The goal of this dissertation is to enhance the understanding of forces that govern technology transfer to a host country. The role of R&D in-tensity of the host country, spillovers from affiliates to the host country and to the multinational enterprise (MNE), and the role of intellectual property rights (IPR) on technology transfer are examined. Chapter 2 sheds light showing how the interplay of factors such as MNE allocating resources devoted to R&D activities, the level of IPR, and the spillovers that MNE obtains from subsidiaries and local competitors are crucial for MNEs choice of FDI over exports. Chapter 3 empirically examines the theoretical predictions of chapter 2 for US outward FDI for a sample of developed economies using panel data estimation. The results demon-strate that foreign markets are initially served through exports, and later through direct investment. There is a non-linear relationship between spillovers and FDI. Chapter 4 examines the role of the same deter-minants for FDI and licensing. The main result is that IPR in the host country has a positive impact on FDI and all forms of licensing.