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International joint ventures and technology diffusion: Evidence from China

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  • Qing Liu
  • Ruosi Lu
  • Chao Yang

Abstract

This paper investigates international technology diffusion through FDI by explicitly considering the ownership structure of FDI projects with detailed Chinese data. We find that international joint ventures (JVs) generate significantly positive technology diffusion effects, while wholly foreign‐owned firms (WFOs) generate significantly negative competition effects. The differentiated impacts of JVs and WFOs are robust, heterogeneous and causal as shown by our instrumental variable estimation. As for the mechanisms, evidence suggests that JVs bring better technology to the host country, invest more in R&D and employee training, and also provide easier technology access to local firms than WFOs.

Suggested Citation

  • Qing Liu & Ruosi Lu & Chao Yang, 2020. "International joint ventures and technology diffusion: Evidence from China," The World Economy, Wiley Blackwell, vol. 43(1), pages 146-169, January.
    • Handle: RePEc:bla:worlde:v:43:y:2020:i:1:p:146-169
    DOI: 10.1111/twec.12809
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    Cited by:

    1. Hu, Tiancheng, 2023. "Foreign ownership in joint ventures under knowledge leakage risks: The influence of industrial munificence and dynamism," Journal of Multinational Financial Management, Elsevier, vol. 68(C).
    2. Xie, Dan, 2023. "Tariff cost and cross-border M&A affiliate sales: Evidence from China," Journal of Asian Economics, Elsevier, vol. 87(C).
    3. Sarker, Bibhuti & Serieux, John, 2022. "Foreign-invested and domestic firm attributes and spillover effects: Evidence from Brazil," Journal of Multinational Financial Management, Elsevier, vol. 63(C).
    4. Yang, Zhihao & Hong, Junjie & Wang, Xuan, 2022. "Environmental spillovers in international joint ventures: Evidence from Chinese industrial firms," Technological Forecasting and Social Change, Elsevier, vol. 185(C).

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