The Economic Impact of Multinationals on USA Technology

Technology Impact of the USA

The contribution of Multinationals to the American society is called for concerns by the analysts time after time. Critics occasionally claim that companies that which are venturing outside the boundaries of the USA as multinationals have abandoned the US and that their policy is needed to be reconsidered for balancing the domestic and international operations (USCIB Foundaton Inc., 2013).

The companies which are producing goods and have international customers accessed through affiliates are often compared with direct exports to its advantages. However, this makes sense, as it reduces costs, which are placed on exports like import tariffs, transport costs, or quotas (Slaughter, 2013). Another benefit is that the after-sales maintenance as well as support which is provided by the multinationals (University of Minnesota, 2009). Many of the US multinationals are technology-based and capital intensive. These types of goods like elevators, engines, and elevators need extensive after-sales support and maintenance services which are provided by these companies. It is one reason that is considered an advantage in the technology-based industry of the US.

Another benefit of the multinationals on US technology is that the multinational companies provide the substitution possibility in between the US and foreign operations. It means that expansion of US companies to foreign countries enhance technology support (Slaughter, 2009).

There are some cons as well. Technology spillovers occur from host countries to the domestic countries. The multinationals providing technical support, training, and in technological knowledge transfer are the main channels of these spillovers (Sonmez, 2013). This technology transfer creates competitors for the US technology industry. By teaching, developing countries the new technologies, companies often create competitors for themselves in the global market. It can be mitigated through constant innovation and continuous product differentiation. US companies would need to remain relevant and in the market by improving its skills and technology, which would be better than the transferred technology.

References

Slaughter, M.J., 2009. How U.S. Multinational Companies strengthen the US economy. [Online] Available at: https://www.uscib.org/docs/foundation_multinationals.pdf [Accessed 27 February 2018].

Slaughter, M.J., 2013. American Companies and Global Supply Networks. [Online] Available at: https://www.uscib.org/docs/2013_american_companies_and_global_supply_networks.pdf [Accessed 27 February 2018].

Sonmez, A., 2013. Multinational Companies, Knowledge and Technology Transfer: Turkey’s Automotive Industry in Focus. 2nd ed. Springer Science & Business Media.

University of Minnesota, 2009. Multinationals and the U.S. technology base : final report of the multinationals project. Office of Technology Assessment, Congress of the U.S.

USCIB Foundaton Inc., 2013. The Role Multinationals Play in the U.S. Economy. [Online] Available at: https://www.theuscibfoundation.org/the-central-role-of-us-multinationals-in-underpinning-us-economic-growth-and-jobs-creation/ [Accessed 27 February 2018].