Abstract:
Over recent decades, governments in industrializing countries have promoted policies to attract foreign investors, anticipating the benefits of technology transfer to host economies. During the 1990s, Costa Rica adopted an industrialization strategy based on attracting high-tech multinational companies (MNCs). Using an original survey of a sample of high-tech MNC subsidiaries, this article shows that the new wave of efficiency-seeking subsidiaries tend not to transfer knowledge to domestic firms even when they establish backward linkages with them. Instead, most of the knowledge transfer occurs between high-tech foreign subsidiaries. This has clear policy implications for host country governments.