Relationship between FDI, foreign ownership restrictions, and technology transfer in the resources sector: A derivation approach

Nahom Ghebrihiwet and Evgenia Motchenkova

Resources Policy, 2017, vol. 52, issue C, 320-326

Abstract: In various industries, multinational companies are the dominant players while local firms play a less prominent role. We consider such an industry and develop a model in which foreign multinationals strategically interact in technology transfer and compete in the product market stage. Furthermore, we analyze the welfare implications of often observed FDI policy measures. We find that the cost of technology transfer provides a possible rationale for why in practice FDI crowding out effects are often smaller in less developed countries.We also find that foreign ownership restrictions may reduce FDI crowding-out effects. However, the net effect of these restrictions on host country welfare will be negative. Finally, we find that, in industries with low levels of product market competition (e.g. the natural resources sector), the government may improve welfare by taking away the joint venture equity share of the domestic firm.

Keywords: FDI; Multinational firms; Technology transfer; FDI crowding-out effects; Joint ventures; Natural resources sector (search for similar items in EconPapers)
JEL-codes: F13 F23 L2 O32 Q32 Q37 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:52:y:2017:i:c:p:320-326

DOI: 10.1016/j.resourpol.2017.03.011

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