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Foreign Direct Investment and the Nature of the Imitation Process

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  • Helene, LATZER

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics)

Abstract

We study the optimal imitation strategy of a developing country having access to both imitation through trade and imitation through Foreign Direct Investments (FDIs). We base ourselves on an extension of the Romer ‘variety model’ (1990) of technology-driven growth, and find that the two types of imitation are substitutes and not complements. We characterize a condition on the technology level transferred by multinational foreign firms for imitation through FDI to be optimal, and study the effect of a technological acceleration.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Département des Sciences Economiques in its series Discussion Papers (ECON - Département des Sciences Economiques) with number 2006012.

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Length: 30
Date of creation: 01 May 2006
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Handle: RePEc:ctl:louvec:2006012

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