Cross‐Border Mergers and Acquisitions: Innovative Capacity and National Economic Security

Yaozhong Wang, Zhizhong Liu and Yang Zhang

Journal of Economic Policy Reform, 2007, vol. 10, issue 4, 263-281

Abstract: Based on capital accumulation and the capacity to innovate, we use an Edgeworth box and find that in a host country that lacks capital, if multinational corporations (MNCs) remit more profits back to their parent companies and invest less in the host country, the latter’s R&D ability to innovate may decline. As a result, the host country’s economic security could be threatened. An empirical test using Chinese data suggests that introducing foreign capital actively and promoting the innovation of small and medium‐sized enterprises could help to maintain national economic security in cross‐border M&A.

Date: 2007
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DOI: 10.1080/17487870701551998

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