have been developed abroad. Developing countries potentially have much more to gain from these types of investments, although substantial local capabilities are needed to exploit the foreign technologies. Moreover, the potential benefits of these investments are roughly the same as those of inward FDI from developed countries. Still, it is possible to expect some differences in three areas. Firstly, the technologies that can be sourced through the two channels are likely to differ somewhat, with a bias towards import substitution for outward FDI and export orientation for inward FDI. Secondly, the prices paid for the technologies are likely to differ. In the case of outward FDI, the investor will have to pay a price determined ex ante by the market, and carry all of the costs needed to adapt the technology to the conditions in the home country; in the case of inward FDI, the investor is paid through license fees and profits, which are larger the more successful the FDI project is. Thirdly, the incidence of spillovers to local firms in the developing country may vary between the two cases. In one case, the spillovers will emanate from the locally-owned MNC parent; in the other case, from the foreign MNC affiliate. To date, there are no studies exploring and comparing the spillovers in these two cases, although these differences might be important in determining the optimal policies for many developing countries.