International Joint Ventures and Technology Diffusion: Evidence from China

24 Pages Posted: 7 Jun 2020

See all articles by Qing Liu

Qing Liu

Renmin University of China

Ruosi Lu

University of International Business and Economics (UIBE)

Chao Yang

University of International Business and Economics (UIBE)

Date Written: January 2020

Abstract

This paper investigates international technology diffusion through FDI by explicitly considering the ownership structure of FDI projects with detailed Chinese data. We find that international joint ventures (JVs) generate significantly positive technology diffusion effects, while wholly foreign‐owned firms (WFOs) generate significantly negative competition effects. The differentiated impacts of JVs and WFOs are robust, heterogeneous and causal as shown by our instrumental variable estimation. As for the mechanisms, evidence suggests that JVs bring better technology to the host country, invest more in R&D and employee training, and also provide easier technology access to local firms than WFOs.

Keywords: China, FDI, international joint ventures, technology diffusion

Suggested Citation

Liu, Qing and Lu, Ruosi and Yang, Chao, International Joint Ventures and Technology Diffusion: Evidence from China (January 2020). The World Economy, Vol. 43, Issue 1, pp. 146-169, 2020, Available at SSRN: https://ssrn.com/abstract=3620962 or http://dx.doi.org/10.1111/twec.12809

Qing Liu (Contact Author)

Renmin University of China ( email )

Ruosi Lu

University of International Business and Economics (UIBE) ( email )

10, Huixin Dongjie
Changyang District
Beijing, Beijing 100029
China

Chao Yang

University of International Business and Economics (UIBE)

10, Huixin Dongjie
Changyang District
Beijing, Beijing 100029
China

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