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Technology Transfer, Foreign Direct Investment and International Trade

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  • Leonard K. Cheng

    (Hong Kong University of Science and Technology)

Abstract

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.

Suggested Citation

  • Leonard K. Cheng, 2000. "Technology Transfer, Foreign Direct Investment and International Trade," Econometric Society World Congress 2000 Contributed Papers 1777, Econometric Society.
  • Handle: RePEc:ecm:wc2000:1777
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    References listed on IDEAS

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    9. Grossman, Gene M & Helpman, Elhanan, 1991. "Endogenous Product Cycles," Economic Journal, Royal Economic Society, vol. 101(408), pages 1214-1229, September.
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    11. Wilfred J. Ethier, 1986. "The Multinational Firm," The Quarterly Journal of Economics, Oxford University Press, vol. 101(4), pages 805-833.
    12. Ekholm, Karolina, 1998. "Headquarter Services and Revealed Factor Abundance," Review of International Economics, Wiley Blackwell, vol. 6(4), pages 545-553, November.
    13. 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.
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