Mode of Foreign Entry, Technology Transfer, and Foreign Direct Investment Policy
Foreign 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...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2001/12/1660275/mode-foreign-entry-technology-transfer-foreign-direct-investment-policy http://hdl.handle.net/10986/19401 |
| Summary: | Foreign 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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