IDEAS home Printed from https://ideas.repec.org/a/jns/jbstat/v217y1998i4p418-435.html
   My bibliography  Save this article

International Know-how Trade and Foreign Direct Investment / Direktinvestitionen und Handel mit Know-how

Author

Listed:
  • Klein Martin

    (Dipl.-Volkswirt Uwe Eiteljörge, Martin-Luther-Universität Halle- Wittenberg, Wirtschaftswissenschaftliche Fakultät, D-06099 Halle)

Abstract

The improved international tradability of services and the better protection of intellectual property rights - both of which have been results of the Uruguay Round - increase the international tradability of know-how. This paper investigates the economic impact of this. It is shown that know-how may be under-traded or over-traded. In the first case know-how is not traded although it would be welfare improving, in the second case know-how trade takes place but welfare is reduced. The results depend on the distinction of a productivity effect and a market power effect of international know-how trade. The welfare-increasing productivity effect arises because trade in know-how raises the buyer's productivity without lowering the seller's. The market power effect arises because trade in know-how redistributes market power between the buyer and the seller and eliminates the seller's competitive edge. Although a more balanced distribution of market power is positive for welfare, there may be situations where an incumbent acquires foreign know-how mainly in order to keep a potential entrant out of its domestic market. These are situations where know-how is over-traded from the point of view of domestic welfare.

Suggested Citation

  • Klein Martin, 1998. "International Know-how Trade and Foreign Direct Investment / Direktinvestitionen und Handel mit Know-how," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 217(4), pages 418-435, August.
    • Handle: RePEc:jns:jbstat:v:217:y:1998:i:4:p:418-435
    DOI: 10.1515/jbnst-1998-0403
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/jbnst-1998-0403
    Download Restriction: no
    File URL: https://libkey.io/10.1515/jbnst-1998-0403?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jns:jbstat:v:217:y:1998:i:4:p:418-435. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.