Jota Ishikawa, Hitotsubashi University
Yoichi Sugita, Columbia University
Laixun Zhao, Kobe University

Abstract

It is observed that in order to undertake foreign direct investment (FDI), multinationals are often required to form joint ventures (JVs) with local firms. This paper examines the effects of technology transfer to JVs in the presence of foreign ownership regulation. We specifically consider technology spillover from JVs to local firms, and its relation with corporate control. It is shown that foreign ownership regulation may facilitate both technology transfer and spillover when the multinational has corporate control. Under corporate control by the local partner firm, however, such regulation may hamper technology transfer.

Keywords: foreign direct investment, joint venture, ownership regulation, corporate control, technology transfer, technology spillover
JEL Classification: F12, F13, F23