Policies to Encourage Inflows of Technology through Foreign Multinationals

The debate on the role of government policies for economic performance has, in recent years, turned from discussing the choice between free markets and government intervention to asking what types of intervention are good or bad. One reason is that almost all governments, irrespective of their political orientation, have chosen to play an active role in their economy (see, for example, Bardhan, 1990). However, the definition of successful intervention is still disputed, although an important lesson from the recent experience of several Asian economies seems to be that governments should make use of market forces in their efforts to influence the direction and character of economic growth: markets and competition need to be retained to discourage wasteful use of resources and to encourage learning and technical advances.