Alvarez , Isabel and Marín, Raquel and Santos Arteaga, Francisco J. (2011) FDI entry models, development and technological spillovers. [Working Paper or Technical Report]
Available under License Creative Commons Attribution Non-commercial.
Official URL: http://eprints.ucm.es/12613/
Most of the literature related to foreign direct investment in developing countries focuses on the incentives of local producers to incur in the technological development costs required to act as suppliers of multinational companies (MNC). Scarce attention has been paid to the strategic interactions derived from the potential (reciprocal) technological spillovers between local firms and MNC subsidiaries, with the recent exception of the theoretical model by Sanna-Randaccio and Veugelers (2007). Such a void in the literature is justified on the technological differences between MNC and local firms, assuming that both of them produce for totally independent markets under no direct competition conditions. If this were the case, MNC entry modes in underdeveloped countries should be independent of their level of development. We reject such a simplification illustrating empirically how entry modes depend on the development level of a given host country. Besides, this finding is justified with a theoretical proposal that generalizes the Sanna-Randaccio and Veugelers (2007) model. Our extension accounts for all the possible equilibrium scenarios jointly defined by the strategies of both the MNC and the local firms, which allows us to consider the equilibria ignored in a partial analysis and to provide a general equilibrium explanation for the evidence presented.
|Item Type:||Working Paper or Technical Report|
|Uncontrolled Keywords:||Multinational Companies, Technological Spillovers, Developing Countries, Entry modes.|
|Subjects:||Social sciences > Economics > Econometrics|
Social sciences > Economics > Economic development
|Series Name:||Working Paper|
|Deposited On:||05 May 2011 10:39|
|Last Modified:||29 Aug 2011 10:21|
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