Working Paper: CEPR ID: DP4099
Authors: Thomas M"uller; Monika Schnitzer
Abstract: This paper analyzes the effects of a potential spillover on technology transfer of a multinational enterprise and on the host country policy. In particular, we examine how both parties’ incentives can be controlled through the ownership structure in an international joint venture. In contrast to existing arguments, we show that spillovers must not always have negative effects on technology transfer and they may be efficiency-improving. Moreover, there are circumstances where a joint venture is mutually beneficial. Surprisingly, however, we find that despite the prospect of spillovers, a joint venture is sometimes not in the interest of a host country.
Keywords: Foreign Direct Investment; Joint Ventures; Multinational Enterprise; Ownership Structure; Spillovers; Transition Economies
JEL Codes: D43; F21; F23; L13; O12; P31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| spillovers (O36) | profit of the multinational (F23) |
| spillovers (O36) | profit of the domestic state-owned firm (L21) |
| ownership share + technology transfer (L24) | effective spillover (D62) |
| spillovers (O36) | technology transfer (O33) |
| ownership structure (G32) | incentives for joint venture (L24) |
| spillovers + joint venture (O36) | mutual benefit (D64) |