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International joint ventures and technology diffusion: Evidence from China
Author(s) -
Liu Qing,
Lu Ruosi,
Yang Chao
Publication year - 2020
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/twec.12809
Subject(s) - competition (biology) , instrumental variable , foreign direct investment , china , joint (building) , diffusion , industrial organization , economics , business , international trade , international economics , econometrics , macroeconomics , political science , engineering , architectural engineering , physics , law , thermodynamics , ecology , biology
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 ( JV s) generate significantly positive technology diffusion effects, while wholly foreign‐owned firms ( WFO s) generate significantly negative competition effects. The differentiated impacts of JV s and WFO s are robust, heterogeneous and causal as shown by our instrumental variable estimation. As for the mechanisms, evidence suggests that JV s 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 WFO s.