Technology transfer and spillovers in international joint ventures

Abstract

It is often argued that multinationals are reluctant to transfer technology due to the fear of spillovers. We show that this need not be the case if host country policies like taxation are taken into account. Furthermore, we examine the incentives the multinational and the host country have to engage in an international joint venture. We show why a multinational may agree to enter a joint venture even though this gives rise to spillovers. Surprisingly, we find that a joint venture is sometimes not in the interest of a host country, despite the prospect of spillovers.JEL-classification numbers: D43, F21, F23, L13, P31, O12.

Who is afraid of political risk? Multinational firms and their choice of capital structure

“…It may induce the investor to choose an inefficient technology (Eaton (1995)), inefficient investment paths (Thomas andWorrall (1994), andSchnitzer (1999)) or excess capacity (Janeba (2000)). More recent papers have investigated the sale of shares to locals as a possible way to mitigate the risk of confiscatory taxation or creeping expropriation (Konrad and Lommerud (2001), Mueller and Schnitzer (2006)). However, none of these authors have allowed for different forms of political risk to impact the investor's decisions in different ways.…”

Local content and procurement requirements in oil and gas contracts

“…5 experience and technological capacity to effectively undertake petroleum operations. 27 LCRs proceed from the premise that domestic workforce and industries should over time develop the capacities to supply the goods, services and human resources needed to drive the oil and gas value chain, by substituting domestically produced goods for imported goods, and to create more local employment by substituting domestic labour for imported or foreign-based labour. LCRs across the MENA region therefore emphasise the desire and need for IOCs to adopt practices that foster the development of a better-trained, qualified domestic workforce over the term of the petroleum contract.…”

International Joint Venture under Asymmetric Information: Technology vis-a-vis Information Advantage

“…Constraint (20), which requires the domestic firm's expected profits in the IJV to be no less than its maximum expected profit under duopoly competition, guarantees the domestic firm's participation in the contract.…”

“…Consequently, the ownership share in their foreign subsidiary generally depends on the conditions under which their intangible assets are transferred to IJV as well as on their bargaining power relative to their domestic partners'. Muller and Schnitzer (2006) analyze the effects of a potential spillover on technology transfer of a multinational enterprise and on the host country policy. The potential of technology spillover induces the host country to attract the multinational enterprise with more favorable taxation and infrastructure.…”