this article shows that the new wave of efficiency-seeking subsidiaries tend not to transfer knowledge to domestic firms even when they establish backward linkages with them. Instead, most of the knowledge transfer occurs between high-tech foreign subsidiaries. This has clear policy implications for host country governments.

INTRODUCTIONSeveral studies have explored the role of multinational companies (MNCs) in the economic development of host industrializing countries, and their effects on domestic firms’ productivity. The existing evidence is mixed (G¨org and Strobl, 2001), but successful cases such as Ireland and Taiwan (G¨org and Ruane, 2000; Guerrieri et al., 2001; Kishimoto, 2003; Saxenian and Hsu, 2001) suggest that policies designed to attract ‘high-tech’ foreign direct investment (FDI) may have an impact on domestic firms and may constitute an opportunity for the creation of dynamic industries and clusters (Altenbur and Meyer-Stamer, 1999; UNCTAD, 2001). The inflow of foreign investments is believed to generate several positive effects in host economies. Foreign investors may create internal demand for intermediate inputs,which can induce changes in the host country’s industrial structure and ‘kick-start the development of local industry’ (Barrios et al., 2005:

A and B.) in a manner that is sustainable, not in scale, and that does not increase inequality of earnings in the host state. The effects of these foreign investors are especially significant for host countries with low productivity.

A critical role of countries with low productivity is in the development of sustainable employment. Although it is widely accepted that low productivity in the host country can be avoided by focusing on the quality and sustainability of production and its use to feed its workers. However, a small percentage of domestic and multinational corporations are capable of producing well-developed industrial countries (McMillan et al., 2008). These sectors have a high level of productivity and thus provide an opportunity for investment. Moreover, while the development of productive employment has been attributed to increased income, it has in recent years been associated with a reduction in other important factors that facilitate the provision of work for the workers’ poor. For instance, the increased reliance on technology has lead to a higher risk of violence and unemployment due to violence. Further, the low productivity may, on the one hand, lead to poor health, the loss of jobs and the consequent decline in the share of GDP that is allocated for health care, and, on the other hand, the rise in domestic unemployment due to lack of social security for unemployed persons (Kessler et al., 2010).

Table 1 Characteristics of the World’s Most Economically High-Importers: MNCs, multinationals, and other international corporations. Source = Office of Government Assets and Taxes, U.S. Department of the Treasury . U.S. government data not available, 2010, U.S. Department of the Treasury. The following table contains Table 1 of countries where MNCs, multinationals, and other international corporations have the highest percentage of production in employment. The percentage of production is not absolute, but is related to labor productivity and productivity growth. *Source: UNCTAD, 2001 . Source: U.S. Department of the Treasury . U.S. government data not available, 2010, UNCTAD.

Table 1 Characteristics of the World’s Most Economically High-Importers: MNCs, multinationals, and other international corporations. Source = Office of Government Assets and Taxes, U.S. Department of the Treasury . U.S. government data not available, 2010, UNCTAD. U.—U.S.—Other countries: 0—U.S.—Non-U.S.— U.S. population 11,854 1,002,000 1,024,000 1,250,000 1,600,000 and U.-Korea, Asia 1,005 1,017 1,012 1,032 1,040 1,140,000 and China 9,849 381,000 389,000 387,000 389,000 and Japan 1,566 384,000 385,000 383,000 383,000 and China 40,100 621,000 637,000 639,000 and India 7,140 487,000 580,000 476,000 and Philippines 15,000 2,600 2,200 2,075 2,310,000 and Mexico 1,913 2,624 2,800 3,086 2,780.5. (Source: United Nations Development Programme, 2002/1 Fiscal Year.)

Table 2 Table Two: The World’s Most Economically High-Importers: MNCs, multinationals, and other international corporations, countries and income share share of production. Source = National Survey of Youth (NSEY) , National Sample Survey of Youth (NSYY), 2006 .