Mode of foreign entry, technology transfer, and foreign direct investment policy
AbstractForeign direct investment can take place through the direct entry of foreign firms or the acquisition of existing domestic firms. Mattoo, Olarreaga, and Saggi examine the preferences of a foreign firm and the host country government with respect to these two modes of foreign direct investment in the presence of costly technology transfer. The tradeoff between technology transfer and market competition emerges as a key determinant of preferences. The authors identify the circumstances in which the choices of the government and the foreign firm diverge-and in which domestic welfare can be improved by restrictions on foreign direct investment that induce the foreign firm to choose the socially preferred mode of entry.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 2737.
Date of creation: 31 Dec 2001
Date of revision:
ICT Policy and Strategies; General Technology; Knowledge Economy; Environmental Economics&Policies; Agricultural Research; ICT Policy and Strategies; General Technology; Poverty and Trade; Foreign Direct Investment; Trade and Regional Integration;
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