International Joint Ventures and Internal vs. External Technology Transfer: Evidence from China

69 Pages Posted: 2 Apr 2018 Last revised: 8 May 2021

See all articles by Kun Jiang

Kun Jiang

University of Nottingham

Wolfgang Keller

University of Colorado; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Larry D. Qiu

The University of Hong Kong - Faculty of Business and Economics; Hong Kong University of Science & Technology (HKUST) - Department of Economics

William Ridley

University of Colorado at Boulder - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: March 2018

Abstract

We study the economics of international joint ventures with administrative data for China exploiting the change in foreign direct investment policy as China entered the WTO in the year 2002. Accounting for a quarter of all international joint ventures worldwide, we first show that foreign investors choose Chinese partners that are relatively large, productive, and often subsidized to set up their joint venture. Second, we document benefits from foreign technology in terms of innovation and productivity that go far beyond the joint venture, not only to the Chinese joint venture parent firm but also to entrepreneurs at firms upstream from and in the same industry as the joint venture (backward and horizontal spillovers, respectively). As China has dropped joint venture requirements and shifted towards wholly foreign-owned FDI as part of becoming a member of the WTO, there have been two opposing effects. While joint venture spillovers have increased, the shift towards wholly foreign-owned FDI has reduced spillovers because we find larger industry spillovers from international joint ventures than from wholly foreign-owned FDI. The results shed new light on the efficacy of FDI performance requirements as well as on claims regarding international technology transfer that underpin the current China-U.S. trade war.

Suggested Citation

Jiang, Kun and Keller, Wolfgang and Qiu, Larry Dongxiao and Qiu, Larry Dongxiao and Ridley, William, International Joint Ventures and Internal vs. External Technology Transfer: Evidence from China (March 2018). NBER Working Paper No. w24455, Available at SSRN: https://ssrn.com/abstract=3154239

Kun Jiang (Contact Author)

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

Wolfgang Keller

University of Colorado ( email )

Department of Economics
PO Box 256
Boulder, CO 80309
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Larry Dongxiao Qiu

Hong Kong University of Science & Technology (HKUST) - Department of Economics ( email )

School of Economics and Finance
University of Hong Kong
Pokfulam
Hong Kong

HOME PAGE: http://www.bm.ust.hk/~larryqiu/

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

William Ridley

University of Colorado at Boulder - Department of Economics

Campus Box 256
Boulder, CO 80309
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
31
Abstract Views
276
PlumX Metrics