TY - JOUR
T1 - Relationship between FDI, foreign ownership restrictions, and technology transfer in the resources sector: A derivation approach
AU - Ghebrihiwet, N.
AU - Motchenkova, Evgenia
PY - 2017
Y1 - 2017
N2 - In various industries, multinational companies are the dominant players while local firms play a less prominent role. We consider such an industry and develop a model in which foreign multinationals strategically interact in technology transfer and compete in the product market stage. Furthermore, we analyze the welfare implications of often observed FDI policy measures. We find that the cost of technology transfer provides a possible rationale for why in practice FDI crowding out effects are often smaller in less developed countries.We also find that foreign ownership restrictions may reduce FDI crowding-out effects. However, the net effect of these restrictions on host country welfare will be negative. Finally, we find that, in industries with low levels of product market competition (e.g. the natural resources sector), the government may improve welfare by taking away the joint venture equity share of the domestic firm.
AB - In various industries, multinational companies are the dominant players while local firms play a less prominent role. We consider such an industry and develop a model in which foreign multinationals strategically interact in technology transfer and compete in the product market stage. Furthermore, we analyze the welfare implications of often observed FDI policy measures. We find that the cost of technology transfer provides a possible rationale for why in practice FDI crowding out effects are often smaller in less developed countries.We also find that foreign ownership restrictions may reduce FDI crowding-out effects. However, the net effect of these restrictions on host country welfare will be negative. Finally, we find that, in industries with low levels of product market competition (e.g. the natural resources sector), the government may improve welfare by taking away the joint venture equity share of the domestic firm.
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U2 - 10.1016/j.resourpol.2017.03.011
DO - 10.1016/j.resourpol.2017.03.011
M3 - Article
SN - 0301-4207
VL - 52
SP - 320
EP - 326
JO - Resources Policy
JF - Resources Policy
IS - June
ER -