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International joint ventures and internal technology transfer vs. external technology spillovers: Evidence from China

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  • Jiang, Kun
  • Keller, Wolfgang
  • Qiu, Larry D.
  • Ridley, William

Abstract

We study the economics of international joint ventures using administrative data for China. We first show that foreign investors choose Chinese partners that are relatively large, productive, and more innovative to set up their joint venture. Using a difference-in-differences framework, we then provide evidence that joint ventures lead to domestic benefits in the form of productivity and technological spillovers to both the Chinese partners in joint ventures as well as other domestic Chinese firms. Exploiting the easing of joint venture requirements as China entered the WTO in the year 2001, we further show that intraindustry spillovers from joint ventures to other domestic firms increased in the wake of China’s WTO accession, consistent with gains from foreign technology rising due to enhanced commitment through the rules-based WTO system. Our results shed new light on the efficacy of FDI performance requirements as well as on claims regarding international technology transfer that underpinned the China–US trade war.

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  • Jiang, Kun & Keller, Wolfgang & Qiu, Larry D. & Ridley, William, 2024. "International joint ventures and internal technology transfer vs. external technology spillovers: Evidence from China," Journal of International Economics, Elsevier, vol. 150(C).
    • Handle: RePEc:eee:inecon:v:150:y:2024:i:c:s0022199624000667
    DOI: 10.1016/j.jinteco.2024.103939
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    9. Thomas Sampson, 2024. "Technology Transfer in Global Value Chains," American Economic Journal: Microeconomics, American Economic Association, vol. 16(2), pages 103-146, May.
    10. Robin Kaiji Gong, 2019. "The Local Technology Spillovers of Multinational Firms," HKUST CEP Working Papers Series 201902, HKUST Center for Economic Policy.
    11. Gao, Yunshu & Yin, Sisi & Ferrett, Ben & Gao, Bo, 2024. "FDI deregulation and firm innovation: Evidence from firm patents," China Economic Review, Elsevier, vol. 83(C).
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    15. Vrolijk, Kasper, 2022. "Economic effects of FDI: How important is rising market concentration?," IDOS Policy Briefs 12/2022, German Institute of Development and Sustainability (IDOS), Bonn.
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    22. Zi Wang & Yanling Zhou, 2021. "Who starts the trade war? A theory of export controls and quid pro quo," The World Economy, Wiley Blackwell, vol. 44(10), pages 2950-2965, October.

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    More about this item

    Keywords

    International joint ventures; Partner selection; Technology spillovers; Joint venture partner firms;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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