Mode of foreign entry, technology transfer, and FDI policy

Aaditya Mattoo, Marcelo Olarreaga and Kamal Saggi

Chapter 25 in Technology Transfer, Foreign Direct Investment, and the Protection of Intellectual Property in the Global Economy, 2023, pp 567-583 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Foreign direct investment (FDI) can take place either through the direct entry of foreign firms or the acquisition of existing domestic firms. The preferences of a foreign firm and a welfare-maximizing host country government over these two modes of FDI are examined in the presence of costly technology transfer. The trade-off between technology transfer and market competition emerges as a key determinant of preferences. The clash between the foreign firm’s equilibrium choice and the local government’s ranking of the two modes of entry can provide a rationale for some frequently observed FDI restrictions.

Keywords: International Technology Transfer; Multinational Firms; Trips; Foreign Direct Investment; Oligopolistic Competition; Vertical Contracts; Intellectual Property Rights (search for similar items in EconPapers)
JEL-codes: F21 (search for similar items in EconPapers)
Date: 2023
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Related works:
Journal Article: Mode of foreign entry, technology transfer, and FDI policy (2004)
Working Paper: Mode of Foreign Entry, Technology Transfer, and FDI Policy (2001)
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