Transfer of Technical Know-How Through Multinational Corporations in Pakistan

G.M. Radhu


The traditional theory of foreign investment says that foreign
investors, which usually are the multinational corporations, bring to
underdeveloped countries not only foreign equity and loan capital most
often in foreign exchange but also advanced technology and managerial
experience. Most underdeve¬loped countries lack qualified technical
skills and managerial personnel; local entrepreneurs are usually not
adequately trained to meet the problems involved in rapid technological
change. Multinational corporations bring with them sophisticated
technical know-how, modern management and marketing techni¬ques and
manufacturing experience. They also give training to local staff in both
the technical and managerial fields. Some patented processes and designs
necessary to successful production are sometimes made available under
licence without the accompanying foreign loan/equity capital; but
management, marketing and organizational skills, and some technical
know-how complementary to the licensed technology is usually not
transferred by multinational firms without having equity participa¬tion
[1], Often the knowledge covered by licence alone is not sufficient; the
complementary know-how and skills are required to apply the patented
know¬ledge to actual production. Particularly in underdeveloped
countries where local technical skills are scarce and technical
personnel is limited, the comple¬mentary know-how and skill is very

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