Capital can flow from rich to poor countries either directly or indirectly. Direct investment involves companies from one country setting up operations in another: factories (e.g. BMW in South Carolina), supply chains (Amazon in India), etc. Indirect investment involves lending money to firms or buying stocks in another country. Which of these should we expect to transfer more productive knowledge (A) from rich to poor countries? Choose an example of a policy that a developing country has used to try to encourage transfer of technology to it. Describe this policy. How did it incentivize technology transfer? What (if any) are the reasons it might not work.

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