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Technology Transfer, Foreign Direct Investment and International Trade

  • Leonard K. Cheng

    (Hong Kong University of Science and Technology)

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    By developing a Ricardian trade model that features technology transfer via foreign direct investment (FDI), we show that technology transfer via multinational enterprises (MNEs) increases world output and trade in goods and services. When there are many goods a continuous reduction in the cost of technology transfer will cause increasingly more technologically advanced goods to go through the product cycle, i.e., goods initially produced in the advanced North are later produced in the backward South as a result of increased technology transfer via MNEs.

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    Paper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 1777.

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    Date of creation: 01 Aug 2000
    Date of revision:
    Handle: RePEc:ecm:wc2000:1777
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    1. Blomström, Magnus & Kokko, Ari, 1994. "Home Country Effects of Foreign Direct Investment: Evidence from Sweden," SSE/EFI Working Paper Series in Economics and Finance 3, Stockholm School of Economics.
    2. repec:tpr:qjecon:v:101:y:1986:i:4:p:805-33 is not listed on IDEAS
    3. Markusen, James R., 1984. "Multinationals, multi-plant economies, and the gains from trade," Journal of International Economics, Elsevier, vol. 16(3-4), pages 205-226, May.
    4. Gene M. Grossman & Elhanan Helpman, 1989. "Quality Ladders and Product Cycles," NBER Working Papers 3201, National Bureau of Economic Research, Inc.
    5. Ekholm, Karolina, 1998. "Headquarter Services and Revealed Factor Abundance," Review of International Economics, Wiley Blackwell, vol. 6(4), pages 545-53, November.
    6. Grossman, G.M. & Helpman, E., 1989. "Endogenous Prduct Cycles," Papers 144, Princeton, Woodrow Wilson School - Public and International Affairs.
    7. Helpman, Elhanan, 1984. "A Simple Theory of International Trade with Multinational Corporations," Scholarly Articles 3445092, Harvard University Department of Economics.
    8. Baldwin, Richard & Ottaviano, Gianmarco, 1998. "Multiproduct Multinationals and Reciprocal FDI Dumping," CEPR Discussion Papers 1851, C.E.P.R. Discussion Papers.
    9. James R. Markusen, 1995. "The Boundaries of Multinational Enterprises and the Theory of International Trade," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 169-189, Spring.
    10. S. Lael Brainard, 1993. "A Simple Theory of Multinational Corporations and Trade with a Trade-Off Between Proximity and Concentration," NBER Working Papers 4269, National Bureau of Economic Research, Inc.
    11. Linda S. Goldberg & Michael W. Klein, 1999. "International trade and factor mobility: an empirical investigation," Staff Reports 81, Federal Reserve Bank of New York.
    12. Horstmann, Ignatius J. & Markusen, James R., 1992. "Endogenous market structures in international trade (natura facit saltum)," Journal of International Economics, Elsevier, vol. 32(1-2), pages 109-129, February.
    13. Grossman, G.M. & Helpman, E., 1989. "Endogemour Product Cycles," Papers 10-89, Tel Aviv.
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