Channels of Technology Transfer-3

Today we will discuss on Turnkey project and Foreign direct investment as a part of Channels of Technology.

d. Turnkey project 

A country buys a complete project from an outside source and the project is designed, implemented, and delivered ready to operate. Special provisions for training or continued operational support may be included in the agreement between the parties. Engaging in a turnkey project is equivalent to buying or selling a machine but on the scale of an entire plant. Most innovative firms would not sell a plant or license technologies that they intend to exploit themselves. 

e. Foreign direct investment (FDI) 

A Corporation, usually a multinational, decided to produce its products or invest some of its resources overseas. This permits the transfer of technology to another country, but the technology remains within the boundaries of the firm (i.e., is still controlled by the firm). This type of investment has advantages for both the investor and the host country. The investor gains access to a labor force, natural resources, technology, or markets. The host country receives technological know-how, employment opportunities for its people, training for the workforce and investment capital that adds to the development of its infrastructure. The host country will also get tax advantages, since most employees will be contributing to the local economy. The multinational may also gain a tax advantage by locating facilities offshore in a country or territory that gives a tax break. Many U.S. Pharmaceutical companies have located facilities in Puerto Rico because of the tax advantage they can get with this arrangement. Some developing countries provide long-term tax relief for foreign companies located on their soil.

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