Technology Spillovers from Foreign Direct Investment (FDI): the Active Role of MNC Subsidiaries in Argentina in the 1990s ANABEL MARIN* & MARTIN BELL** *University of Sussex, Brighton, UK and Universidad Nacional de General Sarmiento (UNGS), Buenos Aires, Argentina, **University of Sussex, Brighton, UK Final version received March 2005 ABSTRACT The usual perspective on technology spillovers from FDI sees the MNC subsidiary as a passive actor. It presumes that the technological superiority that spreads from subsidiaries to other firms in the host economy is initially created outside it by MNC parent companies, and is delivered to subsidiaries via international technology transfer. The role of subsidiaries is little more than to act as a ‘leaky container’ lying between the technology transfer pipeline and the absorption of spillovers by domestic firms. This paper suggests a different model in which a substantial part of the potential for spillover is created within local subsidiaries as a result of their own knowledge-creating and accumulating activities in the host economy. We explore empirically the effects of these activities on technology spillovers from FDI using data for industrial firms in Argentina over the period 1992–96. The analysis suggests that significant results can be obtained incorporating subsidiaries’ own technological activities as an explanatory variable of the spillover process. I. Purpose of the Paper Analyses of the technological spillover impact of FDI on host economies have typically assumed the impact to be the outcome of two linked steps. The first involves MNC parent-to-subsidiary international transfer of technology that is superior to the prevailing technology in the host economy. The second involves the subsequent spread of this technology to domestic firms – a technological spillover effect. The Correspondence Address: Anabel Marin, SPRU – Science and Technology Policy Research, University of Sussex and Universidad Nacional de General Sarmiento (UNGS), Campus Universitario, Los Polvorines, Pcia. De Buenos Aires, Argentina. Tel: þ54 11 44697500; Email: amarin@ungs.edu.ar. Martin Bell, SPRU – Science and Technology Policy Research, Freeman Centre, University of Sussex, Brighton, BN1 9QE. Tel: þ44 1273 877066, þ44 (0) 1273 686758; Fax: þ44 (0) 1273 685865; Email: M.Bell@sussex.ac.uk Journal of Development Studies, Vol. 42, No. 4, 678–697, May 2006 ISSN 0022-0388 Print/1743-9140 Online/06/040678-20 ª 2006 Taylor & Francis DOI: 10.1080/00220380600682298