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Southern Innovation And Reverse Knowledge Spillovers: A Dynamic Fdi Model

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  • Yin He
  • Keith E. Maskus

Abstract

We develop a general equilibrium model of endogenous innovation and foreign direct investment (FDI). In the benchmark model, Northern firms innovate with the help of localized spillovers, and a share of new products is transferred to Southern production via FDI. An increase in Southern imitation risk reduces this share. In the extended model, we permit higher‐cost Southern innovation, which yields inefficient specialization in both regions and reduces global growth. However, it generates a U‐shaped relationship between FDI and local imitation. We also allow for “reverse” spillovers in knowledge to Northern innovation, which partially restore global efficiency and growth.

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  • Yin He & Keith E. Maskus, 2012. "Southern Innovation And Reverse Knowledge Spillovers: A Dynamic Fdi Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(1), pages 279-302, February.
    • Handle: RePEc:wly:iecrev:v:53:y:2012:i:1:p:279-302
    DOI: j.1468-2354.2011.00680.x
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    Cited by:

    1. Maskus, Keith E. & Neumann, Rebecca & Seidel, Tobias, 2012. "How national and international financial development affect industrial R&D," European Economic Review, Elsevier, vol. 56(1), pages 72-83.
    2. Leontitsis, Alexandros & Philippas, Dionisis & Sickles, Robin C. & Tziogkidis, Panagiotis, 2018. "Evaluating countries’ innovation potential: an international perspective," Working Papers 18-011, Rice University, Department of Economics.
    3. Keith E. MASKUS & Lei YANG, 2013. "The Impacts of Post-TRIPS Patent Reforms on the Structure of Exports," Discussion papers 13030, Research Institute of Economy, Trade and Industry (RIETI).
    4. Liu, Ying & Wang, Zhe & Yin, Xiaopeng, 2016. "Economic integration, product cycles and regime effects," International Review of Economics & Finance, Elsevier, vol. 43(C), pages 275-283.
    5. Steff De Visscher & Markus Eberhardt & Gerdie Everaert, 2017. "Measuring productivity and absorptive capacity evolution," Discussion Papers 2017-11, University of Nottingham, GEP.
    6. Ioannis Bournakis & Jen-Chung Mei, 2023. "Embodied and Disembodied Spillovers from FDI: Sectoral Evidence from Ireland," Journal of Industry, Competition and Trade, Springer, vol. 23(1), pages 59-80, June.
    7. Caner Demir & Aykut Lenger, 2019. "Intellectual property rights and global imitation chains: the north–south–east model," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 36(2), pages 549-569, July.
    8. Pietro Grandi & Jean Belin & Elisa Darriet & Marianne Guille, 2024. "SMEs, R &D financing, and credit shocks," Small Business Economics, Springer, vol. 63(1), pages 325-347, June.
    9. Ivus, Olena & Park, Walter, 2019. "Patent reforms and exporter behaviour: Firm-level evidence from developing countries," Journal of the Japanese and International Economies, Elsevier, vol. 51(C), pages 129-147.
    10. Ndubuisi, Gideon & Foster-McGregor, Neil, 2018. "Domestic intellectual property rights protection and the margins of bilateral exports," MERIT Working Papers 2018-035, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    11. Suzuki, Keishun, 2014. "Southern Innovation and Foreign Direct Investment," MPRA Paper 57054, University Library of Munich, Germany.

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