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Taxation and the Transfer of Technology by Multinational Firms

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  • Harry Huizinga

Abstract

This paper analyzes a multinational's transfer of technology to a foreign subsidiary for the case where there is a risk of expropriation. An expropriation is assumed to give rise to competition between the parts of the previous multinational enterprise. To reduce the benefit of expropriation, the multinational generally transfers an inferior technology, even if the transfer of technology is costless. With a reduced benefit of expropriation, the multinational has to pay lower taxes to prevent expropriation. The multinational optimally transfers additional technology over time if it has a finite horizon in the country. For this case, tax payments also are shown to increase over time in a tax-holiday-like fashion.

Suggested Citation

  • Harry Huizinga, 1995. "Taxation and the Transfer of Technology by Multinational Firms," Canadian Journal of Economics, Canadian Economics Association, vol. 28(3), pages 648-655, August.
    • Handle: RePEc:cje:issued:v:28:y:1995:i:3:p:648-55
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    References listed on IDEAS

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    1. Wang, Jian-Ye, 1990. "Growth, technology transfer, and the long-run theory of international capital movements," Journal of International Economics, Elsevier, vol. 29(3-4), pages 255-271, November.
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    Cited by:

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    2. Müller, Thomas, 2003. "The Multinational Enterprise," Munich Dissertations in Economics 799, University of Munich, Department of Economics.
    3. Helene, LATZER, 2006. "Foreign Direct Investment and the Nature of the Imitation Process," Discussion Papers (ECON - Département des Sciences Economiques) 2006012, Université catholique de Louvain, Département des Sciences Economiques.
    4. Latzer, Hélène, 2013. "Bridging the technology gap with limited human capital resources," Economic Modelling, Elsevier, vol. 35(C), pages 175-184.
    5. Yeonseung Chung, 2008. "On the Convergence of Productivity Between Large Enterprise and SMEs," Korean Economic Review, Korean Economic Association, vol. 24, pages 459-475.

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