A Note on Multinational Corporations and Technology Transfer Agreements

Multinational corporations are responsible for much of the technology transfer that occurs between the developed and developing countries. Consequently, these corporations play an important role in economic development by supplying technical skills, managerial know-how and capital. However, this transfer of technology is not a costless process: these corporations remit money in the form of royalties, technical fees, and profits from the less developed countries. For undivided Pakistan, between 1965-1970 payments for royalties and technical fees averaged $102 million per year [2, p. 126]. If other costs, for example, profit repatriation and over-pricing of intermediate inputs, are included the figure would have been much higher. Much of the technology that has been transferred to Pakistan has been on a contractual basis through the subsidiaries of multinational corporations or through joint ventures with domestic Pakistani-owned companies in the agricultural and industrial sectors of the economy. In an earlier study by Radhu [3, pp.361-74] the characteristics of fifty contractual agreements involving technology transfer upto 1969 have been described and analysed. This note examines the contractual agreements from 1970 to 1976. In all, fifty four contracts are examined.1 These agreements cover the manufacturing sector of the Pakistani economy.