The Multinational Firm and the Cost of Technology to Developing Countries

by R. Mason



The article asserts that multinational firms are criticized for various sorts of behavior. Some of the statements that are repeatedly made are that multinational firms make excessive monopolistic profits, which are repatriated rather than being reinvested, these firms arrange licensing agreements even with their own subsidiaries which result in excessive fees and perhaps no infusion of new technology and that multinational firms do not provide enough training nor do they recruit nationals into the higher echelons of management. Moreover, it is argued that direct foreign investors extract monopoly profits and receive excessive fees for the know-how they transfer. These claims are accepted by many influential individuals in the developing countries, despite a deficiency of data supporting those claims. Those who favor greater control of direct investment, when they do offer substantiating evidence, point to the abuses of one or a few firms and fallaciously label all direct investors the same.

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