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International Joint Ventures and Internal vs. External Technology Transfer: Evidence from China

Author

Listed:
  • Kun Jiang
  • Wolfgang Keller
  • Larry D. Qiu
  • William Ridley

Abstract

This paper studies international joint ventures, where foreign direct investment is performed by a foreign and a domestic firm that together set up a new firm, the joint venture. Employing administrative data on all international joint ventures in China from 1998 to 2007—roughly a quarter of all international joint ventures in the world—we find, first, that Chinese firms chosen to be partners of foreign investors tend to be larger, more productive, and more likely subsidized than other Chinese firms. Second, there is substantial international technology transfer not only to the joint venture itself but also to the Chinese joint venture partner firm. Third, with technology spillovers typically outweighing negative competition effects, joint ventures generate net positive externalities to other Chinese firms in the same industry. Joint venture externalities are large, perhaps twice the size of wholly-owned FDI spillovers, and it is R&D-intensive firms, including the joint ventures themselves, that benefit most from these externalities. Furthermore, the positive external joint venture effect is larger if the foreign firm is from the U.S. rather than from Japan or Hong Kong, Macau, and Taiwan, while this effect is virtually absent in broad sectors that include economic activities for which China’s FDI policy has prohibited joint ventures.

Suggested Citation

  • Kun Jiang & Wolfgang Keller & Larry D. Qiu & William Ridley, 2018. "International Joint Ventures and Internal vs. External Technology Transfer: Evidence from China," CESifo Working Paper Series 7065, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_7065
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    File URL: https://www.cesifo-group.de/DocDL/cesifo1_wp7065.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Mandelman, Federico S. & Waddle, Andrea L., 2019. "Intellectual Property, Tariffs, and International Trade Dynamics," FRB Atlanta Working Paper 2019-10, Federal Reserve Bank of Atlanta.
    2. Assaf Razin, 2018. "High Tech and Venture Capital Inflows: The case of Israel," NBER Working Papers 25351, National Bureau of Economic Research, Inc.
    3. repec:pal:jintbs:v:50:y:2019:i:2:d:10.1057_s41267-018-0204-2 is not listed on IDEAS
    4. repec:eee:inecon:v:116:y:2019:i:c:p:125-143 is not listed on IDEAS
    5. Bown, Chad P., 2019. "The 2018 US-China Trade Conflict After 40 Years of Special Protection," CEPR Discussion Papers 13695, C.E.P.R. Discussion Papers.
    6. Hovhannisyan, Nune & Keller, Wolfgang, 2019. "International Business Travel and Technology Sourcing," CEPR Discussion Papers 13739, C.E.P.R. Discussion Papers.
    7. repec:pal:jintbs:v:50:y:2019:i:6:d:10.1057_s41267-019-00248-2 is not listed on IDEAS

    More about this item

    Keywords

    international joint ventures; partner selection; technology spillovers; foreign direct investment; competition effects;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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