Dynamic investment model for high-tech industries in developing countries

Abstract

Purpose: A dynamic model of multinational corporations' investments in developing countries is introduced. It helps to investigate the case of investment flows re-distribution between countries within one industry. Discussion: On the basis of summarizing current research on technology transfer effect, in particular, identified two different forms of it, depending on the stage of the investment process. It was also shown the existence of displacement and substitution effects of investments. Interaction of these effects with the effect of technology transfer was the basis of the proposed economic model. Results: The given model allows companies to estimate benefits and costs of decision-making on transfer of assets between developing markets. It could also be used as a basis for designing public policies for attraction of foreign investments in developing countries.