Negative impact of technology transfer on host country: It is unde undeni niab able le that that tech techno nolo logy gy tran transf sfeer is an oppo opport rtun unit ity y for the the undeve undevelope loped d or develo developing ping countr countries ies can follow follow up with with the develo developed ped ones. ones. Nevertheless, there are some problems that come along with the advantages technology transfer bring. The transfer of technology, however, can also bring negative effects. For the purpose of holding advantages in technology in comparison with local companies, the multinationals may have an adverse reaction to host country R&. It is possible that that the multi multina natio tiona nall corp corpor orati ation onss may may tran transf sfer er to the the host host coun countr try y firm firms! s! inappropriate inappropriate technologies. technologies. "oreover, "oreover, the host country would easily be dependent dependent on the technologies it counts on the multinational ones. #s a result, the local firms! inte intere rest st in prod produc ucti tion on made made by new new tech techno nolo logy gy will will decr decrea ease se..
In thes thesee
circumstances, the host country dependence on multinationals technology will be perpetuated. In terms of the labor force, there also e$ist negative conse%uences from FI inflows. The use of advanced technology by multinationals leads us to predict the need for fewer worers than that used by local firms, leading to the conse%uent increase in unemployment. Furthermore, the enterprises of the host country will feel the support from the local less than it used to be. 'ome e$perts argue that local authorities, verifying that multinationals are a source of training and improving the leve levels ls of educ educat ation ion in the count country ry,, redu reduce ce publi publicc spendi spending ng in this this area area whic which h mitigate mitigate the effect effect of training training of the labor force provided by FI. (ven worst, host countries will witness a wave of intelligent outflow, high educated labors may leave the country for there are no R& activities that they can engage in the host country. In other respects, further integration in the globali)ation thans to technology tran transf sfer er will will leav leavee the the host host count country ry faci facing ng probl problem ems. s. "eci "ecinge ngerr sugge suggests sts that that technology transfer has a far greater impact for imports than for e$ports, which influences negatively the balance of payments. The negative effects are well shown in import field, the multinationals when operating are desperate for a large %uantity and %uality goods and raw materials and under most circumstances, these are not
available available in host country. *ut it another another way, this investment investment made may have as its main ob+ective ob+ective the supply of the local maret and thus does not encourage encourage e$ports. (conomic e$perts have claimed that FI is one of the most way of spreading econom economics ics proble problem, m, especia especially lly those those that that have have occurr occurred ed in the multina multination tionals als countries of origin. ost countries become more open economies and more sub+ect to changes in the global economy. Techn Technolog ology y transf transfer er help help the compan companies ies produc produces es cheape cheaperr produc productt and increa increase se competi competition tion in the maret maret.. oweve owever, r, increas increased ed competi competition tion does does not produce only positive effects on the host country. ($perts argue that this increased comp compet etiti ition on lead leadss inev inevit itab ably ly to the the clos closur uree of some some local local firm firmss -that -that can can not compete with multinationals due to the advantages they have, which leads to increased concentration in the sector, and in turn will lead to decreased competition. In order to face the strong competition competition from multinationals, multinationals, concentration concentration can also occu occurr betw betwee een n loca locall firm firmss to achi achiev evee gain gainss in econ econom omie iess of scal scale, e, redu reduci cing ng competition. Finally, another effect that is recorded by several studies is that caused by the competition created in access to credit, which will bring negative conse%uences to the host country!s economy. In fact, technology transfer through FI cost %uite a lot of money and that will have multinationals tend to be partly financed by the host countries financial marets. This increase in financing needs in the country will have effects in that maret, so it is predicted that the costs of credit increase and that the access to credit changes. "ultinationals financed in host countries will reduce their ability to grant loans, maing it difficult for local firms to obtain loans. #dditionally, FI can cause a loss of domestic savings which further maes the availability to grant loans worse. These problems in access to credit are mainly e$perienced by local firms which have a smaller structure, and then find it difficult to support the increased costs of credit, plus their wea bargaining power with financial institutions. This competition for funding could preclude some local firms from necessary investments for their development or even for their maintenance, which may lead to their disappearance.
There are researching that is conducted in order to reduce these negative effects, help the host country to benefits from technology transfer to have better economics growth.
