This thesis focuses on foreign direct investment (FDI) as a unique form of international technology transfer (ITT). The geographical scope of the study is narrowed to the case of developing countries. Especially, Egypt is taken up as a case study of a middle-income country representative of the wide spectrum of Southern countries. Research resources are drawn from the library of the American University in Cairo, other accessible libraries, electronic databases and directories, print and electronic journals, and other in-field contributions. To qualify the discussion of the case study, input was sought from a group of representative multinational corporations (MNCs) operating in Egypt (16 subsidiaries in 6 different lines of activity) through a questionnaire and, as far as possible, interviews with the relevant officials. Technology has been gaining importance as a vital factor of competitiveness in the world economy. Concurrently, intra-firm technology transfer through FOi has become the predominant channel of ITT, with other non-FDI forms of ITT losing weight. Though FDI comes second to contractual licensing, as a viable tool of domestic technological development, FDI can have important technological spillovers in host economies, especially if it takes a joint-venture form subject to local control. The international FDI environment still leaves a wide room for technological manipulation of spillovers from FDI. Unfortunately, due to dire need for capital finance and/or absence of appropriate national technology policies, most host developing countries focus

on maximizing the quantity of their FOi inflows, while underestimating the importance of the quality of technologies transferred through FOi. Hence, developing countries should try to improve the record of technological exploitation of FOi in their economies. Reaching for this objective, three general policy recommendations could be made. First, host countries should undertake requisite investments in further developing their stocks of human capital, enhancing domestic R&O capacities, and providing stimulating macroeconomic, regulatory, and institutional environments. Second, host countries should assign high priority to channelling FOi flows into the sectors of high and/or needed technologies, and to attracting foreign investors offering the transfer of such technologies. In this context, the transfer of "black-box" technologies should be avoided, or otherwise spillovers from such technologies should be ensured through governmental intervention. Technologies transferred should also be appropriately adapted to the distinctive characteristics of host countries. Finally, anticompetitive practices by MNCs should be combated so as to ensure fair distribution of investment returns and, at the same time, establish domestic environments conducive to creativity and ITT. The local legal, institutional, and policy frameworks as well as the technological impact of FOi in Egypt were examined. It is evidenced that most FOi in Egypt is domestic market oriented, with little technological impact and poor export performance. The survey of MNCs in Egypt reveals that there is a strong potential for improving advanced ITT by foreign investors in Egypt through enhancing local technological capacity, offering investment incentives linked to ITT activities, introducing new local content requirements, using ITT requirements, and protecting intellectual property rights in a more effective way. Thus, Egypt could, and should, make better use of FOi as a tool of domestic technological development. Otherwise, this country will face the risk of restricting its potential and further marginalizing its economy in the world economic system.


School of Business


Economics Department

Degree Name

MA in Economics

Date of Award


Online Submission Date


First Advisor

Nagla Rizk

Committee Member 1

Nagla Rizk

Committee Member 2


Committee Member 3

Bahgat Korany

Document Type



147 leaves

Library of Congress Subject Heading 1

Investments, Foreign

Library of Congress Subject Heading 2

Technology transfer

Library of Congress Subject Heading 3

Borges, Jorge Luis,


The author retains all rights with regard to copyright. The author certifies that written permission from the owner(s) of third-party copyrighted matter included in the thesis, dissertation, paper, or record of study has been obtained. The author further certifies that IRB approval has been obtained for this thesis, or that IRB approval is not necessary for this thesis. Insofar as this thesis, dissertation, paper, or record of study is an educational record as defined in the Family Educational Rights and Privacy Act (FERPA) (20 USC 1232g), the author has granted consent to disclosure of it to anyone who requests a copy.

Call Number

Thesis 2002/29



Included in

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