This paper develops an endogenous growth model where a Less Developed Countries (LDCs) through Foreign Direct Investment (FDI) and licensing. The model assumes that knowledge of DCs spills over to the LDC from licensing but not from FDI. It is found that the LDC relies on either FDI or licensing the decentralized equilibrium. However, due to knowledge spillovers from licensing encouraging licensing and regulation FDI will improve the welfare of a LDC, if his population size or its capacity to absorb knowledge of DCs is sufficiently large.
|Keywords:||Model for Technology Transfer, Foreign Direct Investment, Less Developed Countries, Developed Countries|
Assistant Professor, Petroleum Engineering Department, Amirkabir University of Technology, TEHRAN, IRAN, Iran (Islamic Republic of)
University of Malaya, Kuala Lumpur, Malaysia
Lecturer, Industrial Management, University of Technology, Tehran, Iran, Iran (Islamic Republic of)
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