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The choice between an international joint venture and a wholly-owned subsidiary in a developing country under technology spillover effects

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  • Wing-fai Leung

Abstract

A general equilibriumm model of a foreign multinational enterprise's decisions on establishing a wholly-owned subsidiary or forming a joint venture is built on firm-specific knowledge and plant-specific knowledge when there are intraindustry and interindustry technology spillovers. The welfare effects of a host developing country under closed economies, unrestricted foreign direct investment, and the policy of minimum local ownership requirements are compared. A developing country's worry is confirmed: Introduction of competition from foreign firms may not improve the welfare of the host country. However, the minimum local ownership requirement is Pareto-superior to a closed economy. Copyright Kluwer Academic Publishers 1995

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  • Wing-fai Leung, 1995. "The choice between an international joint venture and a wholly-owned subsidiary in a developing country under technology spillover effects," Open Economies Review, Springer, vol. 6(4), pages 341-368, October.
    • Handle: RePEc:kap:openec:v:6:y:1995:i:4:p:341-368
    DOI: 10.1007/BF01000387
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    Cited by:

    1. Sanjo, Yasuo, 2013. "Country size and tax policy for international joint ventures in an integrated market," International Review of Economics & Finance, Elsevier, vol. 27(C), pages 37-53.

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