Fencing Off Silicon Valley: Cross-Border Venture Capital and Technology Spillovers
71 Pages Posted: 21 Sep 2020 Last revised: 13 Jan 2025
There are 3 versions of this paper
Fencing Off Silicon Valley: Cross-Border Venture Capital and Technology Spillovers
Fencing Off Silicon Valley: Cross-Border Venture Capital and Technology Spillovers
Date Written: September 2020
Abstract
The treatment of foreign investors is a contentious topic in U.S. entrepreneurship policy. We model a setting where foreign corporate investments in Silicon Valley may allow U.S. entrepreneurs to pursue technologies that they could not otherwise, but may also lead to knowledge spillovers. We show that despite the benefits from such inbound investments for U.S. firms, it may be optimal for the U.S. government to raise their costs to deter these investments. Using as comprehensive as possible a sample of investments by foreign corporate investors in U.S. startups, we find evidence consistent with the presence of knowledge spillovers to foreign investors.
Suggested Citation: Suggested Citation