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Paper on FDI favours tech transfer to developing nations

India said on Thursday that technology transfer should be the 'core' of FDI flows to developing countries and multilateral rules should not curtail domestic policy options.

In a paper presented to WTO, India said, "Growth rates recorded by FDI flows in the past few years have been more impressive than those by technology transfer payments, which tend to indicate that recent spurt in FDI flows may not have been accompanied by technology transfer."

The paper, welcomed by several members, pointed out that transformation of developing countries from a stage of low technological development would not be possible except through the transfer of technology.

"More particularly, as the share of developing countries in FDI flows has started moving up, their share in technology transfer has come down," the paper said adding that issue of technology transfer should be at the core of the development debate in the context of FDI flows.

The paper said there was documented evidence to suggest that market forces did not ensure technology transfer to and absorption by developing countries, and therefore the multilateral rules aimed at curtailing rights and ability of developing countries to influence entry and establishment of foreign investment was not desirable.

While the last decade witnessed a veritable explosion in cross-border FDI flows, the lion's share of such flows was accounted for by mergers and acquisitions as compared to greenfield routes, it said.

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