The Ambivalence of Technology Transfer through Foreign Direct Investments

Foreign direct investments (FBI) have been touted as the ideal means through which nations can develop and improve their technological capabilities in order to increase their global competitiveness. It is a known fact that parent companies of FDIs are among the world´s most important creators of knowledge and technology. However, it is debatable if FDIs are the right route to technological capability catching-up for developing countries. This paper attempts at formulating a model that depicts technology transfer (TT) by FDI in the electronics sector in South Africa and make appropriate and enabling policy recommendations for optimal TT. The study sample comprises all FDIs in the electronics sector in the country, albeit more than 80% are based in the Gauteng province. Notwithstanding the fact that technological development of countries such as China could be related to the massive inflow of FDI among many other factors, the academic literature reports that some countries have been negatively impacted by FDI. This study investigates this phenomenon and goes a step further by looking at the social networks involved in the TT process