Trade, Foreign Direct Investment, and International Technology Transfer : A Survey

The author surveys the literature on trade and foreign direct investment--especially wholly-owned subsidiaries of multinational firms and international joint ventures--as channels for technology transfer. He also discusses licensing and other arm&#...

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Main Author:	Saggi, Kamal
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ABSORPTIVE CAPACITY ARBITRAGE ASYMMETRIC INFORMATION BRAIN DRAIN CAPITAL ACCUMULATION CLOSED ECONOMY COLLABORATION COMPARATIVE ADVANTAGE CONSUMERS DECISION MAKING DEVELOPED COUNTRIES DUOPOLY ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMICS LITERATURE ECONOMISTS EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL STUDIES EXPORTERS EXPORTS EXTERNALITIES EXTERNALITY FACTOR ENDOWMENTS FACTORS OF PRODUCTION FINAL GOODS FOREIGN DIRECT INVESTMENT FOREIGN FIRM FOREIGN FIRMS FOREIGN LABOR FOREIGN MARKET FOREIGN MARKETS FREE TRADE GROWTH MODELS GROWTH THEORY HIGH TECHNOLOGY HIGH TECHNOLOGY INDUSTRIES HUMAN CAPITAL IMPERFECT COMPETITION INCOME INCOME LEVELS INDUSTRY TRADE INTERMEDIATE GOODS INTERNATIONAL TECHNOLOGY TRANSFER INTERNATIONAL TRADE INVENTORS KNOW-HOW KNOWLEDGE SPILLOVERS LABOR FORCE LABOR MARKETS LABOR PRODUCTIVITY LEARNING LITERACY MARGINAL COST MARGINAL PRODUCT MARKET FAILURES MODEM MULTINATIONAL FIRMS NEOCLASSICAL MODELS NEW PRODUCTS NEW TECHNOLOGIES OPEN ECONOMIES OPENNESS OPTION VALUE OUTSOURCING PER CAPITA INCOME PRODUCERS PRODUCT DIFFERENTIATION PRODUCTION FUNCTION PRODUCTION TECHNIQUES PRODUCTION TECHNOLOGY PRODUCTIVITY PRODUCTIVITY GROWTH PROPERTY RIGHTS PROTECTIONISM PUBLIC GOOD SCALE EFFECTS SUBSTITUTION EFFECT SUNK COSTS TECHNOLOGICAL CHANGE TECHNOLOGY ADOPTION TECHNOLOGY DIFFUSION TECHNOLOGY TRANSFER TECHNOLOGY TRANSFERS THEORETICAL MODELS TOTAL COSTS TRADE BARRIERS TRADE MODELS TRADE POLICY TRADE PROTECTION TRADE RESTRICTIONS TRANSFER OF TECHNOLOGY
Online Access:	http://documents.worldbank.org/curated/en/2000/05/437640/trade-foreign-direct-investment-international-technology-transfer-survey http://hdl.handle.net/10986/19843

id	okr-10986-19843
recordtype	oai_dc
spelling	okr-10986-198432021-04-23T14:03:46Z Trade, Foreign Direct Investment, and International Technology Transfer : A Survey Saggi, Kamal ABSORPTIVE CAPACITY ARBITRAGE ASYMMETRIC INFORMATION BRAIN DRAIN CAPITAL ACCUMULATION CLOSED ECONOMY COLLABORATION COMPARATIVE ADVANTAGE CONSUMERS DECISION MAKING DEVELOPED COUNTRIES DUOPOLY ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMICS LITERATURE ECONOMISTS EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL STUDIES EXPORTERS EXPORTS EXTERNALITIES EXTERNALITY FACTOR ENDOWMENTS FACTORS OF PRODUCTION FINAL GOODS FOREIGN DIRECT INVESTMENT FOREIGN FIRM FOREIGN FIRMS FOREIGN LABOR FOREIGN MARKET FOREIGN MARKETS FREE TRADE GROWTH MODELS GROWTH THEORY HIGH TECHNOLOGY HIGH TECHNOLOGY INDUSTRIES HUMAN CAPITAL IMPERFECT COMPETITION INCOME INCOME LEVELS INDUSTRY TRADE INTERMEDIATE GOODS INTERNATIONAL TECHNOLOGY TRANSFER INTERNATIONAL TRADE INVENTORS KNOW-HOW KNOWLEDGE SPILLOVERS LABOR FORCE LABOR MARKETS LABOR PRODUCTIVITY LEARNING LITERACY MARGINAL COST MARGINAL PRODUCT MARKET FAILURES MODEM MULTINATIONAL FIRMS NEOCLASSICAL MODELS NEW PRODUCTS NEW TECHNOLOGIES OPEN ECONOMIES OPENNESS OPTION VALUE OUTSOURCING PER CAPITA INCOME PRODUCERS PRODUCT DIFFERENTIATION PRODUCTION FUNCTION PRODUCTION TECHNIQUES PRODUCTION TECHNOLOGY PRODUCTIVITY PRODUCTIVITY GROWTH PROPERTY RIGHTS PROTECTIONISM PUBLIC GOOD SCALE EFFECTS SUBSTITUTION EFFECT SUNK COSTS TECHNOLOGICAL CHANGE TECHNOLOGY ADOPTION TECHNOLOGY DIFFUSION TECHNOLOGY TRANSFER TECHNOLOGY TRANSFERS THEORETICAL MODELS TOTAL COSTS TRADE BARRIERS TRADE MODELS TRADE POLICY TRADE PROTECTION TRADE RESTRICTIONS TRANSFER OF TECHNOLOGY The author surveys the literature on trade and foreign direct investment--especially wholly-owned subsidiaries of multinational firms and international joint ventures--as channels for technology transfer. He also discusses licensing and other arm's length channels of technology transfer. He concludes: 1) How trade encourages growth depends on whether knowledge spillover is national or international. Spillover is more likely to be national for developing countries than for industrial countries. 2) Local policy often makes pure foreign direct investment infeasible, so foreign firms choose licensing or joint ventures. The jury is still out on whether licensing or joint ventures lead to more learning by local firms. 3) Policies designed to attract foreign direct investment are proliferating. Several plant-level studies have failed to find positive spillover from foreign direct investment to firms competing directly with subsidiaries of multinationals. (However, these studies treat foreign direct investment as exogenous and assume spillover to be horizontal-when it may be vertical.) All such studies do find the subsidiaries of multinationals to be more productive than domestic firms, so foreign direct investment does result in host countries using resources more effectively. 4) Absorptive capacity in the host country is essential for getting significant benefits from foreign direct investment. Without adequate human capital or investments in research and development, spillover fails to materialize. 5) A country's policy on protection of intellectual property rights affects the type of industry it attracts. Firms for which such rights are crucial (such as pharmaceutical firms) are unlikely to invest directly in countries where such protections are weak, or will not invest in manufacturing and research and development activities. Policy on intellectual property rights also influences whether technology transfer comes through licensing, joint ventures, or the establishment of wholly-owned subsidiaries. 2014-08-28T18:57:23Z 2014-08-28T18:57:23Z 2000-05 http://documents.worldbank.org/curated/en/2000/05/437640/trade-foreign-direct-investment-international-technology-transfer-survey http://hdl.handle.net/10986/19843 English en_US Policy Research Working Paper;No. 2349 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ABSORPTIVE CAPACITY ARBITRAGE ASYMMETRIC INFORMATION BRAIN DRAIN CAPITAL ACCUMULATION CLOSED ECONOMY COLLABORATION COMPARATIVE ADVANTAGE CONSUMERS DECISION MAKING DEVELOPED COUNTRIES DUOPOLY ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMICS LITERATURE ECONOMISTS EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL STUDIES EXPORTERS EXPORTS EXTERNALITIES EXTERNALITY FACTOR ENDOWMENTS FACTORS OF PRODUCTION FINAL GOODS FOREIGN DIRECT INVESTMENT FOREIGN FIRM FOREIGN FIRMS FOREIGN LABOR FOREIGN MARKET FOREIGN MARKETS FREE TRADE GROWTH MODELS GROWTH THEORY HIGH TECHNOLOGY HIGH TECHNOLOGY INDUSTRIES HUMAN CAPITAL IMPERFECT COMPETITION INCOME INCOME LEVELS INDUSTRY TRADE INTERMEDIATE GOODS INTERNATIONAL TECHNOLOGY TRANSFER INTERNATIONAL TRADE INVENTORS KNOW-HOW KNOWLEDGE SPILLOVERS LABOR FORCE LABOR MARKETS LABOR PRODUCTIVITY LEARNING LITERACY MARGINAL COST MARGINAL PRODUCT MARKET FAILURES MODEM MULTINATIONAL FIRMS NEOCLASSICAL MODELS NEW PRODUCTS NEW TECHNOLOGIES OPEN ECONOMIES OPENNESS OPTION VALUE OUTSOURCING PER CAPITA INCOME PRODUCERS PRODUCT DIFFERENTIATION PRODUCTION FUNCTION PRODUCTION TECHNIQUES PRODUCTION TECHNOLOGY PRODUCTIVITY PRODUCTIVITY GROWTH PROPERTY RIGHTS PROTECTIONISM PUBLIC GOOD SCALE EFFECTS SUBSTITUTION EFFECT SUNK COSTS TECHNOLOGICAL CHANGE TECHNOLOGY ADOPTION TECHNOLOGY DIFFUSION TECHNOLOGY TRANSFER TECHNOLOGY TRANSFERS THEORETICAL MODELS TOTAL COSTS TRADE BARRIERS TRADE MODELS TRADE POLICY TRADE PROTECTION TRADE RESTRICTIONS TRANSFER OF TECHNOLOGY
spellingShingle	ABSORPTIVE CAPACITY ARBITRAGE ASYMMETRIC INFORMATION BRAIN DRAIN CAPITAL ACCUMULATION CLOSED ECONOMY COLLABORATION COMPARATIVE ADVANTAGE CONSUMERS DECISION MAKING DEVELOPED COUNTRIES DUOPOLY ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMICS LITERATURE ECONOMISTS EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL STUDIES EXPORTERS EXPORTS EXTERNALITIES EXTERNALITY FACTOR ENDOWMENTS FACTORS OF PRODUCTION FINAL GOODS FOREIGN DIRECT INVESTMENT FOREIGN FIRM FOREIGN FIRMS FOREIGN LABOR FOREIGN MARKET FOREIGN MARKETS FREE TRADE GROWTH MODELS GROWTH THEORY HIGH TECHNOLOGY HIGH TECHNOLOGY INDUSTRIES HUMAN CAPITAL IMPERFECT COMPETITION INCOME INCOME LEVELS INDUSTRY TRADE INTERMEDIATE GOODS INTERNATIONAL TECHNOLOGY TRANSFER INTERNATIONAL TRADE INVENTORS KNOW-HOW KNOWLEDGE SPILLOVERS LABOR FORCE LABOR MARKETS LABOR PRODUCTIVITY LEARNING LITERACY MARGINAL COST MARGINAL PRODUCT MARKET FAILURES MODEM MULTINATIONAL FIRMS NEOCLASSICAL MODELS NEW PRODUCTS NEW TECHNOLOGIES OPEN ECONOMIES OPENNESS OPTION VALUE OUTSOURCING PER CAPITA INCOME PRODUCERS PRODUCT DIFFERENTIATION PRODUCTION FUNCTION PRODUCTION TECHNIQUES PRODUCTION TECHNOLOGY PRODUCTIVITY PRODUCTIVITY GROWTH PROPERTY RIGHTS PROTECTIONISM PUBLIC GOOD SCALE EFFECTS SUBSTITUTION EFFECT SUNK COSTS TECHNOLOGICAL CHANGE TECHNOLOGY ADOPTION TECHNOLOGY DIFFUSION TECHNOLOGY TRANSFER TECHNOLOGY TRANSFERS THEORETICAL MODELS TOTAL COSTS TRADE BARRIERS TRADE MODELS TRADE POLICY TRADE PROTECTION TRADE RESTRICTIONS TRANSFER OF TECHNOLOGY Saggi, Kamal Trade, Foreign Direct Investment, and International Technology Transfer : A Survey
relation	Policy Research Working Paper;No. 2349
description	The author surveys the literature on trade and foreign direct investment--especially wholly-owned subsidiaries of multinational firms and international joint ventures--as channels for technology transfer. He also discusses licensing and other arm's length channels of technology transfer. He concludes: 1) How trade encourages growth depends on whether knowledge spillover is national or international. Spillover is more likely to be national for developing countries than for industrial countries. 2) Local policy often makes pure foreign direct investment infeasible, so foreign firms choose licensing or joint ventures. The jury is still out on whether licensing or joint ventures lead to more learning by local firms. 3) Policies designed to attract foreign direct investment are proliferating. Several plant-level studies have failed to find positive spillover from foreign direct investment to firms competing directly with subsidiaries of multinationals. (However, these studies treat foreign direct investment as exogenous and assume spillover to be horizontal-when it may be vertical.) All such studies do find the subsidiaries of multinationals to be more productive than domestic firms, so foreign direct investment does result in host countries using resources more effectively. 4) Absorptive capacity in the host country is essential for getting significant benefits from foreign direct investment. Without adequate human capital or investments in research and development, spillover fails to materialize. 5) A country's policy on protection of intellectual property rights affects the type of industry it attracts. Firms for which such rights are crucial (such as pharmaceutical firms) are unlikely to invest directly in countries where such protections are weak, or will not invest in manufacturing and research and development activities. Policy on intellectual property rights also influences whether technology transfer comes through licensing, joint ventures, or the establishment of wholly-owned subsidiaries.
format	Publications & Research :: Policy Research Working Paper
author	Saggi, Kamal
author_facet	Saggi, Kamal
author_sort	Saggi, Kamal
title	Trade, Foreign Direct Investment, and International Technology Transfer : A Survey
title_short	Trade, Foreign Direct Investment, and International Technology Transfer : A Survey
title_full	Trade, Foreign Direct Investment, and International Technology Transfer : A Survey
title_fullStr	Trade, Foreign Direct Investment, and International Technology Transfer : A Survey
title_full_unstemmed	Trade, Foreign Direct Investment, and International Technology Transfer : A Survey
title_sort	trade, foreign direct investment, and international technology transfer : a survey
publisher	World Bank, Washington, DC
publishDate	2014
url	http://documents.worldbank.org/curated/en/2000/05/437640/trade-foreign-direct-investment-international-technology-transfer-survey http://hdl.handle.net/10986/19843
_version_	1764441655808622592

Trade, Foreign Direct Investment, and International Technology Transfer : A Survey

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