The technology gap and the limit of imitation: An inspection of the strategy of 'exchanging market for technology'
AbstractHas China's strategy of 'exchanging market for technology' been successful? This paper analyses the effectiveness of this strategy based on the duopoly model of vertical product differentiation by Choi and Shin (1992). It is shown that the outcome is influenced by technology gap and absorptive capacity. The profit of a developing country firm shows an inverted U-shaped relationship with its technology level when holding the foreign firm's technology level constant. In the process of technology improvement by imitation, the developing country firm faces a limit on imitation. A developing country may benefit from the strategy of 'exchanging market for technology' at the early stage and needs to bring in FDI with advanced technology so that it can overcome restraints from the limit of imitation. For one with a smaller technology gap with the home country of FDI, the country in the long run has to achieve technological progress through innovation.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Journal of Chinese Economic and Business Studies.
Volume (Year): 7 (2009)
Issue (Month): 4 ()
Contact details of provider:
Web page: http://www.tandfonline.com/RCEA20
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty).
If references are entirely missing, you can add them using this form.