TECHNOLOGY-TRANSFER, FIRM OWNERSHIP, AND INVESTMENT IN HUMAN-CAPITAL

Technology is transferred across countries at some cost to the transferor and transferee. Rather than treating transfer costs as determined by a Leontief type cost function, we examine the incentive of each party to invest resources in transferring technology. The theoretical model predicts that subsidiaries will receive greater resources than partially licensor-owned and independent firms. The empirical analysis confirms this prediction. This result favors multinational investment over direct licensing of technology to independent firms.