Foreign Investment, Technology Transfer, and the Technology Gap: A Note

Author: Nakamura, Tamotsu¹

Source: Review of Development Economics, Volume 6, Number 1, February 2002 , pp. 39-47(9)

Publisher: Blackwell Publishing

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Abstract:

The paper analyzes a simple differential game model of international technology transfer via foreign direct investment, in which a subsidiary of a multinational corporation and a host-country firm are engaged in a technology accumulation race. In contrast to previous works, it is shown that an elasticity of the foreign firm's marginal quasi-rent plays a key role in determining the effects of technology spillover and of efficiency of learning activities on the technology transfer: those are positive if it is larger than unity in absolute value, and vice versa. Other comparative static results are reported.

Document Type: Original article

DOI: 10.1111/1467-9361.00138

Affiliations: 1: Yamaguchi University, Japan

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