Management of foreign direct investment in the direction of technological transfer the case of Romania.
Corduneanu, Carmen ; Milos, Laura Raisa
1. INTRODUCTION
The impact of foreign direct investment (FDI) on the productivity
of local companies and local economy through the channel of
technological transfer represent a large theme of debate among
economists worldwide. International competitiveness is a major issue for
generating economical growth among the industrialized states.
Consequence of globalization, this problem has become an increasing
important one to developing states, Romania being also included here.
Reaching competitiveness is a difficult process and requires more than a
simple passive opening to the international markets. The reason why the
international competitiveness is such an important issue is strongly
connected with technology. The fast pace of innovation, the fact that
technology and capital have become very mobile, with the FDI playing a
significant role in this respect, makes it very difficult for economies
to remain isolated from the international commerce. Beyond the transfer
of productive resources, foreign direct investments foster a better
organization of activities, connect production and services to locations
with raw material at lower costs, improves the technological capacities.
As far as concerns the Romanian economy, we can certainly state that as
far as concerns FDI, it has known a positive dynamics over the last
period. In the period 2003-2007, the FDI orientated to Central and
Eastern European countries have grown considerably, Romania being the
country with the highest rate of growth of inflows of FDI. With a deeper
and deeper stabilization of the macroeconomic environment, the volume of
FDI is expected to grow even more, becoming comparable with the inflows
of FDI realized yearly in the neighbor countries.
2. THEORETICAL FRAMEWORK
Among the many authors who have researched this issue there are
worth mentioning some studies that have tried to emphasize the role of
technological capacities in growing the economic competitiveness of a
country, concentrating on the impact of FDI upon the existent technological potential. In their study (Najmabadi & Lall, 1995)
underline that access to foreign technology is vital for developing
existing technological capacities of local enterprises, especially in
what concerns the operational capacities. Of course, the R&D is
extremely important for the way the foreign technology is used.
Moreover, the internal competition, the qualification and competences of
the personnel, the existence of efficient financing mechanisms are
important determinants for an adequate technological transfer. Despite
the fact that foreign technology has an important role in improving the
existent technological capacities, there are some authors that say that
technological transfer is not a complete process (Katz & Bercovich,
1993). In one of his studies (Lall, 1992), the author observes that FDI
can, in appropriate conditions, be a very efficient mean of transferring
a package of capital, skills, technology, brand names and access to
established international networks. It can also provide beneficial
spillovers to local skill creation and, by demonstration and
competition, to local firms. The very factor however, that FDI in such
an efficient transmitter of packaged technology based on innovative
activity performed in advanced countries, has serious implications. With
few exceptions, the developing country affiliate receives the results of
innovation, not the innovation process itself. The affiliate, in
consequence, develops efficient capabilities up to a certain level, but
not beyond. According to some authors (Lall, 1992), such drawback to FDI
in terms of technological development of the host countries may be
overcame through selective policies aiming to protect the learning
process of domestic firms and to attract high quality FDI, characterized
by: advanced multinational activities and technologies, stimulus to
locally use and create sophisticated skills; orientation towards
international markets and so, deeper participation of the host economy
into dynamic systems of international production.
3. IMPACT OF THE FDI UPON THE TECHNOLOGICAL TRANSFER IN ROMANIA
One of the most important impact of the FDI in the host-economies
is represented, as mentioned in the previous paragraphs, by the
technological transfer. We tried in this paper to see whether the theory
remains valid in the case of Romanian economy and more important, how it
was realized and what spillovers did create.
The technologies assumed from the multinational companies help the
Romanian companies to put in practice new working methods, to attain the
necessary competences and aptitudes to use effectively the new
technologies. The mechanism by which the technologies transfer was made
was represented by an assembly of voluntary ways of the new technologies
diffusion, next to methods of learning and purchase of new technologies.
The main mechanisms by means of which the transfer of new technologies
is made are: the local and foreign suppliers of materials, products and
equipments, direct investments made by the multinational, technologies
transfer by technical advisors, purchase of license, exchange of
license, strategic alliances. In reality the mechanisms by means of
which the technological transfer was made was combined. Thereby, the
affiliates of the multinational companies often contracted and paid
licenses in a separate way from the dues for the technical assistance
and certain services supplied by societies of engineering counseling.
The takeover of the new technologies by the Romanian companies depended
on the choice of the multinational companies either in favor of the
indirect transfers, or in favor of the direct ones. These choices were
at the same time influenced by the wide complex of exchanges established
between multiple units of production, sales and scientific research
spread from a geographic point of view, but which functions as an
incorporated space and of the technologies' flows orientation
between these poles. The success of the technological transfers depended
on the efforts laid in the direction of the new technologies takeover,
by the education degree of the population, by the assimilation and the
reformation of the takeover technologies to be adapted to the local
environment conditions. From a practical point of view, this transfer
did not sum up at the equipments transport from one country to another,
but implied an assembly of selection activities to choose the technology
adapted to the local conditions, according to the efficiency that they
had in the new economic and institutional environment.
Practically, the circulation of the technology transfer is not free
inside the multinational company and less outside of it. As a
consequence, the Romanian economy can beneficiate only of one part of
the amount of scientific and technological knowledge transmitted by the
multinational and controlled by these ones. Yet, the transfer of
knowledge to the personnel involved in applying the results of the
research in the company led to the accomplishment of products,
technologies, and services or important innovative processes, which
started a greater request on the market. A recent study (Corduneanu
& Iovu, 2008) notice, on a sample of Romanian enterprises from
industry and services, a slight increase for the share of the innovative
companies, from 17% to 19,9 % in the period 20002004, as well as the
doubling of the share of the companies with non-finalized innovations or
/ and abandoned ones, from 0,1 % to 0,2 %.
The exploitation of new technologies requires a high level of
professional skills. In this sense, we can say that in the last years,
there have been seen positive spillovers of the multinationals by
creating local business schools or vocational courses, where managers
from all the local companies could get adequate professional education
and not only people from the multinationals' affiliates. They had
the chance of getting a new organizational culture that they could
implement therefore in their own companies. Some examples in this
respect can be the trainings and courses organized by Ursus Breweries,
CocaCola, Renault, Selgros, Carrefour. This kind of professional
education is very important, since the existence of qualified labor
force is crucial for future FDI in the region. A natural result could be
the growing number of employees in R&D that are very important for
an efficient technological transfer. The increase of local interest for
the research and development activity (R&D) can be easily noticed
from the table below. The number of employees has grown over the
analysed period from one year to another, as well as their percent in
1000 employees and the total expenditures with R&D. This situation
depends on the region of Romania we are talking about, having in
consideration that regions with large volumes of FDI have registered
also a more significant difference in this respect:
Tab. 1. R&D activity, comparative analysis
R&D employees R&D Total
employees/ expenditures
1000 civil with R&D
normal (thousands
employees RON)
2002 2005 2002 2005 2002 2005
38.433 41.035 46,1 48,9 5.743 11.836
The analysis of the relations between the scientific and technical
potential of the Romanian economy and implanted affiliates by the
multinational shows though that their action space grows, and at the
same time increases the number of Romanian economical entities included
in this space as a consequence of the scientific and technical exchange.
As a consequence a network of relations between the affiliates and the
scientific, technical and industrial entities is created and fostered in
the Romanian economy. This network allows the increase of the technology
transfer. Next to the relations between affiliates and the mother
society, the capacity of technological absorption presents importance
because it influences on the expansion of the multinational.
On the other hand, the number of new workplaces created in Romania
through FDI forecasts an increasing interest in this region for the
future FDI. In a recent survey (Ernst &Young, 2006), Romania ranks
5h place as far as concerns the new workplaces created (12.395) after
Poland, Great Britain, France and Czech Republic. According to this
study, Romania represents an attractive target for foreign investors,
mainly because of the growing productivity, cheap and specialized labor
force and location availability. This is the reason why we consider that
although the technological transfer and other positive spillovers are
not so visible at the moment, there will certainly become more obvious
in the next years.
4. CONCLUSIONS
The paper has brought valuable information upon the spillovers
between the multinational companies and their Romanian affiliates. The
relations between the multinationals and their affiliates with the
Romanian economy were accomplished through: the relations which the
affiliate had with public and private local research centers, the
politics promoted by the affiliates on the line of recruiting and
professional development, the shopping the affiliates make from the
local producers, the products sell of the affiliates on the local
market, the governmental politics in the field of the direct foreign
investments control and the help granted to the research. There is
strong evidence that the multinationals do play an important role in the
process of technological transfer, being given the increase in the
number of innovative companies, the growing number of R&D
researchers, and of R&D expenditures, the trainings and courses of
qualification of personnel from local companies and affiliates.
A future research may take into consideration applying some
questionnaires to some important multinational companies to emphasize
upon the spillovers they produce upon their Romanian affiliates.
5. REFERENCES
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Ernst &Young(2006).European Attractiveness Survey Available
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