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Multinational Corporations and Technology Transfers in Developing Countries


  • Zhang, Kevin Honglin

    () (Illinois State University, Department of Economics)

  • Zhao, Zhongxiu

    () (University of International Business and Economics, School of International Trade and Economics, Beijing, China)


Technology and innovatory capabilities are key sources of competitive strength for firms and countries. As a developing country, China seems to build its capabilities for technology and innovation through foreign direct investment (FDI) by multinational corporations. Do multinational corporations transfer technology? While the topic is quite important, the quantitative analyses on the issue in the literature have been limited. This paper attempts to close the gap by empirically investigating the issue with the Chinese industrial data. The estimates indicate that the Chinese industries benefit from the presence of FDI mainly from spillovers and no obvious technology transfers are made directly from multinational corporations. The results also suggest a key role of an industry’s absorptive capability in capturing potential benefits from FDI.

Suggested Citation

  • Zhang, Kevin Honglin & Zhao, Zhongxiu, 2007. "Multinational Corporations and Technology Transfers in Developing Countries," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 60(2), pages 249-264.
  • Handle: RePEc:ris:ecoint:0062

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    References listed on IDEAS

    1. Jiandong Ju & Kala Krishna, "undated". "Market Access and Welfare Effects of Free Trade Areas without Rules of Origin," EPRU Working Paper Series 96-03, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    2. Lopez, Ramon & Panagariya, Arvind, 1992. "On the Theory of Piecemeal Tariff Reform: The Case of Pure Imported Intermediate Inputs," American Economic Review, American Economic Association, vol. 82(3), pages 615-625, June.
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    More about this item


    Multinational corporations (MNCs); FDI; Technology spillovers;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East


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