be regarded reasonably well, with only about 14 percent of the firms being unwilling to transfer such technology there. The percentage of firms feeling that intellectual property rights protection in these countries is, on the average, too weak to permit such technology transfer is particularly high in the chemical industry and particularly low in the metals and food industries; the industry ranking is the same as in the previous section.
Firms often prefer to license their technology when the foreign market is too small to warrant direct investment, when the firm with the technology lacks the resources required for direct investment, or when advantages accrue through cross-licensing. Also, as is well known, direct investment has been discouraged by the governments of some countries. Particularly in the developing countries, sometimes there has been considerable hostility toward multinational firms. Some governments feel that their sovereignty is threatened by the great power of the multinational firm over their national economies.
Each of the U.S. firms in our sample was asked to indicate whether the protection of intellectual property rights in each of the 16 countries listed was too weak to permit it to license its newest or most effective technology to unrelated firms in that country. More than 30 percent of the firms said that this was the case for India, Taiwan, Brazil, Thailand, Nigeria, and Indonesia (Table 5-5). Less than 10 percent said this was the case for Spain and Japan. The percentage of firms feeling that intellectual property rights protection in these countries was, on the average, too weak to permit licensing is particularly high in the chemical industry and relatively low in the metals and food industries. It is worth noting that more than two-thirds of the chemical firms believe that intellectual property rights protection in India, Indonesia, Nigeria, Thailand, and Brazil was too weak to permit licensing of their newest or most effective technology there.
In the three previous sections, we have provided three crude measures of the perceived strength or weakness of intellectual property rights protection in 16 countries: (1) the percentage of U.S. firms in our sample feeling that protection there is too weak to permit them to invest in joint ventures with local partners; (2) the percentage feeling that protection is too weak to transfer their newest or most effective technology to a wholly owned subsidiary in that country; and (3) the percentage feeling that protection is too